#7
THE AUGUST 17, 1998 CRISIS RESULTED IN A CHANGE
OF POLITICAL AND ECONOMIC ERA IN RUSSIA
MOSCOW, August 16. /RIA Novosti observer/. An event happened in Russia three
years ago that has since been known as "the economic crisis of August 1998."
On August 17, 1998 the Russian government announced the actual devaluation of
the rouble and a three-month moratorium on the payment of external debts by
commercial banks. Within days thereof, the exchange rate of the rouble
plummeted, leading to mass bankruptcies of commercial banks and depriving
millions of people of jobs and savings.
The August 17, 1998 crisis also ushered in a new political and economic era
in Russia. The events that followed that black day caused the death of
speculative economy based on quick megaprofits and a mechanism of numerous
financial machinations, from hard currency and shares of financial pyramids
to the privatisation vouchers and short-term state bonds. It was replaced by
a real production economy where professional managers quickly replaced the
poorly educated newly rich Russians with bad manners.
A change of elite groups took place in politics, where highly professional
political managers moved to the fore.
August 1998 also showed that the country had firmly entered the road leading
to a market economy, from which it did not turn back despite the serious
attempts at "pink " restoration undertaken under Premier Yevgeny Primakov.
On the whole, the influence of the August 17 crisis can be regarded as
beneficial for the country. It put an end to the economic disease of
trumped-up figures. This did not result in an economic collapse but gave
birth to a new, effective economic model based on a more realistic attitude
to business. It signified a transition from quick megaprofits to painstaking
work, which is bound to give rise to a new business ethics.
The ill and largely virtual Russian economy was replaced by a realistic,
pragmatic and much healthier economy. An economy of living on your budget,
rather than on borrowed money. This is why we overcame the negative
consequences of the crisis so quickly.
Stable economic growth was registered in the country less than two years
after the crisis. Non-payments went down and barter was slashed. Pensions and
wages were paid regularly and unemployment went down. As of today, there are
only about a million registered jobless in Russia - and as many vacancies,
for the first time in many years. There is a shortage of qualified and highly
paid personnel on the labour market.
The people have reinvested their trust in the banking system. There were only
2.9 billion dollars on people's deposit accounts in 1998, 5.3 billion dollars
in 2000 and nearly 7 billion dollars this year.
The pre-crisis consumption figures have been topped in quite a few spheres.
For example, the number of Russians who travelled abroad amounted to 3
million in 1997 and the 2001 figure is approaching 5 million. According to
forecasts, our tourists will spend up to 25 million dollars on rest and
recreation.
Russian citizens will spend about 9 billion dollars on the purchase of cars
this year, nearly 22 billion dollars on flat repairs and construction
materials, 4 billion dollars on household, audio and video equipment, and 2
billion dollars on furniture.
Taken together, this means that despite the August 1998 crisis, there is a
substantial middle class in Russia - up to 25% of the population of large
cities. It is indicative that more and more people are coming to see
themselves as middle class. Opinion polls show that about a third of the
respondents think so.
This ensures a rather high level of social and political stability in Russian
society. The number of strikes went down ten and more times in the past few
years. The representatives of the left forces enjoy only 30-35% of electoral
support, while radical and extremist groups taken together get no more than
5% of the vote. This means that society no longer entertains illusion that
somebody else, and not the people themselves, can quickly change their life
for the better.
This is largely the achievement of the August 17, 1998 crisis, which became a
highly effective inoculation against social parasitism that poisoned the
Soviet and post-Soviet societies. As a result of the August crisis, the
people learned to count on themselves and stopped believing in the
omnipotence and paternalism of the state. Irreversible market reforms could
not be launched without that attitude.
Consequently, it can be said that August 17, 1998 marked the beginning of the
end of the post-Soviet era, which should be followed by an age of a normal
market economy. The finale of that post-Soviet era was March 26, 2000, when
Vladimir Putin was elected president of Russia in the first round of
elections.
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#8
Weekly Defense Monitor
Center for Defense Information
Volume 5, Issue #32 August 16, 2001
NATO Enlargement and its Changing Missions
Tomas Valasek, CDI Senior Analyst, tvalasek@cdi.org
As NATO's 2002 Prague summit approaches, alliance members are beginning to
stake out their positions on enlargement. NATO is expected to decide in
Prague whether it accepts new members, which countries will be selected, and
in what time frame. German Chancellor Gerhard Schroeder ruffled feathers in
NATO when he suggested that Russia might be accepted, albeit not in the near
term. More recently, French President Jacques Chirac made a pitch for the
three Baltic states - Latvia, Lithuania, and Estonia - to be accepted to NATO
in 2002. But what is missing from these statements is a rationale for
enlargement; a clear definition of what NATO does and how new members would
contribute to its missions.
The NATO enlargement issue cannot be divorced from the larger question of
NATO's purpose. Only in the context of NATO's future missions can one examine
whether new members would add to or detract from the alliance's ability to
carry out its goals. NATO's purpose is by no means immutable or even clearly
defined - the alliance's guiding document, the Strategic Concept, has been
revised twice in the past decade. With the exception of most recent entrants,
few NATO members today think of the alliance as exclusively - or even
primarily - a mutual defense organization. The alliance is engaged in
missions that its founders never would have contemplated.
NATO today is first and foremost a regional security organization. In
simplified terms, its work in the past six years has consisted of enforcing
internationally accepted norms of behavior, in both interstate as well as
intrastate conflicts (albeit at the cost of violating some of these norms
itself, as discussed below). It launched air strikes against Bosnian Serb
targets in 1995 to keep one ethnic group from massacring another. It fought
again in Kosovo in 1999 to stop the Yugoslav security apparatus from using
indiscriminate force and terror in quelling unrest by the country's Albanian
minority. At the time of writing this essay, the alliance stands ready to
launch another mission, in Macedonia, to enforce a potential peace agreement
between the Macedonian government and ethnic Albanian militants.
Is NATO the right organization to assume the regional security
responsibilities in Europe? It is not Europe's only security organization,
not even its largest one. One alternative to NATO is Europe's largest
collective security group, the 55-member Organization for Security and
Cooperation in Europe (OSCE). Unlike the OSCE, NATO is an exclusive
organization involving less than half of Europe's states. The alliance's
selective nature inevitably raises questions about its legitimacy. By what
right does a group of 19 states enforce order among Europe's 45 countries?
NATO's Bosnia mission was launched on the request of the United Nations'
Security Council. But the Kosovo war received no such endorsement. NATO acted
on the basis of a vote in the North Atlantic Council, the alliance's own
highest decision-making body. NATO's unilateral action appeared to violate,
if not the letter, then the spirit, of the U.N. Charter.
NATO is, in effect, a self-appointed private security force. It is benevolent
in that it seeks to enforce, in the allies' best interpretation, a
universally accepted set of rules, modeled after the U.N. Charter. This
benevolence is a part of the reason why no fewer than nine European countries
seek NATO membership rather than fear its power. But NATO remains a
self-appointed interpreter and enforcer of these rules, and it is willing to
enforce them with military might, and as such in inevitably arouses
suspicions among some neighbors. Russia's objections to NATO's Kosovo
operation focused not as much on the tactical issues as they did on the fact
that the alliance launched the air war without a U.N. Security Council
authorization. Even more worrisome to Moscow, nothing theoretically prevents
the alliance from launching a similar operation against Russia itself. In
polls conducted in April 1999, in the midst of the Kosovo war, 70 percent to
73 percent of Russians said they considered the NATO military operation in
Yugoslavia a direct threat to Russia's security.
Fears that NATO may potentially abuse its military might have translated into
tensions and insecurity as countries such as Russia seek to form alliances
implicitly aimed against NATO. The president of Belarus, Alexander
Lukashenko, justified the union between Russia and Belarus as a response to
NATO's aggression against Yugoslavia. So, would Europe be better off with a
collective security organization instead of NATO? Could the enforcer be
causing more damage than good through the methods it uses to enforce
otherwise sound principles?
Not necessarily. NATO's exclusivity is also one of its strengths. By keeping
its membership relatively limited, NATO has preserved its ability to act --
it is far easier to reach consensus among 19 nations that among 34. Also, a
smaller, more cohesive membership has allowed NATO to preserve its core
values. As expressed in the Membership Action Plans -- guideline documents
for NATO applicants -- these values are: market economy, freedom of
expression, peaceful resolution of domestic and international conflicts,
transparency, and a market economy relatively free of corruption. This basket
of norms accepted by NATO members is crucial to its existence - promotion and
enforcement of these values has, in effect, become NATO's central mission. If
the alliance lost consensus on what principles it stands and fights for, it
would find itself without a purpose.
The OSCE does provide an alternative to NATO but lacks the ability to enforce
its decisions. The flip side of collective security arrangements is that the
same voluntary principle that is at the heart of OSCE's mandate makes the
organization unequipped for situations when a member state refuses to abide
by its principles. In the past few years, OSCE's instructions to Russia to
vacate its bases in Moldova and Georgia have gone partially or completely
unheeded. The OSCE's only tool to punish Yugoslavia for its behavior in
Bosnia and Kosovo was suspension of the country's membership. But with
Belgrade outside the organization, the OSCE lost all leverage over events in
the Balkan country.
NATO is not the perfect answer but it is better than the alternatives. A
Europe without a security organization would be a far more dangerous place.
As proposed earlier, Balkan conflicts would most likely still be burning out
of control. For better or worse, Europe will rely on NATO for the foreseeable
future to provide peace and security to the continent.
Does NATO's changing role mean that applicants should be judged by different
criteria than in the past? For example, should the applicant's ability to
defend itself dominate the list of criteria when most NATO military plans and
exercises are geared for humanitarian crises and peacekeeping? Is the
proximity of the applicant countries to areas of conflict, such as the former
Yugoslavia, a liability or an asset? And would enlargement help or aggravate
NATO's legitimacy problem? All these questions will need to be explored
before the alliance can make a confident decision on enlargement in 2002.
(This article is an excerpt from an upcoming CDI book on NATO enlargement, to
be released this fall).
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#9
Moscow Paper Views Importance of 'Small Steps' Toward
'Common Missile
Defense'
By Carlotta Gall
Rossiyskaya Gazeta
14 August 2001
[translation for personal use only]
Article by political observer Aleksandr Sabov under "What Has Been What Will Be" rubric: "Why Small Steps Are Better Than Great Leaps
Forward"
[Passage omitted on prospects for
Russian-US-Chinese consultations at Shanghai APEC conference in October]
The visit to Moscow which US Defense Secretary Donald Rumsfeld completed
yesterday -- he was the guest of his colleague, Sergey Ivanov -- is
important, once again, in terms of the maturing of the future trends by
which the world will be guided tomorrow.
Both sides had already repeated their arguments to each other on many
occasions. We -- the fact that a further 32 international treaties are
based on the 1972 ABM Treaty and, if this prop were taken away, the
entire system of balanced strategic security would crumble. America --
that the bipolar world no longer exists, for it has vanished into the
past, and so why build the new world order on the principle of mutual
deterrence and the possibility of the guaranteed destruction of the two
countries which stood at the head of former political blocs, whereas it
is better right now to safeguard both ourselves and the whole of the rest
of the planet against unforeseen threats?
Only a deaf person can fail to hear that the truth speaks on both sides.
Already they have both had to acknowledge what a dangerous nature the
spread of nuclear materials and launch vehicles, which are virtually not
subject to international control, around the world has assumed. It is
worth recalling that it was Rumsfeld who, at the annual security
conference in Munich 4 February (it was there that he had his first
meeting with Sergey Ivanov, then secretary of the Russian Federation
Security Council), first aired the new US Administration's international
political tasks. In that speech he did not once say the words "national
missile defense"; on the contrary, he emphasized the desirability
precisely of "common missile defense." However, we disregarded that
subtlety. NMD remained in our memory -- in the very key in which it had
been interpreted in the past by Reagan and then Clinton. Let us note:
There is an article in the 1972 treaty which provides for the possibility
of its denouncement, and America formally has the right unilaterally to
alter it, but since it refrains from taking this step, this means that it
seems to be hearing our Russian arguments. We in turn have acknowledged
the possibility of strategic missile threats "from outside," having
declared our readiness, jointly with NATO countries, to create a European
(that is, common!) missile defense of a nonstrategic nature, against
tactical theater missiles. So the experts and politicians are still
taking "small steps" toward some -- it has to be thought -- unified
concept.
But let us resort to proof by contradiction: What, exactly, cannot be
allowed? We cannot allow the unilateral rewriting of agreements, even if
they provide for the right of any side to denounce them. For this would
mean abandoning the very possibility of international control, which
simply cannot be unilateral. This would lead in turn to the temptation to
replace "heavyweight" legal treaties, which take years or sometimes even
decades to draw up, by "lightweight" political decisions -- a dangerous
path, which has already repeatedly led mankind toward disasters. An
agreed correction to the old treaty is perfectly possible. Why not
introduce into its framework a point on repulsing "outside" missile
threats, while at the same time not throwing the baby out with the bath
water?
It only remains to hope that the presidents' experts are moving in
precisely this direction. No one can find the golden key on his own: In
fact, it can only be an alloy of various blanks.
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#10
The Russia Journal
August 10-16, 2001
Implications of Russia-China deal
Latest arms sales to total $2 billion
By JOHN HELMER
The recent pact between Russia and China is not aimed at third countries,
both President Vladimir Putin and President Jiang Zemin insisted. Nor are
there any secret clauses, like the 1950 Sino-Soviet treaty between Josef
Stalin and Mao Tsedong, which obliged the forces of one country to come to
the aid or defense of the other.
However, if the arms transfers anticipated by the new treaty proceed
according to the hopes of some in both Moscow and Beijing, a dramatic shift
in the Asian military balance may occur. According to Russian military
sources, before that happens the Kremlin will have to make a major policy
decision.
For the moment, all sources close to the Russian arms-export agency
Rosoboronexport will say is that Russia has agreed to supply new fighter
aircraft to China in a fresh arms deal worth $2 billion.
The contract for delivery of up to 45 Russian-built Sukhoi-30MKK interceptors
was signed quietly just before the recent Putin-Jiang meetings in the Kremlin.
The aircraft are to be built at the Sukhoi aviation plant at
Komsomolsk-na-Amur, in the Russian Maritime Province, near the Chinese
border. Deliveries will be over a two-year period.
Military-industry sources have told The Russia Journal that this Su-30MKK
contract follows an earlier one, signed in 1999, which provided 40 of the
aircraft for $1.8 billion. China's first Sukhoi order was signed in 1992, and
provided 26 Su-27 fighter-bombers for $1 billion. Another 22 of these
aircraft were contracted in 1996. After that, Moscow agreed to license
Chinese manufacture of 200 Su-27's at Chinese aviation plants.
According to Maxim Pyadushkin, at Moscow's Center for Analysis of Strategies
and Technologies, the Su-30MKK is "a modernized version of the Su-27. It can
operate effectively against the U.S.-made F-15 and F-16."
The latest deal is the first of many, the Russian sources say, that are
contemplated in Article 7 of the treaty the Russian and Chinese presidents
signed recently. That provision calls for promotion of military cooperation,
arms trade and transfer of military technology.
But Pyadushkin believes the Su-30MKK contract does not alter the balance
between Chinese, Taiwanese and U.S. forces that would be deployed in the
island's defense. "Even with these new planes, China will still have a rather
limited number of modern aircraft," he said. Its naval capability is even
weaker, he added.
However, according to Pyad-ushkin and other Russian military strategists,
some of the weapons systems now under consideration for sale to China have
the potential to change this balance.
A Moscow aviation source has disclosed that talks are under way to supply
China with the latest air-battle-management model of Sukhoi, which can be
deployed to coordinate fighter and missile attacks on targets at ranges of
more than 150 km.
The newest Russian anti-ship missile, the Granit, is also being considered,
although press reports that it is being negotiated for sale are said by
Russian government sources to be wrong.
Equipped with nuclear warheads, the Granit has been designed by the Russian
Navy to be fired by Oscar-II class submarines (the same type as the Kursk)
and to strike at aircraft-carrier forces of the kind the U.S. Pacific Fleet
would operate in defense of Taiwan.
"I know the Chinese are interested in Granit missiles," Pyadushkin said,
"probably to equip the two Russian-made Sovremenny-class destroyers China has
already bought." Granit would allow the destroyers to make up for a lack of
anti-missile systems, without which they would likely be sunk in minutes by
the U.S. fleet, according to U.S. estimates.
For the time being, Pyadushkin rules out the possibility of the sale of
either Granit or Oscar-II class submarines. "That would require a substantial
change in policy.
"If the provision by Russia to China of modern arms systems and nuclear
submarines would threaten the interests of the U.S., there will be pressure
imposed on Russia. I think that under such pressure Russia will choose not to
spoil relations with the United States rather than sign a good contract with
China."
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