Publication: Prism Volume: 4 Issue: 13

Russia sounded the alarm over its continuing financial woes and looked to the world community for aid in surmounting its economic crisis. That appeal came as various Russian political groups began positioning themselves for parliamentary and presidential elections scheduled in 1999 and 2000. In the international arena, meanwhile, the Kremlin found itself at odds with Western leaders over Russian policy toward Kosovo. Moscow also clashed with the United States following the announcement of a lucrative Russian-Indian nuclear deal.


Russia’s financial situation was “alarming,” and radical measures were essential to ward off “social and political danger,” President Boris Yeltsin told a special joint session of the cabinet and State Duma leaders on June 23. He called on parliament to give speedy approval to the government’s proposed measures. The government was drafting some twenty bills to accompany its program; the first six were sent to the Duma on June 24. Yeltsin’s meeting came three months to the day since the president dismissed the government of Premier Viktor Chernomyrdin, saying it had failed to improve economic performance.

Adding to the government’s worries was the continuing slide in Russian share prices that accelerated following the surprise decision on June 18 of the International Monetary Fund board to withhold the latest $670 million tranche of its $9.2 billion loan to Russia. The board said Russia’s government had not yet delivered on its earlier commitments. The IMF board’s decision to disregard the advice of its own mission that the tranche should be released was unprecedented. But the Russian government continued to look to international financial lending institutions for an emergency assistance package.

On June 17, in what was seen as a deliberate attempt to woo Western investors, Yeltsin brought Anatoly Chubais, former Russian privatization chief, back to the government team. Chubais was given the job of coordinating Russia’s relations with the IMF and the World Bank. Contrary to government claims that Russia could cope with the financial crisis on its own, Chubais revealed that Russia was hoping for a stabilization fund of between ten and fifteen billion dollars. Negotiations were expected to last at least a month.


Russia is scheduled to hold parliamentary elections in December 1999 and a presidential election in June 2000. Far away though that seemed, the elections were already on everyone’s mind.

Former prime minister Viktor Chernomyrdin opened his presidential campaign by announcing that he would run for the Duma in an upcoming by-election. After Chernomyrdin left the government, his “Russia is Our Home” movement suffered a sharp loss of influence. So much so that Russia’s Democratic Choice (DVR), the movement led by Yegor Gaidar and Anatoly Chubais, began to see itself once again as a possible leader of a broad center-right coalition in the 1999 parliamentary elections. DVR held a congress on June 13 at which Democratic Union leader Valeria Novodvorskaya surprised delegates by declaring that Yeltsin should run for a third term in office and clear the way for Gaidar or Chubais to run in 2004.

Novodvorskaya created a further sensation by labeling Mayor Yuri Luzhkov “an outright nationalist and a Nazi.” Her remarks were remarkable less for what they said about Luzhkov than for what they seemed to reveal about the direction of the upcoming election campaign. The newspaper Izvestia, which is partly owned by Russia’s richest financier, Vladimir Potanin, recently launched a campaign against racism in Russia. That racial hatred still exists in Russian society is no secret. That extremist candidates stand a strong chance of winning seats in next year’s Duma elections is more questionable.

Novodvorskaya’s warning and Izvestia’s campaign suggest, however, that the liberal wing of the political spectrum may be planning to paint such leading opposition candidates Aleksandr Lebed and Yuri Luzhkov as fascists and nationalist extremists in the upcoming elections. In 1996, Gennady Zyuganov was presented as a dangerous Communist; this time it is may be the turn of the nationalists to serve as bogeyman. This suspicion gained further support when President Yeltsin in a radio address on the anniversary of Nazi Germany’s June 1941 invasion of the USSR spoke of the increasing danger of fascism in Russia. Young people were at especial risk from extremist ideologies, he said.

Luzhkov continued to deny that he had presidential ambitions, but Aleksandr Lebed announced on June 13 that his “Honor and Motherland” movement was already working hard to compile lists of party candidates and planned to take an active part in next year’s parliamentary elections. Also seen as a possible presidential contender was General Andrei Nikolaev, former chief of Russia’s Border Service, who announced that he was forming a new center-left movement called “The Union of People’s Power and Labor.” Nikolaev said he planned for his center-right party also to compete in the 1999 parliamentary elections.


The Kosovo conflict dominated international diplomacy over the past fortnight as Moscow continued to back Serbian authorities in Belgrade while the West intensified planning for a possible military intervention to protect Kosovo Albanians. Discord between Russia and the West over Kosovo burst into the open on June 15, when Russian Defense Minister Igor Sergeev assailed NATO for air exercises that the alliance had conducted in Albania and Macedonia. Sergeev, who had only recently returned from talks with NATO defense ministers in Brussels, accused the alliance of having misled Russia as to the timing and scope of the action. He and other Russian officials also complained that NATO had failed to consult properly with Moscow in its decision to launch the exercise. The Russian Defense Ministry recalled its envoy to NATO in a move that some in Moscow said was a sign of protest over the alliance’s policies.

But the most important diplomatic development came on June 16, when Yugoslav President Slobodan Milosevic — the man responsible for Belgrade’s bloody crackdown in Kosovo — paid a visit to Moscow. The visit itself had been the result of pressure exerted by the West on Boris Yeltsin to use Russia’s influence in Belgrade to help force a peaceful settlement of the conflict in Kosovo. In any event, Yeltsin did win from Milosevic concessions on several points demanded by the West, including a pledge to launch immediate and unconditional talks with Kosovar Albanian leaders. Moscow proclaimed the talks a diplomatic breakthrough — yet another for Russian diplomacy, it was said — and launched a campaign calling for the West now to pressure the Kosovar Albanians into sitting down at the negotiating table with Milosevic.


But, while praising Yeltsin’s efforts, Western leaders looked at the outcome of the Yeltsin-Milosevic talks with considerable skepticism. U.S. Secretary of State Madeleine Albright said that Milosevic had failed to meet several key demands set out by the West. Specifically, she said that Milosevic had agreed neither to halt Belgrade’s brutal police operations against Kosovo Albanians nor to withdraw its forces from Kosovo. In the days that followed, Moscow continued nevertheless to tout the results of the Yeltsin-Milosevic meeting, but the talks in fact appeared only to deepen differences between Russia and the West over Kosovo. As Moscow maintained its vocal opposition to possible NATO military actions in Yugoslavia, NATO planning for such a contingency moved forward and a battle began to shape up over whether or not NATO could act in Yugoslavia without approval by the UN Security Council.

Moscow launched an additional broadside against NATO on June 19, when a high-ranking Russian Defense Ministry official warned ominously that NATO military actions in Yugoslavia without a UN mandate could trigger a new cold war in Europe. Colonel General Leonid Ivashov, head of the Russian Defense Ministry’s international cooperation department, also leveled a series of other accusations at NATO. He criticized the alliance once again for failing to provide Moscow with details of the earlier air exercise in Albania and Macedonia. He also intimated that NATO leaders had launched the exercises without a proper consensus among NATO member states. Finally, Ivashov accused NATO of running roughshod over Europe while ignoring the opinions of its partner states and trying to turn itself into Europe’s policeman. Ivashov suggested that Russia had thus far limited its participation in NATO’s Partnership for Peace program for precisely these reasons.


The deepening tensions over Kosovo did little to ease differences between Moscow and Washington over several other international issues. The chances for ratification of the START II treaty by Russia’s parliament appeared to suffer a blow, for example, as several key lawmakers warned that NATO’s readiness to use military force in Yugoslavia could provide yet another reason for lawmakers to oppose ratification of the treaty. That warning came on the same day that Russian military experts briefed lawmakers on the treaty at the General Staff headquarters. Although the arguments presented by the military briefers were said to have been persuasive, Duma Defense Committee Chairman Roman Popkovich cautioned that many lawmakers remained unconvinced and that ratification would remain a complicated and highly politicized process.

Washington and Moscow, meanwhile, clashed also over a $3 billion Russian-Indian deal that calls for Russia to construct a nuclear power plant in southern India. U.S. officials charged that the deal both undermines international efforts to punish India for its recent conduct of underground nuclear tests and violates informal obligations Moscow assumed earlier as an established nuclear power. Russia justified the deal on the dubious grounds that it was merely an addendum to an older agreement that had been reached in 1988 by then Soviet leader Mikhail Gorbachev and then Indian Prime Minister Rajiv Gandhi. A U.S. State Department spokesman said on June 22 that the deal sends “the wrong message at the wrong time.” He also suggested that there was little the United States could do to stop it.

“The Fortnight in Review” is prepared by Senior Analysts Elizabeth Teague (Russia), Stephen Foye (Security and Foreign Policy), and Vladimir Socor (Non-Russian republics).