THE FORTNIGHT IN REVIEW

The Fortnight in Review

Russia: Rybkin Joins the Government

President Boris Yeltsin brought his close ally Ivan Rybkin into the government as Deputy Prime Minister responsible for CIS affairs. The appointment, announced on March 2, seemed designed to set Russia’s relations with the CIS on a new footing. By freeing Rybkin’s place as secretary of the Security Council, the move also paved the way for a merger of the Security and Defense Councils and the creation of a more streamlined body that, in principle at least, should be better able to tackle long-delayed military reform.

For the time being, Rybkin will retain responsibility for negotiations with Chechnya. News of his appointment was warmly greeted by the Chechen leadership, with Foreign Minister Movladi Udugov predicting that it would speed up the recognition of Chechnya’s independence. During his time at the Security Council — which is part of the presidential apparatus — Rybkin fought an uphill battle to persuade the Russian government to pay over money it had pledged for the restoration of Chechnya’s war-shattered economy. Maverick field commander Salman Raduev complained, indeed, that Rybkin had "bought off" the Chechen leadership. Rybkin should, in any event, be better placed in his new post inside the government to ensure that the money gets paid.

Defense Shake-Up Strengthens Security Council

In terms of personnel, the big winner in the latest reshuffle of Russia’s security decisionmaking apparatus was Rybkin’s successor as Security Council secretary, Andrei Kokoshin. In institutional terms, it was the Security Council itself. Kokoshin is a 52-year-old defense intellectual who first made his reputation as a "new thinker" during the Gorbachev period. In 1992, Kokoshin was named First Deputy Defense Minister of the newly formed Russian army, with responsibilities in the area of weapons procurement and development, and his name was mentioned frequently thereafter as a possible defense minister. In August 1997, as part of an earlier shake-up of the defense establishment, Kokoshin was named secretary of the Russian Defense Council and as chief of a recently created State Military Inspectorate. Those moves were part of a broader push by the Kremlin to oust some uniformed opponents of military reform while advancing the government’s plans for reducing and restructuring the armed forces. Kokoshin’s most recent appointment appears be the culmination of that effort.

In addition, Kokoshin’s appointment, the Kremlin gave the functions and the personnel of the two agencies that he headed — the now defunct Defense Council and State Military Inspectorate — to the Security Council. In 1996, the authority of the Security Council had been sharply curtailed when the Kremlin created the Defense Council. That move was aimed at limiting the political power of then Security Council Secretary Aleksandr Lebed. These latest developments appear to restore to the Security Council the authority that it had enjoyed prior to Lebed’s entry into the government. At that time, the Council was Russia’s preeminent defense and security decisionmaking body.

Russia Finally Gets a Budget

After six months of haggling, Russia’s State Duma adopted the 1998 federal budget in its fourth and final reading. The version passed on March 4 was a very different document from that approved by the Duma in the first reading in October 1997 — before the Asian financial crisis forced Russia’s Central Bank to defend the ruble by hiking interest rates. Russia’s heavily-borrowing government responded to soaring interest rates by slashing its projected spending. This rendered October’s version of the budget meaningless. Parliament and the Kremlin locked horns. At one point last fall, the Duma was threatening to vote no confidence in the government and Yeltsin was threatening to retaliate by dissolving parliament. It was Yeltsin who defused the situation, personally appealing to parliament to call off its no-confidence vote. In return, Yeltsin put Russia’s draft tax code on hold and promised to consult the opposition at regular "Big Four" and "roundtable" meetings. He also hinted that he might sack the cabinet’s "young reformers," and dangled the carrot of a coalition government before the Communists’ noses. By these means, Yeltsin secured parliament’s reluctant approval of his austerity budget.

His goal achieved, however, Yeltsin bluntly told opposition leaders that he had "no time" to read their draft proposals for a coalition government and indicated that he intended to keep the "young reformers" for the rest of his own term in office. The government slashed more spending from the draft budget. A furious parliament threw the budget out and dusted off its threatened no confidence vote. The government was unmoved. It made it clear that, whether parliament approved the budget or not, the government would press ahead with its austerity program. The Duma was left facing the unpalatable truth that, under Russia’s "super-presidential" constitution, parliament is a Potemkin village, and that it is never weaker than when it tries to defy the president. The only tangible result of the Duma’s refusal to approve the budget was that the government was forced to borrow money at punitive commercial rates, instead of relatively cheaply from the IMF. But parliament was the real loser. Gradually the Duma realized that if it wanted to exercise its constitutional right to monitor the government’s execution of the budget, it was going to have to pass that budget first.

"Everyone learned from the experience of adopting this year’s budget," Prime Minister Viktor Chernomyrdin commented on March 4. Communist Party leader Gennady Zyuganov clearly agreed. As a sign that the opposition had abandoned hope of government office, Zyuganov announced preparations to form a shadow cabinet and to join the trade unions in a nationwide day of protest on April 9.

New Bankruptcy Law Comes Into Effect

The government was hopeful that Russia’s new bankruptcy law, which came into effect on March 1, would help it clamp down on corporate tax dodgers. The new law was hailed as clearer and fairer than the previous legislation, which dated from 1992. The old law defined a company’s financial status in terms of an excess of claims over assets. This allowed many indebted companies to claim they were solvent on the basis of paper assets (such as property or debts owed by other deadbeat firms) and left a loophole for asset-stripping by incumbent managers. It was also blamed as a major culprit in Russia’s explosion of payments arrears to workers, the state and other enterprises. The new law, by contrast, allows an arbitration court to declare a firm insolvent if it fails to pay its creditors within ninety days. Moreover, the new law encourages early warning in order to increase the chances that, rather than being wound up, enterprises that get into debt can be helped back onto their financial feet.

UN-Iraq Agreement Buoys Moscow

The Kremlin proclaimed a diplomatic victory on February 23 as UN Secretary General Kofi Annan brokered an agreement with Baghdad stipulating the resumption of UN weapons inspections in Iraq. Moscow had spearheaded international opposition to threatened air strikes by the U.S. and Britain against Iraq, and had been among the most forceful of those countries urging the UN secretary general to get involved directly in negotiations aimed at resolving the latest Persian Gulf crisis. Following the February 23 agreement, Russia’s Foreign Ministry openly credited President Boris Yeltsin with having played a key role in resolving the crisis. Russian diplomats also intimated that the international effort involved in reaching the agreement reflected its own vision of a "multipolar" post-Cold War world." That vision denies the U.S. a role as the world’s "policeman" or dominant diplomatic power. It points instead to the need for various "centers" of global influence — Russia among them — to work in concert to resolve international problems.

The February 23 agreement was received with considerably less enthusiasm in Washington and London. Approval of the agreement by the UN Security Council, moreover, only papered over still-fundamental differences on Iraq between the U.S., backed by Britain, and Russia, backed by France and China. The U.S. and Britain pushed for a follow-up UN resolution that, while endorsing the February 23 agreement, would also threaten Iraq with automatic military reprisals in the event that Baghdad fails to comply with the agreement. Russia, France and China, conversely, opposed any mention of automatic reprisals in the resolution. The UN resolution finally approved on March 2 warned Baghdad that non-compliance would bring the "severest consequences," but made no mention of the automatic reprisals desired by Washington and London.

Last fall, Russian Foreign Minister Yevgeny Primakov brokered an agreement between Iraq and the UN that was accepted only with reluctance in Washington and that, as its doubters expected, failed to prevent a new outbreak of tensions. Critics of the latest agreement warn that, because it weakens UNSCOM (the UN agency overseeing UN weapons inspections), the February 23 agreement too is unlikely to deter Iraqi leader Saddam Hussein from hiding his weapons of mass destruction. Iraqi leaders, moreover, have long impugned the integrity of UNSCOM, and Russia’s Foreign Ministry has increasingly embraced that view. These developments have increased the pressure on UNSCOM, and suggest that a third crisis — again focused on UNSCOM’s activities — could easily arise. Such an eventuality is sure also to renew the conflict between Moscow and Washington. The U.S. has been the foremost defender of UNSCOM’s authority.

Georgia Remains Reliable Oil Transit Country

Georgian President Eduard Shevardnadze managed on February 25 to de-escalate, if only for the time being, the most serious crisis to date between Georgia and Russia. The crisis had erupted with the February 9 assassination attempt against Shevardnadze, which the president and the Georgian body politic saw as designed to reopen Georgia to Russian influence and to thwart the planned transit of Caspian oil. The crisis then took a turn that seemed, at least initially, unexpected. On February 19, heavily armed supporters of the late Georgian President Zviad Gamsakhurdia abducted four officers of the UN Military Observer Mission in Georgia (UNOMIG) which oversees the Georgian-Abkhaz cease-fire. Some members of this "Zviadist" group were suspected of involvement in the assault against Shevardnadze. The group’s main demands included: the release of other suspects arrested after the assassination attempt; the release of "political detainees" sentenced earlier by Georgian courts on criminal charges; the immediate withdrawal of all Russian troops from Georgia; and political negotiations in Tbilisi between the top Georgian leadership and Zviadist emigres residing in Moscow. The Moscow group for its part stood ready to fly to Tbilisi for the "negotiations."

Shevardnadze’s response was governed by the overriding goal of defusing the crisis short of using or provoking violence. On February 24-25, the Georgian government accepted some of the demands of the abductors in return for the release of the UN hostages. The Zviadists gave up the demand for the withdrawal of Russian troops from Georgia — a demand they had not insisted upon in the first place and which seemed designed to package their real political objective: "negotiations" with Shevardnadze. Some 15 abductors gave themselves up to Georgian authorities and were allowed to go to their homes. The group’s leader, Gocha Esebua, and two associates were allowed to disappear, instead of surrendering.

"Zviadists" and Moscow: An Unlikely Link?

As part of the bargain with the abductors, the Moscow Zviadists received a safe-conduct and landed in Tbilisi for political talks with Shevardnadze. Talks were actually held on February 26. The agenda of the talks, their format and possible follow-up sessions have not been made public. The late Gamsakhurdia’s supporters describe themselves as Georgia’s legitimate authority, and the Tbilisi government as usurpers or, at best, de facto authorities. Nemo Burchuladze, a former vice-chairman of the Georgian parliament under Gamsakhurdia, led the Zviadist group from Moscow.

Perhaps the most unexpected revelation in these events was the Zviadist-Moscow connection. Gamsakhurdia and his supporters had been considered hard-line anti-Russian nationalists. Their rhetoric had certainly qualified them for that reputation, even if some of their actions during Gamsakhurdia’s presidency played into Moscow’s hands. Following Gamsakhurdia’s overthrow, the 1993 Zviadist uprising against Shevardnadze in western Georgia seemed initially to evidence some covert Russian backing. It forced Shevardnadze into a Mephisto pact with Moscow as a temporary expedient to reestablish order. Afterward, a Zviadist group including Burchuladze reemerged in Moscow. The Georgian authorities have since applied repeatedly for the extradition of Burchuladze and several others in that group, on criminal charges stemming from the armed conflicts in Georgia. The Russian authorities, however, have protected the group. The situation parallels the better known one involving Igor Giorgadze and associates, suspected as organizers of the 1995 assassination attempt against Shevardnadze. That group has enjoyed similar high-level protection in Moscow.

Diehard Zviadists today are few, marginalized, and divided. In Tbilisi, Gamsakhurdia’s widow, Manana Archvadze, and the rump Round Table Union-Free Georgia denounced the Zviadists landing from Moscow as "traitors." Last week, however, Mrs. Archvadze-Gamsakhurdia and the late president’s son flew to Moscow themselves. Both groups disavowed the seizure of hostages and "terrorist methods" in general; but neither group seemed above trying to reap some political fruits from the convulsion. "Zviadism" has in any case become an increasingly vague and, even, potentially misleading label in the years since the former president’s death. Those acting in his name or claiming to represent his legacy are either doomed to political irrelevancy or simply using that name as a cover for their own agendas.

Political Consolidation

Shevardnadze took the high road in launching the talks with Zviadist representatives. He described the exercise as part of his general policy of national reconciliation and of searching for the broadest possible political consensus in Georgia. The president had called for such reconciliation earlier, as part of efforts to overcome the legacy of internal conflicts and to consolidate society around the goals of independence and modernization. This latest appeal therefore had the ring of consistency and credibility. On the other hand, Shevardnadze had all along insisted on the prosecution of those principally responsible for crimes committed by paramilitary forces during the years of turmoil. In this case, however, Shevardnadze appeared to deviate from that principle under pressure.

The president and other top officials explained their measured response at a specially convened congress of the governing Union of Citizens of Georgia. They made clear that their overriding priority is to maintain the stability required for turning Georgia into a linchpin of world trade. Shevardnadze in his address advised the Russian authorities against "harboring terrorists, because a country which does that puts its own tranquillity at risk." While urging the Russian leadership to seek "equitable relations" with Georgia, he also warned Georgians against any "reckless games with such a big neighbor as Russia." He reiterated that Tbilisi is "ready to work seriously" with Moscow.

State Minister (equivalent of prime minister) Niko Lekishvili cautioned the congress that the sudden reemergence of "Zviadists" and their actions served "the interest of those who want to stop international investments being placed in Georgia and to thwart the oil pipeline and other major projects." Still more explicitly, Parliament Chairman Zurab Zhvania told the 2,500 congress participants that the organizers of the assassination attempt against Shevardnadze and of the hostage seizure were "funded from Moscow," where the 1995 plotters also found a haven. And Shevardnadze’s international law adviser, Levan Aleksidze, told the press that the Zviadist group was acting merely as a "decoy" for those interested in "claiming to the world that Georgia is unstable and incapable of hosting international projects."

The leaders’ inference from all this was the need for a careful Georgian response, designed to avert confrontation with Moscow while protecting national interests. Moscow remained silent. The Russian Foreign Ministry chose only to take issue with adviser Aleksidze, whose views it termed "morbidly anti-Russian."

Undiminished International Confidence

While the hostage crisis was still in progress, Shevardnadze expressed concern that the chain of events which began with the assassination attempt against him had been "planned in Moscow… I do not mean Boris Yeltsin, but forces in Moscow who would do anything to prevent the oil pipelines and the Eurasian transit corridor from being built through Georgian territory. Once those projects are launched, the world will have a stake in Georgia as a country" — in other words, in protecting Georgia’s independence. With the hostage crisis resolved peacefully, Shevardnadze was able to tell the country that the terrorist acts neither destabilized Georgia nor diminished its reliability as a transit route for Caspian oil. He pointed out that transiting the main Caspian oil through Georgia "does not contradict Russia’s legitimate interests" since Russia has its own export routes to Europe. Shevardnadze expressed thanks to Azerbaijani President Haidar Aliev for coming out publicly in favor of laying the main export pipeline for Caspian oil through Georgia.

In a related development, on March 2, the U.S. Chevron company signed with Georgia’s Oil Products company and the British-Turkish enterprise Caspian Transco an agreement on the transport of oil from Kazakhstan across Georgia to international markets. But in a far more significant development that same day, the Foreign Ministers of Azerbaijan, Georgia, Kazakhstan, Turkmenistan and Turkey issued a declaration in Istanbul endorsing a planned east-west corridor via Georgia as the main export route for Caspian oil. That corridor means, primarily, the projected pipeline from Baku across Georgia to Turkey’s Mediterranean port Ceyhan for shipment to international market. The plan envisages a 1,700 kilometer-long pipeline with an annual capacity of at least 45 million tons, at a cost of at least $2.5 billion. The other leg of the project is a trans-Caspian undersea pipeline to pump oil from Kazakhstan and Turkmenistan to Baku and further into the Baku-Georgia-Ceyhan line.

The five countries agreed that the Ceyhan route would best meet the interests of the producing, the transiting, and the consumer countries — all five of whom took part in the Istanbul meeting.

Moscow insists on transiting the lion’s share of Caspian oil through Russia to Novorossiisk, as opposed to the Georgia-Turkey route. Russia was not invited to the Istanbul meeting. When Moscow asked why, Georgian Foreign Minister Irakly Menagarishvili explained that the Istanbul meeting approved projects not using Russian territory. The five countries scheduled a follow-up meeting in Tbilisi. The signing of both agreements at this time not only highlights Georgia’s potential as a transit country, but reflects undiminished confidence in its stability in the wake of the failed terrorist operations.

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

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