Where better to begin a visit to Russia, the new Russia, than in a shiny new office belonging to an investment bank? And who better to speak to than a former KGB agent, who has perforce in these new times set himself a new life-goal, i.e., to become a millionaire as quickly as possible? Renaissance Capital is the name of the firm, and the secret-agent-turned-bank-director's name is Yuri Kobaladze. He is tall, around fifty, and with short grey crew cut hair and steely blue eyes. He is polite and friendly and his English is, certainly by Russian standards, exceptionally good. But that is no surprise: we knew that he had lived in London for seven years. 'As correspondent for the Russian press bureau Tass,' he told us. 'But that was of course just a cover. In reality I worked for the secret service.'

England would come up a number of times, and each time his look took on something of a dreamy quality. 'My beloved country,' he would call it. And 'England, sweet England, how I miss you!' His big hero is Margaret Thatcher, and his dream is to go back to England once more - not as a secret agent this time, but as a multimillionaire.
Yuri Kobaladze is the sort of man who it would be hard to believe existed if you had not sat opposite him, if you had not heard with your own ears what he had to say about back then, and about now, and about the crazy years between, years in which the world around him changed beyond recognition, to an extent that there remained nothing for him but to change beyond recognition himself. 'Do I have an understanding of banking?' he says 'Of course not!' With a sweeping wave of his arm he indicates the other side of the glass wall which divided his room from the rest of the office complex. There a few dozen of his colleagues are busily working at computer screens covered with colourful graphics and tables. 'These guys spend the whole day looking at the Dow Jones Index, and at I don't know what indexes, and I have absolutely no idea what information they get from them. But they're earning a great deal of money. And that's what it's all about, don't you think?'
And Yuri Kobaladze, with the network of contacts that he has maintained from his time in the KGB, which ensures that Renaissance Capital has as little trouble as possible from the various corrupt state services operating in Russia, the new Russia, which usually make it so difficult to do business there - perhaps he knew nothing about banking, but he knew everything about the shady practices of Russian politicians. We will refrain here from quoting him extensively, because he was more someone who put our visit to Moscow into a certain context, who made us aware of the crazy tempo at which the changes in the former Soviet Union had unfolded. This context is of importance to an understanding of how the NATO attacks on Yugoslavia came over in Russia and the emotions which they released. But we leave it to other, more prominent speakers to put these emotions into words. One thing that Yuri Kobaladze told us we do, however, want to recall here, because his words turned out to have a clairvoyant quality.
At the end of our interview we asked him what he thought about Russia's military strength. What we said was this:
In the West the Russian armed forces are no longer highly rated. Except for the nuclear resources, of course, but no-one took Yeltsin seriously when in Budapest he declared in menacing tones that Russia still had the atom bomb. What do you think of this?
Yuri Kobaladze: 'It is of course true that the Russian army is in a deplorable state. The men are so heavily underpaid and demotivated. The materiél is suffering from a chronic lack of maintenance and because of that is hardly usable. So Russia could scarcely conduct a successful traditional war. Just look at the enormous problems which we have at the present time in Chechenya. I am completely convinced there is only one lesson to be drawn from this assessment, a lesson which is being learned in senior military circles. Russia must sharpen up its nuclear strategy. We will have to be prepared to use the nuclear bomb at an earlier stage.'
What sort of concrete situations are you thinking of?
Kobaladze: 'Of the threat from Turkey, for example. Right now there's a strengthening taking place of the bonds between that country and a number of former Soviet republics which feel a fellowship with Turkey, such as Azerbeidjan and Turkmenistan. It is certainly not unthinkable that in the near future this will lead to great tensions. And Russia will not be in any condition to win a conventional war against the Turks. In that case we will have to take refuge in the use of nuclear weapons. I don't think there's any other choice.'
The interview with Kobaladze took place a week before Christmas 1999. A fortnight later Boris Yeltsin resigned his presidency and nominated Vladimir Putin as his successor. One of the new leader's first political acts was the accentuation of Russia's nuclear policy.
If Yuri Kobaladze's contacts with the military top brass can be regarded as a measure of all his high level connections, then he will most certainly achieve his ambition in a very short space of time and become a multimillionaire. And in the meantime the world will have become a little less safe. Exactly as he predicted.
There is supposedly no-one in Russia who understands relations between his own country and the West better than Georgi Arbatov, founder and managing director of Moscow's Institute of the USA and Canada Studies and the former security adviser for every Russian leader from Nikita Kruschev to Boris Yeltsin. Georgi Arbatov has the meticulous bearing of a diplomat, the dependability and independence of a scientist, and the natural authority of someone who knows that, when it comes to his area of expertise, he need defer to no-one - and certainly not to anyone currently forming part of the Russian foreign service.
'Boris Yeltsin,' he said, without beating about the bush, ''in the course of his presidency, got rid of everyone who had any real understanding of matters, and surrounded himself with people who were on a professional level utterly worthless. They had neither sufficient knowledge or expertise, nor enough experience at their disposal to lead the country. Putin is simply the most recent example of this. And the people with whom Putin in his turn surrounded himself are of still less quality."
Arbatov, in short, is worried. And one of the things which most worries him is the enormous lack of understanding in the West of just what is going on in his country at the present time. When we spoke to him it was a few days after the Russian parliamentary elections. In the West the result of these elections was greeted positively, much to the astonishment and alarm of the former strategist. 'In the West people are saying that the reforms are now in good hands. That proves to me once again that they don't have any real idea of what is going on here. These were the sort of elections you find also in Africa, elections which have nothing to do with any real democracy. Two months ago Yeltsin picked a complete unknown to provide leadership to a political party which previously had no existence whatsoever and one which what it stands for no-one knows. Then the whole box of tricks was emptied out, from propaganda and bribery to political murder, in order to ensure that this party had the elections all its own way. And this is what the West is calling a step forward. Apparently the West has no other goal than to undermine Russia once and for all. We'll need years if not centuries to get the Russian economy back on its feet. And in the meantime the door is wide open for a new dictatorship. A dictatorship, remember, which has nuclear weapons. It's extraordinarily worrying.'
Allow us to go back to the year 1989, the year of perestroika, the year that the Wall fell. What chance was there then that the Soviet Union would yet survive and come good?
Georgi Arbatov: 'I think that in the years from 1989 to 1992 there were still plenty of possibilities. Not that the Soviet Union in its then existing form still had a future, that I don't believe. The upkeep of that enormous empire cost many times more than it produced in income. And that always means the irrevocable end for any empire. So it was obvious that the Union must be reexamined. But then a number of matters needed to be carried out with great care. What, for example, to do with the nuclear arsenals? How do you share out the army's resources? How do you deal with the minorities within the various republics? Agreements had to be made on these matters. There are parts of the Ukraine where more Russians live than Ukrainians. These people look to Moscow, they send their children to school in Petersburg, not Kiev. What do you do with these people? How do you go about this? These are all matters that you simply had to regulate, before you shut down the old Union. But in the last two years of his term of office Gorbachev made a number of big mistakes, pushing everything along with a rapidity that was not to be desired. His most important mistake was that he alienated a large number of his supporters, people who just like him wanted sensible, gradual reforms. That was why the attempted coup then took place. And it was this coup that meant that in the end Yeltsin came to power. Because he was of course the man who at the moment of the coup jumped into the breach for democracy. Who climbed on to a tank and addressed the people. Without Yeltsin the communists would perhaps indeed have won. When Gorbachev came back from the Ukraine, where he sat out the coup, his leadership position had in fact already been lost to Yeltsin. And Yeltsin then added yet another list of mistakes to the errors made by Gorbachev.'
What do you mean?
Arbatov: 'I still well remember the first conversation that I had with Yeltsin after the coup was defeated. I said, it's time we got past that tank - that chapter is at an end. Now you've got to go to the office and form a serious, professional government to ensure that the economy gets out of this blind alley. His answer was that he didn't need a professional government. Then he dropped me, just as he'd dropped Gorbachev. He betrayed everyone who in the previous few years had put so much effort into the reform of the Soviet Union. And then he formed a government of non-professionals. In the shortest possible time he had surrounded himself with people with no thorough training and no experience. And worse than that, with thieves, con-men and charlatans. Yeltsin knew absolutely nothing about macro-economics, which is in itself no problem, because I think that most politicians have no understanding of economics. But they call a number of specialists together with different views, then listen to what they have to say, then decide on that basis what they can best do. But Yeltsin listened to someone with no experience whatsoever of practical economics, a lightweight journalist who had never written a book on economics. To this man he entrusted far-reaching economic reforms, with all their consequences.''
Did the West also play a role in this?
Arbatov: 'At the very beginning Moscow was naturally overrun by American consultants who took care that the whole country was festooned with American advertising billboards. Demand for Russian products collapsed completely, and Western imports took their place. Walk into any supermarket and you'll see that almost all products are imported. In eight years the productivity of the Russian economy fell by more than fifty percent - that's more than any economic recession has ever been able to bring off. Russian agriculture was as good as finished. More than half of the cattle stock was slaughtered. If you can no longer get rid of your milk, you slaughter the cows, and then the people who had had the task of looking after these cows are unemployed. It is a terrible tragedy, the consequences of which we can see every day on the street. The difference between poor and rich is in the meantime bigger than that in the United States. Every evening I see out of my window how the tramps are chased out of the waste containers where they've spent the night. And meanwhile elsewhere in the city you're seeing the first Rolls Royces. Meanwhile there is no city in the world with more casinos than Moscow.'
But who do you hold responsible for this? In the West people are always saying that it's the fault of the Russians themselves that it's going so badly for them. Look how corrupt they are, look at all these mafia practices.
Arbatov: 'Of course, we didn't import these corrupt leaders, we produced them ourselves. But these are the same leaders who are always supported by the West - even when it has long been obvious in the West just how corrupt they were. I spoke recently to a very reliable source in America, who told me that the FBI and the CIA had already had access to lists of the foreign bank accounts of all sorts of top Russians, at a time when here nobody had yet seen how bad everything was. And instead of helping us to fight against this putrefaction, they just made it more difficult. Take a man such as Anatoly Chubais, the father of privatisation. This man has for many years been able to yell, if you shove me to one side, then Western credits will dry up. Because he was the one in whom the West had faith. He was a man of the reforms. But what did he do in practice? Those things which had for generations been worked so hard for by Russian workers, that had been built up by the efforts of millions of people, he gave away for almost nothing. There was a big tobacco factory in Moscow, not far from the airport. It was sold off for a low price, then the new owners sold all the machines, the buildings they rented out, and in the biggest building of all they started a new casino. And that sort of practice is still going on. That's the kind of reform which the West says are all steps in the right direction.'
Is Georgi Arbatov a reliable source? Is he not simply an embittered exponent of the old regime? In Russia itself enough people have put this question - if this Arbatov could find it so good under Kruschev, and Brezhnev, and Gorbachev, why should we still trust him in these new times? Arbatov is aware of this criticism and his answer comes loud and unvarying: 'These leaders needed me more than I needed them. I have never applied for any position, but evidently they needed someone with my qualities.'
The fact is also that Arbatov is seen in expert Western circles as undoubtedly the best in the area of international relations. He is known to be erudite, independent and unimpeachable. The institute which he heads offered during the years of the Cold War a place to people who were mistrusted by the regime and forbidden to travel abroad. To Vladimir Lukin, for example, a man who has since also earned his spurs in Russian foreign policy. In the early 'nineties he was for some years Russia's ambassador to Washington. And on his return he was elected to parliament and appointed chair of the Duma's Foreign Affairs Committee. In this capacity he was present at the OSCE summit in Istanbul in the autumn of 1999. Lukin is a member of the Jabloko ('Call') party, the party which is seen by many foreign observers as representing the most democratic, most critical, least populist and least extreme of all of Russia's political currents.
Jabloko suffered in the last elections a painful slump and could win only twenty-one seats, down from forty-five in 1995. In his office in the Russian parliament building we asked Vladimir Lukin about his view of the the West's policy in relation to Russia in general and the Yugoslav conflict in particular.
How did you respond when the NATO bombing of Yugoslavia began?
Valdimir Lukin:'With a feeling of surprise, confusion and humiliation. Because this was without any doubt an act of pure aggression. Anyone who wages war against another country, without the approval of the United Nations, or any other international body, is guilty of aggression. And the consequences for the international legal order we can today here in Russia experience directly. What is now taking place in Chechenya can't be seen as something unconnected to what happened in Kosovo. If one in the world is allowed to do it, then the other will do it too. What was permitted in Kosovo is now permitted everywhere. That means that it can also happen in Russia, or in the Ukraine, or wherever. The only reason Russia won't be attacked by NATO is the nuclear weapons that Russia has at its disposal. That means that the Kosovo war, from a strategic point of view, was also a tremendous disappointment. It was disillusioning with regard to how we thought that relations between the great powers and the conduct of war had developed.'
But the West says 'we couldn't simply look on in Kosovo at what we had already seen happen in Bosnia. There was a desire to prevent another humanitarian disaster.
Lukin was decisive: 'If that's the case, you have to say that this ambition was not fulfilled. One form of ethnic cleansing simply gave way to another form of ethnic cleansing. That's not a matter of belief or opinion, it's a matter of facts.'
You could also say that in Rambouillet there was an attempt to come to an agreement with Milosevic, and that he was threatened with violence as a means of persuasion, the big stick. In the end they were forced to make good on that threat, because Milosevic turned out not to be inclined to come to a solution.
Lukin: 'That's what Hitler did too, saying that "if you don't cooperate we'll use violence." And if the West says that it acted only from the noblest of intentions, then I would reply that "Hitler also considered that he had noble intentions". Hitler really believed that what he did was in the interest of the German people. That's why you can't construct international law on the basis of what someone at a certain moment thinks is right, but on that which you can agree together.'
You used the words 'disappointment' and 'disillusion'.
Lukin: 'For the democratic-minded in Russia what happened in Kosovo was an enormous disappointment. But no-one, I believe, can still care very much about that. The intervention in Kosovo is part of a policy to bring about a further break-up of the Soviet Union. The most important aim of this policy is not to increase Russia's democratic aspects, but to prevent the strengthening of the bonds between Russia and its neighbouring states, such as Ukraine. We very much want to have good relations with Ukraine, not because we want to annex the country, but because we are concerned about the local Russian-speaking population. Is the West doing its best to help us in this? On the contrary, they're encouraging polarisation. Both the United States and the European Union are trying to increase the distance between Russia and Ukraine. They are supporting the people in Ukraine who want a close association with Poland and not Russia.'
But the west claims nevertheless to support the democratic forces in Russia?
Lukin: 'I can see no evidence of it, It's nothing but fine words.
Tony Blair declared immediately after the Russian parliamentary elections that he was very happy with the result.
Lukin: 'That proves only that Tony Blair understands absolutely nothing about the Russian reality. These elections were a power struggle between two competing bureaucratic power blocks. It's the kind of democracy you find in Indonesia, or in Egypt. Real political parties can hardly participate in the political process. Everything is dominated by the power blocs - one led by Yeltsin and the Kremlin, the other by the mayor of Moscow, Yuri Lushkov.'
And so we returned once again to the point where we had been with Georgi Arbatov: to the question of whether the West was really interested in a democratisation of the former Soviet Union and of all those other parts of the world where chaos reigns, or merely the apparent order of a dictatorship. Will anything ever come of this New World Order?
Georgi Arbatov: 'I don't like the words "New World Order". It reminds me too much of Hitler's words. But okay, perhaps the words aren't important, I understand what is meant by them. I thought myself that the end of the Cold War offered the chance for new relations in the world. But I think now that we will need a great deal more time before things really change for the better. As things stand the world's leaders are far too concerned about their own petty interests. About how they can survive an affair with a trainee, for example. Or in the case of Yeltsin, how he can prevent his successor from investigating all the crimes and corruption of which he and his family have been guilty. There is a terrible lack of really good statesmen at the moment. Not so very long ago you had people like Palme in Sweden, Papandreou in Greece, Kreisky in Austria, Ghandi in India - all of them thinkers, all people with major qualities, who each contributed to ensuring during the Cold War that things never really got out of hand. And just look now, there is almost nobody any more whose above average.'
What in your opinion should have happened to NATO at the end of the Cold War?
Arbatov: 'The only justification for the existence of NATO was the presence of a strong enemy. That enemy no longer exists. The Soviet Union has fallen apart, and Russia does not have the power to be seen as a realistic threat. So NATO's viability is at an end. Following the end of the Cold War both sides had to ask ourselves, what now? This question should have been answered by looking for mechanisms and organisations which would both guarantee security and bring about a real integration of Russia into Europe. NATO has never been an organisation which concerned itself with integration, only with security. NATO has no morality, apart from a military morality. The OSCE, on the other hand, has indeed a morality, but lacks instruments. The result is now that the United States, as the sole remaining superpower, threatens to become after a fashion the training school for all international bodies. They are pushing the EU, the OSCE, NATO, the United Nations, all of them, out of the way. Increasingly it seems that nothing can happen unless it has the support of the United States. That was also our biggest concern in the Kosovo war. It is a war which opens the door to still more demonstrations of power by the United States. Because who will be next to take their turn? Bulgaria? Ukraïne? Who can say? Add to this the economic crisis in Russia, which to a large extent was caused by ill-thought out reforms of American manufacture, and you will understand why anti-American feelings have so much revived here. No self-respecting politician can any longer allow himself to say anything positive about the United States. And that is extremely threatening for the future of relations between Russia and the West.'
And Vladimir Lukin adds: 'The New World Order was of course above all a romantic concept and not a realistic idea. But at the same time there was at the beginning of the 'nineties certainly the possibility of doing things differently, better, than they had been done. It was possible to imagine a new security construction for Europe, one of which Russia would form part. But the Americans never wanted that. They don't want NATO to be Europeanised. They want to keep matters under control on both sides of the Atlantic Ocean. If there are outsiders who come forward and want to join NATO then that could happen, but a real, thorough change to NATO, that the Americans are against. The Americans also don't understand what's happening in Russia, because they aren't really interested in Russia. All that interests them is whether Russia will become a second America or not. So when Russia plumped for a president, they were pleased. When McDonald's arrived and ads for Pepsi, they were delighted. And when we decided to have an elected parliament just as they have their Congress, they were completely content. But when they at a certain moment discovered that Russia would nevertheless not become a second America, that we see some things differently to them, then they immediately gave Russia up for dead, saying that Americans can't do anything about it if everyone is against them.'
As a result of the Kosovo war more people in Europe are going to be saying that we must become less dependent on the Americans, that we should have our own European defence force, for example. What do you think about this?
Lukin: 'I don't see it in itself as negative. The Yugoslav question certainly made it clear how important it is that Europe learns to solve this sort of problem for itself. For three years the Americans didn't want to deal with the problem themselves, and when they eventually did get mixed up in it they did so in a totally unacceptable manner. But for a really effective European security organisation it is absolutely necessary that Russia and the Ukraine take part in it. The Yugoslav question cannot be solved without Russia's contribution, as also turned out once again to be the case in Kosovo. For us it's not a matter of easing western Europe away from the Americans, which is neither possible nor necessary. If the Netherlands for example finds it agreeable by means of one construction or another to remain under the protection of the American umbrella and they're prepared to pay for that, why not? But what it is about is that trust in Russia in the European countries must be restored, a trust which suffered enormous damage in Kosovo, because the European countries went increasingly along with the pig-headed actions of General Clark and NATO. Why weren't the agreements laid down in the peace treaty effected by Russia adhered to? There was a great deal of anger over the rapid advance of Russian troops towards the airport at Pristina, but for us it was completely obvious that if we didn't do that there would be no chance whatsoever that the Serbian population of Kosovo would have the protection which had been agreed on. And why were the Russians in Kosovo treated as if they were an occupying power rather than forming part of the international peace-keeping troops. Why was so little action taken against the Albanians' violence? Why was the daily murder of Serbs allowed? That sort of thing meant that we ourselves lost a lot of trust in the European countries. And that trust must first be restored. In order to achieve that we would need to create a sort of regional security council. A podium on which we can together arrive at solutions for this sort of problem. That would go a long way towards a European solution to European problems. That's a completely different way from NATO's and also from that currently argued for by most European leaders.'

The question remains which at the time that this book was being written formed the biggest stumbling block between Russia and the West: the war in Chechenya. Yuri Kobaladze, the man of the new nuclear strategy, the man who so admires Margaret Thatcher, the man who concluded that the world was made up only of winners and losers, and that at whatever cost he would henceforth belong to the winners, this same Yuri Kobaladze surprised us by adopting an unambiguous position against the war in Chechenya. 'This was is criminal and stupid,' he said, 'and we will, just as we did the last war in Chechenya, lose it in the end.'
Georgi Arbatov was also extremely critical of the latest war in the Caucasus. 'It seems really as if this war was started specially to help Vladimir Putin win power,' he said. 'Officially there were two reasons to start the war. First of all the bomb explosions in Moscow and a few other cities. Those were undoubtedly the work of terrorists, but whether they were Chechen terrorists is far from certain. No-one has ever been indicted and no real investigation into the possible perpetrators has ever been established. The second reason was the attack by the Chechens in Dagestan. We had given the Chechens after the last war the chance to run their country according to their own lights, and the result was that the Chechen way of doing things was exported to other provinces such as Dagestan. These two matters made it possible to portray this new war as a war against bandits and terrorists. But you don't conduct a war against terrorists with weapons of mass destruction, with tanks and air-raids. What they want to do is destroy Chechenya, ensure that there's no-one left who would vote for an independent Chechenya simply because there will be no more Chechens left in Chechenya.'
But Vladimir Lukin, whose party was the only one in Russia before the elections to make careful attempts to arrive at a non-military solution to the problems in Chechenya, defended the war waged by his country in the recalcitrant province.
You said at the beginning of our interview that the war in Chechenya cannot be separated from the Kosovo war. What did you mean by this?
Lukin: 'That in Kosovo the rules of the game were changed. And that we see ourselves as forced to play according to these new rules.'
But did you find this war in itself justifiable?
Lukin: 'You know how it began. After the last war we were in complete agreement with a condition of peaceful coexistence. We gave the Chechens the chance to do things their own way. And what happened? They invaded Dagestan. How should you react in such a situation? Russia is an exceptionally peace-loving country. We haven't got ourselves mixed up in the internal affairs of Uzbekistan, of Ukraine, and not even of Chechenya. But there was nothing else we could do.'
Do you think that the Russian army and the Russian leaders will succeed in achieving their aims and win the war?
Lukin: 'I don't see how they could fail. The only problem is time. But eventually any outcome, whatever it may be, will be a success. The only thing we can't do is unilaterally withdraw the Russian troops. Because the the situation would in the shortest of times go back to how it was before the war. And then we would find ourselves within two years once again forced to impose order on things. The Western advice to Russia is therefore completely unrealistic and impractical.'
And in this, to close, Lukin enjoys once more the support of his old mentor Georgi Arbatov, who says that the West should 'stop trying to trample Russia underfoot, stop issuing prescriptions which push our country ever deeper into the morass. Not so long ago Moscow was the safest city in the world, now I wouldn't advise anyone to go alone into the streets at night. Our government has so little money that they said it didn't make much difference if the Bolshoi Ballet was ruined, they wanted to close the Hermitage, our entire rich culture was threatened, and all because we had to adapt to Western prescriptions. And if you count in the arrogance of NATO, then it's not surprising that fascism is raising its head here. That extreme nationalists are enormously popular. In the end every country is responsible for its own problems. I don't want then to pin Russian problems on the West. But if they really want to help the democratic forces in Russia, then the west must draw the lessons from what is happening in this country now.'

See Also

Chapter One

Chapter Two

Chapter Three

Chapter Four

Chapter Five

Chapter Six

Chapter Seven

Chapter Nine

Chapter Ten

Chapter Eleven