DATE=11/9/98 TYPE=BACKGROUND REPORT NUMBER=5-41812 TITLE=CRIMINALIZING RUSSIA BYLINE= ED WARNER DATELINE= WASHINGTON CONTENT= VOICED AT: INTRO: PESSIMISM HAS REPLACED OPTIMISM ABOUT THE FUTURE OF RUSSIA. THE TRANSITION FROM COMMUNISM HAS NOT LED TO THE PEACE AND PROSPERITY ONCE ENVISIONED. IN FACT, AN AMERICAN SCHOLAR CLAIMS THAT RUSSIA, AS IT REVERTED TO CAPITALISM, BECAME CRIMINALIZED. V-O-A'S ED WARNER REPORTS HIS REMARKS AT WASHINGTON'S WILSON CENTER AND SOME COMMENTS BY THE DIRECTOR OF THE KENNAN INSTITUTE. TEXT: IF YOU ARE A WELL MEANING BUSINESSMAN, YOU MAY WALK INTO AN OFFICE IN MOSCOW AND BE IMPRESSED WITH ITS COMFORTABLE WESTERN APPEARANCE. A COMELY SECRETARY POLITELY SERVES TEA, AND THEN A SMARTLY DRESSED EXECUTIVE ENTERS AND OFFERS A FRIENDLY HAND. ALL GOES WELL UNTIL THE VISITOR BALKS AT SOME PROPOSAL. THEN, PERHAPS JUST AS POLITELY, HE IS THREATENED WITH DEATH. DOING BUSINESS IN RUSSIA TODAY IS AS SIMPLE AND DEADLY AS THAT, ACCORDING TO DAVID SATTER, A SENIOR FELLOW AT WASHINGTON'S HUDSON INSTITUTE AND A FORMER MOSCOW REPORTER FOR THE "FINANCIAL TIMES. IN A DISCUSSION AT THE WILSON CENTER, MR. SATTER SAID THE RUSSIAN ECONOMY HAS BEEN CRIMINLIZED: // SATTER ACT // THE RUSSIAN ECONOMY IS NOT ORGANIZED TOWARD PRODUCTIVITY. IT IS ORGANIZED TOWARD THEFT. BUSINESSMEN GO INTO BUSINESS NOT IN ORDER TO CREATE BUSINESS, NOT IN ORDER TO CREATE THOSE ENTERRPISES, BUT TO DESTROY THOSE ENTERPRISES, TO LIVE OFF THEM AS LONG AS THEY CAN AND TO SEND THE MONEY OUT OF THE COUNTRY UNTIL THE DAY COMES WHEN THEY WILL FOLLOW THAT MONEY. // END ACT // MR. SATTER SAID AN ESTIMATED 350 BILLION DOLLARS HAS BEEN ILLEGALLY TAKEN OUT OF RUSSIA, ENOUGH MONEY TO SOLVE ALL THE NATION'S PROBLEMS IF IT HAD BEEN INVESTED IN RUSSIA. HE BLAMES COMMUNISM FOR DESTROYING THE MORAL BASE OF RUSSIAN SOCIETY. WITHOUT MORALITY AND THE RULE OF LAW, HE SAID, NO FREE ECONOMY IS GONG TO WORK, AND RUSSIA'S HAS NOT. A GROUP OF GREEDY INDIVIDUALS, OBLIVIOUS TO THE SUFFERING OF THE MASS OF PEOPLE, MANAGED TO SEIZE THE NATION'S ASSETS AND MILK THEM DRY. THANKS TO CORRUPT TIES TO GOVERNMENT OFFICIALS, THE SO-CALLED OLIGARCHS WON RIGGED AUCTIONS FOR BANKS AND INDUSTRIES. IF ANY LEGITIMATE BIDDER SHOWED UP, HE WAS OFTEN DISCOURAGED AT GUNPOINT BY TOUGHS RECRUITED FROM THE DREGS OF SOCIETY: // SATTER ACT #2 // BY THE TIME PRIVATIZATION REALLY GOT UNDER WAY, THE COUNTRY WAS ALREADY DIVIDED INTO A GROUP OF PEOPLE WHO HAD NO HOPE OF PARTICIPATING IN IT AND A GROUP OF PEOPLE WHO, AS A RESULT OF THEIR ABILITY TO AMASS UNEARNED WEALTH, WERE WELL POISED TO APPROPRIATE THE RESOURCES AND THE ASSETS THAT WERE CREATED BY THE LABOR OF THE ENTIRE POPULATION. // END ACT // MR. SATTER DESCRIBED A VARIETY OF OTHER SWINDLES ALL CARRIED OUT UNDER THE NOT SO WATCHFUL EYES OF SO-CALLED REFORMERS IN THE YELTSIN GOVERNMENT. THESE WERE NOT GENUINE REFORMERS, HE INSISTED, BUT CAREERISTS WHO HAD BEEN THWARTED UNDER COMMUNISM BUT HAD NO REAL QUARREL WITH IT. THEY WERE NOT DISSIDENTS. THAT IS TOO HARSH A JUDGMENT, SAID BLAIR RUBLE, DIRECTOR OF THE KENNAN INSTITUTE. AFTER ALL, MOSCOW REFORMERS TOOK THE ADVICE OF AMERICANS WHO SCOFFED AT THE NOTION OF MORALITY BEING NECESSARY FOR REVIVING THE ECONOMY: // RUBLE ACT // I WOULD HEAR FROM VERY DISTINGUISHED, TENURED FACULTY MEMBERS OF THE BEST ECONOMICS DEPARTMENTS IN THE COUNTRY, IN THE WORLD, THAT BASICALLY THIS ARGUMENT IS WRONG. IT IS BACKWARDS. WHAT YOU HAVE TO DO IS CREATE A CLASS OF PROPERTY OWNERS THROUGH PRIVATIZATION, AND THOSE PROPERTY OWNERS WILL THEN CREATE THE MORAL AND LEGAL STRUCTURES TO DEFEND THEIR OWN PROPERTY, AND THEY WILL BE FORCED TO DO SO BY THE RIGOR OF THE INTERNATIONAL MARKET PLACE. // END ACT // MR. SATTER SAID THERE IS A MORAL VACUUM IN RUSSIA WAITING TO BE FILLED. A LEADER OF CLEAR INTEGRITY WOULD APPEAL TO THE STRONG SENSE OF JUSTICE AMONG RUSSIANS WHO ARE REPELLED BY THE OLIGARCHS. BUT GIVEN CONDITIONS IN RUSSIA, HE SAID SUCH A LEADER COULD ALSO TURN OUT TO BE A RUTHLESS STRONG MAN. IT HAS HAPPENED BEFORE. (SIGNED) NEB/PT 09-Nov-98 10:14 PM EST (0314 UTC) NNNN Source: Voice of America .