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Adventure vs. Order: 25 Years of Doing Business in Russia

Justin Lifflander

The Moscow Times, Russia’s first independent daily English language newspaper, celebrates its 25th anniversary this month. This article appears in a special edition issued in honor of this event.

By Justin Lifflander

I found my customer, Misha — a mountain of a Siberian man — standing in the tail section of the plane. It was 1994 and we had just completed a successful “reference visit” to one of Hewlett-Packard’s oil industry customers in Canada. Misha was grasping a bag with dozens of mini-bottles of alcohol he had obtained from the stewardess. Now he was trying to secure a volume discount.

“Misha, we’ll be in New York in three hours,” I told him.  “I’ve got a barbecue planned at my parents’ house. There will be plenty of beer and vodka.”

“Beer? Vodka?” he repeated. I nodded.

“But, only in three hours?” he asked.  I nodded again. He completed the transaction and consumed his booty before we landed.

Alcohol was a significant element of doing business in Russia in the early 1990s. Many features of the Russian commercial landscape have changed or disappeared since then. Some are missed: well-paid expat positions, limited government reach, the ability to get to across town within 30 minutes for a meeting, and even the need for face-to-face meetings.

Good riddance to others: the dilapidated telecoms infrastructure; mounds of paperwork that actually needed to be done on paper; mythological customer budgets; the need to have a krisha (a “roof”) to protect your business from banditry.

We’ll all live longer without so much booze, but it accompanied adventures and relationships I cherish. Each industry had its preferred spirit. The oilmen loved their vodka. A midwinter business trip to Noyabrsk— where at minus 35 degrees Celsius hair freezes and cracks and spit solidifies before it hits the ground – would convince even a teetotaler to use personal anti-freeze. Telecoms executives mostly drank whiskey. Grain alcohol was available at their office parties – they used it to clean mechanical switches. Aerospace industry people liked cognac. I shared a bottle of 15-year-old Ararat with the IT manager of the Mission Control Center in Korolyov. We had just watched the fiery demise of the MIR space station, which had been orbiting the earth for 15 years. Bankers? Well, they seemed to drink anything.

The Arc of Adventure

It wasn’t just about alcohol. When the U.S.S.R. collapsed and the 1990s got wild, the representation office was the standard format for foreign companies. A position in such a firm gave Russian professionals benefits formerly only available to upper echelons of the Communist Party elite: a few hundred dollars in hard currency monthly, a clothing allowance, a company car and business trips abroad.  

“It was like a dream,” said one Russian businessman who has partnered with foreign firms for more than two decades. “Dealing with foreigners was very interesting. We all wanted some connection to the outside world.”

Some dreams turned into nightmares. “Some came with their 5, 10, or even 100 thousand dollars, lost it all, and left,” said a Russian entrepreneur. “Why did they lose it? Because it was a swamp here. No rules, no law enforcement. If your partner suddenly took a disliking to you, you were gone.”

Many foreign entrepreneurs mastered the relationship factor, like Peter Gerwe who arrived from California and started a media empire, or Bernie Sucher, who turned his hankering for American-style food into the Starlite Diner. Courage, a nascent regulatory system and excessive enthusiasm all facilitated success.

Along the way, Russia got a large dose of the West. Foreigners brought their arsenal of tools and treats: business processes, philanthropy, transparency, corporate culture, and — when margins were fatter— extravagant corporate spending on events and gifts.

“We exposed our business partners and government interlocutors to all these lavish things and they began to adopt them,” said the head of an American multinational who has been doing business in Russia since 1992. “Then, in Russian fashion, they went to extremes and continued these traditions long after the Sarbanes-Oxley Act inhibited us.”

A corporate gift from Rostelecom during its leaner days of the mid 90s’…

…and the Swiss made version, after margins increased in the early 2000s.

The infection was bi-directional. Western firms Russified. A generation of talented young Russians gained experience and now run most of those companies. The standard of living increased, people began to travel abroad and the euphoria for all things foreign subsided. Business became routine.

That dynamic, combined with the current geopolitical situation, has led to an about-face in mindset. CoCom export controls and the Cold War have been replaced by sanctions, anti-sanctions and import substitution.

“In the 1990s, we were like a river of water seeking its path, picking up sediment from wherever, going with the flow, open…,” the entrepreneur said. “Now, it’s as if our state of matter has changed: We are ice. We say if you want to be friends with us, it’s up to you to try harder, make the best offer, consider our needs.”

Bureaucratic Evolution

Meanwhile, bureaucrats have multiplied and gained competence.  However, big and small businesses have different views on the state of corruption.

“It’s out of control,” said the Russian entrepreneur. “There are more inspections and certifications. People used to say: ‘We’ll create something and then get rich!’ Now, there is little enthusiasm. We only have the appearance of change. Instead of bandits there are lawyers.”

But the head of the American multinational feels more secure. “The ‘90s were scary,” he said. “You had to have a krisha—or borrow your partner’s— to defend yourself from racketeers…Now, with the state in control, things seem much safer.”

“The bureaucrats are less corrupt, in part, because you hardly meet them anymore — obligatory reporting to ministries is mostly done online now,” the American businessman added. “On the rare occasion that I do go to them, they are often smiling, chatty…maybe they miss the human interaction, too?”

It Was Personal

Customer acquisition in the ‘90s was both fulfilling and desperate. You knew that success depended not only on the quality of your product or its return on investment, but on your relationship with the decision maker. 

In 1996, Pepsi paid hundreds of thousands of dollars to have cosmonauts aboard the space station display a giant soda can. About the same time, my colleagues and I at HP gave the Russian Mission Control Center a few amortized demo computers. In exchange, we were allowed to place our logo banner under the center’s main control screen for many years.

I got good advice early on. The deputy general director at a state company told me: “If you come to a meeting with a pen and note pad listing your agenda, you’re not likely to get what you want. If you come with some jokes, describe your philosophy of life, and tell stories about your family—saving the business for the end— you are bound to get what you need.”

The banya epitomized customer intimacy. Sitting in a room naked and sweating together, you were bound to bond — even if your note pad got soggy.  

Russia will always be a peculiar market. The high profit margins most foreign companies enjoy here ease the challenge of explaining “Russian reality” to headquarters. But the camaraderie of the banya is something that can’t be explained. It has to be experienced.

 

***Justin Lifflander, a former business editor at The Moscow Times who has worked in Russia for 30 years is author of “How Not to Become a Spy: A memoir of love at the end of the Cold War.”***

AGENTS OF CHANGE: PROMOTING TOLERANCE AND ACCEPTANCE IN RUSSIA By Vasily Kolotilov, The Moscow Times

Justin Lifflander

18 January (Moscow) A rehearsal is being held in a large hall — light streaming in through floor-to-ceiling windows onto the performers. Some dance, some sit sprawled across the floor watching their compatriots. “Kostik, stand up, you’re going to get cold,” the choreographer scolds. A young man slouched on the wooden parquet rises, shooting another performer with imaginary pistols before goading him into wrestling — they are ignored. After grappling briefly, they embrace before returning their attention to the proceedings. READ THE FULL ARTICLE HERE

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A Sentimental Book Tour Through Izhevsk and Votkinsk, or Epilogue II of How Not to Become a Spy

Thomas George

03 December 2015 (Izhevsk, UDMURT REPUBLIC)  As my foot hit the platform, the mallet hit the orchestral base drum and the opening notes of Tchaikovsky’s coronation march flowed through the train station’s loudspeakers into the ears of passengers arriving from Moscow.

 

“Did you arrange that serenade especially for me?” I asked my friend Yevgeny Odiyankov, who was there to greet me, along with his now grown-up son Sasha. The elfin twinkle in Zhenya’s eyes burned just as brightly as it had when I first met him 25 years earlier, only now framed by grey eyebrows...

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The Moscow Times Q&A: Matlock, Reagan's Soviet Teacher, Never Stops Learning

Justin Lifflander

Maximizing depth of knowledge and providing unique insights were key elements of Matlock’s career success.

Maximizing depth of knowledge and providing unique insights were key elements of Matlock’s career success.

Career diplomat Jack Matlock has befriended many world leaders, but perhaps none taught him a more important lesson than U.S. President Ronald Reagan.

"Reagan was the most impressionable student I ever had," said Matlock, who served as Reagan's top Soviet adviser before moving to Moscow in 1987 to serve as ambassador for 4 years. "He always appreciated having things explained to him. He was comfortable with his lack of knowledge, unlike some leaders."

Matlock, 84, is also comfortable with the fact that he might not know something — but that does not mean he is content to leave it that way.

Matlock mastered five foreign languages during his 35-year career in the U.S. Foreign Service, 11 of which saw him posted in Moscow. Those skills helped him understand complex situations, which in turn built his reputation for clear, timely reporting and insights — including being the first to predict that the Soviets would not invade Poland during the 1981 Solidarity uprising.  At one point, he even found himself warning Soviet leader Mikhail Gorbachev of the impending 1991 coup attempt.

Matlock worked with Reagan and his team to implement their mission to bring down the Iron Curtain. But he knew what language to speak to accomplish the goal.

"We were sensitive about what words we used. We didn't say let's bring down the Iron Curtain. We said, 'Let's develop a better working relationship.' That was the euphemism for opening up to bring about a better flow of information," Matlock said, speaking in an interview while visiting Moscow this week to commemorate the 80th anniversary of diplomatic relations between Russia and the U.S.

After leaving the State Department, Matlock spent 22 years at the highest levels of academia, teaching international relations and diplomacy while keeping the mantra of his intellectual quest in view. His mantra can be seen in a small font in the upper right-hand corner on his website: "Can we learn from experience?"

But his students and friends know it's rhetorical. His learning shines through in his writings and commentary, including three books that he's authored about his experiences. The themes are consistent: a little less meddling in sovereign affairs, a little more attention to the details of communication, and a little less publicity during discussions of sensitive topics will all go a long way to help any two parties achieve their goals, especially Russia and the U.S. today.

Jack Faust Matlock 

Education

1950 — Duke University, North Carolina, BA, summa cum laude
1952 — Columbia University, New York; MA in Russian Studies; 
2013 — Columbia University, New York; PhD "Translating Leskov" 

Work experience

1991-2012 — Various academic positions at Columbia University, Mount Holyoke College, Hamilton College, Princeton University, 
1956-91 — State Department, including ambassador to the Soviet Union, Moscow (1987-91); ambassador to Czechoslovakia, Prague (1981-83); charge d'affaires, U.S. Embassy, Moscow (1981); deputy chief of mission, U.S. Embassy, Moscow (1974-78); vice consul and second secretary, U.S. Embassy, Moscow (1961-63); 
1953-56 — Russian language and literature instructor, Dartmouth College, Hanover, New Hampshire. 

Favorite book: The ones I return to most often include Shakespeare's tragedies, Proust, and Nikolai Leskov's stories. 

Reading now: "Zhizn i Sudba" (Life and Fate, 1986) by Vasily Grossman and "Mating" (1992) by Norman Rush. 

Movie pick: "Casablanca" (1942) directed by Michael Curtiz; "Master i Margarita" (2005) directed by Vladimir Bortko. 

Favorite Moscow restaurant: U Pirosmani, 4 Novodevichy Proyezd. 

Weekend getaway destination: My wife Rebecca's farm in Tennessee. 

The learning never stops. Matlock earned his doctorate from Columbia University this year — an effort that he had started while still a graduate student there in 1952. He settled on an analysis of idiomatic expressions of 19th-century Russian writer Nikolai Leskov, who was known for his ability to provide a comprehensive picture of contemporary society.

Many of Leskov's fans, including Matlock, see the relevance of Leskov in how Russia functions today.

"People ask me if it makes sense to try to do business in Russia. I tell them to read Leskov's 'Choice Grain' and then decide," Matlock said.

The satirical story "Choice Grain" (Otbornoye Zerno) depicts bourgeois morality through a tale of 19th-century merchants.

This interview has been edited for length and clarity.

Q: What fired your initial passion for Russia?

A: My attention was first drawn to Russia during World War II, when I followed the resistance to the Nazi invasion with great attention and admiration. When I heard Russian spoken for the first time on the radio — It was Soviet Foreign Minister Andrei Vyshinsky's speech in San Francisco when the United Nations was founded — I had an aspiration to learn to understand a language that was important but seemed totally incomprehensible. But there was nobody in Greensboro, North Carolina, where I grew up, who spoke Russian.

Finally as a freshman at Duke University I read Constance Garnette's translation of Dostoevsky's "Crime and Punishment," not as a class assignment but just out of curiosity. It bowled me over, and I registered for a course in the Russian language the first year it was offered. I later took my graduate degrees in Russian literature at Columbia and have never regretted that choice.

Q: You famously declared that you wanted to become the ambassador to Moscow when you entered the Foreign Service. How did your colleagues and superiors react to that?

A: My colleagues were probably not surprised. One said he wanted to be the first Foreign Service officer to become secretary of state. But the course supervisor wrote something in my personnel record like: "Matlock's ambition is obviously excessive, but he seems level-headed enough to bring his aspirations in line with reality as his career progresses."

Q: Have you noticed any common personality traits between you and your peers during your meetings in Moscow with other former U.S. and Russian ambassadors?

A: Each of us has a distinctive personality, but I believe we all share a conviction that the basic interests of our countries are compatible and that both countries would benefit from cooperation rather than confrontation.

Q: How did it happen that you managed to warn Gorbachev about the impending coup attempt in August 1991?

A: Moscow Mayor Gavriil Popov called on me when Boris Yeltsin was visiting Washington in June 1991. During our conversation he wrote a note asking me to get a message to Yeltsin that a conspiracy was being organized to remove Gorbachev. As we talked of other things, I wrote on his note in Russian, "I'll send a report, but who is behind this?" Popov wrote four names: "Kryuchkov, Yazov, Pavlov and Lukyanov."

President George Bush had a meeting scheduled with Yeltsin the same day. Yeltsin had just been elected president of the Russian Soviet Federative Socialist Republic, and Bush wanted to persuade him to cooperate with Gorbachev rather than oppose him.

In any event, I received an encrypted telephone call from Washington instructing me to "warn" Gorbachev, but without naming names, since we had no independent confirmation of the information.

I told Gorbachev that we had information that was more than a rumor and we could not confirm it, but President Bush found it sufficiently disturbing that he wanted to inform him. The information, I said, was that a conspiracy was being organized against him and could take place at any time.

Gorbachev thought we were relying on an erroneous intelligence report and did not want Bush to think that his position was weak — Bush was planning to visit Moscow in July — so he laughed off the information but thanked Bush for notifying him.

The next day, when Bush spoke to Gorbachev on the telephone, he mentioned Popov's name, and this was on a telephone line maintained by the KGB.

When the coup attempt did take place in August, three of the persons named were leaders of the infamous putsch, and the fourth seems to have been sympathetic.  

The final ironic twist to this incident is that Bush's slip in naming Popov on a telephone line monitored by the KGB may have contributed to the failure of the attempt to replace Gorbachev in August. Vladimir Kryuchkov, who was organizing the effort, must have learned that he had a leak and therefore stopped planning. One of the reasons for the failure of the August putsch was poor planning — everything seems to have been improvised at the last minute.

Q: What elements of the leadership styles of Reagan and Gorbachev made it possible for them to work together?

A: Reagan's acting skills gave him a strong desire and the unique ability to understand the role his opponents were playing and find a common language.

President Reagan understood that the best way to increase respect for human rights was by private diplomacy. He noted in his diary early in his presidency that we had been "too up-front" in our human rights policy and needed to refocus on private channels. He also recast our comments to avoid direct demands on the Soviet government to do something but instead sought to establish a dialogue over how we could cooperate to improve respect for human rights.

Reagan's leadership style was quite different from Gorbachev's, as were the political systems they headed. But what brought them together was the conviction that they could make a difference — that they were not bound by the policies they had inherited — combined with a passionate hatred of nuclear weapons. They wanted to put the world on a track aimed at eliminating those weapons that have no military utility and are capable of destroying humanity.

Q: What do you think of the Magnitsky Act and the Edward Snowden affair? What role could diplomacy have played to achieve desired results on both sides?

A: I believe the Magnitsky Act was a political mistake, not because the Magnitsky scandal was not a serious matter, but because it is one that only Russians can deal with effectively.

As an American, I find it outrageous that a Congress that cannot pass a budget, that threatens the nation's creditworthiness by playing political games with the debt ceiling, that has a confidence rating among our public in the single digits, would presume to teach other countries the elements of democracy.

At the same time, I would observe that the actions of the State Duma harmed Russian interests more than American ones. Russians must judge whether the emotional satisfaction of "revenge" was worth the cost.

Concerning Snowden, he violated U.S. law and the oath he took when he went to work for the National Security Agency. If he ever returns to the U.S. he will face trial, but not execution. If he had committed the same crime in China or Russia, he would most likely face execution. Anyone who thinks that communications on the internet or through cyberspace are not being intercepted by many different organizations is naХve indeed. But the greatest threat to privacy comes not from governments but from commercial organizations and hackers.

Q: How should policymakers find a balance between the benefit of "private diplomacy" and having to respond to domestic public pressures and values?

A: Of course, every government must take due account of domestic political pressures. Also, by private diplomacy I do not mean that a government should mislead the public. Private diplomacy does not mean duplicitous diplomacy. If negotiations are conducted entirely in public, then special interest groups tend to take over and prevent agreements that meet the needs of both sides. Also, if details of a negotiation are made public too soon, the media tend to treat the negotiations virtually as a sporting event. Who "won" this point or who "lost" that point. Not every starting position is actually in the interest of its proponent. It is the job of negotiators to find solutions where both sides benefit. This is exceedingly difficult if each change of position is scored as a loss.

Q: How do you see the U.S.-Russian diplomatic dynamic evolving vis-á-vis Syria?

A: It is in the interest of both the United States and Russia — and, indeed, all humanity — for the civil war in Syria to end. If the U.S. and Russia can cooperate to persuade the various parties to come to terms, that would be great. But the problem is that neither the U.S. nor Russia can force the parties to come to terms when they are determined not to.

Q: What are some new specific steps or programs that you envision that can help both sides "move past mutual grievances and deal with common threats"?

A: There are many areas where our military forces can cooperate. The NATO Partnership for Peace provides one approach that could work, and there are others. How about training forces from smaller countries for peacekeeping assignments?

Q: Do you have any ideas for cooperation programs that should be initiated by the private sector?

A: The visa agreement concluded a few months ago should make private travel and contacts easier. Individuals and groups in the private sector need to do their own thing with a minimum of governmental interference. The amount of travel and contact in both directions is actually quite encouraging.

Q: Do you have any specific suggestions on how to better curb official corruption and nourish an independent judiciary here in Russia?

A: No. This is something Russians must do for themselves. Of course other countries must be prepared to prosecute malefactors when their own laws are violated. We need more Russian-American cooperation in dealing with organized crime, which preys on both our societies, but with even greater impact on Russia's.

Q: Are there other problems that Russia is facing now where the U.S. has useful experience that could be shared?

A: Russians must determine when and where experience elsewhere is useful. After all, the United States has a very open society. Our faults are much in evidence — at times more than our virtues. But the United States may provide useful examples of how an independent judiciary benefits society and economic development. Our current Congress also provides a negative example of how ideological rigidity and extremism can cripple a legislature.

Q: Who inspires you?

A: Former Secretary of State George Shultz has been an inspiration for his political wisdom, his practical ability to navigate political barriers, and his ability to lead a large and diverse organization and to encourage employees to work as a team. I also find Mikhail Gorbachev a great inspiration, a man who delivered his country from bondage and refused to use force to keep himself in power.

Someday Russians will give him the honor he deserves if they understand his true achievement.  After all, he gave them political space to chart their own destiny. If the results are not what Russians want, they are to blame, not Mikhail Sergeyevich.

The Moscow Times: How 2 Cold War Foes Implemented the INF Treaty

Justin Lifflander

Display of Soviet and American missiles at the Smithsonian Air and Space Museum in Washington DC.

Thirty Soviet inspectors moved to Utah in June 1988 to watch the gates of the Hercules plant, which manufactured Pershing II intermediate-range missiles.

The inspectors painstakingly inspected every exiting vehicle that was long enough to contain a banned missile.

The Americans selected the manufacturer of the Soviet SS-20 intermediate range missile, located near the Ural Mountains. The Votkinsk Machine Building Plant in Udmurtia, which at the time was closed to foreigners, became their target for continuous monitoring of treaty compliance.

The inspections, granted under the Intermediate-Range Nuclear Forces Treaty, marked the start of cooperation on nuclear arms control between the Cold War foes that has continued to this day, despite recent steps by Russia to curb the work.

"This growing trust has enabled the United States and Russia to work consistently through various international climates to secure and dismantle a vast array of WMDs, pooling our resources to make both nations safer, and indeed, to make the world safer," the U.S. Defense Threat Reduction Agency said in an e-mailed statement.

The INF Treaty, signed by Soviet leader Mikhail Gorbachev and U.S. President Ronald Reagan in 1987, called for the destruction of all nuclear missiles with a range of 500 to 5,500 kilometers. To this end, teams of inspectors deployed to Magna, Utah, and Votkinsk, the birthplace of composer Pyotr Tchaikovsky, whose father was a manger at the precursor to the modern weapons factory.

The 13-year mission of the Americans, which would later be extended due to START, a treaty on long-range missiles, was slightly more complicated than that of their Russian counterparts in Utah.

The Votkinsk plant, which had a long history of producing missiles, made not only the banned SS-20 but also the SS-25 Topol intercontinental ballistic missile. The Topol, the jewel in the crown of the Soviet strategic rocket forces, is similar to the SS-20 in that it travels on and is launched from the back of a truck. So U.S. inspectors had to be sure the Soviets weren't sneaking a banned SS-20 inside a slightly larger SS-25, whose production was not affected by the INF treaty.

Both sides had to create new government agencies to carry out the treaty work. The Nuclear Risk Reduction Center, headed by strategic rocket forces General Vladimir Medvedev under the Soviet Defense Ministry, was created to manage the inspection process at home and abroad. In the United States, Reagan signed an order creating the On-Site Inspection Agency to do the same.

The On-Site Inspection Agency hired contractors to supply and partially staff the treaty work.

Expanded Cooperation

The success of INF Treaty implementation and the burgeoning spirit of cooperation between the superpowers led to the 1992 Nunn-Lugar Act, which created a program known as Cooperative Threat Reduction. Its goal has been to secure and dismantle weapons of mass destruction and their infrastructure in the former Soviet Union.

In the 20 years the threat reduction program has functioned, billions of dollars have been spent by the United States on everything from destruction of chemical weapons to construction of security systems at nuclear facilities. The vast majority of spending and work has taken place in Russia, under the guidance of the U.S. Energy Department and the successor to the On-Site Inspection Agency, the Defense Threat Reduction Agency.

The work has been carried out by defense contractors Bechtel, Parsons, URS, Raytheon and others. They in turn have in many cases subcontracted key portions of work to Russian defense industry firms.

The cooperation between U.S. and Russian defense firms has been a key legacy of the original INF effort, as U.S. firms have implemented standard government contracting policies for their work in Russia.

"At first, Russian subcontractors are amazed at the number of forms we make them fill out, and they might not believe they have a chance of winning the business," said a senior U.S. executive with a defense contractor, who asked that his name not be published because he didn't have permission to speak to the media about defense matters. " But in the end, they like working with us because they eventually learn that they are getting a fair deal, even when we have them bid against each other."

The executive believes that the cooperation has broader ramifications.

"A whole generation of military officers and defense industry people on both sides have grown up together and learned to work together and understand each other while working toward a common goal," he said.

The interaction has created long-lasting friendships.

"I retain the greatest respect for the strategic rocket forces officers with whom I worked, especially the late General Medvedev, who was a true gentleman," said George Connell, a Marine colonel who was one of the first U.S. site commanders at Votkinsk. Connell eventually went on to serve as a vice president at Raytheon, where he oversaw the firm's Cooperative Threat Reduction work from 1990 to 2004.

Matrimony was another unexpected outcome of the INF treaty. In the rush to ramp up its ability to manage the incoming American inspectors, the Soviet Defense Ministry hired a batch of young female linguistic graduates to work at the portal monitoring facility, while the U.S. sent mostly male military and contractor inspectors. At least half a dozen marriages came out of relationships formed at the Votkinsk Portal Monitoring Facility. Some gave INF the nickname "International Nuptial Foundation."

Changing Winds

Despite the friendly atmosphere and positive reviews from both sides, Moscow has signaled that the times have charged and that the INF Treaty and the Cooperative Threat Reduction initiative are no longer needed.

"The need for cooperation is significantly less, and the economic situation in Russia has fundamentally changed," Deputy Defense Minister Anatoly Antonov said in response to e-mailed questions.

As early as February 2007, President Vladimir Putin said the INF Treaty no longer serves Russia's interests. General Yury Baluyevsky, then chief of the General Staff, said at the same time that Russia could pull out of INF due to NATO's plan for a missile shield in Europe.

Behind the scenes, discussions are ongoing about whether and how to continue the Cooperative Threat Reduction program, which is set to expire in June. Deputy Foreign Minister Sergei Ryabkov said in October that Moscow intends to end the 1992 agreement.

But U.S. President Barack Obama this week urged Russia to work with the United States to update the program.

"Russia has said that our current agreement hasn't kept pace with the changing relationship between our countries," Obama told anti-proliferation experts at the National War College in Washington. "Let's work with Russia as an equal partner. Let's continue the work that's so important to the security of both our countries. And I'm optimistic that we can."

Not everyone is so hopeful.

"I'm not very keen to express any optimism for future cooperative work because of the apparent mindset of the current Russian government," said Connell, the former U.S. defense contractor.

Deputy Prime Minister Dmitry Rogozin is equally skeptical about finding a compromise with the U.S. on a variety of defense issues, including U.S. plans to set up a missile defense shield in Europe.

"Concerning the missile defense system and how, as they assure us, it is not directed against Russia, we don't believe in words. Gorbachev believed, but we don't," Rogozin said at a security conference last month, Interfax reported.

"We need a written guarantee that the missile defense system being created in Europe is targeted against [only] short- and medium-range missiles," he said.

The Moscow Times Q&A: 25 Years On, Gorbachev Recalls Nuclear Milestone

Justin Lifflander

Reagan visiting Red Square with Gorbachev after the ratification of INF.

Mikhail Gorbachev regrets the Soviet Union's deployment of hundreds of SS-20 intermediate-range nuclear missiles at bases in Eastern Europe and Western Russia beginning in the late 1970s.

The move prompted the United States to respond by deploying hundreds of Pershing II missiles in Europe — just a five-minute flight from Moscow.

"It was like holding a gun to our head," Gorbachev said in an interview. "It increased the risk of nuclear war, even one that was the result of an accident or technical glitch."

The nuclear brinkmanship ended up laying the groundwork for a treaty that took the world by surprise and began the end of the Cold War 25 years ago this Saturday. The Intermediate-Range Nuclear Forces Treaty, signed by Gorbachev and U.S. President Ronald Reagan in Washington on Dec. 8, 1987, marked the first time the superpowers had agreed to actually eliminate nuclear weapons. All nuclear missiles with a range of 500 to 5,500 kilometers from both countries' arsenals were to be destroyed, including the SS-20s and Pershing IIs in Europe.

The treaty had an uncommonly explicit 126-page appendix. It contained descriptions, quantities and exact locations — including drawings and map coordinates — of all the storage and launch sites of 846 U.S. and 1,846 Soviet missiles, which were eventually destroyed by June 1991. The elimination process was carried out across the United States, Britain, mainland Europe and the Soviet Union under the watchful eyes of hundreds of inspectors on both sides.

But the truly unique feature of the INF Treaty was the mutual acceptance of "continuous monitoring" of missile manufacturing facilities.

"When the treaty was being readied and the discussion turned to the topic of 'perimeter control,' we insisted that it would apply to the American factory in Utah where such missiles used to be made," Gorbachev said.

Gorbachev, who credits much of his success to his ability to find a common language, reminisced with The Moscow Times by e-mail about his signing of the INF Treaty and said he remains cautiously optimistic despite tensions over Washington's determination to deploy a missile defense shield in Europe and moves by President Vladimir Putin to end post-Soviet cooperation in the destruction of nuclear weapons.

"I welcome President Obama's recent statement about his readiness to cooperate with Russia as an equal partner," said Gorbachev, now 82. "I think it is possible to find a common language and reach agreement on that foundation."

This interview has been edited for length and clarity.


Q: What were the internal processes within the Soviet Union that opened the door to the signing of the INF Treaty?

A: Having started perestroika, the Soviet leadership understood the need to move along the process of nuclear disarmament.

This reflected the position of the entire Soviet leadership. We came to the conclusion that the deployment of medium-range missiles in Europe had been a mistake because it allowed the U.S. to install Pershing II missiles within a 5-minute flight time to Moscow.

This was like holding a gun to our head. It increased the risk of nuclear war, even one that was the result of an accident or technical glitch.

Because of that, in Reykjavik, one of our proposals, which had the Politburo's approval, was to mutually liquidate these missiles.

Of course, in order to open the way to that agreement, and then to an agreement on reducing strategic nuclear weapons, it was necessary to resolve many political,  military and technical issues.

The Soviet Union's position was developed in the framework of the so-called "Group of Five," which included top officials from the Defense Ministry and defense industry.

As a result of their discussions, they reached a consensus that the treaty should be signed, and their decision was confirmed by the Politburo.

We expected the treaty would take a first step toward not only ending the nuclear arms race, but also toward substantially reducing the arsenals. This goal was achieved.


Q: How were the details about the treaty's implementation resolved?

A: A bilateral consultative commission resolved all the problems that arose during the implementation of the treaty. I don't remember that it was ever necessary to bring any issues to the personal attention of President Reagan or me.

Overall, we worked under the concept of, "If you want control, OK, but this will be done strictly on the basis of reciprocity."

Because of this, when the treaty was being readied and the discussion turned to the topic of "perimeter control," we insisted that it would apply to the American factory in Utah, where such missiles used to be made. The Americans agreed to that point, eventually.


Q: Do you see the treaty and the process that created it as a model for future agreements?

A: The process of creating the INF Treaty in and of itself was nothing unique. It involved negotiations, bringing separate positions closer together, considering the interests of both sides. But political will was really the principal element. It was exhibited by our side and the American side.

Afterward, unfortunately, the rate of nuclear arms reduction slowed. Only in 2010 did Presidents Obama and Medvedev take a significant step forward by signing the new START treaty, which not only sets reduced levels for strategic weapons, but also involves a mutual system of verification. But further progress in this direction is dependent on the overall demilitarization of international relations.

There is a lot to be alarmed about today. Nuclear arsenals are still huge — overall there are several thousand warheads. Hundreds of tactical nuclear weapons remain in Europe. The Comprehensive Nuclear Test-Ban Treaty has not entered into force. New nuclear powers have emerged, and we are faced with further proliferation of nuclear weapons. A new arms race has begun right before our eyes, and the threat of the militarization of space is looming.

Promises made as part of the joint statement of the 1985 Geneva summit to not seek military superiority are lost in the past. Nearly half of all global military spending is done by one power, the United States. If the situation continues, we can forget about the goal of a nuclear weapons-free world. At some point that rifle will be fired.

The leaders of our two countries must not forget that, as before, the process of nuclear disarmament and avoiding a nuclear war is the responsibility of two powers— the United States and Russia.

The Moscow Times Q&A: Media Mogul Peter Gerwe Keeps Earning and Learning

Justin Lifflander

Gerwe’s management secret s promote from within and invest in training.

There is some training money just can't buy.

After 30 years of doing business in Russia, Californian Peter Gerwe is qualified to conduct several unique master classes: "Leveraging regional and federal authorities," "How to be a big entrepreneur but stay under the radar," and for those even less risk averse, "How to differentiate oligarchs and live to tell about it."

Gerwe, 53, now serving as head of Fortune-300 conglomerate Sistema's media empire, doesn't offer such seminars, but he easily could. He says the out-of-the-box thinking that allowed him to come here long ago, make good friends, build one of the first FM radio stations in Russia, the first private television network and other unique media properties was influenced by his early mentor and boss, Apple co-founder Steve Wozniak.

"Woz was a pretty inspirational guy," Gerwe said in an interview. "His mindset was different. He was a little out there in those days — to say, 'Let's do a satellite link with the Soviet Union.' And you'd say, 'What?'"

But, after saying, "What?" Gerwe organized the first "telemost," as the link was called, so a Soviet studio audience could appear on the screens of one of the rock concerts on the U.S. West coast organized by Wozniak in 1982.

The telemost effort gained him a reputation as someone who could get things done in the Soviet Union, which led to his involvement in Western rock star tours. Gerwe's friends in Moscow saw the opportunities that Mikhail Gorbachev's liberalizations were creating and invited him to start a venture. He combined his growing experience with the sense of vision that "Woz" had imbued in him, and proposed the radical idea of starting the rock-and-roll FM radio station. A healthy does of persistence was useful, too.

"I said it will be the coolest thing in the whole city … and it shouldn't be too scary to the authorities, since in 1989 nobody was on that band," he said. "It took two years to get the licenses. Everyone said, 'No, no, no.' Then finally we got a yes."

The next venture, which started in 1996, involved building from scratch the CTC entertainment TV network, which eventually spanned nine cities with 350 affiliates and is now traded on NASDAQ with a market cap of about $2.5 billion. In the process, he managed to fend off a hostile takeover from Vladimir Gusinsky and befriend the founders of Alfa Group, whom Gerwe calls "fantastic partners," before exiting in a successful IPO.

Peter Gerwe

Education

1981 — University of Santa Clara, Communications major

Work Experience

1982-90 — Various media projects in the Soviet Union, including telemosts, and rock concerts. 
1991-2006 — Set up Radio Maximum, one of the first FM stations in Russia, and CTC, the first privately owned nationwide television network, now traded on NASDAQ. 
2006-10 — Created HELLO! Magazine, Russia's first and market-leading celebrity glossy, and Corvette Telecom, a broadband Internet company.   
2010-12 — Led buyout of News Outdoor in Russia; set up Hello TV globally
2012-Present — President/CEO Sistema Mass Media

Favorite book: The Aubrey/Maturin novels by Patrick O'Brian   
Movie pick: “Avatar” (2009) directed by James Cameron
Favorite Moscow restaurant: Na Dalny Vostok, 15 Tverskoi Bulvar, Bldg. 2
Weekend Getaway Destination: anywhere in Italy

He told The Moscow Times that in his latest role — president of Sistema Mass Media, where he manages 500 people creating digital and video content for MTS, other Sistema subsidiaries and the consumer market — he is fulfilling the goal he set for himself to transform from entrepreneur to corporate leader, all the while reveling in the learning process.

This interview has been edited for length and clarity.

Q: What brought you here 30 years ago?

A: I was working for Steve Wozniak right after college in 1982. Apple had just gone public, and he made a ton of money. He wanted to do a West Coast equivalent of Woodstock with a U.S. Festival. We had the biggest artists: The Police, David Bowie, U2. Woz had all these wild ideas. We designed the first stage with video screens. I was head of production.

We wanted to do creative and interesting things for the audience of 100,000 to 200,000 people who were sitting there for 30 to 40 minutes between set changes. So the idea was to use the screens to entertain them: show spaceships and helicopters landing; have people talking back and forth. MTV had just launched, and we had VJ's appear. Then Steve said, "Let's do a satellite link up with Soviet television." So I got the task and we did the first "space bridge," or telemost.

Q: How did you set up such a thing back then?

A: We called a bunch of friends and contacts, found out who the "private diplomats" were, got the name of a person who did this stuff unofficially and paid him a consultant fee. We started talking to Gosteleradio, the Soviet agency responsible for television and radio. The first telemost was between a Soviet TV studio and one of our music festivals, in 1982. It was very much controlled by them, but they were intrigued by the idea — satellites, Apple computers, Wozniak. They liked the result and then put it on TV.

Their motivation? Well, it was the Ronald Reagan evil empire days; there was no communication between the countries. This represented world peace, global communications, and it was controllable. They positioned it as Soviets on the cutting edge. Pure propaganda.

This was when Vladimir Pozner came over from radio to TV. He was very articulate on stage, and it worked.

Then I started getting telexes from Gosteleradio: "Please come to Moscow. We want to do more of these things." I guess some Politburo member saw it, said it was a cool idea, and told them to do more.

I get off the plane in Moscow in a "Surf California" T-shirt and jeans. I'm still the simple Californian. There were these guys right at the plane, with my name on a sign. "We are looking for Mr. Gerwe. Is the executive on the plane? Are you his aide? We really need to find him." It took me 20 minutes to convince them who I was. You could just see the disappointment on their faces.

I got in the Chaika limousine, and we drove in the center lane. Then I found myself in a meeting with the chairman of Soviet television. I had put on a suit and was properly presentable, and we agreed on doing another five-six space bridges, which led to the space-bridge industry in the early '80s.

Q: And what was the follow on?

A: Since the music industry was involved in our two U.S. festivals, for years after that I would get phone calls to do Russian media. I helped organize the Billy Joel tour of Moscow and Leningrad.

Then in the late '80s, my Soviet friends in Gosteleradio started contacting me, saying things were changing: "We can do cooperatives, small businesses, but we need a Western partner. You've got the passport. So what should we do?"

On the Pan Am flight over, I read about a radio station in San Francisco that had just sold for $100 million — an unconceivable amount of money for me at that time. And there were no radio stations in Russia on 88 to 106 — Western FM was empty. So I said, "Let's get a frequency and build a radio station." They at first said, "No." They couldn't believe it.

We did a little market survey, to the extent that we could, and learned that there was 30 percent penetration of devices that could listen to FM. Boom boxes and so forth.

I said it would be the coolest thing in the whole city to have Western rock 'n' roll on the radio. And it shouldn't be too scary to the authorities, since in 1989 nobody was on that band. They would doubt that a large number of people could listen to it.

Q: How did you put the company together?

A: I was dealing with new up-and-comers in Gosteleradio. A lot of them are still in media today. It took two years to get the licenses. Everyone said, "no, no, no." Then finally we got a yes.

I had a little money. We started a company called Story First Communications. I put together a partnership with

Westwood One Radio Networks, an American radio programming company, and Harris Corporation for the equipment. I just called the presidents of these companies and said, "I am putting together a radio station in Moscow, and I need you to invest in the equipment. We'll give you equity. It will be your foothold." They agreed, and we started Radio Maximum.

We spent a lot of time negotiating with Moskovskiye Novosti. We viewed the newspaper as the best partner. They gave us space, people and rubles. We negotiated that there would be no news. Just music. If there would be any news, it would be about Madonna's bra size and what's going on in the pop industry. No hard news. We decided to launch on Jan. 1, 1992, and formulated a marketing strategy that we would do one week of pure Beatles music — no station ID, no call sign, no interruptions — just Beatles song after Beatles song. On Dec. 25, 1991, Christmas Day, we put on "All You Need Is Love" as the first song, then "Back in the U.S.S.R." We were sitting in the control room having Champagne. Then someone walked in and said Mikhail Gorbachev and Boris Yeltsin had signed documents about the dissolution of the Soviet Union. The editor of MN came in and said, "We need to make an announcement, this is historic news." And I said, "Wait a minute, we agreed no news." Well, we had a long negotiation. I did not change my mind. No news. Finally, we negotiated a terse statement. "We just want to inform you that today …" Clean and simple. We played it two or three times. It was the only news ever to appear on Radio Maximum.

Q: How did you handle sales and marketing?

A: I never had any formal business education, but I remember walking into the advertising sales guy's office and asking him what his plan was. He looked at the phone and said, "I'm waiting for it to ring." I explained to him that he needed to be calling out. Radio is about sales. Take 10, replace the bottom two, and you need a good sales manager. Westwood sent guys to help teach us how to do it.

Q: What advice would you give about picking partners?

I partnered with the Communications Ministry early on because they were technical but with no knowledge of media, which is what I had. I always had the best relations with them. We formed friendships, even if it was a little too much drinking in the early days.

We were always very good partners, straight, no games. I really liked the people I worked with. They were my friends. And the people at the Russian Satellite Communications Company, like Boris Chirkov, helped us to build CTC television. We were late with payments sometimes, but they were still cobbling together this, and making that work.

I think sometimes it's better to partner a little bit later, to build the operations and lay the groundwork first. It worked for us with CTC.

If you are talking about a bigger deal, $100 million or more, a Russian partner is critical.

Q: How did you wind up starting a television station?

A: My friends in the ministry said radio was small, let's do television. I met a guy who had been the Communications Ministry man in Leningrad, and he had the first 24-hour private TV frequency in the country. He had a cooperative. He was a step away from Moscow, so he got less attention. We bought 50 percent of the company and invested. We did "tower" deals — working with the people at the broadcasting towers. This is the most important part: with transmission equipment, frequencies, broadcast infrastructure.

We started this station, and it was doing fine. But Moscow seemed too big, so I said, "Let's do all the other million-plus cities." Our guy went right to his tower colleagues. We could have gone to the mayors' offices and tried to get through the official way, but it's so difficult to work with those guys. The tower guys had the frequencies, so we just went directly to the tower guys and made deals.

We built seven or eight stations outside Moscow, so we were off everybody's radar screen. Then we came to Moscow and bought a channel that had almost no coverage in the city. We went to Mostelecom, the local cable system, and helped them refinance, so they could wire the whole city, and upgraded them from six channels to 12 channels, including ours.

We launched CTC as a station group, and then we signed on affiliates. Private stations were starting, but they didn't have programming. So we put in our plan that we'd have 30 affiliates by the end of year one, 100 by the end of year two, and full coverage by the end of year four. Well, by the end of year one we had 350 affiliates — it took off like a rocket. So all of a sudden we had a national television network.

Q: What keeps you here?

A: This Sistema job is really interesting for me professionally because I wanted to get into a large market cap company. Until 2010, all I did was work in green field: start it, build it and sell it. I didn't want to anymore: too small, too difficult and it takes too long.

I want to take a company that's worth $100 million and turn it into a billion in three to four years. I think I can do it.

I really like Vladimir Yevtushenkov and Mikhail Shamolin. It's real important to me to like who I am working for. Yevtushenkov has great vision. I might think a few months ahead, but he thinks years ahead. He's got vision, people and energy. These guys are at the top of their world in what I want to do, which is big corporations and how to make them work.

Sistema is a good learning ground, enormous and very rigid, like Time Warner. And I have a lot of resources to move things around. I can buy and sell companies. It's more like chess moves than the roll-up-your-sleeves and heavy lifting of being an entrepreneur. You get to play in a bigger field. It's a different skill and a real learning experience for me.

Q: How do you deal with corruption?

I think it's a real issue. For me as an individual, it's both an advantage and disadvantage. It's an advantage because everyone knows it's very straight and simple with me. I get a lot of deal flow, people willing to partner. This is because people know we just don't participate in corruption. We are very honest and straightforward. People know there is no agenda behind the scenes. For me, a handshake is just as good as a contract.

Philosophically, I look at Russia as in the early days of any country opening up and changing its markets. Look at the U.S. in the early days, the robber barons, who were the same thing as oligarchs. I've got to hope that the market will eventually work itself out. The Russian model will be the Russian model. It won't be the American one or something else. It's an enormously proud and wealthy country, and it will develop as it needs to develop. Corruption will work itself out of the systemic problem that it is today. It is inhibiting the growth of the country.

I do have issues with some people's personal interest. Let's say somebody walks into the office and says we need to build a new building for this company and it needs to have a complete new technical layout. You ask, "What is wrong with the old one?" It could be that the person wants to spend $50 million on equipment so he can get $1 million back from the supplier.

You look at him and start thinking, "What is his real motivation?" And that's really unpleasant. What do you do? You break it down. "Do we really need it? What would it cost in the West?" But you have to be smart about it. You can see the patterns. If they're blatant about it, then they don't last in the company.

Q: What is your strategy for management?

You surround yourself with good people who are smarter than you, honest, hungry to learn, work, improve themselves and develop. And you build a culture that supports that. Promote from within. Invest in training. Encourage people at all levels to develop. Tell them, "This is your job or your area. How is it going to be the best?" And we don't like office politics and backstabbing. We cut it off right away. People who don't fit in the team don't stay.

The key in the companies that I've built so far is that the teams are very tight. We have very little turnover of people; we try to stay salary competitive, but I'm always pushing people to learn, always supporting development, always promoting from within the organization; so the teams are very tight. The old CTC team still gets together; the same for Radio Maximum.

The higher you get in an organization, the more you rely on your team. You can do very little at the top in terms of getting things done yourself. You can do three things well as a CEO or owner: The first is vision. You need to provide a clear vision of where you are going. Start with the end in mind. Where do we want to be in four years? How do we get there? Look back and break it down. If you don't know, then develop it with your team.

People is the second area for me. Get good people, keep them, support their development, pay them well, and demand results.

Third, for a leader, is energy. You need to rally people and get them going. If you are having fun and you like what you are doing, it's pretty easy to do.

I always try to be very clear about roles and responsibilities. Anytime there is a gray area, or there are two people in charge of one thing, that comes back as a problem. It doesn't work.

You learn to do protocols of meetings. Everyone agrees and puts their initials at the bottom. A little bit of formality is important. So I tell my people, "Don't bring me something to sign if your initials are not on it." I learned that here.

Q: Have you had any negative experiences with the business environment?

A: Around 1996 we realized we needed a Russian partner at CTC, so I started talking to some potential Russian partners, and I met Vladimir Gusinsky. He was very simple and straightforward. He said, "You did a great job. Beautiful company. Unbelievable to have accomplished that. But let us take it over."

That's when I learned what "attack" due diligence is. You just go to the leader in a sector and say, "I want to buy you." Then you send in your teams, get all their information, look at all their contracts and learn everything you want about the company. I learned this from Gusinsky.

We thought we were cool, the big guys, before we started talking about prices and term sheets and other things we should have done first. Clearly, I was uneducated.

Gusinsky wanted to buy 51 percent, and we wanted to sell 100 percent. But his value was one-tenth what we thought it should be. So we said, "Thank you very much and goodbye." And he said, "No, wait. It's not that easy. Either sell it at this price, or we'll take the company — your management and your licenses."

The next day the general manager and the top five deputies resigned. Gusinsky had already gone to them and doubled their salaries.

Then we started having problems with every frequency in every city. I got calls from governors and mayors. For the next year we were fighting for our frequencies.

There were two issues that worked to our advantage. The federal and local authorities were locked in a power struggle. To the credit of federal authorities, they were honorable and backed us up, saying, "You have the license, you have the frequencies." We did our own work with the locals. Gusinsky would go to a mayor, and we'd go to the governor. We only lost one city: Omsk.

I wound up meeting with Andrei Kosogov, the head of Alfa Capital, and Mikhail Fridman and Pytor Aven. They were fantastic partners. They sold their stake for $1.1 billion last year. This has to be their best return on investment. I loved the time I spent with them.

Q: Who inspires you?

A: In addition to Woz, I always enjoy people who are smarter than I am. At a meeting they are often the ones out in front of you, and you are trying to keep up with them, like some Russian business leaders. I keep imagining that they are like the Rockefellers. These guys don't get to where they are by being ruthless. They are fast, they think quickly, they have vision, and they take risks. I give them a lot of credit. Certainly, Russian groups fight each other. That's their business. I don't get involved. You can see problem areas and just stay away from them.

Q&A: Kremlinologist's Russian Skills, Preserved in Alcohol

Justin Lifflander

Courtesy of Anna Belousovitch. Belousovitch as a senior analyst.

Every April for the past 17 years, former U.S. soldier Igor Belousovitch has gone to Arlington National Cemetery at the invitation of the Russian Embassy in Washington. There he joins a dwindling group of World War II veterans and U.S. and Russian officials in commemorating a 10-minute meeting between Soviet and American troops at the Elbe River on April 25, 1945, to celebrate their successful effort to destroy fascism in Europe.

"No one intended for me to be there, despite my Russian background," Belousovitch, one of the United States' most experienced Kremlinologists during the Cold War, told The Moscow Times. "It was an accident of fate. But my background allowed me to understand it."

A plaque installed at Arlington by the Russian government and some U.S. supporters reads, "In tribute to the partnership in the battle against tyranny." On Wednesday morning, it was quickly covered in red carnations deposited by children from the local Russian Embassy school and other participants during the ceremony, while a bugler played taps in the shadow of the Tomb of the Unknown Soldier. Belousovitch laid a wreath.


Igor Belousovitch

Education

1948 — University of California, Berkeley, master’s in Russian literature and language
1946 — University of California, Berkeley, bachelor of arts, Soviet and East European studies

Work Experience

1956-91 — U.S. State Department, Bureau of Intelligence and Research, including chief of U.S.S.R. section, Division of Biographic Intelligence (1959-61); analyst of Soviet policy, Near East Division (1962-68); analyst of Soviet policy, with focus on Chinese-Soviet relations, Asia Division (1969-75); first secretary in political section, covering Soviet internal affairs and dissent, U.S. Embassy, Moscow (1976-77); senior intelligence analyst, specializing in dissent, human rights problems, emigration policy, nationality issues and cultural trends, Soviet Internal Affairs Division (1978 -91) 
1951-56 — Georgetown University, Institute of Languages and Linguistics, editor of the Russian-English military dictionary project for the Department of the Army; also worked in the Slavic division of the Library of Congress

Born in Shanghai in 1922 as the son of a White Army officer fleeing Soviet Russia, Belousovitch moved to San Francisco with his parents in 1923. He enrolled in the University of California, Berkeley, in 1941 and joined the army two years later.

Belousovitch then spent the next half-century studying the intricacies of how the Soviet Union functioned. As a Kremlinologist, he read between the lines, interpreted the symbols and tried to provide objective information to U.S. policymakers.

Time and experience have given him immense perspective and refreshing optimism. He views the current opposition in Russia as being far better off than their Soviet-era predecessors. Despite the attention he and his fellow intelligence analysts dedicated to the country, they were unable to predict the final moments of Soviet power, even though they saw the writing on the wall. Throughout his State Department career, he valued his ability to communicate in Russian as a tool to bring clarity to the otherwise opaque world of East-West relations.

Even as a brash soldier at that historic linkup on the Elbe River, he knew that his understanding of the subtleties of Russian, his second mother tongue, would affect the outcome of the meeting and what impression the Soviet soldiers would get of their American counterparts.

"Considering the importance of the event, it actually dramatized the end of the war," Belousovitch said by telephone from Washington. "Nobody at that time anticipated that the relationship between the United States and Soviet Union would soon get complicated. At that moment everybody treated each other as friends and allies."

Since then, both sides have been cautious about how they define the wartime relationship. "In America we called it an alliance; the Soviets never used that word," said Belousovitch, 90. "They spoke of a coalition — it gives a slightly different flavor to the relationship, which quickly degenerated at the end of the war. They still treated us as a potential adversary."

This interview has been edited for length and clarity.

Q: What do you make of how Russian and American societies regard World War II now?

A: For the U.S.S.R., it was a tragic national event that touched the great majority of citizens. In the U.S. we did not experience an invasion of our country. People here worked in the defense industries, read about the events of the war and hoped that their relatives who were in military service would come back alive. In that sense we participated, but it did not really affect the domestic population of the country in the way it did the Soviet Union — on a scale that is hard to comprehend.

Q: How did you feel the last time you were invited to attend the Victory Day parade by the Russian government in 2010 and you saw foreign troops march across Red Square?

A: That was an unexpected highlight. There we were, sitting in bleachers on the side of Lenin's tomb, from where I had witnessed the parade many times. All of a sudden I saw a detachment of the U.S. army with the American flag flying. The Brits were there and so were the French. It was the first time that I ever recall seeing foreign military participation in the victory parade. It was extraordinary. I treated it with enthusiasm, glee and joy. I looked at it as a symbol of current relations. It told me that things are developing, that the relationship is now becoming more normal.

Q: How would you compare the opposition movement now to the dissidents of the Soviet era?

A: In those days, dissidents were just beginning to become visible. There were the "big guns," the people who wrote huge manuscripts, like Alexander Solzhenitsyn, about fundamental issues of the political status of the Soviet regime, the terrorism that was being practiced and the gulags. Then there were the smaller dissidents who began to put out samizdat. It was all quite illegal, and, of course, we at the embassy collected as much of it as possible. To us this was brand new — that there was some possibility for Soviet citizens to express their opinion in as public a way as they could. But they were all running a serious risk.

On Human Rights Day a handful of dissidents would gather on Pushkin Square and at the same moment simultaneously take off their hats. They'd be arrested for having an "organized protest." You can see how symbolic but cautious these early demonstrations were.

Now, of course, instead of describing gulags and trying to preserve themselves without being arrested and sent there, the activists are running for office, they are visible in the press, they are grudgingly recognized by the authorities. All of this to me is tremendous progress, and I wish them well. Who would have thought in those days that opponents of the regime would be running for office and even joining legislative bodies. It shows how far these people have come.

Q: What about communicating at the individual level?

A: I remember in 1977, when I was at the embassy in Moscow, and Chief Justice Warren Burger came for a visit. He had been invited by his counterpart, Lev Smirnov, the head of the Soviet Supreme Court. The Soviets were overjoyed to have him come because it gave them a legitimacy they did not enjoy previously.

On a flight to Tbilisi, I sat next to Smirnov, and we started talking. It was not the first time I discovered that Soviets love to talk to old Russian emigres — the "first wave" ones who left as a result of the Revolution and civil war. They frequently become very candid, speaking not as a Soviet with a foreigner but as a Russian to a Russian. Smirnov began to recall World War II, when he was a military prosecutor. He told me how he was instructed to report on a case to Stalin himself. He said he became so frightened that his legs were trembling and he could barely walk into Stalin's office. He said what made it especially dangerous was that he was going to recommend the case not be prosecuted. Stalin accepted the recommendation and allowed him to leave the office, safe and sound.

Though I was a foreign diplomat, he felt secure talking to me because he knew the conversation would not be reported to the Soviet authorities and he knew I would understand him.

Official and nonofficial Russians would tell me things, including details of Soviet outrages, that they wouldn't dream of telling a foreigner, much less a diplomat or one of their own people. They would speak as though they were confessing. They would do such a thing only while speaking to an old Russian emigre.

One Soviet acquaintance told me: "One of the things I find interesting about you is your language. You speak a kind of old-fashioned pre-revolutionary language that one rarely hears in this country nowadays. It sounds like 19th-century Russian, preserved in alcohol."

Q: What were some of the surprising things you learned while working as an intelligence analyst?

A: It was a wonderfully interesting profession. We did our best to find out what was really going on — what the Soviet authorities were up to. Analysts were not bound to follow American policy in expressing their views. Occasionally we were heretical in how we analyzed trends.

In 1969, the Soviets and Chinese started shooting at each other across the Amur River. It was totally unexpected by everybody in Washington, particularly by the people in the Pentagon. They were mesmerized by the possibility of a major Sino-Soviet conflict. They began to churn out a huge number of articles, all kinds of staff studies, focusing on how a Sino-Soviet conflict would proceed. That's all they could think of. To me it sounded highly unlikely. For the Soviet Union to get involved in a conflict 6,000 miles (9,650 kilometers) away from Moscow, with that part of the country connected only by a vulnerable railroad track, was simply out of the question. The Chinese were not issuing a major challenge to the Soviet Union. They were just interested in getting the Soviets to recognize the exact line of the boundary. Moscow interpreted the previous treaty to mean that China started on the Chinese bank and the whole river was Soviet space. But this violated a modern notion of international law — that river boundaries run through the navigable channel of a river. Both sides eventually recognized that this was a reasonable Chinese position, and it ended there.

Another fascinating period was the approaching collapse of the Soviet Union. When Mikhail Gorbachev came to power, things began to happen in the Soviet structure that were, to say the least, strange. The authorities began to stray from the party line. In the Supreme Soviet there appeared to be signs of genuine free debate. These were things that you would never expect to take place in the Soviet Union.

Gradually, it became clear to us that Gorbachev was one of these rare birds — a genuine reformer. He and many others in the U.S.S.R. recognized that the Soviet structure was becoming incredibly inept and bureaucratic, that things had to be shaken up. The new trends of glasnost, of open discussion, of discussion about where the country was going and what should be done — it was unprecedented. Most of the information was hardly classified. It was appearing in open Soviet sources, the Soviet press. So we began to analyze these unlikely events and wrote papers that were barely, if at all, classified. Of course, a lot of people at the State Department were a bit uneasy about it.

Q: Were you able to foresee the demise of Soviet power?

A: Well, it did happen, didn't it? We couldn't predict the exact date of the collapse, but it was clear that events were moving toward a major political crisis. We understood that over the years the Soviet authorities, no matter how inefficient they were, had an uncanny ability to muddle through. If there was some sort of huge problem, they would rearrange the chess pieces in such a way that they would muddle through one crisis by taking resources from a different sector of policy and use them to somehow ameliorate the crisis of the moment. It was one crisis after another, some public, some not so public. They were having more and more trouble coping with shortages of resources. Gorbachev began to blow a little fresh air into the stagnant structure, and it was fascinating to observe this procedure. But it was hard to imagine they would ever come to a point where they could no longer muddle through.

Q: Do you feel that the current policymakers have built on the experience gained from your own historical time frame?

A: I am not sure. I sometimes wonder about that. Maybe occasionally we in the U.S. are muddling through?

But I lived through an absolutely fascinating period where glasnost touched not only the Soviet authorities but my own work as well. Now there is a whole generation of adults in Russia who have never experienced the war personally or even the Soviet Union or Soviet life and who are interested in a more open society. That's why I think the country is gradually and steadily moving in that direction.

Q: What about the "anti-Americanism" during recent Russian elections?

A: You know, there is a lot of latent anti-Russianism here in the U.S., too. You can feel it every time there is publicity about repression, stacked court trials, fixed elections. And then there is also the Jackson-Vanik amendment. This is a painful thing because it was passed during the Soviet period. It seems to me it is hardly applicable anymore. Everybody would be better off if it was repealed.

I know that there are irritating aspects to the relationship, but, after all, we did manage to get rid of a huge stock of nuclear missiles on both sides. Who would have thought that this would happen during the height of the Cold War?

When I was in Moscow 10 years ago for a Victory Day celebration, I attended a reception at the U.S. Embassy. I was taken around the new building, which I had not visited before, and what do I see? Russian citizens working in the military section, dealing with contacts and equipment that we were making available to Russia. To see Russian employees working inside the embassy was totally unexpected.

Events are slowly and uncertainly bringing us toward more normal relations, but I do expect a lot of unpleasant things along the way. Painfully and slowly, with a lot of problems on both sides, Russia is becoming a normal country. I never thought I would live long enough to see such a trend. I think about the Cold War and compare it with current events to see the distance we have traveled.

People in Russia are beginning to lead normal lives, and I find that more important than any tension involving Washington and Moscow — which gradually simmers down in any case. I am optimistic.

Cuban Cigar Paying Homage to Local Tastes

Justin Lifflander

International companies are trying to cater to local tastes by making certain products exclusively for Russia.

In addition to pizza with mashed potato topping and caviar-flavored potato chips, Russian consumers will now have a Cuban cigar especially designed for their tastes.

Thanks to 20 percent growth in premium cigar sales, as part of a surging luxury items market, Top Cigars — the official distributor of Cuban stogies in Russia — introduced a new cigar especially selected and only available locally, during its annual partner event in Moscow on Thursday.

When asked about the resemblance of the model to its target market, Javier Terres, vice president of Cuban cigar sales monopoly Habanos, said, "It's big, and it's strong."

The cigar, named the Emperador — Spanish for Emperor — is part of the Bolivar line. Its flavor and name were determined based on inputs from Top Cigar and its local partners.

This is the 25th regional edition made by the famous cigar maker since it started the concept in 2005, said Oleg Chechilov, editor of Smoke magazine. Terres, who was born at a cigar factory in Spain where his parents lived and worked, said the regional editions are intended to confirm the leading position of Habanos and its distributors in a country.

"[The Emperador] is a homage to Russian consumers. … They deserve it," Terres said.

Terres said he would consider the program a success if the first shipment of 25,000 cigars sells out in a few months. Such a quantity represents less than 3 percent of total annual sales of Cuban cigars in Russia. Local retailers expect to charge between 700 rubles ($22) and 1,000 rubles ($31) for each cigar.

Top Cigars has about 400 partners — up 20 percent from last year — which gives it at least one shop in every city of Russia with a population of more than 1 million people. More partners are being recruited.

The Emperador is not the first cigar designed exclusively for Russia. Costa Rican cigar company Isthmus announced its Imperial cigar, complete with a double-headed eagle on the band, in May 2010, though it is only making first shipments next month, due to excise stamp problems.

"We took inputs on the desired flavor, size and even the name via the web portal of our Russian partner, which allowed us to offer the first regional cigar made especially for the local market. … We did this as a sign of respect to Russian smokers," Kurt Brandt, founder of Isthmus, told The Moscow Times.

Industry experts estimate that about 70 percent of the total imported cigar market, valued at between $15 million and $20 million in 2010, belongs to Habanos.

China, which also has an exclusive Cuban cigar, is another focus market for Habanos. News reports, however, that cash-strapped Cuba is supplying both tobacco and agricultural expertise to help China build up its own cigar industry could not be confirmed by Terres.

Though the Russia business is growing, cigar retailers are resigned to a saturation of outlets, at least in Moscow, and a very specific client base. "Americans smoke to enjoy the smoke, while Russians are still in the show-off stage. … Buying and smoking is a very social process," said Andrei Ushatov, who started selling cigars at his family-run shop in Volgograd when he and his wife realized that it was the next logical step in addressing the wealthy male segment.

"Before 2008, there were middle-class buyers who just wanted to have a new experience, but after the crises they disappeared," Ushatov said.

Former alcoholics are a unique segment of customers, said Vladimir Sushkov of Moscow retailer Tabachnaya Lyubov. "They use cigars as a substitute for their obsessive tendencies, and their wives are thankful for the healthier habit," he said.

Cigar Smoking Survives and Thrives

Justin Lifflander

A cigar aficionado taking a puff during Habanos Day in Russia on Thursday. The new Cohiba was also introduced.

Imports of handmade cigars should return to pre-crisis levels in 2012 after falling by nearly half last year, Russia's exclusive importer of Cuban cigars said Thursday.

The country imported 2.2 million handmade cigars in 2008, but supply plummeted 45 percent to 1.2 million last year, according to data from Top Cigars, the Moscow-based company owned by Cuban cigar export monopoly Habanos.

"We've maintained our regular customer base of genuine smokers," said Alexander, a salesman at the Tobacco Gallery shop on Tverskaya Ulitsa. "But the crisis definitely reduced the number of customers buying cigars as gifts. I guess they just switched back to chocolates."

Luxury cigars remain popular among wealthy Russians looking for flavor and exotic ways to spend their cash. Once featured in Soviet propaganda as the hallmark of the evil Western capitalist, the stogie is staging a comeback.

"For some of our smokers, image is even more important than flavor," said Oleg Chechilov, editor of the magazine Smoke, which has 30,000 readers across the country. He estimates that Russia has 600,000 cigar smokers.

"The typical Russian cigar fan is a male between 30 and 65, smokes once a day, and has a humidor at home," Tamara Teixo-Balinas, the director of Top Cigars, said at a conference her company was hosting, which included lectures and a competition to pair cigars with expensive alcohol.

Habanos now has more than 70 percent of the Russian market for handmade cigars, slightly above its worldwide average, said Gonzalo Fernandez, the company's deputy marketing director.

He attributed the cigars' popularity to Russia and Cuba's "special historical relationship." In Soviet times, cigar imports peaked at 13 million per year, though those were mostly machine-made, Fernandez said.

Russia is the second-fastest-growing market for Habanos after China, he said. Cuba has a warehouse with tobacco in reserve and land to grow more if demand continues to rise or the lucrative U.S. market ends its embargo.

The company has built up a network of 260 retailers throughout the country, with stores concentrated in Moscow and St. Petersburg.

Fernandez said anti-smoking trends and hectic lifestyles had not really affected overall sales, although preference for specific types of cigars has been fluid.

Some smokers are choosing shorter and fatter cigars to get the same enjoyment in less time. Those who are smoking less because of the dwindling number of places they are allowed to smoke in are focusing on larger and more flavorful models, he said.

Prices for handmade cigars keep them out of reach for many Russians, at least on a regular basis. The average Cuban Robusto can cost 240 rubles ($8), while the newly introduced Cohiba Behike costs 2,100 rubles ($70) each.

Cigars have a storied history in Russia, where Catherine the Great is credited with inventing the cigar band to protect her fingers from nicotine stains. Vladimir Lenin is also said to have bought cigars on credit at Davidoff's store in Geneva before returning home to start the Revolution.

The country's lone domestic manufacturer — the Pogar Tobacco Factory in Bryansk — produced 1.5 million cigars last year, most of which were also sold in Russia, chief executive Igor Moiseyev said Thursday by phone.

"The crisis actually helped sales, since people began to look for ways to save money," he told The Moscow Times.

The company's cigars, which retail for 100 rubles to 120 rubles each, also benefited from an issue with excise stamps earlier this year that restricted the flow of imported cigars to the Russian market, he said.