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Johnson's Russia List


July 14, 1997   

This Date's Issues:   1043 1044  1045 1046

Johnson's Russia List
14 July 1997

[Note from David Johnson:
1. Patrick Armstrong (Canadian Department of National Defence):

2. Stanislav Menshikov: re David Filipov.
3. AP: Russia Leaders Watch Local Elections.
4. International Herald Tribune: William Pfaff, Genuflecting at 
the Altar of Market Economics.

5. The Sunday Times (UK): Mark Franchetti, Soviet feelgood films
knock Hollywood off the screen.

6. The Economist: A survey of RUSSIA: In search of spring. (8 part
series). Part 3: Quiet flows the Don--and almost all else. A sign of 
despair, not contentment. Part 4: Some do eat cake. Quite a lot, even.

7. Los Angeles Times: Carol Williams, Deputy Premier Is Blazing a 
Trail of Hope in Russia. Politics: Boris Nemtsov's feel-good message 
fueled his meteoric rise. Cynics say his populist crusade can't last. 

8. Financial Times (UK): Oil: Caspian share sought by Russians.]


Date: Sun, 13 Jul 1997 12:18:01 -0400
From: Patrick Armstrong <>

At first I thought I would keep out of the "Pipes
debate" and then Jan-Philipp Goertz's remarks on
JRL #1029 9 Jul 97) persuaded me to add my two
kopeks' worth. I agree with him, there are a lot
of "old memories and judgements" floating around
and -- dare I say it -- they are usually uttered
by people who have been wrong virtually every time
out of the box over the last ten years (remember
all the confident pronouncements that Gorbachev
was just re-painting the facade, that there would
be a military coup, that the USSR would never pull
out of Eastern Europe, that Russia would never
leave the Baltics, that Zhirinovskiy would take
the place over, that Yeltsin wouldn't dare hold
elections and so on ad nauseam?)

I want to say something about Prof Pipes' latest
indictment of Russia (JRL #1015 4 Jul)in
particular this remark: "The Russian ruling elite
has not reconciled itself to the separation of the
fifteen dependent republics which, with the
Russian federation, made up the Soviet Union."

That statement is always uttered as if it meant
something. But it doesn't actually mean anything.
It is a classic non-falsifiable proposition. No
evidence is ever given and no action by Russia is
ever allowed to affect the absolute certainty that
its intentions are always evil. Opinion polls are
never quoted to support it (and I've certainly
never seen anything that would support the
assertion and as Brian Taylor JRL 1023 showed,
there are polls that contradict it). Who are this
"ruling elite" anyway -- Korzhakov and Grachev?
Chubays and Nemtsov? Yeltsin himself?
Chernomyrdin? or just "They"? Nothing Russia does
is ever judged to contradict the assertion. Russia
recognizes Ukraine -- well that doesn't count
because Yeltsin has never visited. Yeltsin visits
-- well that doesn't count because he didn't mean
it. Russia pulls its troops out of the Baltics on
time -- well that doesn't count because it was
forced to. Russia recognizes Estonia -- well that
doesn't count because Russia doesn't recognize the
borders. When Russia and Estonia do sign a border
agreement (the agreement, we are told by the
Estonians, is ready to go) that won't count
either. We who are in the know perceive (nudge
nudge wink wink) that Russia never means what it

As used, the statement is without meaning. It
rather reminds me (this should get people foaming
at the mouth) of the good old days when Pravda
went on and on about Grenada and Panama, Pershing
missiles and all the rest of it. Selective cases,
taken out of context, without reference to any
other nation's activities covered over with the
conviction that it's all fake and the other guy is
permanently malevolent.

Patrick Armstrong
Dept of National Defence Canada, diplomat in
Russia 1993-6


Date: Sun, 13 Jul 1997 23:32:58 +0200
From: Stanislav Menshikov <>
Subject: re: David Filipov

I am indebted to David Filipov of the Boston Globe (Moscow Bureau)
who was among the few who responded openly to my queries with respect to Mr.
It is, of course, stupid to relate western reporting to performing
paid services for business interests. One of my private respondents claims
though that editorial policy of US papers does reflect the interests of
advertisers and that papers do not want to spoil the image of Russia in the
eyes of 
those pension and investment funds who seek clients among middle-income US
That same anonymous respondent also claims that the US public is
generally not interested in Russia and therefore does not give a damn about
Chubais. That may be so but how does one explain, for instance, big pieces
recently published in the New York Times about government lotteries in 
Russia? Is that because the readers are so ignorant and have no idea that
state lotteries were a favourite with Communist governments, as well?
One anonymous respondent seriously asks me whether I do not believe
that Chubais, Berezovsky and the like are not modern Russian analogues of
Rockefeller and Vanderbildt and that they might be necessary for creating a
prosperous capitalist Russia. Of course, the difference between these two
sets of "robber barons" leaps to the eyes. Vanderbildt, Rockefeller, Morgan,
Ford, Krupp, etc., etc. were creators of Western industry while their modern
Russian prototypes have become rich by taking over for close to nothing
industries created by the Communists. They have yet to invest a single
million dollars into Russian industry, particularly into greenfield
When another anonymous respondent says that the Western bankers he
deals with are of the Chubais type and therefore like him and want to do
business with such a guy, I believe that is probably true. What about
Western politicians? Are they of the same type?
>if we are so
>concerned with nailing a guy who took oodles of US.-taxpayer money and then
>turned out to be far richer than he should be while repeatedly betraying the
>ideals we thought we were entrusting him with, then why, pray tell, don't we
>go after the man who hired all these people? 

Indeed, why?
This is a simple question to answer because it is Yeltsin who has
been hiring "all those people". The Russian press (Communist and nationalist
excluded) is indeed meek in exposing Yeltsin. The reason why obvious: they
elect Yeltsin.
As for the Western media, it was and is so enthusiastically for
Yeltsin, that meekness is not the right word in describing its attitude. The
reason for that enthusiasm is clear: Yeltsin is working in Western interests
better than all previous Russian leaders in this century, including Mr.
Gorbachev. It would be stupid for the West to go after him. Or wouldn't it?
But there is a difference between Yeltsin and Chubais. He is
Russia's Finance minister and should be clean as a tear in terms of his
personal financial dealings. The fact is that he is unfortunately not clean
in that respect and has avoided being indicted only due to the
underdevelopment of relevant Russian legislation. In the US he would have
long ceased to be a 
Secretary of the Treasury on that personal record. 
As deputy premier in charge of the media (among other matters) he
should be the defender of free speech and the freedom of newspapers to print
the truth even if he does not like it and to preserve their right to
criticise him short of slander. When reporters and even chief editors are
fired on his orders it smacks of gross violation of those freedoms. In the
US such an official would be long fired in disgrace.
So I come back to David Filipov's BASIC QUESTION and ask him: what
are the US ideals that you thought you were entrusting Chubais with? I
suspect that it was not financial integrity and freedom of speech that the
US had in mind in this case. Other ideals and values seemed to have been
predominant - being a Communist-hater, a man whose maximum efficiency has
been demonstrated in destroying Russian industry and Russian finances to
boot. It is not oil ompanies, Mr. Filipov, it is the geopolitical interest.
Isn't that why Mr. Clinton called him "very talented" in Denver?
No, I am not a "Chubais hater". In his main profession, teaching
elementary economics in a provincial college, he is probably OK and would
have merrily played with your baby at its birthday party. But he is simply
out of place at the top of the Russian government.
You do not seem to disagree. But that is not going to change matters.


Russia Leaders Watch Local Elections
July 13, 1997
MOSCOW (AP) - Russia's leaders closely watched two provincial
runoff elections on Sunday for clues to the future of economic
reform in the country.
In the Nizhny Novgorod region, a runoff for governor pitted a
communist against a reformer in a close race that many saw as a
referendum on the economic reforms carried out by the previous
governor, Boris Nemtsov.
Nemtsov's success in the region catapulted him into a top
position in President Boris Yeltsin's administration, where he is
one of two deputy prime ministers charged with reforming the
Russian economy.
In Samara, a run-off for mayor pitted two candidates who were
considered democrats, but each with a different vision of reform.
Preliminary results from both races were expected Monday.
The Nizhny Novgorod race, centered in Russia's third-largest
city about 250 miles east of Moscow, drew the most attention. It
offered a dramatic showdown between communists - who still can hold
their own in provincial elections - and the reform movement now
ascendant in the Kremlin.
The bitterly fought contest pitted Mayor Ivan Sklyarov, a
reformer who is Nemtsov's heir apparent, against communist Gennady
The race for mayor of Samara, on the Volga River about 550 miles
southeast of Moscow, also attracted national attention and
high-powered endorsements.
In the first round of voting last month, Vice Mayor Anatoly
Afanasyev, led a field of 12 with 28 percent of the vote, followed
by Georgy Limansky, deputy chairman of the regional parliament,
with 20 percent.


International Herald Tribune
14 July 1997
[for personal use only]
Genuflecting at the Altar of Market Economics
By William Pfaff © Los Angeles Times Syndicate and International Herald 

PARIS - Alan Greenspan, chairman of the Federal Reserve, gave a striking 
talk to a Woodrow Wilson Scholars' Center audience last month, 
describing the cultural factors at work in economic behavior, speaking 
in particular of their influence on the Russian economy since the Soviet 
system collapsed.
What was noteworthy about this speech was that Mr. Greenspan found the 
notion that cultural factors are an important force in the economy a 
novel idea.
Mr. Greenspan is not a foolish man, and if this idea was a new idea to 
him, that surely is evidence of a huge and crucial professional 
deformation among Western economists, too often educated to ignore all 
but a narrow range of materially or mathematically defined factors in an 
economy's functioning.
How many high policymakers in the West, and Western advisers to the 
Russian and other ex-Communist governments following 1989, have been the 
victims of the illusion that dismantling communism would ''automatically 
establish a free-market entrepreneurial system'' - an idea in which Mr. 
Greenspan himself believed?
In contrast, one might ask how many ordinary businessmen who had dealt 
with the Soviet Union, or how many political specialists or journalists 
who actually knew the Soviet Union and how the Communist system had 
functioned there over the previous 40 years, believed such a thing? Not 
many, I should think.
Mr. Greenspan said that after 1989 he - or ''we,'' as he put it - 
discovered that ''much of what we took for granted in our free-market 
system and assumed to be human nature was not nature at all, but 
culture. The dismantling of the central planning function in an economy 
does not, as some had supposed, automatically establish'' market 
It explains a lot about what has happened to the ex-Communist world 
since 1989 that men and women with the influence of Mr. Greenspan, 
occupying posts of great power, should have held so egregiously naive, 
or historically and culturally ''deaf,'' a belief as did Mr. Greenspan.
It also demonstrates the degree to which the conception of market 
economics today has turned into an ideology, which is to say into a 
belief system detached from the empirical or scientific observations 
with which it originated, so as to become - to use the definition of 
ideology put forward by Raymond Aron, Daniel Bell and others in the 
1950s - a ''secular religion.''
It has become a political as well as an economic religion, the dominant 
one today in much of the industrial West. Certainly it is dominant in 
the United States, where both conservative Republicans and Clinton 
liberals avow that markets and democracy are not only indissolubly 
interlinked but a fundamental expression of human nature itself. This 
is, of course, a version of the Liberal Illusion, even though so-called 
conservatives believe it - the illusion of mankind's essential innocence 
and natural virtue.
Surely it should be self-evident that culture has a deep influence on 
economic conduct, both in practical and intellectual ways. If there is 
no established culture of law and obedience to law, system of contracts, 
network of conventional behavior concerning the conduct of business or 
history of sophisticated commerce, there will be no ''automatically 
established free-market entrepreneurial system.''
Poland, Hungary and the Czech Republic have made successful transitions 
from communism because all were relatively sophisticated industrial or 
commercial societies before communism was imposed on them at the end of 
the 1940s. Freed of communism, they knew how to become capitalists 
In Russia, only the beginnings of a modern economy had existed in St. 
Petersburg and Moscow when the Bolshevik revolution took place.
That not only was 80 years ago, but those involved in that economy were 
mostly subsequently murdered.
Russians for decades afterwards were taught that property is theft, 
capitalism is exploitation and individual wealth is not ''earned'' but 
stolen. This has had a lasting influence on how people think today. It 
was natural that Russian capitalism after 1989 evolved toward what its 
new practitioners had been taught to believe it had to become.
Before the Communists took power, much of Eastern Europe's - as well as 
China's - commerce and industry rested on family alliances, patronage, 
government favoritism and clientelism. This was the ''oriental'' 
commercial system of the Ottoman empire, as well as that of much of the 
Far East. That is what it has tended to become again.
All of this will change over time, but not because human nature is 
spontaneously capitalistic (or ''American'' - as Americans have always 
been inclined to assume). It will change because the external system 
with which it is forced to interact will demand change.
Foreign business will demand enforceable contracts and transparent 
financing and will resist doing business with mafia-controlled 
enterprises. Foreign banks and international institutions will not 
finance unverifiable borrowers and will resist handling funds whose 
origins are suspect. An evolutionary change is under way that is also an 
educational experience for the ex-Communist societies.
It is an exercise in pragmatic change. It contrasts, obviously, with the 
Communist world's ideological beliefs of the past, but also with the 
Western inclination today to make market economics a new secular 


The Sunday Times (UK)
13 July 1997
[for personal use only]
Soviet feelgood films knock Hollywood off the screen

THEY FLIRTED with Hollywood blockbusters, Mexican soap operas and Indian 
musicals. But as the euphoria of freedom fades, the Russians want their 
old films back, writes Mark Franchetti in Moscow. 

In a trend unthinkable only two years ago, Russian state and private 
television channels are flooding the airwaves with communist-era films, 
some dating back to the 1920s. The films, shown on prime time 
television, are achieving record ratings. 
"Russians are sick and tired of American blockbusters," said Sergei 
Fiks, who buys foreign films for NTV, Russia's most successful 
commercial channel. "They are fed up with the cheap violence and sex. 
They've seen it a hundred times and the novelty has finally worn off." 
The sudden surge of affection for old films has led to a very 
post-communist commercial battle. The wave of nostalgia has sparked a 
bitter bidding war between networks to buy the rights to more than 1,000 
Soviet films gathering dust in the archives of Mosfilm, Moscow's state 
film studio. 
Once Europe's largest studio, Mosfilm employed 5,000 people in its 
heyday. Now, with its huge state subsidies gone, it is facing 
privatisation and its Soviet film collection is being eyed by 
entrepreneurs as a potential gold mine. The archive ­ which includes 
films commissioned by Lenin and epic dramas such as Sergei Eisenstein's 
Ivan the Terrible and Sergei Bondarchuk's War and Peace ­ will earn 
television stations millions of dollars in advertising revenues. Six 
minutes of prime-time advertising during popular Soviet films can fetch 
up to $180,000 (£112,000). 
The films bring back memories of the days when everyone had a job and 
got paid on time. Not that life under communism was perfect. But in the 
films it usually was. Film directors who failed to depict the communist 
system in a positive light would not get their work past the censors. 
The old films evoke a gallantry and nobility of spirit lacking in 
today's cut-throat world of consumerism. The task of directors was to 
inspire greater progress on the path to socialism. White Sun of the 
Desert, a 1969 heroic epic, so pleased the politburo that it became 
compulsory viewing for cosmonauts. The story of a brave communist who 
kills a ruthless aristocrat and frees his seven wives from a life of 
slavery, the film by Vladimir Motyl was seen as a fine example of Soviet 
virtue and a film to inspire good communists. A last-minute private 
viewing was thought to guarantee success for all Soviet space missions. 
"Today Russians have learnt to love the film's message," said Fiks. "It 
reminds them of the good old days when the Soviet Union was a world 
power, feared by the rest of the world. When good always won over evil. 
In today's chaos, where people go unpaid for months, the film is pure 
magic. It tells them that everything will turn out fine, just as it did 
then with our cosmonauts." 
Not all the old films were entirely reverent about the system. Films 
such as Irony of Fate, a bittersweet 1970s romantic comedy, poked gentle 
fun at drunken sessions in the sauna and the uniformity of Soviet 
apartment blocks. 
"People now want something they can relate to, and that is Russian 
culture," said Danil Dondurei, a leading Russian film critic. "More and 
more, Russians are living in the past. The present is too bleak and they 
have lost all sense of the future. They long for the positive hero of 
Soviet films." 
One such classic figure is Katya, the main protagonist of Moscow Doesn't 
Believe in Tears, a 1979 cult film directed by Vladimir Menshov. A young 
student from the provinces who moves to the capital in search of a 
better life, Katya is the image of Russian resilience. She brings up a 
child on her own, is promoted to the top of a Moscow factory and marries 
the man of her dreams against all odds. "She is hope. And that's what 
Russians long for above all else in today's uncertainty and misery," 
said Dondurei. 


The Economist 
July 12th - 18th, 1997

A survey of RUSSIA: In search of spring
3/8 Quiet flows the Don-and almost all else

A sign of despair, not contentment

If it is possible for a country to succumb to a disease, then Russia is in
the grip of chronic-fatigue syndrome. Though doctors may say no such
affliction exist, the description seems both fit the symptoms and to
explain why the people are so apathetic. Emerging from 74 grim years of
communism, they have in short order lived through the disintegration of the
Soviet Union, an attempted coup in 1991, the storming of parliament in
1993, a series of lurches from central planning towards a market economy
via privatisation, depression and hyperinflation, plus a war in Chechnya
that may have claimed as many as 100,000 lives. After all that, they have
little appetite for futhter upheavals.

Besides, for most Russians, staying alive is fulltime occupation: they have
no time for planning revolts. Great demonstrations have been promised: on
May Day , over 1.5m Communists and trade unionists in 900 towns took to the
streets ot vent their anger. But it was as much as matter of discharging
frustration as challenging authority. A few weeks earlier, on March 27th,
the organisers of a national day of protest forecast a turnout of 20m
people. The total, in the event, was under 2m.

Sporadic strikes and protests happen almost all the time-500 workers
rejecting food at a power plant in Primorsky Krai in the Far East, 300
tunnellers refusing to leave the Yekaterinburg metro - but, like the
strikers in Vorkuta, the protesters usually drift back after a while. The
Communists' leader, Gennady Zyuganov, wants a petition to recall President
Yeltsin from office. Communists in St Petersburg have gathered signatures
to unseat the local governor. But these protests look more like the stuff
of democracy than the makings of a revolution.

A good old-fashioned coup d'état might seem more likely. The army, after
all, has plenty to grumble about: unpaid wages, dilapidated equipment, a
lost empire and a lost war. Russia's soldiers, however, are not inclined
to meddle in politics. Ever since Stalin exterminated about 90% of his
senior generals in 1937, the armed forces have preferred to stick to their
own business. So far from supporting the coup in 1991, they actually
ensured its failure. There is no evidence that they are plotting now.

On the contrary, they have been remarkably restrained. Wretched they may
be: Igor Rodionov, the defence minister until he was sacked in May,
described them as "a disintegrating army and a dying navy" ' But they are
loyal and, perhaps as important, divided: Russia has not just one armed
force but 17, including the interior Ministry's 230,000 troops and the
border forces' 100,000, as well as the army's 460,000 or so (the numbers
are uncertain). The interior Ministry's troops have mostly been getting
their pay on time. So have some elite troops such as the strategic rocket
force (whose boss, Igor Sergeyev, has taken over as defence minister), the
paratroops in Tula and a division south-west of Moscow which acts as a sort
of imperial guard for the Kremlin. But many others have not. There is
therefore no unanimity of gruntlement or disgruntlement.

Even within a single division or brigade, there are differences of
disaffection. most senior officers are temperamentally reluctant to revolt.
Anyone for whom retirement is in sight probably would not want to risk his
pension. Perhaps the group most likely to mutiny are some
lieutenant-colonels, majors and maybe captains who have invested ten years
of their life in the army but have little love for their superiors and have
not seen a pay packet for months. Yet their response, believes Dmitry
Trenin, of the Carnegie Endowment in Moscow, is more likely to be a
democratic one than an attempt to seize power or support a coup. He thinks
that such malcontents might try to resuscitate the officers' assemblies
that were formed in the late 1980s and early 1990s, before being abolished
in 1992.

If formed again, they could be potent rallying points for discontented
officers shocked by the impoverishment of the army, the corruption of some
of their superiors and the state of the country as a whole. They would be
especially effective if they formed links with civilian strikers: the army
is perhaps the only country-wide institution that could be used to
co-ordinate protest. Even if no such links were formed, the chain of
command might disintegrate, obliging military commanders to decide with
whom they should throw in their lot. The chances are that, in that event,
General Lebed, though far from universally popular at the top of the armed
forces, would be making a bid for their support.

It is more probable, though, that Russia's soldiers will remain disciplined
and loyal. They, too, like the civilian population, have had their fill of
commotion for the moment. They hope soon to receive at least some of their
unpaid wages: MrYeltsin says all debts to the army will be settled by the
end of August. And they know that, even if they were to seize power, they
would find it hard to hang on to it. Russia may not be a democracy, but it
has acquired the voting habit and will not lightly give it up.


4/8. Some do eat cake
Quite a lot, even

THE case for optimism does not rest only on the demoralised and exhausted
state of the nation. It also rests upon the fact that some aspects of
Russian life have grown not worse but better. Amid the general ghastliness,
it is a fact often overlooked.

Calvin Klein underpants may not exactly represent the acme of spiritual,
political or even material freedom, yet the picture of the slouching hunk,
naked but for the said underpants, which adomed almost every lamp-post on
the road from Sheremetyevo airport to central Moscow this spring was a
strangely cheery sight. For Muscovite men, the Wonderbra girl who had been
there a month earlier was even more uplifting. Only a few years earlier,
visitors had been greeted by giant hammers and sickles and the tired old
slogans of communism. Today the exhortations are at least to secure
something, however banal, that somebody might actually want.

Even if designer underwear is out of most Russians' reach, the
advertisements are reminders that theirs is now a market economy, whatever
its imperfections. Moreover, much of the pain necessary to achieve such an
economy may at last be over. In particular, inflation - enemy of the poor
and destroyer of social stability - has dropped from 2,505% in 1992 to an
annual rate of 15% in April this year.

Even more notable is the transfer of property into private hands - the
biggest in history. In just three years after 1991, 120,000 enterprises
changed from state to private ownership. Although many of the 40m Russians
who acquired shares have since sold them or seen their value dwindle to
nothing, many more have become property-owners for the first time in their
lives. One family in two now owns its own home, acquired usually for a
nominal sum; 36% own a dacha and 9% a second or third apartment; 62% own
land. In a country where property was for so long officially considered
theft, this is a change few Russians seem to regret.

Nor do they regret the institution of genuine elections, however cynical
they may be about their politicians. And after last year's presidential
poll, which was held on time (many prophesied Mr Yeltsin would cancel or
postpone it) and relatively fairly (many said it would be rigged), a
precedent has been established that will be difficult to abandon. It has
already been followed by elections in all but one of the federation's 89
regions. These have shown, first, that the voters enjoy the right to pick
and choose and, second, that Russia has become much more decentralised than
it ever was before.

Not that Russians are ecstatic about their new system. In April, according
to one polling organisation, only 6% said they were content, and 62% said
they expected nothing to get better. But that does not mean anyone wanted
to go back to the past. Some in fact have much to look forward to.

Prizes, but not for everyone

Indeed, it is plain that the five years of reform have produced many more
winners than the rich oligarchs and the criminals often presented as the
main beneficiaries. Most healthy adults under 35 are winners. Older
people, meaning anyone over 6o, perhaps most over 50, find it more
difficult to adapt to the strange new world of freedom and the market.
Under communism, they learnt the hard way that enterprise and initiative
would bring retribution, not reward. They are mostly ignorant of the
world outside Russia, and ill-equipped to come to grips with change.

The intelligentsia, too, many of whom had led a privileged life under
communism, are likely to be losers. Members of the Soviet Union's many
institutes of this and that, for instance, held positions of considerable
prestige without doing anything very useful; they now find it hard to get
jobs. Writers, too, used to be treated with undue respect, given a dacha
in Peredelkino outside Moscow and expected to produce a dull volume only
after years of indolent creation. Today the populace prefers works of
escapism to Russia's modern masters.

The young are the biggest group of winners. The Russian Market Research
Company finds that 73% of those aged 16-24 and 60% of those aged 25-34
think life got better last year, whereas 67% of the over-65s reckon it got
worse, much worse or unbearable. Moreover, the young expect things to
improve further this year. It is no surprise, therefore, to find that so
many of Russia's successful entrepreneurs and so many of its reformist
politicians - are young.

But there are other winners too. They include people in industries such as
oil and gas, which can sell their products to the highest bidders on the
world market; and in regions with natural resources which now have the
money to exploit, or at least secure, their autonomy. Those with nothing
to dig out of the ground, or those in declining industries, tend to be
losers. Russia has 70 towns of over 50,000 people dependent on only one
industry, an industry often heading for the junk heap.

If reform is to succeed, the number of winners must exceed the number of
losers, and there are some signs that the apparently remorseless decline of
the past five years may be at an end. Little things are getting better.
For example, some tenants are now signing leases without a clause
stipulating arbitration in Stockholm in the event of a dispute unthinkable
a few years ago, and indicating some faith in the legal system. Kryshas
are beginning to ring up judges or bureaucrats in order to get official
rulings rather than by issuing menaces and breaking kneecaps. The
statistics may be bottoming out, too. The proportion of Russians below the
poverty line dropped to 22% in 1996, from 26% the year before. The figures
for child malnutrition are improving. The stock market is booming. Maybe,
just maybe, the economy will start to grow this year.


Los Angeles Times
13 July 1997
[for personal use only]
Deputy Premier Is Blazing a Trail of Hope in Russia 
Politics: Boris Nemtsov's feel-good message fueled his meteoric rise. 
Cynics say his populist crusade can't last. 
By CAROL J. WILLIAMS, Times Staff Writer
NIZHNY NOVGOROD, Russia--He calls himself a kamikaze, and, indeed, many 
expect the brash Boris Yefimovich Nemtsov to quickly crash and burn. 
     In the four months since he left the helm of the government of this 
prosperous Volga River reform showcase to become a first deputy prime 
minister in Moscow, the charismatic crusader has taken aim at the 
corrupt and the greedy who have made post-Soviet Russia a vast and 
terrifying gangland. 
     The 37-year-old former physicist has presided over the first 
promising signs of economic recovery since Russia jettisoned communism, 
and, to the cheers of the struggling masses, has waged war against 
government fat cats junketing in imported luxury cars and chartered 
     Because such populist grandstanding could threaten bribe-taking 
bureaucrats' personal welfare, a consensus has formed in this nation of 
cynics that such a squeaky-clean figure will soon be compromised or 
     But the virus of gloom that infects most Russians has failed to 
penetrate Nemtsov or cramp the boyish optimism that sets him apart from 
the dour ranks of Russian leaders. Despite his grudging acceptance of 
what he considers a suicide mission, the latest politician now pegged as 
a possible successor to Russian President Boris N. Yeltsin is 
irrepressibly and calculatingly cheerful. 
     "First of all, kamikazes don't always end up dead," Nemtsov said, 
fixing his interlocutor with the wide-eyed ebony gaze that has made him 
the darling of Russian politics, at least among the country's women. 
"And secondly, the prospects are not hopeless." 
* * *
     In interviews, speeches and heavily publicized travels, Nemtsov has 
been spreading his feel-good message about Russia's future, promising to 
root out crooked officials, to cut energy and transport costs and to 
make the benefits of democracy and a market economy tangible for all 
     He has added a splash of youthful exuberance with his habit of 
bounding from planes, trains and automobiles, all of Russian make and 
modest proportions, even as he has expanded the entourage of aides and 
sycophants surrounding every Russian power-seeker since Peter the Great. 
On a trip to Japan, he was accompanied by 80 advisors, and his recent 
visit here paralyzed traffic for miles whenever his 10-vehicle motorcade 
speeded through. 
     His meteoric rise over other would-be successors to Yeltsin has 
serendipitously coincided with the first tiny increase in industrial 
production--a trend that Nemtsov insists will continue, allowing idle 
Russians to find jobs, earn dignified wages, pay taxes and support a 
social safety net for the poor. 
     "Trust in the government cannot be restored by proclamations," 
Nemtsov said in an interview, earnestly explaining how he intends to 
convince wary Russians that their leadership is not a plaything of 
organized crime. "This can only be achieved by concrete actions, 
openness, accessibility and good judgment." 
     He ticked off advances in paying overdue pensions, lowering 
interest rates and railroad tariffs and boosting public revenues from 
some of the country's wealthiest tax deadbeats. 
     That performance is far from a personal achievement, however; 
fellow First Deputy Prime Minister Anatoly B. Chubais has foremost 
responsibility for economic matters. But as the considerably more 
popular half of the leadership's new dynamic duo, the ever-smiling 
Nemtsov has been positioned to take the bows. 
     Critics and fans alike say Nemtsov is guided by a keen sense of 
what will play with the people, especially fellow "provincials," the 
usually derogatory label applied by Muscovites to those from the 
far-flung regions. 
     "The Provincial" is the title of Nemtsov's recently released 
autobiography, an immodest account of his every triumph and quaintly 
humanizing tribulation. 
     Until Nemtsov was lured into the federal leadership from his 
illustrious tenure as governor of Nizhny Novgorod, there was not a 
single figure in the Kremlin hierarchy with a hope of winning a fair 
presidential election. Grooming a successor has become less pressing 
since Yeltsin has recovered from quintuple bypass surgery, but Nemtsov's 
one-man charm offensive has wiped some of the grime from the 
government's image. 
    It took him only three weeks to reach the top of popularity 
polls--a statistical feat that would mean little in a society steeped in 
apathy if his name and crowd-pleasing gestures weren't a constant topic 
at bus stops, in elevators and around the kitchen table. 
     "He's the only hope for this country," said Eduard Kruglyakov, a 
fellow physicist in Novosibirsk. "The academic world is the last refuge 
of honest men, and it is no coincidence that this is where he comes 
     Among his more popular campaigns have been a call to auction off 
Western luxury cars bought for the government with public money and for 
full financial disclosure by elected officials. 
* * *
     Nemtsov was among the first to bare his personal finances, 
disclosing ownership of a two-room apartment here, a 5-year-old 
Russian-made Zhiguli compact, savings of $1,300 and 1996 income of less 
than $16,000. 
     Modest living has played a large part in endearing the tall, 
clean-cut scientist to average Russians, as have his vows never to 
accept a bribe, defect, resort to brutality or collaborate with 
Communists, fascists or nationalist hothead Vladimir V. Zhirinovsky. 
     The indulged only child of a Communist Party functionary and a 
doctor, Nemtsov spent his early years in the Black Sea resort of Sochi 
before moving to this military-industrial city, known in the Soviet era 
as Gorky. He earned a graduate degree in theoretical physics from Gorky 
State University but turned to politics in the late 1980s to campaign 
against construction of a nuclear plant here after the devastating 1986 
accident at the Chernobyl plant in Ukraine. 
     Nemtsov rose to regional fame in defeating the project, propelling 
him into the Russian parliament in 1990 and a year later into the post 
of Nizhny Novgorod governor at age 31. 
     Always one for the dramatic gesture, he personally presided over 
the televised auction of the first privatized businesses in this city 
and transformed Nizhny Novgorod into the regional poster child for 
     At least two previous approaches by Yeltsin to draw Nemtsov into 
the Kremlin were rebuffed. But earlier this year, Yeltsin sent his 
37-year-old daughter and political confidant, Tatyana Dyachenko, to 
appeal to Nemtsov's senses of patriotism and ambition. 
     On his first day on the job, Nemtsov declared that he would 
resurrect industrial production and would start with an edict that the 
government always "buy Russian." Hitting out at the fleet of lavish 
Mercedes-Benzes, BMWs and Saabs shuttling government ministers around 
the capital, Nemtsov called for auctions to begin within a month. Few 
critics failed to overlook the pork-barrel prospects for Nizhny 
Novgorod, home of the auto works producing Volga sedans. 
     Resistance was clear from the inauspicious results of the first 
auction: Government garages only offered seven cars, and three of those 
weren't sold for failure to elicit minimum bids. 
     "It was pure populism. But when you have government officials 
flying around in expensive foreign cars, this is offensive to people 
struggling to put food on the table," said Sergei Yefimenkov, whose 
Avtogarant firm is directing the sell-off. "From the moral point of 
view, it was successful. Economically, it's another story." 
     Nemtsov has also hinted that he might push for tighter restrictions 
on "special flights" for officials on the grounds that if regularly 
scheduled air transport is good enough for the people, it should be good 
enough for public servants. 
     Another early strike at institutions of privilege was his 
insistence that the monolithic Gazprom natural gas entity pay up its 
staggering tax arrears and manage government shares more profitably. 
Russian state coffers have received only $3.5 million over the past five 
years from a 40% stake in Gazprom, one of the world's richest companies, 
valued in at least double-digit billions. 
* * *
     Because the natural resource industries are among the most 
mob-infiltrated, Nemtsov's challenge to Gazprom prompted predictions 
that he was not long for this world. 
     A deal cut with Gazprom soon after raked in $1 billion in back 
taxes--almost half of what was owed--in exchange for dropping insistence 
that the management hand over control of the government portfolio. Some 
saw that as evidence that the Kremlin's new golden boy could pull 
himself out of the fire. Others contend that he has already embarked on 
the slippery slope of moral compromise. 
     "I am absolutely certain Nemtsov will not be able to make any 
significant change in this government," insisted Lev A. Ponomarev, a 
prominent human rights champion and leader of the Democratic Russia 
political movement. "All he has done so far is engage in populism with 
the finest of Soviet methods. This is a young man who has studied the 
old textbooks." 
     Aside from the splashy moves to make the government appear in tune 
with the people, Nemtsov and a pair of allies have reaped credit for 
some improvements of the economic landscape as well as a discernible 
social mood swing. 
     Teamed with Chubais, 42, and another vice premier from the 
provinces, Oleg Sysuyev, 44, Nemtsov has infused the flagging transition 
with new energy and direction. 
     "It was difficult for him, as it was for me, to leave Nizhny and 
move to Moscow," said Boris Brevnov, who heads the powerful Unified 
Energy Systems. "But it was absolutely the right decision. He is 
creating an atmosphere of trust in the government, which is necessary to 
succeed with the reforms." 
     While Nemtsov is clearly being groomed for the 2000 election, three 
years is an eternity in Russian politics. And the Kremlin wunderkind, 
who is married and has a 14-year-old daughter, has already incurred a 
few black marks on his record--he had his fingers burned by involvement 
in regional power struggles. 
     Still, he has soared higher and faster than any political shooting 
star since Alexander I. Lebed, the Security Council chief fired by 
Yeltsin a year ago for an offensive excess of ambition. 
Search the archives of the Los Angeles Times for similar stories. You 
will not be charged to look for stories, only to retrieve one. 


Financial Times (UK)
14 July 1997
[for personal use only]
Oil: Caspian share sought by Russians
By Charles Clover and Robert Corzine in Almaty

Talks aimed at breaking a deadlock in the negotiations to launch one of 
the biggest international oil projects conceived for the Caspian Sea 
region will open in New York today. The move comes amid apparent 
wrangling by Russian companies to secure a position in the project.
Representatives of the Kazakh government will meet their counterparts 
from a consortium of seven western oil companies trying to sign a 
production-sharing agreement with the aim of drilling their first 
exploratory well off Kazakhstan in 1998.
The western companies claim there is still a high degree of risk as to 
whether any oil will be found in the area but admit that the geology is 
almost perfect for world-class reservoirs. Some experts claim the north 
Caspian could be another Kuwait.
The negotiators are under pressure from Kazakh President Nursultan 
Nazarbayev to agree on a deal within the next two months, but positions 
have hardened on both sides. Failure to agree in the next two months 
could push the project back a full year because of the limited drilling 
season in the very shallow water 100km off the northern Caspian Sea.
According to those familiar with the negotiations, the two sides 
disagree on fundamental issues such as oil prices and reserve estimates, 
which will affect the consortium's ability to reach the 20 per cent rate 
of return target being offered by the Kazakhs. Another big issue is the 
pace of the proposed drilling programme.
But many observers see the consortium structure itself as a leading 
difficulty. "The biggest problem is the process. The consortium can't 
arrive at a common position," said a western businessman familiar with 
the negotiations.
The list of the consortium members reads like a Who's Who of the 
international oil business: Agip, a British Petroleum/Statoil 
partnership, British Gas, Mobil, Shell, and Total. The difficulty in 
co-ordination among the seven arises from the fact that the companies 
have different priorities in Kazakhstan.
Some consortium members would like to bypass the Kazakh negotiating team 
and appeal directly to President Nazarbayev to break the logjam, but at 
least one - thought to be Mobil, which has extensive interests in 
Kazakhstan - is said to be against this tactic, which may undermine its 
position in the country.
Meanwhile, two of Russia's biggest oil companies are said to be 
manoeuvring for a stake in the offshore exploration effort. Lukoil and 
Rosneft have been competing for the a position in the offshore area.
Western oil executives say they would welcome Russian participation in 
Kazakhstan's offshore, a sentiment thought to be shared by the Kazakh 
government in the hope that such involvement would deter the Kremlin 
from challenging the legal status of oil developments in the Caspian.


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