July 14, 1997   

This Date's Issues:   1043 •1044  1045 1046

Johnson's Russia List
#1045 
14 July 1997
djohnson@cdi.org

[Note from David Johnson:
Can you really have too much of a good thing? Some recipients of 
JRL may think so. To them I apologize for the multiple daily
messages. There is simply too much interesting material to
pass on. I do not have the self-discipline to resist. Actually,
it might be interesting to hear how some readers utilize/cope
with this material.
1. Tomas Valasek (CDI): NATO chat.
2. Steve Blank: Armstrong.
3. Wendell Solomons: Great Wall of Russia.
4. Novoye vremya: Jokes of a Master. Luzhkov - Nazdratenko - 
Rossel: Party of New Masters.
5. Novoye Vremya: Erik Gofman, "Soviet Science is Dying, Long 
Live Science! Science is Facing up to Production as it Casts Off
Deadwood."
6. New York Times: Michael Specter, To Yeltsin, Vacation Sport 
Is Like Shooting Fish in a Barrel.
7. RIA Novosti: YELTSIN STARTS TENNIS TRAINING.
8. From Russia Today: Satire by Mary Campbell, Fashion Victim.
(Yeltsin fishing). 
9. The Economist: A survey of RUSSIA: In search of spring. Part 6:
The men for the job. And an opportunity to be seized. Lebed rumbles...
as Chubais reforms...and Berezovsky prospers.
10. Floriana Fossato (RFE.RL): Kremlin Wins Key Gubernatorial Election, 
Loses Mayoral Vote.
11. RIA Novosti: NEW GOVERNOR OF NIZHNY NOVGOROD REGION OUT 
URGENTLY TO RESOLVE THE QUESTION OF REDUCING FUEL AND ELECTRICITY 
PRICES.
12. RIA Novosti: STAROVOITOVA: FORMATION OF PRESIDENTIAL TEAM 
IS MAJOR RESULT OF YELTSIN`S PRESIDENTSHIP OVER THIS YEAR.
13. RIA Novosti: RUSSIA DOES NOT ONLY ATTRACT OVERSEAS INVESTMENTS, 
BUT MAKES INVESTMENTS IN FOREIGN COUNTRIES AS WELL.] 

********

#1
Date: Mon, 14 Jul 1997 10:39:24 -0500
From: Tomas Valasek <tvalasek@mail.cdi.org>
Subject: NATO chat

At 2:00 PM EST on Wednesday, July 16, 1997, the Center for Defense
Information will host an on-line chat discussing the implications of NATO
summit in Madrid. 
Chats are biweekly on-line discussions on military and security issues.
Our past participants have included members of think tanks and the
diplomatic communities, as well as the armed services, academia and people
with a general interest in the issues discussed. The discussions are
intended to allow participants to trade ideas and learn about different
points of view. In order to encourage free expression the chats are not
for attribution, and its participants remain anonymous, unless they choose
otherwise. 
You can join the chat by logging on to CDI's homepage at www.cdi.org and
then selecting CDI Chat from the side menu. The program requires a
Java-capable browser (Netscape 3.0 or higher). 
We only have one hour for discussion but we will try to work in the
following topics pertaining to NATO summit in Madrid: 
1) NATO's commitment to further rounds of expansion: will they take place? 
2) Burden-sharing problems and their potential impact on NATO expansion
3) Former Soviet republics and their potential membership in NATO
4) The U.S. - European split in Madrid over expansion costs, NATO command
structure
5) The role of NATO's new agreements and structures: NATO-Ukraine
agreement, the EAPC 
When you enter CDI's Chat area you can select "background briefing" for
more information concerning the above mentioned topics. 
Looking forward to seeing you on CDI's Chat site. 
Sincerely, 
Tomas Valasek
Research Analyst
Center for Defense Information

***********

#2
Date: Mon, 14 Jul 1997 10:58:41 -0400
From: blanks@carlisle-emh2.army.mil (Steve Blank)
Subject: Armstrong

As Patrick Armstrong knows, I stated my reservations over some of 
Pipes' conclusions recently. However, I must object to this attempt 
to state that those of us who believe that the Russian government 
still finds it difficult to accept the status quo are nothing more 
than unreconstructyed cold war warriors or conspiratorial types who 
believe in the incorrigibility of the Russian elite. Let me assure 
you, and Armstrong certainly has access to the same stuff I read, that 
I have made this statement in JRL and in my writings and public 
lectures or presentations based on close reaidng of Russian sources 
and discussions with many scholars and "Praktiki" including Russians. 
I have no problem with people who disagree and wish to debate the 
evidence, but this kind of argumentation is unbecoming to serious 
people (notice I didn't say scholars) who wish to discuss the issues 
with the seriousness they deserve. As for the Ukraine, it is pretty 
evident that if it had not been for NATO's interest in Ukraine, 
Yeltsin would not have signed the treaty, and it is still the case 
that Russia treats the Baltic, Central Asia, and Caucasus as an 
imperial hegemon would do. Worse yet, it has not yet seen fit to 
enter into a serious dialogue with Poland, for example on European 
security and is already using its positon in the forthocming 
NATO-Russian Council to abort or delay Warsaw's entry into NATO. 
Moreover, I've not seen anyone in government denounce Primakov's Set. 
1996 call for revision of th borders in Central and Eastern Europe.

So let's talk evidence, not invective.

*********

#3
Date: Mon, 14 Jul 1997 20:53:42 +0600 (GMT+0600)
From: "Wendell W. Solomons" <solomons@slt.lk>
Subject: Great Wall of Russia

The John Danzer, Stephen Shenfield and Richard Pipes model
seems to bring out a projection. The Empire story creates
a body rather similar to the "Evil Empire" which came off
the bat of President Ronald Reagan which demonizing the
President was forced to withdraw.

The NATO experiment can be in part be explained as an old-
fashioned fencing out move. It is too expensive for European
and American taxpayers. There was a different time and place
for it. Cowboy stories remind us of the reservations created
for Red Indians. A similar method was used for the aborigines
of Australia.

We are dealing today with the aftermath of the privatization model
which penetrated borders a long time ago. This is the 20th Century
and such borders have become rather hypothetical if we take shared
environmental and health-care (e.g. drugs traffic, AIDS) concerns
alone.

Is this the latest gimmick being marketed by black sheep among
academe for consumers?

Best,
--Wendell

Danzer quotes from
JRL, No.1040, 13.07.97

From: Telos4@aol.com (John Danzer)
Date: Sat, 12 Jul 1997 22:06:37 -0400 (EDT)
Subject: Russian Empire Policy

>I have been reading JRL since it began. My opinion, though non-
>professional, has been informed by the thousands of pages that have
>scrolled on my monitor. Quite a few have actually entered my brain.
<snip>
>I am pleased to see Richard Pipes expressing a healthy pessimism
>concerning the FSU.
<snip>

Why pessimism now from the longterm Russia expert and not when the
ill-planned reforms were being foisted on Russia?

Both statements represent an attempt to speak from a position of
objectivity. One wants to ask why this person has invested time in
reading thousands of pages yet cannot speak straight off for himself.

>Statistics vary about how Russians really feel about the loss of
>their world status as a great and powerful nation. But common sense
>tells you that most Russians look with fondness to the time when
>they had some social security and got paid on time. 
<snip>

So the author has been going into statistics. "Humanitarian" attempt
to "empathise" with victims soon twisted into resurrection of the old
Russian bogeyman for an audience in the USA where much money was
invested during the Cold War to create the former image.

>China's economic model was well established by the time the Soviet
>Union was dissolved by Yeltsin's signature. Yeltsin knew that to
>carry out his revenge on Gorbachev he had to act quickly. By
>destroying the Soviet Union Yeltsin gave up the possibility of a
>rational and gradual transition to free-markets. By alienating and
>banning the Communist party Yeltsin lost a valuable tool that would
>enable society to hold together through the period of transition. 
<snip>

This is an attempt to blame Yeltsin for not looking at what was
happening in China. The role of public relations firm Buston-Marstellar
is hidden by this statement and so is the role of the policy foisted
on Russia by consultants of the Friedmanist school. 

>Since the Soviet Union's undoing was primarily the act of this one
>power hungry man it is easy to see that it would simply require one
>power-hungry Hitler type who can speak to the heart of the Russian
>people to reestablish what was lost and even add to its territory.
>That is the most important idea that I got from Pipes article. 
>There IS a strong German parallel that doesn't need any great
>insight to discern. The question is what sort of dictator is
>finally going to restore the empire?

After Yeltsin is made the scapegoat the author goes on to the
diversion.

The ongoing civic dissolution isn't the work of one man. Russia has
become the cross which Europe will have to bear, a larger one than
Albania and Yugoslavia. Besides the dictatorship which the author
is trying to flesh out here, there are other democratic alternatives
which Europe need not be distracted from.

*********

#4
Novoye vremya in Russian No. 27, 13 Jul 97 p 4
[Report by: unattributed comment "Jokes of a Master"]

Luzhkov - Nazdratenko - Rossel: Party of New Masters

Finally everything has been settled. Luzhkov is not going to let
Nemtsov privatize his official flat. The Moscow mayor's position is
clear and legally correct: official flats should remain official. 
The funny thing is the Nemtsov never tried to privatize it. What
caused this remark which is not a refusal but a form of punishment? 
Luzhkov is offended. What offended him is not important; it is not
equally important whether Nemtsov was right when he insisted that the
Moscow mayor had been, let us say, overzealous when distributing
contracts for the famous repair of the Moscow Ring Road. This is for
experts to decide. What is important is Luzhkov's slip of the tongue.
Even if his comment on the flat was nothing more than a joke, this
was a joke of a master. The lord. All the nomenklatura traditions
have survived. Everybody should know that he sets the rules of the
game in Moscow. So far in Moscow. No, not only in Moscow. He is
prepared to defend the Masters all over the country. Who was
prepared to interfere with Evgeniy Nazdratenko who was living by his
own rules? Were they Chubays and Nemtsov? Hands off Nazdratenko!
Luzhkov has created a sort of a party - a Party of Masters. But no
in the European sense of the word. Masters in the Russian tradition.
This is a new nomenklatura interpretation. This is the party of
masters of cities and krays who are going to pursue privatization,
spend budget money, distribute flats and clamp cars as they see it
fit in honor of their bureaucrats and to consolidate their power. 
Luzhkov defended Nazdratenko not as a colleague but as a
comrade-in-arms who, due to circumstances, was the first to join
power struggle and gained more experience than others. Luzhkov has
assessed the situation correctly: the attack against Nazdratenko is
an attack against his "party". It is for the first time that such
attack has been coordinated and meaningful. It is not the regions
that are opposing the executive power: these are the New Masters
opposing reforms. In his position Nazdratenko did the only correct
move: he went to the Senate to seek support and protection. As
individuals, Luzhkov, Nazdratenko and Rossel carefully emphasize
their loyalty. As part of the united Senate front they are dissolved
in the opposition - much more principled than the communists.
Regrouping has nearly come to an end. Everything is falling into
place.

*********

#5
Novoye Vremya in Russian No. 27, 13 Jul (Signed to press 8
Jul 97) p 21
[Analysis by Erik Gofman: "Soviet Science is Dying, Long Live
Science! Science is Facing up to Production as it Casts Off
Deadwood"]

If the climate of research has vanished from Russia, whence have
then come from the carbon laser, the other medical discoveries, the
procedure speeding up the process of alloying at the West Siberian
Metallurgical Combine?
Before us are two different stances: one consists in that the glass
of Russian science is half empty, and the other consists in that it
is half filled. The difference between these two stances consists in
the assessment of the dynamics of change. The second stance seems to
be more near the truth. The there is a "brain drain" is general
knowledge. How do the brains live there in the United States and
Germany, and what they do? A proportion of them have everything
going their way -- they work on a permanent basis or on contract. 
The other, greater, part could not find jobs, and they work as cab
drivers, deliver air tickets. This signifies that many of our
doctors and candidates of sciences fail to make the grade and foreign
science has cast them off as deadwood. Does this mean that Russian
science, too, has gotten rid of its deadwood? An assumption painful
for many. What is Russian car manufacturing industry, for example? 
Our Zhiguli car is a FIAT of a forty-year vintage. The AZLK has
taken its own road, and Moskvich cars have proved absolutely
uncompetitive. What did Russian car science do for years and
decades, where are the results of the numerous and overstaffed
scientific research institutes and design bureaus? The leviathan
Institute of High Temperatures (IVTAN) has for decades been
developing the idea of magnethydrodynamic [MGD] generators. The
institute is "down" at the moment, but where are MGD generators? The
achievements described in Izvestiya -- drugs created "in test tubes"
have been at best produced in institute laboratories and small
experimental research institute facilities. There is no money to
launch industrial production of the drugs. But if you think of it,
this has always been the case. The so-called "introduction of
scientific achievements" is a structure invented by Soviet reality. 
Production rejected all innovations because they only meant
additional headache whereas plan was completed very well without
them. That left Soviet science without the most important condition
of progress -- testing in practice. There was instead a growth in
the number of candidates and doctors of science, and we were "ahead
of the whole planet [a line from a song mocking Soviet achievements]"
in this department. This "practice a la Soviet" is with us till this
day, and attesting to its tenacious nature is a news report that the
Academy of Science has added 250 new full members and corresponding
members to its rostrum. A fine indicator in the case of a dying
science! Among the new members of the Academy is the Atomic Energy
minister, and the head of a department of science and education of
the Russian Federation government staff. Can a senior official be an
outstanding scientist as well? Market is essential for science even
if it is a bitter test. Igor Ashmarin, member of the Russian Academy
of Medical Sciences and head of the Biology Department of Moscow
State University, points out: "We do not have enough of good
equipment, reactors, experimental animals. But the scientist under
such circumstances comes to sharpen his mind, find new ways, offbeat
solutions. This mobilizes you in a sense." Market also mobilizes
production making it take a fresh look at science. The West Siberian
Metallurgical Combine has launched a line to produce a powder wire --
a novelty in world metallurgy. The Russian scientists did not have
to "introduce" their achievement because it proved essential for the
combine in solving its financial woes. Russian science is alive. 
Casting off its driftwood in pain, it is facing up to production
while the latter is facing up to science. The glass of Russian
science is becoming filled with useful contents.

*********

#6
New York Times
14 July 1997
[for personal use only]
To Yeltsin, Vacation Sport Is Like Shooting Fish in a Barrel nyt
By MICHAEL SPECTER

MOSCOW -- Vacation season has descended on Russia, and like millions of
other people, Boris Yeltsin lit out for the territory last week. A
fisherman of great eagerness, if modest talent, the Russian president
decided to head straight to the northern lakes of the Karelia region and
try his luck with rod and reel. 
Luck was not necessary, though. By the time he arrived in the resort
town of Shuya on Lake Ukshe, the forces of nature, which can sometimes
interfere maddeningly with fishing, had been brought to heel. 
A lake that was already a prime Russian fishing stop was stocked with
10,000 perch and trout, and navy frogmen scoped out the scene beneath the
water to make sure that nothing could frighten Yeltsin's imported catch away. 
Just for good measure, Kremlin officials said, Yeltsin's bodyguards have
been starting every day with a new assignment: digging for worms. 
"We were told by the city administration to make sure President Yeltsin
had a good time," a member of the Karelian Fisheries Commission told a
reporter for a Russian daily newspaper, The St. Petersburg Times, on Friday
and said again Sunday in a telephone interview. "That is exactly what we
are doing. I would say there are more than 10,000 fish that were specially
stocked for the president. He won't be able to miss." 
He also won't have any competition, said Anatoly Tsigankov, the editor
of the local weekly newspaper, because the lake has been closed to everyone
but Yeltsin. 
That is the kind of certainty that Russian leaders have always relied
on. When the czars went hunting, scores of people would drive animals into
the open to help them. And the Soviet leaders did even better. 
When Leonid Brezhnev, long an avid hunter, was too sick to do much more
then stroll a few unsteady steps, he still managed to bag many wild boar on
every vacation trip. 
Instinct? Not exactly. The animals were usually as aged and infirm as
the man who was stalking them -- and if that wasn't enough, they were often
drugged or simply tied to stakes in the ground. 
Earlier this year, Russians were shocked to learn how their current
prime minister, Viktor Chernomyrdin, spent his winter vacation. Eager for
bear, Chernomyrdin traveled to the woods near Yaroslavl by helicopter. 
He was able to land because bulldozers had just cleared a mile of virgin
forest to make a road. Teams of bodyguards, police officers, federal
security agents and professional hunters prepared the way. 
Attack dogs then flushed a mother bear and her two cubs from the silence
of their winter den. After that, Chernomyrdin managed to kill one of the
cubs. 
Presidents often cause disruptions when they travel: George Bush felt
bad about it when he took his annual trips to Maine, and Bill Clinton turns
Martha's Vineyard into a parking lot when he vacations there. So many
people just nodded glumly and understood when the lake where Yeltsin is
fishing was closed off. 
Still, the deceit -- or at least the sense that Russia's leaders play by
different rules -- does seem to rankle. Last year, for instance, when
Yeltsin was so sick that he was unable even to vote in public, he was said
to have killed many wild boars and ducks on a hunting expedition. 
The 66-year-old president, who has shown new vigor since recovering from
open heart surgery last year, said he wanted a long, quiet family vacation
this summer. The first news that many local residents had of his arrival,
said Tsigankov, the editor of the local newspaper, was when they were
banned by the local leaders from fishing in their own lake. 
Local reporters have complained that they are not allowed access to the
president and that the only subject they are permitted to address in their
stories is fish. 
So far, Yeltsin has caught many. Tsigankov's paper, Severny Kurier,
published a photograph that apparently shows the president's fishing boat
on the lake. But the photograph was taken from so far away that it looks
like nothing but a gray blur. 
It is accompanied by a first-person account of how the paper's
photographer got the photo. 
"Since no other boats are allowed out, our photographer could pick out
the one boat on the lake that must have been the president's," the paper
wrote. "We had time to snap off one photo before a lieutenant put his hand
on our shoulders and smiled. He offered us mineral water and sent us on our
way." 
Sunday, Yeltsin fished with the president of Finland, Martti Ahtisaari.
The winds and rain that plagued the lakes earlier this week had dispersed.
Each man caught at least one trout Sunday afternoon. 
A spokesman for the Kremlin had no comment when asked if the trout had
been longtime residents of the lake or recent arrivals.

********

#7
YELTSIN STARTS TENNIS TRAINING
PETROZAVODSK, JULY 13 (from RIA Novosti's Alexander
Krylovich) - It is too early for President Boris Yeltsin to take
part in tennis tournaments after last autumn's heart surgery,
but he is already training.
He appeared on the tennis court Friday, July 11, for the
first time since his bypass operation. "It was quite a dynamic
game," he said to RIA.
The President feels he has fully regained his health, and
doctors allow him to play every day.
Mr. Yeltsin is thoroughly enjoying his vacation in Karelia,
Russia's northwest, especially because its climate resembles
that in his native Urals. He spent the first few days catching
up on his sleep.
The President goes to his residence sauna every day, and
swims in a lake, though the water temperature does not exceed 16
degrees Centigrade. 

*******

#8
>From Russia Today
http://www.russiatoday.com
Satire
The Week That Was
Fashion Victim 
by Mary Campbell 

(Boris Yeltsin, in full fishing regalia, has just climbed into a rowboat
and is about to shove off when his daughter – and newly appointed
imagemaker – Tatyana comes running down the dock) 

Tatyana: DADDY! 

Yeltsin: (startled) What? What? 

Tatyana: Where do you think you're going dressed like that? 

Yeltsin: Fishing. I'm going fishing. And what do you mean, "Dressed like
that?" 

Tatyana: I mean horizontal stripes, Daddy, which should never be worn
outside of prison. And that hat – we're in Karelia not on Golden Pond! 

Yeltsin: Tatyana, I'm going FISHING, I'm not meeting the president of
Finland… 

Tatyana: (climbing into boat) No, that's Saturday, but that reminds me – we
have to talk about what you'll wear. Something Nordic, I think, something
with a reindeer motif… 

Yeltsin: Fine. I'll strap horns to my head, but in the meantime, I'm going
fishing. 

Tatyana: You are having an extremely bad hair day, Daddy. Here, let me fix
it. 

(Starts combing Yeltsin's hair as First Deputy Prime Minister Boris Nemtsov
comes running down the dock) 

Nemtsov: Boris! Where are you going? We're supposed to talk about the state
of the economy! 

Yeltsin: Later, Nemtsov, later – first I'm going fishing. Stop that! (to
Tatyana, who has begun powdering his face) 

Nemtsov: (climbing into boat as Yeltsin shoves off from dock) But Boris, we
have to talk. We're going to be in bad shape this fall if tax collections
don't improve. 

Tatyana: Fall collections! That reminds me, Daddy – we have to pay close
attention to the fall collections. You don't want to be the only world
leader with the wrong size lapels, do you? 

Nemtsov: We're still in the red as far as public sector wages go… 

Tatyana: (buffing Yeltsin nails) It's too bad red has such bad
connotations, Daddy, because you look good in it. You're a Winter and you
should always wear vibrant colors… 

Nemtsov: The only way we'll get ourselves back in the black… 

Tatyana: Black! Such a versatile color – serious but not somber, dignified
but not stodgy. No world leader can survive without his little black suit… 

(Yeltsin rows harder) 

Nemtsov: …is to put the squeeze on the corporations. Maybe file a few
bankruptcy suits… 

Tatyana: Bankruptcy suits? I bet Armani does a nice bankruptcy suit – I'll
look into it, shall I Daddy? (Yeltsin stops rowing and stands up) 

Nemtsov: There's no way we can meet that Oct. 1 deadline for paying all
salaries – I don't even know if we can pay the military salaries on time… 

Tatyana: Oh, I love a man in uniform. That's an idea, Daddy, maybe you
could wear a uniform – it works for Kadhafi. And Castro. And Michael Jackson. 

(Yeltsin leaps from boat) 

Nemtsov: Wow, he swims really well for a guy recovering from heart surgery. 

Tatyana: Swimming is very good exercise – it works all the major muscle
groups – I just wish he wouldn't do it without wearing a bathing cap. He'll
wreck his hair! (Looks at Nemtsov who's started rowing) And speaking of
hair, you could use a little trim yourself, curlylocks! 

Nemtsov: Wait a minute – you may be your father's imagemaker, but you're
not mine! 

Tatyana: Have you ever considered color? Nothing drastic, just a little
something to bring out your highlights. You know, Chubais doesn't like it
to get out, but he and Miss Clairol are old friends… 

Nemtsov: (rowing faster) Thanks Tatyana, but I prefer to be like a Russian
monopoly. 

Tatyana: What do you mean, Boris? 

Nemtsov: Natural, Tatyana, natural. 

Ms. Campbell is an editor for Russia Today. 

*********

#9
The Economist 
July 12th - 18th, 1997
[for personal use only]
A survey of RUSSIA: In search of spring
6/8. The men for the job
And an opportunity to be seized
Lebed rumbles... as Chubais reforms... and Berezovsky prospers

PERHAPS the biggest oddity of Russia today is not that so much needs to be
done to reform the economy and introduce the rule of law but that there is
at least a possibility that some of it may be achieved. Barely 18 months
ago, it should be remembered, the most popular politician in Russia was
Gennady Zyuganov, a Communist of the old school who both vowed to put a
stop to reform and, to judge by the opinion polls, seemed likely to win the
June presidential election and thus keep his promise. In an effort to make
himself less unpopular, Mr Yeltsin had sacked his two ministers most
associated with reform-Yegor Gaidar, prime minister until December 1992
(and first deputy prime minister for a spell in 1993-94), and Anatoly
Chubais, privatisation chief until January 1996. And although Mr Yeltsin
went on to win the election, he had by then been discredited in the eyes of
most liberals by an appalling war in Chechnya.

The impression that nothing much was going to happen on the reform front
was strengthened by two developments. One was Mr Yeltsin's miserable
health record: at least one heart attack in 1995, at least two in 1996, a
five-way by-pass last November, and a bout of double pneumonia this
January. All this meant eight post-election months in which government
merely ticked over. The other development caused equal uncertainty: the
deal that Mr Yeltsin had struck in order to win re-election.

A part of this deal involved Alexander Lebed, the populist general who had
thrown his support to the president in the second round of the election.
His reward was a place in government, as national security adviser, in
which he quickly showed himself to be decisive - he secured a peace in
Chechnya - and thus potentially dangerous to Mr Yeltsin. Come October, he
was duly sacked.

Super seven

More worrying to reformers was the other part of the electoral deal, in
which Mr Yeltsin had handed over the running and financing of his campaign
to the group of seven bankers. True, these men had invested in Mr Yeltsin
in order to stop a return to Communism and to keep Russia on a capitalist
path. And true, the skilful reformer Anatoly Chubais had been brought
back, first, to mastermind the president's re-election, then to be his
chief of staff. But such was Mr Chubais's unpopularity that he was
unlikely to be able to accomplish very much alone. Moreover, the prime
ministership was, and
hopes for reform in Russia rest upon these two men-41 and 37 years old
respectively.

Mr Chubais's skills are not in doubt. He secured privatisation, whatever
its shortcomings. He organised Mr Yeltsin's re-election. He knows how to
acquire allies, such as MrYeltsin's daughter, Mrs Dyachenko. And he knows
how to get rid of opponents, such as Alexander Korzhakov, the president's
former confidant and bodyguard. In short, he understands economics,
administration and political infighting. But he is allied to the banking
oligarchy, and he is unpopular - indeed, so unpopular that he cannot argue
the case for reform to the public at large. It has therefore remained
unargued.

That is where Mr Nemtsov comes in. Mr Nemtsov is also clever. He too
understands economics and the need for market reform in Russia. In his six
years as governor of Nizhny Novgorod, a region 4ookm east of Moscow, he has
already shown what can be done. Nizhny is hardly a model of
free-enterprise vigour, but it is undoubtedly more prosperous than it would
have been without Mr Nemtsov.

Like many another Russian region, Nizhny Novgorod was heavily dependent on
the defence industry, which is why the city-when it was called Gorki - was
closed to foreigners. After being appointed governor in 1991, Mr Nemtsov
began vigorously reforming the local administration. He brought in
competitive tendering, abolished the system of government-appointed banks
and suppliers, cut the number of taxes paid by small businesses from 30 to
one and ended housing subsidies. Above all, he privatised, starting with
an auction of used lorries in 1992 and going on to sell all sorts of
enterprises and about 150 collective farms. His success was popular not
only with the voters-they put him back in the job in 1995, even as they
chose Communists for the Duma - but also with foreigners: Nizhny Novgorod
is one of the few regions in Russia to have attracted direct foreign
investment. Coca-Cola, Forte, Parmalat and US West are some of the names
that have come to the region, and Lufthansa flies in from Germany three
times a week.

Can a young lad from the sticks repeat even this limited success on a
national scale? Grigory Yavlinsky, the leader of the social-democratic
party, Yabloko, wishes him well but is doubtful. He thinks that Mr
Nemtsov's efforts to eliminate housing subsidies by 2003 - they gobble up
about 4% Of GDP - will make him miserably unpopular. At present Russians
are subsidised to the tune of roughly 70% of their household-maintenance
and utility bills. The fear is that householders will simply withhold the
new charges, and bureaucrats may well withhold the income-support payments
designed to compensate the poorest. The reform will fail, and Mr Nemtsov
will be discredited.

It could well turn out that way. Mr Nemtsov is up against big vested
interests, of which the biggest may be Gazprom - responsible for producing
perhaps 8% of the countrys GDP, supplying a quarter of Western Europe's
natural gas, and constipating, through its non-payment of taxes and
pensions dues, much of the Russian economy. But Mr Nemtsov has made a
start. Last month, Gazprom at last coughed up its unpaid taxes, enabling
the government to clear its pensions backlog. A month earlier Mr Nemtsov
had taken charge of a board to "introduce order" at the gigantic company,
in which the state still owns a 40% stake, though it has been run almost as
an independent country. He had also renegotiated the dubious management
agreement that the government had with Rem Vyakhirev, Gazprom's chairman.
However, Mr Nemtsov has said he will not try to break Gazprom up, and has
made no attempt to dislodge Mr Vyakhirev.

This may be judicious: Mr Vyakhirev is going along with the changes, as is
Mr Chernomyrdin, the company's prime-ministerial patron. But sooner or
later Mr Nemtsov will have to get rid of, rather than accommodate, the
managers, and not just in Gazprom. For instance, the electricity company,
UES, has increased its workforce by 40% since 1991 while reducing output by
22% and withholding $1.7 billion in taxes and another $300m in pensions
contributions. The hopeful news here is that Mr Nemtsov has brought in one
of his protégés, Boris Brevnov, to electrify UES. It has already agreed to
cut its rates for industrial users by 13% this year and to crack down on
non-payers. Similar reforms are needed in other monopolies, notably the
railways and the oil-pipeline company, Transneft.

The forces of reaction

A second obstacle to Messrs Chubais and Nemtsov is the Duma, which is
controlled by Communists and nationalists. The Duma can, and will,
frustrate reforms. It will pass unrealistic budgets, resist the inevitable
spending cuts, and corrupt the new tax code. It may well keep skills and
capital out of Russia by passing an absurd foreign-investment law and
restrictive enabling legislation for the production-sharing agreement on
minerals. But it should not prove an insurmountable hindrance to reform.
The Communists probably reckon they have less to lose by playing along with
the government than by risking a confrontation. They know that the
presidential election last year almost certainly represented the high-water
mark of their support. They also know that, if they passed a vote of
no-confidence in the government, MrYettsin could respond by calling an
election, in which many might well lose their seats - and thus their many
perks.

Plenty of non-Communists would probably like to see the reformers fail.
Vladimir Zhirinovsky, for instance, a virulent right-winger, has a
particular hatred for Mr Nemtsov, especially after the young reformer
(Jewish, to boot) had the temerity to respond, on television, to a glass of
orange juice flung in his face by throwing one back. Mr Zhirinovsky is now
largely a figure of fun, though a less comic man of similar views might
well be potent in the future. A more serious threat is anyone who sees
himself as a successor to Mr Yeltsin and therefore as a rival to the lad
from Nizhny Novgorod. Mr Nemtsov disavows any desire to be Russia's next
president, but it is hard to believe he will not be a contender.

The group of potential rivals does not include Mr Chubais, who is probably
telling the truth when he says he has no presidential ambitions. But it
might include Mr Chernomyrdin and Yuri Luzhkov, the popular mayor of
Moscow. Both these men may be considered the leaders of a clan, the word
that seems best to describe the groupings that, at least until this year,
characterised Russian politics. The clan theory, elegantly elaborated by
Tom Graham, an American diplomat, holds that Russia has different
interest-groups struggling for power, each centred on a political figure.
They are linked to financial, trade and industrial structures. They have
guaranteed access to the media. They control armed formations, state or
private. And they have ties to regional groups that operate along similar
lines.

Since Mr Graham's analysis was published in the Russian press in November
1995, some of the clans have gone into eclipse (without undermining the
thesis), but that is true of neither Mr Chernomyrdin's nor Mr Luzhkov's.
Mr Chernomyrdin, however, is a lacklustre figure who as president would
represent continuity more than charisma, and his power has undoubtedly been
weakened this year by Mr Yeltsin's decision to give the reformers their
head. As for Mr Luzhkov, he may well make a challenge in due course; but
for now, he seems unlikely to undermine Mr Nemtsov as long as the mayor
remains free to run Moscow more or less as he likes.

All in all, the reformers have a fighting chance. And in Mr Nemtsov they
have a champion who might keep their cause going. Mr Nemtsov has two
qualities above all that make him stand out from other politicians. First,
he is unquestionably honest and uncontaminated by links to bankers,
industrialists, oligarchs or criminals. Second, he is an attractive
politician who performs well on television and revels in campaigning. He
became involved in politics through environmental protest in the 1980s: as
a physicist, he spoke out against a proposed nuclear power plant in Nizhny
Novgorod. Much later, in his days as governor, he organised a petition
with a million signatures calling for a truce in Chechnya.

His impulses are thus rooted in the everyday concerns of average people,
not in economic theories. No wonder people like him. Just after his
appointment in March, they liked him more than anyone else: according to
the opinion polls, he was even more popular than Mr Lebed. At last,
therefore, Russia has a reformer who, unlike such liberals as Mr Gaidar and
Mr Yavlinsky, can make a persuasive case for his policies in terms that
ordinary people can understand-and maybe even applaud.

*********

#10
Russia: Kremlin Wins Key Gubernatorial Election, Loses Mayoral Vote
By Floriana Fossato

Moscow, 14 July 1997 (RFE/RL) - A Kremlin-backed candidate has won a
gubernatorial election in Nizhny Novgorod, defeating a Communist rival in a
runoff vote widely portrayed as a referendum on reform. But President Boris
Yeltsin's administration received a setback in a mayoral vote in the city
of Samara. 
Nizhny Novgorod Mayor Ivan Sklyarov won yesterday's gubernatorial
election. The local central electoral commission said returns of the vote
showed that Sklyarov won 52 percent of the vote, and communist State Duma
Deputy Gennady Khodyrev received about 42 percent. 
Observers in Nizhny Novgorod and Moscow said, before the vote, that the
race to fill the seat vacated when Yeltsin appointed then-governor Boris
Nemtsov to the post of Russia's First Deputy Prime Minister in March held
symbolic importance, stretching far beyond the region. Commentators said
that a victory by Sklyarov, seen as a pro-reform candidate, would show that
the population in the region 400 kilometers east of Moscow backed reforms
carried out previously by Nemtsov, and would demonstrate support for the
government, where Nemtsov is now spearheading nationwide reforms. 
In the first-round vote last month, Skyarov received 41 percent of the
vote and Khodyrev 38 percent, fueling concern among Kremlin and government
officials that a possible communist victory in Nemtsov's former domain
could provide powerful arguments for Yeltsin's foes. 
As Nizhny Novgorod governor, Nemtsov had tried to turn the region, a
former bulwark of the Soviet military-industrial complex, into a showcase
of economic reform. Nemtsov strongly supported privatization, and also
social reforms. The communists blame Nemtsov and Sklyarov, until now Mayor
of the regional capital, a city of 1.5-million people on the Volga river,
for unemployment and the decline of social care and education. Other
critics have said Nemtsov's success was mainly in capitalizing on reform
slogans, but that the regional population had not gained much from his
economic programs. 
Sklyarov's election comes as a relief for the Kremlin and follows a
tough campaign battle since last month's first-round election, in which
Sklyarov and Khodyrev beat three other candidates, but neither of the two
won enough votes for outright victory. After the first round, Nemtsov and
other top officials, including Prime Minister Viktor Chernomyrdin, threw
their weight behind Sklyarov, as about 60 State Duma members, including
communist leader Gennady Zyuganov and ultra-nationalist leader Vladimir
Zhirinovsky, came to Nizhny Novgorod to campaign for Khodyrev. 
Turnout yesterday was about 49 percent, higher than in the first round,
when more than 60 percent of voters ignored the poll. 
Nemtsov recently spent three days in the region campaigning for
Sklyarov. During a rally, he called his supporters to "go and inspire
people to come and vote." He gave an account of what he called "the awful
state of the region" in Soviet times, when Khodyrev was ruling Nizhny
Novgorod as local communist party chief. He also told citizens that if they
"wanted empty shops back, transport and energy problems" they should just
"go ahead and pick the communist candidate again" 
Nemtsov recognized Slyarov did not enjoy strong popular following, but
said that by voting for him people were not committing themselves 'to love
him." According to observers, Sklyarov's program and campaign rhetoric
differed little from Khodyrev's. 
Chernomyrdin visited the nuclear research center in Sarov Friday and
promised federal support for the center. Although spokesmen said
Chernomyrdin's visit was "not connected to the election," a RFE/RL
correspondent in Nizhny Novgorod noted that Khodyrev outpolled Sklyarov in
the district containing Sarov in the first round. 
Communist leaders, commenting on the outcome of the election today, said
the vote had been close, showing that society is divided over the
government's planned reform program, and that nearly half of the population
is not happy with their course. 
Interfax news agency quoted officials in Moscow as saying the positive
result in Nizhny Novgorod overshadowed a partial disappointment in the
central Russian city of Samara, where a supporter of Yeltsin's outspoken
critic and former Security Council secretary Aleksandr Lebed was elected
mayor to replace Oleg Sysuev, who was appointed Deputy Prime Minister in
March. Sysuev is working closely with Nemtsov in the government team
perceived as pro-reform. 
Georgy Limansky, deputy chairman of the Samara region's legislature,
gained more than 54 percent of the vote to win yesterday's runoff mayoral
election in the city. 
Sysuev, who was appointed Deputy Prime Minister in March, had supported
Deputy Mayor Anatoly Afanasev, who polled some 38 percent. Limansky heads
the Samara region branch of Lebed's Russian People's Republican Party.
Lebed campaigned for Limansky in Samara last month, and Yabloko leader
Grigory Yavlinsky and Forward, Russia! leader Boris Fedorov also backed
Limansky. Sysuev campaigned for Afanasev, but showed up in Samara only
briefly. 
Some observers noted that Limansky, who is also an influential
businessman, enjoyed stronger popular support in Samara than his rival.
Turnout in Samara was just over 40 percent, despite the fact that city
officials authorized unlicensed trade on the day of the vote. 

********

#11
NEW GOVERNOR OF NIZHNY NOVGOROD REGION OUT URGENTLY TO RESOLVE 
THE QUESTION OF REDUCING FUEL AND ELECTRICITY PRICES
MOSCOW, July 14, RIA Novosti - Ivan Sklyarov, who was
elected Governor of the Nizhny Novgorod Region the day before,
is planning urgently to resolve on a priority basis the question
of reducing the prices of fuel and electricity, creating the
conditions for the active granting commodity producers in the
region long-term credits at small bank rates. He said the above
in an exclusive interview with the RIA Novosti correspondent.
He also said that he intends to get more precise figures of
the volume and system of placing the military order with the
region which, with due account taken of the nuclear centre,
accounts for the manufacture of almost half of Russia's arms, as
well as to secure the right to sell arms through the Nizhny
Novgorod Fair. Innovations are also in store for the
agro-industrial complex whose condition "is not simple," as he
put it. In order to tackle those priority questions for the
region, Sklyarov hopes for a meeting with the Russian President
and cooperation with the country's government.

*******

#12
STAROVOITOVA: FORMATION OF PRESIDENTIAL TEAM IS 
MAJOR RESULT OF YELTSIN`S PRESIDENTSHIP OVER THIS YEAR
MOSCOW, JULY 14 (FROM RIA NOVOSTI CORRESPONDENT MARIYA
BALYNINA)--Enumerating events which have become the major result
of the year which has passed since Boris Yeltsin`s re-election
Galina Starovoitova, leader of the Democratic Russia party,
spoke of consolidation of power, formation of a new team of the
Russian president and changes in the structure and contents of
the presidential power. Starovoitova said this addressing
session of the All-Russian Coordination Council today.
According to Starovoitova, the president "has managed to
create a balance of power branches and different political
forces." In particular, she said, Boris Yeltsin "has created a
governmental triangle made up of Viktor Chernomyrdin, Anatoly
Chubais an Boris Nemtsov" "This was a delicate, lacy political
work," she said. Speaking of other achievements of the president
Starovoitova metioned Russia`s successes in foreign policy, its
participation in integration processes in the CIS.
At the same time, speaking of the second stage of liberal
reforms announced by Boris Yeltsin, Starovoitova assumed that
they might become "a new spiral of a shock therapy." This may
happen, she said, because the reforms are being implemented
under a complicated socioeconomic and political situation and
"we do not ask advice of the people in a proper scale." 

*********

#13
RUSSIA DOES NOT ONLY ATTRACT OVERSEAS INVESTMENTS, BUT MAKES 
INVESTMENTS IN FOREIGN COUNTRIES AS WELL
MOSCOW, JULY 14, RIA NOVOSTI - Alongside attraction of
overseas investments, Russia also makes investments in foreign
countries as well, however, the volume of them is not high. 
The State Committee for Statistics told RIA Novosti that
over the first quarter of 1997, overseas Russian investments
have made up $20 million and 2.6 billion roubles. One needs to
mention in this respect that the so-called other investments,
i.e. trade credits and bank credits, accounted for the 2/3 of
the total. Direct investments constituted $3 million and were
mainly used for the industrial needs, including non-ferrous
industry, chemical industry and petrochemical industry.
As far as hard currency overseas capital investments into
the Russian economy are concerned, according to the Centre of
the Economic Situation under the Russian government, over the
reform years, they have reached the mark of $13 billion,
including $2.2 billion over the first quarter of 1997. However,
these figures are also relatively small, considering that over
the first three months of 1997, foreign investments accounted
for a mere 4 percent of the total volume of investments into the
fixed stock. The fact that the flow of overseas capital, for
example, in the national agriculture over the period in question
has increased five-fold against the similar period of 1996, is
something rather optimistic. However, it dropped substantially
into the ferrous industry (only 7 percent of the last year's
figure), light industry (10 percent), machine building (23
percent). 

********