July 16, 1997   

This Date's Issues:   1052 •1053 

Johnson's Russia List
#1052
16 July 1997
djohnson@cdi.org

[Note from David Johnson:
I intend to be more ruthless about bouncing email. While I
have learned that nearly everyone experiences occasional problems--
and I have thus been tolerant--I will be quicker in the future
to delete email addresses which do not seem to be working. It's
a lot of administrative work to cope with the problem. So the
WARNING is: if in the future you find yourself with no new
JRL message in your In Box, it may be because I have deleted you.
You should then contact me and we'll see what we can do.
1. Stephen Shenfield (Brown): "reform"
2. AP: Senate Panel Considers Russia Envoy.
3. USIA: SENATE CONFIRMATION HEARINGS FOR GROSSMAN, COLLINS, 
KORNBLUM.
4. TEXT: COLLINS' REMARKS AT CONFIRMATION HEARING JULY 15. 
(James Collins, nominee as U.S. ambassador to Russia).
5. Reuter: Peter Henderson, Russian economy shrinks, firms told 
fight for funds.
6. Paul Goble (RFE/RL): New East-West Tensions.
7. RIA Novosti: YELTSIN'S STAFF GET 17,000 AGONY LINE CALLS 
WITHIN FORTNIGHT.
8. RIA Novosti: SUMMING UP EFFORTS TO BUILD UP BUDGETARY 
REVENUE.
9. The Economist: A survey of RUSSIA: In search of spring.
Part 8 (last): The rooks have come. Might spring have arrived 
at last? [DJ: The author of the Economist survey appears to
be John Grimond).
10. Chicago Tribune: Colin McMahon, MOSCOW'S ANNUAL HOT WATER 
SHUTDOWN IS A WHIFF OF THE PAST.
11. RIA Novosti: DEFENSE MINISTRY TO SUBMIT PROGRAM ON CONTRACT 
SERVICE BY AUTUMN.
12. Summary: Izvestiya, Russian Neo-Nazis Say Their People Have 
Penetrated All the Power Structures.
13. Stacy Gunther (Stimson): Information on "Russia's War."]


*********

#1
Date: Tue, 15 Jul 1997 
From: Stephen_Shenfield@brown.edu (Stephen Shenfield) 
Subject: "reform"

David,

You question the use of the term "reform" in Western discussions of Russian
politics. The usage is indeed a very curious one.

Within the context of the old "socialist" system (or whatever you want to
call it), it did make rough sense to distinguish pro- and anti-reform
political actors. At that time hardly anyone ever openly called for the
wholesale dismantling of the system: what was at issue was indeed reform,
meaning important changes WITHIN the system, as opposed to revolution -- to
use the classical political terminology. (Some of the "reformists" may have
been dissembling, though probably not that many.) Gorbachev, for instance,
was undoubtedly trying to reform and not transform / revolutionize the system.

What the current arguments are about, of course, is precisely the depth and
character of what must be regarded -- even in its "softer" or more
conservative proposed variants -- as transformation or revolution, and not
reform. Why then continue calling it reform? Partly, I think, out of
inertia. Partly because "reform" sounds nice, it has favorable emotional
connotations. I can't think myself of a more logical explanation. Can anyone
else? 

********

#2
Senate Panel Considers Russia Envoy
July 15, 1997
WASHINGTON (AP) - President Clinton's choice for ambassador to Moscow opened
his confirmation hearing Tuesday by rebuking the Russian parliament for
trying to ban Western religious groups from proselytizing in the country. 
``It's bad legislation and, if enacted as passed by the Russian parliament,
it will be a step backward,'' said James Collins. 
Collins appeared before the Senate Foreign Relations Committee, along with
Stephen Sestanovich, nominated to be ambassador-at-large for former Soviet
states; John Kornblum, for Germany; and Marc Grossman, to replace Kornblum as
assistant secretary of state for European and Canadian affairs. 
The growing popularity of Western evangelical groups in post-Soviet Russia
has prompted opposition from an unlikely coalition of communists and the
Russian Orthodox Church. 
The communist-led State Duma has approved a bill that would deny legal
status
to most newly established religious groups. It would recognize only the
Orthodox Church and other traditional faiths such as Islam, Buddhism, and
Judaism. 
President Boris Yeltsin has shown no intention of banning the groups. But
under the proposed law, which now is before the president, religious groups
would have to work in Russia for 15 years before they could register, own
property, set up bank accounts or engage in other otherwise legal activities.
``The U.S. position is to support freedom of religion,'' Collins said.
``This
would be a step backward and I believe it would have negative consequences
for our relations.'' 
Collins, a career diplomat, has been nominated by President Clinton to
replace Thomas Pickering, who left Moscow eight months ago. 
In his testimony, Collins said the United States and Russia are nations with
global responsibilities and are destined to work together. ``The challenge is
whether we find the means and the will to make that work constructive and
cooperative,'' he said. 
Sestanovich is considered a controversial choice to handle relations with
former Soviet states because, as an analyst at the Carnegie Endowment for
International Peace, he was at odds with administration policy on NATO
enlargement. He is opposed by a coalition of East European ethnic groups who
accuse him of supporting the establishment of a Russian sphere of influence
in the region. 
Sestanovich strongly denied he had advocated increased Russian influence,
saying: ``It's clear that some of the things I've written on the subject have
been misunderstood.'' 
He acknowledged he had been a skeptic on NATO enlargement, but said that he
was now convinced that the administration ``has it exactly right.'' 
Kornblum is a former special U.S. envoy in the former Yugoslavia, and
Grossman is a career diplomat. The committee is expected to quickly approve
Collins, Kornblum and Grossman, but Sestanovich's confirmation could take
longer. 

********

#3
United States Information Agency
15 July 1997 
SENATE CONFIRMATION HEARINGS FOR GROSSMAN, COLLINS, KORNBLUM 
(Nominations appear on track for confirmation) (430)
By Rick Marshall
USIA Staff Writer
Washington -- The Senate Foreign Relations Committee held initial
confirmation hearings July 15 for three senior State Department
officials: Marc Grossman, John Kornblum and James Collins.
Grossman, until recently the ambassador to Turkey, has been nominated
to become assistant secretary of state for European and Canadian
affairs. He would replace Kornblum, who has been nominated ambassador
to Germany.
Collins is currently the special advisor to the secretary of state for
the New Independent States (NIS) and has been nominated as ambassador
to the Russian Federation.
Judging by the tone of the hearings, each of the three can expect to
be confirmed without much difficulty. According to Senate staff
members, the three may be approved by the committee by the end of this
week, at which time their nominations will proceed to the Senate as a
whole.
Stephen Sestanovich, nominated to replace Collins as special adviser
for the NIS, met with sharp questioning from Sen. Paul Sarbanes
(Democrat, Maryland) about articles which appeared critical of the
administration's foreign policy.
A well-known Russian scholar who served in the Reagan administration
and is currently at the Carnegie Endowment, Sestanovich made clear,
however, that he supports the administration, praising in particular
its recent handling of Russian and Eastern European security affairs.
He specifically cited the Russian-NATO Founding Act, signed in Paris
in late May, and last week's Madrid Summit where Poland, Hungary and
the Czech Republic were invited to join the Alliance.
Grossman was asked mostly about Turkey, with Senator Paul Wellstone
(Democrat, Minnesota) particularly critical of that country's human
rights problems. Grossman replied by stressing three objectives for
U.S. policy with respect to Turkey: expanding democracy, getting "the
right kind of security relationship," and improving the country's
economic performance.
Sarbanes praised both Grossman and Kornblum for their work in helping
Secretary of State Madeleine Albright broker an agreement between
Turkey and Greece last week during the Madrid Summit.
Collins was asked by Sen. Gordon Smith (Republican, Oregon), chairman
of the European Subcommittee, about a recent bill passed by the
Russian Parliament which would substantially restrict religious
freedom in the country. In responding, Collins called the bill a "step
backwards" for religious freedom in Russia and noted that President
Clinton and Secretary Albright have raised the matter with President
Yeltsin and Foreign Minister Primakov.
"The consequences (of the bill) are very straightforward," Collins
said. If Yeltsin signs it, it "would have a negative consequence" for
U.S.-Russian relations.

********

#4
>From United States Information Agency
TEXT: COLLINS' REMARKS AT CONFIRMATION HEARING JULY 15 
(Russia's new freedom brings opportunities, challenges) (800)

Washington -- James F. Collins, President Clinton's nominee as U.S.
ambassador to Russia, told a Senate confirmation hearing that the
emergence of a more open Russia that is trying to build democracy
"means a Russia with which we can cooperate and compete to advance
shared interests and manage differences in a constructive, civilized,
and respectful manner."
Collins, whose most recent assignment has been as ambassador-at-large
and special advisor to the secretary of state for the New Independent
States, spoke to the Senate Foreign Relations Committee July 15.
He cited some of the problems facing Russia and its people, but noted
that "there is vibrance to Russia's unprecedented new freedom and a
determination to preserve the peoples' voice over their future that is
a source of hope for the future."
Collins said he believes "U.S. leadership implemented through
creative, intelligent, effective, interest-based U.S. diplomacy will
be critical in determining whether we realize the potential in the
opportunities before us."
Following is the text of his remarks as prepared for delivery.

(Begin text)

STATEMENT OF JAMES F. COLLINS
TO THE SENATE FOREIGN RELATIONS COMMITTEE

Mr. Chairman and distinguished members of the Committee:

It is a great pleasure for me to be with you today to discuss my
nomination to be Ambassador of the United States to the Russian
Federation. I am deeply honored by the trust and confidence that
President Clinton and Secretary Albright have placed in me by
selecting me to assume this assignment. If confirmed, I look forward
to consulting and working closely with the members of this committee
and of the Congress in pursuit of the critical American interest at
stake in our relations with the Russian Federation.

As we prepare for a new century, I believe America has every reason to
approach these relations with hope. The United States and Russia are
nations with global capabilities and responsibilities: we are destined
to live and work together. The challenge is whether we find the means
and the will to make that work constructive and cooperative.

For most of our lifetimes the Cold War and ideological conflict with
Soviet communism determined that America's relations with the Russian
people took place in an environment of confrontation. Today the Cold
War is over and the forces that created and perpetuated that division
and conflict are gone.

The emergence of a new, more open Russia building democracy offers
nothing less than the opportunity for the Russian people and their
government to become fully integrated into the family of democratic
nations. For the United States, this means a Russia with which we can
cooperate and compete to advance shared interests and manage
differences in a constructive, civilized and respectful manner.

The challenges to achieving this goal will be many and the process
will be long. Our nation today works with a Russian government and
people who face an uncertain economic future, a political order in
transition, serious problems of crime, corruption, and lawlessness, a
military structure in crisis, and health, education, and environmental
problems of staggering proportions. Yet, there is vibrance to Russia's
unprecedented new freedom and a determination to preserve the peoples'
voice over their future that is a source of hope for the future, and
it is to that hope that the American interest looks.

I believe firmly that U.S. leadership implemented through creative,
intelligent, effective, interest-based U.S. diplomacy will be critical
in determining whether we realize the potential in the opportunities
before us. The bi-partisan support of Congress for our objectives and
the leadership Congress has shown through creative legislation such as
the Freedom Support Act and the Nunn Lugar program for threat
reduction remain essential resources and tools for the conduct of
effective American policy and for the mission I will be asked to
undertake, if confirmed, as Ambassador to Moscow.

Mr. Chairman, if confirmed, I will, in all likelihood, be the first
American Ambassador to the Russian Federation in the next century. For
just over forty years, I have been involved with Russia, its people,
and its culture; first as a self-taught high school student of the
language, then as a student and instructor of Russian history in the
academic world, and as a career diplomat with previous assignments in
Moscow and Washington over a career spanning almost thirty years. In
all that period, at no time was the opportunity greater to pursue
U.S.-Russian cooperation on the basis of mutual respect and shared
interests. If confirmed, Mr. Chairman, I will spare no effort to
assure that our Government and our people take full advantage of these
opportunities for a safer America and a safer world. Thank you.

**********

#5
Russian economy shrinks, firms told fight for funds
By Peter Henderson 
MOSCOW, July 15 (Reuter) - Bright forecasts of Russian economic growth were
proven hasty on Tuesday when official figures showed the economy was still
shrinking and a leading reformer said companies must fight for foreign cash. 
``We have to get used to the fact that the battle for foreign investment is
always tough and at times completely without rules,'' Interfax news agency
quoted minister without portfolio Yevgenny Yasin as telling an investment
forum. 
Russia's efforts to attract foreign funds to jump start growth have so far
not turned around the economy, which the State Statistics Committee said on
Tuesday had shrunk 0.2 percent in the first half of the year compared to
1996. 
The news undermined Prime Minister Viktor Chernomyrdin's triumphant
announcement on July 2 that gross domestic product (GDP), or national output,
had grown one percent in six months, reversing a 39 percent decline since
1991. 
``The decline has stopped,'' President Boris Yeltsin chimed in two days
later. 
But Tuesday's sobering figures contained signs of hope. 
GDP in June alone was unchanged on a year ago, a possible sign that
growth is
around the corner, and unemployment edged down for the first time in six
months by 70,000 people to 6.9 million people, or 9.5 percent of the
workforce. 
Industrial production rose 0.8 percent in the first six months of the
year on
a year ago to 761 trillion roubles ($131.8 billion) and the foreign trade
surplus widened to $11.0 billion in the first five months of this year from
$6.8 billion in the first half of 1996. 
Foreigners are drowning the stock market with funds, pouring in more
than $1
billion over the last month alone, some traders say, and sending stocks and
domestic bond prices nudging all time highs. 
But direct investment into factories is critically low. Finance Ministry
economist Viktoria Kotova, part of the ministry's expert group, recently
estimated 1997 direct foreign investment would be a paltry $2.7 billion. 
``Despite certain progress by Russia in this area, our competitors,
including
Eastern Europe, have gone farther and offer investors more preferable
conditions,'' Yasin said. 
One of Russia's strongest achievements, lauded by investors and envied by
other developing nations, is its fight with inflation which was 1.1 percent
in June after 0.9 percent in May. It was over 1,000 percent annualised during
parts of 1993. 
Russian industrial prices, which offer a taste of consumer inflation around
the corner, when manufactured goods are finally sold, rose by 0.9 percent in
June, almost double May's 0.5 percent rise. 
Russia's monetary stability may look even better if a few zeros are lopped
off the rouble, which trades at almost 6,000 to the dollar but was worth more
than a dollar a decade ago. 
Central bankers are considering other countries' approach to redenominating
currency, Prime-Tass news agency quoted bank Chairman Sergei Dubinin as
telling journalists. 
But Russians who hold as much as $20 billion cash in U.S. bills, distrust
their own currency, and Dubinin said any such cosmetic move would be careful
and fair to all. 
``If redenomination is considered expedient, then the currency exchange
will
take place at the same rate for all holders,'' he promised. 

*********

#6
Russia: Analysis From Washington -- New East-West Tensions
By Paul Goble

Washington, 15 July 1997 (RFE/RL) - The Russian government has put itself
at odds with the West on three key issues in a manner that threatens to
undermine the recent spirit of cooperation between the two. 
It has denounced NATO's move to arrest suspected war criminals in the
former Yugoslavia. It has condemned the possible inclusion of the three
Baltic states into NATO as "dangerous." And it has apparently expanded its
participation in Iran's military industry. 
Some in both Russia and the West may be inclined to dismiss or even
excuse these statements and actions as Moscow's response to the NATO's
decision to expand. 
But a careful consideration of each suggests that they reflect deeper
divisions between East and West, disagreements that may surface in the
context of the NATO enlargement debate but that are in fact more fundamental. 
As a result, each of them has the potential to expand into an even more
general disagreement between the two sides even as some leaders on each do
what they can to contain the discord. 
Last Friday, the Russian foreign ministry sharply criticized the use of
NATO troops to arrest suspected Bosnian Serb war criminals. It said that
Russia would not take "any responsibility" for what it called "cowboy raids." 
In its response, the U.S. State Department noted that Russia was the
only country that had objected to the raids. Department spokesman Nicholas
Burns added that he knew of no one but the Serbs and Bosnian Serbs who were
seriously arguing against action. 
And Burns continued that if the Russians wanted to associate themselves
with the Serbs and the Bosnian Serbs, that was clearly up to them. 
But he pointedly noted that among the Bosnian Serbs are some people who
bear responsibility for what Burns called the worst crimes against humanity
in Europe since World War II. 
This exchange between the Russian and American foreign ministries is one
of the sharpest in many months. Even by itself, it would have highlighted
the current differences between Moscow and Washington. 
But it was quickly followed by a very public disagreement between the
two on whether Estonia, Latvia and Lithuania could ever become members of
the Western alliance. 
Russian President Boris Yeltsin on Sunday reiterated Russian opposition
to the inclusion of the three Baltic countries into NATO. 
He said that would endanger Russian security. And he added that NATO's
decision to mention the Balts as possible future members at Madrid was in
itself "dangerous." 
On the one hand, Yeltsin's remarks simply restated earlier Russian
objections. But on another, they were inflammatory because U.S. Secretary
of State Madeleine Albright had given more support to the idea of future
Baltic membership than ever before. 
On Sunday, Albright said on Russian television that the Baltic states
were eligible to join NATO despite Russian objections. "We have said all
along that NATO is open to all democratic market systems in Europe," the
American diplomat added. 
And the same day in Vilnius, she told Lithuanian students that the
United States supports "your efforts" to join NATO. "We will not punish you
in the future just because you were subjugated in the past." 
Albright and her aides tried to take some of the sting out of these
words for the Russians by suggesting that no NATO country is yet pressing
for Baltic admission. But despite these efforts, the differences between
Moscow and the West could hardly be more stark. 
And yet a third issue surfaced over the weekend to highlight this
continuing divide. On Sunday, Israeli officials told the Jerusalem
newspaper Maariv that they had identified some 9,000 Russian armament
experts currently working in Iran. 
The newspaper reported that the Israeli government had sent a report on
its findings to the leaders of Germany, the United States and France. 
Even if the Maariv figure is exaggerated, such Russian participation in
the Iranian arms industry represents a direct challenge to the West and
especially to the United States. 
Washington has consistently opposed any outside involvement in the
Iranian economy, let alone the Iranian arms industry. Indeed, last week the
United States put pressure on Ukraine to end its sales of military
technology to Tehran. 
Russia's apparent decision to expand its participation, something
Washington earlier tried to block, thus represents not only an effort by
Moscow to recover its influence in radical Islamic states of the Middle
East but also to challenge the U.S. in yet another venue. 
Many in both Moscow and the West are likely to try to limit the impact
of such disagreements lest they threaten cooperation on other issues. But
the depth of discord on these three questions shows how difficult the task
will be. 

***********

#7
YELTSIN'S STAFF GET 17,000 AGONY LINE CALLS WITHIN FORTNIGHT
MOSCOW, JULY 15 (from RIA Novosti correspondent Natalia
Salnikova) -- The presidential agony line received over 17,000
calls within the last two weeks, when pensioners were authorised
to make free calls and inform the presidential staff about all
pension payment abuses.
This is the last day of the emergency arrangement, and the
presidential staff are summing it up to report to Boris Yeltsin
tomorrow, Mikhail Mironov, in charge of public appeals on the
presidential staff, said in an exclusive RIA interview as he
pointed out that the number of back payment complaints had
dramatically shrunken these last few days. More than that, 85
per cent of recent callers thanked the national leaders for
timely payments, while a mere 15 per cent were complaining of
payments put off. 

*********

#8
SUMMING UP EFFORTS TO BUILD UP BUDGETARY REVENUE
MOSCOW, JULY 15 /FROM RIA NOVOSTI CORRESPONDENTS ANDREY
GALKIN, YULIA KAPUSTINA AND OLGA KIRILLINA/--Over the four
months the inter-departmental revenue build-up plan has been in
effect, the state budget has received overdue taxes to the tune
of 1.8 trillion roubles. These include over 920 billion to the
federal budget and 915 billion to local budgets. The figures
were cited today at a briefing by General Yevgeny Novikov, chief
of the main board for economic crime combat. 
Besides, legal proceedings were started in 1,300 cases over
aversion of tax-payment. Among chief offenders are satellite
firms conducting barter operations with major tax-dodging
companies as well as office abuse and embezzlement committed by
officials. The Ministry of the Interior, in association with tax
services, staged check-ups on law observance at enterprises
catching and marketing sea products, oil-and-gas companies,
banks and other lending institutions.
According to preliminary results, the decision has been
taken to set up a data tank on legal and physical entities who
have committed economic crimes. Besides, the Interior Ministry
has suggested passing a law on declaring major purchases to the
sum of more than 300 minimal wages and on amendments to the
Criminal Code of the Russian Federation in its part "concerning
responsibility of officials for cash settlement above
established norms.
The inter-departmental plan for budgetary revenue build-up
was approved by Prime-Minister Viktor Chernomyrdin on March 15
this year and is being carried out by joint efforts of the
Interior Ministry, the Federal Service of Tax Police, the State
Tax Service, the State Customs Committee and Russia's Federal
Service for currency and export control.

**********

#9
The Economist 
July 12th - 18th, 1997
[for personal use only]
A survey of RUSSIA: In search of spring
8/8. The rooks have come
Might spring have arrived at last?

IN THE Tretyakov Gallery in Moscow hangs a well-known painting by Alexei
Savrasov, "The Rooks Have Come", which is reproduced on the cover of this
survey. To art critics, the return of these cawing birds to make their
nests among the feathery branches of the birch trees represents spring, and
so regeneration and the promise of better times. To an untutored onlooker,
however, the scene looks horribly wintry and the birds could easily be
hoodie crows, ready to pick at whatever carrion they can find in the snow.
in the same way, it is far from clear whether Russia is emerging into
cheerful spring or still in the grip of an apparently endless winter.

Those who see winter will dwell on the losers in the current turmoil, the
Russians who have found themselves on the down escalator these past five
years. For them, reform has meant confusion, loss of position,
impoverishment. Many of these people are valuable, hard-working members of
society. Some can get through this latest set of hard times in the
traditional manner-by using a mixture of connections, barter, toil or
theft.others look out of their window and see the world literally crashing
about them. So many balconies have collapsed from lack of maintenance in
St Petersburg that last year the council took to tearing down any it
thought dangerous, leaving bare bricks on beautiful stuccoed facades. That
did not save Alexei Lazarev, a 14-year old boy killed in April by falling
masonry.

For many, the suffering will increase rather than stop. Mr Nemtsov's
attack on subsidies will make some people's lives harder. Unemployment is
likely to rise, as overmanned companies shed labour. The bleak fact is
that most Russians work in miserably unproductive industries: the 100
biggest companies produce 40-50% of GDP but employ less than 3% of the
labout force. You might think therefore that a great opportunity awaits
small and mediumsized businesses-which together employ a paltry l0% and
produce barely 12% of GDP - but they are unlikely to take it soon. Taxes,
regulations and the incubus of the mafia keep them down. And anyway, there
are not enough of them to be able quickly to create the millions of jobs
the country needs.

For those on the land, too, life is getting harder. Three-quarters of
Russia's farms were losing money last year, and will probably go on doing
so. The only solution, privatisation, is scarcely advancing at all: only
3% of agricultural workers are private farmers, and their number is
falling. Moreover, because farmland is deemed to have no value, banks will
not treat it as collateral, so credit is almost unobtainable. The
countryside is starved of investment.

Against this background, it is hard to see much economic growth. Who will
invest in companies that keep several sets of books; whose managers are
untrainable (only 4% "fit the parameters of a market-oriented manager",
says the head of the federal bankruptcy administration - the same
proportion as in 1988); whose "directors behave like majordomos, not like
owners"? The words are those of Yevgeni Yasin, the minister without
portfolio, and his answer to the question is, Nobody. Mr Yasin says
investors have no intention of putting money into Russian enterprises. And
anyway, is there any money to invest? Foreigners will not provide it: the
$2 billion they invested in 1995 was trifling compared with the $38 billion
they sent to China. As for Russia's banks, their capital is less than
Finland's.

So Russians are likely to be dependent on their uchastki - their little
family plots-for some time yet. These plots are now thought to provide 50%
Of the food produced in Russia. It is a frightening statistic,
illustrating the way that Russia really is a subsistence economy. The old
description, "Upper Volta with rockets" ' seems truer than ever. Yet the
statistic is hopeful too: it shows that on their own land - a tiny
proportion of their country's millions of hectares - they can be as
productive as anyone.

As slow thaw

And so from winter to spring. If the rooks really have arrived, it is just
a matter of giving Russians, as it were, their own land. That has been the
logic behind the entire privatisation programme, the programme that has led
to so much inequity and theft. Alas, those are not its only shortcomings.
Another is that so much was privatised before it was broken up or
restructured; capitalism was created without competition. in their defence,
the privatisers say they had to seize their chance when they had it. They
did not know how long it would be before reactionaries took over the
government, possibly even by force. And they were right: in October 1993,
an armed attempt was made to put a stop to it all. Moreover, if
privatisation was crude, and competition sacrificed, that was because it
had to be to get the permission of parliament and the goodwill of the
managers who could frustrate it.

It is a persuasive argument, and would be a clinching one had it led to its
desired ends. One of these was that it would bring greater economic
efficiency through restructuring. That has far to go. Another was to
create a huge class of property-owners who would want to secure protection
for their investments - whether shares in privatised firms or in mutual
funds. Through the ballot box, they would see that they got it; and they,
with allies in a growing service sector, would also throw their weight
behind such reforms as land privatisation, economic stabilisation and free
trade. But so far, the claim that privatisation has wrought great changes
can only really be sustained in the 11% of privatised companies that are
controlled by outsiders (non managers) with significant blocks of shares.
All this, however, is not to say that privatisation has failed: merely that
it is incomplete. The need now is to press on with the second stage, to
enable outsiders to win control in the 80% of companies where they do not
at present have it. Unfortunately, there is no sign of further privatisation.

There is, however, evidence of a big improvement in the rules of the game.
In May a regional court upheld a claim by a group of foreign and Russian
investors, together holding 40% of the shares in a large steel company,
Novolipetsk Metallurgical Kombinat, to nominate four directors for election
to the board. It promises to be a landmark ruling in favour of minority
shareholders and, with other rulings, could well lead to further changes,
such as an opening of companies' books and the appointment of external
auditors. Western auditors alone may be quietly changing the habits of
more and more Russian companies. Alfa Bank, for instance, will not lend to
any business whose books are not audited to western standards. Such audits
ineluctably lead to greater openness and efficiency.

Further spring-like features can be found all over the landscape: a good
appointment at the head of the tax service here, a crackdown on corruption
there, the sacking of some generals, the rulings of some arbitrators.
Public tendering has been opened up; the cosy arrangements between
government and certain banks are being broken. There is even evidence that
flight capital is coming home and that Russians are starting to invest in
their own country. And some Russians indubitably want to create serious
international companies. Mikhail Khodorkovsky, for instance, who runs
Yukos, Russia's second-largest oil company, is determined to make it fit to
sup with the Seven Sisters.

The strongest sign of spring, though, is in the ascendancy of Mr Chubais,
Mr Nemtsov and, it should not be forgotten, Mr Yeltsin himself. If Mr
Yeltsin - never a man for day-to-day administration, always better at
rising to the occasion in a crisis - can continue to put his weight behind
reform, there is a real chance that it will bring results. The small signs
would be a sensible budget before the Duma, a decent foreign-investment
law, the bringing to book of a corrupt oligarch or two: do not rule out a
show trial. But bigger changes have to take place, and quickly. In some
respects, the pace of change in Russia is astonishingly fast. The
transformation from robber-baron to prominent politician that took three
generations in America takes just a few years in Russia. Similar speed is
called for in the transformation of new money to old if, as must be hoped,
old money has an interest in seeing the rule of law applied to business and
government.

Here the ambiguity of Russia returns. Sometimes what seems to be a change
maybe evidence of deep continuity, or vice versa. The sign in the
cafeteria of the Hotel Volzhsky Otkos in Nizhny Novgorod is an example. It
lists the categories of people who may advance to the head of the queue for
service: heroes of Soviet labour, heroes of Russian labour, mothers with
five or more children under 16, those who helped put out the fire at
Chernobyl, veterans of the Great Patriotic War, and those who have been
rehabilitated after false imprisonment for political crimes. Evidence of
an incorrigible addiction to privileges and waivers? Of the inevitability
of finding queues? Or of a new politics that recognises the evils of the
old regime?

Nihilism obstat

There is unquestionably a deep fatalism about the Russians. It makes it
hard to believe that in some places, especially the countryside, change
will bubble up from below. It is hard not to contrast this profound sense
of cynicism and weariness with the energy of Asia or the enthusiasm of
America. Yet there is room even for fatalism in the springlike landscape.
It makes the present upheaval tolerable. Things are bad, but so what?
They have always been bad. You should expect no better from this lot of
thieving rulers than from any of their predecessors through the centuries.
No point in rising up.

Or in working to make life better? That is certainly the depressing
conclusion of some people, those who find solace only in the vodka bottle.
But not of all. It is resourcefulness as well as fatalism that has enabled
the Russians to survive throughout centuries of suffering. They have
reserves of both qualities. As Richard Pipes, a Harvard historian, points
out, Russians have just been let out of prison, and when people are let out
of prison, some will be unable to cope; their spirit will be shattered,
confidence destroyed. others, though, will be truly liberated, eager to
take advantage of life without bars.

Unfortunately, all suffer from a history of 70 years of communism and more
of autocracy. No other country has such a legacy, no other has had its
brightest and most enterprising people held down or exterminated so
systematically for so long. And no other country, communist or otherwise,
still has quite so many disabilities as Russia. It has Africa's
subsistence economy, Pakistan's corruption, Brazil's wayward congress,
Italy's mafia, Canada's fissiparousness-and a Communist Party all its own.

To believe that it will, in spite of all this, make a success of its
endeavours undoubtedly requires a degree of faith. No faith is needed,
however, to see that it does today have a fighting chance of pulling
through. With luck, the economy will slowly start to get better. With
luck, the new rich will start to see advantages in going legit. With luck,
MrYeltsin will survive, and restrain himself from cutting down Mr Nemtsov,
should he become too successful. It will take time for it all to come
together. But with luck, the rooks really may have arrived. If they
haven't, they will certainly not be back this decade.

*********

#10
Chicago Tribune
13 July 1997
[for personal use only]
MOSCOW'S ANNUAL HOT WATER SHUTDOWN IS A WHIFF OF THE PAST 
By Colin McMahon, Tribune Staff Writer. 
Dateline: MOSCOW 

Ah, summer in Moscow.
Sipping cold beers at sidewalk cafes that pop up where once only the
Soviet elite could gather. Picnicking in Sparrow (formerly Lenin) Hills or
taking boat rides on the Moscow River. Spending long weekends at the dacha.
Not to mention holding one's nose on the Moscow metro.
It's the hot and sticky season in this city of about 12 million people,
and with many Muscovites going without hot water these days, you can put the
emphasis on sticky.
It is a rite of summer peculiar to the Russian capital: For three weeks,
staggered in blocks between May and September, officials shut off hot water
to various neighborhoods to clean and repair Moscow's centrally planned
central heating system.
Some residents respond by hauling out the 10-gallon pot, setting the
morning alarm a half-hour early and boiling themselves a nice, hot bath.
Others flock to the city's private bathhouses or impose on friends and
relatives. Then there's that subset who would rather just let hygiene slide.
"You can tell on the metro which neighborhoods are without hot water," one
woman said. "The people have greasy hair, but a lot of the women are still
trying their best to look good."
The whole system seems so, well, Soviet: Society resolutely sacrificing as
one to overcome a common problem, like the citizen harvests that fell apart
once Mikhail Gorbachev loosened the reins.
The reality is the practice has nothing to do with ideology and everything
to do with technology.
"You cannot do the repairs and electrical work on the heating system with
water in the system," said Svetlana Davidova, a federal official who oversees
energy provision in Moscow. "As long as we have this centralized heating
system, it will always stay like this."
For some, the water deprivation is "an annual catastrophe," as one woman
put it. For others, like Yuri Sakhno, it's a minor nuisance.
"I don't give it much thought, to be honest," said Sakhno, the 25-year-old
general manager of a Moscow appliance store. "It's hot out now, so. . . ."
Sakhno sells electric boilers for those who can't stand even temporary
discomfort. He's out of stock now (the smaller boilers usually fly off the
shelves soon after they come in), except for a deluxe model that costs about
$400--far more than many Russians make in a month.
"I see no reason to buy something that you'll need for only, what, a week
or two?" Sakhno said, ignoring for the moment that his job is to sell these
things.
Others scoff as well, like the pensioner who said she could not afford to
pay even for the electricity to run a boiler, much less buy one.
So what do Muscovites do?
Some have the cold-water shower down to a science, which in May and June
can be downright frigid. Run the water, get wet. Kill the water, get soaped.
Run the water, get rinsed. Kill the water, get dry. All of this is easier
because many Moscow baths are really "sh-baths"--shower heads dangling on the
end of a snakelike pipe.
Friendships and family relations get closer--or strained.
"I call up my friends, and I say, `Hi, so do you have hot water?' If it's
`yes,' then I tell them, `Great, I'll see you soon,' " said Anna Markova, a
15-year-old high school student out for a walk with a boyfriend on a balmy
afternoon.
Markova, dressed in jeans and a Metallica T-shirt, said she hopes Moscow's
heating system does not change soon.
"I don't complain about it because this is Russia," said Markova, sipping
from a can of something called "Gin and Tonic," a premixed cocktail now
popular on Moscow's streets. "It's why it's so interesting here."
Besides, having only cold water beats having no water at all. Ask Nikolai
Vasechenkov, who arrived in Moscow a few weeks ago from southern Russia.
"In the Crimea, this happens all the time," said the 23-year-old
Vasechenkov, who was hoping to land a construction job even though he had no
permit to live or work in the capital. "There they announce what hours water
will be available, what hours it won't--all year long. Things are a lot worse
there."
Moscow operates a 60-year-old all-in-one system that uses hot water for
steam-heating radiators and for the bath.
To say the least, it is a testament to central planning. Rather than each
building having its own boiler and furnace, and thereby individual control,
everyone gets heat and hot water from the same source.
The government is like a big landlord, with an eye on the energy meter and
a firm grip on the thermostat. If it's too cold or too hot, Muscovites can do
little, except grumble and open or close windows. When the heat is shut off
in May, it stays shut off until autumn even if temperatures plunge toward
freezing, as they did this past spring.
The system, with its Soviet tinge, is an example of the inconsistencies
one sees in Russia's struggle to join the free-market First World.
Young professionals and entrepreneurs, people who are destined to form the
backbone of any middle class that Russia is able to create, furtively are
telephoning friends and family in search of a hot shower.
It may indeed be interesting, as Anna Markova insists, but whether it is
productive is a different issue.

*********

#11
DEFENSE MINISTRY TO SUBMIT PROGRAM ON CONTRACT SERVICE BY AUTUMN 
MOSCOW, JULY 15 (FROM RIA NOVOSTI CORRESPONDENT ALEKSEI
MESHKOV) -- In line with the presidential decree On Transfer to
Staffing Soldiers and Sergeants Personnel of Russia`s Armed
Forces on Professional Basis, Russia`s Defense Ministry is
finalizing a corresponding program to submit it to the
government for consideration by this autumn, deputy chief of the
Organizational and Mobilization Department of Russia`s General
Staff Major General Valery Astanin reported at a briefing in the
Defense Ministry today.
He pointed out that as many as 231,000 people (among them
115,000 women) serve on contract in Russia`s Armed Forces in the
ranks of soldiers and sergeants, this is about 25 percent of the
total strength of soldiers and sergeants.
As Astanin said, to draw a soldier for a contract service
will cost 3.5 times more that to call up an ordinary conscript.
At the same time "the performance of a contract soldier is not
so high as it was expected in the military department." Astanin
believes that this is mainly related to the fact that people
come to serve not due to their conviction but "sooner due to a
hopeless situation." Now they start to leave the Armed Forces
because of the absence of housing, inappropriate level and undue
payment of monetary allowances, problems with jobs for members
of their families, As many as 17,000 military who have served on
contract have annulled their contracts, their number may
increase in 1998.
Really assessing Russia`s economic and financial state, the
Defense Ministry believes that "it would be hardly possible to
transfer to staffing the soldiers and sergeants personnel on
contract from 2000," he said. That`s why the Russian Defense
Ministry offers to first of all transfer units and detachments
making up peacekeeping forces, as well as forces intended to
fulfill tasks under the situation of armed conflicts, to
contract service. 

*******

#12

>From Russia Today press survey
July 14, 1997
Summary
Izvestiya 
Lead story 
Russian Neo-Nazis Say Their People Have Penetrated All the Power Structures 

Stavropol's branch of the Russian National Unity (RNE) organization
numbers about 2,000 people, according to its leaders. These people are
ready to close their ranks and to start "cleaning Holy Russia of all the
filth" at the first command of leader Aleksander Barkashev. 
"We have a huge number of supporters. Our people are everywhere. In the
territory administration, in the FSB (Federal Security Service), in the
police departments and in the army." 
"They do not advertise themselves, but they are doing useful and
important work. Our organization is the most informed organization in the
territory," the head of the Stavropol RNE branch, Andrey Dudinov, told the
daily. 
Their headquarters are in a building in the center of Stavropol. The
premises are covered with portraits of leader Barkashev and decorated with
red swastikas, a symbol of the party. "The officers of the 101th brigade of
interior troops and military school students often come here," Dudinov said. 
The RNE is most popular with soldiers and officers who were in the
Chechen war, he said. Its members in Stavropol are especially active in the
205th motor-infantry brigade, which has been withdrawn from Chechnya. 
The organization's key concept is "iron order." Now that we are
witnessing widespread destruction the country, the RNE wants to impose
"Russian order," said the daily -- which means Russian math, Russian
automobiles and a Russian Internet. Those who do not like it, will have to
go to other countries to live, according to the RNE's plans. 

**********

#13
Date: Tue, 15 Jul 1997 18:30:23 -0400
From: Stacy Gunther <sgunther@stimson.org>
Subject: Information on "Russia's War"

If no one else has already responded, copies of "Russia's War," a 10 hour
documentary series, can be ordered through PBS: (800) 344-3337. If it
takes a little while, that is probably because Congress is gnawing away at
their budget. My only plug is, therefore, become a member of your local
public television station -- they could use it. (In DC, that's WETA). Best!

********