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Johnson's Russia List


July 24, 1997   

This Date's Issues:   1080  1081

Johnson's Russia List
24 July 1997

[Note from David Johnson:
A think-piece in the current issue of The New Yorker
(not David Remnick) bemoans the state of American media
in "the newsless society." We who are immersed in Russian
news can obviously count our blessings for no matter
what else Russia may lack today, it certainly has news
1. Moscow Times: Sergei Markov and Michael McFaul,
Russian Presidential Primaries?

2. Max Smetannikov (Bloomberg News): Re Folks drowning in 

3. Jamestown Foundation Monitor: DEFENSE EXPERT ASSAILS

4. Sam Ruben: Need to Improve Docking Maneuvers Now.
5. The Independent (UK): Phil Reeves, Yeltsin wins over the 

6. New York Times letters in response to Michael McFaul's
"Russia's Ominous Void."

7. Washington Times: James Morrison, NATO 'mistake.'
(Remarks of Russian Ambassador Yuli Vorontsov).



11. Interfax PM: Russia's Economy Showing Growth.
12. AP: 30 Nations to Overhaul Arms Pact.
13. Nezavisimaya Gazeta: Redistribution of Power in the Government.
14. Pravda-5: The First-Half Statistics Are False.



Moscow Times
July 24, 1997
Russian Presidential Primaries? ("New Kind of Candidate") 
By Sergei Markov and Michael McFaul
McFaul and Markov are associates at the Carnegie Moscow Center as well as
professors at Stanford and Moscow State respectively. 

Two weeks ago, two critical elections took place in Russia, one for
governor in Nizhny Novgorod and one for mayor in Samara. These elections
took on much greater significance than your typical regional election in
that both elections filled offices vacated by two new deputy ministers in
the current federal government, first deputy prime minister Boris Nemtsov
and deputy prime minister, Oleg Sysuev. As both Nemtsov and Sysuyev are
considered leaders of Russia's "second liberal revolution", elections in
Nizhny and Samara effectively served as referenda on the present government.
Consequently, political supporters and opponents of the current regime
devoted inordinate amounts of time, organizational resources, and money to
their campaigns.
According to accounts reported on Russian national television networks,
Moscow newspapers, and some Western press accounts, the "reformers" won and
the "communists" lost both elections. This oversimplified scorecard is
fundamentally flawed and obscures the new real contours of Russian
electoral politics. From 1990-1996, Russian electoral political were
polarized between "reformers" and "communists," but since last year's
presidential election, this bipolar scheme has disappeared. In its place, a
more complex range of leader "types" and ideologies is beginning to
emerge. While still early in the presidential electoral cycle, one can
already identify not two but four categories of candidates that will
compete in 2000 -- the liberal-young-reformer-type (Boris Nemtsov), the
non-ideological "khozyan" (boss) who gets things done ( Yuri Luzhkov), the
anti-communist and anti-regime protest candidate (Aleksandr Lebed), and the
traditional communist (Gennady Zyuganov). In Nizhny and Samara, all four
types were represented. In Nizhny, a "khozyan" ala Luzhkov won; in Samara,
a "protest" candidate ala Lebed won. In other words, both the communists
and the reformers lost. 
In Nizhny Novgorod, Gennady Khodyrev represented the traditional communist
opposition in the final round of the gubernatorial election there. He had
the full support of Zyuganov and his Russian Communist Party as well as
active support from Vladimir Zhirinovsky. As Khodyrev finished second, one
can agree with conventional accounts that reported that the "comunists" lost
in Nyzhny. 
But the "reformers" did not win. The Nizhny victor, Ivan Sklyarov, in no
way represented the liberal reformers or Nemtsov's man in Nizhny. Early in
the campaign, Nemtsov supported his Vice-Governor Igor ( ? ) Lebedev. When
it became clear that Lebedev had no chance of winning, Nemtsov loyalists in
Nizhny tried to minimize turn-out as a way to postpone the election
altogether. (If turnout was less than 25 percent, the election would not
have been legitimate.) As low turnouts typically help traditional
communists in local elections, Sklyarov's campaign organizers were furious
with the tactic. Results from the first round demonstrate that turnout
suppression did in fact help Khodyrev and hurt Sklyarov as Sklyarov fared
much worse in this first round than expected. 
Ironically, the close finish between Khodyrev and Sklyarov in the first
round convinced Nemtsov and his local allies that they had to support
Sklyarov. Nemtsov visited the region and publicly endorsed Sklyarov in the
last days of the campaign. In the weeks of campaigning before Nemtsov's
visit, however, Sklyarov purposely tried not to identify himself with the
former governor. He stressed that his own "natural conservatism" would
serve as a needed correction to Nemtsov's radical reforms. In the
countryside, Sklyarov's message was even more anti-Nemstov. According to
Maxim Dianov, manager of Sklyarov's campaign, the main message of their
campaign in the rural electoral districts of Nizhny was "Ivan Sklyarov is
a better communist then Gennady Khodyrev". 
Immediately after his electoral victory, Sklyarov moved quickly and
publicly to distance himself from Nemtsov. At his first press conference
after the election, Sklyarov declared that he personally identified himself
with Moscow mayor Yurii Luzhkov. For dramatic effect, he even wore a
"kepke" to the press conference, a hat worn frequently by Luzhkov.
Informally, Sklyarov aides in Nizhny already have begun to warn Nemtsov
loyalists within the oblast government of their future unemployment. 
In Samara two other types of future presidential candidates were
represented. Deputy mayor Anatoly Afanasiev played the role of liberal
reformer. His candidacy was supported by Deputy Prime Minister and former
mayor of Samara Oleg Sysuyev, the entire executive apparatus of the mayor's
office, and all major media outlets in the city. He received extensive
financial support from the local business community as well as from Moscow ,
which allowed him to employ some of Russia's most famous electoral
consulting firms. And still he lost. The victor, Georgy Limansky, assumed
the role of protest candidate in this drama. While Limansky has been a
known political figure on the Samara scene for several years, he has never
succeeded in winning a major election before last week's victory. The
decisive factor for him this time around was Lebed endorsement as Limansky
recently became a member of the Political Council of Lebed's People's
Republican Party. He also was successful in massing support from other
non-communist but anti-government groups in Samara, including "Yabloko" and
Boris Fyodorov's Forward Russia. 
Both these elections contain important lessons regarding Russia's next
presidential election. First, the old dichotomy of "democrats" versus
"communists" is gone. Politicians, analysts, and journalists, who continue
to cling to this old framework either are deceiving themselves or their
constituents. Second, these elections demonstrated that traditional
communists cannot win major elections. For the future presidential
election, this means that a traditional communist may again make it into the
second round, but has no chance of winning that round. Third, both of these
elections also showed the weakness of today's "party of power." While
representatives of today's government remain confident that a monopoly on
national media combined with hundreds of millions of dollars, and a
political message about the communist threat will succeed again in 2000,
elections in Nizhny and Samara suggest they are wrong. Rather, these
elections hint that we are more likely to see Luzhkov versus Lebed in the
final round of a presidential election rather than Nemtsov versus Zyuganov. 


From: "max smetannikov" <>
Organization: Bloomberg News Washington D.C.
Date: Wed, 23 Jul 1997 18:14:46 GMT-0500
Subject: Re: Folks drowning in Moscow

Dear David,
Most Moscow teenagers get smashed on the night they graduate from 
high school, or so the rumor has it. The long-standing prom night tradion is 
``meeting the sun'' -- kids essentially stay up all night and have 
the city to themselves.
One of the ``prom night stories'' sprang into my mind while I was 
reading the drowning statistics. 
A body of mine, three years older, highly intoxicated on the prom 
night, took a cab to the Moscow river and went for a swim -- from 
bank to bank.
He said it wasn't easy to haul a cab near Kremlin at 3 am wearing 
boxers and a suit jacket.
Years later, and on reflection -- it's no wonder we Russian males 
live to be only 60!

Max Smetannikov ( swims only with life guard on duty)


Jamestown Foundation Monitor
24 July 1997

published on July 22 by the daily Segodnya, one of Russia's best known and
best connected defense journalists savages the military reform program now
being drafted and implemented by the government. According to Pavel
Felgengauer, President Boris Yeltsin's unexpected decree "On Emergency
Measures to Reorganize the Armed Forces," announced on July 16, constitutes
neither a first step in the radical restructuring of the armed forces nor a
blow against reactionary generals within the defense establishment, as many
in the media have portrayed it. 

Instead, Felgengauer claims, the decree was drafted by a small clique within
the Defense Ministry -- organized around Col. Gen. Valery Manilov, a senior
General Staff officer -- as a means by which to pursue its own narrow
bureaucratic interests. As one example, Felgengauer cites the proposed
amalgamation of Russia's Strategic Rocket Forces (SRF) and Military Space
Forces, which he claims is aimed not at streamlining or cost-cutting, but at
giving SRF commanders access to the considerable commercial revenues being
generated by the Military Space Forces. Felgengauer warns that the
amalgamation could drive away foreign customers, ultimately reducing
desperately needed revenues and endangering Russia's commercial space

Felgengauer suggests also that Yeltsin's decree was railroaded through a
military reform committee chaired by Prime Minister Viktor Chernomyrdin, and
that the Defense Council, which had been given the dominant role in drafting
Russia's military reform program, was by-passed. According to Felgengauer,
Defense Council secretary Yury Baturin -- a civilian -- has denied having
anything to do with the decree and Defense Council officials, speaking
privately, have dismissed the substance of the document as "nonsense."
Moreover, Felgengauer quotes Defense Minister Igor Sergeev as saying that it
will not be necessary even to convene the Defense Council to promote the new
reforms. The Russian journalist draws the disturbing conclusion that the
hasty adoption of the reform decree has been aimed expressly at excluding
civilian experts from participating in the development of Russia's defense
reform program. (Segodnya, July 22)

Felgengauer brings an element of respectability to criticism of the new
defense reform plan being voiced by the Kremlin's nationalist and Communist
opposition, particularly on the question of whether the reform has been
conceived and is being implemented with undue haste. However appropriate his
comments and conclusions may be, they suggest that the government's new
military reforms could draw fire from groups across the political spectrum.


Date: Wed, 23 Jul 1997 09:22:21 -0700
From: Sam Ruben <>
Subject: Another contribution

Ruben on Russia: Need to Improve Docking Maneuvers Now
by S. M. Ruben, MD, MPH, Lay Russian Scholar

The immediate and attention-grabbing proposal, previously
entertained, in the spirit of George Catlett Marshall and his band of
post-war visionaries, is: have Russia join NATO, then call it something
Now that we're going to Mars together, in about fifteen years,
they're saying now, let's get back into that old universal
brother/sisterhood Apollo-Soyuz kind of thing. Sounds trite as usual,
but what's in a name? What's in a alliance vs. a defense arrangement vs.
a trade pact? Better and cheaper than a war, hot, cold, or warm.
The North Atlantic Treaty Organization has to evolve into a wider
scope, whether or not that means dilution (and, as any sanitarian knows,
the solution to pollution is dilution), now that we're admitting Eastern
Europe and consultative status for Russia anyway. Maybe the name can be
changed to North Atlantic and Baltic Sea Treaty Organization, then add
the Pacific someday, and maybe even revive Columbus' old rank for the
NATO-commander, maybe call him or her
Grand-Admiral-Marshal-Captain-General of the Ocean Sea, lots of gold
braid, a big hat...
What we really have to do now is admit Russia into NATO, and soon.
Make Russia's armed forces a part of our integrated forces: pay them
what our military gets paid. That's the way to infuse a quick billion
into the economy safely, without it winding up into corrupt hands, or at
least minimize this, and get our own military moving again, shake out
some cobwebs, regain that old sense of Mission. Have Russia access our
military medical facilities. 
Integration into NATO would be on the scale of the Marshall Plan,
considered by all again as typical of our great country's magnanimity,
and the benefits would be apparent a generation from now --- a better
world, the same result from the Marshall Plan. 
We need to integrate ourselves better because we're going to Mars
together. The humor will continue to fly about the Red Planet, but we're
going together; we'll recoupe some of that money we infuse into Russia's
military. We have to integrate our weights and measurements better, if
anything, for our docking maneuvers. We'll be docking alot. There'll be
alot of male-to-female ends to conjoin, couple, if you'll excuse me lest
that be misconstrued as harassment, which is one of the cobwebs that we
are shaking out of our own military. (One of the jokes in Washington was
that Dan Quayle just won his first spelling bee--- beat out Clinton and
Kennedy by knowing that harass was one word.) 
The two nations are still in the process of changing each other,
while cultural and economic evolution is proceeding rapidly on all sides
of the Ocean Seas. (Of course, we need to attend to the business of
preserving the Ocean Seas!) We ourselves are still going through
cultural evolution from Cold War militarism/patriotism (read Barbara
Ehrenreich's excellent tome "Blood Rites") to something different.
We have much to build on. We fought and died for the defeat of the
same enemy two generations ago--- fascism, even if afterward, as Pogo
said, we saw the enemy, and they were us (sic). Now we have the chance
to forge something entirely different, a new treaty alliance of
unprecedented scope. 
In the process, we can save an entire people from a decade or two of
starvation, destitution, and economic upheaval. Things in Russia are
reaching critical mass with the health situation--- dropping life
expectancy and fertility, increasing suicides and child mortality and
violence and addiction and abuse, and malnutrition. A major collapse is
eminent. We've been there before, but in an immigrant nation where
self-reliance was the rule, a certain docility was present which
internalized blame, and our government survived; we were missing a
history of dictatorship that externalized, focused, and eliminated
Russians are getting desperate. Desperate people do desperate
things... we need to avoid that. 
Besides, we're going to Mars together. We have to integrate our
military now.


The Independent (UK)
24 July 1997
[for personal use only]
Yeltsin wins over the West
By Phil Reeves in Moscow 

Boris Yeltsin found himself with some strange bedfellows yesterday. The 
Pope. Human rights activists. The United States Senate. These are not 
entities whom he has always considered friends. But his refusal to sign 
a Bill which would have sharply curbed religious freedom in Russia has 
won him rare international applause and will be seen as a milestone, 
albeit small, in his eratic presidency. 
Observers of this complex man have long puzzled over which component of 
his character is dominant - despot, pragmatist or (loosely speaking) 
democrat. Is he the autocrat who bombarded parliament in 1993, and 
blindly led his nation into a bloodbath in Chechnya? Or is he the man 
whom the world remembers standing on a tank opposing the failed coup of 
1991 - the same man who, for all his errors, presides over a country 
where the citizenry can read what they like, travel abroad, and (despite 
a manipulated press) say what they like. 
The third, and more convincing, variant is that of a man who simply does 
what it takes to retain power. It was this entity who fathered both the 
nationalist Boris Yeltsin of 1995, surrounded by his hard-line military 
cronies and dependent on the security services, and Boris the Beneficent 
who won the 1996 elections after promising to spend, spend, spend on the 
people - a pledge he knew he would break. 
But the freedom of worship issue placed Mr Yeltsin in a genuine 
quandary. It was a "difficult decision", he said, after labouring over 
the papers from his holiday residence in Central Russia. And he was 
right. The Bill would have restricted the activities of all but four 
religions which are classified as "traditional" in Russia - Orthodoxy, 
Islam, Judaism, and Buddhism. All other faiths would have to prove that 
they have been active in Russia for more than 15 years before they 
received legal rights. 
The ostensible targets of the new laws were outlandish religious sects. 
But it was also an attempt by the Orthodox Church to see off established 
rival churches from abroad, such as the Catholics, who claim 1 million 
worshippers in Russia. As such, it blatantly violated the Russian 
constitution which says that all religions are equal. The Bill forced Mr 
Yeltsin to make a choice in which he took a hit either way. Signing it 
would have dealt a blow to his relations with the United States and the 
West at a time when Russia is still seeking further loans, investment 
and integration into international structures. The US Senate was poised 
to withhold $200m in aid had he signed. 
Even without that threat, no politician in his right mind would seek to 
unleash the baying hounds of the American religious lobby. But, by 
vetoing it, he has set himself at odds with the Orthodox Church, an 
institution which stands close to the state and which is being promoted 
as a focus for the new Russia's national aspirations by evoking its 
imperial past. 
Mr Yeltsin is not especially devout, but he has forged close political 
ties to the Church. During his election campaign, he rarely missed an 
opportunity to appear on television standing next to the Russian 
Patriarch, Alexy 11. 
Yesterday the Church maintained a stony silence about the President's 
decision. But the hierarchy will be displeased. Mr Yeltsin's decision 
has also intensified his running battle with his Communist-dominated 
Parliament, with whom he has been fighting on several fronts, notably 
over removing Lenin from his mausoleum on Red Square. 
On the face of it, a stand-off is now looming between the Kremlin and 
the legislature when the latter returns to work in the autumn. Both 
houses overwhelmingly supported the Bill; they could override his veto 
with a two-thirds vote, forcing it into the courts. 
Yesterday there were bullish cries from the Communist camp. Viktor 
Iluykhin, a leading voice in the party, accused Mr Yeltsin of running a 
protectorate of the West. Another, Valentin Kuptsov, accused him of 
caving in to "voices from across the ocean". 
However, none of this will worry Mr Yeltsin much. He relishes the 
opportunity to remind Parliament of its institutional weakness and his 
strength. And the Communist-nationalist opposition has proved so 
ineffectual that a debate has begun among Russia watchers over whether 
it amounts to an opposition at all. 


New York Times
24 July 1997
[for personal use only]
Russian Opposition Is Not That Weak
To the Editor: 
I take issue with "Russia's Ominous Void," Michael McFaul's July 22 Op-Ed
article on the Russian opposition's weak response to NATO enlargement. If
the Communists and nationalists controlled Russia's powerful executive
branch, there would be a stern reaction to NATO expansion. It is precisely
because the power they have accrued -- their control of a majority of seats
in the Duma, Russia's legislature -- is not real power over anything but
the budget that they have been "ineffective and marginal." 
Russia's opposition leaders have threatened various responses to NATO
expansion but lack the political muscle to counter President Boris N.
Yeltsin's monopoly on foreign policy. However, months ago they formed an
anti-NATO faction in the Duma, including more than 100 members --
Communists, nationalists and even some so-called centrists. They could use
their opposition to NATO expansion to put ratification of the Start weapons
treaty and other treaties at risk. 
For a few years Russia will have an irresponsible opposition with strong
anti-Western inclinations. Therefore, the trend of bringing centrists and
hard-line opposition forces closer together is the real danger of Russian
decline and isolation. 
Mr. McFaul mentions the organization formed recently by Gen. Lev Rokhlin,
a Duma deputy and the former commander of Russian forces in Chechnya, and
Igor N. Radionov, a moderate former Defense Minister, ostensibly to "lobby"
for the interests of the military. What is so disturbing about this
association is the extremism of other leaders in the group. 
Though I would agree that NATO expansion is not on the minds of the
Russian "man in the street," it is on the minds of those in political
office, the broad political elite and the community of Russian defense
Stanford, Calif., July 23, 1997
The writer is coordinator of the Russian archives research program at the
Hoover Institution.

Don't Ignore Moderates
To the Editor: 
Countries in transition from Soviet-style socialism to some semblance of
markets and democracy have engendered two kinds of opposition: a
within-system opposition that is in broad agreement with the goals of
reform and a retrograde opposition, which is the focus of Michael McFaul's
July 22 Op-Ed article. 
The former is well represented in Russia by Grigory A. Yavlinsky and his
Yabloko party. If a right-wing, authoritarian opposition does assume power
in Russia, part of the blame might go to those in the West who have been
obsessed with the extremes of the political spectrum, to the detriment of
Yabloko and other movements that stand for human rights and a commitment to
democracy and the rule of law.
Oakland, Calif., July 22, 1997

Rural and City Divide
To the Editor: 
Michael McFaul (Op-Ed, July 22) does not give sufficient weight to the
differences between the "haves" in Moscow and the "have nots" in rural
While on a recent tour, on the road between Moscow and Poland we saw
people carrying water buckets from a community well because they didn't
have running water. Men followed horse-drawn plows in gigantic fields. Old
men and women weeded these fields with hoes. We saw emergency clinic
buildings that had not been cleaned in weeks and factory workers selling
linen napkins that had been given to them in place of wages. 
I fear that if opposition to President Boris N. Yeltsin does occur, it
will not be at the polls, but in the streets.
Edison, N.J., July 22, 1997 


Washington Times
24 July 1997
[for personal use only]
Embassy Row
By James Morrison

NATO 'mistake'
Russian Ambassador Yuli Vorontsov yesterday shook up a conference of
NATO cheerleaders by calling expansion of the Western alliance "the last
mistake of the 20th Century."
In a daylong Washington seminar of the Atlantic Council of the United
States, which included speaker after speaker praising the alliance, Mr.
Vorontsov eagerly played the role that President Bush once described as the
"skunk at a garden party."
Mr. Vorontsov also could not resist a little humor. He praised the NATO
battle tank as a well-oiled machine with eight wheels on one side and eight
on the other, a reference to the 16 current members. He said NATO is adding
three more little wheels to one side and maybe several more in the future.
That will make the tank impossible to steer, and soon it will become
nothing more than an "armor-plated tourist bus," he quipped.
Speaking of tanks, Mr. Vorontsov referred to the Soviet Union's armored
divisions that once threatened Western Europe. He said the West was right
to be "scared" of the Soviet tanks because their mission was to invade NATO
countries if the Soviet Union suffered a nuclear attack.
"Where are those divisions now? Behind the Ural Mountains rusting --
19,000 tanks rusting," he said. "There is no Russian threat to Europe."
The ambassador said Russian officials are satisfied with the new
Russia-NATO consultative council, but opposition to further expansion
unites Russians of every political stripe.
"That is a firm belief of Russians -- democrats, communists,
Zhirinovskyites," he said, referring to followers of ultra-nationalist
Vladimir Zhirinovsky.
"NATO is a military bloc," he said. "Why do you want to move the
military machine of NATO close to our borders?
"When I ask that question [at the State Department] or in the White
House, I don't get a serious answer."


SAMARA, July 24. (RIA Novosti correspondent Alexander
Krylovich). "This is exactly what I dreamt of, what is required
by the reform and what Russia's revival demands," in this way
Russian President Boris Yeltsin described his impressions of
today's visit to two private farms in the Stavropol District of
Samara Region. The head of state visited the Medvedevs'
household and a cheese-production shop at Anatoly Khripkov's
private farm.
Talking to journalists, Boris Yeltsin noted that all Russia
should learn by the example of these farms. In so doing, he
stressed with satisfaction that there is a whole programme for
the development of private farms in the Samara Region. "I have
nothing against collective and state farms provided they operate
efficiently", said the President, "however, every collective
farmer should have his own share so that he could get his land
plot back when withdrawing from the collective farm".
The head of state stated again that he is categorically
against the Land Code approved by the parliament, which rules
out the sale and purchase of land. "The whole world is working
like that", said Boris Yeltsin. "So, what are we afraid of: that
Russia will be robbed?". He stressed that it is necessary to
"really return land to farmers so that they could dispose of it,
while the state must help them in doing so."
The head of state said that he will not sign the Land Code
approved by the parliament, which, he stressed, "benefits
neither the state nor the people". "And I am upholding the
interests of the people," said Boris Yeltsin. He expressed hope
that the conciliation commission will prepare an acceptable
draft of the Land Code, which will be returned for repeated
examination to the Parliament. 


MOSCOW. JULY 24. /RIA Novosti's correspondent Alexandra
Utkina/. The Russian Orthodox Church has voiced regret over the
Russian President's rejection of the State Duma-proposed draft
law on religious associations. The Patriarch of Moscow and All
Russia Alexii II issued a statement to this effect, which was
released at a press conference in Moscow today by archishop of
Solnechnogorsk Sergii. 
In the document the Patriarch contends that the draft law
was "misinterpreted by foreign media". He believes the law, if
adopted, would "legally bar pseudo-religious organisations
appearing on the territory of our country from penetration and
The Patriarch also believes the rejection of the bill could
create tension between the authorities and "the bulk of the
people", thereby making more difficult the way towards peace and
accord. According to father Sergii, the Moscow Patriarchate
believes it necessary to make widely known to the public the
text of the bill to bring about its broad discussion in regions.
In this connection, father Sergii claimed that the new draft law
is widely supported by the public. 
The statement of the Patriarch says the Moscow Patriarchy
has called for putting the law into effect without any
amendments whatsoever. The Patriarch's statement notes that the
mentioning in the bill of a phrase about "respect" to other
confessions "in no way infringes on their activity".
According to the Metropolitan of Smolensk and Kaliningrad,
Kirill, the Patriarch is currently sick and is staying in bed.
Tomorrow the Patriarch is to pay an official visit to Lithuania,
despite the doctors' advice to put it off. 


>From RIA Novosti
24 July 1997 

In 1997, Russia's Gross Domestic Product will not grow and
will make up 98-100% of last year's volume, is the conclusion
by the RF Ministry of the Economy. 
The ministry forecasts that the volume of industrial
production will be 98-100%, and in agriculture 95%, of last
year's figures. 
The consumer prices' increment in the country will not
exceed 12-14%
The ministry notes a 0.8% growth of industrial production
in January through June 1997, explaining it by a growth of
production at small enterprises and joint ventures. At the same
time, the production dropped by 0.9% at large and medium-size
enterprises, and by 5% in agriculture, compared to the first
six months of 1996. 
Among the positive trends in the sphere of finances, the
ministry notes the low inflation rate, a stronger rouble and a
growth of international reserves which stood at US$ 23.8
billion as of 1 July. But this growth is mostly due to larger
borrowings on the part of Russia. 
Experts believe that the continuing 'dollarisation' of
Russia's economy is proven by the fact that the population
spend up to 90% of their savings to buy hard currency. 
Among factors hindering the effort to lead the Russian
economy out of the crisis, the ministry lists an unbalanced
budget, lower investments, non-payments and snowballing wage
As of 1 July, wage arrears nation-wide totaled 55.33
trillion roubles, or 17% more than at the end of 1996.


24 July 1997
PM: Russia's Economy Showing Growth 
MOSCOW -- Prime Minister Victor Chernomyrdin, chairing a Cabinet meeting
Thursday to review the progress of reforms, said current indices suggest
the Russian economy is showing signs of growth. 
Russia's efforts to improve dismal tax collection have met with some
success, he said. 
While tax collection in the first quarter reached only 58 percent of
targeted levels, this index rose to 87 percent in the second quarter, the
premier said. However, this still leaves first half budget revenues only 64
percent fulfilled, while spending targets were met at 68 percent. 
Over the past 12 months, the real volume of industrial production rose
by 2 percent, he said. He also said the government's economic policy has
been successfully in lowering inflation, which stood at about 7 percent in
the first six months of 1997. T-Bill yields have decreased six times to 20
percent compared to the same time last year. 
He added, however, that Russia's main economic problem is "financial
anemia of the real production sector" caused by a shortage of circulating
The premier also admitted that the nonpayment crisis has increased over
the past year. According to the Cabinet sources, the total volume of credit
indebtedness increased from 15 percent of the gross domestic product in
mid-1996 to 27 percent at present. 
Chernomyrdin, commenting on efforts to solve the nonpayment crisis,
warned that debtor enterprises will have to chose between reorganization
and bankruptcy.


30 Nations to Overhaul Arms Pact 
By Barry Schweid 
AP Diplomatic Writer 
July 24, 1997 
WASHINGTON (AP) -- Thirty nations have agreed to limit tanks and other
non-nuclear weapons in Eastern and Central Europe as NATO expands toward
Russia. Details could take a year to work out. 
The new limits would be included in an overhauled Conventional Forces in
Europe treaty. This could ease Russia's concern over NATO's projected
absorption of Poland, the Czech Republic and Hungary, and probably Romania
But the United States and its allies are insisting on reciprocal limits
on weapons in part of Russia, as well as in Ukraine and Belarus, and
working out an accord could be difficult. 
Apparently assured, though, is that new and lower limits will be imposed
on tanks, armored combat vehicles, aircraft and other weapons across Europe
as the 1990 treaty is overhauled to take into account the dissolution of
the Warsaw Pact and NATO's eastward expansion. 
Central and Eastern Europe were targeted for special concern by the
negotiators who concluded a six-month round of talks Wednesday in Vienna,
``The heart of Europe... is sensitive geography,'' Robert Bell of the
National Security Council said at a White House news conference. 
He called the tentative accord a ``remarkable example of the kind of
cooperative effort'' the United States and Russia were making on arms
control issues. 
``Cooperation, not confrontation'' marked the Vienna talks, which began
in February, the U.S. defense and arms control specialist said. It could
take a year, though, to complete the revision of the treaty, which now will
set limits for individual countries, not NATO and Warsaw Pact blocs. 
Under the treaty, approved by the Senate in 1992, more than 50,000
pieces of combat equipment were eliminated. 
``At the end of the day, when this new agreement is finished and all the
national ceilings have been set, the total amount of combat equipment that
will be in Europe will be significantly lower than the total amount that
had been allowed by the original 1990 treaty,'' Bell said. 
Having no choice, Russia accepted the NATO expansion with a grumble and
also pocketed an offer from President Clinton for special ties that give
Moscow a voice but not a veto in some NATO deliberations. 
In a related move, the Senate unanimously approved a change in the
treaty that will allow Russia to position more tanks and armored vehicles
along its northern and southern borders. The measure was accepted in a
100-0 vote. 
The so-called flank agreement was negotiated last year and approved by
the United States and 29 other countries. Russia had argued that the
Conventional Forces in Europe treaty, which limited Soviet deployments
along its western frontier and also its northern and southern flanks, did
not provide flexibility needed in the post-Cold War world to respond to
flare-ups such as the Chechnya uprising. 
During Soviet times, troops were concentrated in border areas, including
Ukraine and Georgia, that are now independent countries. 
The negotiators in Vienna are expected also to work out assurances for
Russia that there would be no concentrations of destabilizing weapons
menacing their borders. 
Even so, Russia is bound to wind up with far fewer weapons at its
command than the Soviet Union could muster through the Warsaw bloc, which
dissolved in 1989. 
Each country will have its own ceilings -- Bell stressed those limits
still must be set -- and Russia no longer will have access to the tanks and
other equipment held by erstwhile allies in Central and Eastern Europe. 
During the Cold War, Russia and its allies enjoyed a 3-1 superiority
over NATO in conventional arms. 


Russia Today press summary
Nezavisimaya Gazeta
23 July 1997
Redistribution of Power in the Government 
Nezavisimaya wrote about redistribution of power among Russia's political
The new reformers in the government (Anatoly Chubais, Boris Nemtsov and
Oleg Sysuyev) apparently overdid it in advertising their successes. The
propaganda even made President Boris Yeltsin believe in the unlimited
possibilities of First Deputy Prime Minister Anatoly Chubais, and caused
him to order all budget debts to state workers and the military be paid off
by September. The reformers then had to explain to the president in public
that they could not cope with this task. 
They also have not succeeded in bringing foreign investments to Russia.
Besides, said the daily, Chubais had to answer to the tough criticism of
Izvestia daily, which wrote about his sources of income. 
Prime Minister Victor Chernomyrdin, having recovered from the recent
humiliating personnel cleaning, has begun to strengthen his own position in
the government again. He now controls practically all the power structures,
said the daily -- except, maybe, the Defense Ministry. 
Chernomyrdin has reinforced his positions in the Fuel and Energy
Ministry, despite the fact that First Deputy Prime Minister Boris Nemtsov
was appointed to head the ministry. 
The premier also controls the activities of the Rosvooruzheniye company,
which is a monopolist in weapons exports. 
Nezavisimaya wrote that it is the next stage of redistribution of state
property that has sparked unusually active political life in the country
this summer. No one is going to take a vacation when metallurgical company
Norilsk Nickel, telecommunications firm Svyazinvest or the Tyumen Oil
Company are about to be privatized. 
The Cabinet reshuffle this spring brought in a younger, more reform-minded
team. At the time, observers said Chernomyrdin was battling with Chubais to
keep members of his circle within the government. Many said he lost the
fight, and the media has since been rife with rumors of a power struggle
between Chernomyrdin and the "young wolves" led by the Chubais-Nemtsov
team. Both sides, however, have denied any split. 


Russia Today press summary
Pravda 5 
23 July 1997
The First-Half Statistics Are False 
The government will discuss the country's social and economic situation
on Thursday, examining statistics for the first half of the year. 
According to official statistics, the gross domestic product rose by 0.2
percent, as compared with the first half of 1996. The daily said that a
comparison with the second half of 1996 would have been more accurate, and
would have shown a 4 percent decline. 
It also argued that official figures for inflation in the first half are
wrong (8.6 percent in the consumer sector and 6.3 percent in industry).
According to the daily's own estimates, consumer inflation was at 16
percent for the first half. This underestimated inflation rate allows banks
to set lower interest rates. The government also sets lower indexes for
salaries and pensions adjustments. 


>From United States Information Agency
23 July 1997 
(Framework in place; now time to make "New NATO" work) (1470)

Washington -- In opening the Atlantic Council Conference on NATO
Priorities after Madrid, Under Secretary of State Thomas Pickering
declared the Madrid summit to be "a watershed in the history of
European security."
Ambassador Pickering described some of the Alliance's accomplishments
and declared that now "the real work begins," suggesting three top
priorities in the aftermath of Madrid.
First, NATO must complete the accession talks and gain ratification of
the accession protocols. He stressed the necessity of doing this well,
since "success of this effort will be critical for the future of [the]
Second, the ambassador said, NATO must "bring life to the new
institutional arrangements" created to develop more cooperative
relations with the countries outside the Alliance, including the
Euro-Atlantic Partnership Council, the NATO-Russia Permanent Joint
Council, and the NATO-Ukraine Joint Charter.
Finally, NATO must complete its internal adaptation work, such as
arrangements that would permit a European-only military operation,
Pickering said.


>From United States Information Agency
23 July 1997 
(U.S. interests served by Alliance enlargement) (630)
By Rick Marshall
USIA Staff Writer

Washington -- The strategic interests of the United States will be
well-served by the enlargement of the North Atlantic Treaty
Organization (NATO), a panel consisting of Walter Slocombe, Paul
Wolfowitz and General John Sheehan concluded July 23.
"The reason NATO enlargement is in the U.S. interest is because
European security is in the U.S. interest," Slocombe, the under
secretary of defense for policy, told a conference hosted by the
Atlantic Council at the State Department.
"We have an opportunity to build a security system for all of Europe,"
a system that will include new members and those who choose not to
join the Alliance, Slocombe said.
Such a system is "very much in the U.S. national interest and very
much deserves bipartisan support," said Wolfowitz, who held Slocombe's
job in the Bush administration.
NATO's decision to add three new members -- Poland, Hungary and the
Czech Republic -- was taken July 8 at the Madrid Summit.
Wolfowitz criticized opponents of enlargement, especially in light of
the high degree of consensus the Allies have demonstrated in admitting
the new members. Were the U.S. Senate -- or other NATO parliaments --
to reject the move, it would be the equivalent of the United States
failing to ratify the Treaty of Versailles following World War I, he
said. Repairing the damage to the Alliance would be very difficult.
One of the arguments opponents of enlargement use is that there are
few visible threats on the horizon. But it is "precisely because it is
a relatively calm time" that now is the moment to act, Wolfowitz said.
Russia should profit from the moment, too, adjusting its Cold War view
of NATO's peaceful intentions.
Indeed, Russia and the West have much in common, Wolfowitz continued,
pointing to growing security concerns over northwestern Asia. "I
believe we should work with Russia to promote security in the Far
East," he said. He stressed in particular the possibilities of the new
NATO-Russian Permanent Joint Partnership Committee and common worries
NATO and Russia share about China's growing military power. He added
that he believes stability in the western Pacific and Far East would
be improved considerably if Russia and Japan could begin to cooperate
more fully.
Slocombe attacked the view that NATO enlargement will somehow prove
too costly. Such costs "are well within the means" of both the current
and the new members, he said.
Wolfowitz was even more pointed. The question of costs is being
exaggerated, he said, especially because the lack of an immediate
threat means that the work of training, equipping, and integrating the
new members' military forces into NATO can move fairly slowly.
Asked about the desire of the Baltic nations to join NATO, Wolfowitz
confessed that he did not know when membership would be possible in
this "delicate region." He added, however, that Baltic security has
already been somewhat enhanced by NATO's enlargement to the east.
Also speaking was Gen. John Sheehan, the Supreme Allied Commander,
Atlantic (SACLANT). He noted that the European defense budgets have
been declining over the past several years and expressed concern that
the "technological gap" between the United States and the Europeans is
continuing to increase as a consequence. He expressed concern, too,
about who will be responsible for the costs that will be incurred in
the Enhanced Partnership for Peace program.
On other matters Sheehan expressed confidence that Spain's integration
into NATO military wing would be completed by autumn of this year.
With that resolved and the Alliance moving toward admitting the three
new members, the most disturbing issue remaining on NATO's plate is
the French desire to gain command of AFSOUTH, the general noted.


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