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Johnson's Russia List


August 13, 1997  
This Date's Issues: 1120 1121 • 

Johnson's Russia List
13 August 1997

[Note from David Johnson:
1. Stuart Byczynski: Korzhakov book in English?
2. The Times (UK): Richard Beeston, Ex-bodyguard wins fight
to 'expose' Yeltsin.

3. Christian Science Monitor: Peter Ford, Exposé of 'Old' 
Yeltsin Shows How Much Has Changed.

4. Paul Goble (RFE/RL): Alcohol Behind Disaster.
5. Press summaries from Russia Today.
6. Interfax: George Soros to Visit Russia in October.
7. Zavtra Sees Soros Planning To Dominate Infrastructure.
8. St. Petersburg Times editorial: Ruble Reform: Yeltsin's 
Chance To Instill Currency Confidence.

9. Washington Post: Daniel Williams, Russia's Crisis of Faith.
Orthodox Church Debates Its Role as Post-Communist Glory Fades.

10. ITAR-TASS: Volga-Don Shipping Canal Falls Into Dangerous 

11. ITAR-TASS: Far East Mayors Ask Yeltsin for More Economic 

12. Financial Times (UK): John Thornhill, Chubais promises 
toughest budget.

13. Reuter: State sales, not tax, fill Russian coffers in July.
14. Journal of Commerce: Aviation safety at a new low in Russia.

16. Radio Rossii Network: Russians Doubtful of Government's 
Ability To Repay Arrears.

17. AP: Russia Probes Communications Sale.]


Date: Tue, 12 Aug 1997 
From: "Stuart Byczynski" <Stuart.Byczynski@MCI.Com> 
Subject: Korzhakov book in English?

Any word yet on when this shocking Korzhakov book will hit the US in


The Times (UK)
August 13, 199
[for personal use only]
Ex-bodyguard wins fight to 'expose' Yeltsin 

PRESIDENT Yeltsin's former bodyguard yesterday claimed victory in a 
year-long battle with the Kremlin when he announced the publication of 
his memoirs that are likely to embarrass the Russian leader and many key 
figures in his administration. 
Aleksandr Korzhakov, who for more than a decade was the Kremlin leader's 
closest confidant before his sacking last year, said that the 
authorities had tried bribes and threats to block the book Boris 
Yeltsin: From Dawn to Dusk, which is out today. "I believe that the 
people should know the people who rule them," said the burly former KGB 
agent, who for five years was regarded as the second most powerful man 
in the Kremlin. "The book portrays Yeltsin as a person and not as a 
[figure behind a] mask." 
Despite his declared noble ideals, the book seems largely motivated by 
revenge. The two men's relationship was destroyed last year after Mr 
Yeltsin ignored Mr Korzhakov's advice to cancel presidential elections 
and then sacked him in a Kremlin power struggle. Yesterday the former 
bodyguard described his relationship with Mr Yeltsin as "a divorce, 
final and irrevocable". 
After Mr Yeltsin reads the 500-page book, divorce may be putting it 
midly. In page after page Mr Korzhakov describes his former employer as 
mentally unstable, and at times suicidal, an alcoholic who allowed 
Russia's key reform period to be hijacked by a corrupt bureaucracy and a 
criminal business class. 
For the first time, the author sets out plausible versions for bizarre 
events in 1994. He writes that Mr Yeltsin was unable to attend an 
official ceremony at Shannon airport because he had suffered a heart 
seizure or stroke on the flight over from America. He also gives a 
detailed account of the incident earlier that year in Germany when Mr 
Yeltsin seized the baton from the hand of a German military conductor 
and began to conduct the band at a ceremony for the withdrawal of 
Russian troops from Berlin. 
He also attacks Tatyana Dyachenko, Mr Yeltsin's daughter and adviser, 
who was instrumental in Mr Korzhakov's removal from power. Describing 
Mrs Dyachenko as a "bit of fluff", he alleges that she was duped into 
her role by scheming Kremlin courtiers, in particular Anatoli Chubais, 
the deputy Prime Minister, and Boris Berezovsky, the billionaire and 
deputy head of the security council. 
Mr Korzhakov claims that on one occasion Mr Berezovsky discussed 
murdering Yuri Luzhkov, the Mayor of Moscow, to prevent his presidential 
ambitions and also talked of killing the mayor's allies, media magnate 
Vladimir Gusinsky and the singer Iosif Kobzon. 
He also takes a swipe at Viktor Chernomyrdin, the Prime Minister, whom 
he alleges secretly collected 1,500,000 signatures ahead of last year's 
presidential elections, in case the Russian leader did not survive to 
polling day and the premier could put forward his candidacy instead. 
The impact of Mr Korzhakov's book, which is due to have an initial print 
run of 150,000, is unlikely seriously to threaten the Russian 
leadership. Most of the events contained in the book occurred several 
years ago, and many of the allegations must be viewed with scepticism, 
since Mr Korzhakov was himself one of the most notorious figures to 
emerge from the Yeltsin Kremlin. 
Nevertheless, senior Kremlin sources said yesterday that the book would 
not go unnoticed. "These two men were very good friends, and it still 
hurts the President to hear these allegations made by someone so close 
to him for so long." 


Christian Science Monitor
August 13, 1997 
[for personal use only]
Exposé of 'Old' Yeltsin Shows How Much Has Changed 
By Peter Ford, Staff writer of The Christian Science Monitor 

MOSCOW -- For more than a year, Moscow's political circles have been 
eagerly waiting for the dirt-dishing memoirs of President Boris 
Yeltsin's former bodyguard and onetime closest buddy, Alexander 
Ever since he was unceremoniously ditched in June 1996, General 
Korzhakov has been teasing the Kremlin with thinly veiled threats to 
publish all the compromising material he had collected during the 11 
years he spent at Mr. Yeltsin's side.
But as he previewed his soon-to-be-released book of memoirs here Aug. 
12, Korzhakov sounded like a blast from a distant past. So radically has 
Yeltsin changed his image since his reelection last year that it is hard 
to imagine any of the threatened mud sticking.
The drunken autocrat veering from buffoonery to dictatorial rage whom 
Korzhakov portrays was the creature of another set of handlers - 
Korzhakov among them. Today's kinder, gentler president has surrounded 
himself with a new group of aides with a subtler approach.
Korzhakov himself acknowledges the change, almost wistfully. "As for 
Boris Yeltsin, it's a complete divorce for me," he told reporters as he 
presented his book, "Boris Yeltsin, from Dawn to Dusk." "He is a 
different person."
Korzhakov was the KGB man assigned to Yeltsin's security back in 1985, 
before Yeltsin was made a candidate member of the Soviet Politburo. 
Following his boss into the political wilderness when Yeltsin fell out 
with Mikhail Gorbachev, Korzhakov became the future Russian leader's 
drinking partner, closest confidante, and influential adviser.
But as a former KGB officer, he has let it be known, he never lost his 
nose for kompromat - the Soviet term for "compromising material" - that 
is still the currency of Russian politics. 
"If anyone wants to take me to court" to challenge allegations in the 
book, "I am ready for them," Korzhakov declared Aug. 12. "But I promise 
them that the investigation will not be secret, and that I can provide 
tapes and computer disks that I took with me. That is a warning."
IN a political culture where corruption, bribery, and blackmail are 
stock in trade, a secret policeman at the hub of power could amass a 
great deal of clout through his knowledge of embarrassing incidents. And 
Korzhakov exploited his shadowy reputation to the full.
Indeed, he is still doing so, hawking his book at press conferences, 
excerpting it in foreign newspapers before publication, and claiming 
that intermediaries acting for the Kremlin offered him $5 million not to 
publish these memoirs.
But the stories he tells - of a drunken Yeltsin seizing the baton to 
conduct a police band during a visit to Berlin in 1994, of a sick 
Yeltsin too unpresentable to get off his plane to meet the Irish prime 
minister a month later - are well-known stories about a well-known man.
Since recovering from surgery last autumn, Yeltsin has allowed his 
younger daughter, Tatyana Dyachenko, to take him in hand as his image 
Working in tandem with the new political team Yeltsin put in place after 
his reelection, Ms. Dyachenko has been key to presenting a new-style 
president with softer edges. If yesterday's Yeltsin could easily be 
imagined spending vodka-soaked nights with his old Communist Party 
buddies, today's Yeltsin is more likely to be spending time with his 
Gone too are the hard-liners - grouped in the shadowy "party of war" - 
who captured Yeltsin's ear in the run-up to the war in Chechnya. Men 
like Korzhakov himself, former Defense Minister Pavel Grachev, and other 
hawks were swept from office in a purge just before last year's 
Instead, the Kremlin tone today is set by a younger crowd with good ties 
to the West, and good ties as well with the powerful bankers who 
financed Yeltsin's re-election campaign. It was they, led by Anatoly 
Chubais - now first deputy prime minister and widely seen as the power 
behind the current government - who engineered Korzhakov's dismissal.
The bodyguard's book may have some interesting revelations to make about 
that incident, when Korzhakov's security men detained two of Mr. 
Chubais's aides as they left a government building with $500,000 that 
they could not account for. Chubais portrayed the event as an incipient 
coup d'etat, and the old guard around Korzhakov was sacked en masse.
But whatever Korzhakov writes, his revelations are unlikely to win much 
play in the newspapers, which are now almost all owned by bankers allied 
with Chubais and his colleagues.
Yeltsin may be pained by some of the things he reads in his old friend's 
memoirs, but at least he is still president. Korzhakov, as he knows only 
too well, is yesterday's man. 


Russia: Analysis From Washington -- Alcohol Behind Disaster
By Paul Goble

Prague, 12 August 1997 (RFE/RL) - Unprecedented declines in the life
expectancy of Russian men and women since the collapse of the Soviet Union
reflect equally dramatic increases in the consumption of alcohol, increases
that themselves are the product of specific Russian government decisions. 
According to a study published in the British medial magazine Lancet on
Saturday, life expectancy at birth for Russian males fell from 63.8 years in
1990 to only 57.6 years in 1994. And this measure fell for Russian females
from 74.4 years to 71.1 years over the same period. 
Such changes in life expectancy are "without parallel in the modern era,"
the study concluded. And it noted that while declines in nutrition and
general health may be responsible for some of the changes, "the evidence is
that substantial changes in alcohol consumption over the period could
plausibly explain" most of this decline. 
Many observers have suggested that Russians have turned to drink as a
result of some sort of generalized despair over the radical changes in their
lives and status following the collapse of the USSR. 
But a closer examination of this situation suggests that this linkage in
fact reflects the unintended consequences of a series of Soviet and Russian
government decisions over the last decade. 
Soviet leader Mikhail Gorbachev's 1986-87 anti-alcohol campaign not only
had the effect of driving ever more Russians to produce their own home brew
but also of highlighting the political dangers of trying to change the
drinking habits of the Russian people. 
Increased production of samogon as Russian home brew is known had
especially negative consequences. Not only did it mean that the government
lost control over much of the production of alcohol, but it also meant that
ever more Russians were drinking something often of poor quality or
contaminated by one or another poison. 
Moreover, public outrage at Gorbachev's campaign -- he became known as
the "mineral water secretary" among many Soviet citizens -- taught Russian
President Boris Yeltsin an important lesson: trying to get Russians to stop
drinking in order to improve their physical well-being would almost
certainly be hazardous to any leader's political health. 
But the impact of these factors was compounded by the impact of moves
toward a free market. Because the government was unwilling or unable to use
its tax powers to regulate the situation, the Lancet study found, "the price
of alcohol fell relative to the costs of consumer goods" during this period. 
And given this change in relative prices, ever more people have shifted
from consuming non-alcoholic beverages to drinking alcoholic ones and from
drinking light wine to hard liquor and especially vodka. 
These findings might appear to suggest that Russia could escape from its
current predicament by changing its regulations and taxes on alcoholic
beverages in order to make such drinks less available and less attractive.
But there are at least three important reasons why any such changes are
unlikely to happen or have an impact in the near future. 
First, the impact of alcohol consumption on life expectancy has been so
high because it has hit the youngest age groups. Children born to mothers
who have consumed large quanties of alcohol are particularly at risk of
life-threatening deformities. 
And even those children who have these abnormalities but do survive the
first year of life are significantly more likely to die earlier in later years. 
Second, too many Russians now see the private production and sale of
alcoholic beverages as their right under a "free market." Other countries,
including the U.S., have had to struggle to overcome the notion that the
private production of alcohol is a perfectly legitimate activity. And Russia
will have to do the same. 
And third, Russian rulers face today a problem that they have faced
before. Taking any steps to cut consumption will not only be politically
risky but will reduce tax revenues and drive ever more people into
purchasing non-regulated samogon. 
And that in turn will only exacerbate the health risks to the population. 
As any number of countries have discovered, prohibition does not work.
But unless the Russian government and the Russian people develop a workable
response to the demographic dangers they face, they will each face a problem
far greater than the one caused by individual Russians drinking themselves
to death. 


Press summaries from

12 August 1997
Redistribution of Money Is the Basis of Military Reform 
Military analyst Pavel Felgengauer wrote about the concept of military
reforms, recently approved by the president.
The Defense Ministry managed to persuade President Boris Yeltsin that the
armed forces should be restructured according to a "ground-sea-air-space"
The author argued that this is absurd from the viewpoint of a
professional military. The Strategic Nuclear Forces cannot be joined with
anything else. Otherwise, the army will not be able to win a non-nuclear
war, which has already been demonstrated by wars in Afghanistan and
Officers in many garrisons remain absolutely indifferent to reform. Their
only concern is whether or not the government fulfills its promise to pay
off salary debts to the military by the Sept.1 deadline.
If everyone gets their money, military problems will be set aside for the
time being, and the military opposition organization of Generals Igor
Rodionov and Lev Rokhlin would remain a union of retired generals. If the
pledge is not fulfilled, the servicemen's disappointment and indignation
will result in mass protest. 
The author questioned whether the system of payments to the military may
ever work perfectly, because even the exact number of servicemen in the
country remains unknown. 

Komsomolskaya Pravda
12 August 1997
General Rutskoi Commands His Region from the Fence 
Recently the Kursk region has become a place of political and financial
scandals, said the daily. And its governor – Gen. Aleksander Rutskoi, Boris
Yeltsin's former rebellious vice-president and defender of the White House
in 1993 -- is at the center of the scandals. 
Rutskoi, a former military pilot, recently got Certificate Number One of
a combine operator. A parade of 200 Rostov combines, which the governor
bought for the region, followed along the streets of Kursk. The governor
took pride in the fact that the rest of Russia had only bought 50 Rostov
combines this year. 
Almost a year has passed since Rutskoi was elected governor, and he has
never called the Kursk region anything other than a rubbish dump while in
office, Komsomolka wrote. 
Rutskoi has made dozens of foreign trips during the year – to Strasbourg,
London, Buenos Aires and Spain -- and has always promised to bring
investment money from abroad. Instead, total investments have declined by
one-third compared to during the same period of last year. 
Many of Rutskoi's advisors are connected with the criminal world, said
the daily, with some of them control the alcohol trade and other highly
criminalized businesses in the region. 

Nevskoe Vremya (St. Petersburg)
12 August 1997
Lead story
The Most Important Battles between the Duma and the Government Are Still to Come
While on a recent visit to St. Petersburg, Communist Duma speaker Gennady
Seleznyov, spoke with reporters and discussed the country's most pressing
Although he still sees the ruble as an unstable currency, Seleznyov said
the recently proposed currency redenomination is a positive step because it
is hard to stomach seeing Russians as "impoverished millionaires." While
he is confident that the government will stick to its promises of paying
wage arrears to workers and soldiers, the Duma speaker added he is concerned
this will be accomplished through proceeds from privatization. Once this
money is gone, he fears Russia will again find itself in a nonpayment crisis.
On the government's proposed tax code, Seleznyov said feedback from the
regions is negative and that serious changes will be necessary in the code's
Turning to the controversial draft law on religions recently vetoed by
the president, he said the Duma does not plan to change the text and will
try to override the president's veto.
Like most Communists, Seleznyov remains an adamant opponent of the sale
of land to the people. If land could be freely bought and sold, he said,
another Uneximbank would come along and buy up the country. And through such
a bank, some foreigner like billionaire financier George Soros would be able
to take control of Russian land. The daily added that Seleznyov neglected to
explain just what Soros would do with thousands of hectares of Russian farm


11 August 1997
George Soros to Visit Russia in October 
ST. PETERSBURG -- Billionaire financier George Soros is planning a visit to
Russia from Oct. 7-19, the St. Petersburg office of the Soros Fund announced
on Monday. 
His visit is timed to coincide with the tenth anniversary of the opening
of the fund's branches in Russia. A fund representative said meetings are
being scheduled with members of the Russian government. 
During his trip, Soros will make stops in Moscow, St. Petersburg,
Yekaterinburg, Kazan, Novosibirsk and Novgorod in the northwest of Russia. 
The Soros Fund provides aid to former Soviet Bloc countries making the
transition to capitalist economies. 
Soros, an American financier, has generally avoided investing in the
countries he aids, but that has changed in Russia. Soros was the primary
partner in a consortium led by the Russian Uneximbank in its recent
successful bid for the telecom holding Syvazinvest. He put up almost half of
the $1.9 billion winning bid. 


Zavtra Sees Soros Planning To Dominate Infrastructure 

Zavtra, No. 31
August 1997
[translation for personal use only]
Item from the "Den Security Service Agents' Reports" column,
under the "Bulletin Board" rubric

Sources from U.S. financial circles are reporting that, at the
headquarters of [George] Soros's financial empire (building "888" in New
York), business plans have been worked out and talks have been held with a
number of other U.S . financial groups about further "expansion" in the
Russian Federation. On Wall Street, Soros's representatives have, in
recent days, been "trading" in shares from the "hedge funds" connected with
the Russian sector. The funds that have been accumulated (around $4
billion) are soon to be used for three major projects. This above all
concerns buying back [perekupka] Svyazinvest shares through the banks of
Potanin and
Jordan -- the head of Renaissance-Capital -- and giving the
Americans total control over telephone communications in Russia. Another
sphere is connected with the ES (Electricity System of the Russian
Federation) [as published] Russian Joint-Stock Company, which it is planned
to buy through Nemtsov and his protege Brevnov (the first $200 million has
already been sent). Finally, the third target in the next few months will
be a number of oil companies, including Rosneft and Nizhnevartovskneftegaz.
There are plans to totally replace the managers there and elevate U.S.
finance capital to commanding heights in the infrastructure of the Russian
Federation; it is planned to make use, in all three areas, of the Unexim
group and Alpha, which are planning to destroy Most and Logovaz and then
carry out a front-line attack on Gazprom through Potanin and Soros....


St. Petersburg Times
AUGUST 11-17, 1997
Ruble Reform: Yeltsin's Chance To Instill Currency Confidence 

THERE WILL be a certain amount of anxiety and technical cost associated
with President Boris Yeltsin's decision to strike three zeros from the
nominal value of the Russian ruble. But if it is handled correctly, it will
be a crucial step towards convincing Russians that they can trust their
From a purely economic point of view, the reform is largely cosmetic. It
should not cost the public anything, it will not affect inflation nor the
exchange rate nor anything else in the real economy.
The only effect will be on people's perceptions. 
Currency has been a peculiar nightmare for Russians, going back to the
Soviet period, when the ruble was "wooden," fictional money that could not
be converted into hard currencies. In 1961 and 1991, the government simply
confiscated currency on the theory that people should not have too much cash.
This neurosis only deepened in the early reform years, when the ruble
became more or less convertible and real but suddenly dropped in value under
the assault of hyperinflation.
As all Russians suddenly become millionaires, the confusing rows of
zeroes that appeared on all prices in rubles were the public proof that
something was still wrong with the currency.
Professional economists have known for about a year and a half that the
ruble has changed. The currency has been stable against the dollar,
inflation is low and the ruble represents real value.
But the ruble re-denomination will be a way of bringing that message home
to the common people. They will now hold in their pockets a new currency
whose denominations will be a pledge from the government that it has changed
its ways.
If people believe this pledge, there will be long-term positive
consequences. Increased confidence in the currency should increase people's
willingness to save in rubles rather than dollars.
But the government will have to get this enormous public relations
exercise right. From bitter experience, most Russians will be deeply
cynical. Some will panic and many will be convinced that they are being
cheated and someone somewhere is going to make money out of this.
The Central Bank has made a good start to addressing these dangers: It
has reassured people that new currency will be exchanged for old currency
gradually and with no cost to anyone. That is exactly what must happen.
An interesting side-benefit is that the government can redesign the ugly
ruble. One proposal - to decorate the bills with heroes of Russian
literature and science - deserves particular attention.
If lopping off the zeroes works, it will be a political boost for
Yeltsin, albeit a paradoxical one. After all, he was also largely
responsible for the hyperinflation in the early years of reform that put all
the zeroes there in the first place. 


Washington Post
12 August 1997
[for personal use only]
Russia's Crisis of Faith
Orthodox Church Debates Its Role as Post-Communist Glory Fades
By Daniel Williams
Washington Post Foreign Service

MOSCOW— MOSCOW—The newly built Christ the Savior Cathedral rises high over
the Moscow skyline, its gleaming domes and giant bells attesting to the
revival of Russian Orthodox worship in Russia. Across the country, Orthodox
churches, monasteries, publishing houses and congregations have found new
life in a post-communist renewal of faith -- and of church property.
Yet for all these signs of restored glory, Russian Orthodoxy seems to be
wrestling with feelings of insecurity. It is not the heavy hand of a
totalitarian state that makes church leaders and clergy uneasy, but
declining enthusiasm among believers.
Church attendance is down. Although the Orthodox Church is widely
regarded as the most trustworthy of Russian institutions, few Russians want
to see their children join the clergy and fewer and fewer Russians are
donating money, polls show.
That sense of spiritual decline forms the backdrop to an intense
political battle being fought here over religious rights, church officials
and priests say. The Orthodox hierarchy, led by Patriarch Alexei II, is
backing a bill that would favor Russia's four "traditional" religions --
Orthodoxy, Islam, Buddhism and Judaism -- and restrict the activities of all
others, including the world's Catholic and Protestant churches. Orthodoxy,
by far Russia's biggest religion, is listed as the first among equals.
Last month, President Boris Yeltsin vetoed the bill, but he quickly began
negotiations to find a compromise. He is looking for a formula satisfactory
both to the Orthodox leadership, which says Russia's religious marketplace
needs order, and to human rights critics, who assert that limits would
represent a step back toward authoritarian rule. The U.S. Senate has
threatened to cut off aid if the measure becomes law.
While commonly portrayed as a battle between Orthodoxy and other
religions and denominations, the struggle also plays into a debate within
the church. Participants on all sides are asking the same questions: How
does Orthodoxy carry on in the first democratic experience for it and
Russia? What kind of Orthodoxy will be housed under the newly polished domes
and whitewashed walls of its ancient churches?
"We are now past the era of euphoria and into a period of a search for
normalcy," church spokesman Vsevolod Chaplin said in an interview at the
Orthodox patriarchy's offices, adjacent to an old monastery. "We have said
many times that we are not seeking to be a state religion. We only question
whether every sect that comes to Russia should have a legal status."
Alexander Borisov, a parish priest who opposes the bill and favors
getting along with other religions, countered: "We must learn to live for
the first time in a situation of freedom. Whatever problems we face, looking
to restrict the freedom of others is not the right approach."
Such a divergence of views is alarming to an organization that has
historically put a premium on unity, some observers say. "The schism that
the patriarch fears most . . . is an internal one between the
ultra-traditionalists and the modernists," wrote the English-language Moscow
The religion bill passed overwhelmingly in the Duma, the lower house of
Russia's parliament, with the votes not only of Communists and nationalists
who oppose the Yeltsin government, but also of politicians who normally back
The margin of passage seemed to reflect changes in the political
atmosphere. Russians' eagerness to embrace freedom for freedom's sake after
the fall of communism appears over. Borisov tells of a question he hears
frequently from listeners to his weekly call-in radio show. "People ask why
Russia needs so many religions. Isn't four enough?" he said.
At the beginning of the decade, Russians flocked to Orthodox services,
religious lectures and exhibits of precious icons. As the officially
atheistic Soviet Union crumbled, old and young alike quickly lined up for
long-postponed baptisms.
Chaplin, the church spokesman, said that erosion of such enthusiasm was
natural, especially given the mounting problems faced by Russians as they
adapt to the competitive life that democracy and the free market have
brought. "People expected the church to solve all problems. They soon felt
discouraged," Chaplin said.
Church leaders perceived another threat to Orthodoxy: foreign
missionaries. Encouraged by constitutional protections, representatives of
numerous religions -- Christian and non-Christian -- flocked to Russia in
search of converts. In big cities like Moscow, street-corner proselytizers
added to the cosmopolitan air. In small towns, their arrival was sometimes
welcomed, but sometimes created resentment. Occasional reports of
missionaries being run out of towns surfaced in the Russian press.
Patriarch Alexei has spoken darkly of the dangers of "totalitarian sects"
and referred to Aum Supreme Truth, the group that attacked Tokyo subway
riders with poison gas, as a prime example. Church officials frequently
portray foreign proselytizers as parasites and debauchers of Russian morals.
"Anyone with a few bottles of vodka can sign up 10 people and form a
church," said Chaplin. "And then they immediately become qualified for tax
It seems barely evident that the Orthodox Church is under threat from
abroad. Recent surveys say 50 percent of Russians identify themselves as
Orthodox, even if far fewer are churchgoers. (Alexei puts the figure at 60
Close relations with public officials and the mayor of Moscow have
benefited the church materially. For a time, the Yeltsin government awarded
the Orthodox Church a license for tobacco imports that provided a windfall
in the post-Soviet era. Christ the Savior Cathedral, a copy of a church
destroyed in the 1930s by Soviet dictator Joseph Stalin, was built with the
help of donations solicited by Moscow Mayor Yuri Luzhkov.
Dissidents who favor openness to other religions say that by raising the
foreign threat, church conservatives hope to prod the government to do what
the church feels unable to: keep the flock faithful.
Gleb Yakunin, a dissident Orthodox priest who was defrocked for political
activism against church rules, said the church has become accustomed to
identification with the government. In Soviet times, the church was both
persecuted and officially recognized. "They want state protection, though
this time without state repression," Yakunin said.
A poll issued this month by the All-Russian Public Opinion Center said
about 49 percent of Russians think the Orthodox Church should be granted no
special privileges. Twenty-seven percent were in favor of the privileges and
the rest undecided.
Public opinion, however, plays a far smaller role in the arguments of
proponents of the bill than nationalism. When Yeltsin vetoed the religion
bill, its supporters seized on the opposition voiced by the Clinton
administration, the U.S. Senate and Pope John Paul II as evidence that
Russia was being brought to its knees by foreigners.
"Yeltsin made a big mistake. We are just trying to preserve the heritage
of the state," said Alexei Podveryozkin, a Communist member of the Duma.
Alexei, the patriarch, also played the nationalist card. He compared the
influx of foreign missionaries to the expansion of NATO to Russia's borders.
"It is the aim of the sects to divide us into creeds instead of enlightening
Russia," he told Interfax news agency. "Someone finds it very important to
split the Russian public. Unity is always a force. Probably someone in the
West sees a threat in our unity."


Volga-Don Shipping Canal Falls Into Dangerous Condition 

Volgograd, 11 Aug (ITAR-TASS) -- The Volga-Don shipping canal has
become dangerous for vessels to pass through it. Its equipment is worn out
and, as a result, it could become unusable at any moment, Igor Koblev, head
of shipping at the Volga-Don basin state waterways directorate, told an
ITAR-TASS correspondent.
The Volga-Don shipping canal, which was opened 45 years ago, now needs
fundamental reconstruction, however, there is no money for this. Koblev
said that in 1996, the river transportation organization had received only
1.5 billion rubles out of the 52 billion rubles earmarked for the year, and
this year, it has not received a single ruble. As a result, only four out
of 18 sets of lock gates have been replaced during the last three years.
Yet another serious problem is the lack of proper security at the
locks. Local youngsters who throw lighted flares at barges loaded with
gasoline or climb aboard them to grab what they can are becoming a real
menace during the navigation season, Koblev said. Every day, 10 to 12
vessels pass along the Volga-Don shipping canal.


Far East Mayors Ask Yeltsin for More Economic Freedom 
Vladivostok, 9 Aug--Ten Maritime Territory mayors today appealed to
President Yeltsin to review the federal center's economic policy regarding
Maritime Territory.
The Territory makes timely annual payments of 4-5 trillion rubles to
the federal budget, and no money is left for the towns' budgets, the appeal
says. This is why the towns have problems with central heating, hot water,
and electricity supplies. There are some other problems actually unheard
of in central Russian cities.
At least 10 percent of the customs dues imposed in Maritime Territory
should be left in the local budget to stimulate the Territory's economy,
the mayors believe. Electricity tariffs in Maritime Territory should be
the same as in other areas of Russia. The mayors are also asking for
permission to use some of the money designated for clearing wage arrears of
workers paid from the budget for preparing the towns for the coming winter
and for procuring fuel.
The mayors believe that Russian provinces should have "development
budgets" which will make it possible for the local authorities actually to
plan their economic moves and not to rely on transfers, the amount and
regularity of which are determined by Moscow bureaucrats.
The mayors of all major Maritime Territory towns have signed the
appeal except for Vladivostok Mayor Viktor Cherepkov.


Financial Times (UK)
13 August 1997
[for personal use only]
Russia: Chubais promises toughest budget
By John Thornhill in Moscow

Mr Anatoly Chubais, Russia's first deputy prime minister, yesterday 
promised that next year's budget would be the toughest since reforms 
began, with further cuts in spending and a targeted primary deficit - 
which excludes debt service - of just 0.43 per cent of gross domestic 
"It will be a tough budget and I think this may turn out to be a 
surprise for some," he said.
In his additional role as acting finance minister, Mr Chubais has been 
determined to get a grip on Russia's runaway public finances, which have 
resulted in delayed wage payments to millions of soldiers and federal 
The government is presenting the 1998 budget as the best opportunity to 
inject tougher financial disciplines into the economy, stimulating the 
first real growth this decade.
The annual inflation rate is projected to fall to 5 per cent next year, 
allowing further cuts in interest rates, which are currently at about 18 
per cent.
Mr Chubais said the finance ministry was putting the finishing touches 
to its spending and revenue projections and would submit them to the 
cabinet next week.
By August 25, the budget must be presented to parliament, where it is 
expected to meet a hostile reception from opposition members.
Independent economists suggest the government will have to make heroic 
efforts to boost revenues - or make savage budget cuts - if it wants to 
close the primary budget deficit to the targeted figure.
The government expects a primary deficit of up to 3 per cent this year, 
with the overall deficit swelling to 8 per cent after interest payments 
on government debt are included.
Mr Michael Marrese, senior global emerging markets economist at Chase 
Manhattan International, said the government could secure economic 
growth if it was able to stick to its tight budget plans next year.
"I think there is a good chance we will see measured growth next year in 
the range of 2.5 per cent to 3 per cent of GDP," he said.
Mr Chubais said yesterday he was still concerned about the low levels of 
current budget revenues in spite of recent efforts to raise additional 
Nonetheless, the government expects revenues to pick up sharply over the 
coming months as new taxes are imposed on foreign currency purchases and 
securities transactions.
The finance ministry is basing its budget projections on the assumption 
that parliament will give final approval to a new tax code later this 
year. Mr Chubais said the government would work with MPs in "the most 
active, even aggressive way" to ensure the tax code was adopted.


State sales, not tax, fill Russian coffers in July
MOSCOW, Aug 12 (Reuter) - Russian state budget revenue was mostly covered by
proceeds from privatisations in July and tax collection was below target,
First Deputy Prime Minister Anatoly Chubais said on Tuesday. 
"We are not quite satisfied by July tax revenues," Chubais told a news
conference. "I can say even more -- in July we have only managed due to
proceeds from privatisation." 
He did not mention the volume of tax collected in July. 
Russia sold a quarter of telecoms holding company Svyazinvest for $1.875
billion in July and 51 percent of voting shares in metals producer Norilsk
Nickel <NKEL.RTS> for 236.18 million ECUs, excluding investment obligations,
in August. 
Chubais said tax collection had improved at the beginning of August. A new
tax on buying cash hard currency and a tax on operating in government
securities would bring more money to the government, he said. 
The Finance Ministry was now working with the regions, checking their debt to
public employees and looking for extra money to repay the arrears, he added. 
President Boris Yelsin has ordered all wage arrears, totalling 30 trillion
roubles ($5.17 billion), to be paid by January 1, 1998. 
The Finance Ministry said in a statement that the federal government would
lend 11.3 trillion roubles to the regions, which were unable to pay on their
($ = 5,800.5 roubles) 


Journal of Commerce
13 July 1997
[for personal use only]
Aviation safety at a new low in Russia
In a 2½-year period, 144 people died. Russia's Federal Aviation Service 
says 79% of its air crashes are due to human error. ASSOCIATED PRESS

MOSCOW -- Russia's civil aviation safety record reached new lows in the 
first half of this year, with 66 people killed in seven air crashes, a 
top aviation official said Tuesday.
That death rate is the highest in the last three years, Gennady Zaitsev, 
head of the Federal Aviation Service, told the Interfax news agency.
A total of 43 people died in five air crashes in 1995 and 35 were killed 
in four crashes in 1996, Mr. Zaitsev said. Errors by flight and ground 
crews and air traffic controllers account for 79% of all crashes, a 
pattern he said was evident in recent years.
Many problems experienced by Russia's civil aviation were caused by the 
breakup of Aeroflot, the giant carrier that broke into hundreds of 
separate airlines after the Soviet collapse.
Some of these small companies have neglected flight safety in the quest 
for profits, failing to properly maintain aircraft and allowing 
overloading that has resulted in fatal crashes in recent years.
Freight and passenger traffic continues to decline, according to Mr. 
Zaitsev. The amount of air freight and mail decreased by 11.3% in 
January-June 1997 against the same period in 1996, Mr. Zaitsev said.
Russian airlines carried a total of 10.8 million passengers in the first 
six months of 1997, 1.7 million people fewer than over the same period 
last year. Passenger revenue already had dropped by 7.6% in 1996, he 
He blamed low consumer purchasing power, higher ticket and fuel prices 
and the lack of government support.
Mr. Zaitsev said the government plans to review the situation in the 
civil aviation sector in November.


MOSCOW, AUGUST 12 (from RIA Novosti's Anatoli Mikhailov) -
"Empty talk," says Metropolitan Cyril of Smolensk and
Kaliningrad, as he shrugs off public alarm, especially Western,
over a harsh and constitutionally non-compliant bill, "On
Freedom of Conscience and Religious Organisations".
Moscow Patriarchate official in charge of external church
relations, the hierarch addressed a news conference on church
information policies today.
The bill cannot hurt, let alone insult any sane person, he
insisted. It was passed by the State Duma and received the
approval of His Beatitude Patriarch Alexis II. The federal
President, however, vetoed it on allegations of constitutional
True, the Constitution stipulates universal freedom of
conscience. But then, aliens, insofar as they are granted rights
equal to nationals', are supposed to be equally restricted by
the Russian legislation, which, without clashing with
constitutional premises, limits their social, political,
economic and religious activities in the fields where the
government deems such restrictions necessary, argued the
The Russian Orthodox Church firmly insists on these
restrictions, necessitated by Aum Shinryi Kyo's gas attack in
the Tokyo metro, the White Fraternity's hysterical rites, and
the "fiendish fanaticism" of many sinister cults, said Cyril.
Young religious communities will not enjoy the status of
juridical persons for fifteen years since their establishment,
according to the bill, which robs them of property and legal
defence rights. In this context, Metropolitan Cyril assured
Roman Catholics and Protestants, in particular, Baptists, that
their denominations have long established themselves in Russia
and so will not be subject to creed and activity inspections.


Russians Doubtful of Government's Ability To Repay Arrears 

Radio Rossii Network
August 10, 1997

Only 12 percent of Russia's residents believe that wage arrears to the
nonbudgetary public sphere will be paid before the end of this year. About
one-third of the population believe that debts will be paid, but rather
slowly. The same number of Russia's residents, 30 percent, think that the
Russian Government's indebtedness regarding wages and other payments will
not be reduced in the near future. Only 15 percent believe that the
government's debts are likely to increase. These figures, based on the
results of a survey carried out at the beginning of August, have been given
to Interfax by sociologists from the All-Russian Public Opinion Research
Center. Thirteen percent declined to comment.


Russia Probes Communications Sale
August 12, 1997
MOSCOW (AP) - Two government agencies are investigating the legality of last
month's $1.875 billion sale of a stake in a giant telecommunications company,
officials said Tuesday. 
The probe into the Svyazinvest privatization deal is being conducted under
orders from Prime Minister Viktor Chernomyrdin, the Interfax news agency
``Neither official nor preliminary results of this audit have been compiled
and nothing has been sent to the government,'' Iosif Rogol, acting head of
the Federal Currency and Export Control Service, was quoted as saying by the
news agency. 
Rogol said his agency and the State Anti-Monopoly Committee are conducting
the investigation. 
The Svyazinvest tender has set off a fierce debate, with the losing bidders
attacking the winner and the officials handling the sale. The government,
desperate for cash to pay off wages and other debts, has stood by the sale. 
Oneximbank, a Russian financial giant, led the winning consortium for the 25
percent stake in Svyazinvest. The consortium included financier George Soros,
who put up $980 million, as well as investment banks Deutsche Morgan Grenfell
and Morgan Stanley. 
The winners paid $700 million more than the minimum asking price, and in
comparison with past sales of state property, most observers considered the
auction relatively fair. 
The sale was part of the government's efforts to shed some of its biggest
companies in efforts to move toward a free-market economy. 


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