August 14, 1997  
This Date's Issues: 1122 • 1124 • 1125 1126

Johnson's Russia List
#1125
14 August 1997
djohnson@cdi.org

[Note from David Johnson:
1. Joel Ostrow: USAID vs. ILBE.
2. Interfax: Poll Shows Most Russians Do Not Trust Government.
3. RFE/RL NEWSLINE: NEWSPAPERS CLOSE TO CHERNOMYRDIN CRITICIZE 
PLANNED CURRENCY REFORM and CHURCH OFFICIAL SAYS RELIGION LAW WOULD 
NOT HURT CATHOLICS, BAPTISTS
and POSSIBLE NEGATIVE CONSEQUENCES OF MILITARY REFORM.
4. RFE/RL NEWSLINE: GOVERNMENT SCIENCE POLICY CRITICIZED and DEPUTY 
PRIME MINISTER WARNS OF TEXTBOOK SHORTAGE.
5. Nezavisimaya Gazeta: Denis Babich, PRIVATISATION BOSS TURFED OUT.
Chernomyrdin Kicks Out Chubais's Close Ally.
6. RIA Novosti: BOIKO ENTERS STATE PROPERTY COMMITTEE WITH 
"HIS OWN VISION" OF PRIVATIZATION PROCESS.
7. RIA Novosti: MAXIM BOIKO DOUBTLESS THAT DEAL ON SVYAZINVEST 
DONE LEGALLY.
8. RIA Novosti: GUSINSKY SAYS HE HAS NO CLAIMS TO AUCTION 
ON SALE OF SVYAZINVEST`S 25-PERCENT STAKE.
9. Delovoi Mir: Miroslav Buzhkevich, PRESIDENT LOOKS TO QUIET 
"POLITICAL AUTUMN."
10. RIA Novosti: BORIS YELTSIN RECEIVES CREDENTIALS OF AMBASSADORS
OF ELEVEN COUNTRIES IN THE KREMLIN. (and talks).
11. Reuter: Remote Russian Far East City Makes US Ice Cream.
12. Moskovskaya Pravda: Russia Said To Lack 'Appropriate' 
Caucasian Policy.
13. USIA: Belarusian Public Unlikely to Push Government on Free-Market 
Reforms. (DJ: There may be something here relevant to Russia).
14. Washington Post: Daniel Williams, Moscow Office Gear Flap Fuels 
Reform Skepticism.
15. RIA Novosti:THE POLICE PRECINCT SERVICE IS UNDER A THREAT, 
SAYS A SPOKESMAN FOR THE RUSSIAN INTERIOR MINISTRY.]

*******

#1
Date: Thu, 14 Aug 1997 11:02:58 -0500
From: "Joel M. Ostrow" <ostrow@socrates.berkeley.edu>
Subject: USAID vs. ILBE

David --

I admit up-front that I know little about ILBE and the intricacies of this
story. So I will try to confine my comments to what Filipov [Boston Globe] 
has written.
It is unfortunate that in so many stories like these the assumption of
Russian criminal intensions dominates. Why was ILBE's concern to have a
detailed account of where the equipment was going next given short-shrift
here? Why the implicit assumption that such a need is illegitimate? This
is the impression conveyed, because Fillipov did not think to press his
American sources on their insensitivity to ILBE's need for information (or
did not fight hard enough to prevent that part of the story from being
edited out.) As a former Moscow correspondent myself, this is a glaring
omission.

Given both the state of Russian law and the pervasiveness of corruption, AID
and other American organizations need to respect and be responsive to the
special needs of Russian partners when they are trying to cover their asses.
If the ILBE officials are sincere in simply wanting to know where the
equipment is going, this demand ought to be admired and immediately accepted
by other organizations, including US government organizations. It is quite
easy to see how ILBE could be investigated, harrassed, or worse, if half a
million dollars of equipment disappeared and they had no way to document
what happened to it.

It is hard enough for Russian organizations to comply with the ever-shifting
Russian tax and legal environment. It is hard enough for them to operate
honestly. AID above all should understand this. It would be nice for those
writing about Russian organizations at least sometimes to give them the
benefit of the doubt, and to ask as probing questions of the American
sources as of the Russian sources. Maybe, just maybe, ILBE is in the right,
while USAID with it's American contractors like in so many other
interventions around the world again operates with a total lack of
understanding of the local environment they purport to be trying to
"develop." Unfortunately, the employees at the US Embassy seem to have no
more of a clue.

*******

#2
Poll Shows Most Russians Do Not Trust Government
MOSCOW, Aug 14 (Interfax) - Russian citizens are rather skeptical of
promises made by the their government, though they generally approve of its
initiatives, the Public Opinion Fund revealed in a poll of 1,500
respondents held in Russian cities and villages at the beginning of August. 
Fifty-five percent of respondents do not think that the government will
be able to collect taxes from debtor- enterprises. The same number do not
believe that back wages will have been repaid to servicemen before
September 1, and 54% that debts will have been repaid to the workers of
state- run enterprises before January 1. Less than one third of the
respondents (from 29% to 31%) said the government will fulfil the these
pledges. 
Many of the respondents are rather skeptical about the optimistic media
reports on the Cabinet's performance. More than half of them (58%) doubt
that the government has a clear- cut plan of action, and 67% do not think
that the government will overcome the economic crisis. Optimism about this
is shared by 23% and 30% of the respondents respectively. 
Some 66% of Russians surveyed do not perceive the government as a
close-knit team. Another 40% are ready to accept assertions by some media
that the government has become more open, is trying to establish a dialogue
with the population and is candidly explaining its plans, successes and
setbacks. However, 51% of those polled were skeptical of this. 

*******

#3
From
RFE/RL NEWSLINE Vol 1, No. 94, Part I, 13 August 1997

NEWSPAPERS CLOSE TO CHERNOMYRDIN CRITICIZE PLANNED
CURRENCY REFORM. The redenomination of the Russian ruble planned
for 1 January 1998 will help neither the public nor the economy and
will serve only the interests of the government's "young reformers,"
according to "Nezavisimaya gazeta" on 12 August. The paper claimed
the government embarked on currency reform because it had
"exhausted its reserves for supporting the appearance of stability in
the economy." In recent months, "Nezavisimaya gazeta," partly
financed by Berezovskii's LogoVAZ group, has increasingly praised
Chernomyrdin and criticized the government's "young reformers" --
code words for First Deputy Prime Ministers Anatolii Chubais and
Boris Nemtsov (see "RFE/RL Newsline," 19 June and 29-30 July
1997). "Rabochaya tribuna," also seen as close to Chernomyrdin,
argued on 9 August that the redenomination will hurt ordinary
people, since shops are unlikely to cut prices by 1,000 times
following the disappearance of three zeroes from the ruble.

CHURCH OFFICIAL SAYS RELIGION LAW WOULD NOT HURT
CATHOLICS, BAPTISTS. Metropolitan Kirill of Smolensk and
Kaliningrad, who heads the Moscow Patriarchate's department on
foreign Church relations, has said the religion law recently vetoed by
President Boris Yeltsin would not limit the rights of Catholics or
Baptists in Russia, Russian news agencies reported on 12 August.
Kirill described the Catholic and Baptist Churches as "traditional
confessions" that have a 150-year history in Russia. (The law would
give more rights to religious groups that can prove they have existed
in Russia for at least 15 years.) Kirill argued that he had never seen a
"more liberal" religion law, despite "stylistic problems" which made
the law appear discriminatory. He also asked why Russia is "afraid"
to mention the special historical role of the Russian Orthodox Church
in the law's preamble, given that "nobody is offended when some
countries say they are Catholic countries."

POSSIBLE NEGATIVE CONSEQUENCES OF MILITARY REFORM. The
implementation of Yeltsin's July decrees on downsizing the Russian
military will create the opportunity for senior officials to embezzle
huge sums of money by writing off equipment and privatizing
property, according to military analyst Pavel Felgengauer. Writing in
"Segodnya" on 12 August, Felgengauer also warns that failure to pay
wage arrears to officers and servicemen could provoke "mass
disobedience" this fall. Felgengauer suggests that the movement
created by State Duma Defense Committee Chairman Lev Rokhlin to
support the armed forces is intended as a "nationwide parallel
system of control" over troops that will assume command over the
military if the General Staff loses control in a crisis. In an article
published in "Segodnya" on 22 July, Felgengauer argued that the
proposals outlined in Yeltsin's decree were drafted by a small group
of influential generals to protect their own personal interests.

*******

#4
From
RFE/RL NEWSLINE Vol 1, No. 95, Part I, 14 August 1997

GOVERNMENT SCIENCE POLICY CRITICIZED. Vladimir Strakhov,
director of the Institute of Earth Physics, has warned that
government policies on restructuring the scientific sector are
tantamount to the "castration of Russia's scientific potential." In an
open letter to Deputy Prime Minister Vladimir Bulgak published in
"Sovetskaya Rossiya" on 14 August, Strakhov charged that the
government, the leadership of the Academy of Sciences, and trade
unions for scientific workers have focused their efforts on preventing
a "social explosion" among scientists rather than on promoting the
"real interests and needs of science." Strakhov has staged two hunger
strikes to protest funding shortages and low salaries for Russian
scientists (see "OMRI Daily Digest," 14 October 1996 and 7 January
1997) Meanwhile, 58 hospital workers in Altai Krai, who are owed
eight months in back wages, have vowed to continue a hunger strike
that has already lasted 10 days, ITAR-TASS reported on 13 August.

DEPUTY PRIME MINISTER WARNS OF TEXTBOOK SHORTAGE. Oleg
Sysuev has warned that two weeks before the start of the academic
year, Russian schools face a drastic shortage of textbooks, ITAR-TASS
reported on 13 August. He said that only 29 million textbooks have
been printed this year, despite a demand for more than 100 million
books. Sysuev blamed regional governments, which, he said, are
responsible for supplying schools with textbooks but which have
only allocated enough funds to print 10 million books this year. He
said various federal ministries and agencies have been instructed to
take urgent steps to alleviate the textbook shortage. Sysuev also
argued that the responsibility for funding textbook production had
been transferred to regional governments too "hastily." He called for
a revision of that policy.

********

#5
>From RIA Novosti
Nezavisimaya Gazeta
August 14, 1997
PRIVATISATION BOSS TURFED OUT
Chernomyrdin Kicks Out Chubais's Close Ally 
By Denis Babich 

Personnel 
Yesterday's Boris Yeltsin decision to remove from the
post of State Property Management Committee head Deputy Prime
Minister Alfred Kokh, who got his promotion in April, portends
a great deal. In fact, the head of government, who had drawn
up the appropriate decree and marshalled his arguments to kick
out his deputy, demonstrated to energetic reformers the extent
of clout with the head of state. 
The events of the latest weeks had been indicating that
Mr Kokh's dismissal would not be a long way off. The first
warning sounded during an enlarged government meeting, when
Viktor Chernomyrdin asked Kokh to end the auctions and tenders
ballyhoo. It was, however, the latest privatisation measures
(a tender to sell a 25 per cent stake in the largest
communications holding company Svyazinvest and a 38 per cent
interest in Norilsk Nickel) that perhaps became the most
scandalous. Things went so far as to directly ignore the
Premier's instructions, something which Chernomyrdin was not
to accept lying down, as it transpired. 
Now, sensational scoops that made their way into the
pages of Moscow papers that the Russia's Federal Currency and
Export Control Service (VEK) had discovered irregularities in
the purchase of the 25 per cent of shares in the Svyazinvest
holding, reports which seemed to have petered out, may herald
a new prelude to political showdowns. With Kokh dismissed, the
department's moves would perhaps be more consistent.
However that may be, public opinion will be looking to
conclusions by the VEK and the Central Bank, although their
implications are, however, already clear to everybody. The
dismissal of Mr Kokh, whom Boris Yeltsin thanked for his work
in the government, may have only a hypothetical effect on the
deal. Kokh's sacking is hardly evidence that moves doubted by
the head of government may be ruled out in future. After all,
the seven trillion roubles, secured by the government from the
deal, is already been apportioned by the Finance Ministry
between public sector workers, and the process is almost
impossible to stop, especially since the President has praised
it in public. 
On balance, the impression is that the second stage of
privatisation has been conceived merely to smear with mud once
again government structures, which are guided in their work by
anything but common sense. 
The scramble between financial groupings for a place in
the sun, which is involving top government officials, is not
only becoming boring to the players, but doing direct damage
to the country's economy. 

*******

#6
BOIKO ENTERS STATE PROPERTY COMMITTEE WITH "HIS OWN VISION"
OF PRIVATIZATION PROCESS
MOSCOW, AUGUST 14 (RIA NOVOSTI CORRESPONDENT ALEXANDER
KRYLOVICH). Maksim Boiko who was appointed Deputy Prime Minister
and Chairman of the State Property Committee, said today that he
takes the new office "with his own vision of how the
privatization process in Russia must look like," he said this at
his last briefing in the Kremlin cabinet.
Privatization, to quote Boiko, must be "honest, efficient
and open." Mass media and the public must understand very well
"what is going on in the privatization and for what it is being
done, what is the public effect. We must known the origin of
money, we must know, who is participant of the auctions and who
becomes owner" of the privatized enterprises.
Boiko specially pointed out that "a very good dynamics" has
been marked in the privatization process and called to preserve
"the situation when the rules of privatization tenders are known
to all potential participants of the tender beforehand." "We
need stability in the rules of privatization," Boiko said.
Privatization, he emphasized, must "bring substantial
proceeds to the budget." "It is very important" that the prices
at the auctions should correspondent to fair market estimates.
Simultaneously, privatization "must lead to real improvements at
enterprises, to investments in enterprises,' Boiko said.
He highly estimated activity of his predecessor Alfred Kokh
and expressed hope that "there will be no need" for any staff
re-arrangements in the department. 

*******

#7
MAXIM BOIKO DOUBTLESS THAT DEAL ON SVYAZINVEST DONE
LEGALLY
MOSCOW, AUGUST 14, RIA NOVOSTI'S ALEXANDER KRYLOVICH - The
newly appointed Vice Premier and chairman of the State property
management committee Maxim Boiko expressed no doubts that the
transaction on Svyazinvest was concluded legally. Talking to a
press conference in the Kremlin today, he stressed that this is
just his personal opinion as he did not started functioning in
his new capacity and had no time to see the documents. 
At the same time Boiko noted that the inspection is now
underway and it will complete its work shortly. According to his
data, the Federal service for currency and finance control is
yet to submit its conclusion and they must wait when the
document will be available.
Maxim Boiko stressed that the transaction on Svyazinvest is
actually "a very important and pretty nice one". He believes
that the state will get "solid revenues to add to its budget".
In addition to that, Boiko emphasised that none of the main
participants to the tender has voiced so far any complaints
about the way it was run. "I hope that the situation on this hot
issue will be clear pretty soon", he concluded. 

*******

#8
GUSINSKY SAYS HE HAS NO CLAIMS TO AUCTION ON SALE OF
SVYAZINVEST`S 25-PERCENT STAKE
MOSCOW, AUGUST 14 (RIA NOVOSTI CORRESPONDENTS TALEXANDRA
UTKINA, LYUDMILA VANINA). Head of the Media-Most holding company
Vladimir Gusinsky said today that he "has no claims" to the
procedure of the auction on the Svyazinvest joint stock company.
Speaking life on air in a program of the Ekho Moskvy radio, he
reminded that the auction was held in line with the rules which
were developed beforehand. At the same time he assumed that all
tenders which were held over the last period of time "may arouse
reprimands."
According to Gusinsky, a company, a part of the Most group
but not the Media-Most holding company, was participating in the
auction on sale of Svyazinvest`s shares, it is related to the
financial activity on the securities market. In addition.
Gusinsky described the information on participation of Deputy
Secretary of Russia`s Security Council Boris Berezovsky in this
deal as "a myth number one." "I can reassure that neither Boris
Berezovsky, nor his structures have participated in this deal
either directly or indirectly," Gusinsky said.
Gusinsky confirmed the information on his joint trip with
President of ONEXIMbank Vladimir Poranin and Berezovsky to
France to Russia`s First Deputy Prime Minister Anatoly Chubais.
As he said, the issue which he wanted to clear up in the course
of his conversation with Chubais did not concern the tender on
sale of the Svyazinvest company`s shares. "We were speaking of
principal, honest rules of game on the market, it was important
to understand what are they now and what they will be in the
future," Gusinsky said. 

******

#9
>From RIA Novosti
Delovoi Mir
August 13, 1997
PRESIDENT LOOKS TO QUIET "POLITICAL AUTUMN"
By Miroslav BUZHKEVICH

Boris Yeltsin is going to open the spring/winter session
of the Federation Council. He agreed to do so yesterday during
his meeting with Yegor Stroyev, speaker of the upper house of
parliament. 

During his address to Senators, the President plans to
analyse the progress of the law-making process, make some
suggestions on speeding it up and, most important of all,
demand from Federal Assembly members a better legal quality of
the laws they pass. Yeltsin will also dwell on the further
development of federalism in Russia and problems associated
with it. 
The President and the upper house speaker also discussed
a new tax code. In Stroyev's opinion, this legal document
should go softer on the regions as far as taxes are concerned.
For the time being the old principle remains: most of taxes
collected are to be handed over to the centre. This, however,
acts as an obstacle to economic development of the localities
and tends to increase the number of subsidised regions. 
Yeltsin, backing the speaker's words, expressed the hope
that the government and conciliation commissions of various
levels would cope with the task and prepare a tax code, with
interests of the Russian Federation's members taken fully into
account. Failing that, added the President, the more important
articles directly affecting the implementation of the 1998
budget would have to be culled from the code to form a package
of relevant laws and be approved. 
The President agreed with Stroyev that the autumn would
be quiet if wages were paid and more jobs created, reducing
the numbers of hard-up Russian jobless. In Yeltsin's view,
pensions should also be raised by a promised 21 per cent. 
The President believes that against all odds the Russians
are calm and composed. But this does not mean that the
government should take its time. All government structures,
executive and legislative bodies, and local self-government
authorities should consolidate the positive gains made
recently in the social and economic sectors. 
The two men also took up the future of the law on freedom
of conscience and religious associations. The President, after
noting the great importance of that legal act and its
international aspect, made the point that a conciliation
commission should be set up to remove discrepancies and
contradictions in the law. He hopes that a number of
amendments can be made in this way, and the law would be
passed. 
Yeltsin then expressed great concern about orphaned
children. The state, he said, cares little for them. Cases
have recently increased of foreign nationals adopting such
children. A way out, according to Yeltsin, would be to
establish a charity fund. 
Stroyev revealed that the President did not take kindly
to the Chechen language being given the status of the sole
official language in the Chechen Republic. In the President's
view, this is counter to the Russian Federation's
Constitution, because the Chechen Republic is one of the
federation's constituent territories. 

*******

#10
BORIS YELTSIN RECEIVES CREDENTIALS OF AMBASSADORS
OF ELEVEN COUNTRIES IN THE KREMLIN 
MOSCOW, AUGUST 14 - RIA NOVOSTI CORRESPONDENT NATALYA
SALNIKOVA. Russia is for an early settlement of conflict
situations, be it in Transcausasia, Afghanistan, in the Middle
East, or in the area of the Great African Lakes, said President
Yeltsin in his speech at the ceremony of the presentation of
credentials by the ambassadors of 11 foreign countries in the
Kremlin today. The head of the Russian state stressed that for
settling conflicts in these regions Russia uses its position as
permanent member of the UN Security Council, Chairman of the
Commonwealth of Independent States and member of the "Big
Eight."
President Yeltsin noted that Russia's foreign policy is
"aimed at creating favourable international conditions for the
reforms that Russia is carrying out now." "Our country is for a
multi-polar world where all countries will be able to cooperate
and develop partnerships on the basis of equality and sovereign
equality," said Boris Yeltsin. 
Addressing the ambassadors President Yeltsin noted that
their activity in Russia will proceed at a responsible time that
is historically important for Russia." Boris Yeltsin said that
transformations are now being actively implemented in Russia and
that a lot has by now been accomplished along that road: the
foundation has been laid for a law-governed state, Russia has
become a democratic country, and reform of the armed forces has
been launched." We have overcome the economic crisis, said the
President, noting that "industry and other branches are on the
uprise." We are now heading for the next stage of
transformations, further economic growth, and the prerequisites
for this are already being created, said Boris Yeltsin. He named
among the most important prerequisites the creation of a
favourable climate for foreign investors. The head of state
expressed confidence that investments in Russia's economy will
grow because the country has become politically stable.
Addressing the ambassadors, President Yeltsin noted that
the beginning of their activity in Moscow will be "tinged with
festive tones," because in the beginning of September Moscow
will be marking its 850th anniversary in a generous, typically
Russian way. The President invited the Ambassadors to attend
the celebrations at which "the Russians will fully reveal their
hospitable souls," said the President.
Boris Yeltsin expressed the hope that the ambassadors will
find "many friends and business partners for their countries"
everywhere in Russia. "We have no restrictions, you can go
wherever you like," said the President. He recalled an old
saying that goes "An ambassador has neither an army nor ships,
his only weapon are words and favourable opportunities." "I
sincerely wish that you do not miss a single opportunity for
strengthening friendly relations between our countries," said
Boris Yeltsin to the ambassadors.
The Ambassadors of the Lao People's Democratic Republic,
Ecuador, the Republic of Burundi, Chile, Pakistan, Armenia,
Greece, Guinea-Bissau, Bulgaria, Congo and Rwanda presented
their credentials to the President of Russia today. 

*******

#11
Remote Russian Far East City Makes US Ice Cream
By Adam Tanner 
August 13, 1997
MAGADAN, Russia (Reuter) - In December, a state inspector looked over Frank's
Siberian Supreme, a tiny operation trying to make American ice cream for an
isolated corner of the Russian Far East, and decided its documents were not
in order. 
``At first I thought it was a joke, but she was powerful enough to close us
down,'' said Alexei Rekounov, the company's 24-year-old sales manager. ``In
this country a clerk is everything. An official is czar and king.'' 
The suspension that resulted was just one of many obstacles the company,
started with $150,000 from an American businessman, has had in opening up
small-scale ice cream production. 
Even today, a year and a half after operations began, only a few stores
sell
Siberian Supreme's tasty versions of peach, strawberry, cherry and chocolate
in Magadan, a regional center 5,000 miles east of Moscow. 
``In the beginning, we had problems with quality because we had no
experience,'' said Andranik Mirtitsyan, 25, the company's Russian director. 
Frank Edgerly, the California partner whose name adorns each carton of the
ice cream, added: ``We've had every problem you could think of. ... There are
many times I asked myself why I am trying to make ice cream.'' 
The factory with four workers fits in the space of a large apartment. 
One room holds bags of American ice cream powder, another a modern ice
cream
machine where filtered local water is mixed in. Freezers are in two other
rooms. The office has a portrait of Lenin with a Siberian Supreme sticker on
his lapel. 
The grass-roots venture started when Edgerly, 32, who was involved in
timber
and food export businesses with Russia, traveled to Magadan to help build a
church and met the young men who today staff Siberian Supreme. 
``We figured we could make ice cream quite a bit cheaper than importing it
pre-made,'' he said. 
Since then, the idea has attracted the attention of the American
government-funded U.S.-Russia Investment Fund, which is finalizing a deal to
buy 40 percent of Siberian Supreme for $300,000, company officials said. 
``We're looking at making a direct investment to help the company,'' said
Derek Norberg, head of the U.S.-Russia Investment Fund in the Far East. ``You
have a unique situation in Magadan because there is no local production.
Because it's cut off from land routes, any local production does have an
advantage.'' 
Operating in a small market has distinct pluses. The 30-second television
commercial they recently prepared costs less than $20 to air eight times a
day locally. And in a city where the severe northern climate and isolation
from Russian ground shipping routes limit the variety of food, ice cream
becomes especially alluring. 
``The colder the territory, the more people eat ice cream,'' said
Rekounov. 
Siberian Supreme is now producing only 150 to 200 cartons a day, which
brings
them a profit of about $1 a carton. And their encounter with Russian-style
bureaucracy has left the staff a bit scarred. 
In addition to fighting state bureaucrats, the firm is far behind a local
importer, Amros, which has been shipping in Wells' Blue Bunny ice cream from
Iowa to local stores. 
``We don't see them even as competitors, because people are already used to
Blue Bunny,'' said Amros sales manager Mikhail Gerasimovich. 
He said Amros delivers three containers with 6,000 to 8,000 individual
cartons of ice cream a month to the port city first established as a gateway
to Stalin's Gulag system of prison camps in the 1930s. 
Edgerly said he is soon bringing in display cases for Magadan stores and
plans to pump up production significantly to expand his market share. 
He added he is undaunted by the experience of American ice cream maker
Ben &
Jerry's Homemade Inc., which pulled out of Russia earlier this year after
deciding their high-profile joint venture was not paying off. 

********

#12
Russia Said To Lack 'Appropriate' Caucasian Policy 

Moskovskaya Pravda
August 9, 1997
[translation for personal use only]
Article by Nikolay Ligonin under the "MP Prognosis" rubric:
"Stepping On the Caucasian Rake"

The Caucasian region is once again turning into a fire-breathing
volcano for Russia. If one is to believe the seriousness of the latest
statements from official Groznyy, the period of deliberation that Moscow
was given until the year 2001 to resolve the issue of the status of
Chechnya is coming to an end ahead of time. Today the Chechen leadership
is raising the issue of a full-scale international treaty with Russia and a
resultant exchange of embassies. Naturally Groznyy understands that Moscow
will not agree to this now or in the near future. Why are the Chechen
leaders bringing up this problem precisely now, in a very harsh tone
reminiscent of an ultimatum, using the elastic wording of the Khasavyurt
agreements regarding a decision about the independent status of the
republic before the next century, which in a way does not rule out,
according to them, the chances of deciding this even now?
First and foremost the answer to this should be looked for in the
general situation that is developing in the Caucasus, which is not very
favorable for Russia, from which Groznyy intends to squeeze out as much as
possible and try to assume a leading political position in the region.
Having first become mired in the Chechen war, and then in domestic
political problems, Moscow was in fact unable to untie a single knot in the
North Caucasus. This was explained not just by the absence of a clear-cut
political, and incidentally economic, concept in the region, but also by
the discrepancy of opinion among the Russian leadership itself regarding
such a policy. As a result the dangerously smoldering coals of conflict
have started heating up to the temperatures of a new fire. And this mainly
concerns the Ossetian-Ingush conflict. Today panicky headlines about the
possibility of a "civil war" are already appearing in the press. Moscow's
lack of a strong, truly constructive policy on its southern flank has
already generated talk that the Caucasian people themselves should be the
ones to resolve the problems of the region. And this tendency, which sort
of leaves Moscow out of the equation, is receiving particularly strong
support from Groznyy.
So far the Kremlin has not found anything better than to appoint
Ramazan Abdulatipov to the post of vice premier for inter-ethnic problems. 
This tardy decision will perhaps to some extend help set up a dialogue
between the Center and the territories of the North Caucasus, but it does
not clarify the most important issue: What strategy does Moscow intend to
adhere to in a seething region that is so important to it?
Its position regarding the Georgian-Abkhazian conflict is just as
amorphous. In its fear of "losing" Abkhazia, Moscow strongly cooled off
its relations with Tbilisi. The term of the mandate of Russian
peacekeeping forces on the banks of the Inguri is up, and for now it is not
clear if it will be extended. The lack of a strong initiative from Moscow
here as well, unless you count B. Yeltsin's statement in which he confirmed
his support for Georgia to remain single state, galvanized not just Western
countries, who offered their services to help settle the conflict, but also
Groznyy. It is significant in this sense that during a recent conversation
between Shevardnadze and Chechen Vice Premier A. Zakayev, the issues
broached did not only concern bilateral relations, but also the presence of
Russian peacekeeping forces in the zone of the Abkhazian conflict. In this
way Groznyy is actively trying to assert itself as one of the main
political centers in the Caucasus.
And it will succeed at this more and more if Moscow does not have
enough will and wisdom to make changes to its policy appropriate to the
changed situation there. For the time being the Chechen leadership,
exploiting the serious problems of the Kremlin, is jacking up the stakes in
the dialogue, setting Moscow deliberately unfeasible terms -- from Russia's
diplomatic recognition of Chechnya and demands to extradite to Groznyy
those who are responsible for the disgraceful war, to exorbitant
compensation of $260 billion. At the same time a new financial barrier is
being put in the way of the fulfillment of the agreement to transport oil
across the territory of the republic, which is just about to start.
But the main thing is that in the Caucasus it will not be understood
exactly how Moscow intends to resolve the painful problems of the region. 
They are tired of waiting for real help from Russia. The leaders of the
North Caucasus no longer believe that the Center is capable of helping
them. And this means that the situation will permanently remain explosive.

*********

#13
Belarusian Public Unlikely to Push Government on Free-Market Reforms 
U.S. INFORMATION AGENCY
July 18, 1997

With a government pledging "market socialism," Belarus has made less
progress in developing private enterprise than have its neighbors. Public
opinion on reform continues mixed, allowing an all-tooreluctant leadership
to postpone change.

KEY FINDINGS
1. Belarusians consider economic conditions bad, but not as bad as two
years ago. They are also less pessimistic about the economy than they were
in 1995.
2. Wage and pension arrears are far less extensive than they are in Russia.
3. The public remains divided on key aspects of reform, such as
citizens'right to buy and sell land, government subsidies for unprofitable
state enterprises, and foreign business in Belarus. More, however, now
approve of free prices and foreign business activity than did two years ago.

Economic Conditions Not Quite So Bleak
Three-quarters say that the economic situation in the country is fairly bad
(51%) or very bad (22%). A fifth describe it as good. In a spring 1995 USIA
survey, nine in ten Belarusians called conditions bad.

Two-thirds now say that their household's standard of living is fairly bad
(48%) or very bad (17%), while a third (30%) consider it good. Two-fifths
(41%) believe that their standard of living worsened over the past 12
months, but as many (42%) say that it remained the same. Only 16 percent
feel that it improved.

Belarusians are neither optimistic nor pessimistic about the outlook for
the next 12 months. Two-fifths (40%) expect their family's economic
situation to remain the same, a fifth (22%) expect it to improve, and about
the same proportion (24%) think it will worsen. As for the economy as a
whole, a third expect it to remain unchanged over the next 12 months, a
quarter expect it to improve, and a quarter think it will worsen. Two years
ago, nearly half (46%) expected things to get worse.

Wage and pension arrears are far less extensive than in Russia. Two out of
three Belarusians report that their salaries and pensions have generally
been paid on time since January 1, 1997. A quarter say that they have
usually been paid no more than a month late, and only 5 percent say they
have been paid more than a month late. In contrast, an April USIA survey
found that three-fifths of Russian adults either had been paid more than a
month late or had not been paid at all since January 1.

Mixed Response to Free-Market Reforms
Private ownership of land is restricted to small tracts. As in prior USIA
surveys, a large majority (67%) say that citizens should be allowed to own
land as their private property (only 16% disagree). The public continues to
be divided, however, over whether citizens should be permitted to buy and
sell land freely (45% say they should, 47% say they should not).

When asked about the extent of state and private ownership in the economy
as a whole, a majority (54%, up from 44% in 1995) express a preference for
an economy in which some enterprises, shops, and farms are owned by the
state and some are privately owned. A quarter (26%, down slightly from 32%
in 1995) believe that the state should own most or all enterprises, shops,
and farms. Fewer (14% now, 16% in 1995) believe that most enterprises,
shops, and farms should be privately owned.

Support for other aspects of a market economy is equivocal. Belarusians are
split over whether the government should stop subsidizing unprofitable
state enterprises even if this means that workers will lose theirjobs (44%
agree, 43% disagree). Furthermore, they more often disagree than agree (48%
to 40%) with the view that free prices are necessary for Belarus's economic
recovery. Two years ago, when the inflation rate was higher, Belarusians
were more likely to disagree (59% to 30%) with the need for free prices.

Lukewarm Support for Foreign Investment
Compared to such neighboring countries as Poland and Russia, Belarus has
gained relatively little foreign investment since 1991. The government has
not made Belarus attractive to foreign investors, and public opinion has
continued to be wary of foreign capital. Asked to choose between two
statements, half (48%) say that foreign companies should be encouraged to
invest in Belarus because such investment will help the economy develop. A
third (31%), however, think that foreign investment should be discouraged
because foreigners might gain too much influence over affairs in their
country. A fifth have no opinion.

The public is evenly divided over whether foreign companies should be
allowed to establish their own businesses in the country (44% say yes, 43%
say no). Two years ago, more Belarusians opposed foreign businesses than
approved of them (59% to 34%). By a two-to-one margin, Belarusians reject
the view that foreign investors should be allowed to purchase a controlling
interest in local companies (55% to 26%, with a fifth giving no opinion).

As in neighboring lands, young people under 30 years of age, urban
residents, and those who have completed higher education are much more
inclined to favor private ownership, free prices, and foreign investment
than are the elderly, rural, and less educated segments of the population.

This report presents findings from the latest USIA-commissioned survey in
Belarus. TheMinsk-based firm NOVAK interviewed a nationally representative
sample of 1,073 Belarusian adults, 18 years of age and older, between April
14 and May 5. The margin of sampling error is plus or minus 5 percentage
points.

Prepared by Richard B. Dobson, RIRUC (202-619-5131)
Issued by the USIA Office of Research and Media Reaction
This report is provided courtesy of the Business Information Service for
the Newly Independent States (BISNIS)

********** 

#14
Washington Post
14 August 1997
[for personal use only]
Moscow Office Gear Flap Fuels Reform Skepticism 
U.S. Agency, Russian Group at Loggerheads
By Daniel Williams
Washington Post Foreign Service

MOSCOW, Aug. 13—Two and a half years ago, a team of young Russian lawyers
was assembled, provided with millions of dollars in operating funds by the
U.S. government and the World Bank, and tasked with helping create a solid
legal foundation for Russia's new market economy.
The group's name, the Institute for a Law-Based Economy, implied a
righteous approach that was rare in a country whose nascent democracy and
capitalist economy were rife with corruption. But that image was eclipsed
this week by an unseemly tug of war between the institute and its American
sponsor, the U.S. Agency for International Development. U.S. Embassy
officials say the lawyers' group has stolen U.S.-funded office equipment
worth $500,000; the Russians say the equipment is being held in safekeeping
pending talks over its final disposition.
The tussle is a subset of a scandal that grew out of a broader U.S. aid
program -- overseen by the Harvard Institute for International Development
-- that was meant to stimulate economic reform. The scandal, which came to
light in May, led to the ouster from the program of two Harvard
University-affiliated advisers amid charges -- which the advisers denied --
that they used inside information from the Russian government for private
gain.
The Institute for a Law-Based Economy had operated within the
Harvard-run program and was implicated in the alleged insider dealings,
which U.S. officials say broke both the aid agency's and Harvard's
conflict-of-interest rules. Now, AID officials are trying to repossess
computers, desks, telephones, files and books that institute employees
carted from the Harvard program office in central Moscow Friday to their
own offices a short distance away. "It's valuable stuff, and [the
institute] just decided to take it," a U.S. Embassy official said. "It's
not theirs."
Institute director Sergei Shishkin said the equipment is listed on his
organization's books and, therefore, belongs to it under Russian law.
Nevertheless, he says he is willing to discuss a compromise with AID
officials, whom he accuses of "trying to create an earthquake out of nothing."
"They haven't been able to pin anything on us over the [inside
information] stuff, so now they're trying this," Shishkin said in an
interview.
Whatever the outcome of the affair, it represents another smudge on
Russia's tarnished economic reform credentials. Insider dealings, in
particular, have been much in the news recently. Last month, well-connected
Russian tycoons squabbled publicly among themselves and with the government
over how to divide up the mountains of natural resources still wholly or
partially under state control. The conflict highlighted how a few financial
barons with close government ties can dominate the bidding for such assets.
Such controversies give reform opponents ammunition in their persistent
assault on Russia's privatization efforts. The effect on the public is hard
to gauge, although polls show a general lack of trust in the professed
reform government of President Boris Yeltsin.
In any event, allegations of profiteering aimed at the Harvard advisers
seem likely to confirm widespread Russian suspicions that Americans are
here only to help themselves. And the removal of the office gear by the
lawyers' institute will almost certainly reinforce a feeling in foreign
business circles here that Russians rely on strong-arm tactics rather than
law in settling business disputes.
A probe of the Harvard-run program by the U.S. aid agency centers on two
Americans -- economist Andrei Shleifer and legal expert Jonathan Hay, both
Harvard-trained. The Harvard operation closed down here at the end of July,
except for a tax-reform project that is scheduled to continue until the end
of the year. Harvard's oversight was canceled by Finance Minister Anatoly
Chubais, who AID officials say was upset that Hay and Shleifer, both
Chubais associates since the early 1990s, had come under fire.
As for the office equipment, Harvard proposed that it be divided up --
some going to the tax project, some to other AID programs in Russia and
some to the institute, but it disappeared before any such deal could be
worked out. Institute director Shishkin said he notified AID officials of
his group's intention to transfer the equipment; the agency said it sent
him a letter forbidding its removal. "They just helped themselves," a U.S.
Embassy official said.
Shishkin said the letter did not reach him until the day after the move.
"Anyway, we are pledged to take care of the equipment," he said. "AID is
welcome to inventory it, if they like."
Shishkin said his group and the U.S. agency have been at loggerheads
over an AID request to audit the institute's books. Shishkin said he has
agreed to an audit of accounts related to AID matters, but not ones related
to other donors or private companies. "We exercise the right to client
privilege," he said.
The Institute for a Law-Based Economy began as a nonprofit venture and
eventually received $8 million in U.S. assistance and another $4 million
from the World Bank. The group soon added a profit-making arm called
ILBE-Consulting, which AID officials endorsed on grounds it would give
institute lawyers practical experience in advising clients on new Russian
business legislation.
However, a U.S. official said, the new institute branch began offering
advice on investments, along with guiding clients through the wilds of
Russia's bureaucracy. Two such clients were Shleifer's wife and a female
associate of Hay's, both of whom ran investment firms.
"People with access to high government officials were selling
information to commercial clients, including friends and relatives," the
embassy official said. "This is not what we had in mind."
Shishkin insists that all of ILBE-Consulting's dealings were aboveboard
-- that the services provided had nothing to do with access to insider
information, but rather with the practical issue of doing business in
Russia. "Advice on how to invest was not our responsibility," he said. He
said the nonprofit institute's operations will continue with financial
support from other donors. 

*******

#15
THE POLICE PRECINCT SERVICE IS UNDER A THREAT, SAYS
A SPOKESMAN FOR THE RUSSIAN INTERIOR MINISTRY
MOSCOW, AUGUST 14 - RIA NOVOSTI CORREPSONDENT ANDREI
GALKIN. The existence of the precinct police service is under a
threat now. This opinion was expressed by Major-General Anatoly
Sukhov, deputy-head of the Main Public Order Administration of
the Russian Federation's Ministry of Interior Affairs, at a
round-table conference in the ministry today. 
The general links his apprehensions, above all, with the
low pay of the precinct policemen who bear the burden of about
80% of all the police problems and the preliminary inquiries in
all kinds of crimes. The pay of the precinct policemen, who are
on the payroll of the local budgets, has been delayed for more
than three months in 70% of the regions of Russia. As a result,
many of the 53,000 precinct policemen working in Russia leave
their jobs after acquiring experience and start working for
other establishments where they are better paid -- either in
criminal investigation or inquest departments, noted the
general.
To retain the precinct service which examines more than
half a million crimes annually and cuts short half of all
administrative offences, the ministry is planning to transfer it
to a contract basis. At present, as an experiment 60% of the
precinct policemen are already working on contract, said the
general. 

********