August 15, 1997  
This Date's Issues: 1127 • 1128 • 1129

Johnson's Russia List [list two]
#1128 
15 August 1997
djohnson@cdi.org

[Note from David Johnson:
1. Steve Blank replies to Gordon Hahn.
2. Kuranty: Viktor Bondarev, "Gonchar--Luzhkov's Successor?"
3. Interfaks-AiF: Vladimir Krayniy, "Come Back, All Is Forgiven!
Billions of Dollars Flee Russia Every Year: How Are They To Be 
Returned?"
4. Privatization in Russia: NOVGOROD REGION: THE BEST CLIMATE 
FOR INVESTORS.
5. Paul Goble (RFE/RL): Russia: Analysis from Washington - 
New Plane For Unpaid Army.
6. InterPress Service: Andrei Ivanov, Pacific Coast Health 
Strikes Raise Cholera Fear.
7. Washington Post: Linton Weeks, Czar's Jewels III: Bauble, 
Bauble, Toil and Trouble.]

*********

Date: Thu, 14 Aug 1997
From: blanks@carlisle-emh2.army.mil (Steve Blank)
Subject: blank replies to hahn

I would prefer not to carry on a long polemic here but Gordon Hahn 
still either misses what I wrote or under cover of charging me with 
Stalinist methods (strange I used to be called a fascist here,les 
extremes se touchent) distorts what I said. So let me answer his 
charges.

First. He may suspect that I have a rampant anti-Russian attitude 
so prevalent among U.S. students of the Soviet military. 
Unfortunately to say this betrays his own ignorance. Few, if any, 
(and nobody I know) of those who study the Russian armed forces 
professionally are anti-Russian, quite the opposite and this includes 
professional serving officers. Only someone uninformed of the subject 
would write this. 

Second, I stand by what I said about democracy. It is Russians and 
Yeltsin himself who call him a boss or a Tsar and he rules like one 
and thinks like one. May I remind readers here of his remarks about 
Tsars visiting Karelia or his 1993 statement, "I answer only to my 
conscience". I'm sure many of the problems in Russian democracy occur 
elsewhere but psuedo-constitutionalism, to use Max Weber's term, is 
not the real thing. Nor did I create a strawman. If there is 
democracy there are open, free, and fair elections. While our own are 
sadly corrupt, Bill Clinton did not buy Perot's TV time or have a 
secret deal with him. or the other things that went on in the Russian 
election. Please see the article Jake Kipp and I did in 
Demokratizatsiia which lays out the whole sorry story. Furthermore to 
say that there is democracy when you have no legal or executive 
accountability to anyone except Yeltsin, no effective, civilian, 
democratic controls over the multiple armed forces, no mechanisms for 
internal conflict resolution (see the new book by Matsyugina and 
Pereplkin on an ethnic history of Russia), a federalism whose laws are 
made up as we go along is to abuse the term. I don't need to get 
personal about this but those conditions do not represent democracy 
and are absent in many of the more successful transitioning states. 
And in any case we are not discussing Chile or Argentina here.


As for NATO, I am well aware of the arguments pro and contra. I do 
believe it strengthens democracy,most particularly in the 
civil-military sphere by its insistence on effective democratic 
controls which were at some risk in Poland and are utterly nonexistent 
in Russia and are part of the general crisis there.

I'm happy Gordon Hahn has studied Russian history and political 
science and civil-military relations. But if he did he wouldn't go 
around making unfounded statements about U.S. students of the subject. 
Moreover, one need not be an expert on military relations and issues, 
but this is the subject he chose to make his original statements which 
I merely meant to say were erroneous. As a matter of fact I am doing 
the serious work he calls for to show that NATO has nothing to do with 
these reforms and I wish he'd read what Felgengauer, Lebed, Rokhlin, 
et al have said and separate politics from substance here. The forces 
structures being created here have no capability for any conventional 
operation above low-level police actions at best, the multiple 
militaries and their politicization are not being dismantled, and the 
whole purpose is to save money and strike at political enemies in the 
MOD. I'm happy to see there are reconciliation commissions. I'm also 
happy to see that Hahn acknowledges that executive-legislative 
relations are not what they should be. But where is the judiciary 
ruling against extra-constitutional acts like those of allocating and 
spending state money without parliamentary authorization, e.g.. the 
military budget?.

So there is an anti-NATO Duma committee. The entire government was 
against NATO enlargement, that proves nothing about civil-military 
relations and in any case what are serving Colonels doing in the 
Parliament and what does that tell us. Believe me I have studied 
other institutions quite closely. Their presence has nothing to do 
with NATO but to Yeltsin's past malign neglect of the military and 
coinciding efforts to politicize them and Grachev's campaign to elect 
military men in 1995 to the Duma, not my personal preferences. I 
wrote about this in Transition and in a book published by Gert de Nooy 
for clingendael (the Netherlands Institute of International 
Relations). Furthermore I might refer to much of what Russians have 
said in public about NATO. Primakov's demand before the OSCE and in 
International Affairs, for a revision of the current borders of the 
post-1991 states. Sergei Rogov's demand for an extraordinary role for 
Russia in Europe and a host of other statements indicating a 
reluctance to disengage from the imperial and revisionist mentality. 
But I guess evidence is not of material importance in this debate.

Finally, I repeat what I said about the need for study and it is 
not intended or was not intended for Mr.. or Dr. Hahn but for all of 
us. From his previous statements, it is clear that for all his 
studying, Gordon Hahn does not know enough about the facts of the case 
in military affairs to make the pronouncements he made and when 
caught, he resorts to ad hominem attacks and distortions of a record 
of which he knows sadly little. So Pipes opposes NATO expansion, I 
disagree, but it doesn't have to be an occasion for a mutual slanging 
match. No doubt you think he is anti-Russia too. It seems that there 
are many people on this net who can't bear to hear anything critical 
of Russia or in favor of whatever they oppose. But that's not how you 
learn things or conduct scholarly debate. While we don't need mutual 
back scratching to use Gore Vidal's phrase, the antidote is not mud 
slinging, for in any case those who do it only muddy themselves and 
betray their own failings. 

**********

Gonchar Seen as Potential Moscow Mayor 

Kuranty, No. 30
July 30-August 5, 1997
[translation for personal use only]
Article by Viktor Bondarev: "Gonchar--Luzhkov's Successor?"

Nikolay Gonchar is organizing a referendum on the unification
of Russia and Belarus.... The idea in and of itself is no longer
that urgent since it has been ascertained that the political elites
of the two states are not eager for merger. In Russia neither the
party of power nor the opposition wants to unite with Lukashenka.
The Belarusian President and his ways are simply not to the taste
of the powers that be and the democratic opposition. The leaders
of the Communists are afraid that Lukashenka would "push" them and
would himself take charge of the struggle against the present regime
and the reforms. Only the mayor of Moscow, probably, is campaigning
sincerely for Slav brotherhood since Yuriy Mikhaylovich is not,
to judge by his recent statements, afraid of anyone or anything.
But even Luzhkov has achieved little since he has not received any
real support anywhere.
Why, though, has the experienced Nikolay Gonchar taken on
so hopeless a project? No, it is not hard, perhaps, to collect 1
million signatures with the aid of the opposition. It is far more
difficult (practically impossible!) to achieve a 50 percent turnout
of Russian citizens. And only in the event of a "yes" vote of half
the Russian electoral rolls (!) could the result be considered the
people"s decision on this matter, what is more. Given the
present passiveness of the citizens and the negative attitude of
the news media toward the union with Lukashenka, the task is practically
infeasible.
But Gonchar has not embarked on a hopeless cause for no
reason—this
action fits perfectly well within his political image. Nikolay Nikolayevich
is a highly gifted politician with two professional qualities: an
ability to negotiate with all and to "make" political news. The
first quality he possesses to perfection, which he demonstrated
as head of the Moscow City Council. Nikolay Gonchar has, perhaps,
only one rival—Ivan Rybkin—among the present politicians
when it comes to an ability to find a compromise. And as far as
the second property is concerned, here Nikolay Nikolayevich is unique.
Of course, all well-known politicians "work" the tongue well.
But more often than not they attract attention by sharply worded
opinions or provocative behavior. Lebed, Zhirinovskiy, Yavlinskiy,
and Zyuganov operate in precisely this way. Yet Gonchar knows how
to "make" policy from nothing and, which is particularly surprising,
without any repercussions. He may perfectly well be considered a
most gifted newsmaker—he is brilliant in creating pretexts
for attracting the attention of the news media. Gonchar takes no
drastic steps here, as a rule, but his statements and actions contain
some new emphasis or opinion, some mini-sensation, that is. The
public"s attention is attracted to the person of the politician,
and everyone happily forgets about the substance of the action.
And this is the case time and again. As a result, the impression
of the politician"s constructive and vigorous activity
is created. It is significant that his opinion is practically never
categorical or aimed against anyone personally. Gonchar has already
accustomed the press to the fact that a nontrivial statement on
an urgent topic may be expected from him, and the news media make
active use of this quality, seeking interviews with him on any pretext.
Invitations have gone out to Gonchar particularly frequently from
Svanidze.
Nikolay Nikolayevich"s ability to continuously appear
in the political arena as the author of mini-sensations—hurting
no one, exacerbating nothing—is simply that of a virtuoso.
Gonchar should be recognized as a master of the political glass
bead game (since books are not read nowadays, I would remind you
that Hesse"s book "The Glass Bead Game" was popular in
the stagnation years). And the fact that this politician is now
toiling actively in the field of Russian-Belarusian unification
is entirely part of his style: In Russia everyone maintains that
they are for the rapprochement of brother Slavs, but some, like
Luzhkov, stop at nothing, others, like liberals or Communists, merely
simulate their unification zeal. Gonchar, on the other hand, has
found a third way: He is, seemingly, both active and at the same
time engaged in a perfectly innocuous pursuit, to which it is hard
to object—imparting a legal form to the unification process.
Gonchar became such a newsmaker by dint of circumstance. In
1993 he was elected a senator and had an opportunity to show what
he could do in the Federation Council, relying on the power of the
administration chiefs and the considerable authority of the upper
chamber. But the law was revised, and only those in possession of
senior portfolios became senators, and Gonchar had to be elected
to the Duma. A politician outside of parties and factions, he was
there initially among the outsiders since the main offices had been
shared out on a party basis. The prospect of becoming an ordinary
backbencher, whose opinion was of no interest to anyone, arose.
But Gonchar knew how, while remaining a parliamentary loner even,
to break through into television, having mastered the trade of newsmaker,
presenting first one initiative, then another. True, he made a gaffe
also, when he inferred from Luzhkov"s conflict with the
President a particular political game. Yuriy Mikhaylovich publicly
repudiated such a version. But this was the sole instance of a version
suggested by Gonchar meeting with condemnation. Everything goes
smoothly and without problems, as a rule.
It is not hard to guess that Nikolay Nikolayevich is not suited
by his present political line of business. He was a leader of Moscow
and then in the Federation Council he was in charge of the most
important Budget Committee and worked closely with the military-industrial
complex and the industrial ministry structures. His present status
is a clear reduction in political "rank." Having taken up the hopeless
Russian-Belarusian integration, Gonchar is probably pursuing a perfectly
tangible and realistic goal: elections to the Moscow City Duma are
to be held shortly, and he has every opportunity not only to become
a deputy but also to take charge of Moscow"s representative
authority. In this case Gonchar would return to the Federation Council
and could once again engage in serious politics. Thus in earning
political capital Gonchar is simply preparing for the elections.
A persuasive and logical version. Let us, however, recall
that Luzhkov continues to be considered a possible presidential
candidate. What if he were, indeed, to go for it? We cannot rule
out another scenario either: In his final year the mayor would be
engaged in a bitter fight, and the result could be unpredictable
here.... Who, then, would be in charge of Moscow? There is a unique
situation in the capital at this time: Muscovites know only one
leader—the mayor. Despite their obvious administrative
merits, his deputies are, as politicians, practically unknown to
the rank-and-file constituents. Shantsev, Resin, and other members
of the mayor"s team are not perceived as independent figures.
Who, in the event of Luzhkov"s departure, has a chance
to take his place? Clearly a politician, not a business manager,
is needed here. After all, even Yuriy Mikhaylovich, who has on so
many occasions rejected politics as such, has today become a political
figure. Were Gonchar to take charge of the Moscow Duma, it is he
who would have every opportunity to become Luzhkov"s successor.
The biggest difficulty is persuading Muscovites to go out and
vote—there
are few in the capital who pay attention to the local legislature
or take it seriously. And unless the elections to the Moscow Duma
are timed to coincide with some important vote—a referendum,
for example—the city could be left without members of parliament
altogether.
This, incidentally, is paradoxical: In Moscow, the bastion
of democracy, the representative power performs a very negligible
role. The capital has preferred the authoritarian version of democracy.
Perhaps Russia as a whole has no need of an elective legislature?
Theory is theory, and our Russian practical reality makes adjustments
to it. So perhaps we should recognize objective reality and reduce
all representative authorities at both the federal and regional
levels to the condition that has come about in Moscow?
Yuriy Mikhaylovich knows Nikolay Nikolayevich well, and the
Moscow authorities clearly supported the member of parliament at
the past Duma elections. Why not assume that either Gonchar himself
hopes in the future to become the Moscow city chief or that Luzhkov
is preparing his successor ahead of time? And why not? Gonchar knows
the city and has already worked at the capital level for about 20
years, and neither liberals nor Communists nor the leaders of regions
and industries have any particular complaints about him.
The Moscow mayoral elections are three years off. Plenty of
time.

********

Efforts To End Capital Flight, Return Funds 

Interfaks-AiF, No. 29-30
July 14-20, 1997
[translation for personal use only]
Article by Vladimir Krayniy: "Come Back, All Is Forgiven!
Billions of Dollars Flee Russia Every Year: How Are They To Be Returned?"

In June the Government of the Russian Federation established
a commission to fight illegal export-import operations. Its task—to
fight the illegal export of hard currency and return the capital
that has fled the country. According to RF [Russian Federation]
Central Bank information, in the past year $20.8 billion was exported
from the country (the net foreign assets of Russian enterprises
increased by this sum). In the opinion of a number of experts, anywhere
up to $300 billion has been shipped abroad since 1992. Some think
that it is necessary to return this money in order to solve many
economic problems. However, there is no simple solution to the problem.
We tried to figure out how much money has been taken out of the
country, and also how to stop the flight of capital abroad and return
the money.

Everything Is Flowing--Capital Also

The outflow of capital—this means not only the shipment
of hard currency abroad. It also includes the fact that commodities
are being exported and the earnings from them are not returning
to the country in full measure. Of course, there is also the problem
of laundering "dirty" money (narcotics, weapons, and so forth).
Perhaps no one can name the exact amount of capital that has
fled. Minister of the RF Yevgeniy Yasin in an interview with Interfaks-AiF
called the figure $200-300 billion excessive. Foreign trade statistics
make it possible to estimate the maximum scale of the outflow. From
1992 to 1996 Russian exports, according to data of the RF State
Statistics Committee, amounted to $350.4 billion. If the sum of
the imports for these years is deducted ($260.3 billion), the
difference—$90.1
billion—will establish the possible limit of capital exports.
In a year the country acquires a positive trade balance difference
of from $10 billion to $26.9 billion; moreover, an increase in this
indicator is observed in all subsequent years.
A system was established in 1994 to control export contracts
on the basis of an agreement between the State Customs Committee
and the Central Bank of Russia. Ye. Yasin thinks that unreturned
hard currency earnings, in accordance with contracts, now total
on the order of 5 percent of the volume of exports, which in recent
years has exceeded $80 billion. At the same time a number of outflow
channels are being maintained.
One of the main ones is a reduction in the cost of commodities
being exported. A second channel—the general expenditure
of hard currency purchased under contract—is controlled
much more poorly. "Before the presidential elections last year,
control was practically lost, and money was being taken out of the
country in suitcases," Ye. Yesin noted. "The outflow of capital
is now no more than on the order of $5-7 billion. However, this
is no small amount, inasmuch as this is approximately what we borrow
abroad each year."

The Flow Cannot Be Stopped by Turning Off the Faucet

As for the prevention of the outflow of capital, in Ye. Yasin"s
opinion, there are two groups of measures. One is administrative,
the other is economic. The first is the strengthening of control,
which is gradually bearing fruit. With respect to exports, on the
order of 90 percent of them are being controlled, and imports—70-75
percent. We have a lot of unorganized imports, which "shuttlers"
engage in. There was a time when one-third of imports were unorganized.
Such imports are often treated as the outflow of capital, but in
reality the return flow of commodities corresponds to the flow of
money abroad, and therefore this cannot be considered an outflow
of capital. A system of control over imports is now being set up,
but according to Ye. Yasin"s reports, as soon as one outflow
channel is stopped, new channels are immediately invented. There
is a traction, something of a difference in potentials, that pulls
money and resources out of the country. If an attempt is made to
stop this with the introduction of a foreign trade monopoly and
other harsh measures, the country will suffer even greater losses.
The main measures are economic, Ye. Yasin believes. It is
necessary to create the kind of investment climate in the country
that will encourage capital to come here rather than flee. To achieve
this it is necessary to improve the economy. From the standpoint
of reducing the volume of capital export, stabilization of the hard
currency rate of exchange of the ruble and the transparency of the
hard currency market are important. One other important factor is
the liberal nature of the regime of capital export. When businessmen
are asked what needs to be done to stop the outflow of capital,
they reply that it is necessary first and foremost to abolish all
restrictions on its export. Paradoxical as this may sound, there
is a certain logic here. If capital can always be exported, businessmen
will have confidence in the policy of the state, will work calmly,
and will not have the desire to export it "just in case."
Ye. Yasin is convinced that on the whole we continue to have
an unfavorable investment climate. High taxes, bureaucratic arbitrariness,
corruption, continuous changes in the laws...
In addition, as Saltykov-Shchedrin has written, the severity
of Russian laws is mitigated by their optional implementation, which
also scares off law-abiding Western investors. Russia is losing
in the world competition to attract capital. Capital, for example,
is eagerly flowing to Malaysia. The conditions there are good: cheap
manpower, a rather strict regime, and order in the country.
Capital is also going to China, of course; there are specific
conditions there, but they are better than in our country. There
is one other fact—in our country there is also an internal
flight of capital. Our banks bring into Russia more than $30 billion
in cash per year. Where does it go? People prefer hard currency
savings. Each month they spend 20 percent of their incomes on this,
or $5 billion.

Amnesty Is an Ethical Question

Some experts propose to declare an amnesty on the capital
that has fled. that is, authorize its importation without the imposition
of taxes and criminal prosecution. Ye. Yasin thinks that this is
more a question of morality, but it is necessary to find compromises
in a realistic approach. In the minister"s opinion, we
will have to go along with them—after all, administrative
methods do not resolve the problem completely.
"A sober calculation indicates that a certain kind of amnesty
would very likely be useful," says Ye. Yasin. "I will not say that
plans on this score are already being constructed—I am
expressing my personal opinion. I think that a tax amnesty is necessary.
This means that if you bring in capital, invest it in a business,
then taxes will be imposed starting at that very moment. That which
you were supposed to pay previously will be written off, and no
interest will be shown in where you got this money. Perhaps this
is not very ethical, but it would be useful from the standpoint
of the investment climate."
All this has happened in other countries. In 1981 President
Mitterrand won the elections in France, and the first thing he did
was to start nationalizing a number of enterprises, banks, and so
forth. There was an outflow of capital from France. Nationalization
had to be stopped, privatization was begun, and the outflow of capital
stopped. It is quite possible that the fleeing capital and its owners
will be able to await an amnesty in our country. There have been
measures of this kind in other countries.

[begin box]—In 1996 Vladimir Smirnov, director of
the department of hard currency regulation and hard currency control
of the RF Central Bank informed Interfaks-AiF that, owing to the
establishment of export controls, only 6-7 percent of export earnings
were not repatriated in Russia on the prescribed dates. In 1993,
according to the data of government experts, 25-30 percent of export
earnings did not return to the country.
—According to data of the RF Central Bank, the illegal
export of capital from Russia amounts to $12-15 billion per year.
Moreover, these estimates of the outflow of capital involve so-called
"black schemes" for exporting hard currency and are not complete,
inasmuch as they do not take into account semilegal "gray schemes."
[end box]

**********

>From RIA Novosti
Privatization in Russia 
July 30, 1997
NOVGOROD REGION: THE BEST CLIMATE FOR INVESTORS

According to the World Bank's expert assessment, the
region has been numbered among the six regions of Russia which
are most attractive for foreign investors. Basing their
analysis on the region's performance results, experts of such
well-known companies as "Mitsui", "Ernst and Young", "BASF",
"British Petroleum", "Renault", "Siemens", "Fiat" and others
placed the Novgorod Region at the top of the list among areas
"with the most favourable conditions, as to legislation", for
foreign investors, and gave it the tenth place when assessing
the degree of investment risks.
In per capita foreign investment Novgorod ramls second in
Russia after Moscow. In 1996, the region attracted 2.5 percent
of all foreign investments in Russia (with the population
accounting for 0.5 percent of Russia's total). More than 160
enterprises with foreign capital have been registered here so
far. The largest of them attracted capital of the European
Union's companies, including such companies as "Kummene",
"Sjoman Wood" and "Rauta" (Finland), "Sommer GmbH and Co." and
"Fleiderer" (Germany), and "Holzindustrie Trading" (Austria).
The global producer of chocolate and soft drinks "Cadbury
Schweppes" chose the town of Chudovo in the Novgorod Region as
the site for building its largest factory (40,000 tons of
chocolate sweets a year). The factory was built in less than a
year. Investments in the project amounted to 150 million US
dollars.
Germany, Finland, the United States, Poland and Norway
lead in the number of enterprises registered in the region.
The main thing which attracts foreign investors to the
region are tax privileges for enterprises implementing
investment projects there. In 1994, the regional Duma passed
the law "On Tax Privileges to Enterprises and Organisations
Located on the Territory of the Novgorod Region." Thus,
enterprises with the use of foreign capital registered on the
region's territory and engaged in production are exempted from
all regional taxes until complete recoupment of all invested
funds. On average, this sum accounts for 30 percent of all tax
amounts to be paid to the regional and local budgets.
In turn, many towns and districts of the region grant
local tax benefits to enterprises with foreign investments.
This means that enterprises which invest their own and
attracted funds in the implementation of their projects on the
territory of the Novgorod Region enjoy even greater tax
privileges than similar enterprises, say, in the "Yantar"
(Amber) free economic zone in the Kaliningrad Region.
For investors a low level of risk is extremely important.
It is ensured by guarantees of the regional administration,
including the guarantee fund provided for in Article 24 of the
Law on the Budget and the rules "On Non-Worsening Starting
Conditions for Investors Working on the Novgorod Market". 
Other favourable factors include free supply of
comprehensive information, the existence of the secondary land
market, a wide choice of unused land plots supplied with the
necessary infrastructure (gas, water, electricity and sewage),
and partial exemption of marketing expenses from taxes. Should
there be a long-term program of an enterprise's recovery with
the use of direct investments, the property which is used
temporarily is exempt from property tax.
From 10 to 12 percent of the regional land was sold to
enterprises with foreign investments. The region has a system
of supervising investment projects: each project is supervised
by a representative of the regional administration.
Every regional district has a special "passport" which is
necessary for introducing the area to an investor. The economic
passport presents the background on the area's potential,
indicating land plots with communications and fixed assets
which could be of interest to the would-be investor. 
However, Novgorod is interested not only in foreign
investments. In 1996, the Cherkizovo meat-processing factory
(based in Moscow) appeared on its market. It invested 10.5
million dollars in the modernisation and development of the
local meat-packing factory. The "Dovgan" company invested 30
billion roubles and 1.2 million dollars in the Novgorod
production of alcoholic beverages. They managed to attract
large investments for the development of "Novgorodtelecom" (7
million dollars) and the "Garo" plant (4 million dollars). A
long-term strategy is being worked out jointly with the
interested investors to further improve the investment climate
in the region.
The direct result of this activity is the growth of
foreign investments by 20 times: from 3.5 million dollars in
1994 to 69.1 million in 1995. Last year, foreign investments in
the region amounted to 154 million dollars. They accounted for
49 percent of the total volume of investments in the region's
economy. Russian companies invested 40 billion roubles in the
Novgorod Region.

*********

Russia: Analysis from Washington - New Plane For Unpaid Army
By Paul Goble

Prague, 14 August 1997 (RFE/RL) - Moscow is introducing a new generation of
advanced military aircraft even though the Russian government still has not
paid the back wages of many officers and draftees. 
On Monday, Russian first deputy defense minister Andrei Kokoshin said
the Russian army of the future would be armed with advanced new combat
aircraft. He added that the military had made particular progress in the
development of control systems and avionics. 
Then on Wednesday, a senior Russian air force officer amplified
Kokoshin's remarks. He told the Interfax news agency that next week Moscow
would unveil a new world-class warplane. 
Suggesting that this new plane would "without a doubt" surprise many
people, the officer -- whose name was not given -- said that it represented
"a kind of answer to NATO's eastward expansion." 
This public relations build-up for next week's third Moscow
International Air Show raises three disturbing questions about Russian
military policy. 
First, is Moscow really as cash-strapped as the Russian government has
repeatedly claimed? Russian officials from President Boris Yeltsin on down
have regularly plead poverty to justify their inability to pay military
personnel on a regular basis. 
While Moscow recently has sought to reduce these wage arrears, it still
owes many officers and men a great deal of money. And they may be less
understanding of a government that is so publicly introducing a very
expensive new aircraft. 
Second, is Moscow planning to use this new generation of aircraft to
increase its sales of military equipment abroad? Over the past three years,
Moscow has significantly increased such sales around the world. 
Just this month, for example, Indonesia announced plans to buy several
Russian Sukhoi-30 jet fighters. And the new Russian plane being touted this
week could lead to even more sales. 
Such sales could have some unfortunate consequences both beyond Russia's
borders and within them. Abroad, such sales of advanced weaponry could
destabilize any number of situations by setting off regional arms races. 
And at home, the more profitable Russian military industry becomes, the
less willing the Russian government is likely to be to pursue defense
conversion. 
Given continuing declines in other sectors of the Russian economy, these
profits from the sale of advanced military equipment abroad could mean that
Russian military industry will occupy an ever larger share of the country's
economic and hence political life. 
And third, this announcement of a new plane raises the further question:
just how pacific are Russia's intentions? 
By suggesting that the new plane represents an answer to NATO's decision
to include three former Warsaw Pact countries as members, Moscow is
implying that it will seek to build up its own forces to be in a position
to block any further growth of the Western alliance. 
For the immediate future, the Russian government probably is not going
to be able or even willing to project that kind of power. But the threat
implied by this announcement will have an immediate impact on the debates
taking place in each NATO country about enlargement. 
Many opponents of any growth in the alliance have argued that NATO's
move to the east will prompt Moscow to rearm, a step that would inevitably
affect East-West cooperation and limit Russia's ability to make the
transition to democracy and free markets. 
They are certain to point to this announcement of a new Russian plane as
proving their case. 
But this Russian strategy, if such it is, may have the unintended
consequence of actually strengthening the position of those who actively
back NATO expansion. 
To the extent that the new aircraft represents "a kind of answer" to the
Western alliance, the Russian government has unwittingly provided support
for those who argue that Moscow continues to represent a threat to the
countries of Eastern Europe. 
And that will only increase the stridency of demands by those countries
to be included in the Western defense alliance. 
At the same time, the introduction of this new weapons system now
suggests that at least some in the Russian capital will always seek a
military answer to any action of the West, something that could complicate
East-West relations more generally. 

*********

>From InterPress Service
RUSSIA: Pacific Coast Health Strikes Raise Cholera Fear
By Andrei Ivanov

MOSCOW, Aug 8 (IPS) - The combination of a strike by both doctors
and garbage collectors in the Pacific coast city of Vladivostok
raise the very real threat of an outbreak of cholera or equally
dangerous disease, warn local health experts.

Doctors working for the public health and epidemic prevention
centre in Russia's far east Maritime Territory around the city say
the health situation is becoming critical as a result of on-going
strikes.

Already there has been an increase in gastric infections, with 50
cases reporting to hospitals and three have died from dysentery,
says Vladimir Sidinko, Vladivostok's furious public health
director, who announced his resignation on Jul. 31, along with his
entire department.

''Three people have died from dysentery - a two fold problem,
since the garbage caused the infection, but the lack of medicine
made it impossible to treat,'' he says.

The city's garbage men are demanding that the town hall pay 13.5
billion roubles (2.4 million dollars) in unpaid wages. Municipal
authorities have called on the city's organisations to dump their
own rubbish but to little effect. The situation is being made
worse by a strike by local housing and municipal utilities
workers, also demanding back pay.

Medical personnel in Maritime Territory have been on strike
sporadically for over a year in protest not only at delays in
salaries but also in the lack of funding for hospitals and clinics
and the shortage of medical supplies.

They received some money in January following a four day protest
and a threat to go on indefinite strike. However, this did not
cover the six months arrears then owed. At that time, the total
debt, including funds for medicines, bandaging materials, cotton
wool and catering for the diseased, was over 350 billion roubles.

The personnel of Vladivostok Children's Hospital have sent a
telegram to Russian health minister Tatyana Dmitriyeva about the
critical situation in the hospital, which has been denied funding
by the city's mayor, Victor Cherepkov.

None of the funds needed for medicines, urgent assistance to
patients and surgery have been allocated since January. The future
of Maritime Territory's only oncological cancer centre, located on
the premises of the Children's Hospital, is now in doubt.

Criticism of Cherepkov has been mounting. Sidinko, whose
announced his resignation last week, was the fifth city health
department head to be appointed since October 1996.

He holds Cherepkov responsible for the fact that some 250,000
people are uninsured out of a population of 800,000, claiming that
Cherepkov has failed to finance a municipal insurance fund which
pays for the city's unemployed.

''The fund is supposed to cover children, invalids and
pensioners,'' he says. ''The mayor has not funded medical care
overall, leaving medical workers unpaid, city blood stores
dangerously low, and hospitals suffering serious shortages of
necessary medicines.''

For July, Cherepkov allotted only 50 million roubles, funds that
were used up in 10 days. As a result health is deteriorating
rapidly. Sidinko says that tuberculosis has doubled over the last
five years and hepatitis has become a problem.

The rate of hepatitis A infection in Vladivostok is four times
higher than in the rest of Maritime Territory and six times higher
than the rest of the nation. Neither Sidinko nor the health
department would release figures on numbers of cases.

But he said a cholera epidemic was probably if the garbage
continued to pile up and not funding was made available for
medicines.

City sanitary officials say rotting garbage is responsible for 84
cases of intestinal infections and 31 cases of food poisoning.
Outbreaks of infections resembling scarlet fever and tuberculosis
have been growing since mid-July.

Cherepkov has refused Sidinko's resignation and is trying to fire
him instead, but Sidinko says he is leaving because he ''can no
longer work with a man who does not listen''.

The doctors have now received a salary promise from Victor
Kondratov, president Boris Yeltsin's representative in Maritime
Territory and head of the local FSB security police, following a
demonstration on Jul.15 that drew national media coverage.

As to the garbage strike, Cherepkov blamed Yuri Kopylov, the city
manager, and suspended him on Jul. 23.

Kopylov was one of the few original deputies who had not been
fired or quit since the mayor resumed office in September.
Cherepkov says he wants to centralise services, and has refused to
sign a number of municipal contracts with private firms, some of
which he is trying to bring some under control of city hall.

Refuse collection is a privatised monopoly, but the mayor hasn't
yet signed a contract with the collection company,
SpetsAvtoKhozyaistvo (SAK).

In March garbage truck drivers blocked the road to the city's
seaside dump and returned to work only after Cherepkov promised to
pay them.

But SAK's director, Nikolai Mozgovoy, says the money never
materialised. Arrears are now over six months and total 13.5
billion roubles. ''It's not a strike -- we're simply not
working,'' says Mozgovoy. His company is continuing to serve those
private businesses and condominiums that have made separate
agreements with SAK.

Meanwhile, over 2,000 elevator repairmen, building cleaners and
apartment maintenance people, who have also been waiting six
months for their salaries, will now have to work directly for the
mayor's office in order to get their pay, Cherepkov says.

He says housing services will no longer answer to the five-
district agency that used to control them, and accuses district
agency management of corruption. Maintenance workers have rejected
the new arrangement and are calling for the mayor's resignation.

''How can they let us work the first half of the year and then
say, 'Thank you very much for your work, we spit on you for the
second half of the year'?'' asks Galina Azimova, a union committee
chairwoman. ''The mayor won't sign a contract with us because that
means taking responsibility.'' 

*********

The Washington Post
14 August 1997
[for personal use only]
Czar's Jewels III: Bauble, Bauble, Toil and Trouble
By Linton Weeks
Washington Post Staff Writer

The Curse of the Romanovs now has fallen on California.

After much haggling and many headaches, the exhibit "Jewels of the
Romanovs: Treasures of the Russian Imperial Court" will open at the San
Diego Museum of Art on Saturday. But only after the museum's director,
Steven Brezzo, described the exhibit as "the most complicated, demanding,
sometimes bewildering and frequently frustrating project" he's worked on in
the past two decades, according to the San Diego Union-Tribune.

Bob Trettin, a spokesman for the California museum, said, "The nitty-gritty
involved was just amazing."

If you remember the exhibit's volcanic visit to Washington, you know
exactly what they're talking about. The traveling display of dizzying
gemstones has been the source of international tension since it first came
to Washington in January.

After a 10-week run at the Corcoran Gallery of Art, the collection was
caught in a prolonged standoff. Russian Embassy cars even blockaded a
United Van Lines truck parked near the White House with a cargo of
priceless art objects. Then the van, driven by Jack and Marcy Eschenbach,
was taken to the heavily guarded Russian Embassy compound.

The whole affair was wacky, but it boiled down to a feud between two groups
-- the Russian Organizing Committee and the Washington-based
American-Russian Cultural Cooperation Foundation. Ironically, the
foundation hoped to use the exhibit to promote cultural understanding
between Russia and the United States.

Eventually the battling factions signed a truce, the van was freed and the
exhibition was dispatched to Houston's Museum of Fine Arts. There the
jewels were even more wildly popular than they had been in Washington. More
than 156,000 people shuffled peacefully by cases filled with the bedazzling
baubles of Czarist Russia -- such as a brooch fashioned for Catherine the
Great and a small casket coated with rubies, pearls and quartz.

But the two organizing groups just couldn't stop wrangling, even then. They
continued to squabble over money and over whether the exhibit would
continue to San Diego and Memphis, where it is scheduled to open in November.

Texas newspapers reported that the Houston museum ran a full-page ad
warning that the show would soon close and the jewels would be taken back
to Russia. At another point, a prominent Texas clan filed suit against the
Russians. The Magness family claimed that the Russian government seized
more than $160 million in property in the wake of the 1917 revolution. But
a Houston judge refused to issue a restraining order and the jewels were
shipped to California.

"I thought it was a glorious exhibit in Houston," said James W. Symington,
chairman of the American foundation. Of the animosity and angst experienced
in Washington, he said, "We closed that chapter, just as if it was an old
book."

In Houston, Symington and other representatives of the foundation sat down
with Mikhail S. Gusman, head of the Russian organizing committee, Yevgeny
Sidorov, Russia's minister of culture, and Timothy L. Dickinson, a K Street
lawyer who represents the Russians.

The two sides agreed to split the gross receipts of the San Diego and
Memphis shows with the Russians getting 65 percent of the money; the
Americans 35 percent. The gross of the four-city tour is expected to reach
nearly $2 million, Symington said. The two groups also will take a
percentage of merchandise sales. And they worked out the myriad details of
who pays various expenses.

The contract with the San Diego museum, Trettin said, was more than 30
pages long. But for all the uncertainty, he said, "we have never sold as
many advance tickets as we have for this exhibit -- more than 60,000."

The jewels were flown from Texas to California. The display cases, costumes
and other items were trucked to San Diego. Driving one of the three moving
vans were those ever-patient specialists in museum-quality moving jobs --
Jack and Marcy Eschenbach.

********