August 28, 1997  
This Date's Issues: 1153 •1154  •

Johnson's Russia List
#1153
28 August 1997
djohnson@cdi.org

[Note from David Johnson:
No time to make your life easier. But it's a good read.]

********

#1
Russia: Promise To Pay Military Wages May Be Fading 
By Simon Saradzhyan

Moscow, 27 August 1997 (RFE/RL) - Russia's President Boris Yeltsin and
Defense Minister Igor Sergeyev vowed this month that all of Russia's massive
military pay arrears would be paid up by September 1. But as the deadline
approaches, a military financier says there is no way the promise will be kept.
Our military affairs correspondent in Moscow reports Colonel Nikolai
Bulgakov of the Defense Ministry's Chief Directorate For Military Budget and
Finance says that taking the federal government at its word would be a nice
ideal - but catching up to back pay by the deadline is "not quite practicable."
Bulgakov said that, despite the best efforts of the Finance Ministry,
cash will not reach each Russian officer by the end of this week. All the
transfers simply could not be made in just two months, he says.
Last week, the deputy chief of the general staff, Col. General Valery
Manilov, narrowed the promise. He said only wage arrears would be paid off
by the deadline, while other compensation, including social payments, would
be paid off by the end of the year. "Other compensation" is a substantial
part of Russian military personnel pay.
Yeltsin himself repeated Tuesday that all arrears would be paid strictly
before the deadline. Upon arriving in the Russian city of Saratov, he
praised Defense Minister Sergeyev for starting needed military reforms.
Yeltsin added: "We keep our promises. We will settle 100 percent (of wage
arrears) by August 31 sharp."
The Russian press has remained skeptical. "Nezavisimaya Gazeta" weekly
said Tuesday that the promise could not be kept. The newspaper cited
exchanges of words between the federal Finance Ministry and military
financiers about the amount of the government's back obligations to the
military. The dispute indicated pessimism about meeting the deadline, the
newspaper said.
In one exchange early this year, Finance Ministry official Alexander
Smirnov publicly charged that the Defense Ministry was overstating the wage
arrears at the equivalent of $1.3 billion. 

*********

#2
Date: Wed, 27 Aug 1997 
From: "Hoagland, Richard E" <rehmosc@usia.gov> 
Subject: Re 1151.13: U.S. Embassy Worst Traffic Offender...

David:

In reply to the "Rossiyskaya Gazeta" article, "U.S. Embassy Worst Traffic 
Offender Among Moscow Missions" (JRL 1151.13), I would like JRL readers 
to see an extract from the Moscow American Embassy's original -- and 
accurate -- on-the-record response the next day after the accident 
occurred which involved Political Officer Matt Bryza:

" A diplomat from the American Embassy was involved in a traffic accident 
which injured a pedestrian late on the evening of August 18. The Russian 
police questioned the diplomat at the scene of the accident. He 
accompanied the police to the local station to provide further 
information. The diplomat fully cooperated with the police who took no 
action against him. He was not arrested and a short time later returned 
[to his] home [in Moscow]."

This much is official U.S. Government comment. What follows are my own 
views.

The allegation that cars registered to the American Embassy committed 
114, or 14 %, of all diplomatic driving violations in Moscow since the 
beginning of the year -- and I don't know if these figures are accurate 
-- has to be put into context. JRL readers likely will remember the 
Moscow GAI's (city traffic police) "Operation Foreigner" at the beginning 
of this year, which many suspect was retaliation for two Russian 
diplomats having been arrested in New York during a parking violation. 
While "Operation Foreigner" was underway, American Diplomats' cars were 
being stopped left and right -- as often as three times within one mile 
-- for "infractions" such as dirty license plates or, a little later, for 
having the wrong sized bolts holding on the license plates. Surely, 
these "infractions" must have skewed the statistics.

I also want to say something about Matt Bryza who comes across in the 
press reports about this incident as all but a monster. Matt was one of 
the brightest, most polite, most promising young diplomats at the 
American Embassy in Moscow. While we have to have compassion for the 
woman who was injured in this accident, I think it's important we have 
compassion for Matt, too, who has suffered the double trauma of having 
been involved in a traffic accident and of having had his diplomatic 
career in Moscow abruptly yanked out from under him.

Richard E. Hoagland
Press Spokesman
American Embassy Moscow
Tel. 7-095-956-4238 Fax 7-095-255-9766
rehmosc@usia.gov

*********

#3
Date: Wed, 27 Aug 1997
From: "max smetannikov" <msmeta@bdc1.bloomberg.com> 
Subject: Re: 1151 Thomas

Addressing some of the issues Henrietta Thomas <hkt@wwa.com> found in
my statement on Russian immigration laws. I said immigration to Russia
is rising because of overpopulation in neighboring countries, so
Russian laws should be changed to accommodate that. 

Thomas:
Instinct #2: The neighboring countries are mostly former Soviet
republics. Which of them are so overpopulated their people would want
to emigrate to Russia?
A: Chinese are illegally crossing and settling in
Siberia, North Koreans enjoy their move to Russian Far East,
Afganistan-Tajikistan: do they still have a border (I think there are
still Russian border troops in the region)?

Instinct #3: Millions of Russians are more or less stranded in
countries no longer part of the Soviet Union. Seems to me they should
have a first right of return.
A: Who will pay for it? Russia has way too
many welfare obligations already.

Thomas:
The borders already leak like a sieve, with all sorts of illegal
skullduggery going on. Russia would be better advised to establish
better border patrols.

A:And who will pay for that? On the contrary, the newcomers will step up
competition and improve economy.

Thomas:
Russia already has 100 different nationalities within its borders.
There are tensions between these various ethnic groups. And you would
add "foreigners" to the mix? I think it should be a very long time for
anything like that to happen. Let the Russians have Russia to
themselves; the land does not belong to the rest of the world.

A:Russian Federation obviously does a poor job keeping the rest of the
world out. The truth is, it can't: there is no money and no real point
in that. If foreigners keep sneaking in illegally, tensions (among the
100 ethnic groups mentioned) will just escalate. Immigration is always
an unpopular domestic policy issue, but is inevitable. In the dream
world, politics defines reality. In the real world, it's the other way
around.

Thomas: Final note: Those who think there is a vast Russian land on
which to resettle their people should bear in mind that most of the
land is uninhabitable, and only about 10% is truly arable. That's why
the right to buy and sell land is not such a great idea.

A:Farmable land isn't the main reason people move from place to place
these days. In the 20th century economy, it's mainly because of jobs
in cross-border commerce and industry. Also, it is because of higher
living standards in various places, when compensation for identical
work varies from country to country. The first factor creates jobs in
the home country, the second takes them away. Hopefully, Russian
Federation will try to strike a balance between the two. The current
legislature impedes with this global market trend and will be changed,
ne mitiom tak katanem. 

*******

#4
Russian Bad Boy Bashes Big Macs
August 27, 1997
MOSCOW (AP) - With characteristic brashness, Russian ultranationalist
Vladimir Zhirinovsky ripped apart a Big Mac and trampled on it Wednesday. 
The move aimed to slam home Zhirinovsky's point that he doesn't like Western
fast food and wants parliament to limit imports. 
Zhirinovsky said his party, the third largest in parliament's lower house,
would demand that the British and Belgian ambassadors be deported. That's
because their countries are ``the main exporters of poisonous beef,'' he told
the ITAR-Tass news agency. 
He was referring to the ``mad cow'' crisis and reports earlier this summer
that banned British beef may have been illegally exported to Russia through
Belgium. 
``This is not real meat,'' he said Wednesday as he tore into the burger. 
This might be sour grapes. Zhirinovsky has recently opened a small grocery
store in Moscow, where nationalist polemics are dished out along with meat
and his name-brand vodka. 
His fling at business doesn't quite measure up to McDonald's, though. The
chain is expanding rapidly in Moscow and its restaurants are some of the few
places where Russians still line up for food. 

*******

#5
Russia church head rejects "North American" values

MOSCOW, Aug 27 (Reuter) - The head of the Russian Orthodox Church, Alexiy II,
said on Wednesday that ``North American standards'' of freedom of religion
should not be applied to Russia, Itar-Tass news agency reported. 
``We must completely bar proselytising,'' Alexiy said, referring to
``non-traditional'' faiths, following a meeting with the archbishop of
Vienna. 
He called proselytising ``an attempt by unworthy means to lure people to
another faith from the religions of their ancestors.'' 
Alexiy lobbied earlier this summer for a parliament-approved draft law which
gave strong advantages to the Orthodoxy and few other traditional faiths. 
But President Boris Yeltsin rejected the bill, saying it violated the Russian
constitution and internationally accepted standards of human rights. Yeltsin
has said that he would, however, approve a different, amended bill on the
issue. 
``I think we have our own traditions and history and our legislation must
consider them. Sometimes they even try to impose North American standards on
us,'' Alexiy was quoted as saying. 
``But, entering into European society, we would like to preserve our face,
our profile, those spiritual-cultural traditions which formed over the
1,000-year history of Russia.'' 
The fall of communism in 1991 brought not only a revival in the Orthodox
Church, but the growth of numerous other religions, as well as cults and
sects which Orthodoxy views as unwelcome rivals. 
The rejected parliamentary bill, approved by a majority of lawmakers who said
it would help clamp down on dangerous foreign sects, identified Orthodoxy,
Islam, Buddhism and Judaism as traditional faiths in the multi-ethnic Russian
Federation. 
Representatives of other confessions, including Catholicism, which has a long
history of tension with the Orthodox Church, fear that the vaguely worded
bill could have resulted in a loss of their legal rights. 

*******

#6
Yeltsin Comments on His Health 

SARATOV, Aug 26 (Interfax) -- Russian President Boris Yeltsin is
satisfied with his current physical and moral condition. "I'm in good
shape and in a good mood, even though I have gone through difficult
moments," he said Tuesday during a meeting with the workers of the
Mikhailovskaya state poultry farm in the Tatishchevsky district in Saratov
region.
He praised the farmers, saying that he has visited dozens of poultry
farms but has not seen anything like this before. "A poultry farm that has
survived and is developing is a rare thing in Russia today," Yeltsin said.
He said that among the causes of decline in poultry farming is that
"poultry farms have failed to withstand the inflow of cheap imports." He
confirmed that "the government will fulfill its promises." "We have paid
off our debts to servicemen and are determined to pay off the debts to
state-run enterprises," he said.
Assessing the current economic situation, he said that "Russia has
overcome the crisis and is making economic advances," which can be seen
from the fact that "the rate of inflation has stood at zero for more than
two months."
"Another sign of stability is that the news about the upcoming
redenomination of the ruble caused no panic in the country," he said. The
government will continue to pay special attention to social problems,
Yeltsin went on. He announced that "the question of compensating the
citizens' deposits made before 1992 is being considered."

********

#7
U.S. Institute Cited on Russian Radical Opposition Activity 

Zavtra, No. 33
August 1997
[translation for personal use only]
Untitled report by the Den Security Service under the "Bulletin
Board" rubric

According to information from the Hoover Institute of War, Peace, and
Revolution (Stanford, United States), a situations analysis of the activity
of the opposition in Russia was completed here on 19 August, the sixth
anniversary of the [1991] coup attempt. This secret document says that in
July and August alone the executive authorities of the Russian Federation,
from a legal standpoint, committed three violations of the Constitution
(the agreements and course of the negotiations with Groznyy, distribution
of property at the expense of the federal budget, and announcing a money
reform). These actions required an emergency meeting and the passing of a
corresponding decision from the legislative agencies, which did not occur. 
In the meantime, the greatest fears of the authors of the document are
being aroused by the possible actions of "radicals within the CPRF
[Communist Party of the Russian Federation] and its faction in the State
Duma," which could achieve a delegitimation of both foreign loans and
credits and the current transfer of property to Russian and foreign banking
and finance groups...."

*********

#8
The Times (UK)
August 28, 1997
[for personal use only
 Moscow mafia in textbook murder
Russia's underworld has turned its guns on state publishing, writes 
Richard Beeston from Moscow 

RUSSIA'S publishing industry, for long the preserve of the 
intelligentsia, appears to have fallen prey to the country's ubiquitous 
mafia, after details emerged yesterday of the gangland assassination of 
a successful young publisher. 
Although Russians have become used to frequent accounts about the 
murders of bankers, prominent sportsmen and casino owners, publishers 
have, by and large, remained untouched by Russia's mobsters. 
That myth was dispelled late on Tuesday when police were called to a 
residential street in Moscow after the contract killing of Aleksandr 
Krutik, commercial director of the Drofa publishing house. 
Witnesses said the 29-year-old publisher was hit by two rooftop snipers 
as he left his home in the capital. His bodyguard returned fire with a 
pistol, but the killers escaped and Mr Krutik died of his wounds as he 
was being taken to hospital. 
Drofa is Russia's leading publisher of educational literature, a hugely 
profitable industry, given that the Government still pays for the 
publishing and distribution of textbooks free of charge to the nation's 
pupils. 
The publishing house was due to have given a press conference yesterday 
when it was expected to announce that it had again won a 
multi-million-pound contract for publishing textbooks for the next 
academic year. 
Last November Vladimir Veshnyakov, Drofa's deputy director-general, was 
found shot dead in a car in suburban Moscow. At the time his partner 
said Veshnyakov should not have moved around the city without a 
bodyguard, a precaution which did not protect Mr Krutik nine months 
later. 
Police have made no headway in that murder investigation and, judging by 
their poor track record in solving contract killings, it is highly 
unlikely that any arrests will be made in the latest shooting. 
Publishing industry sources said that there were several possible 
suspects, ranging from rival publishers trying to cut into the lucrative 
market, to distributors and printers who had not been paid. 
Aside from the illicit business of translating and publishing pirated 
Western bestsellers for the Russian mass market, most commercial 
publishing in Russia remains largely mafia-free. 
"Frankly the profits involved are too small to bother killing somebody 
for," said one veteran publisher. "The only exception are the contracts 
for the Government's school textbooks. The publishing and distribution 
rights are worth hundreds of millions of dollars, and as a result the 
mafia is heavily involved in every step of the way." 
Tuesday's murder happened only a day after President Yeltsin told Yuri 
Skuratov, the Prosecutor-General, that he was not satisfied with the 
performance of the law enforcement agencies in their fight against 
crime. 
This month alone St Petersburg has witnessed two high-profile killings. 
Valeri Mandrykin, vice-president of the Finnish-owned oil company 
Neste-Sankt-Petersburg, was shot dead. Last week Mikhail Manevich, 
deputy governor of St Petersburg and a crusading reformer, was killed by 
a sniper. 
In Moscow figures in the sports world have been particular targets. In 
April, Valentin Sych, the head of Russia's Ice Hockey Federation, was 
shot dead. His murder was followed in June by that of Larisa Nechayeva, 
director of Moscow Spartak football club. 

*********

#9
Russia: Billions In State Assets May Be Sold Next Year
By Stephanie Baker

Moscow, 27 August 1997 (RFE/RL) -- Russia's new privatization chief Maxim
Boiko plans to sell thousands of millions of dollars worth of state assets
next year.
The government's program, submitted to the State Duma late Monday, lists
37 companies to be sold next year in an attempt to speed up privatization
and make the process more open.
Boiko yesterday urged the Duma to approve the plan, saying: "This will
put privatization on a solid legal footing, which means that it will be
governed by laws, not merely by presidential decrees and resolutions."
The program was drawn up in line with a new law that went into effect
August 2, requiring the government to submit a list of state assets up for
sale to the Duma. In the past, the government has organized most sell-offs
on the basis of haphazard presidential decrees.
The government is currently in the midst of a high-profile sell-off of
state assets in a bid to plug up holes in the federal budget, which has been
squeezed by a shortfall in tax revenues. Recent auctions have sparked
rivalries among Russia's once-tightly knit bankers, who are competing for
property still in state hands.
Under the program, several major enterprises are slated for sale next
year, including telecommunications holding company Svyazinvest (25 percent
minus one share), state oil company Rosneft (96 percent), oil giant Lukoil
(6 percent), state airline carrier Aeroflot (51 percent), and pipeline
operator Transneft (50 percent minus one share).
Boiko said the government is currently working out the sale terms for
Svyazinvest and Rosneft, which means those stakes could be sold off already
this year. In the past the government has discussed selling off only 24
percent of Svyazinvest.
A quarter stake in Svyazinvest was sold at a cash auction in July,
fetching nearly $1.9 billion in what was deemed one of Russia's most
successful privatizations ever. But the losing bidders launched a bitter
media campaign to discredit the winning consortium, led by Russia's Uneximbank.
Other companies slated for privatization in 1998 include Moscow airport
Sheremetyevo and a series of oil and transportation companies. The program
calls for most of the companies to be privatized by commercial tenders or
auctions, with the government keeping a controlling stake in many of the firms.
The list appears so extensive and the stakes so huge that it reads like a
catalogue of the government's final privatization plans. But analysts said
many of the enterprises have been mentioned previously in the government's
privatization plans. Nevertheless, the program is in line with past
statements by Boiko, who has called for selling off state assets as quickly
as possible.
Boiko said the combined value of the stakes is about 30 trillion rubles
($5.2 billion), well above the government's forecast of 6.1 trillion rubles
in privatization revenue for 1998. Boiko said the number of companies to be
privatized had been expanded in order to give it room to maneuver in
negotiations with the Duma.
It is not clear whether the plan requires parliamentary approval. But
Boiko's statements indicate he wants the Duma's blessing in an attempt to
put his own signature on the privatization process after replacing Alfred
Kokh, who left his post earlier this month amid an uproar over Svyazinvest.
As one analyst put it: "You could see some horse-trading between three
key pieces of economic legislation before the Duma now: the tax code, the
1998 budget and the privatization program."
The opposition-dominated Duma in the past has blasted the government's
privatization record as a failure, with communist deputies complaining state
assets have been sold for a song. Analysts said it is unlikely the 1998
program will sail through the legislature without a political fight.
In an interview in yesterday's "Izvestia," Boiko acknowledged that the
government could have handled privatization better in the past by speeding
up the number of sell-offs. But he defended the 1995
loans-for-shares program, which handed major stakes in prized companies to
insider banks at discounted prices.
"I don't think loans for shares was illegal. It's another thing to
discuss whether it was the best means of privatization," he said.

********

#10
RUSSIA`S CEC PLANS TO QUALITATIVELY IMPROVE ELECTION LAWS
MOSCOW, AUGUST 27 (RIA NOVOSTI CORRESPONDENT ALEXANDRA
UTKINA). Russia`s Central Elections Commission plans to start a
work aimed at "a qualitative improvement" of election laws as
several of them have "serious defects," CEC Chairman Alexander
Ivanchenko said at a press conference today in Moscow.
According to Ivanchenko, it is necessary to introduce
corrections, in particular, in the laws on elections of the
Russian president and State Duma deputies. He reported that the
CEC is preparing a law on principles of financing of election
campaigns which will prevent any violations in the course of
elections to any power bodies. Ivanchenko also expressed hope
that the law on basic guarantees of electors` rights turned down
by the Federation Council will be shortly adopted. As Ivanchenko
assumed, there were "no concrete claims" to this document on the
part of members of the upper chamber, but the upcoming elections
to the local self-rule bodies and legislative assemblies of
different regions "prevailed over them."
Ivanchenko pointed out that additional elections of
deputies to the State Duma will be held in seven one-mandate
districts, there will be repeated elections in three of them,
namely the Khakasia, Sovetsky and Kyshtym election districts.
According to Ivanchenko, elections to the legislative assemblies
will be held in 22 constituent members of the Russian
Federation, in 11 districts - to the local self-rule bodies and
elections of heads of executive power bodies will be held in
three districts.
Responding to journalists, Ivanchenko said of his meeting
with the Russian president several day ago. As he said, Yeltsin
expressed concern due to violations during the elections to the
local self-rule bodies adn recommended "to more strictly"
control the situation in the course of election campaigns. 

*******

#11
LEFT-RADICAL ORGANIZATION FROM PSKOV OFFERS TO DRAW UP
"LISTS OF PEOPLE`S ENEMIES"
MOSCOW, AUGUST 27 (RIA NOVOSTI CORRESPONDENT). The Pskov
left-radical organization which calls itself Union of Resistance
Forces "Gamayun" has addressed administration of the Pskov
region with proposals on cooperation, in particular, in
composing a list of people "destined to a trial for what they do
against the people."
As sources in the region`s Main Interior Department
reported to RIA NOVOSTI correspondents, the letters were written
"judicially literally" and it is difficult "to find fault" with
these letters from the point of view of RIUssia`s Criminal Code.
Until now the Gamayun organization was known in Pskov be
repeated pickets held near commercial banks under
anti-governmental slogans.
The Pskov radicals have visited the capital as well. They
threw leaflets with the appeals "to fight against the existing
dictator regime" signed by this organization at the opening of
the season of the Bolshoi theater during the first act of the
Ivan Susanin opera. In addition, several central newspapers and
television channels have received letters on behalf of Gamayun
with the demand of resignation and repentance of chief editors
"whose guilt of an active complicity to the existing regime has
been established."
Officials in the capital`s law enforcement bodies assumed
in a conversation with a RIA NOVOSTI correspondent that this
organization "cannot remain in peace due to the scandalous fame"
of the people and organizations involved in the explosion of the
monument to Nicholas II in Taininskoe (near Moscow) and placing
a mine to the monument of Peter the Great in Moscow. Competent
bodies are investigating activity of the Gamayun organization,
it is not ruled out that criminal proceedings will be instituted
against this organization. 

*******

#12
>From Russia Today press summaries
http://www.russiatoday.com

Segodnya
August 27, 1997
Lead story
Well, Taxes Are Just Dust and Mist
THE PUBLIC'S FAVORITES DO NOT WANT TO FILL OUT THEIR DECLARATIONS
Summary
Popular singers Nadezhda Babkina and Lev Leschenko and comic Vladimir
Vinokur gave exclusive video interviews to the tax police. They discussed
how it feels to submit tax declarations and pay taxes in full. Other stars
who accurately paid their taxes were Gennady Hazanov, Valery Leontyev and
Igor Nikolayev, according to a tax police briefing Tuesday. 
However, many other favorites of the public were noted for various tax
code violations. The most widespread form of tax evasion was receiving cash
bonuses. Famous performers usually charge from $5,000 to $20,000 per show.
Sometimes, in rich night clubs, bonuses reach $40,000 per night. 
Intermediary companies that arrange performances often disappear after a
series of performances, or even after one show. Besides, it is very
difficult to discover what share of the total bonus goes to the main
performer. 
The tax police think that at present in Russia the show business market
is controlled by a number of criminal structures. Tax service analysts say
mandatory licensing of companies engaged in show business could make it more
civilized. However, lawmakers have so far resisted attempts to change
legislation in this area. The tax service said the performers' lobby is
strong at the Duma. 
RUSSIA TODAY Notes:
Tax evasion has become something of a national sport in Russia, leading
to income shortages for the government and contributing to the overall
nonpayment crisis. The Cabinet has been trying since last year to correct
the problem, cracking down on corporate tax evaders and pushing for the
introduction of a new simplified tax code, which they hope will encourage
people to pay up. Still, the government fell short of tax collection targets
in the first half of the year, forcing it to cut budget expenditures.

********

#13
>From Russia Today press summaries
Nezavisimaya Gazeta
August 27, 1997
Lead story 
NATO Maneuvers on the Crimean Coast Pushed Moscow towards Military
Cooperation with Kiev
Summary
The daily wrote about Defense Minister Igor Sergeyev's visit to Ukraine.
His arrival was timed for the beginning of NATO-Ukrainian exercises near Crimea.
The citizens of the peninsula protested against the NATO maneuvers,
viewing them as foreign intervention. Nezavisimaya wrote that the list of
the naval exercises' participants proves these fears are not groundless. Sea
Breeze '97 includes 25 battleships from the U.S., Ukraine, Turkey, Romania,
Bulgaria and Georgia, and 300 marine infantrymen from the U.S. and Ukraine.

The hidden confrontation between the Russian and Ukrainian Black Sea
fleets may be eased with Sergeyev's arrival in Sevastopol to speak about the
division of the fleet.
Sergeyev will also meet with President Leonid Kuchma, as well as the
prime minister and Security Council secretary, to solve military and
political problems in bilateral relations. 
The daily wrote that Russia is lagging behind NATO in attempts to set up
a good military partnership with Ukraine. The objective of the Defense
Ministry's visit is an attempt to catch up with the West in this direction. 

*********

#14
>From Russia Today press summaries
Pravda
August 27, 1997
A Trojan Horse for Russia 
Summary
The daily wrote that reforms are in fact a long-term siege of the Russian
economy, conducted by the International Monetary Fund and the West.
However, the daily said their storm of the Russian fortress for the past
five years has not brought the desired results yet -- the economy is still
alive, even though it is in a monetary blockade. 
They are starting a new offensive now, looking to suffocate Russia's
energy sources. It began with the replacement of top officers at the
national energy grid Unified Energy Systems (EES). Later, leaders of the
company and the Fuel and Energy Ministry cut energy supplies by half because
of debts in two regions -- Kemerovo and Astrakhan.
This "surgery," which was caused by an artificial money shortage, became
the best finale for the shock therapy, which Yegor Gaidar's team was
commissioned to perform in Russia. 

********

#15
>From Russia Today press summaries
Delevoi Peterburg
Businessmen Will be Attending the School of Free Market Patriotism
Summary
Anatoly Karpov used to work in the timber industry, but a few years ago
his business closed, wrote the daily.
He then realized that it is tough to do business in Russia, not so much
for external reasons, but for internal ones -- many people are not prepared
psychologically for life in the free market. This is especially true of
entrepreneurs, he said, who are Soviet in soul.
Now, his goal is to promote the free market as a new ideology in Russia.
This is what they do in America, the daily quoted him as saying, and such
propaganda there is stronger (though subtler) than the Communist Party could
ever have dreamed of. 
One of the biggest problems for business heads is the absence of
stability in society, he said. Entrepreneurs should work to create such
stability and must become politically active, Karpov said.
Many business bosses also need to acquire a work ethic. He points out
that many think that if they begin a business, they will soon be receiving
big money. But they must learn that it takes time and hard work.
As part of his patriotic course, Karpov takes examples from Russian
history of figures who were clever and enterprising -- sometimes finding
examples in the most unexpected places. For instance, Karpov spoke about how
Dmitri Donskoi prepared for battle against the Mongols, and of people who
were clever enough to stay alive during the Blockade of Leningrad. 

********

#16
Financial Times (UK)
August 28, 1997
[for personal use only]
Russia: Ties with China strengthened by $100m arms deal
By Chrystia Freeland in Moscow

Russia's burgeoning friendship with China was strengthened yesterday by 
the visit of a senior Chinese general who concluded a multi-million 
dollar arms deal with his Moscow hosts.
In recent months, the Kremlin, dismayed by its failure to be accepted as 
a full member of the western club of developed nations, has vigorously 
cultivated ties with the Middle East and Asia.
A growing relationship with China has been the centrepiece of Russia's 
new eastern emphasis. Jiang Zemin, China's president, visited Moscow in 
April. Boris Yeltsin, the Russian president, plans to travel to China 
this year.
"Relations between Russia and China are positive as never before," 
Viktor Chernomyrdin, the Russian prime minister, said during his meeting 
with Gen Liu Huaquing.
Russian news agencies said that during his visit to Russia Gen Liu, a 
member of the powerful committee of the Chinese politburo, had signed a 
contract with Rosvoruzheniye, Russia's recently revamped arms 
organisation, for the delivery of armaments worth more than $100m.
The deal is part of the swiftly growing weapons trade between Moscow and 
Beijing. Russia has sold some $1bn worth of weapons to China over the 
past year, accounting for about 30 per cent of its booming arms exports.
During their meeting yesterday, Mr Chernomyrdin and Gen Liu discussed 
further military co-operation, including deliveries of spare parts for 
Russian military aircraft already purchased by the Chinese, and the 
transfer of Russian licences that would allow China to build the Sukhoi 
Su-27 fighter jet.
Gen Liu, whose visit to Russia is scheduled to last for 10 days, is 
expected to visit military factories across the country, travelling to 
the Urals capital of Yekaterinburg, the Siberian academic centre of 
Novosibirsk and the far eastern city of Khabarovsk.
Russia continues to place high value on its ties with the US and Europe, 
and attached great importance to its almost total inclusion in the 
summit meeting this summer of the Group of Seven industrialised nations. 
But the Kremlin is increasingly seeking ways to counterbalance the west.
Growing ties with Moscow offer the same enticement for China, whose 
president, Mr Jiang, told the Russian leadership during his spring visit 
that together the two countries could help prevent the emergence of a 
single "hegemonic" world power - a remark observers believed was aimed 
at the US. However, Russian-Chinese relations are troubled by continued 
friction along their border.

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#17
Ukraine: Ukraine Defense Chief Outlines 'Sea Breeze' Exercise 

Novoozernoye, August 25 (Interfax- Ukraine) -- The main topic of the
Sea Breeze-97 Ukrainian-US naval exercises will be a humanitarian operation
in an Orange Republic hit by an earthquake and following economic turmoil.
This was disclosed by Ukrainian Defense Minister Mykhailo Yezhel at a
press-conference in Novoozernoye on the eve of the opening of the Sea
Breeze exercises.
According to the Minister, the exercises will be held in two stages 
-- the maritime and ground ones. The first stage will include the
formation of a convoy for humanitarian cargo and its escorting at sea, and
at the second one -- due on the Shyroky Lan training range in Mykolayiv
region -- cooperation in the delivery of humanitarian cargoes to the
population will be trained between peacekeepers of participant countries.
The character of the exercises has been determined by the "supreme,
rather than by military command," General Yezhel underscored, and added
that the program for the exercises does not envisage the use of weapons.
The ground stage of the exercises will not include any amphibious
landing operation, it only envisages "humanitarian cargo unloading and
peacekeepers' landing in the port".
"It would be better" if Russia attended the exercises as well, the
Ukrainian Minister said. At the same time, he observed, "This is Russia's
business", and recalled that a joint Ukrainian-Russian military exercise
was held in April this year, and another one is due in this
September-October.
The exercises have been arranged for with the funds of the US
Administration in the amount of $700,000, he disclosed.
The Sea Breeze-97 exercises will be held with the participation of
eighteen Ukrainian ships and craft, two naval ships of each of the USA and
Turkey, and one ship from each of Bulgaria, Romania and Georgia. Greece,
Italy, India, Canada, Great Britain Lithuania, Germany and Moldova will
attend as observers.
The Ukrainian Navy will also be represented by naval aviation, a
marine company and nine units of hardware. On the US side will participate
a reinforced company of the marines.

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#18
Russia says not buying Kiev's strategic bombers
By Rostislav Khotin 

KIEV, Aug 27 (Reuter) - Russian Defence Minister Igor Sergeyev, on a visit to
Kiev that has coincided with joint NATO exercises which have irked Moscow,
said on Wednesday Russia had decided not to buy strategic heavy bombers from
Ukraine. 
Ukraine inherited 19 Tu-160 ``Blackjacks'' and 25 Tu-95 bombers and 600 to
800 cruise missiles from the Soviet Union and has been talking to Moscow for
five years about selling them. 
Kiev says its military doctrine foresees no need for such powerful planes,
which can stay in the air for 18 hours without refuelling and fly missions
thousands of kilometres (miles) away. 
``This problem is extremely complicated. The time was lost and there is no
going back. But we are looking for other ways out which should satisfy both
sides,'' Sergeyev said. 
Moscow complained throughout talks that the planes were deteriorating
increasingly as they have not been used since Ukraine won independence in
1991. 
Russian news agencies said this year that Kiev had accepted an offer by
Moscow of $320-$350 million for the planes, but Kiev denied this, saying the
sum was too small. 
Volodymyr Horbulin, Secretary of Ukraine's policy-making Security and Defence
Council, made clear Kiev's frustration over Moscow's reluctance to buy the
planes. 
``The Russian delegation consists of VIPs but the results do not correspond
to such a high representation,'' he said. 
``It seems the third (air) component of the nuclear triad (of nuclear
missiles, submarines and bombers) does not attract the attention it needs. I
told Sergeyev it would not benefit either of our countries,'' Horbulin added.
Ukrainian Defence Minister Olexander Kuzmuk said the military in both states
would think about how to convert the bombers into different types of planes.
He said ideas included patrolling and intelligence purposes. 
``We cannot find any use for these planes in Ukraine or in Russia -- but is
this a bad thing?'' Kuzmuk said, focusing on the overall nuclear threat from
the bombers. 
``An airfield for Tu-160s is a nuclear facility...It is like 36 Hiroshimas.
The military men don't want war because they know what powerful weapons they
have in their hands.'' 
Some commentators were sceptical about the future of the bombers. ``Money is
the problem,'' said Serhiy Zgurets, a military commentator at the Den daily.
``But if Russia has no money to buy these planes, where will Ukraine find
money to convert bombers for other purposes?'' 
Sergeyev was due later on Wednesday to travel to Ukraine's Crimean peninsula
to see President Leonid Kuchma and visit Sevastopol, where the Russian Black
Sea fleet is based. 
He did not reiterate Moscow's objections to Sea Breeze exercises being held
in southern Ukraine, including Crimea, with Ukraine, America, Turkey,
Romania, Bulgaria and Georgia contributing vessels. 
``The fact that the official visit, agreed a long time ago and allowed by
President Boris Yeltsin, coincided with the Sea Breeze exercises is simply a
matter of chance,'' Sergeyev said. ``It does not disturb me during my
visit.'' 
Kuzmuk thanked the Russians for not mentioning Sea Breeze. ``I cannot
understand why there is such a fuss around such an ordinary thing as Sea
Breeze. I am grateful to the Russian delegation for not raising this issue
during the visit.'' 
``We (Russia and Ukraine) are not like young jealous lovers.'' 
Kuzmuk added that Russian-Ukrainian naval exercises would be held in the
Black Sea in October. 

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#19
US Military Gets Look at Russia Guns
August 27, 1997

PANAMA CITY BEACH, Fla. (AP) - The U.S. military is getting its first public
look at new Russian rifles and pistols during a series of commercial
demonstrations this week at a police shooting range and a Navy base. 
``Very nice weapons, very smooth, very accurate,'' said Marine Staff Sgt.
Brian Foy. 
Marine Lt. Col. Dennis Verzera called it ``an opportunity of a lifetime'' to
fire high-tech weapons produced by a former Cold War foe. 
``I never thought I would ever see a Russian team specifically demonstrate
Russian weapons with the intent of potentially marketing them to the U.S.,''
he said Tuesday. ``It's a new world order and both countries are cautiously
going forward.'' 
Marines and local law enforcement officials are being given a chance to fire
the weapons at the Panama City Beach Police Department's firing range, with
demonstrations also held at the Naval Coastal Systems Station outside Panama
City Beach. The demonstrations end Thursday. 
``The American armed forces are very well armed, but there's some new
technologies that are here that have already been developed, already put into
production,'' said arms importer Don Wood of Birmingham, Ala., who helped
organize the demonstrations. 
At the top of the new technology list are guns that can be fired under water,
and low-noise ammunition that doesn't need bulky silencers, weaponry of
particular interest to units involved in amphibious, underwater or
clandestine operations such as Marine Corps and the Navy's SEALS. 
An underwater demonstration in a pool at the Navy base on Tuesday featured an
SPP-1 pistol firing a 4.5 mm bullet, even smaller than the common American
.22-caliber, and a Special Underwater Assault Rifle firing a 5.66 mm round,
slightly larger than a .22-caliber round. 

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#20
EUROPEAN COMMISSION PRESS RELEASE: MEMO/97/74 
DOCUMENT DATE: AUGUST 27, 1997 

EU/Russia relations 

General data 
Capital: Moscow 
Total area: 17,075.4 km2 
Population: 148,164 million inhabitants 
Population density: 8.7 inhabitants per km2 
Ethnic profile: 81.5% Russian; 3.8% Tatar; 3% Ukranian; 1.2% Chuvash; 0.9%
Bashkir; 0.8% Belorussian; 0.7% Mordovian; 8.1% other (26 recognised ethnic
groups) 
Religion: Predominantly Orthodox, but Muslim, Jewish and Buddhist minorities 
Official Language: Russian 
GDP per capita (US$-1995): 2230 

Contractual links 
The Partnership and Cooperation Agreement (PCA) was signed at Corfu in June
1994. Once ratified it will cover a wide range of European Community/Russia
trade, commercial and economic relations. It will institute political
dialogue and place respect for human rights and the democratic process at the
centre of the relationship. 
An Interim Agreement (IA) on trade and trade related matters was signed in
Brussels on 17 July 1995 and entered into force 1 February 1996. It will
enable the trade and commercial provisions of the PCA (tariff provisions,
elimination of quantitative restrictions, etc.) and flanking measures
(safeguard clause, anti-dumping rules, etc.) to enter into force already,
pending ratification of the PCA. 
The Political Declaration signed by the President of Russia, the European
Council and the European Commission at Brussels in November 1993 provides the
basis for ``permanent political dialogue and a system of regular
consultations at different levels on the whole spectrum of political,
economic and other issues of mutual interest.'' 

Assistance and financial support 
Assistance provided by the countries of the OECD during the period 1990-1993:
US$ 120,000 million (the largest bilateral donors have been the countries of
the EU with Germany as a leader). The US commitments for the period 1990-1995
totalled US$ 8,800 million (technical assistance, food aid, credits and
guarantees). Japan contributed a total of US$ 4,300 million over the same
period. 
Over the last year the Russian government reached agreement with the IMF for
an Extended Fund Facility (EFF) of US$ 10.2 billion over 3 years, with a
disbursement of US$ 4 billion the first year. 
EBRD has established US$ 2.2 billion in equity and loans at the end of 1995. 
The EU has provided, in addition to its bilateral aid, assistance to Russia
under the TACIS programme since 1991. From 1991 to 1996 the aid provided
under the programme totalled ECU 1,000 million. In addition of this technical
assistance, the EU has provided ECU 354 million in grant aid for food and
medical products and ECU 28 million in humanitarian aid. 

Trade EU/Russia 
The main trading partners of Russia in the EU are Germany, Italy and France.
Russia's primary export products to the EU are fuel, minerals and mineral
oils and base metals, chemical products are also an important category, the
primary imports from the EU are machinery and mechanical appliances (25.6%),
chemical products (8.2%) and transport equipment (9%). 

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