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Johnson's Russia List


December 2, 1997  
This Date's Issues: 1403  1404  


Johnson's Russia List
2 December 1997

[Note from David Johnson:
1. Newsweek: Bill Powell and Kim Palchikoff, Sober, Rested and 
Ready. While their men drown in vodka and self-pity, Russian women 
move on and up.

2. Reuters: Adam Tanner, Russia holds American worker on spy 

3. NTV: Nemtsov on Monarchy. (DJ: This should give some food for

4. Sovetskaya Rossiya: Rokhlin Urges 'Bloodless' End to Regime.
5. Reuters: Mike Collett-White, Shares-for-loans reappear in 
Russian cash scramble.

6. The Wall Street Journal: Alexei Bayer, Why Investors Will Bear 
With Russia.

7. Pravda 5: Two Years without Salaries.
8. Segodnya: Chemical Disarmament Is Not Progressing in Russia.
9. Sankt-Peterburgskye Vedomosti: Moscow Is Like Some Distant 

10. NTV: Press conference of Russian Orthodox Patriarch Aleksiy II.
11. PRNewswire: The American Hot Dog Invades Russia and China And 
Takes On Different Tastes and Forms.]


December 8, 1997
[for personal use only]
The Sexes: Sober, Rested and Ready
While their men drown in vodka and self-pity, Russian women move on and up
By Bill Powell and Kim Palchikoff

When Anna Koff, a 24-year-old political-science graduate of Moscow's most
prestigious university, applied for a salesclerk's position at the Moscow
airport's duty-free shop in 1989, her male friends told her she was crazy.
The job was clearly beneath her. But she somehow sensed, two years before the
Soviet Union collapsed, that she'd be better off pushing perfume for dollars
than finding a job as a politician's secretary. "I wanted to have my own
apartment and travel abroad," she recalls. "I knew that more money was more
freedom." How right she was. Today she's cool, confident and impeccably
dressed for business. And she earns nearly $50,000 a year (a fortune by
Russian standards) as an executive-search consultant at Korn Ferry
International, a world leader in the headhunting industry.
If only Russia were run by its women. Today, the country's males--from
President Boris Yeltsin and First Deputy Prime Minister Anatoly Chubais on
down--are in crisis. Life expectancy for men in Russia declined steadily in
the five years after communism's collapse, leveling off in 1996 at a pitiful
58 years. The drop is "the steepest and most severe ever documented anywhere
in the world"--and is due mainly to an increase in binge drinking, says David
Leon, a researcher at the London School of Hygiene and Tropical Medicine. The
overwhelming majority of the 35,000 Russians who died of alcohol poisoning
last year were men, he says; the rate has tripled in three years. Sharply
rising suicide rates also suggest that Russian men have proved less capable
than women in dealing with the shocks their nation has endured since the
collapse of the Soviet Union. Russia at the end of 1997 is full of brilliant,
proud men, from physicists to generals, who have seen their status
vanish--often along with their paychecks. Their response--a collective
drowning of sorrows--could not be more destructive.
Russian women have simply gotten on with it. Their life expectancy, just
below 73, has barely budged in the past five years. There may not be many
outspoken feminist leaders demanding change, but in their own way, Russia's
women are quietly beginning to lead a feminist revolution. There are simply
too many women like young investment banker Yekaterina Kubasova--competent,
determined and now moving up rapidly--to be ignored.
In the Soviet era, of course, women in the workplace were common--a
reality that was less ideological than grimly practical: starting in 1941,
millions of men went to war and never returned. By 1946 working-age women
outnumbered men by 20 million in the former Soviet Union. Even by the
mid-1970s, women still made up more than half of the total Soviet work force.
In offices they tended to be secretaries, and in factories regular laborers.
When communism collapsed, much of the country's industrial base collapsed
with it, leading to sharp increases in unemployment among women, since
managers often fired them first.
They've bounced right back. Universities report more women enrolling in
business and economics courses. Foreign companies in Moscow say that their
new women hires are less picky about where they start and more open to
transfers. Ambitious women packed a recent USAID conference on jobs in small
business. "Russian women are more inclined [than men] to start at the
bottom," says Margaret Minchini, an American who worked at a USAID-funded
project teaching women basic business skills. "They're not shy to take an
entry-level position and look for opportunities to move up. Men don't seem to
want to do that." Partly as a result, income levels for women in managerial
positions have begun to rise, up from about half of what their male
counterparts earned three years ago to about 70 percent now.
Employers are cashing in. Two months ago Mary Kay, the American cosmetics
company, held a convention for its representatives in the former Soviet
Union. More than 3,000 perfectly coifed women jammed a huge ballroom in a
Moscow hotel to swap tales about how to increase their sales. From a sales
force of 20 women in 1992, Mary Kay now has 60,000 representatives in the
former Soviet Union, and they rack up sales of $75 million a year.
How pathetic, by contrast, can some Russian men be? The Mary Kay women are
exactly the kind of modern women that a lot of Russian men are leaving.
Divorce rates in Russia are rising rapidly--from 606 out of 1,000 couples in
1992 to 764 in 1996. General economic hardship is the main reason, experts
say, but not the only one. In Soviet times, many couples didn't get divorced
simply because whomever left would not have had an apartment to go to. Today,
particularly in Moscow, more women are getting out of bad marriages because
they are able to find new apartments and support themselves. But nearly as
often, it is men who are leaving, unable, apparently, to deal with a
successful wife.
Natalya Dyakonova was a newspaper journalist who, by 1992, was making
enough money to buy groceries every month--but nothing else. Today, she's the
president of a high-powered public-relations agency in Moscow. She charges up
to $5,000 to arrange promotional parties and press conferences for her
clients. Her former husband was an unemployed journalist. "A lot of Russian
men are lazy and [need to be] treated like children," says Dyakonova. "I
treated my first husband like a child. I really thought that if I didn't take
care of him, he wouldn't be able to survive on his own." She turned out to be
right. "He got tired of coming home and there'd be no food on the table,"
recalls Dyakonova. "So he went to go live with his mother."
Still, the battle of the sexes in Russia really hasn't been joined. Many
Russian women view their men's behavior less with contempt than with pity.
They know better than anyone how difficult the collapse of communism has been
on their husbands and brothers; few say they are surprised at the
psychological toll it has taken. "Russian men," says Dyakonova, "have to feel
higher than women; it's part of their upbringing."
But traditional male attitudes do present problems for women, particularly
in the workplace. Sexual harassment is rampant. Many Russian firms--and
Western companies operating in Russia--still seem to hire women on the basis
of how they look in a miniskirt. But, like their Western colleagues, Russian
women are beginning to object. Last year the weekly news-magazine Itogi
(published in partnership with Newsweek) ran a cover story on the topic,
replete with a photo of a hand creeping up a woman's thigh next to the cover
line: you've already been asked: don't proposition!
That problem may fade only when women have made it to the top. And there
the plight of Russians seems similar to their Western counterparts. The glass
ceiling is firmly in place in the new Russia: only about 5 percent of
senior-management jobs at Russian companies are filled by women. Koff of Korn
Ferry, a company that specializes in top management jobs, reports that 70
percent of the resumes that she sees are from women--"usually highly
qualified women." But 80 percent of the jobs she finds go to men.
She doesn't approve of such discrimination, but she's not worried, even
though women in the West have hit their heads against the glass ceiling for
decades. Koff has sized up the male competition in Russia, seen how far she
and her female friends have come in just six years and made her own
calculation. How long will it take for Russian working women to break through
to the top? Oh, she says, "maybe three to five years."


Russia holds American worker on spy charges
By Adam Tanner 

MOSCOW, Dec 1 (Reuters) - Russia said on Monday it had detained an American
on suspicion of spying but the U.S. Embassy in Moscow denied he was involved
in espionage. 
The Federal Security Service (FSB) said the American worked for a U.S.
telecommunications company in the southern region of Rostov-on-Don. 
``He carried out topography and long-distance surveys using illegally
imported satellite receivers,'' Alexander Taurinsky, a spokesman for the
Rostov-on-Don division of the FSB, said by telephone. 
Both Taurinsky and the U.S. State Department in Washington named the American
as Richard Bliss and said he was employed by telecommunications company
Qualcomm Inc (QCOM.O). 
He was being held in a detention centre in Rostov, said the FSB spokesman,
whose service is the domestic successor of the Soviet-era KGB. 
Taurinsky said topographical works could be conducted only with a special
licence, which he had not had. If the court proved he was a spy he could face
between 10 to 20 years in prison, he said. 
``They are certainly not spies,'' a spokesman for the U.S. Embassy in Moscow
said, adding that a second American had also been detained and then released.
In Washington, State Department spokesman James Rubin said the United States
had protested over a Russian delay in granting consular access to Bliss, who
was detained on Nov. 25. Access was granted for the first time on Monday. 
``He has not been formally charged with any crime. According to the Russian
government, he's being investigated on suspicion of espionage,'' Rubin said. 
``Mr Bliss said that he was being well treated.'' 
Qualcomm, a maker of wireless communications gear, has projects in
Chelyabinsk, Rostov and Moscow in Russia and in October announced the
commercial launch of a high-tech wireless network in Rostov. 
The company's other products include a satellite-based communications system
to provide two-way data and position reporting as well as low-orbit satellite
communications services. 
Top company officials at corporate headquarters in San Diego were not
immediately available for comment. 
Rubin said Bliss was gathering data for the development of a cellular
telephone network using a global positioning system device. Bliss and his
employer said they had proper documentation for use of the equipment, he
Despite the end of the Cold War, espionage cases are still reported in Russia
and the United States, many of them involving industrial spying. 
A U.S. army captain was declared persona non grata and told to leave Russia
in August 1995 after he was detained near a secret nuclear plant in Siberia. 
Russia expelled an Iranian last month after he was arrested ona ccusations
that he sought to buy missile technology designs. 
German prosecutors said last Friday they had arrested two Germans on
suspicion of spying for Russia. 


Nemtsov on Monarchy

16 November 1997
[translation for personal use only]
Studio interview, including phoned-in questions, with Russian
First Deputy Prime Minister Boris Nemtsov, conducted by anchorman
Yevgeniy Kiselev; from the "Itogi Night Conversations" program --

[Kiselev] Here is another interesting question. There are those who
oppose the burying of the imperial family's remains, who think that such a
triumphant ceremony, if it takes place, may give some impetus to the
development of the monarchist movement in Russia because, as you know, such
ideas do exist. Are we going to revive the monarchy in Russia? What do
you think of this idea?
[Nemtsov] You know, without a Tsar in Russia there is discord. When
supreme power weakens, civil war develops. I can cite two examples: this
very same Nikolay II who abdicated, and look at how that ended, with the
Bolshevik revolution and civil war; the second Tsar, although he was called
something different, Mikhail Sergeyevich Gorbachev abdicated because of
certain circumstances and the Soviet Union disintegrated, a huge country
disintegrated, didn't it? So weak power in general -- I call it Tsarist
power -- with regard to the current authorities as well.
[Kiselev] So by your light hand Boris Nikolayevich Yeltsin and the
people who belong to the Moscow political club, as it were, are called
[Nemtsov] You know, that may be a good thing. There should be a
supreme arbiter in Russia. There must be a strong executive power in
[Kiselev] And what it is called is not important to you?
[Nemtsov] No. Russia cannot have the English system of power. It
[Kiselev] A constitutional monarchy and a parliament?
[Nemtsov] That would be a good option. And, incidentally, it does
more or less exist in Russia now. You see, the name tsar or president or
general-secretary or, I don't know, chairman of the Supreme Soviet,
whatever you like, has absolutely no significance. There must be strong
power, executive power. If there is no strong power there will not be a
united country, there will be constant feuding, there will be constant
arguments about who is strongest.
[Kiselev] So as I understand it, you are not against the idea of
reviving the monarchy, at least a modern, constitutional monarchy?
[Nemtsov] I would go further. Many features of it already exist in
our lives today. They already exist. Look at the Russian constitution and
compare it with the constitution of 1905.
[Kiselev] Boris Yefimovich, that is a very brave answer. You have
been more than frank for a politician of your level. Do we have any more
viewers' questions?


Rokhlin Urges 'Bloodless' End to Regime 

Sovetskaya Rossiya
22 November 1997
[translation for personal use only]
Undated statement by Executive Committee of the movement "In
Support of the Army, the Defense Industry, and Military Science"
signed by Chairman L.Ya. Rokhlin: "What We Want"

Ever since the movement "In Support of the Army, the Defense Industry,
and Military Science" emerged it has been continually disparaged by the
semiofficial media and been subject to threats from officials. We are well
aware of the reason for the fuss being made about the movement -- it is due
to the fear experienced by the current regime. We also realize something
else -- there is dissension in the president's entourage and those who are
pursuing reform for the sake of their own enrichment are squabbling among
themselves. Yeltsin needs an "enemy image" to make the rich rally round
and to force the poor and unhappy to keep quiet. That is why our movement
is being called "Communist" or is said to "dream of great upheavals rather
than a great Russia"; the movement's leader is called a "provocateur who is
inciting the Army to a military revolt." Sticks and stones may break my
bones! But, knowing how adept the president's entourage is at provoking
and manipulating public opinion, we want to state clearly and firmly what
we want, why we want it, and how we intend to achieve it.
We want one thing -- unswerving observance of the Constitution, the
granting to citizens of the rights it proclaims, and the imparting of a
truly democratic nature to the reforms. We do not oppose the Constitution
or the president as the top official, we oppose President Yeltsin and his
pernicious policy, which means that the fatherland is being robbed and an
incredibly small group of people is getting rich. We do not need 3 percent
"new Russians" but a new Russia for all. We advocate democratic choice. 
But that choice must be made by the people.
Bitter historical experience shows that a people who are not given a
choice are doomed to rise up. Recalling this, we say that there is still a
chance to change policy with the help of legitimate methods. We need to
use every means -- including mass protest -- to remove B. Yeltsin from
power. Only in this way can we avoid a repetition of tragedy. We are
ready for such actions. But we are also ready to ensure that the Army in
conjunction with law- enforcement organs acts as guarantor of the peaceful
replacement of the regime. A peaceful and evolutionary approach is always
preferable until society's patience is exhausted.
Its patience is running out. The pain of dashed hopes could lead to a
social explosion. We will make every effort to ensure that the Army does
not allow any harm to come to the people. We will do everything possible
to ensure that the law-enforcement organs take a similar stance. Our
stance is based on the conviction that the people's will is sacred. We
were not the ones who said that the voice of the people is the voice of
God. Our movement's task is to prevent violence and block any destructive
sentiments so as to ensure that the venting of the people's will flows in a
constructive political direction.
The movement's political guidelines are clear -- the Army is outside
politics. So the movement has done everything in its power to ensure that
the Army is not dragged into political squabbles. The Army supports neither
"Reds" nor "Whites," "liberals" nor "conservatives," "new Russians" nor
"old Russians." Its sacred duty is to protect the freedom of the
fatherland and the people and to defend its national interests.
A free people are simply a people able to express their will. The
Army's duty is to ensure that the people's will is defended and, with it,
Russia's national interests.
The preservation of a powerful and high- tech Army is not a sop to
imperial ambitions but a vital need. Russia is doomed to be strong. This
is the result of its territory and its geopolitical position. Russia is
the bridge between East and West. On the one hand, it is the gateway to
Asia, on the other hand it is the gateway to Europe. As is well known,
people who live on both banks want to control the bridge. Russia is a
buffer between extremes that coexist peacefully if opposites can move
smoothly from one end to the other. Without its unique role the opposing
worlds of East and West would find their inflamed borders touching. So it
is the guarantor of the world order. It only had to abandon its historic
role for a while and bloody conflicts began. Russia has incalculable
natural resources, and, as it grows weaker, so the desire to acquire those
resources increases. The desire to establish control over Russian
territory and, simultaneously, its resources will be all the more justified
in the eyes of the world public because Russia is failing to cope with
conflicts in the sphere of its former age-old interests. NATO's eastward
expansion is the first symptom, but a worrying one. Today saving the Army
means saving Russia.
Saving the Army is not an end in itself for us. It is impossible to
have a strong modern Army in a poor country. Russia has to make a leap
forward into the new civilization that the world is on the threshold of. 
According to our calculations, it could do so in short order. It is
important to create the economic, political, moral, and legal conditions
for the manifestation of creative energy.
Creativity and freedom are indissoluble. That is directly stated in
the Constitution. Broad and democratic transformations will become
possible when the people believe in them and invest their creative energy
in them of their own free will rather than out of fear of unemployment or
under the coercion of what are now called "the laws of the market."
The Army has always been a vehicle for advanced technical and social
ideas. We need only note that the old military-industrial complex
developed a unique relationship between basic science, design activity, and
production. The movement is using its powerful creative potential, placing
it at the service of Russia and its people.
The Army has a quality which attests to the people's unconditional
trust in it. More than any other social institution it has managed to
preserve its national traditions and it relies more than others on the
people's historical experience in its day- to-day operations. The movement
will augment this invaluable capital.
Today neither the movement "In Support of the Army, the Defense
Industry, and Military Science" nor any other public and social movement or
party would be able to say that they alone have the truth, that they alone
have the right to obtain a mandate to rule from the people. That is why
cooperation among all opposition forces is needed. The movement relies on
those who are not ducking their responsibility for the future. This future
is the fruit of the present, and the present has come from yesterday. 
Those who are to blame for what has happened and is happening are scared of
their responsibility. The movement is with those who are not shirking that
responsibility but taking it on their own shoulders. They alone will
revive Russia.
History has often faced Russia with a choice: To be or not to be. 
Each time Russia has found a worthy answer. It concentrates the people's
view of themselves and of Russia's role. This watershed has given meaning
to the national idea and become the core of the national consciousness. It
has shaped a readiness for new trials -- Russia is once again facing the
challenge of history.
A demeaned nation looks with hope to its Armed Forces -- will they
accept the challenge, will they be true to their oath of allegiance to
Russia so as not to fear any threats and help the people to get rid of the
Yeltsin chaos? We accept the challenge. The urgent problem of replacing
the president is a procedural problem. It is not an uprising but
constitutional norms that will allow us to cope with this task.
Today it is not enough to voice dissatisfaction with the rule of
timeservers or to be horrified about our country's prospects. The time has
come for intelligent constitutional action.
It is time to stop Russia's degeneration and collapse.
It is time to save the country from destruction and technical
It is time to provide the people with normal living conditions and
It is time to give Russians the legal right to resolve their own
destiny themselves and to feel that they are the full masters of Russia.
Power is not an end in itself for our movement. We will nominate and
support professional administrators who are concerned about our people and
our fatherland.
All these things are possible only if there is a bloodless and
legitimate replacement of the bankrupt ruling elite. And we are tackling
this difficult undertaking.
United we will save the fatherland.
On the instructions of the Executive Committee of the movement "In
Support of the Army, the Defense Industry, and Military Science,"
[Signed] L.Ya. Rokhlin, movement chairman


Shares-for-loans reappear in Russian cash scramble
By Mike Collett-White 

MOSCOW, Dec 1 (Reuters) - Controversial shares-for-loans schemes, the bane of
Russian privatisation to date, were back on the agenda on Monday after the
government admitted it was mulling such an agreement using its shares in oil
firm Rosneft. 
The Kremlin would prefer to drop these deals and move to more open and
competitive sell-offs. 
The fact that it is even considering another of these unpopular schemes is a
sign of the state's desperation, for money, analysts said. 
``To boost tax collection in the short term will be difficult, so they need
to accelerate privatisation somehow.'' said an analyst at investment bank
Troika Dialogue. 
Moscow is striving to bridge a gaping budget deficit this year and to fulfil
promises to pay off trillions of roubles of wage arrears to public workers. 
The cost of borrowing on the domestic government securities market and
through Eurobonds has soared, forcing politicians to seek alternative sources
of income. 
A shares-for-loans scheme for Rosneft may be a political risk, but it would
ensure funds for state coffers fast. Plans for open auctions, simply selling
off the company, would not bring in revenues until the first quarter of 1998
at the earliest, which may be too late. 
Under a shares-for-loans scheme, a financial institution lends the government
money in return for temporary control of a company stake. 
The fact that in the past the institution involved was virtually guaranteed
winning that stake when it was put up for auction won the arrangements a bad
``It is very difficult to remember a single fair price the government got for
company stakes sold off under those conditions,'' said one economist who
asked not to be named. 
First Deputy Prime Minister Anatoly Chubais said on Friday that
shares-for-loans was one option on the table for Rosneft, the last great oil
property still in state hands. 
``This could be one of the variants, although there could be others. We never
limit ourselves to one variant,'' he said. 
Ivan Mazalov, oil and gas analyst at CentreInvest Group, said the schemes
were damaging for the firm being privatised as well as to Russia's reputation
as a fair place to do business. 
``In the past, the banks which held shares in trust used them to strip the
company of assets and exploit it, as they could never be 100 percent certain
that the state would sell the company to them in the end,'' he said. 
``This was despite clandestine agreements that this would be the case.'' 
The most recent example of shares-for-loans was the sale of a controlling
stake in mining group Norilsk Nickel (NKEL.RTS), where powerful conglomerate
Uneximbank won the auction in August as expected, after holding the shares
since 1995. 
The fate of Rosneft is being watched closely by oil and gas majors at home
and abroad, after two mighty alliances joining domestic and Western energy
companies were formed to look into bidding for the company. 
The Kremlin had been hoping that such fierce competition could drive the
value of the company beyond current estimates of $1.0-$1.5 billion. 


The Wall Street Journal Europe
1 December 1997
[for personal use only]
Why Investors Will Bear With Russia
By Alexei Bayer
Mr. Bayer runs his own consulting firm, KAFAN FX Information Services, in New

When I visited Moscow in early October, the sense of euphoria was palpable. A
pro-market government team was in control, inflation was falling toward
single digits, economic growth was set to resume. And to cap economic
stabilization, the monetary authorities were preparing to redenominate the
country's currency, issuing new notes in January with three zeros knocked off
the unwieldy ruble. 
In financial markets, too, the future looked awesome. Having pushed the stock
market up by more than 100% in 1996, and having reaped the benefits of
another doubling in the first eight months of this year, investors were
looking past the blue chips, into second- and third-tier shares -- regional
telecoms, power distributors, the military-industrial complex. 
The Russian investment game had evolved into a new version of Russian
roulette. Typically, Russian investment banks, using local brokers as agents,
would build up a stake in a regional company and then resell its shares to
foreign investors. The company would be put into play, and its stock prices
would rocket -- sometimes appreciating 10 to 15 times within days. Western
investors often knew little about the companies they bought. As far as they
were concerned, they were placing bets and waiting for their number to come
Then came a November correction, triggered by a spreading emerging market
crisis that ravaged stocks and currencies throughout Asia and Latin America.
The Russian Trading System index lost a whopping 40% of its value during the
last two months of turbulence, but the real carnage took place in more
obscure stocks: liquidity dried up overnight and investors couldn't even give
away their shares. 
Now, sitting on these unsellable assets, Western investors and portfolio
managers are taking a closer look at their holdings and don't like what they
see. The usual risks attendant in emerging market investment are multiplied
several times by lack of transparency, questionable reporting, large
interenterprise debt, shady business practices and unskilled or corrupt
management. Such concerns, easily pooh-poohed while stock prices were on the
rise, became salient once the market turned bearish. 
So has the Russian investment opportunity, one of the most rewarding of the
1990s, come to an end? Not likely. The Russian shakeout should be kept in
perspective. The market is still more than 50% up on the start of the year,
and some cautious bargain hunting is already underway. Unless the emerging
market crisis reaches Wall Street, stability will eventually return --
especially since Russia's economic fundamentals are indeed sound. 
Nevertheless, even when the situation improves, investment will probably not
proceed with the same gay abandon. Making money in Russia will still be
possible, but it will have to be done the old-fashioned way -- it will have
to be earned. 
Thus, Western fund managers will have to rely less on Moscow's elite
investment banks to supply them with ready-made stock plays but instead push
deeper into Russia's interior, learning more about the firmament of Russia's
economy and Russia's regional dynamics. They may uncover a lot that would
shock them, but they may also find reliable partners. 
To understand where the opportunity lies one must look beyond Moscow. Russia
is very much like the Soviet Union on a smaller scale. It too is huge,
enormously rich in natural resources and, upon closer observation, not
homogenous but a mix of languages, religions and nationalities. Some 35
ethnic homelands, each with its own culture and history, are part of the
Russian Federation. 
These ethnic homelands, together with other territories and regions, comprise
89 subjects of the Federation, which are roughly equivalent to American
states. Since the start of economic reform, they have been developing
differently, some making great strides toward the free market, others
preferring to rely on handouts from Moscow or, worse, pining for the old
Communist system. 
However, both more advanced regions and laggards suffered from the same
problem -- poor access to financial markets. Moscow remains Russia's
pre-eminent financial center, containing 94 of the 100 largest investment
companies and concentrating over 80% of the country's total financial
resources. Not surprisingly, some 60% of direct foreign investment has been
focused on Moscow, while provincial companies beyond a handful of flagship
blue chips in the oil and gas sector, power generation and telecoms
encountered bottlenecks in attracting capital. Almost half of public
companies in the regions have not yet placed their issued shares. This has
nothing to do with whether the company is a dud or a diamond, but reflects a
lack of access to distribution channels. 
Yet, the situation is starting to change from the bottom up. Financial
markets are opening in regional centers such as St. Petersburg, Nizhny
Novgorod, Samara and Vladivostok. These regions will bring Western investors
closer to the action. At the same time, local brokers, who had no choice but
to act as agents for Moscow's financial giants because they lacked their own
capital and sophistication, are looking for a direct pipeline to Western
investors and fund managers. They could become an invaluable resource for
foreigners seeking to gain insight into Russia's interior and find hidden
If competition for financial funds intensifies in the aftermath of the Moscow
market correction, differences between reform-minded regions and those that
are stuck in the old rut will become more pronounced. Regions that have
created a more business-friendly climate will more readily gain access to
sources of capital, giving them a healthy incentive to push reforms further.
Reform in the ethnic homelands is now more possible, strangely enough,
because of Moscow's bitter struggle against separatism in Chechnya. Mindful
of stirring local, especially Muslim, nationalisms, the federal government
has granted them a large measure of control over laws, industrial policies
and finances. Resource-rich Tatarstan, the lower Volga home of Russia's 13th
century conquerors, was the first to take advantage of the situation.
Tatarstan may not yet qualify as Singapore of the Steppes, but it is
implementing pro-business policies, tax incentives and government financial
participation to promote foreign investment and a comprehensive republic-wide
economic recovery. 
While direct investment flows have not yet been impressive, Tatarstan has
been noticed by financial markets. The regional oil company, Tatneft, is a
prominent blue chip, which has been among the first Russian companies to tap
the Eurobond market. Other companies have been getting investor attention,
especially in petrochemicals and in industries which produce machinery and
equipment for the oil sector, such as Nizhnekamsk Neftekhim and
Kazanorgsintez. They should piggyback on the investment program initiated by
Tatneft. And beyond Tatarstan's blue chips, other companies are waiting to be
Neighboring Bashkortistan, which shares many of Tatarstan's macroeconomic
characteristics, seems intent in following suit. Bashneft, the local oil
company, is starting to attract investor interest and is set to issue
American Depository Receipts. Also embarking on a similar path are other
resource-rich ethnic regions: Yamal-Nenets, Khanty-Mansi and Sakha. 
Although making money in Russia's financial markets may now be harder and
riskier, in some ways those who will stay in the Russian market for the long
term will have an advantage over the pioneers who ventured into it earlier in
the 1990s. The groundwork for financial infrastructure has been laid
throughout Russia, and industrial managers even in remote regions have
advanced on the learning curve. 
Two-way ties with the Russian interior have been built up. Investors don't
always have to go to Russian companies but can wait for Russian companies to
come to them. ADRs are being issued not only by behemoths such as Gazprom,
the gas monopoly, but a wide variety of smaller companies -- Nizhny Tagil
Metal, Moscow's Babaev Candy Co. or Tatarstan's Kazanorgsintez -- are
preparing to trade on Wall Street as well. Lenenergo, the St. Petersburg
power monopoly and an underperforming blue chip, put on a road show in New
York to raise awareness among U.S. fund managers ahead of the government's
sale of its 17% holding in late November. 
Looking further down the road, tighter financial markets may actually be a
blessing in disguise -- especially as far as 
Russia's long-term economic prospects are concerned. The tide of booming
Russian financial markets was lifting all boats, sea-worthy vessels and leaky
canoes alike. A more discriminating market that should develop after the
correction will have a disciplining effect on Russia, promoting greater
transparency and spurring economic and legal reforms -- including more
rigorous bankruptcy laws, greater protection for investors and a more
enlightened tax code. Most important, it will reward those companies which
use scarce investor funds most efficiently. 


>From Russia Today press summaries
Pravda 5
1 December 1997
Two Years without Salaries 
The daily reported that Victor Lysenko, a worker at the Roschino timber 
plant chained himself to a gate, driving a nail through his hand, to 
protest salary nonpayments. 
After he was freed and taken to hospital, he declared that he would do 
the same again, unless the situation changed. 
The daily said the event was a consequence of the terrible situation at 
the large timber company in the Smirnihovsk district of Sakhalin. Wages 
have not been paid for two years, and people do not even have enough 
money to buy bread. 
Workers have already tried everything obstructing train lines by lying 
across the rails, hunger-strikes -- but nothing has helped. 
Two other Roschino plant workers told the management that if wage 
arrears are not paid soon, they will burn themselves to death in 


>From Russia Today press summaries
1 December 1997
Lead story
Chemical Disarmament Is Not Progressing in Russia 
The daily wrote that since last month's Duma ratification of the 
international convention banning chemical weapons, the urgent problem of 
where to find the money for its realization has yet to be solved. 
In Brussels recently, Russia and NATO representatives held their first 
consultative meeting on the on non-proliferation of weapons of mass 
Russia announced that it would need $5.5 billion for the liquidation of 
its chemical arsenal. Besides, Russia asked the West to construct seven 
plants to dispose of the chemical weapons and to provide money for 
higher security for the weapons. 
Currently in Russia, 40,000 tons of poisonous military gases are being 
kept at seven main storage facilities. The author listed their 
locations, all of which are in European Russia, and said that the seven 
disposal plants are designed to be constructed in these sites. The West 
proposed to take on the job of destroying the chemical weapons in 
exchange for Russia's ratification of convention. 
Prime Minister Victor Chernomyrdin promised to allocate 500 billion 
rubles from the state budget for the needs of chemical disarmament in 
1998. The daily commented that this money will not likely be used to 
destroy chemical weapons. 
In 1994, President Boris Yeltsin signed a decree providing for 10,500 
extra staff at the Defense Ministry from the means allocated for 
chemical disarmament. Since then, not a single object meant for the 
liquidation of the poisonous weapons has been constructed. 
However, a ministry department for the liquidation of chemical weapons, 
with a staff of 82 people, has been set up. Part of the money was also 
used for housing construction. 


>From Russia Today press summaries
Sankt-Peterburgskye Vedomosti
1 December 1997
Lead story
Moscow Is Like Some Distant Country 
Not long ago, Deputy Prime Minister Oleg Sysuyev, who came to the White 
House from the provinces, said that "maybe it would be a good idea to 
move the capital of the country to somewhere in the middle. Then maybe 
more things would get done and be done differently." 
Continuing along the same lines, the president of the republic of 
Marii-El, Vyacheslav Kislitsin, when asked his opinion of the recent 
scandal over the book on privatization, told NTV: "Moscow is a distant 
country. If only we had so much going on." 
Such opinions, wrote the daily, are unfortunately indicative of the 
mentality of people from the provinces. 
It is also perhaps one of the root problems in the country. People from 
Russia's regions set Moscow up on a pedestal, asserting that everything 
worth happening in the country is only happening in its capital. While 
the people of the regions have long had an inferiority complex, the 
daily said, now it is even worse. 
Many look on the extravagant displays of wealth and lifestyle in the 
capital and feel estranged from that distant land, the daily said. 
Families in the Far North or in the mining towns of Kemerova in Siberia 
can barely feed themselves, and then they see on Moscow-sponsored 
television a Moscow rock star living in luxury who does not want to pay 
taxes. Such tax money, the daily said, could be used to develop the 
For now, it concluded, Russia's regions will just quietly turn their 
back on Moscow and go about their own work. But the time may come when 
their patience is at an end, and they will demand that Moscow account 
for its behavior. 


>From Russia Today television summaries
Highlights from NTV News in Moscow 
December 1, 1997 

Russian Orthodox Patriarch Aleksiy II, in a rare public appearance, 
attracted the public's attention with a press conference in Moscow on 
Monday, said NTV. 
The Patriarch spoke about several different issues. First, he declared 
that the Orthodox Church will not become involved in political 
tug-of-wars. He said the Church has no connection with those who 
attempted to gain political or economic advantage from its disagreement 
over NTV's recent showing of the controversial Scorcese's film "The Last 
Temptation of Christ." 
He said the Russian Orthodox Church is not and will never be a political 
or economic force and that the Church remains opposed to the showing of 
the film, despite the fact that it has already been aired. The Russian 
Patriarch pointed out that although Russia is and will be a secular 
state, its legal system prohibits offense against the religious values 
of Russian citizens. He appealed to Russian authorities to consider 
society's moral health. 
Turning to the questions of the remains of the last czar and his family, 
including whether they are authentic and where they should be reburied, 
he said the matter is a very delicate one and that it is better to 
examine all options thoroughly before making a decision. 
The Patriarch was careful in discussing the issue of removing the body 
of Lenin from its mausoleum and reburying it, saying it could 
potentially divide society and thrust Russia into turmoil. 


The American Hot Dog Invades Russia and China And Takes On Different Tastes
and Forms

WASHINGTON, Dec. 1 /PRNewswire/ -- The venerable hot dog has taken on an
important new status in the world of international trade. What was once a
traditional American food has become a favorite among such formidable trading
partners as Russia and China, which are now importing made-in-the U.S.A.
wieners in record amounts.
According to the National Hot Dog and Sausage Council, which tracks hot
dog and sausage consumption trends for the American meat and poultry
industry, the leading overseas customer by far is the Russian Federation.
Since the end of the Cold War in 1991, Russians have developed a huge taste
for the American hot dog. At a time when livestock production in Russia has
fallen behind during the restructuring of the economy, Russian consumers are
turning to U.S. hot dogs as a major source of protein and are eating American
franks for breakfast, lunch and dinner. As a result, the market for U.S. hot
dogs has skyrocketed -- from $122,000 in sales in 1992 to over $70 million in
Behind this dramatic growth in sales, the Council explains that "sosiska"
or sausage has always been routine fare in Russia. For breakfast, Russians
slice hot dogs, fry them in butter, and dish them up with bread, cheese and
smoked fish. At the same time, Russians consider hot dogs the perfect metro
station snack food which has led to an explosion of hot dog stands -- one on
almost every corner in the downtown areas.
The Russian love affair with "sosiska" goes back to a time when there
were no imported products, no buns and a shortage of paper products for
plates and napkins. During these Cold War days, consumers ate their hot dog
on a single slice of bread -- sometimes white, sometimes Russian black bread,
sometimes fresh, but often stale -- with a squirt of watered-down ketchup.
Now, reports the Council, American hot dogs are widely available and are
being featured in a variety of presentations. Along with the basic hot dog
and bun combination served with the option of different condiments, vendors
now dress up American wieners and sell them as fancy food. For example, a
top seller at $2 each -- compared to 50 cents for the common variety imported
hot dog -- is "Po-Fransuskey" (French style), which is served in a simulated
baguette. Here, vendors bore a hole in the bread, squirt ketchup, mustard or
mayonnaise inside and then insert a long, skinny hot dog into the middle.
Sales of "Po Fransusky" are strong, as are a variety of dressed up sausages,
brats and wursts.
Besides dressing up their hot dogs, the National Hot Dog and Sausage
Council finds that Russians prefer more spicy franks than do Americans. As a
result, hot dogs manufactured for the Russian market contain a lot more
garlic. Further, Russians prefer American-made poultry hot dogs because
overseas shipping costs put beef and pork franks out of the price range of
most consumers.
"It is clear from U.S. export statistics that American hot dogs have
found true popularity in the Russian marketplace," said J. Patrick Boyle,
president of the American Meat Institute (AMI). "In five short years,
American franks have become mainstream in the Russian culture because they
have been adapted to suit Russian taste preferences and eating habits."



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