This Date's Issues: 1424 •1425
to CDI's Home Page I Return
to CDI's Library
Johnson's Russia List
11 December 1997
Financial Times (UK)
December 11, 1997
[for personal use only]
Moscow: Foreign investors return to Russia
By Chrystia Freeland in Moscow
For Russia, the worst of the international financial crisis is over, and
foreign investors are beginning to return to the market, a central bank
official said yesterday.
"The situation has significantly normalised and the peak of the pressure
is over," Denis Kisiliev, deputy chairman of the bank, said. "We have an
impression that the nervousness of investors about emerging markets is
But Mr Kisiliev's assessment risks being sabotaged by Boris Yeltsin's
latest illness. Russian markets, which had been making a tentative
rebound, began to sink yesterday after news that Mr Yeltsin had been
taken to hospital.
Mr Kisiliev said the rouble had begun to strengthen and foreign
investors were returning to the fragile treasury bill market. "The
actions of the central bank and government have been adequate. The
rouble is stable and foreigners are beginning to buy government bonds.
"More than tens of millions of dollars" in foreign investment had
returned to the domestic treasury bill market, Mr Kisiliev declared.
Russians had also returned to the market, creating buying pressure which
had pushed yields down.
The central bank, which in November spent over $4bn of its hard currency
reserves propping up the rouble and holding down rates in the treasury
bill market, had not intervened since the start of this month.
Mr Kisiliev, who has special responsibility for supervising Russia's
largest commercial banks, said he believed the commercial banking sector
would weather the recent crisis.
He insisted the Russian central bank would not bail out domestic banks
if they collapsed. Instead, the central bank would sell failing banks to
investors able to cover their liabilities. According to Mr Kisiliev,
several leading western institutions have volunteered.
In the last week of November and the first week of December, the two
most difficult weeks for the Russian banking system, Russia's biggest
banks had been forced to come up with $1.3bn to meet margin calls on
dollar-denominated Russian debt, he added.
"The financial crisis brought significant losses, but we have not heard
of any defaults by Russian banks."
Russian human rights under threat--activists
By Philippa Fletcher
MOSCOW, Dec 10 (Reuters) - Totalitarian tendencies still threaten human rights
in Russia and undermine achievements made on paper over the past year,
activists said on Wednesday.
``There are tendencies in both directions and it's hard to say which is
forefront,'' said Lyudmilla Alekseyeva, president of Russia's oldest human
rights organisation, the Moscow Helsinki Group.
Focusing on abuses in Russia's judicial system at a news conference to mark
International Human Rights' Day, activists praised President Boris Yeltsin's
overturning of a decree allowing police to hold people for up to 30 days
But they said torture was still routinely used to extract confessions and far
too many people, many of them not convicted, were being kept in jails where
conditions were inhuman and sometimes fatal.
Human rights lawyer Sergei Pashin said people often spent two to three years
on remand. They complained particularly about the behaviour of authorities
fighting organised crime.
One in four adult Russian men has been in prison at some time in his life and
around 1,000 died in jail each year in cells packed with four times as many
people as they should hold, the Social Centre for Coordinating Judicial Reform
said in a report.
The transfer of the prison system from the Interior Ministry to the Justice
Ministry, announced this year, was another key step towards stopping police
jailing people with no proper basis and then using force to extract
confessions, the activists said.
But Valery Abramkin, director of the centre, said the way it was turning out
in practice was a long way from the ideal, with many prisons not submitting to
their local judicial authorities.
``They can make sure the idea is adhered to to the very least extent,'' said
Alekseyeva said much depended on social pressure, citing a draft law on
judicial procedures now in the lower house of parliament as a major threat.
``If it is passed in its current form we will become a police state
overturns all the achievements in the judicial field and restores the Soviet
judicial system,'' she said.
``It depends on us to a large extent because at the upper echelons of power,
in local government and among the population, there is quite a strong
On the positive side, Alekseyevna said Yeltsin had rescinded another decree
which allowed the unemployed to be forced to leave towns, under pressure from
a committee planning events next year to mark Human Rights year as declared by
International pressure had also helped maintain a moratorium on executions,
although courts continued to sentence people to death and 900 people remained
on death row.
``I think that it will be a very long process and even the successes won't
bear real fruit for a while, but we can't stop trying because we have no other
hope,'' Alekseyeva said.
Voice of America
TITLE=RUSSIA'S ECONOMY: BANDIT OR CAPITALISM?
BYLINE= ED WARNER
INTRO: RUSSIA APPEARS TO HAVE WEATHERED THE CRISIS IN ITS
FINANCIAL MARKETS, AND LONG-TERM FOREIGN INVESTMENT IS RETURNING,
HEARTENED BY MUCH REDUCED INFLATION AND OTHER SIGNS OF PROGRESS.
BUT WHAT ARE THE PROSPECTS FOR AN ECONOMY THAT HAS BEEN IN
DECLINE FOR SEVERAL YEARS AND IS NOW WRACKED WITH CONFLICT
BETWEEN REFORMERS AND POWERFUL NEWLY ENTRENCHED INTERESTS? ED
WARNER REPORTS THE VIEWS OF TWO LONGTIME ANALYSTS OF THE RUSSIAN
TEXT: RUSSIA HAS 40-PERCENT OF THE WORLD'S RESERVES OF NATURAL
GAS, SIX-PERCENT OF ITS OIL AND A LARGE SHARE OF ITS COAL,
DIAMONDS, GOLD, ALUMINUM, AND TIMBER. IT HAS AN EDUCATED WORK
FORCE AND, ACCORDING TO THE ECONOMIST MAGAZINE, LABOR COSTS ARE
FAR LESS THAN IN POLAND OR MEXICO AND ONLY A FRACTION OF
THIS IS THE POTENTIAL COMPARED TO TODAY'S REALITY: UNPAID WAGES
AND TAXES, INDUSTRY WITHOUT CAPITAL AND RIFE WITH CRIME, AND
22-PERCENT OF RUSSIANS LIVING BELOW THE OFFICIAL POVERTY LINE OF
70-DOLLARS A MONTH.
PRESIDENT BORIS YELTSIN WANTS TO LEAVE A LEGACY OF A PROSPEROUS
ECONOMY, BUT OVERCOMING 70 STIFLING YEARS OF COMMUNISM HAS BEEN
HARDER THAN ANTICIPATED. IN THEIR RUSH TO PRIVATIZE STATE
ENTERPRISES, THE PRESIDENT AND HIS REFORMERS SOLD THEM AT BARGAIN
PRICES TO A GROUP OF WEALTHY BUSINESSMEN WHO, AS A RESULT,
CONTROL A SIGNIFICANT PORTION OF THE ECONOMY.
THE REFORMERS MUST NOW CONFRONT THEIR OWN HANDIWORK. A
SPECIALIST ON RUSSIAN ECONOMICS AT THE U-S CONGRESSIONAL RESEARCH
SERVICE, JOHN HARDT, SAYS A STRUGGLE IS UNDER WAY FOR THE
IDENTITY OF RUSSIA: THE PRIVILEGED FEW AGAINST THE DESTITUTE
MANY, BANDIT CAPITALISM OPPOSED TO PEOPLE'S CAPITALISM:
/// HARDT ACT ///
THE ECONOMY IS DOMINATED BY FINANCIAL INDUSTRIAL GROUPS
-- THE OLIGARCHY. THESE GROUPS -- THE MAJOR BANKS, THE
MAJOR ENTERPRISES, AND CONTROL OF THE MEDIA -- ARE
PARTICULARLY GROWTH DAMPENING. THIS KIND OF RESULT,
COMING OUT OF THE FIRST STAGE OF PRIVATIZATION, HAS BEEN
AND IS A CRITICAL PROBLEM AND A BARRIER TO MOVING TOWARD
/// END ACT ///
THE MEMBERS OF THE OLIGARCHY WHO SUPPORTED MR. YELTSIN'S
RE-ELECTION HAVE COME TO EXPECT SPECIAL FAVORS, BACK-ROOM DEALS
INSTEAD OF COMPETITIVE BIDDING FOR STATE ASSETS. WHEN THE
REFORMERS INSISTED ON A MORE OPEN ECONOMY AND SOLD A STATE
TELECOMMUNICATIONS COMPANY TO THE HIGHEST BIDDER, THE MOGULS WERE
UNIVERSITY OF VERMONT PROFESSOR OF POLITICAL SCIENCE, PETER
STAVRAKIS, SAYS CLANS ARE FIGHTING FOR POWER MUCH AS THEY DID IN
/// STAVRAKIS ACT ///
THE FUNDAMENTAL PROBLEM WITH RUSSIA'S ECONOMY IS THAT IT
IS DEEPLY AND INTIMATELY TIED TO POLITICS INSIDE THE
KREMLIN. ECONOMIC POLICY REALLY REVOLVES AROUND A
NARROW SET OF ELITES WHO ARE IN A VERY UNSTABLE
POSITION. RUSSIAN POLITICS HAS A WAY OF CREATING THE
STRANGEST PAIRINGS AND BEDFELLOWS IMAGINABLE. TODAY'S
CONFLICT BETWEEN (FIRST DEPUTY PRIME MINISTER ANATOLY)
CHUBAIS AND (INDUSTRIALIST BORIS) BEREZOVSKY MAY BE
TOMORROW'S ALLIANCE AGAINST SOMEONE LIKE A (PRIME
MINISTER VIKTOR) CHERNOMYDIN OR OTHERS.
/// END ACT ///
PROFESSOR STAVRAKIS SAYS IT IS CLEAR WHAT HAS TO BE DONE TO
IMPROVE THE ECONOMY -- THERE HAVE TO BE RELIABLE RULES TO
ENCOURAGE URGENTLY NEEDED BUSINESS INVESTMENT, THERE MUST BE AN
OVERHAUL OF A TAX SYSTEM THAT GENERATES ABOUT ONE-THIRD OF THE
REVENUE COLLECTED IN MOST DEVELOPED COUNTRIES, AND SMALL
BUSINESSES MUST BE ENCOURAGED BY REDUCING RED TAPE, CRIME AND
MR. STAVRAKIS THINKS THESE CANNOT BE ACCOMPLISHED UNDER THE
PRESENT SYSTEM OF GOVERNMENT:
/// STAVRAKIS ACT ///
IT MAY BE POSSIBLE TO PRESERVE THE ECONOMIC PROGRESS,
BUT AT THE EXPENSE OF CERTAIN IMPORTANT ACHIEVEMENTS IN
DEMOCRATIC REFORM. I DO NOT THINK WE CAN CONTINUE
DEMOCRATIC REFORMS AT THE EXPENSE OF ECONOMIC ONES. I
DO NOT EVEN THINK THAT IS AN ISSUE. WE HAVE TO HAVE
SOME FUNDAMENTAL CHANGE IN THE ATTITUDE OF THE
GOVERNMENT, AND THAT WILL NOT HAPPEN UNLESS THE CURRENT
OCCUPANTS OF THE POSITIONS LEAVE THE STAGE.
/// END ACT ///
BUT MR. HARDT THINKS GENERATIONAL CHANGE MAY BE SUFFICIENT. A
RUSSIAN MARKET RESEARCH COMPANY HAS FOUND IN CONTRAST TO THEIR
ELDERS, A SOLID MAJORITY OF THOSE AGE 16 TO 34 THINK LIFE IN
RUSSIA IS GETTING BETTER. FROM THEIR RANKS COME MANY OF THE
SUCCESSFUL ENTREPRENEURS AND POLITICAL REFORMERS.
/// HARDT ACT ///
THE NEW CAPABILITIES, THE NEW CADRES, THE NEW LEADERSHIP
ARE VERY IMPRESSIVE -- MUCH MORE THAN WE WOULD HAVE EVER
THOUGHT. WE HAD THE ILLUSION, I THINK, THAT SOMEHOW
RUSSIANS COULD NOT BE EFFECTIVE COMPETITORS, THAT ONLY
THE GERMANS COULD, NOT THE RUSSIANS. SOMEHOW AS I HAVE
BEEN LOOKING AT THE UNIFICATION OF GERMANY, THE RUSSIANS
LOOK PRETTY GOOD.
/// END ACT ///
MR. HARDT SAYS IF YOU LOOK BACKWARD, IT IS HARD TO BE OPTIMISTIC
ABOUT RUSSIA, BUT IF YOU LOOK AHEAD OPPORTUNITIES BECKON. RUSSIA
COMBINES ENORMOUS POTENTIAL WITH ENORMOUS BURDENS.
The Times (UK)
December 11 1997
[for personal use only]
When will Russia find a new Tolstoy?
The Russian Booker Prize has galvanised writers to produce
controversial winners. Jason Cowley reports
The old, grey Muscovite, breathless after battling through a scrum of
photographers, fumbles for words as he peers down from the podium at the
cultural crowd eating marinated salmon in the Maly Manezh art gallery.
Anatoli Azolsky, 67, has just won the 1997 Russian Booker Prize, and he
appears humbly flummoxed by his success. The hard lights of nine
television stations dazzle him; he clutches his $12,500 (£7,800) prize
cheque (three years' wages for the ordinary Russian) like a vulnerable
child holding his mother's hand.
Tomorrow Azolsky will be caught up in the kind of spat that is now so
much part of the Moscow literary scene. But tonight is his, the
culmination of a long journey that began in his years of internal exile
under Stalin, years when he wrote without any hope of being published -
"writing to the table", the Russians call it.
Whether this former factory worker was an appropriate symbol of the new
literary Russia was a different matter. "Why did he win?" asked the
critic and poet Helena Riumina. "This little, white-haired Soviet man
with a grey face seems to come from Brezhnev's time. When he speaks, I
hear the old style of a member of the Central Committee of the Communist
Party of the USSR. His phrases are wooden; he doesn't have his own
That his novel The Cage, a metaphysical thriller about a freethinking
scientist's attempt to forge an autonomous identity, was set under the
shadow of Stalinist terror inspired disappointment. At the press
conference, I overheard one judge say: "When I hear Azolsky speak, I
regret awarding him the prize. He is a man of the past."
This was an eventful year for the Russian Booker. The shortlist was
traduced, the judges mocked, the winner ridiculed and the future of
fiction itself questioned. If all this has a ring of familiarity, it
should: the 1997 Russian Booker shared more than a family resemblance to
its British cousin. Why, it even had its own Martin Amis or Ian McEwan,
a virtuoso stylist called Viktor Pelevin, considered to be the
outstanding writer of his generation (he is in his late thirties) but
who, it seems, is destined to remain out of favour with Booker juries.
The exclusion of Chapaev and Emptiness, Pelevin's novel about a hero of
the civil war that followed the Russian Revolution, enraged everyone
except the judges. The critic Konstantin Kedrov captured the mood when
he said: "It looks like there are two different talents here: to be a
jury member and to be an expert on literature."
The Russian Booker Prize is in its seventh year. Set up by Sir Michael
Caine, then chairman of Booker plc, in association with the British
Council, its effect on contemporary Russian literary culture cannot be
overestimated. It has galvanised the Russian novel at a time when
increasing numbers of people are turning away from fiction, preferring
to read newspapers, magazines and historical narratives.
"During the Soviet days you would go on the Metro and everyone would be
reading books; but now it's all glossy magazines," complains Igor
Shaitanov, a literature professor at Moscow University and chairman of
the 1997 judges.
Professor Shaitanov is dismissive of those cultural pessimists who say
that the Russian novel is doomed never to recapture its past grandeur,
but he concedes that something has been lost in the rush to embrace
capitalism. "We are living in a time of wilful anarchy; freedom has
overwhelmed us. When we had the underground and people were writing
against the system, writers had a point of focus."
The problem is compounded by the chaotic state of publishing and the
prevailing threat of mafia terror. In August Aleksandr Krutik, 29, a
publisher of school textbooks, was assassinated outside his Moscow
apartment. His company publishes at least 30 per cent of all school and
college textbooks. It is a lucrative market since Russian schools
urgently require material untainted by the Soviet past. The criminal
underworld of contemporary Moscow, a kind of Wild West of unfettered
markets and cruel disparities in wealth, is naturally eager to control
Most novels are published in so-called "thick journals" - cultural
magazines such as Novy Mir and Znamya - recalling in style, if not in
content, the great literary periodicals of the 19th century. But even
these are losing readers.
When the Booker was established, the nominators could scarcely find
enough novels to form a long list; this year nine of the 42 entries were
published as finished books. So there is progress.
The success of the Russian Booker has inspired imitators, most notably
the Little Booker Prize, which honours philosophical essays and works of
criticism; the waggish Anti-Booker Prize, set up by Boris Berezovsky, a
media entrepreneur; and the Solzhenitsyn Prize, supported by the
self-styled saviour of the Slavic people himself.
But, as the critic Lyudmila Lantsova points out: "The Booker will
continue to overshadow all other prizes. . . because it takes skill to
make people wait and talk and to create hype around the shortlisted
Skill and luck. For always running below the surface of the Russian
Booker is a current of confusion. The awards dinner was a model of
organised chaos; many more guests arrived than had been expected, and
additional tables had to be swiftly laid. The resulting delay was
softened by a steady flow of vodka and champagne, provided by
co-sponsors Smirnov, and by memorable moments of cultural confusion:
Vladimir Smirnov and Jonathan Taylor, the chairman of Booker plc,
attempting to have a conversation when neither spoke the other's
language; the delay in proceedings, like an echo on an international
phone call, as every public pronouncement had to be translated (or
mistranslated); the frisson of excitment when Sir Michael was mistaken
for the British actor of the same name.
Best of all was the moment when Sir Michael was asked by a Russian
television interviewer to name three "interesting contemporary Russian
novelists". In a deep, resounding voice, he answered: "Tolstoy,
Dostoevsky and. . ." He paused theatrically, drawing on his constant
cigarette. Jonathan Taylor helpfully whispered: "What about Pushkin?"
But Sir Michael would have none of it.
"No," he continued, "Tolstoy, Dostoevsky and Gogol."
"Yes," said the interviewer, "but what about contemporary Russia?"
"I'm sorry," boomed Sir Michael. "I can't help you there."
There is something of the grand Victorian patriarch about Michael Caine.
Tall and intimidatingly vigorous, he has a a mischievous sense of humour
and the kind of stutter that was once likened to the sound of a battered
Morris Oxford refusing to start on a cold February morning.
Without his stubborn determination, the Russian Booker would not exist.
Yet Sir Michael is over 70 and "his" prize may eventually have to break
free from foreign influence, becoming fully Russian. Sir Michael almost
conceded as much in his short speech at the award dinner: "The boat is
fully launched and ready to go out alone into the heavy, wild seas of
All that is missing is a modern Dostoevsky to document Russia's
Journal of Commerce
December 11, 1997
[for personal use only]
Barely begun, Caspian pipeline exports could cease
BY MICHAEL S. LELYVELD
JOURNAL OF COMMERCE STAFF
Less than a month after the first Caspian Sea oil began flowing over a
pipeline to the West, experts are concerned that it may stop on Dec. 31
because Russia has failed to negotiate a new transit pact with Chechnya.
A stopgap agreement in September with the breakaway republic runs only
through the end of the year. So far, there have been no reports that the
accord will be either renegotiated or extended, said Julia Nanay,
director of Petroleum Finance Co. in Washington.
The issue is a little-noticed but potentially serious problem for
Azerbaijan International Operating Co., the huge U.S.-backed consortium
that began pumping oil last month toward Russia's Black Sea port of
Novorossiysk over the line through Chechnya.
The celebration is over
The Nov. 12 opening of the "early oil" route was celebrated as an
international media event with top U.S. officials. But just a few weeks
later, the continuation of oil flows is already in doubt. "What are you
going to do come Jan. 1?" asked Robert Ebel, director of the energy and
national security program at the Center for Strategic and International
Studies. "You have no agreement on transit fees."
So far, the route is the only pipeline access to the landlocked Caspian,
where oil companies have rushed to sign billions of dollars in deals,
hoping that export solutions will materialize.
Fiona Hill, associate director of the Strengthening Democratic
Institutions project at Harvard University's John F. Kennedy School of
Government, said political crises in both Russia and Chechnya have
apparently kept the two sides from even starting transit talks.
Chechnya's president, Aslan Maskhadov, has been struggling to maintain
his hold on power, while a planned January visit to the republic by
Boris Yeltsin looks unlikely because of the Russian president's
hospitalization Wednesday and diplomatic squabbling.
The Jamestown Foundation's Monitor reported this week that a commission
has been drafting a "full-scale treaty" between Moscow and the republic
which it decimated in a 21-month war.
But there has been no mention of fee negotiations, and Russian Security
Council Secretary Ivan Rybkin complained this week that his country has
failed even to honor pledges to pay the tiny sum of $6 million in
reconstruction aid. One report has indicated that Chechen officials have
demanded a $2 billion lump sum payment for future oil transit, Ms. Nanay
The interim transit pact took months of tumultuous talks to negotiate
and resulted in a Russian promise to pay only $854,000 for the transport
of 1.4 million barrels of oil over the 95-mile section of Chechen line
this year. Moscow has talked of building a bypass around Chechnya, but
that would take at least a year. A southern early oil line through
Georgia is also not expected until late 1998.
Not too concerned
An official of British Petroleum, the largest single shareholder in the
$7.4 billion Azerbaijan consortium, said the companies are aware of the
Chechnya problem but not overly concerned because their delivery
contract is with Transneft, the Russian pipeline operator.
Michael Townshend, manager of international government affairs for BP
America Inc., said that if pipeline shipments stop, Russia will simply
have to substitute an equal quantity of Urals crude for export from
Novorossiysk. The crude is lower quality than the Caspian product,
making swaps less than ideal.
Other options available
The consortium has other solutions in mind, including rail transport,
increased storage and refining for local use. One serious option under
consideration is swaps with Iran. The exchanges could be licensed for
U.S. companies under an exemption in President Clinton's May 1995
"If the northern route fails, I sense that we would apply to the U.S.
government for an exception," said Mr. Townshend. He also voiced
confidence that licenses would be approved if the swaps were for a
Positive statements by a State Department spokesman Tuesday about
possible talks with Iran suggest officials are trying to keep the swap
option open in case the Chechnya situation goes wrong.
The Times (UK)
11 December 1997
Albright accused of dictatorial Cold War style
The Secretary of State rules with an iron rod, writes Tom Rhodes
SINCE Madeleine Albright was appointed US Secretary of State, the
seventh floor of her department has become a mini-fiefdom within the
Clinton Administration, a foreign policy fortress from which she reigns
While the most prominent woman in President Clinton's Cabinet and the
first female Secretary of State regularly demands "out of the box"
thinking from her subordinates, the reality is a world according to
Madeleine in which only those who toe her line have any hope of
survival. She has weekly lunch meetings with William Cohen, the Defence
Secretary, and Sandy Berger, the National Security Adviser, but
considers herself first among equals in terms of foreign affairs.
Ms Albright believes she is one of the few members of the Administration
untainted by the myriad White House scandals and has simultaneously
maintained strong support among powerful Republicans in Congress. She
relies on a small coterie of advisers to promote her thinking and
preserve good relations with Capitol Hill. But other senior officials at
the State Department, unable to support her often blunt approach, have
gradually withered on the vine since her appointment.
The most prominent of these has been Strobe Talbott, her deputy who was
once the Administration's chief co-ordinator on Nato and Russian
relations. Mr Talbott has been deemed too generous in his overtures to
Moscow and is now isolated from the inner sanctum. Throughout the recent
Iraq crisis, Ms Albright is said to have been furious at the attention
being paid to Yevgeni Primakov, the Russian Foreign Minister who
brokered a deal with President Saddam Hussein. Her distrust of Mr
Talbott's close friend was echoed in numerous American publications in
which Mr Primakov was depicted as a former KGB spymaster and Arabist
appeaser of dictators.
"It would be extraordinary if Strobe didn't pick up on the message,"
said one official. "She has made it so clear that everything he has done
in the last four years has been a matter of coddling the Russians."
Mr Talbott is now considering his options. He is not alone. Tim Wirth,
the Under-Secretary for Global Affairs, announced last month that he was
leaving to become the administrator for Ted Turner's $1 billion donation
to the UN. He had been America's lead negotiator at the international
conference on global warming in Kyoto and his departure, weeks before
the talks started, was viewed as a signal of his dissatisfaction with Ms
Albright's lack of interest in the issue.
The most important members of her team now tend to be those with
political rather than policy experience. Elaine Shocas, her Chief of
Staff, Jamie Rubin, her spokesman, and Thomas Pickering, a former
Ambassador to Moscow who is now Under-Secretary for Political Affairs,
are among a small band who co-ordinate Ms Albright's global vision. "Her
view of the world is what you might have expected from a Secretary of
State 20 years ago," an official said.
"There's nothing wrong with that but it's old thinking, and if, as we
have been told, we are trying to create a new foreign policy world, then
she is doing nothing to facilitate that." Critics argue that this Cold
War paradigm has been coloured by her East European roots while she has
apparently little interest in economic issues.
Only in recent months has the Secretary of State recognised the
importance of America's role in the Middle East. She has recently been
concentrating on trying to break the deadlock between Israel and the
Aware that the weapons inspections controversy with Iraq is far from
over, Ms Albright is now pressing Israel to present a flexible approach.
If she can rebuild the Arab coalition that failed to support America
last month, then she will have scored a notable triumph.
Russia: Parliament Calls For Support For Arms Industry
By Simon Saradzhyan
Moscow, 10 December 1997 (RFE/RL) -- The Chairman of each house of Russia's
Parliament has urged the government to boost state management of the
country's struggling arms industry.
Gennady Seleznyov of the State Duma and Yegor Stroyev of the Federation
Council suggested to President Boris Yeltsin that he set up an independent
Committee on Management of the Defense Industry. The two Chairmen discussed
the arms industry's dire straits with Yeltsin and Prime Minister Viktor
Chernomyrdin other subjects, during a meeting yesterday of what is called
the "big four."
After the meeting, Seleznyov told reporters that the big four had not
only "touched upon this problem," but that the government has already
started working out a new management scheme for the arms industry. "I don't
know yet how the government is going to solve this problem: either to set up
a committee as we suggest, or reinforce the (existing) defense department in
the Economics Ministry, the State Duma Chairman said.
Contacted by RFE/RL after Seleznyov's comment, representatives of the
Economics Ministry spoke against the suggested reorganization. "I don't
really see how it will all work out," said Alexander Shalimov of the
ministry's defense department. "I think we have had more than enough of
reshuffles," said Shalimov, who has helped to run first the Soviet and then
the Russian arms industry planning for more than a decade.
Indeed, Russia's arms industry and its exporting branch have seen so many
reorganizations that observers wonder what new the cabinet might propose.
With the disunion of the USSR and the advent of market reforms, Russia's
government assumed that a single state committee would be enough to run the
gigantic arms industry. This assumption turned out to be incorrect and the
committee was upgraded into the ministry of defense industry
(Minoboronprom). That ministry was disbanded this year, and several
departments were set up in the Economics Ministry.
"How can a ministry manage us efficiently if it has one department to
deal with both naval and aviation sectors, (which are) giants of its own,"
argued a middle-rank official (anonymous) of the Irkutsk Aviation Production
Alexander Dondukov of the Yakovlev design bureau is much more flamboyant
in criticizing the existing structure of state management. Dondukov, who is
Yakovlev's chief designer, has openly called the Economics Ministry's
management of the arms industry "obsolete and short-sighted.
"It is more than clear that we need a separate governing body until
enterprises merge into large conglomerates," stressed the IAPO official.
Despite numerous public vows, the Economics Ministry has, so far, failed
to facilitate mergers among arms industry giants, which experts say is much
needed to boost efficiency and competitiveness.
According to statistics released at recent parliamentary hearings on the
arms industry, every second defense enterprise is close to bankruptcy, due
to sheer lack of state orders. Even the largest, which still get orders can
barely survive, as the state manages to pay for only 45 per cent of what it
has ordered - while demanding that contractors fully pay taxes on their
The government remains so cash-strapped that it has even decided to allow
a Far East contractor to sell its anti-ship, supersonic missile (Mosquitoes)
to China. Until this decision, the missile had been on the top state secret
list, despite numerous appeals of arms makers and exporters.
PRIVATE OWNERSHIP FOR LAND IN RUSSIA ON FEDERAL LEVEL
SHOULD BE FIXED: GRIGORY YAVLINSKY
MOSCOW, DECEMBER 10, RIA NOVOSTI'S GALINA FILIPPOVA - "We
believe that private ownership for land in Russia on the federal
level should be fixed. We also think that the right to use this
or that approach to the land reform and practical introduction
of private ownership for land should be granted to Russia's
regions, constituent members of the Russian Federation", Yabloko
deputy faction leader Grigory Yavlinsky told the RIA Novosti
According to Yavlinsky, his faction is positive that "there
will be no equal conditions for land ownership, say, in the
Krasnodar Territory and in the Murmansk Region because of
different climatic conditions and the very attitude to land as
it is". However, the MP stressed that practical steps in this
direction can be made on the basis of thoroughly developed
legislation which should in its turn meet the Civil Code.
"We are absolutely sure that the decision on this hot issue
is extremely important for Russia and its economic reform",
RUSSIA MUST PREPARE ITSELF FOR NEW FINANCIAL CRISES AS IT
FULLY INTEGRATED INTO GLOBAL FINANCIAL SYSTEM: ALEXANDER
MOSCOW, DECEMBER 10, RIA NOVOSTI'S GALINA FILIPPOVA - Our
Home Russia (OHR) faction leader Alexander Shokhin thinks that
"Russia must prepare itself for new financial crises as it is
fully integrated into the global financial system".
Shokhin called upon the cabinet to get ready for
"overheating" of the national economy which, according to him,
will "happen by the next spring because of a return of those
foreign capitals which left Russia's financial and stock markets
after the global crisis". Alexander Shokhin stressed that
"financial authorities of Russia should do their best not to be
caught by surprise".
He also believes that the crisis in the global financial
market has revealed a number of drawbacks in the economic policy
pursued by the government. He noted in this connection that
"orientation to foreign investors produced too many
non-residents in the financial and stock markets".
Shokhin also noted that the eagerness to solve all the
problems as early as in 1997, in particular, to pay wage arrears
and close an agreement with the London Club "has produced the
situation when the federal budget is overloaded".
The Electronic Telegraph (UK)
11 December 1997
[for personal use only]
Kazakhstan's capital moves to industrial town
By Alan Philps in Moscow
TO the dismay of diplomats and bureaucrats, the former Soviet state of
Kazakhstan yesterday moved its capital from the pleasant city of Almaty
to a ramshackle town in the middle of the windswept, inhospitable
steppes of Central Asia.
The new capital, Akmola, is agreed by everyone except the country's
President, Nursultan Nazarbayev, to lack almost every single quality
necessary to put Kazakhstan on the map. A drab Soviet industrial town,
where wooden huts alternate with cheap tenements, it has one of the most
extreme climates, with Siberian cold in winter giving way to stifling,
mosquito-ridden heat in the summer.
Electricity, gas and housing are all in short supply. Bureaucrats are
being forced to leave their homes in Almaty, a green city in the
foothills of the Tien Shan mountains, to sleep two to a room in gloomy
hotels or dilapidated flats. In the best Soviet tradition, the facades
on the main street of Akmola (pop 270,000) have been smartened up on the
outside, and some central buildings resurfaced to give a bright and
shiny look. But little else has changed.
Mr Nazarbayev was unabashed yesterday as he convened a joint session of
the two houses of parliament to declare Akmola the capital. He said that
Akmola was "one of the geographical centres of Eurasia". He said: "The
economic, technological and information streams of the developing
Eurasian mainland will intersect in our new capital in the 21st
As one of the many "hare-brained schemes" which led to his downfall, the
Soviet leader Nikita Khrushchev decreed that the Kazakh steppes, known
as the Virgin Lands, should be put to the plough in the mid-1950s.
Hundreds of thousands of young people were moved to the steppes around
Akmola - then known a Tselingrad, or Virgin Lands City - to make a new
life. After two good harvests, it became clear that the land had been
raped: some 30 million acres were ruined by soil erosion.
Some of the old pioneering spirit has rubbed off. The Speaker of
parliament, Marat Ospanov, declared that it would be good for MPs to
live two to a room. Such a view is not shared by the diplomatic
community. Suzanne Hill, third secretary at the British Embassy, said:
"We have no plans to move at the moment. The Kazakh authorities keep
asking us when we are going to select a plot of land in Akmola for our
embassy, but we are adopting a wait-and-see approach."
It is not as if the diplomats in Almaty had a grand embassy or great
housing. Britain shares an embassy with Germany and France. Mrs Hill
said: "It really is quite small - we have half of the German corridor.
Where I live we have had no gas for the past two weeks."
Yeltsin rests, puts off radio address
By Gareth Jones
MOSCOW, Dec 11 (Reuters) - Russian President Boris Yeltsin, laid low by a
cold and a viral infection, rested at a sanatorium outside Moscow on
Thursday after being advised by doctors not to record a planned radio address.
The Kremlin said the 66-year-old president's illness was not serious but
he was expected to stay at the Barvikha sanatorium for up to 12 days.
"The president is in some discomfort and has a temperature of 37.3
Celsius (99.14 Fahrenheit)," said a Kremlin statement.
Bulgarian President Petar Stoyanov, who had been due to visit Moscow on
December 18 to 20, told reporters in Sofia he had spoken for 20 minutes by
telephone with Yeltsin on Thursday and that his trip had been postponed
until February or March.
The Kremlin dismissed a Western media report quoting informed sources as
saying Yeltsin had suffered a renewed bout of heart trouble.
Renat Akchurin, who led the team of surgeons which carried out Yeltsin's
quintuple bypass 13 months ago, also denied any link between the president's
illness and his heart operation.
"I am not alarmed in the least by the head of state's general health,"
Akchurin told Interfax news agency.
Yeltsin underwent his surgery in November last year and then caught
pneumonia before returning to the Kremlin full-time in February.
He has made a strong recovery since then and kept up a busy schedule that
has included several trips abroad. It was on a trip to Sweden last week that
spokesman Sergei Yastrzhembsky said he had begun to show symptoms of a cold.
Yeltsin had been expected to record a radio address on Thursday to mark
Friday's Constitution Day national holiday. This year radio addresses have
become a regular event, underlining Yeltsin's more fatherly approach towards
governing his country.
"Due to signs of catarrh, doctors have asked B.N. Yeltsin to refrain from
recording his radio address," the Kremlin statement said. A presidential
spokesman told Reuters the president was expected to follow his doctors'
The Kremlin statement said a council of doctors had met on Wednesday and
confirmed that Yeltsin was suffering from an acute viral respiratory infection.
Doctors had prescribed anti-inflammatory and antiviral drugs, and
medicine to bolster Yeltsin's general health.
Kremlin officials said he was not confined to bed and would continue
working on documents. Russian news agencies said Yeltsin held talks at
Barvikha on Thursday with Valentin Yumashev, head of the presidential
Ukraine's presidential service said Yastrzhembsky was expected to go
ahead with a planned trip to Kiev on Thursday and was due to meet President
Leonid Kuchma at 1400 GMT.
Despite the Kremlin's insistence that the president's illness is not
serious, the news has unsettled Russia's already jittery financial markets.
The rouble and Russian share prices remained under pressure on Thursday
after falling on Wednesday on news that Yeltsin was ill.
Political analysts said decision-making would also slow down in Yeltsin's
absence owing to his domination of the political scene and his extensive
powers under the country's post-Soviet constitution -- whose fourth
anniversary is being marked on Friday.
Policy drifted during Yeltsin's eight-month absence from the Kremlin due
to the heart problems that followed his re-election in the summer of 1996 to
a second presidential term.
Yeltsin had originally been due to meet opposition and trade union
leaders on Thursday for the first of a series of "round table" talks
designed to bridge some of the sharp differences between the government and
its Communist foes.
The talks, now postponed until after Yeltsin's recovery, were to have
focused on the ideologically fraught issue of land reform.
Revived Moscow Duma steps out of shadows
By Timothy Heritage
MOSCOW, Dec 11 (Reuters) - The recent appearance of election fliers in mail
boxes across Moscow caught many residents of the Russian capital by surprise.
People were startled to discover they were due to elect a new Moscow City
Duma, or parliament, on Sunday. Many had no idea until they read the fliers
that such an assembly existed.
``I haven't a clue who I will vote for. To tell you the truth, I didn't
even know we had a Duma,'' said Olga Adamovich, a typical 23-year-old
Such uncertainty among the seven million voters, a force almost as large
as the population of Switzerland, makes the outcome particularly hard to
At stake is more than just 35 seats in the local Duma. Whoever wins will
gain valuable influence and improve their ability to lobby in a city where
most of Russia's top leaders, wealth and foreign investment are concentrated.
This is partly why some nationally-known politicians are running --
former Moscow police chief Arakdy
Murashov, independent politician Nikolai Gonchar and senior Communist Party
adviser Alexei Podberyozkin.
LUZHKOV AND LIBERALS WATCH RESULTS CAREFULLY
The outcome will have major implications for Moscow Mayor Yuri Luzhkov
and liberal and centrist reformist parties who have formed an unprecedented
alliance for the vote.
The Moscow City Duma elected in 1993 has been dominated by liberals and
has rarely opposed Luzhkov.
He is hoping the elections will not create an opposition capable of
undermining the campaign he is widely expected to launch in Russia's next
presidential election, due in 2000.
The Yabloko, Russia's Choice and Our Home is Russia parties will also be
watching carefully. They have temporarily put aside their wrangling and
joined forces --- an experiment they might try to repeat on a national level
if its proves successful.
The rival campaign chiefs have no doubt about the importance of Sunday's
vote, the latest of many local and regional elections across Russia.
``Seventy to 85 percent of Russian capital is concentrated here. It's
clear that whoever influences the situation in Moscow influences the
situation in Russia as a whole,'' said Vyacheslav Igrunov, head of the
liberal Yabloko party's campaign.
A rival, Alexander Kuvayev, agreed. ``Moscow is a state within a state.
It is very important to have a foothold in the capital,'' said Kuvayev,
first secretary of the Communist Party's Moscow city branch.
IN THE SHADOW OF THE NATIONAL DUMA
More than 350 candidates contest 35 seats on Sunday. The chamber will
then elect a chairman who has the right to sit on the Federation Council,
Russia's upper chamber of parliament.
The City Duma dates back to tsarist times and was revived only in 1993
after more than seven decades of communist rule.
It is responsible for passing laws governing life and business in Moscow
but the legislation it adopts must be in line with federal laws or the
Just as President Boris Yeltsin dominates Russia's political life and has
powers that humble the 450-seat State Duma, Russia's lower house of
parliament, Luzhkov dominates the political scene in the capital.
The Moscow City Duma has been so docile that political pollsters say only
six to seven percent of Muscovites knew of the city assembly's existence a
Luzhkov's popularity -- he won 95 percent of votes in a mayoral election
this year which gave him a second term of office -- also makes for an
unusual situation in which almost all candidates support him. Many claim he
The chances of the new Duma being radically opposed to him or challenging
him are slim.
``I think that if there is not a straight repeat of the last election, it
will return a very similar Duma because of the mayor's influence,'' said
Nikolai Petrov, an analyst at the Carnegie Endowment for International Peace
think-tank in Moscow.
``Luzhkov does not need a Duma that is a real centre of power and I think
the Duma that's elected will suit him,'' said Petrov, who follows Russia's
local elections closely.
Luzhkov, 61, would welcome such an outcome. Although he denies he will
run for president, most analysts expect him to enter the race in 2000. Any
challenge to his authority in Moscow would be an unwelcome dent to his image.
LIBERAL REFORMERS UNITE BUT FOR HOW LONG?
Many of the leaflets and posters now slapped across the city celebrate
the centrist and liberals coming together at last.
Yabloko and Russia's Choice have squabbled over minor differences which
have prevented them in the past from uniting. This split the reformist vote
in a national election in 1995 and meant many liberals failed to enter the
This time, they and the pro-government Our Home is Russia have made sure
their candidates do not run against each other in any of the 35 constituencies.
Repeating such cooperation nationwide would probably work in the
liberals' favour. But the chances of the marriage lasting until Russia's
next parliamentary election in 1999 may be slim.
``I see no chance of repeating this on a federal level with Our Home is
Russia. I think we will find it hard to make a united stand with them unless
they change in a big way,'' said Igrunov, whose party often votes against
``I am not so categoric about Russia's Choice but I fear they might be
quite weak in two year's time.''
Russia's Choice is on the decline nationally, while Yabloko's support has
Moscow has proved a ``democratic'' stronghold since the Soviet Union
collapsed in 1991 and the pro-communist ``My Russia'' group of candidates
faces an uphill struggle on Sunday.
The overall leanings of the Duma may not be apparent even after the
results are announced. Many candidates are independent or say little or
nothing about their affiliation in their campaign leaflets.
This partly reflects a trend in regional elections in which candidates
rely entirely on showing they are practical -- can get things done -- rather
than expressing any ideology.
Many of the main issues are local -- pollution, crime, transport and
housing. Others reflect concern over the need for social security and
protests about high taxes.
``Voters will...replace leaders splendidly armed with democratic rhetoric
with leaders who can be described as pragmatic,'' said opinion pollster