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Johnson's Russia List
31 December 1997
[Note from David Johnson:
A personal note at the end of the year. Very few of you
know me other than through the impersonal email connection.
I have on rare occasion alluded to events on my non-JRL
life which, contrary to appearance, does exist. There is a
major event about to take place. My wife--Lisa--and I are
separating, amicably. Ironically, one consequence of this may
be a less monomaniacal approach to the Russia List as I adjust
to my new circumstances. I thought I would share this with you.
Happy New Year!
1. Fred Weir in Moscow on Yeltsin's end of year remarks.
2. Jay Ulfelder: Re: Yeltsin's end-of-year address.
3. Boston Globe: David Filipov, Russians' TV taste turns to
4. Michael Intriligator: Gorbachev Foundation Boston conference
on economics of globalization.
5. Nezavisimaya Gazeta: Yekaterina Tesemnikova, CONTRARY TO HOPES.
Seventy-Five Years Ago the Soviet Union Was Founded.
6. RFE/RL NEWSLINE: ZYUGANOV PREDICTS IMMINENT OUSTER OF
LUZHKOV SAYS DEPENDENCE ON IMF IS 'NATIONAL DISGRACE, BEREZOVSKII
ASSAILS 'BOLSHEVIK' MENTALITY OF CHUBAIS, and CHUBAIS RETURNS FIRE.
7. The Independent (UK): Phil Reeves, Russians on red alert as
rouble is reinvented.
8. Reuters: Chubais promises better year for Russia ahead.
9. Boris Nemtsov on peoples' capitalism. (From December 25 press
10. Reuters: Facts on redeonomination of Russian rouble.
11. VOA's Frank Ronalds on state of Russian economy.
12. RIA Novosti: AS PUBLIC OPINION POLLS SHOW, 80% OF RUSSIAN
CITIZENS REJECT A RETURN TO THE COMMUNIST PAST, ACADEMICIAN
GENNADY OSIPOV SAYS.
13. RIA Novosti: OUTGOING YEAR WAS VERY IMPORTANT FOR RUSSIAN
FOREIGN POLICY -- BORIS YELTSIN.]
Date: Tue, 30 Dec 1997
For the Hindustan Times
From: Fred Weir in Moscow
MOSCOW (HT) -- Russia had a painful 1997 but new policies
that emphasize humane values over unbridled market reforms will
make the coming year more hopeful and productive, a well-
looking President Boris Yeltsin has told the nation.
"It is obvious to most of us today that there have been
very few noticeable successes," Mr. Yeltsin said in his year-end
"The every-day life of many of our people remains very
difficult. People justly complain that the pace of transformation
is too slow," he said.
"But we will correct the mistakes and draw the necessary
Economic growth and social renewal have been promised every
year since the collapse of the USSR six years ago. But Russia
remains frozen in one of the 20th century's longest, deepest and
strangest economic depressions.
The country's continuing problems have been caused by
embracing Western-style capitalist ideology with too much
enthusiasm while forgetting about traditional social values, Mr.
"We overlooked many things when we entered the free market,"
he said. "We have fixed the market's legal frameworks, but have
forgotten about the laws of morality, about such a simple thing
as business ethics."
Russia's new rich minority are guilty of extravagant and
selfish behaviour, he charged. "They continue to egotistically
wallow in personal success, thereby tormenting the majority of
their fellow countrymen."
By lashing out at the arrogant young business class, Mr.
Yeltsin may have been warning their sponsors in government that
major policy shifts are in the offing.
"The country has suffered too many years of poverty and
hopelessness, and people are exhausted," says Nikolai Zyubov, an
"The president is reflecting the widespread view that it's
time for the government to intervene in the economy, to
redistribute the wealth and help the poor. That has very serious
Mr. Yeltsin hinted that he may start by making key personnel
changes in the New Year, perhaps by sacking leading liberal
reformers such as First Deputy Prime Minister Anatoly Chubais.
Mr. Chubais, a 42-year old economist who has served in
government almost continuously since 1992, said in a recent
interview that he might resign before the president fires
Heaping more bad news upon Russia's beleaguered pro-market
reformers, Mr. Yeltsin said he will step up cooperation with the
Communist-led parliament in 1998, and consult more frequently
with leaders of the left-wing opposition.
"I have asked Russians to turn this year into a year of
reconciliation and accord," Mr. Yeltsin said. "And I am doing it
myself, even when I have to force myself and seek agreement with
the once 'irreconcilable opposition.'"
A year ago, many believed that Mr. Yeltsin's 1996
re-election as president against a strong Communist challenge,
and his subsequent recovery from radical heart surgery, would
stimulate a wave of foreign investment and generate an economic
breakthrough in 1997.
But the economy remained flat, financial crisis struck when
global stock markets tumbled, and the year ended with Mr.
Yeltsin's health once more a potent political issue.
"As always, Yeltsin is interested in remaining in power
rather than accomplishing any particular agenda," says Mr.
Zyubov. "The fact that he is signalling a change of course tells
us that the mood of the country and the balance of political
forces is already moving that way."
In Russia's super-presidential system, however, all
calculations are hostage to the chief's state of health.
Though Mr. Yeltsin looked well enough before the cameras
this week, he has spent much of December in a Moscow-area
sanatorium recovering from what aides called a "viral infection".
The Kremlin press office announced this week that Mr.
Yeltsin will ring in the New Year with yet another extended leave
of absence -- two weeks in a presidential rest house at Valdai,
in western Russia, beginning this weekend.
"These constant unscheduled vacations by the president
cannot help but raise doubts about his health and stamina for the
job," says Mr. Zyubov.
"Yeltsin's health has become the defining issue of our
times, upon which everything else depends."
From: Jay Ulfelder <Ulfelderjr@aol.com>
Date: Tue, 30 Dec 1997 15:27:18 EST
Subject: Re: Yeltsin's end-of-year address
Reading Yeltsin's end-of-year radio address as presented in translation in a
recent JRL got me thinking...
The businessman as "the real hero of our times"...the "social responsibility
of well-to-do people" as a lost value in contemporary Russia...the family, and
the "older generation" in particular, as "the bearer of priceless experience,
the necessary link for the continuation of traditions"..."we must pay more
attention to the [sic] family values"...
Is somebody in the Kremlin plagiarizing Newt Gingrich and Trent Lott's
speeches? Are Newt and Boris Nikolayevich, in fact, one in the same? The
hair, the bizzare public proclomations that make aides wince...(Perhaps this
explains Yeltsin's frequent "disappearances" from public life...)
In all seriousness, this thing reads startlingly like the current GOP line --
the notion that the appropriate check on the market is not state intervention
but social conscience and "personal responsibility" on the part of the well-
to-do. In other words, social welfare is best ensured through private, not
public, endeavor, freely chosen by the "haves" who acknowledge their social
role (while keeping enough handy, to be sure, to pay for million-dollar homes
and honkin' SUVs, or, in the Russian case, Mercedes 600s).
Well, if *that's* the prescription for Russia in 1998...uh, oh.
30 December 1997
[for personal use only]
Russians' TV taste turns to the raw
By David Filipov
MOSCOW - If you like mayhem, you'd love Russian television these days.
In ''Russian Battle,'' one of the country's hot new TV game shows,
contestants parachute through a ring of fire, break stone slabs with
their bare hands and beat one another senseless as a bloodthirsty studio
audience goes wild.
During breaks in the program, commandos in black masks dispatch a
Kalashnikov-toting gunman with grenades and karate chops. Knights hack
at one another with broadswords. And a gargantuan rap singer prances
around a smoke-filled boxing ring, spurred on by a bevy of scantily clad
''Russian Battle'' is part of a new wave in Russian TV programming that
caters to viewers for whom chaos, turmoil and violence have become
routine in everyday life. These Russians crave more combat, titillation
and grit in their television than has been provided by the entertainment
fare, much of it imported from Hollywood, that has dominated local
channels since the 1991 Soviet breakup.
''People want to see the truth,'' said David Gamburg, a former Soviet
emigre who returned to Moscow from the United States to produce
''Interception,'' in which contestants steal cars and try to evade real
police dragnets. ''In the last few years, they've seen so much of
American products, action movies, you can't surprise them with special
The appeal of the rough new shows like ''Russian Battle'' and
''Interception'' is far from universal. Blatant Russian rip-offs of
''Wheel of Fortune'' and ''Name That Tune'' are still among the
most-watched shows in the country. Still, the creators of the new shows
think they have hit paydirt.
''Our viewers are real Russians who want to see real men. They want to
see real women,'' said Pavel Nee-Lee, 22, the Korean-Russian host of
''Russian Battle,'' which airs on state-owned Russian Television on
Like post-Soviet Russian society itself, the new shows are copies of
familiar programs, laced with a raunchy craziness that give them local
flavor. ''Russian Battle,'' for example, is based on ''American
Gladiators,'' the US show in which contestants compete on an obstacle
course and in contests of strength against mock villians in superhero
uniforms, armed with harmless weapons.
''American Gladiators'' is tame television in which no one gets hurt.
''Russian Battle,'' on the other hand, looks like a cross between
''American Gladiators'' and the Roman ones. The obstacle course is still
there, but it has real fire. There are real knives to throw, real guns
to shoot and real brick walls to crash through. The contestants, chosen
from Russian special forces units, are all masters of martial arts.
Their expertise comes in handy during the three rounds of kick-boxing in
During breaks, viewers see action clips of the contestants during their
training exercises, together with odd entertainment acts like the
knights in battle, the cheerleaders on display, and 350-pound pop star
Sergei Krylov lip-synching songs.
But the main attraction is the kick-boxing fight, which produces a
substantial number of low blows for a mere three rounds.
''I watched American Gladiators a few times, and it's a good show, but
it was all staged, and those were fake tough guys,'' said Nee-Lee,
reflecting on how he came up with the idea for ''Russian Battle.'' ''Our
show has real tough guys, gladiators for law and order. American
Gladiator is for a calm, quiet society like suburban America. Our show
is for a society where life is still violent.''
Amazingly, ''Russian Battle'' is not the most violent game show on
Russian television. Nee-Lee's father and producer, Gennady, is also the
creator of ''Serious Game,'' a contest between two military units that
has the look of real war. It includes helicopters, tanks, minefields and
''shootouts'' between contestants equipped with sonar weapons that blow
the opponent's helmet off when they find their mark.
''Serious Game'' is so realistic that the weapons sometimes jam, the
motorcycles sometimes fail to start, and the soldiers often get lost and
take the wrong route, just as they do in real war.
Most of the contestants in ''Russian Battle'' and ''Serious Game'' are
familiar with such problems. Gennady Nee-Lee says that 90 percent of
them fought in Chechnya. One of his goals in producing the show is to
improve the image of Russia's armed forces, humiliated in its
unsuccessful 20-month campaign to defeat few thousand, poorly armed
rebels in the breakaway Caucasus region beginning in 1994.
''I'm trying to give children an education, so that they are not afraid
of tanks and weapons,'' he said. ''Like it or not, we have mandatory
conscription in this country, and everyone will serve in the armed
forces. Our programs are schools that teach children to get ready for
service. We want people to respect men in uniform. Maybe fewer will want
to join mafia gangs.''
Gamburg, the producer of ''Interception,'' also says he wants to raise
the prestige of defenders of law and order - in his case, the traffic
police, known by their Russian acronym, GAI, which is pronounced
It is a daunting task. Any Russian driver will tell you that the GAI are
the most corrupt, unreformed and meddlesome remnants of the Soviet
police state, masters of on-the-spot ''fines'' for non-existent
In the show, real-life pedestrians jeer at the GAI's Ford Celebrity
patrol cars as they race around Moscow after the ''stolen'' vehicles.
The show's hyperkinetic host, Nikolai Fomenko, watches on a huge screen
from the studio, located in a large hangar made up to look like a pit
stop. Fomenko openly sides with the ''thiefs,'' and the audience cheers
when the contestants outwit the GAI.
But the GAI always get their man or woman. When they do, they arrest
them Russian-style - face down on the hood, Kalashnikov pointed at the
neck. Producers say the police major who leads the GAI patrols, Leonid
Omelchenko, has already become a local celebrity.
''We've had a lot of programs borrowed from the West that don't take
into account the Russian mentality,'' says Fomenko, who also hosts an
amateur strip show in which contestants perform wacky feats to rock
music to avoid stripping down to their shorts. ''Russian people like
humor, action and wide-open spaces. If you're going to do a strip show,
the girl has to strip. If you're going to do a police-chase show, you
need to use the whole city. That's our innovation.''
Date: Tue, 30 Dec 1997 10:58:19 -0800 (PST)
Subject: Gorbachev Foundation Boston conference on economics of
From: Michael D. Intriligator, Department of Economics, UCLA
JRL readers might find of interest the globalization project of the
Gorbachev Foundation. Recently the new Gorbachev Foundation of North America
held a very successful meeting on the economics part of this project at
Northeastern University in Boston, with Gorbachev present. Also attending
were American Nobel Prize winners in Economics Lawrence Klein and James
Tobin, Russian academicians Oleg Bogomolov and Alexander Nekipelov, and
other economists from England, Germany, Hungary, and India as well as Russia
and the U.S.
Below is an article about the conference that appeared in the BOSTON
GLOBE on Wednesday, December 17. It included a photo with the caption:
"Former Soviet President Mikhail S. Gorbachev dedicated his new Gorbachev
Foundation yesterday at Northeastern University."
Best regards and all the best for 1998, Mike Intriligator
Gorbachev urges UN to change with times
By Stephanie Ebbert
Former Soviet President Mikhail S. Gorbachev yesterday called for
the reform of international organizations such as the United Nations and the
International Monetary Fund to reflect the changing global economy.
Closing a two day conference on economic globalization, sponsored by
the Gorbachev Foundation of North America at Northeastern University, he
said that there may be a need for new organizations to offer equal weight to
less powerful nations.
"The international community should not agree to continued funding
of international organizations based on the rules established decades
ago...reflecting the views and interests of major powers," Gorbachev said
through a translator.
"The Security Council of the UN should reflect better the changes
and the realignment that happened during the past decade," he added. "I
believe countries like India, Japan, Brazil, and Germany should be
represented on a regular basis."
Conference participants, including scholars and two Nobel Prize
winners in economics, concluded that global economic changes ushered in by
the end of the Cold Ear, advances in technology, and more open trade could
boost competition, productivity, and wages worldwide.
Yet they pointed to pitfalls: Some fear that the world's most
powerful nations and international firms and organizations will wrest
economic control from individual governments. And because interdependence
brings the threat of collective vulnerability, a crisis in one nation could
dampen the regional or global economy.
The group plans to continue meeting and to issue recommendations to
the United Nations before a 1999 special session on the problems of
During questioning, Gorbachev registered disappointment at the
United States' stance during recent talks on global warming in Kyoto, Japan.
The United States wants developing nations to voluntarily limit gas
emissions as more developed countries would be bound to do.
Noting that the United States and Russia are primary polluters,
Gorbachev said those governments should assume more responsibility.
"If a government takes a position exclusively in the interest of the
business community of a country, I think eventually it is bad for that
country. It's bad for all of us," he said.
The Gorbachev Foundation is a nonprofit think tank headquartered in
Moscow, with a US location at Northeastern.
>From RIA Novosti
December 30, 1997
CONTRARY TO HOPES
(Seventy-Five Years Ago the Soviet Union Was Founded)
By Yekaterina TESEMNIKOVA
Contrary to the hopes placed on the organization of
effective cooperation between the countries of the former
Soviet Union, the past year has not become a turning-point for
their cooperation within the framework of the Commonwealth of
Independent States. Even so, during the year the leaders of the
Commonwealth states seemed to have decided to revise in a
radical way the ineffective mechanisms of the CIS. The
President of Russia sharply criticized at the Kishinev summit,
despite the fact that at the previous meeting in March he had
been elected for the fourth time as chairman of the Council of
the Heads of Commonwealth States, has "firmly and
unequivocally" proclaimed a course at the development of
integration "with due regard for the new realities and for
From now on, bilateral relations between the CIS members,
on which Russian politicians have insisted all the time, have
become a norm, and not least of all for Moscow. Among the
events which have positively influenced the political life of
the Commonwealth states in 1997 analysts today name the Union
Treaty between Belarus and Russia, concluded by Boris Yeltsin
and Alexandr Lukashenko in Moscow on April 2, and the Treaty of
Friendship, Cooperation and Partnership between the Russian
Federation and Ukraine signed on May 31 during the first
official visit by Boris Yeltsin to Kiev. Having got tired of
the endless debates over the division of the Black Sea Fleet,
Moscow has decided to put the emphasis on economic matters,
having notably described as "absurd" the imposition of double
taxation in trade and economic relations between Ukraine and
It is probably due to the appeals to give up the Big
Brother status and not to build relations with the
newly-independent states that Moscow has chosen not to oppose
the formation of regional associations. This is how Boris
Yeltsin has interpreted this decision: "the head of the CIS
should not begrudge the formation of associations such as "the
union of two" or "the union of four", because "it is very
useful. So, after the Central Asian Union, the leaders of
Georgia, Ukraine, Azerbaijan and Moldavia have stated their
intention to develop strategic partnership, using the GUAM
abbreviation for their alliance. The GUAM leaders have made an
immediate reservation that their association should not be
"mixed" with the CIS and have called their union "a common
world practice when countries are looking for opportunities for
the implementation of their interests", first of all in the
GUAM, though, has been united not only by the idea of the
development of the Euroasian-Transcaucasian transport corridor,
but also by the problems of the settlement of conflicts,
peace-making activities and the struggle against separatism.
Georgia, for example, has become to "tired" of Russia's policy
towards Abkhazia, that the question of the republic's
membership in the CIS has begun to be voiced loudly.
Given that Tbilisi is not the only place where they are
saying that they have nothing to gain from CIS membership, the
principal issue of the first 1988 summit will apparently be the
revision of the cooperation mechanisms within the CIS
RFE/RL NEWSLINE Vol 1, No. 187, Part I, 30 December 1997
ZYUGANOV PREDICTS IMMINENT OUSTER OF CHUBAIS.
Communist Party leader Gennadii Zyuganov told journalists
on 29 December that First Deputy Prime Minister Chubais's
"days [in the government] are numbered," Interfax reported.
He argued that the government will fail to pay all wage
arrears to state employees and that Chubais will
consequently be forced to leave the government by the end
of January. After Zyuganov made similar remarks on 25
December, Chubais told Interfax that Zyuganov's "plans for
me and my own [plans] do not coincide." The same day, First
Deputy Prime Minister Nemtsov also denied that Chubais
will soon leave the government, RFE/RL's Moscow bureau
LUZHKOV SAYS DEPENDENCE ON IMF IS 'NATIONAL
DISGRACE.' Moscow Mayor Yurii Luzhkov claimed on 29
December that Russia's economic policy goals are formed by
foreign institutions and termed the situation a "national
disgrace," Interfax reported. He said U.S. Vice President Al
Gore and IMF Managing Director Michel Camdessus should
not be able to "praise or scold" Prime Minister Viktor
Chernomyrdin for government decisions. Letters sent to
Chernomyrdin by Camdessus and World Bank president
James Wolfensohn recently sparked a scandal (see RFE/RL
Newsline, 18, 19 and 23 December 1997). In addition,
Luzhkov charged that the IMF member states want Russia to
"remain a source of raw materials for the civilized world." He
also argued that in order to improve the standard of living
in Russia, capital must be channeled from what he called the
"parasitic sector of the economy" to the manufacturing
BEREZOVSKII ASSAILS 'BOLSHEVIK' MENTALITY OF
CHUBAIS. Boris Berezovskii lashed out at Chubais during a
24 December press conference, RFE/RL's Moscow bureau
reported. He again accused Chubais of having a "Bolshevik"
mentality, which, he said, was well-suited for the first stage
of Russian economic reforms. However, he claimed that the
second stage of Russian reforms requires "super-
professionalism." Berezovskii also said western financial
institutions should not "dictate" policy demands to the
Russian government, ITAR-TASS reported. Media partly
financed by Berezovskii, including the Russian Public
Television network and "Nezavisimaya gazeta," have accused
Chubais of using his contacts with the World Bank and the
IMF to put pressure on Chernomyrdin. Chubais is believed to
have played an important role in persuading Yeltsin to fire
Berezovskii from the Security Council in November. LB
CHUBAIS RETURNS FIRE. In an interview published in
"Izvestiya" on 24 December, Chubais claimed that
Berezovskii's frequent allegations about "Bolshevism"
conceal his true goals. Chubais argued, "Berezovskii naively
thinks [his] whole problem is with Chubais. The problem is
that no authorities in Russia (if they are civilized) will ever
allow themselves to be transformed into a housemaid for big
business." He recalled an interview Berezovskii gave the
"Financial Times" in autumn1996, in which Berezovskii
boasted that he and six other bankers controlled half the
Russian economy. LB
The Independent (UK)
31 December 1997
[for personal use only]
Russians on red alert as rouble is reinvented
Nerves are jangling in Russia over tomorrow's introduction of the new
rouble. As Phil Reeves reports from Moscow, it comes at a jittery time.
Amid deep suspicion and considerable grumbling from those who will use
it, Russia's kopek will tomorrow be brought back to life after an
absence of some six years.
The resurrection of the coin comes with the redenomination of the
rouble, which has acquired an ungainly trail of zeros after tumbling
spectacularly in the first half of the decade.
From New Year's Day, the rouble will lose three of its noughts. A pair
of jeans that now costs the daft-sounding 400,000 roubles should, if all
goes well, retail at a more respectable 400. With an anticipated six
roubles to the dollar, the kopek will be worth a mighty one sixth of a
But that "if" is, in the eyes of many Russians, alarmingly large.
Distrust of the government runs deep when it comes to money.
Two previous changes in the currency in the last seven years were badly
mishandled and led to panic. Millions will never forget how
hyperinflation of up to 2,600 per cent a year wiped out their savings,
vaporising an estimated total of $17bn.
Since then, the government has restored the rouble to stability by
maintaining it within a corridor, a policy that has helped pull
inflation down to less than 12 per cent this year.
But it has not been easy, particularly in the last few months. The
fiscal crisis in South-east Asia sent foreign and domestic investors
scurrying back into the safer arms of the dollar, prompting Russia to
pour several billion dollars of its reserves into defending the rouble.
When Mikhail Gorbachev tried to reduce money supply in January 1991 by
ordering the population to hand in 50- and 100-rouble notes, there was
chaos, largely because he only gave them three days to do so.
The Yeltsin administration is trying to make a better fist of things.
The old roubles will circulate alongside the new for a year, and it will
be possible to exchange them in banks for five years.
The government has run an advertising campaign, commandeering revered
Soviet-era actors to issue televised assurances that there is no cause
for people to be alarmed.
Russians remain sceptical, however. The reaction of Marina Dobkina, 49,
a school director, was typical: "Nothing will change for the better.
Prices will go up. Though all actors announce on television that nothing
will change, prices are growing just before the event. The leaders never
miss a chance, do they?"
The Central Bank's new notes look very like the old ones. This is
sensible, though dull. Over the years, Russia has had some eccentric
currency. In 1896, the 100- rouble note was printed in a rainbow of
colours, with Catherine the Great in the centre. In 1919, when the
Bolsheviks harboured ambitions of world revolution, the Soviets produced
notes with the hammer and sickle on the front with the slogan "Workers
of the World Unite" in Russian, Chinese, Japanese, French and Italian.
Lenin didn't appear on money until 1938.
The new Russia has produced notes boringly ornamented by the national
flag flying over the Kremlin.
Chubais promises better year for Russia ahead
By Andrei Khalip
MOSCOW, Dec 30 (Reuters) - Russian economic reform chief Anatoly Chubais on
Tuesday forecast a better 1998 for Russia after this year's modest economic
performance and brushed aside talk that he might resign in the face of severe
``This year gave no cause for joy. But we managed to halt the decline in
industrial production and it rose a tiny bit. It will rise more next year,''
Chubais, a first deputy prime minister, told Russian Television in an
``Unemployment has fallen and will fall further, wages rose and will rise,
mortality is down and will continue to decline.''
Earlier, President Boris Yeltsin said the government's economic performance
was not good enough and warned ministers to come up with new ideas to
The economy, for the first time since market reforms began in 1992,
decline this year. Chubais said industrial production rose 1.7 percent year-
on-year. Gross domestic product also edged up, official statistics show.
Chubais said the government had paid off wage arrears to the public sector,
meeting a January 1 deadline set by Yeltsin.
In a confident performance, the main target of criticism over the
market reforms insisted wage arrears would not start to build up again after
``When we repaid pension debts earlier this year they were saying everywhere
that back pensions would start piling up again. But it did not happen. The
same goes for wages,'' Chubais said.
``They said it was impossible to pay off pensions and wages. But we did it.
They said it was impossible to halt the decline in production but we did it,''
Earlier this year the government made good on a pledge to pay off pension
arrears by mid-year. Ministers say pensions have been paid on time since then.
Chubais admitted that not all of the targets had been reached but added that
he hoped they would be met next year.
``We failed with the tax reform. We failed to stop non-payments in the
economy, which means that wages are not paid on time in some sectors. It means
we will do it next year.''
A long-awaited new tax code, which ministers say could reduce the web of debt
and help business by reshaping Russia's largely ineffective tax system, has
been blocked by the opposition-dominated parliament.
Tax collection is low as many firms simply cannot afford to pay. A web of
payments between companies has caused a wave of bankruptcies and delayed wages
in the private sector.
Yeltsin said earlier on Tuesday: ``I had expected that this year's economic
results would be better...the main blame rests with us, the country's
``I expect considerable improvement from the government in the sphere of the
economy. Its work should be centred on securing the main goal -- economic
growth in Russia. We need breakthrough ideas and new approaches.''
``The biggest danger now is complacency. Economic growth should be
stimulated,'' Yeltsin said.
Chubais and another liberal First Deputy Prime Minister Boris Nemtsov
into trouble with a defiantly hostile, communist-led parliament and opposition
from powerful business and media interests. Chubais, 42, lost control of the
finance ministry last month after a scandal over payments he accepted.
But he brushed off talk of resigning.
``These rumours started appearing when I joined the government in 1991. They
are all around. I view them as a permanent background, like rain or snow...you
have to work.''
Chubais himself said last week in an interview that his resignation might be
``not far off.''
Press Conference with First Vice Premier Boris Nemtsov
RIA Novosti News Agency
December 25, 1997
[translation for personal use only]
Q: Some time ago you came out with the slogan of people's capitalism.
You were ridiculed by the press while officials ignored it. I believe
that what you have proclaimed is fulfillable and timely. Are you the
only one at the top who supports the theory of people's capitalism? Is
there anybody else at your side? What about the President, is he with
you or not?
Nemtsov: We discussed not this combination of word as the essence of the
matter. It is an impossible situation for Russia when we have flaunted
wealth and terrible poverty. We discussed and arrived at the conclusion
that our main task is to create the middle class. The rudiments of
bandit capitalism that we can see every day should become a thing of the
past. They should leave our life together with the 20th century.
As to terminology, this may not be the best of terms. That is why the
top government officials are not using it. But I am absolutely convinced
that a society based on social partnership, on economic freedom, and
this is the basis of a democratic market, that such a society really can
be created in Russia.
Perhaps, I should have said not "people's capitalism" but "democratic
market" or something of the sort. You see, the long dominance of one
ideology has inculcated in people a rejection of the word "capitalism".
Perhaps, "democratic market" is a better name.
Facts on redeonomination of Russian rouble
MOSCOW, Dec 30 (Reuters) - Russia will lop three zeros off the rouble on
January 1, promising to make the inflation-battered currency easier to handle.
Here are some details on the redenomination process:
WHY THE NEW MONEY? President Boris Yeltsin and top officials say Russia has
finally won its battle with inflation, which ravaged the rouble after
communist-era prices were freed in 1992 but which is expected to be a
relatively modest 11 or 12 percent in 1997.
The rouble has plummeted to about one-10,000th of its value during the Soviet
Union. It is now quoted at 5,974 roubles to the dollar. The redenomination
will change that to about six roubles per dollar.
The redenomination is intended to show Russia's economy is on track for
growth. The new reforms should make transactions and accounting simplier and
lead to a rebirth of the kopeck coin, a victim of hyperinflation.
WHERE THE MONEY WILL COME FROM? The central bank has distributed new roubles
to regional banking centres across Russia.
Automatic teller machines are allowed to issue the money from the stroke of
midnight on January 1. Currency exchange offices may also start releasing the
money on New Year's Day.
Some major cities may not see the new money until January 5 or 6 after the
long New Year holiday, and it may take a while longer for the money to arrive
to remote villages.
WHAT WILL HAPPEN TO THE OLD MONEY? Older Russian roubles -- in denominations
from 100 to 500,000 -- will gradually be withdrawn in 1998, and the central
bank says the overall supply of money in circulation will be the same.
First Deputy Central Bank Chairman Sergei Aleksashenko says 128.7 trillion old
roubles will have to be destroyed in 1998.
Russian stores must post two sets of prices throughout 1998 and must accept
both new and old roubles during that time. After 1998 citizens will still be
able to exchange old roubles at some banks.
WILL THE MOVE PROMPT HIGHER INFLATION? Government officials say inflation will
not increase as the money supply will stay the same. But many citizens fear
that retailers will use the redenomination as an excuse to round up prices to
the nearest rouble.
WHAT ABOUT CHECHNYA? The breakaway republic considers itself independent of
Moscow and has been talking for some time about introducing its own currency.
It has not received any new money so far.
HOW DOES THE CURRENT CURRENCY REFORM DIFFER FROM PREVIOUS SUCH REFORMS? In
1993 the Russian government gave citizens only a few days to dispose of their
Soviet-era roubles, leading to panic in banks and spending sprees in stores. A
move to abolish 50 and 100 rouble notes in 1991 had a similar effect.
This time around, government officials have announced the reform months in
advance. They have repeatedly attempted to calm citizens' fears, telling them
they will not lose out as they did in monetary reforms in 1947 under dictator
Joseph Stalin and in 1961 under his successor Nikita Khrushchev.
Voice of America
TITLE=STATE OF RUSSIAN ECONOMY
INTRO: A SPECIALIST IN THE RUSSIAN ECONOMY AT NEW MEXICO
UNIVERSITY'S SCHOOL OF MANAGEMENT, PROFESSOR AVI SHAMA, HAS BEEN
SURVEYING THE OUTPUT OF RUSSIAN BUSINESSES AND THE INCOME OF
INDIVIDUAL RUSSIANS. FRANK RONALDS REPORTS THE PROFESSOR CLAIMS
THE ECONOMY HAS BEEN GROWING STEADILY FOR SEVERAL YEARS AND IS
FAR HEALTHIER THAN OFFICIAL STATISTICS WOULD SUGGEST.
TEXT: PROFESSOR SHAMA SAYS GOSKOMSTAT, MOSCOW'S OFFICIAL
COMPILER OF STATISTICS, HAS BEEN PROVIDING INFORMATION ON
ECONOMIC PRODUCTION AND INCOME LEVELS WHICH, ALTHOUGH THEY ARE
WIDELY ACCEPTED BY WESTERN REPORTERS, ARE AS MUCH AS 50-PERCENT
BELOW THE ACTUAL LEVELS.
// 1ST SHAMA ACT //
RUSSIA'S ECONOMY IS DOUBLE THAT REPORTED BY GOSKOMSTAT.
A TRUE PICTURE OF THE RUSSIAN ECONOMY IS MUCH LARGER,
MUCH HEALTHIER, AND IT STARTED GROWING IN 1994. MANY
REPORTERS WILL TELL YOU THAT THE RUSSIAN ECONOMY HAS
BEEN DECLINING IN 1994, 1995, AND 1996, BUT IN FACT IT
HAS BEEN GROWING IN ALL THOSE YEARS. SO THE PICTURE IS
NOT AS BAD AS ONE MIGHT THINK.
// END ACT //
THE FIGURES ARE WRONG, PROFESSOR SHAMA SAYS, FOR THE SIMPLE
REASON MOST BUSINESSES AND MOST INDIVIDUALS DO NOT REPORT THEIR
TRUE INCOME TO THE GOVERNMENT, IN ORDER TO AVOID PAYING TAXES.
// 2ND SHAMA ACT //
IN THE FOCUS GROUP THAT I HAVE DONE OF RUSSIAN FAMILIES
-- AND I ASKED SPECIFIC QUESTIONS ABOUT HOUSEHOLD
INCOME, WHERE THE MONEY IS COMING FROM, WHERE IT IS
GOING, HOW MUCH OF IT IS DECLARED AND SO FORTH, REALLY
STRUCTURED INTERVIEWS THAT TAKE HOURS. GENERALLY,
40-PERCENT OF RUSSIAN HOUSEHOLD INCOME IS NEVER REPORTED
TO THE TAX COLLECTORS AND COMES FROM THE PRIVATE SECTOR.
IN THE LAST COUPLE OF YEARS, I HAVE BEEN CONDUCTING
IN-DEPTH INTERVIEWS WITH MANAGERS OF PRIVATE AND EVEN
WITH MANAGERS OF PREVIOUS STATE ENTERPRISES, AND THE
MESSAGE THAT COMES LOUD AND CLEAR FROM ALL INTERVIEWS IN
THE PRIVATE SECTOR IS THAT 90 PERCENT OF THEIR
PRODUCTION AND SALES AND PROFITS IS NEVER REPORTED TO
// END ACT //
IN THE PERIOD 1991 TO 1994, PROFESSOR SHAMA SAYS, PRICES ROSE BY
12-HUNDRED PERCENT SO THAT GROSS NATIONAL PRODUCT AND AVERAGE
INCOMES PLUMMETED BY ABOUT 50-PERCENT. BUT, THOUSANDS OF NEW
SMALL BUSINESSES WERE FORMED, AND THE LOSS OF PRODUCTION IN THE
MILITARY-INDUSTRIAL COMPLEX RESULTED IN A SHIFT TO AN ECONOMY
WITH A GROWING SERVICE SECTOR. PROFESSOR SHAMA SAYS ONCE THE
GOVERNMENT GOT INFLATION UNDER CONTROL IN 1994, THOUSANDS OF NEW
BUSINESS REALLY TOOK OFF.
// 3RD SHAMA ACT //
YOU GOT FINANCIAL SERVICES, PERSONAL HYGIENE SERVICES,
REPAIR SERVICES, APARTMENT REMODELING SERVICES, REAL
ESTATE SERVICES IN RENTING AND SELLING APARTMENTS, CAR
REPAIRS. SOME SECTORS, OR SOME SMALL BUSINESSES AR
GROWING BY 100 OR 150-PERCENT A YEAR; OTHERS ARE
REPORTING ONLY 15 TO 20-PERCENT A YEAR. GENERALLY
SPEAKING, THE SMALLER THE BUSINESS, THE FASTER IT GROWS.
THE TYPICAL PICTURE OF A SMALL BUSINESS, IT IS DOUBLING
IN SIZE IN TERMS OF SALES AND EMPLOYMENT AND PROFIT
EVERY YEAR. ALL THESE SERVICES ARE LITERALLY BOOMING,
NOT ONLY BALANCING THE DROP IN INDUSTRIAL PRODUCTION BUT
// END ACT //
FIRST DEPUTY PRIME MINISTER BORIS NEMTSOV HAS SAID THAT HIS AIM
WAS THE FORMATION OF A STRONG MIDDLE CLASS. ACCORDING TO
PROFESSOR SHAMA, THAT MIDDLE CLASS IS ALREADY IN THE PROCESS OF
// 4TH SHAMA ACT //
I THINK THAT THE MIDDLE CLASS HAD BEGUN FORMING IN 1995
IN RUSSIA, PARTICULARLY IN THE CITIES, AND THAT MIDDLE
CLASS WILL CONTINUE TO GROW. AS IS ALWAYS THE CASE, NEW
PHENOMENA USUALLY START IN MOSCOW. AND IN MOSCOW, YOU
ALREADY HAD THE BEGINNING OF A MIDDLE CLASS IN 1995, AND
BY NOW IN MOST LARGE CITIES. AS YOU GO FROM THE BIG
TOWNS TO THE SMALL TOWNS, AND AS YOU GO FROM THE AGES OF
35 TO 45 AND YOU GO TO THE ELDERLY, YOU FIND MORE
POVERTY AND STRUGGLE. BECAUSE THE SMALLER VILLAGES HAVE
NOT REALLY REAPED THE FRUIT OF THE FREE MARKET YET. AND
THE ELDERLY HAVE BEEN RECEIVING PENSIONS THAT CAN
FINANCE ONLY PART OF THEIR LIVES.
// END ACT //
RUSSIA IS NOW HAVING SOME TEMPORARY ECONOMIC DIFFICULTIES
PROFESSOR SHAMA SAYS, DUE TO THE SPILLOVER EFFECT OF THE
FINANCIAL TURMOIL IN EAST ASIA. SOME SMALLER WESTERN INVESTORS
LOOKED AT RUSSIA AS JUST ANOTHER EMERGING ECONOMY, AND WITHDREW
THEIR CAPITAL. BUT LARGER INVESTORS ARE MAINTAINING AND EVEN
INCREASING THEIR INVESTMENTS. HE EXPECTS RUSSIA WILL GET HELP
FROM THE INTERNATIONAL MONETARY FUND AND THE WORLD BACK IF IT IS
NEEDED. BUT HE IS CONFIDENT THE STOCK MARKET WILL SOON RECOVER
AND RUSSIA'S LONG TERM ECONOMIC OUTLOOK IS BRIGHT.
AS PUBLIC OPINION POLLS SHOW, 80% OF RUSSIAN CITIZENS
REJECT A RETURN TO THE COMMUNIST PAST, ACADEMICIAN
GENNADY OSIPOV SAYS
MOSCOW, December 30. (From RIA Novosti correspondent Galina
Baryshnikova) -- The restoration of communism in Russia is out
of the question, as more than 80% of Russian citizens flatly
reject a return to the communist past, director of the Institute
of Social and Political Studies of the Russian Academy of
Sciences and President of the Academy of Sociology Academician
Gennady Osipov said in an interview with this correspondent,
referring to the results of public opinion polls taken in the
out-going year. Democratic gains are among the most serious
achievements of the policy of reform, he thinks. "People
received a right of choice, and, when the question is put as to
what you prefer: a return of communism or the road of reform,
even though a difficult one, citizens give preference to the
latter," the Academician said. According to him, this shows that
the Russian people do not want to live in the conditions of a
totalitarian regime, in the conditions of a "mobilisation"
At the same time, as Gennady Osipov pointed out, the public
opinion polls also show a different thing: this year has not
eased the people's life, and many problems remained outstanding.
Evidently, precisely for this reason quite a few Russian
citizens are still dissatisfied with the current policy of
No matter what could be said about Russia, however mistakes
it did make, next year it is bound to take a very "serious,
unexpected" step in its development, Academician Osipov said. In
his view, the in-coming year is bound to be "one of positive
actions." First of all, this holds true of the development of
domestic industry based on the use of high technologies and
integration in the post-Soviet zone, a tendency toward which can
be clearly traced even this year, he thinks.
As the scientist is firmly convinced, "there will be no,
nor can there be any" social explosion in Russia, but,
nevertheless, in order to prevent "Russian statehood from
disintegrating," it is essential in future, in 1998, "to effect
change in the social and political situation in the country,"
Academician Osipov believes.
OUTGOING YEAR WAS VERY IMPORTANT FOR RUSSIAN FOREIGN
POLICY -- BORIS YELTSIN
By RIA Novosti correspondent
MOSCOW, DECEMBER 30, /RIA NOVOSTI/ -- The outgoing year
1997 was very important for Russian foreign policy, Russian
President Boris Yeltsin said, replying to questions put to him
by some leading Russian mass media.
"We have set a union of Belarus and Russia and normalised
inter-state relations with Ukraine. Ways have been mapped out of
promoting cooperation within the framework of a union of four
states -- Russia, Byelorussia, Kazakhstan and Kirghizia," said
the head of state.
After noting that active work is under way to outline
prospects for the CIS, he expressed confidence that this will
"give a new lease of life" to the commonwealth.
Russia has also largely consolidated its ground in Europe,
stated the Russian head of state.
"Our European partners have seen that attempts to picture
Europe without Russia are futile. We have signed the Founding
Act Russia-NATO, which has laid down foundations for the
development of constructive collaboration between our country
and NATO. Our agreement with the European Union has come into
effect," he emphasised.
A momentous event, according to Yeltsin, was Russia's entry
into a number of influential international economic structures,
and above all Russia's membership of the Paris and London clubs
The outgoing year did much to consolidate equal partnership
between this country and the US and other developed states.
Russia has become a full-fledged member of Eight, stated the
A real breakthrough, according to him, took place on the
Asian sector of Russia's foreign policy. It was decided to
accept Russia into such an international organisation as
Asia-Pacific Economic Cooperation.
"We have made great progress in relations with our great
neighbour -- China," noted Yeltsin. "Nearly all frontier issues
have been resolved. Future generations of our peoples will have
no grounds for disputes around that problem. This is important
not only for our countries, but also for the whole of Asia,
where the border problem is among the most acute," he said.
Yeltsin indicated that the year was also remarkable for
Russian-Japanese relations. New principles of Russian-Japanese
cooperation were endorsed, and agreement reached on wide-ranging
The President recalled that in the outgoing year Russia as
before played an impressive role in resolving regional
For example, he noted, Russia's initiatives helped to head
off a dangerous exacerbation of the crisis around Iraq.
"Russia's role in the world arena is growing. Its voice is
clearly heard in a powerful chorus of the world community. And
it will be heard even more strongly," emphasised Yeltsin.