February 13, 1998   
This Date's Issues: 2061 •2062  • 

Johnson's Russia List
#2062
13 February 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Adil Baguirov: Gusev/Shevardnadze and Pipes.
2. BBC World Service: Latvia rejects less restrictive citizenship 
law.
3. Gary Krueger: Thanks for the help!
4. Eva-Lotta Fasth: Re Iraq Crisis.
5. Reuters: Russian government could modify '98 budget.
6. Tony Wesolowsky (RFE/RL): Russia: The Roots Of Labor Malaise.
7. Journal of Commerce: Richard Lawrence, Ukraine vows to carry out 
reforms.
8. Vek: PEOPLE WANT IT, BUT LEADERS CANNOT DELIVER. (Interviews on
Russo-Ukrainian relations with Yevgeny KOZHOKIN, director of the Russian
Institute of Strategic Studies).
9. Moscow Times: Andrei Piontkovsky, SEASON OF DISCONTENT: Police 
Mission Very Different From Church's.
10. Moskovskaya Pravda: Oleg Zhirnov, Yeltsin Move Seen Jeopardizing
Political 'Accord.'
11. Moskovskiy Komsomolets: Yeltsin Seen Working Against Chernomyrdin 
Presidency.
12. VOA: Paula Wolfson on Central Asia.
13. Jamestown Foundation Monitor: RUSSIA: TAXING PROBLEMS.
14. RFE/RL NEWSLINE: U.S. OFFICIAL DENIES REPORT ON YELTSIN 
CAMPAIGN FINANCING, and YELTSIN CUTS KREMLIN STAFF.] 

*********

#1
Date: Thu, 12 Feb 1998 
From: Adil Baguirov <baguirov@scf-fs.usc.edu>
Subject: Gusev/Shevardnadze and Pipes

Referring to the JRL #2058 comment by Dmitri Gusev on the LATimes article,
which I have liked overall, I would like to make a slight correction:

[LA Times by Vanora Bennett]
>Russia has a documented post-Soviet history of stirring up local
>discontent by funding one side or another in ethnic conflicts--
>notably in Nagorno-Karabakh, Chechnya and Abkhazia--to keep the new
>regimes of the south weak and divided and to ensure its own
>continued dominance of the region it ruled until 1991. 

[Dmitri Gusev, "Shevardnadze and Pipes"]
This is false, with the notable exception of Chechnya, where the
Russians initially gave military support to opposition to Dudayev
in a couple of the northern regions of the breakaway republic.
Eventually, the resulting conflict grew into a full-blown war, and
Russia lost it. However, unlike Nagorno-Karabakh and Abkhazia,
Chechnya formally is part of Russia. 

Chechens, at least, would disagree, since multitude of the documents and
endless agreements that Moscow signs with Chechnya, have some references
to Chechnya which might be interpreted as an independent entity. At least
that's what Chechens insist on.

So that would make Russia less in control of its subject of federation
even in terms of legal aspects and formal control (and of course no
physical control), than Azerbaijan's over illegally occupied Karabakh
region, or Georgia's over Abkhazia.

In case of Azerbaijan, the international community always supported its
territorial integrity and acknowledged Azerbaijan's legitimate control
over illegally occupied Karabakh region (and other 7 districts). Illegal,
because the occupation was condemned, requested to be withdrawn, and no
one recognized the puppet separatist regimes. That is supported and proven
by several CSCE/OSCE summits, such as one in Budapest '94 or most
importantly in Lisbon '96, or by the UN with its four Security Council
resolutions (822, 853, 874 and 884), as well as many other summits,
conferences and meetings (e.g., Denver G8 summit, etc.) 

The terms for Abkhazia to Georgia are pretty much the same, at least de
jure. 

It seems LA Times' author is also correct about certain Russian circles'
interest and role in many of the conflicts in the Caucasus, especially as
some are documented beyond any reasonable doubt. And as history shows,
such meddling often backlashes. 

*******

#2
BBC World Service
February 12, 1998 
Latvia rejects less restrictive citizenship law

The Latvian parliament has rejected changes which
would have made it easier for foreign residents -- most of
whom are Russian-speakers -- to become Latvian
nationals. 
The amendments would have extended citizenship to
any child born to non-Latvian permanent residents after
May 1990, when Latvia declared its independence from
the former Soviet Union. 
More than forty per cent of foreigners in Latvia are
Russians-speakers -- mainly Russians, Ukrainians and
Belarussians -- and international bodies have urged the
country to do more to integrate them. 
A BBC correspondent says the vote is a setback for
moderates within the Latvian government who've been
trying to remove obstacles to membership of the
European Union 

********

#3
From: KRUEGER@macalester.edu (Gary Krueger)
Date: Fri, 13 Feb 1998 09:38:03 -0500 (CDT)
Subject: Thanks for the help!

Many thanks to all those who sent in CV's in response to my soliciation for
Russian Political Scientists. Thanks to Johnson's list we received roughly a
dozen or so CV's from excellent candidates. As we are in danger of losing
funding for this program, the high quality of the candidates should help to
ensure continuation of the program in the future. We are in the process of
circulating them to the members of our Russian Area Studies program, and we
hope to make some decisions by next week. Candidates should hear, barring any
unforseen delays, by March 1.

Sincerely,
Gary Krueger
Dept. Of Economics 
Macalester College
St. Paul, MN
(612) 696-6222
(612) 696-6746 (f)

*******

#4
From: efasth@medleyadvisors.com (Eva-Lotta Fasth)
Date: Fri, 13 Feb 1998 09:40:46 -0500
Subject: Re: Iraq crisis

I have yet another question and would appreciate if I can post it on your
site. My question is: How would a US attack on Iraq affect US-Russian
relations? What would Yeltsin's response be? And what would be the
domestic politics dynamic in case of an attack? I.e. would Yeltsin be
forced to take action against reformers to appease the ultra-nationalists
or Communists? What would be the fate of reform in case of attack?

*******

#5
FOCUS-Russian government could modify '98 budget
By Peter Henderson 

MOSCOW, Feb 12 (Reuters) - A senior Russian official gave the first indication
on Thursday the government may slash 1998 spending and rejig its lending to
deal with fiscal shortfalls. 
Deputy Finance Minister Oleg Vyugin predicted revenues would not meet
targets
in the budget under parliamentary consideration and said he agreed with
forecasts that debt service payments would have to be increased and other
spending cut. 
Russia faces starkly different economic conditions than in the autumn when
the first budget was submitted by the government to parliament. The government
has to deal with greater debt servicing costs because of higher interest rates
caused by international market turmoil. 
But Vyugin told a briefing the government could broadly stay within the
letter
of the 1998 draft budget and was legally allowed to cut some spending. 
He said inflation could be 8-10 percent -- compared with 5.7 percent on
which
the draft budget was based -- giving the government breathing room as revenues
as a percentage of output will fall, but will be partly made up by inflated
nominal income. 
The unofficial forecast was in line with predictions by many Western
economists and investors who have been looking for an indication the federal
government was dealing with the fallout from four months of economic crisis. 
Interest rates more than doubled, the stock market has fallen by nearly
half
since October and economic growth is uncertain. 
The reality check will be appreciated, even if the Finance Ministry
officially
waffles on the figures. ``There is no new version of the budget,'' Vyugin
said, adding he was making forecasts as an economist, rather than for the
Finance Ministry. 
An official government revision of the economic outlook could play havoc
with
the draft 1998 budget which has jumped the worst political hurdles, but could
still be rejected by parliament. 
Instead the revisions may be reflected in a 1998 economic plan Vyugin said
Russia and the International Monetary Fund were close to agreeing ahead of a
visit by IMF head Michel Camdessus. 
Vyugin said an IMF mission in town to study the economy had not decided
whether Russia should receive the next tranche of its $9.2 billion, three-year
loan. ``The question of money is not yet decided,'' he said. 
``The management and our leadership will meet and they will probably more
specifically decide when and how much.'' 
Camdessus arrives in Moscow next Tuesday. His support is widely
appreciated in
Russian markets and a decision to delay a loan tranche, which has been taken a
number of times, would shatter growing confidence. 
Russia hopes to tap that confidence soon and is considering returning to
foreign markets with a new mark or lira Eurobond in two to four months, Deputy
Finance Minister Mikhail Kasyanov told Reuters on Thursday. 
Eurobond borrowing in 1998 may rise to $5 billion and Russia could take $1
billion in syndicated loans, according to the estimates Vyugin approved, as
published by Chase Manhattan bank. 
The estimates showed debt servicing costs would rise to 4.7 percent of GDP
from 1996's 4.5 percent, while non-interest payments would fall to 11.4
percent of GDP from 11.7 percent. 
Russia had hoped to increase its investment in the economy and decrease its
borrowing costs, but Vyugin said average Treasury bill interest rates would be
25 percent this year, compared to a low of under 20 percent last autumn. 
Yields on Russian debt have fallen by about a quarter in the last two
weeks to
just over 30 percent, but a major rating agency on Thursday put Russia's long-
term foreign currency debt on watch for a possible downward adjustment. 
Fitch IBCA, which made the announcement, joined Standard & Poor's and
Moody's
in putting Russia on a ratings watch, threatening to increase borrowing costs
even more than Vyugin expected. 

******

#6
Russia: The Roots Of Labor Malaise 
By Tony Wesolowsky

Prague, 11 February 1998 (RFE/RL) - There are a multitude of factors 
contributing to why a quarter of Russia's labor force receives its wages 
late, in kind, or not at all. 
Commonly cited as the main cause of wage arrears is incompetence and 
corruption on the part of local bureaucrats and enterprise directors, 
who have failed to shut down or restructure unprofitable enterprises or 
who siphon off enterprise funds for their own personal gain. 
There is little doubt those factors play a key role. But others say the 
root of the problem lies much deeper. 
The London-based Institute for Public Policy Research (IPPR) partially 
blames the neo-liberalist "shock therapy" economic policies first 
pursued by Yegor Gaidar, then economic adviser for President Boris 
Yeltsin. 
"What was fundamentally wrong with the concept of shock therapy was its 
neglect of institution building, efficient corporate governance, the 
development and implementation of the laws necessary for a market 
economy, the creation of a modern and effective public administration, 
the development of appropriate social policies, and other tasks which 
inevitably take time," it said in a report issued at the end of last 
year. 
The managing director of the International Monetary Fund, Michel 
Camdessus (IMF), told the Financial Times (Jan. 10, 1997) when referring 
to Russia that, "no-one measured the true depth of the collapse of all 
administrative structures, the decomposition of the state which 
accompanied the collapse of the communist system." 
David Kotz, economics professor at the University of Massachusetts in 
the United States, writes in his book "Revolution from Above; The Demise 
of the Soviet System," that Russian might have been better off with a 
gradual transition to a capitalist market economy than shock therapy's 
laissez-faire approach. He notes China encouraged the creation of new 
non-state enterprises while providing a stable and supportive economic 
environment for one to develop. Kotz says by 1994 over half of China's 
industrial output came from the non-state sector. 
According to neo-liberalist theory, cutting government credits and 
freeing prices would force Russian industry to learn to either swim or 
sink in the new capitalist order. What the theory failed to take into 
account, according to the United Nations' International Labor 
Organization (ILO), was that during the Soviet era, enterprises and 
plants were already making due without credit, as money played only a 
nominal role for accounting purposes. Instead of cutting staff or 
production, the ILO says Russian plants, which enjoyed monopolies and 
were integrally linked, merely arranged barter agreements among their 
suppliers and costumers. Where payments were called for, such as wages 
and taxes, they just didn't pay them. Russia's Goskomstat estimated that 
almost 70 percent of deliveries were exchanged on barter terms in 
industry in 1996. 
A report by the Moscow-based Institute for Comparative Research into 
Industrial Relations (ISITO), in collaboration with Warwick University 
in Great Britain, says by 1993 the problem of unpaid bills was isolated 
mainly between companies. 
But in statistics culled from Russia's Goskomstat, starting in 1996, 
companies also were postponing payments to the federal and regional 
budgets, pension funds and wage earners. Again citing Goskomstat 
information, the report said at the end of 1996, total arrears of 
companies, excluding arrears to banks, accounted for 23 percent of the 
GDP over the last 12 months. 
Stanley Fischer, Deputy Managing Director of the IMF, said recently 
(Jan. 9, 1998) that Russia's economy is improving. He noted the economy 
grew slightly last year, albeit barely .2 percent, its balance of 
payments was in surplus, and that the Russian Central Bank had brought 
inflation under control. 
He acknowledged: "Now the challenge is to move the economy toward 
sustained growth of output and living standards." 
That will be a massive task. Russia's economy has been devastated since 
the downfall of the Soviet system. Kotz says GDP fell by 42 percent and 
industrial production by 46 percent following the introduction of shock 
therapy from 1992-1995. Kotz says Russia's economic contraction was 
worse than during the height of the great U.S. depression between 1929 
and 1933. 
The expected Western credits to finance Russia's industrial rebirth 
never really materialized, according to Kotz. More money actually left 
the country than came in. Yuri Melnikov, head of the Russian bureau of 
Interpol, estimated that the capital flight from Russian at $80 billion 
at the end of 1994. Meanwhile, between 1992-1994, gross foreign domestic 
investment in Russia was $3.9 billion and official grants and credits 
totalled 15.5 billion, according to the Economic Commission for Europe. 
Fischer said the country's banking system "remains too small to serve 
the financing needs of the private sector--particularly given the large 
borrowing needs of the government sector." 
The Brussels-based International Confederation of Free Trade Unions 
(ICFTU) says the limited role of Russian commercial banks in the 
productive sector means that they are not able to play the regulatory 
and financing role which banks play in a developed capitalist economy. 
The ICFTU says the development of such a banking system is unlikely 
given the high returns on secure investments in government debts, while 
the productive sector faces very low profits and uncertain prospects. 
Fischer says the main reason Russia and other CIS countries lag behind 
other Eastern European and Baltic countries in reform is because of the 
slow pace of economic restructuring. But the ILO points out that simply 
closing many Russian enterprises would cause even worse social 
dislocation. It notes Russia's Avtovaz is not just Russia's Chrysler. 
It's more like Russia's Detroit providing a wide-range of social 
services, albeit quickly deteriorating. 
The IPPR notes the revolutionary changes initiated in 1989 were fairly 
easy, ranging from price liberalization and the intiation of 
privatization and financial stabilization. The IPPR says Russia, along 
with Central and East Europe, is at a very vital stage. "The choices now 
being made are more difficult than ever. It is this second-generation 
transformation that will determine what kind of societies the new 
democracies and market economies become." 
(This article is one in a three-part series called Russia's Workers: Why 
They Go Without Wages.)

********

#7
Journal of Commerce
February 13, 1998
Ukraine vows to carry out reforms
Economic measures needed for investment
BY RICHARD LAWRENCE
JOURNAL OF COMMERCE STAFF

WASHINGTON -- Ukraine, Europe's largest country but a laggard in 
reforming its economy, is signaling that it finally will follow through 
on a host of changes keyed to expanding trade and attracting U.S. and 
other foreign investors.
Kempton Jenkins, president of the Washington-based Ukraine-U.S. Business 
Council, reports "genuine progress" in recent talks in Kiev with 
high-level Ukrainian officials.
Serhiy Tyhypko, Ukraine's deputy prime minister, indicated that his 
government will pursue reforms that include deregulation, product 
standards and certification rules, the settlement of commercial 
disputes, and the privatization of state-owned enterprises, Mr. Jenkins 
said.
"We plan to accelerate privatization for cash, partly to bolster the 
nation's foreign reserves," added Victor Suslov, the Ukraine economics 
minister who visited here last week. 

Decree signed

As evidence of Ukraine's intentions, President Leonid Kuchma has just 
signed a decree to reduce government interference in the private sector 
while simplifying customs and licensing procedures. Another law took 
force last week to ease business registration and licensing 
requirements.
Ukraine, the former "breadbasket" of the Soviet Union, is the fourth 
most populous country in Europe, after Germany, Britain and France, and 
the largest in land area. But despite its size and potential, reforms 
have been half-hearted and progress slight.
Indeed, Mr. Jenkins said the announced changes "do not add up to 
nirvana. But the trends are decidedly improved."
John Costello, president of the Washington-based Citizens Network for 
Foreign Affairs, which promotes Ukrainian agricultural reforms, is also 
cautious, calling the outlook mixed. "There is a credibility issue," he 
said. "We've heard a lot of promises before."
But, he noted, Ukrainian officials now have put "specific number and 
target dates on the table" involving very important reforms that could 
soon open Ukraine's agricultural market.
So far, Ukraine -- a market of 52 million people -- has attracted far 
less trade and investment than would have been expected. Two-way U.S. 
trade with Ukraine was only $850 million in 1996. Quixotic government 
actions, amid charges of widespread corruption, have discouraged U.S. 
and other companies from entering the market. 

Investor problems

Foreign investment in Ukraine is below $2 billion, including about $325 
million by U.S. firms. Motorola's decision to cancel a planned major 
investment because of Ukraine's changing ground rules illustrates 
investor problems.
One big plus, however, is that Ukraine's economy may finally stop 
contracting this year and post a small gain. The budget deficit, 
officials say, will be trimmed to 2.5% of gross domestic product and 
inflation is forecast at below 20%.
To help carry out some reforms, the Ukrainian government is seeking U.S. 
business advice. It will hold monthly meetings with the American Chamber 
of Commerce in Ukraine on product standards and certification.
The U.S. government is stepping up the pressure for action. If, by April 
30, Ukraine has not made significant progress in resolving U.S. investor 
complaints -- about a half-dozen are at issue -- the United States will 
deny Ukraine more than $100 million in economic aid this year.
"We'll do everything we can" to settle the complaints, Mr. Suslov 
promised last week. 

Focus on agriculture

In its reforms, Ukraine is especially focusing on agriculture and 
energy.
The government is privatizing the nation's grain silos and developing 
plans to enable private farmers to use their production and eventually 
land as collateral for purchases of seeds, insecticides and other inputs 
-- a potentially major market for U.S. exporters.
A production-sharing law is expected this year, providing revenue 
guarantees for U.S. and foreign firms developing Ukraine's oil and gas 
resources. The law could trigger substantial offshore investment, 
officials say.
Meanwhile, Ukraine is securing more aid for its reform efforts. Up to $1 
billion a year in World Bank loans is tentatively available, if Ukraine 
takes the right economic measures. The International Monetary Fund, 
which has lent Ukraine $542 million, may be about to discuss a possibly 
larger loan.
Looming over all this are Ukraine's March 29 parliamentary elections. 
But, says Mr. Suslov, "we are convinced that after the elections the 
reforms will continue." The elections, suggests Mr. Jenkins, may lead to 
a more effective, reformist legislature. 

******

#8
>From RIA Novosti
Vek, No. 6
February 1998 
PEOPLE WANT IT, BUT LEADERS CANNOT DELIVER

There are quite a few problems in Russo-Ukrainian
relations, Yevgeny KOZHOKIN, director of the Russian
Institute of Strategic Studies, told Yekaterian DOBRYNINA

Question: Some say that Russo-Ukrainian relations are
improving, others say they are worsening. What do you say?

Answer: It would be irresponsible to make forecasts.
Moscow-Kiev relations are complicated by a great deal of
difficult, and sometimes tragic problems. The greatest problem
concerns who will deal with whom at the state level, and in
what form. 
The thing is that Ukraine has entered the deepest crisis
since the proclamation of its independence. The crisis has been
chronic, but now it has reached a dramatic height in the
economic and political spheres. The financial system of the
republic is undermined. The currency corridor established for
the local monetary unit, grivna, has been widened. There are
major problems in the work of the republic's largest banks, not
to mention the payments problem and the fact that many
enterprises are out of work. 
Add to this a situation where the current republican
authorities do not know for how much longer they will remain in
power. The current parliamentary election campaign is the
toughest and most uncompromising ever. Besides, it is not clear
if the elections will be held at all, although the campaign is
in full swing. The Constitutional Court might recognise the law
on elections in general or some of its provisions as
contradicting the constitution. 
In addition, the presidential election campaign will begin
a year after the parliamentary elections, and the struggle has
already begun. There is a harsh confrontation between the
presidential team and Prime Minister Pavel Lazarenko, which
proves that the main rivals have been determined. But it is not
clear if they will walk the road to the end, that is, to the
election day.

Question: Do successes in cooperation with Moscow benefit
or damage Ukrainian politicians?

Answer: Today the most unexpected political figures
address Moscow. For example, Vyacheslav Chornovil has made
pro-Russian statements. Parliamentary candidates are trying to
live up to the voters' expectations, at least in word. Nobody
in Ukraine or Russia knows which of them the people, who have
been deceived by their politicians many times, will believe
now. 
The Ukrainian leaders very much want to ensure themselves
a direct and an indirect support of Moscow. But many of them
should have worked to strengthen their eastern and northern
flanks long before the elections, for as long as they had been
in power. The economies of Russia and Ukraine are linked very
closely. 
The bulk of Ukraine's population regard themselves as a
part of Russian culture and speak Russian. The Kiev officials
have always regarded this as a threat to the existence of the
Ukrainian state. They hold negotiations with Moscow and sign
reasonable agreements, but all the while the Ukrainian press
conducts an anti-Moscow campaign. Ukraine is still cut off from
the Russian information space. 
Moreover, despite the dire shortage of funds, money is
still found for anti-Russian actions. We may soon see a feature
film about Chechnya made in Ukraine. It has two main
characters, the "black" one - a Russian soldier, and the
"white" one, a Chechen who wants to kill the Russian soldier.

Question: Pamyat activists in Moscow hold anti-Ukrainian
pickets. How much can these campaigns influence Russo-Ukrainian
relations sufficiently civilised for normal cooperation?

Answer: Russia and Ukraine have different statuses in the
CIS. Russia is a full member and a co-founder of the
Commonwealth, while the situation of Ukraine is strange, to put
it mildly. It created the CIS together with Russia and Belarus
in Belovezhskaya Pushcha, but it is not a member from a legal
viewpoint, because it has not signed a single document which
would seal this (Ukrainian leaders often say this with pride at
international conferences).

Question: Do they plan to sign any such documents?

Answer: We are talking about the improvement of Russo-
Ukrainian relations and the need to ensure their collaboration
within the framework of the CIS. It would be logical for
Ukraine to make the first, symbolic step by signing the CIS
Charter and thus proving its membership. Otherwise its position
will remain dubious, when it collaborates with CIS countries
but is not a member de jure. 

Question: Who stands to gain from this dubious position?

Answer: If this dubious position of the leadership is
explained to the people, which will above all hit at those who
hold the reins of power and hence are responsible for relations
with the CIS countries and cooperation with Russia. But who
will do this? The Ukrainian mass media (first and foremost
television) are much better guided and controlled than the
Russian ones. We live in different worlds. 

Question: Ukraine's cooperation with NATO is regarded in
Russia very painfully. Is there a hope for a reasonable
compromise in this sphere?

Answer: Mutual trust is needed above all to resolve
complicated economic problems which call for mutual
concessions. Ukraine's policy with regard to NATO does not
serve to strengthen this trust. We suggested a rather
constructive formula for collaboration with NATO. We are
prepared to collaborate with it and resolve certain problems of
European security jointly. 
But we want to deal with NATO which is changing inside,
does not expand and takes into account the interests of
Europe's largest non-NATO states, including Russia, Ukraine and
Belarus. Regrettably, statements made by the Ukrainian leaders
in the past 18 months show that Ukraine is pursuing a different
policy, thus putting in question long-term cooperation with
Moscow. 
And yet the main thing for both countries now is to
develop democracy and stop the emasculation of democratic
institutions. When we have formally democratic elections, the
parliament and the press which no longer fulfil their
functions, the people find themselves removed from the power
mechanisms. 
If democracy is allowed to freely operate in Ukraine,
Moscow and Kiev will have a chance for cooperation, because
their people advocate closer relations. In fact, they want our
states to become allies. But there is a "but," which is that
this will be possible if the people are given the real right to
have their say. 

*******

#9
For more articles from The Moscow Times, check out their website at
www.moscowtimes.ru

Moscow Times
Friday, February 13, 1998 
SEASON OF DISCONTENT: Police Mission Very Different From Church's 
By Andrei Piontkovsky 

Recently, as I caught a glimpse of television in passing, I was 
intuitively drawn by a strange picture, which was disturbing in its 
disharmony and made me look more closely. Above all, the series of 
images was astonishing in its aesthetic tastelessness. Looking like some 
kind of garish spot against the background of dirty-green police 
uniforms, the Patriarch of All Russia, Alexy II, was shown accompanied 
by Interior Minister Anatoly Kulikov walking down an aisle of a 
conference room to the presidium of some kind of meeting. 
It turned out that these were the Interior Ministry's "Christmas 
readings" devoted to morals. The main speaker was the interior minister 
himself, who certainly has every reason to consider himself an expert on 
questions of morality. 
Russia's prisons, in which more than a million people are held (many of 
them for months and years while awaiting trial), are under the Interior 
Ministry's jurisdiction. According to the Council of Europe, the 
conditions in which prisoners are kept are tantamount to torture. During 
Kulikov's tenure as interior minister, these conditions have only grown 
worse. 
Assaults and torture have become common practice in police departments 
and investigative bodies. Opinion polls show that the average citizen is 
more afraid of policemen than criminals. But it is not always easy to 
tell the two apart when they are carrying out similar functions, such as 
providing protection, or a krysha, to businesses and prostitutes. 
Then there is Chechnya. It is a moral catastrophe of contemporary 
Russia. Kulikov, undoubtedly, is one of the main guilty parties. He was 
always against "negotiations with bandits." He is personally implicated 
in one of the most disgusting pages of this dirty war. We can't return 
all of our prisoners, because we cannot return to the Chechens a single 
one of their prisoners. Not one of the 1,600 men. They were all 
captured, not in battle, but arrested by Kulikov's people on the street 
and at checkpoints. They all disappeared in Kulikov's filtration points, 
where they were shot or tortured to death. We can't even return their 
corpses. 
Well, a man with such a service record had something for which to answer 
to God during the Christmas reading. Perhaps it was not yet too late for 
him to save his eternal soul. 
But he spoke about something else entirely. With a very serious 
expression, like the one very stupid people usually make, he read from a 
paper that was written for him an idiotic text about the decline of 
morals among the young, about the "loss of spiritual aura" and, for some 
reason, about the "harmful influence of postmodernism" (?!). 
Why did he bring the patriarch to listen to all this gibberish? In a 
more general sense, why were all these people with a semi-communist and 
semi-pagan mentality standing with candles in a cathedral and not 
knowing how to make the sign of the cross? They most likely perceive God 
as a kind of "super-krysha" that is useful to have around just in case. 
But what was the patriarch himself doing at this strange gathering? The 
church and police are both very important institutions in any society. 
But they have very different missions in this world. The patriarch may 
appear in public surrounded by men in police uniforms in only one 
instance: when he is being arrested for the truth -- like Christ in 
Gethsemane garden. 

*******

#10
Yeltsin Move Seen Jeopardizing Political 'Accord' 

Moskovskaya Pravda
7 March 1998
[translation for personal use only]
Article by Oleg Zhirnov: "End of 'Accord'"

When asked by your Moskovskaya Pravda observer "How do you assess the
fact that the president has once again taken Chubays and Nemtsov under his
wing?", State Duma Chair Gennadiy Seleznev said: "What matters here is not
whether he has taken them under his wing but how they are going to manage
their sectors of work. This would not be the first time that the president
had taken someone under his wing and then kicked out those who proved
unequal to their jobs. I do not think that there is much behind it. This
simply shows an intention to reassure these people so that they work
efficiently. It does not scrap the policy of accord in any way."
The speaker has clearly embellished the situation. In reality there
is much behind B. Yeltsin's latest statements. What is taking shape here
is yet another turn in the Kremlin course, whereby "accord" could take a
considerable beating. Is it accidental that "the president should have
issued a two-year protective charter to Chubays and Nemtsov on precisely
the day the Duma passed the budget? [no closing quotemark as published] It
is more likely to be a regular development whereby the political pendulum
has completed its swing.
The spring and summer of 1996 were a time of open confrontation
between the Duma and the young reformers, with the former demanding the
latter's removal from the government. In response the latter were
threatening to disband the Duma. In October of 1997, when the Duma began
to consider the 1998 budget, the deputies' resentment drove them toward a
vote of no confidence in the government. At this point Yeltsin suddenly
broke up the entire preceding aggressive course of the "young reformers"
while asking the deputies not to dismiss the government. As for the
reformers themselves, he moved them back as far as possible. An era of
accord, of "foursomes" and roundtables set in. Basking in the president's
kindness, the Duma hurried to pass the budget in consecutive readings in
the hope of getting a coalition government in exchange.
No way! They did what they were expected to do -- passed the budget
-- and that was it! The president's sympathies and safe passes have
reverted to the reformers, one of whom publicly promised to drive the last
nail into the lid of the coffin of Russian Communism.
Under the royal protection, the snug pair of "young reformers" can
pull any trick. Like privatizing Rosneft a la Chubays, and arranging a new
"book business." They have been given carte blanche. At the same time the
president has declared the young reformers' adversaries well-nigh "enemies
of the people." Who is going to end up in the category of enemies?
Yeltsin will talk politely with bankers, the way he used to. He
will make Chernomyrdin pipe down. But the main blow in the "fight with the
enemies" will, it is not ruled out, fall on the left. Having done
something despite themselves and having been duped by the "accord" thing,
they will now have to reap the bitter fruit of acting despite themselves in
this way.
The situation is actually reverting to that of last summer when the
"pair of the young reformers" were trying to corner the Duma. Now that
their political influence is back, their anticommunism is due to come back,
too. A new sword of Damocles hangs suspended over the Duma: a demand to
alter the election system. Chubays is back to his old practices, pressing
for the urgent passing of the Tax Code. The Communists are left with no
alternative but to once again revive "mass protests by the working people,"
precisely as Zyuganov has done.

*******

#11
Yeltsin Seen Working Against Chernomyrdin Presidency 

Moskovskiy Komsomolets
9 February 1998
[translation for personal use only]
Unattributed report: "Rumor Laboratory"

Last week Yeltsin proved yet again that no one is equipped to figure
out his moves in advance. Hardly had Viktor Stepanovich [Chernomyrdin]
crossed the threshold of the sanitarium in Barvikha than Yeltsin was
already gathering the young reformers under his wing, pointedly stating
that he was not going to surrender them to anyone until 2000 and that, even
if someone should make an attempt on them, he would defend them using all
means, including physical force. And they do need protection, because the
presence in the country of forces (Yeltsin described them as "foes"
[nedrugi]) vigorously trying to squeeze out the young pair from government
could not hide from the vigilant eye of Boris Nikolayevich [Yeltsin]. The
president did not say who qualifies for these forces. And why should he? 
They, the "foes," know all about themselves, and they must be now shaking
in their boots sitting in their offices and dachas. True, the president
would not be president had he not given to the especially curious a hint at
which of the two young people he is more fond of. He has talked with
Chubays mostly about debts and problems that have to be resolved before
2000. With Nemtsov he has mostly talked about things lofty, affecting the
entire state, even great-power problems such as, for instance, where to
bury some remains or and where to send the children to school -- as if to
say: It is you, Boris Yefimovich [Nemtsov], who will work with them in the
future and shape them into even younger reformers. It was also in
Nemtsov's presence that he made his program statement. He has singled him
out generally. Nevertheless, he issued a two-year warranty to both, and to
no one else. Not even to Chernomyrdin. He, in fact, falls rather into the
category of those who may collide with the young reformers and whom the
president will push away if there is any trouble, if someone fails to do
the right thing. Berezovskiy has done the right thing, defending Chubays
in every way in front of Soros and clearly defining his stance in all the
media. As for Chernomyrdin, he jumped the gun in Davos with his plans for
the presidency, talked too often with Kohl, failed to hide well enough the
fact that he too intends to run, and generally speaking has gotten himself
so much power that he is once again being talked about as the most likely
next president. This cannot be right! Because it has been said time and
again that the "internal image of his successor" is formed here in our
country by one person alone. The rest are only granted the honor of trying
to guess the most radiant direction of his thinking. And nothing more. So
it is possible that, by bringing Nemtsov and Chubays nearer to him, the
president wanted to stress once again that it is a young democrat who is
going to be his successor after all. Or perhaps, by striking a blow at
Chernomyrdin, he meant to balance criticism directed at Nemtsov. Or he
meant by this that there will be no coalition government. Or else.... Our
experts' comments may help us to understand what is behind Yeltsin's sudden
show of love for the young reformers.

Vladimir Lysenko (leader of the Republican Party):
I think that too many people have now appeared wanting to gobble up
the young reformers. In his search for a successor Yeltsin has most
probably added the two above persons to the list. By such a pronouncement
he has made it clear, as it were, that one of them may become his successor
by the year 2000.

Aleksandr Filatov (Liberal Democratic Party of Russia deputy):
The most serious attacks precisely against these two vice premiers
have been lately coming from the State Duma and the Federation Council. By
defending them, Yeltsin wants to maintain the balance in the government and
prevent Chernomyrdin from strengthening his positions. The president is
simply trying to preserve the classical "love triangle" inside the
executive.

Nikolay Kharitonov (leader of the Agrarian deputies group):
Yeltsin is growing more conservative with time and finds it hard to
"surrender" his entourage. He is hardly going to try to force on people
the reformers' candidacies for the presidency in 2000. Yeltsin has most
probably sensed that Chernomyrdin is acquiring a realistic chance of
becoming president. Capital is concentrating around Chernomyrdin. Yeltsin
is very jealous, and he would not like to see the premier picking up any
points. Boris Nikolayevich is at pains to look for successors but is not
finding any. He will most probab be looking for them in the regions. He
will be throwing in candidates gradually to see people's reactions. Now
they have begun talking about Stroyev, but I do not think that Stroyev is
up to scratch as president. He is not tough enough in his positions on key
questions.

*******

#12
Voice of America
DATE=2/12/98
TITLE=CONGRESS-CENTRAL ASIA (L ONLY)
BYLINE=PAULA WOLFSON
DATELINE=CAPITOL HILL

INTRO: EXPERTS ON CENTRAL ASIA SAY THE KEY TO THE REGION'S 
FUTURE MAY WELL LIE IN ITS RESERVES OF OIL AND NATURAL GAS. 
THESE COUNTRIES ARE LOOKING FOR WAYS TO GET THESE ENERGY 
RESOURCES TO EAGER MARKETS. BUT AS V-O-A'S PAULA WOLFSON REPORTS 
FINDING A SOLUTION HAS PROVEN TO BE A DIFFICULT AND COMPLEX TASK.

TEXT: THE U-S HOUSE OF REPRESENTATIVES HAS PAID LITTLE ATTENTION
IN THE PAST TO THE FLOW OF OIL AND NATURAL GAS FROM CENTRAL ASIA.
BUT INTEREST IS GROWING AND AS A RESULT, THE HOUSE SUBCOMMITTEE 
ON ASIA CALLED IN EXPERTS FROM GOVERNMENT AND THE PRIVATE SECTOR.

A TOP ENERGY DEPARTMENT OFFICIAL -- ASSISTANT SECRETARY ROBERT 
GEE -- TOLD THE SUBCOMMITTEE THE REGION CAN PLAY A KEY ROLE IN 
MEETING FUTURE WORLD ENERGY NEEDS.

///GEE ACT///

THE UNITED STATES HAS ENERGY SECURITY, STRATEGIC AND 
COMMERCIAL INTERESTS IN PROMOTING CASPIAN REGION ENERGY 
DEVELOPMENT. WE HAVE AN INTEREST IN STRENGTHENING 
GLOBAL ENERGY SECURITY THROUGH DIVERSIFICATION AND THE 
DEVELOPMENT OF THESE NEW SOURCES OF SUPPLY.

///END ACT///

IN 1995, THE LAST YEAR FOR WHICH STATISTICS ARE AVAILABLE, THE 
REGION PRODUCED ABOUT 870-THOUSAND BARRELS OF OIL A DAY. 
WESTERN OIL COMPANIES SAY THAT'S ONLY A FRACTION OF THE AREA'S 
POTENTIAL -- THAT THEY COULD INCREASE PRODUCTION BY MORE THAN 
500 PERCENT BY THE YEAR 2010.

THE PROBLEM IS FINDING A WAY TO GET THE OIL TO POTENTIAL 
CUSTOMERS. THE PIPELINES SERVING THE REGION WERE BUILT DURING THE
SOVIET ERA AND POINT NORTH AND WEST. THE MAJOR MARKETS FOR THE 
REGION LIE TO THE SOUTH AND EAST: CHINA, JAPAN AND OTHER MAJOR 
PACIFIC RIM NATIONS.

THE CLINTON ADMINISTRATION SUPPORTS ONE PROPOSAL -- A PIPELINE 
RUNNING FROM BAKU, AZERBAIJAN THROUGH THE CAUCASUS TO THE PORT OF
CEYHAN (CHAY'-HAN) IN SOUTHERN TURKEY. THE MAJOR OBSTACLE TO 
THE PROJECT IS THE ONGOING CONFLICT BETWEEN AZERBAIJAN AND 
ARMENIA. FREDERICK STARR, HEAD OF THE CENTRAL ASIA INSTITUTE AT 
JOHNS HOPKINS UNIVERSITY, SAYS THE PROJECT WILL NOT SUCCEED 
UNLESS U-S RESTRICTIONS ON AID TO AZERBAIJAN ARE LIFTED.

///STARR ACT///

SECTION 907 OF THE FREEDOM SUPPORT ACT OF 1992 PREVENTS 
THE UNITED STATES FROM EXTENDING TO AZERBAIJAN MOST OF 
THE ASSISTANCE THAT OTHER NEWLY INDEPENDENT STATES ARE 
RECEIVING IN ORDER TO FOSTER THEIR DEVELOPMENT. IN 
OTHER WORDS, WITH ONE HAND WE ARE PLACING AZERBAIJAN IN 
A POSITION THAT CALLS FOR STABLE, FREE DEVELOPMENT AND 
SECURITY AND THEN, WITH THE OTHER, WE ARE UNDERMINING 
AZERBAIJAN'S ABILITY TO ACHIEVE THESE ENDS.

///END ACT///

THE CLINTON ADMINISTRATION IS ALSO CALLING FOR THE REPEAL OF 
SECTION 907, WHICH WAS PASSED BY CONGRESS AFTER THE AZERI 
GOVERNMENT IMPOSED A BLOCKADE ON NAGORNO-KARABACH -- A SEPARATIST
ARMENIAN ENCLAVE INSIDE AZERBAIJAN. MAJOR OIL COMPANIES 
INTERESTED IN THE BAKU-CEYHAN PIPELINE ARE JOINING THE APPEAL.

BUT JOHN MARESCA, AN EXECUTIVE WITH THE UNOCAL CORPORATION TOLD 
HOUSE MEMBERS THAT EVEN IF THIS AMBITIOUS PIPELINE IS BUILT, IT 
WILL NOT BE ENOUGH. HE SAID CHINA IS INTERESTED IN BUILDING A 
PIPELINE FROM KHAZAKSTAN. ANOTHER OPTION WOULD BE A PIPELINE 
THAT GOES DIRECTLY SOUTH FROM CENTRAL ASIA TO THE INDIAN OCEAN.

///MARESCA ACT///

ONE OBVIOUS POTENTIAL ROUTE SOUTH WOULD CROSS IRAN. BUT
THIS IS FORECLOSED FOR AMERICAN COMPANIES BECAUSE OF U-S
SANCTIONS LEGISLATION. THE ONLY OTHER POSSIBLE ROUTE IS
ACROSS AFGHANISTAN, WHICH HAS, OF COURSE, ITS OWN 
UNIQUE CHALLENGES.

///END ACT///

MR. MARESCA SAID HIS COMPANY HAS MET WITH ALL THE WARRING 
FACTIONS IN AFGHANISTAN, AND THEY HAVE ALL SIGNALLED THEIR 
SUPPORT FOR THE PROJECT. BUT HE TOLD LAWMAKERS THERE IS NO WAY 
THE PIPELINE WILL BE BUILT BEFORE THERE IS AN INTERNATIONALLY 
RECOGNIZED GOVERNMENT IN PLACE IN KABUL. 

*******

#13
Jamestown Foundation Monitor
13 February 1998

RUSSIA: TAXING PROBLEMS. In March, the State Duma will get its third chance
to consider adopting the government's new tax code. If adopted, the
government hopes to instate it effective January 1999. The IMF considers the
new legislation vital, both to putting the federal government's finances on
a sound footing and to correcting the inefficiencies and irrationalities of
the current Soviet-era taxation system. 

The new code will simplify the system by reducing the number of taxes from
200 to around 30 and eliminating many exemptions. Tax offsets, where debtor
firms write off taxes against state spending which they are owed, will also
be eliminated. (They accounted for 14 percent of federal revenues last
year.) In order to make the new code more attractive to the Duma, the plan
is that the federal tax burden will be cut by 2 percent of GDP. This is a
rather contradictory claim, as one of the express purposes of the new code
is to increase the level of federal tax collection. It remains to be seen
just how this circle will be squared. (Interfax-Argumenty i fakty, No. 6) 

The legislation should help clarify the formal rules of the game for Russian
taxpayers. However, many of the problems lie in the informal rules of the
game that have built up over recent years. 

First, there is a chronic problem of tax avoidance, through the registration
of multiple shell companies and the laundering of money through multiple
bank accounts. According to Dmitry Chernik, head of the Moscow State Tax
Inspectorate, 170,000 of the 572,000 registered legal enterprises in the
nation's capital paid no taxes at all last year. Some of them may have
ceased operations, but others may have simply escaped the taxman's
attention. To improve collection of personal income taxes (on private
entrepreneurs or people renting out their apartments, for example), the tax
service is relying on tips from nosy neighbors. In Moscow "informers"
exposed 230,000 cases of tax evasion last year. (Kommersant-daily, February
13) 

Second, there is the problem of chronic debtors. So many firms have got into
tax arrears that they simply cease paying altogether, or enter into
protracted bargaining with the tax inspectorate. First Deputy Prime Minister
Anatoly Chubais was instructed last week by President Yeltsin to launch
another crackdown on leading tax debtors. Chubais told a government meeting
on February 4, that already in January 1998, the State Tax Service collected
26 percent more taxes, and the Customs Committee 30 percent more, than in
January 1997, which is an encouraging sign. (Radio Rossii, February 5,
Russky telegraf, February 7) 

Third, and perhaps most threatening to passage of the new tax code, is the
question of revenue sharing between federal and regional authorities. Under
the present system, most revenues are earmarked for the federal budget,
which redistributes them to the regions for spending. Only if regional
administrations are given a larger, direct share of tax revenues will they
have a real interest in tackling the problems of tax evasion and debts
enumerated above. Otherwise, it is in their interests to tolerate such
behavior by local firms and cut their own deals with them for payment of
local taxes in kind, through provision of off-the-record barter goods and
services. If the regional leaders are not satisfied with the tax code, even
if it passes the Duma, it could die in the Federation Council, which they
control. 

*******

#14
RFE/RL NEWSLINE Vol 2, No. 30, Part I, 13 February 1998

U.S. OFFICIAL DENIES REPORT ON YELTSIN CAMPAIGN FINANCING. "Nezavisimaya
gazeta" on 13 February quoted an unnamed official in the U.S. embassy in
Moscow as denying that U.S. funds were used to finance Yeltsin's 1996
presidential campaign. "Moskovskii komsomolets" recently alleged that the
U.S. transferred $500 million to Moscow in March 1996 and that large
Russian banks, many of which financed Yeltsin's campaign, acquired that
money (see "RFE/RL Newsline," 11 February 1998). The U.S. embassy official
told "Nezavisimaya gazeta" that the $500 million in new $100 bills were
stored at the embassy because no Russian bank--not even the Central
Bank--would guarantee the security of such a large sum. Russian banks
purchased the new $100 bills for equivalent sums in old bank notes, the
source said. LB

YELTSIN CUTS KREMLIN STAFF. Yeltsin on 12 February issued a decree
dismissing 100 officials in the presidential administration and reducing
the total staff of the administration to 1,945, Russian news agencies
reported. The casualties included Yurii Baturin, Yeltsin's adviser on
security questions since spring 1993, and Boris Kuzyk, adviser on
military-technical cooperation abroad since summer 1994. According to the
13 February "Rossiiskie vesti," the official newspaper of the presidential
administration, the cutbacks are intended to eliminate duplication and
competition within the administration, which, the newspaper said, has led
to the president receiving conflicting information. "Kommersant-Daily"
argued on 13 February that Kuzyk's dismissal is the final blow to the team
of Aleksandr Kotelkin, which oversaw Russian arms exports from late 1994
until August 1997, when Yeltsin sacked Kotelkin as the head of the arms
exporter Rosvooruzhenie (see "RFE/RL Newsline," 22 and 25 August 1997). LB

*******