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Johnson's Russia List
 

 

February  23, 1998  
This Date's Issues:    2074    2075  

Johnson's Russia List
#2074
23 February 1998
davidjohnson@erols.com

[Note from David Johnson:
1. St. Petersburg Times: Brian Whitmore, "Yavlinsky, Yabloko 
Gain Key Support."

2. Philadelphia Inquirer: Maura Reynolds, "In Russia, Ukraine, 
dissent over executions."

3. RIA Novosti: YELTSIN GREETS RUSSIAN OLYMPIC TEAM.
4. Boston Globe: David Filipov, Russia's stance on Baghdad 
raises questions for US.

5. InterPress Service: Dilip Hiro, POLITICS-IRAQ: China And 
Russia Draw Together Under U.S. Shadow.

6. Lynn Turgeon: Hyperinflation and Supply-side Inflation: 
Two Different Breeds of Cat.

7. Jeffrey Surovell: Lend-lease and Moscow.
8. Journal of Commerce editorial: Contain NATO.
9. RIA Novosti: NO NUCLEAR UMBRELLA OVER MOSCOW: DEFENCE MINISTER.
10. VOA: Peter Heinlein, Red Army Day.
11. RIA Novosti: GEORGIA'S PRESIDENT DENIES RUSSIAN TOP CONNECTION 
IN ATTEMPT ON HIS LIFE, BUT INSISTS ON RUSSIAN INVOLVEMENT.]


******

#1
St. Petersburg Times
FEBRUARY 23-MARCH 1, 1998 
Yavlinsky, Yabloko Gain Key Support 
By Brian Whitmore
STAFF WRITER

Liberal economist Grigory Yavlinsky, long the odd man out in Russian 
politics, suddenly seems to be picking up support among media and 
financial elites as well as in the country's regions.
In the past month, Yavlinsky has won a public endorsement from one of 
Russia's most high-profile media tycoons and from a powerful regional 
governor, and has seen his party dominate St. Petersburg local district 
elections. The developments are significant since media access, campaign 
financing and support from regional leaders are the main factors that 
win elections.
Earlier this month, financial and media mogul Vladimir Gusinsky - 
founder of the MOST-Group media and financial empire including 
MOST-Bank; the television station NTV; the Ekho-Moskvy radio station; 
the national daily newspaper Segodnya and the weekly newsmagazine Itogi 
- pledged to back Yavlinsky in the 1999 parliamentary elections "to the 
maximum."
"Everything that I can do, I will. That is not a secret," said Gusinsky.
Gusinsky's support, together with the rest of Russia's financial and 
media elite, was crucial to President Boris Yeltsin's come-from-behind 
victory in the 1996 elections. Yavlinsky has already declared his 
intention to run in the next presidential elections, due to take place 
in the year 2000. 
Yeltsin's 1996 media support was organized by First Deputy Prime 
Minister Anatoly Chubais, then Yeltsin's campaign manager. But since 
then, the once unified media-financial oligarchy has split and descended 
into an ugly public feud after Uneximbank won a privatization auction 
for the massive telecommunications giant Svyazinvest. 
Most notably, Gusinsky and Russia's other media mogul Boris Berezovsky - 
who controls ORT Russian Public Television - have broken with Chubais, 
who they consider a stooge of Uneximbank chairman Vladimir Potanin. 
Gusinsky said Chubais had compromised himself as a government official 
by lobbying for the interests of Uneximbank.
"For me, Anatoly Borisovich is not a deputy prime minister; he is rather 
one of my competitors. He represents one of my competitors - 
Uneximbank," Gusinsky said. "That is wrong. I believe that no 
representative of the government should represent the interests of one 
or another enterprise, be that a bank or an industrial group."
But analysts say that neither Gusinsky nor any of Russia's other tycoons 
are prepared to hand the presidency to Yavlinsky, but instead are 
planning to support Prime Minister Viktor Chernomyrdin.
"This is a consolation prize," said Andrei Piontkovsky, director of the 
Center for Strategic Studies, a Moscow-based political think-tank. "Both 
Gusinsky and Berezovsky have already decided that they will support 
Chernomyrdin for president in 2000 but they want to keep Yavlinsky in 
the game as the leader of a democratic opposition."
Piontkovsky said that barring any changes to the current election laws, 
the next Duma should have two big factions: Yabloko and the Communists, 
with both Vladimir Zhirinovsky's nationalist Liberal Democratic Party 
and Chernomyrdin's pro-government Our Home Is Russia falling from the 
picture. 

******

#2
Philadelphia Inquirer
February 22, 1998 
[for personal use only]
In Russia, Ukraine, dissent over executions 
Both nations have called a temporary halt. But most people support 
capital punishment. 
By Maura Reynolds
ASSOCIATED PRESS

MOSCOW -- The cavernous room where Anatoly Pristavkin works was once 
used by Kremlin officials who handed down death sentences. These days, 
he uses it to issue pardons.
Pristavkin heads Russia's presidential clemency commission, and every 
week the members take their places at its long conference table to 
review as many as 10 cases of criminals sentenced to death by the 
courts.
"Sometimes our nerves can't take it, and we drink vodka at the table," 
Pristavkin said.
One reason for his distress is that Pristavkin, a prominent novelist, is 
one of the few public opponents of the death penalty in a country that 
overwhelmingly condones and has frequently imposed capital punishment. 
The presidents of Russia and neighboring Ukraine have temporarily 
suspended the carrying out of death sentences. But the parliaments of 
both countries have thwarted efforts to end capital punishment, which 
was used in Soviet times to send millions of citizens to early graves 
with a bullet to the back of the head.
In 1996, Ukraine and Russia ranked second and third in the world in 
executions, behind China, according to the human-rights group Amnesty 
International. Ukraine executed at least 167 and Russia at least 53 and 
perhaps as many as 140.
Ambivalence over the death penalty runs deep in the former Soviet Union. 
On one hand, executions were a tool of terror for the now-discredited 
communist police state.
Moreover, Russia and Ukraine are eager to join international 
organizations such as the Council of Europe, which has made abolishing 
capital punishment a condition of membership.
But Russians and Ukrainians have been deeply frightened by a very large 
and very visible surge in crime since the Soviet Union's collapse six 
years ago. The vast majority think keeping the death penalty will keep 
criminals in line.
"It's not that people in Ukraine are bloodthirsty, it's just the 
situation they are in," said Vasyl Malyarenko, deputy chairman of 
Ukraine's Supreme Court.
Recent polls say that only about 10 percent of Russians and Ukrainians 
support abolishing capital punishment.
"In the future, capital punishment is likely to be remembered as an act 
of barbarism," said Oleg Mironov, a communist member of the Russian 
parliament's legislative committee. "But deputies must consider the real 
criminal situation in our country, and public opinion. The public will 
never support deputies who favor the abolition of capital punishment."
In this atmosphere, Presidents Boris N. Yeltsin of Russia and Leonid 
Kuchma of Ukraine face an uphill fight to banish the practice.
Kuchma says his country has carried out no executions since last March.
In Russia, Yeltsin's suspension of the death penalty came after he 
increased the pace of executions beginning in 1995, seeking to look 
tough on crime as he prepared for his successful reelection battle the 
following year. The clemency commission responded by suspending its work 
in protest.
Now Yeltsin says he intends to move toward abolition, although in a 
phased manner.
In the meantime, Pristavkin's commission has the tricky job of mediating 
between demands for justice and pleas for mercy.
The 15-member panel -- which includes prominent artists, writers, and 
jurists -- meets in a room near the Kremlin once used by Communist Party 
officials to impose "discipline" on their cadres.
Pristavkin said the commission reviews all death sentences, which judges 
are still permitted to hand down.
Even though members have a range of views on capital punishment, they 
nearly always recommend commuting the sentence to life in prison. In the 
last year, Yeltsin followed their recommendations "with only a few 
exceptions," Pristavkin said.
But helping commute death sentences doesn't necessarily lift 
Pristavkin's spirits. Russia's prison system is cruel and crumbling, and 
life imprisonment in such miserable conditions "is just a delayed death 
sentence," he said.
"We condemn them to such suffering that some ask us to overturn their 
pardons and put them to death."
*******

#3
YELTSIN GREETS RUSSIAN OLYMPIC TEAM

MOSCOW, FEBRUARY 22, RIA NOVOSTI - Federal President Boris
Yeltsin forwarded a greeting message to the Russian Olympic
team. We offer you its unabridged text, as circulated by the
presidential press service.
"Dear friends,
"The Nagano Olympics are receding into the past. They
brought our country something to take pride in. Russia once
again proved itself one of the global athletic leaders. What
matters even more, Russians have once again proved themselves
worthy competitors who are able to win, and know how to score
victories. Our women athletes made Russian men a gorgeous
present before Motherland's Defender Day of February 23. Our
glorious queens of the 28th Winter Olympics won a majority of
gold medals.
"Not all on our team could score victory in a tough
competition, but all were honestly and bravely competing as
worthy representatives of their country.
"Never say die, boys and girls! Your Nagano experience will
come in handy at future Olympics. You will have an unique chance
to start a new sport millennium with enviable achievements.
"Dear friends,
"The Olympic fire will soon be put down in Nagano, but its
dramas and triumphs will long survive in fans' memory.
"I have been closely following all Olympic developments as
your fan throughout these last two weeks, and I was no less glad
than you were as the Russian flag was hoisted and the Russian
anthem played in your honour.
"You have done your bit for Russian sports. Now that you
are coming home, I wish you more victories. I am proud of you."

******* 

#4
Boston Globe
22 February 1998
Russia's stance on Baghdad raises questions for US 
By David Filipov

MOSCOW - Has the Iraq crisis brought the United States and Russia back to 
the brink of Cold War? 
First, President Boris N. Yeltsin warned two weeks ago that a US 
military strike on Iraq could trigger a ''world war.'' Then Russian 
legislators turned up in Iraq declaring full solidarity with Saddam 
Hussein as Moscow's diplomats furiously worked to head off a US attack 
on Baghdad. 
Meanwhile, Russian Defense Minister Igor D. Sergeyev announced that his 
country's nuclear weapons, even those recently retargeted away from the 
United States, are ready to strike anywhere within 8 minutes. This 
remark came two days after Sergeyev warned Defense Secretary William S. 
Cohen of the ''possible costs to US-Russian military relations'' of 
American-led strikes against Iraq. 
Viewed from the United States, these words and actions have a chilly 
feel and have prompted some to wonder whose side Russia will be on if 
war with Iraq breaks out. 
But in Moscow, almost no one is talking about war. Here, Russia's 
efforts in Iraq are seen as part of a difficult balancing act that has 
become the centerpiece of the Kremlin's foregn policy: Restore Russia's 
prestige by acting like a great power alternative to the United States. 
This stance relies on diplomacy and alliance-building over firepower. 
The harsh Russian rhetoric of recent weeks may have undercut Moscow's 
efforts to present itself as a cool-headed mediator. But people here 
tend to dismiss the bluster as a sign of the disarray of the post-Soviet 
Russian political scene, where tough talk is cheap and about-faces are 
common. 
Events seem to have confirmed this view. Amid his hard posturing, 
Sergeyev voiced support for joint US-Russian programs to eliminate the 
countries' nuclear arsenals. The antics in Iraq of hard-line Russian 
lawmaker Vladimir V. Zhirinovsky earned him reprimands from Russia's 
Foreign Ministry and his colleagues in parliament. 
And Yeltsin, whose warning shocked the world, on Tuesday toned down his 
rhetoric during his annual state-of-the-nation address to parliament in 
which he stressed that Iraq must fulfill the UN Security Council's 
resolutions by allowing inspections of suspected chemical weapons sites. 
He made no mention of world war. This time, Yeltsin merely referred to 
the use of force ''as the last and the most dangerous way.'' 
Meanwhile, Russia's efforts have focused on building a coalition of 
states opposed to the use of force. All week, Foreign Minister Yevgeny 
M. Primakov has been hinting that a diplomatic breakthrough with Baghdad 
is near. Russia has been supported by fellow UN Security Council members 
China and France. 
''Today it is clear to all - without Russia it is impossible to reach 
productive decisions on thorny international issues, be it the Bosnian 
problem, the Arab-Israeli conflict, or the Middle East situation,'' 
Yeltsin said Tuesday. 
That may be wishful thinking. But some analysts here say that Moscow has 
nothing to lose in trying make it look that way. 
''Russia's stance is to hope for a diplomatic settlement it could call a 
victory,'' said Viktor Dontsov, head of the Center for Middle Eastern 
Studies in Moscow. ''But if the US goes ahead and attacks, Moscow can 
say it tried. It's a no-lose strategy.''
It is also a strategy that epitomizes Russia's new foreign policy goals. 
Since the breakup of the Soviet Union, Yeltsin has steered Russia toward 
integration with Western markets and institutions. But in recent years, 
Moscow's political establishment has grown increasingly uncomfortable 
with what is perceived here as the second-class status afforded to a 
financially dependent, politically loyal, militarily weak Russia. 
Not only reactionaries worry about the expansion of the North Atlantic 
Treaty Organization toward Russia's borders, or the success of US oil 
companies to redirect away from Russia a large chunk of the resources of 
the Caspian Sea and Central Asia, regions Moscow used to control. 
Erstwhile foreign policy liberals, and more importantly, such powerful 
business players as Russia's resurgent oil companies, have joined 
hard-liners' calls for Moscow to be more competitive with the United 
States. 
The point man of this new approach has been Primakov, an Arabic-speaking 
former Middle East specialist for the KGB who has known Saddam Hussein 
since the 1960s and served as an adviser on the region for every Soviet 
leader from Brezhnev to Gorbachev. Until his appointment as foreign 
minister in 1995, he directed Russian foreign intelligence operations. 
This has, for some in the West, lent credibility to reports, denied by 
Moscow and played down by the Clinton administration, that Russian 
officials may have been helping Hussein hide his chemical weapons. 
Condemned in the West as an unreformed Cold Warrior, Primakov is viewed 
here as a moderate pragmatist whose recent efforts to forge closer ties 
to China and Iran won praise from across the Russian political spectrum. 
So did his successful mediation in Iraq in November to help head off a 
similar crisis. 
Primakov is also under pressure, sources here say, from Russian energy 
conglomerates, which have signed oil exploration deals with Iraq worth 
more than $10 billion. They can take effect only after UN sanctions 
against Baghdad have been lifted. Russia also cannot collect Baghdad's 
$7 billion debt to Moscow from the Cold War until the sanctions are 
ended. 
Moscow had decided to oppose US politicial initiatives wherever it is 
advantageous to do so. The Middle East, where many Arab countries oppose 
the use of force against Iraq - a former Soviet client state - is one 
such area. 
''We should oppose the United States wherever so that they know that 
Russia can take a strong stand even when it is in a difficult 
position,'' said Viktor Kremenyuk, deputy director of the USA and Canada 
Institute in Moscow. ''For years, we tried to agree to everything, and 
what did we get? NATO expansion.''
From the Kremlin perspective, competition on geopolitical issues does 
not rule out cooperation in other areas. Yeltsin, in his speech Tuesday, 
talked of opening Western markets to Russian goods - hardly the rhetoric 
of a leader bent on Cold War style confrontation. 
The question is, how much confrontation should there be? Again, 
conflicting signals emerge from Russia's fractious political landscape. 
Zhirinovsky's calls for unilateral support of Saddam Hussein have been 
dismissed as extreme. But more moderate voices have sounded increasingly 
shrill. 
''More and more Russians believe the United States is a rogue superpower 
and that only nuclear warheads aimed at US cities can keep the Big Satan 
at bay,'' wrote Pavel Felgenhauer, defense and security editor for the 
liberal newspaper Segodnya. ''If bombs fall on Baghdad, this may become 
the prevailing view in Moscow.'' 
The Kremlin insists its own policies are not anti-American. But it is 
unclear how much control the Kremlin has over all the potential players 
in Russian-Iraqi relations. 
This question has been highlighted by evidence from the special UN 
commission inspecting Iraq's weapons programs this past week, first 
reported in the Washington Post, that Russian companies may have 
supplied some of the technology that allowed Baghdad to manufacture the 
biological weapons at the heart of the current crisis. 
The commission's director, Richard Butler, described meetings in Moscow 
in 1995 between Russian companies and an Iraqi delegation to discuss the 
sale of a facility to produce single-cell proteins for animal feed - the 
kind of factory Iraq has admitted it used to make biological weapons. 
Russia has denied that the deal was completed, and some sources suggest 
that the Russian officials involved may have been freelancing without 
their government's knowledge. But the disclosures added weight to 
Washington's concerns about Russia's relationship with Saddam. 
US officials publicly have minimized the significance of Russia's role 
in Iraq and emphasized instead American cooperation with Moscow in 
Bosnia and on nuclear disarmament. But there are signs that the Clinton 
administration's patience is wearing thin with the contradictory signals 
coming from Moscow. ''There's some tension, no doubt about it,'' said 
one administration official. 
David Marcus of the Globe Staff contributed to this report from 
Washington. 

*******

#5
>From InterPress Service,
POLITICS-IRAQ: China And Russia Draw Together Under U.S. Shadow
By Dilip Hiro

LONDON, Feb 18 (IPS) - Within hours of his arrival in Moscow last
Monday, Chinese premier Li Peng had joined Russian president Boris
Yeltsin in signing a statement strongly opposing use of force
against Iraq in the current crisis over U.N. weapons inspections.
Similarly, during Yeltsin's own visit to Beijing in November, the
joint statement issued by him and Chinese president Jiang Zemin,
referred to 'a strategic relationship between Russia and China',
expressing their opposition to 'a unipolar world' -- a thinly
disguised reference to U.S. international dominance.
Russia and China have always been united in opposing Washington's
threat to take military against Iraq if it does not comply with a
U.N. demand to allow its inspectors to check sites suspected of
holding weapons of mass destruction or parts to make them.
At the root of this joint opposition is Moscow and Beijing's deep
suspicion of what they perceive as Washington's unchallenged
influence in the international arena, particularly in the wake of
the collapse of the Soviet Union six years ago, and their own
economic interests.
Having lost its status as one of the two superpowers, Russia, the
dominant republic in former Soviet Union, has been uneasy about
the way Washington has monopolised power on the world stage.
Having performed an economic miracle during 1978-97 by achieving
up to 20 percent annual growth in industrial output, Chinese
leaders decided in mid-1997 that they should now project China as
a leading diplomatic player in the world community.
The state visit to the U.S. by Jiang Zemin in October, though
planned much earlier, fitted well with this newly adopted policy.
The following month Chinese foreign minister, Qian Qichen, toured
the Middle East. The purpose of Qian Qichen's mission was not only
to raise China's diplomatic profile in the region but also to help
secure new sources of petroleum for domestic consumption.
Due to ambitious industrialisation plans, China is finding itself
increasingly short of petroleum. Until 1992 China was a net
exporter of oil. In 1993 it imported 25,000 barrels per day (bpd).
In 1996 the figure rose to 445,000 bpd, an 18-fold increase in
three years.
The potential for petroleum imports into China is great. At
present consumption per capita in China is three barrels annually
whereas in the U.S. it is 66 barrels. As a country with the second
largest proven petroleum reserves, Iraq is of economic interest to
both China and Russia, which is one of Baghdad's creditors.
On the eve of the break-up of the Soviet Union in December 1991,
Baghdad owed Moscow seven to 10 billion dollars for the weapons it
had purchased, mainly during the 1980-88 Iran-Iraq War.
Given the financial straits in which Russia, successor state to
the Soviet Union, finds itself today, coupled with the fact it is
owed in hard currency, this is a substantial sum.
Moscow, therefore, is keen for the United Nations economic
sanctions to be lifted so that Iraq can repay its debts to Russia.
The Security Council Resolution 687, which formalised the Gulf War
cease-fire, states that sanctions will be lifted once the weapons
inspection team UNSCOM issues Iraq a clean bill of health.
Russian oil corporations have already signed contracts with the
Iraqi government for the exploration and extraction of oil in
southern Iraq. These will come into force the day the U.N. embargo
is lifted.
Both Russia and China are permanent members of the U.N. Security
Council, the most powerful body in the world community. As such,
they, along with the United States, Britain and France, have the
right of veto.
Four of these five permanent members are either European or North
American -- that is, they are 'white'. (Overall, 'white'
countries, containing only 30 percent of the global population,
are currently exercising 80 per cent of international power.) The
exception is China. Little wonder then that China perceives Asia,
Africa and Latin America differently to the other four permanent
Security Council members.
This became apparent during the crisis caused by Iraq's
occupation of Kuwait in August 1990. As the Kuwait crisis deepened
into the prospect of war in the region, Qian Qichen, keen to avert
an armed conflict, visited Baghdad in mid-November and met
President Saddam Hussein.
The Iraqi leader told him that if China were to agree to veto the
U.S.-sponsored Security Council resolution calling for military
action against Iraq, he would withdraw from Kuwait. On Qian
Qichen's return to Beijing, the Chinese leadership discussed but
ultimately rejected the proposal on the grounds that a veto
against a U.S.-led resolution would anger Washington and damage
China's interests.
China was the only Security Council permanent member, however,
not to vote for the crucial Resolution 678 of 29 Nov 1990, which
called on U.N. member-states to assist Kuwait to expel Iraq from
its territory by 'all necessary means'. It abstained. Cuba and
Yemen, both members of the non-aligned movement, opposed the
resolution.
After the end of the Gulf War, China again abstained on the
Security Council Resolution 688 of 5 April 1991, which called on
the Baghdad government to stop 'repression of the Iraqi civilians
especially in the Kurdish areas'. In Beijing's view, the
resolution interfered in a sovereign state's internal affairs.
Six years on, Beijing now feels confident enough to make a
unwavering stand against Washington's stance on Iraq.
The U.S.'s hawkish policy towards Iraq is overwhelmingly opposed
from outside the Security Council, including the 105-member Non-
Aligned Movement, and G-77, the group of 77 developing nations
which have been urging the U.N. Secretary-General, Kofi Annan, to
travel to Baghdad to solve the current crisis peacefully.
The five permanent members of the Security Council agreed on
Wednesday to a formula, thought to include the offer of limited
concessions over inspections of the presidential sites at the
centre of the dispute, for Annan to take to the Iraqi leader.
Annan is due in Baghdad on Friday.
The Chinese ambassador to the U.N., Qin Huasun, told BBC
Television that Beijing ''attaches great importance to the
proposed visit by the Secretary General aimed at finding a
diplomatic and peaceful solution to the current crisis''.
Washington has said that it will accept a deal negotiated by
Annan only if it is consistent with its own 'no compromise'
position.
Iraq has emerged, whether by chance or design, as the touchstone
by which Russia and China have decided to test their independence
and express opposition to the continued U.S. dominance of world
politics.

*******

#6
Date: Sun, 22 Feb 1998 
From: "LYNN TURGEON, PROFESSOR EMERITUS OF ECONOMICS, HOFSTRA UNIVERSITY"
<ECOELT@hofstra.edu>
Subj: Hyperinflation and Supply-side Inflation: 
Two Different Breeds of Cat 

In the fifties, it was assumed that there was only one type of
inflation, demand-pull inflation, one that was obvious in our Civil War, World
War I and World War II. After the two World Wars, there were some notorious
hyperinflations, most obvious in Germany and Russia diring their Civil War.
Both were ended by the issuance of new currencies.
After World War II, the Hungarian hyperinflation was similar to that
found after World War I in Russia and Germany. In the USSR and Germany, there
were monetary reforms to absorb excess purchasing power and the issuance of new
currencies in 1947 and 1948. In France and England, the excess purchasing power
was left in the system (as in the United States) and there were devaluations in
Britain and France (approved ex post by the IMF) and a monetary reform in
France in 1960 when their decimal points were moved two places to the left.
This event occurred at the same time that Khrushchev was waiting for
President Eisenhower in Paris for a return meeting following Khrushchev's visit
to the United States. This summit meeting never occurred due to the downing of
our U-2 in Siberia, but the French experience was absorbed by Khrushchev
producing the monetary reform of January 1, 1961, when Soviet decimal points
were moved one place to the left and the nominal price level was approximately
the same as it was in the 1920s before the industrialization drive. A 10-fold
increase in Soviet prices was wiped out and the Soviet propagandists now
claimed that inflation was not a "socialist problem," but confined to
capitalism.
In the United States, all high school students were taught about the
German experience in 1923 when consumers were taking their money to the stores
in wheelbarrows. In the academy, it was taught that creeping demand-pull
inflation automatically led to hyperinflation of the 1923 German variety. In
the mid-sixties, I noticed that the introduction of medicare and the taxes to
finance it was followed by a little upward blip in the CPI and I began to talk
about "legislated inflation." The most important Keynesian to recognize
inflation coming from higher taxes in an underheated economy was Sir Roy Harrod
in 1969 in letters to the "London Economist" and The New York Times. This
phenomenon was later labeled "supply-side Inflation" by Keynes's contemporary,
Abba Lerner.
The possibility that double-digit inflation might be stabilized rather
than leading to hyperinflation was found in practice in Brazil in the late 50s
and early 60s. The Brazilian experience was contrasted with the Argentinian
experience which followed strict IMF principles that put a higher priority on
controlling inflation with unemployment with a long-term goal of zero
inflation. Ultimately private investment was withdrawn from Brazil (encouraged
by IMF advisers) and a military coup put an end to a progressive Keynesian
experiment combining rapid growth with double-dogit inflation.
Since then, "high inflation" that doesn't necessarily lead to
hyperinflation has cropped up in a number of countries in the 1980s, such as
Israel, Argentina, Brazil, Mexico, Peru and Bolivia, as well as the
transitional economies of Eastern Europe in the 90s. According to Daniel
Heymann (Argentina) and Axel Leijonhufvud (UCLA), "High Inflation" (Oxford
1995), p. 138, "To put the historic cataclysm that the former communist
countries are undergoing in the same context as the high inflations of Israel
or Argentina is to trivialize it." Professor Leijonhufvud, incidentally, was
brought over to Kirghizia by a former student early in the transition of the
former Soviet Republic. As far as I am aware, he was the only non-monetarist to
advise the former socialist countries,
Poland and Hingary are the two transitional economies that have done
quite well, combining double-digit inflation with respectable growth records
after an initial sharp drop in the growth of GDP associated with the break-up
of COMECON. Both have allowed their currencies to depreciate against the dollar
in the period of high inflation. All of the transition economies have
experienced the collapse of their welfare states due to the inability of the
governments to continue subsidizing this non-market sector. It is important to
recpgnize that the impact of the elimination of these subsidies is similat to a
tax increase, a major component of supply-side inflation.
IMF advisers followed conventional monetarist principles when they
warned the transitional economies to avoid hyperinflation. In fact, the high
rate of price increases during the Gaidar year (1992) was in large part
supply-side inflation coming from the elimination of subsidies and could hardly
lead to hyperinflation. Any attempt to apply demand-pull prescriptions - such
as cracking down on the money supply or failure to pay wages - was therefore
counterproductive just as the application of demand-side prescriptions in the
advanced capitalist system suffering fron supply-side inflation. As H&L, p.8
remark: "To both eliminate subsidies and raise taxes on a population that has
already seen their nominal assets consumed by inflation would pose a somewhat
rough welcome to the market economy." Thus, "the formerly communist countries
are in for more troublesome straits (than the Latin American countries)" M&L,
p. 142, concluding "that fot the Soviet Union the conditions are far off under
which capital formation in significant volume can resume."
We can thus interpret the continued double-digit high inflation in
Poland and Hingary as a continuation of the dissolution of the welfare state
and basically supply side inflation.
Russia and the former Soviet Republics have been more radical in
allowing their former "seller's market" to become intense "buyer's markets"
with extreme shortages of money and a resort to barter and the dollarization of
the economy. Russia, in particular, has been "successful" in redicing domestic
inflation to single-digits and thereby earned the seal of approval of the IMF
and monetarists generally.
The problem with the Russian radical approach is that it has produced
all of the characteristics of the U.S. Great Depression outside of Moscow.
Conditions in the countryside remind one of the U.S. rural areas in the early
thieties. If our early experience has any lesson, it is extremely unlikely that
the vaunted market can end the stagnation, In a recent speech, Yuri Luzhkov,
the aggressive mayor of Moscow, criticized the "monetarism" that represents the
ideology of the Yeltsin regime. There would seem to be time to draw up a
non-monetarist recovery program before the year 2000 elections. Lynn Turgeon

********

#7
Date: Sun, 22 Feb 1998 
From: Jeffrey Surovell <surovell@iris.nyit.edu>
Subject: lend-lease and moscow

One can only be saddened and mystified after reading such contri-
butions to your List as those which wax rhapsodic over the "new, won-
derful Moscow" or the triumphant assertions that "we" (that is, the
US and the West, led, presumably by--John Wayne?) won World War II, not
the Soviets, all because of lend-lease. Even the related contention
that "both" the Soviets and the West won can by no stretch of the 
imagination be taken seriously. It just shows how neo-liberalism
and the "new world order"--and all the disinformation which has
accompanied it--are alive and well.
First, with respect to the "new" Moscow. One's perception of the
Russian capital flows, of course, directly from one's values. If one
welcomes the crass vulgar materialism which has come to pervade the 
city (and society as a whole), if one pays no attention to the fact
that Moscow's enrichment has been paid for by the tragic impoverishment
of much of the rest of Russia, if one hides one's eyes to the ever-
present armed guards guarding Moscow's numerous casinos and the cri-
minals inside who play with the wealth they plundered from the people,
if one witnesses the heartbreaking shabbiness of once-great institu-
tions of learning, such as Moscow State University, while marveling
at the up-to-date gleaming technology of Moscow's heartless,
exploiting financial institutions--then yes, Moscow has surely
improved. As for me, I'll take the old Moscow over this any day.
As for the second issue, lend-lease simply did not make all that
much of an impact on the overall course of the war. While it is true
that Western aid, after 1943, did help significantly, particularly
in the supply of food, clothing, jeeps, and weapons (although the
number of planes and tanks sent by the West was relatively small),
the Nazi war machine was ultimately defeated by the herculean efforts
and tragic sacrifices of the Soviet people, the staggering 27 million
who died and the extraordinary reestablishment of industry in the
East. Not only was the overwhelming bulk of the German land forces
on Soviet territory, but allied aid to the Soviet Union was not even 
taken seriously until 1943, which coincided with the victory at
Stalingrad and the turning of the tide of the war in favor of the Red
Army. In fact, some Western equipment sent during 1941-2 was considered
downright unsatisfactory (such as the Matilda tanks). So it was the
USSR, virtually alone, who confronted the brunt of the Nazi war machine
at its most ferocious point, it was the Soviet people who themselves
turned it back by 1943.
But there is another issue here which has been entirely omitted by
those who attempt to minimize the Soviet role. Western material aid was
sent in place of troops and the launching of a second front to relieve
the pressure on the Soviet front. In spite of repeated requests by 
the Soviets, the British and US refused to send such troops, the 
British preferring instead to focus on the North African campaign
(against which the Germans sent a mere four divisions!). Even when
Churchill offered to replace Soviet troops in Northern Iran with Bri-
tish troops so that 5-6 Soviet divisions could be transferred to the
Eastern front, the Soviets justifiably saw this as merely an attempt to
maximize Soviet casualties. And when in May 1943 FDR finally agreed 
to a cross-channel invasion, he did so only because he feared, among
other things, a Soviet victory and Soviet dominance in Europe.
Finally, how did it come to pass that the Red Army confronted the
Wehrmacht virtually on its own and to thus rely on lend-lease (and
the launching of a second front) in the first place? Britain's wil-
lingness in 1935 to enter into negotiations for the Anglo-German
Naval Agreement, the failure of the Western powers to assist the
Spanish Republicans against the fascist onslaught (only the Soviet
Union gave aid to the Spanish democratic Republic), Britain's rejec-
tion of the Soviet Union's 1939 proposal for a conference of Britain,
France, the USSR, Poland, Rumania, and Turkey to devise a means of
opposition to fascist aggression in March 1939 and its rejection the
following month of a Soviet proposal for a triple pact of mutual
assistance--all demonstrated the West's true aim of appeasement of
the fascists to deflect the Germans to the East in the hopes that
the Soviets and the Nazis, locked in bloody combat, would ultimately
exhaust each other.

********

#8
Journal of Commerce
February 23, 1998
Editorial
Contain NATO

NATO's longstanding goal in Europe has been to keep the United States 
in, keep the Germans divided and keep Moscow out. This formula worked 
well during four decades of Cold War.
New realities have weakened its mission, however, and the Senate should 
vote against expanding NATO into Poland, Hungary and the Czech Republic. 
Washington is engaged in European affairs over everything from trade to 
security and a unified Germany has become the commercial and financial 
backbone of an integrated Europe, while Russia has trouble assembling a 
car -- let alone a European invasion force.
With the risk of attack at its lowest since World War II, the 
administration fails to provide credible estimates of the cost of NATO 
expansion or the threats it would address. Furthermore, expansion 
unnecessarily fuels Russia's historical fear of encirclement at a time 
when NATO'S existing structure and other security arrangements provide 
the security that fosters trade, economic growth and social harmony. 
The United States should instead expand Western ties to Eastern Europe 
by encouraging economic reforms, democracy and integration with Western 
Europe.
NATO expansion supporters argue that any costs are a bargain if they 
prevent another world war. This scare-mongering masks a price-tag that 
is sizable when juxtaposed against a declining threat. The 
administration pegs NATO expansion at $27 billion to $35 billion over 10 
to 13 years, with the U.S. share under $2 billion. But detailed analyses 
by the Rand Corporation peg it at $10 billion to $121 billion, while the 
Congressional Budget Office puts it at $61 billion to $125 billion, 
depending on various risk scenarios.
The U.S. share is also suspect. Military estimates tend to quickly 
balloon, with the administration's $1.5 billion Bosnia figure now up to 
$6 billion. Furthermore, if NATO allies balk -- France and Germany 
oppose any dues increase given expensive European Monetary Union 
commitments -- Washington would pay even more. Finally, the Senate is 
being asked to vote before it sees NATO's budget, due out in June. 
Obviously any decision affecting the collective security of so many 
people and their livelihoods involves more than cost. But the 
administration cites no credible threat requiring NATO expansion other 
than vague notions of a resurgent Russia. Most expansion supporters see 
little threat from Russia these days and fall back on arguments that 
this nuclear power could attack someday. 
Even assuming the worst, NATO can't prevent a nuclear strike. And given 
Russia's chaos, a conventional buildup would be well telegraphed. NATO 
is not equipped or designed to defend against the more likely threats -- 
terrorist attacks, or fighting among members, as seen when Greece and 
Turkey fought over Cyprus in 1974.
In fact, an expanded NATO could actually inflame tensions. Russia lost 
the Cold War, but overly harsh, Versailles-treaty style settlements are 
counterproductive, particularly as Washington also struggles to turn 
Russia around economically. While fears that Russia will embrace China 
if NATO expands are probably overblown, Russia's deep-seated fears of 
encroachment deserve our understanding. Adding Poland puts NATO up 
against the Russian border of Kalingrad, an unnecessary challenge. 
Further NATO expansion would only intensify the unease. 
Supporters of expansion also argue that NATO would ensure trade and 
social stability and fill a troublesome security vacuum. But most 
Eastern European nations have already turned around their economies 
without NATO -- and often embrace reform faster than Western Europe.
Washington would do better to support and expand inclusive security 
organizations like the Partnership for Peace, leave NATO at its present 
size as insurance, nudge Eastern European nations to continue reforms 
and pressure Western Europe to further open their markets. Prosperity, 
democracy and free trade -- forces that helped win the Cold War -- 
ultimately offer the best safeguard against aggression and 
totalitarianism. 

*******

#9
NO NUCLEAR UMBRELLA OVER MOSCOW: DEFENCE MINISTER

MOSCOW, FEBRUARY 22 (from RIA Novosti correspondent Alexei
Meshkov) -- There is no nuclear umbrella over Moscow now, and
there will be none, Marshal Igor Sergeyev, federal Defence
Minister, said to the press yesterday by way of comment on
current media allegations about an extra anti-missile contingent
shortly to be deployed round the city.
No nuclear missiles will ever appear near the federal
capital, pledged the minister. "The stronger we fortify Moscow
the greater attention military blocs will be paying it," he
explained.
Military experts share his view, as every nuclear launching
pad is bound to be regarded as target for tentative opponents'
aviation and missiles, so a nuclear shield will merely expose
the settlement it protects. 

*******

#10
Voice of America
DATE=2/22/98
TITLE=RUSSIA/RED ARMY DAY (L ONLY)
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW
///// EDS. NOTE. MONDAY, 2/23 IS DEFENDERS OF THE FATHERLAND DAY.
OBSERVANCES WERE HELD A DAY EARLY THIS YEAR. //////

INTRO: THOUSANDS OF RUSSIANS HAVE MARCHED THROUGH THE STREETS OF
MOSCOW TO MARK "DEFENDERS OF THE FATHERLAND DAY", THE 80TH 
ANNIVERARY OF THE FOUNDING OF THE SOVIET MILITARY. CORRESPONDENT
PETER HEINLEIN IN MOSCOW REPORTS THE TONE OF THE DEMONSTRATION 
WAS SHARPLY ANTI-AMERICAN.

TEXT: 

/// SFX OF SINGING, FADE TO... ///

IT WAS A TRADITIONAL DAY OF NOSTALGIC SONGS AND PATRIOTIC 
SPEECHES IN FRONT OF THE LUBYANKA, HOME OF THE SOVIET SECURITY 
SERVICE, THE K-G-B. AS RED HAMMER AND SICKLE FLAGS FLAPPED IN 
THE BREEZE, ABOUT FIVE-THOUSAND MOSTLY ELDERLY RUSSIANS CHEERED 
AS SPEAKER AFTER SPEAKER RECALLED THE GLORY OF SOVIET MILITARY 
POWER.

/// SFX OF CHEERING, FADE TO... ///

BUT THE EVENT ALSO HAD ANOTHER THEME: OPPOSITION TO U-S POLICY ON
IRAQ. COMMUNIST PARTY LEADER GENNADY ZYUGANOV WARNED OF THOSE 
WHO WANT TO DOMINATE THE WORLD.

///ZYUGANOV ACT UP, THEN FADE TO...///

MR. ZYUGANOV SAID TODAY THE VULTURES ARE CIRCLING, GETTING READY 
TO STRIKE AT IRAQ. HE LASHED OUT AT WHAT HE CALLED THE -- 
POLICEMEN OF THE NEW WORLD ORDER WHO PRESUME THEMSELVES TO BE 
MASTERS OF THE PLANET. HE CAUTIONED RUSSIA COULD BE NEXT IN 
THEIR SIGHTS.

VICTOR KOSHIRIN STOOD QUIETLY NEXT TO THE STAGE WEARING HIS 
SOVIET ARMY OFFICER'S UNIFORM. THE 48-YEAR-OLD FORMER LIEUTENANT
COLONEL SAYS MANY RUSSIANS FEAR WHAT HE CALLED -- AMERICAN 
AGGRESSION.

/// KOSHIRIN ACT UP, THEN FADE TO... ///

MR. KOSHIRIN SAID -- THIS AGGRESSION IS DIRECTED AT US AS MUCH AS
IRAQ, AND SO WE HERE AS STANDING WITH IRAQ.

FELIX GLAZKOV STOOD HOLDING A LARGE HAND-PAINTED PLACARD SHOWING 
A SMILING PRESIDENT CLINTON PUSHING RUSSIAN PRESIDENT BORIS 
YELTSIN, AS MR. YELTSIN CUTS UP A MAP OF THE SOVIET UNION.

MR. GLAZKOV SAYS RUSSIANS ARE HUMILIATED BY THE TURN OF EVENTS 
THAT HAS WEAKENED THEIR ONCE-PROUD ARMY. BUT HE PREDICTS THE 
PENDULUM WILL SOON SWING THE OTHER WAY.

/// GLAZKOV ACT UP, THEN FADE TO... ///

MR. GLAZKOV SAID -- EVERY COUNTRY HAS ITS UPS AND DOWNS. BUT 
RUSSIA WILL NOT REMAIN IN MISERY. SO WE WILL MEET IN THE WORLD 
ARENA. AND IT MAY NOT BE WHAT SOME AMERICAN POLITICIANS EXPECT.

IN A SPEECH MARKING DEFENDERS OF THE FATHERLAND DAY, PRESIDENT 
YELTSIN ACKNOWLEDGED MILITARY WEAKNESS, AND SAID THE SOLUTION IS 
A SMALLER, PROFESSIONAL ARMY.

/// YELTSIN ACT UP, THEN FADE TO... ///

MR. YELTSIN SAID -- WE ARE BUILDING A NEW ARMY, A PROFESSIONAL, 
MOBILE ARMY THAT MEETS MODERN REQUIREMENTS.

MEANWHILE, THE ARMED FORCES ARE BEING CUT TO ABOUT 
ONE-POINT-TWO-MILLION MEN THIS YEAR, ALMOST HALF THE STRENGTH OF 
THE SOVIET UNION'S COLD-WAR FIGHTING MACHINE. 

********

#11
GEORGIA'S PRESIDENT DENIES RUSSIAN TOP CONNECTION IN 
ATTEMPT ON HIS LIFE, BUT INSISTS ON RUSSIAN INVOLVEMENT

TBILISI, FEBRUARY 22, RIA NOVOSTI - President Eduard
Shevardnadze again denied the Russian presidential circle's
alleged involvement in an abortive attempt on his life, February
9, as he addressed a congress of the Georgian Citizens' League,
party in office.
He is sure, however, of a track leading to Russia. "The
killers could not have organised the assassination. I do not by
far assume Chechen leaders' involvement, and I know that the
masterminds are in Moscow," said the president as he emphasised
that he was not hinting at either Boris Yeltsin or anyone close
to him.
"There are forces in Russia who can be expected to oppose
their president to get their ends. The latest Caucasian changes
run against these ends. Terrorists were hoping to fling Georgia
into a chaos which would be inevitable if I were killed February
9. But whatever they might be doing, the West now knows Georgia
for a reliable partner in teamwork, and oil and gas mainlines
will soon be crossing our country," said Shevardnadze. 

*******

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