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Johnson's Russia List


February  27, 1998  
This Date's Issues:    2083   ē 

Johnson's Russia List
27 February 1998
For more articles from The Moscow Times, check out their website at
[Note from David Johnson:
1. Moscow Times: Christian Lowe, Theatrics Are Designed to Show 
Who's Boss.

2. The Electronic Telegraph: Alan Philps, Yeltsin puts his ministers 
through trial by television.

3. Anthony D'Agostino: Re Hahn. 
4. Kennan Institute Meeting Report: Kathryn Stoner-Weiss, "Local Heroes" 
and Political Economy in Russia's Regions.

5. Heritage Foundation: Ariel Cohen, NATO Enlargement Is No Threat to 
U.S.-Russian Relations.

6. Sovetskaya Rossiya: Left Paper Hits IMF's 'Humiliating Demands.' 
7. Moscow Times: Andrei Piontkovsky, SEASON OF DISCONTENT: Yeltsin
Braces For Last Battle To Keep Power.

8. Interfax: Sergey Kovalev--US 'Mistakes' Behind Iraqi 'Crisis.'
9. Reuters: Europe must help Russian democracy - Ahtisaari.
10. Selskaya Zhizn: Farming Paper Claims George Soros Protects Vice 


Moscow Times
February 27, 1998 
Theatrics Are Designed to Show Who's Boss 
By Christian Lowe

With his capricious performance at Thursday's keynote government 
meeting, President Boris Yeltsin was proving to his ministers that he is 
still the unrivaled boss in the Kremlin and as such can do what he 
pleases, analysts said. 
Yeltsin's unceremonious exit from the meeting at the government's White 
House headquarters sent financial markets falling and left politicians 
and commentators alike scratching their heads over what to make of the 
The 67-year-old leader threatened to sack three Cabinet ministers by the 
end of the meeting, but left without firing anyone. Prime Minister 
Viktor Chernomyrdin did, however, indicate that heads might still roll, 
singling out three ministers -- State Tax Service chief Alexander 
Pochinok, Deputy Prime Minister in charge of relations with former 
Soviet republics Valery Serov, and Foreign Trade Minister Mikhail 
Fradkov -- for particular criticism. 
Rumors immediately began to circulate that Yeltsin had fallen ill or 
that the president -- who was seen scowling through much of 
Chernomyrdin's speech -- left because he was unhappy with the way the 
meeting was going. 
But according to analysts, Yeltsin was just demonstrating his familiar 
mercurial style. 
"Yeltsin is not interested in politics, but in power," said Sergei 
Markov, director of the Institute of Political Studies. "He threatened 
[to fire cabinet ministers] so that everyone would know he is the master 
of the house," Markov said. "He wants to show that he has the complete 
right to be capricious." 
According to some reports, Yeltsin had wanted to fire ministers 
Thursday, but Chernomyrdin dissuaded him from doing so at a meeting 
between the two men earlier that morning. 
"It is possible that at the beginning Yeltsin wanted to sack people, 
then changed his mind," said Yury Korgunyuk, analyst with the INDEM 
think tank. "But he went ahead and said it all the same. ... These 
things happen with Boris Nikolayevich from time to time. He gets carried 
Yeltsin threatened the sackings not because of a desire to ring the 
changes in the work of his cabinet, but out of inertia. "Yeltsin has 
been threatening for a long time to haul his government over the coals," 
said Korgunyuk. "And now he had them all gathered together and so he had 
to stamp his foot a little." 
In fact, Yeltsin recently promised not to sack the two most 
controversial figures in the Cabinet, first deputy prime ministers 
Anatoly Chubais and Boris Nemtsov. 
Yeltsin's promise of wholesale sackings Thursday, however, casts a long 
shadow over less prominent figures in the cabinet, particularly the 
three ministers targeted by Chernomyrdin. 
Indeed, dismissals are even more likely now, otherwise Yeltsin risks 
losing face, Korgunyuk said. "Even if in the beginning there were not 
any plans to fire anyone, now they will have to do it." Korgunyuk added 
that, in his opinion, the firings would reach no higher than "the level 
of deputy minister." 
Markov suggested, however, that Pochinok, Fradkov and Serov, plus Yakov 
Urinson, the deputy prime minister with responsibility for industrial 
policy, are at the front of the firing line. They are at risk partly 
because none of the ministers has achieved particular success in their 
respective sectors. But perhaps more importantly, they are convenient 
scape goats. 
"They are not colorful figures, therefore it is easy to remove them 
without causing a fuss and without political consequences," said Markov. 
"If you fire a colorful figure then they could run for the [State] Duma 
or for the presidency." 
Fradkov, 48, a career bureaucrat, was appointed head of the Foreign 
Trade Ministry in April 1997. Chernomyrdin gave a stern assessment of 
Fradkov's work Thursday. "You lack initiative. You don't bother, which 
is absolutely inadmissible for such a ministry," the prime minister 
said. "On the contrary, we say act, make mistakes. We will correct you 
or replace you as the president has said today." 
"There have been complaints about the ministry for some time," said an 
official with the World Bank in Moscow who did not want to be named. "It 
is considered to be not promoting Russian products abroad actively 
enough." But the official added, "Our experience is that, whoever is in 
the minister's chair, nothing much changes." 
Pochinok, 40, previously a deputy in the Duma, parliament's lower house, 
was named head of the Tax Service last April. He said Thursday that tax 
collection was up 35 percent for the year. But the poor record on tax 
collection has embarrassed the government and forced it to call for deep 
cuts in spending in the 1998 draft budget. 
The 58-year old Serov has also failed to please his superiors in recent 
months. Yeltsin has little progress he can point to in his goal of 
deepening integration with former Soviet states. Most recently, Serov 
took the blame for a Commonwealth of Independent States summit last 
November at which Yeltsin arrived badly-briefed and unprepared for the 
storm of criticism he received from his fellow CIS leaders. 


The Electronic Telegraph (UK
27 February 1998
[for personal use only]
Yeltsin puts his ministers through trial by television
By Alan Philps in Moscow 

THE show trial - the staple of political life under Stalin - returned to 
Moscow yesterday as President Yeltsin staged a special cabinet session 
to flush out the ministers responsible for wrecking the Russian economy.
He opened the meeting, live on television, with the news that three 
ministerial heads would have to roll for the failures of the past year. 
His tone sent a shudder through the assembled ministers, as they tried 
to guess who would be heading for Siberia.
The President told them to forget triumphal talk: the people demanded 
that the guilty be punished. "We are here to sum up the results of 1997 
and name the culprits, the people who failed to carry out their 
assignments, who made promises but didn't keep them," Mr Yeltsin said.
Viktor Chernomyrdin, the Prime Minister, launched into abject 
self-criticism punctuated with some extravagant praise for the 
President's "gigantic" efforts to avert war over Iraq. He said the 
government he had headed since 1992 was slow, lacked initiative, was 
self-satisfied and afraid of unpopular steps.
State budgets were "virtual reality", the tax system was "surreal", the 
government was blundering around in a "financial fog", and the economy 
was clogged with "mounds of garbage". He said: "We have been unable to 
keep pace with the times, unpardonably slow in making decisions, and 
lacking in responsibility."
"This is due to our own errors and miscalculations, inefficient 
management, frequent changes of personnel and organisation, and our 
inability or reluctance to face economic realities." Rarely has such a 
full confession of guilt been made by a government.
"The load of the problems in the Russian economy and the international 
context mean that steering such a heavily-laden vehicle at high speed 
would challenge even a top-class driver," he said. Pleading to be spared 
a reshuffle, he said that the country did not need more "frenetic 
According to NTV television, he asked Mr Yeltsin before the show trial 
to moderate his criticism. In the end, Mr Yeltsin left the meeting after 
90 minutes, when it became clear that he would not be able to dismiss 
anyone on television.
Some sources said that Mr Yeltsin was unhappy that the Prime Minister 
had insisted on a less theatrical end. The Kremlin said the President 
had to leave to record a radio address, but it could just have been that 
Mr Yeltsin, having delivered his dramatic prologue, got bored.
His departure was a perfect example of his style. He is always right, 
the government is to blame. His spokesman said that he would disclose 
his verdict on the government today.


Date: Thu, 26 Feb 1998 
From: "Anthony D'Agostino" <>
Subject: Re: Hahn

You would never know it by the tone of the debate on the fall of Soviet
power between Hahn and me, but there is a great deal of developing
consensus. In fact one can note a marked evolution in Hahnís views.
Consider his most recent three points:
1. I complained about the widespread Gorbachev Intentionalism (JRL
2036). I see the fall of Soviet power as inadvertent. I donít see any
Gorbachev epiphany about the bankruptcy of the Soviet system. Hahn seems to
agree, calling the Gorbachev revolution "unintended." So far so good. But
he also denies my argument that Gorbachev was engaged from 1985 to 1991 in a
bitter struggle for power, a struggle in which he sought, in my opinion,
personal power free of any opposition. He thinks that I have only noted
this to ascribe "ulterior motives" to Gorbachev (JRL 2041). Well, if the
fall of Soviet power was not intentional, and it was not a matter of power
struggle (in the toils, to be sure, of a US "exhaustion strategy"), then how
did it happen? 
Hahn refers cryptically to Gorbachevís "learning." We all used to talk a
great deal about Soviet learning and about a "learning curve" in Soviet
strategic doctrine. How does it work here? Can we have inadvertence and
learning at the same time? It is not clear. 
2. Hahn has arrived at a denial of the struggle for power. "One cannot
argue," he now says, "that Gorbachevís tenure was threatened from 1985 to
1991," at least not by reference to his post as CPSU general secretary. To
do so is just "old Sovietology" (I think he meant to say Kremlinology).
That is discouraging. Soviet power was based on the CPSU, and the gensek
was boss right up to the coup of August 1991. But Hahnís point is that
Gorbachev was by that time safely ensconced in his improvised and unelected
Presidency. This is just what Gorbachev himself thought: after the new
Union treaty he would leave the economic and fiscal problems to the
Republics while they left the foreign policy of the new Union to him as
their President. A few months later he was undeceived. When the party was
crushed so was the Union. No doubt inadvertently, Hahn ends up citing the
Soviet Presidency to show the security of Gorbachevís tenure! 
3. Was de-Stalinization prompted by the emergence of the Ligachev
opposition in January 1987? I said yes. It was another indication of the
opposition attacking and Gorbachev trumping them with what the French call
a fuite en avant, an "escape forward." Your opponents are complaining that
you have produced an excess of X. It is dangerous that there is so much X.
You respond that we need, not less, but more X, the greatest amount of X!
To deny the need for redoubled X is "thinking in the old way." The fuite en
avant is the pattern of the Gorbachev attacks on opposition after the plenum
of January 1987 and in the period between the letter of Mme. Andreeva and
the Nineteenth party conference in summer 1988. Hahn wants to see it the
other way: Gorbachev initiates the campaign for X and the opposition
resists. Is this Gorbachev Intentionalism?
In JRL 2041, Hahn devoted three paragraphs to proving that
de-Stalinization was already the line during the period of "Acceleration"
(uskorenie), 1985-7. But I cited cases of Gorbachev endorsing and defending
Stalinism during that period. In JRL 2070, Hahn makes a retraction: "I said
(or meant to say) that glasnost began with uskorenie." Glasnost, he now
says, and not de-Stalinization. Of course, glasnost before January 1987
only meant better information, not de-Stalinization. So Hahn now agrees.
So far so good. But wait, he says I am still wrong. "DíAgostinoís
reference to a 1985 speech (of Gorbachevís) is thus irrelevant. Everyone
knows what Gorbachev was saying thenÖ He would have been crazy to talk about
de-Stalinization in 1985. It would have been his and reformís death knell
for several more decades." He would have been crazy? What about those
three paragraphs on the presumed de-Stalinization in JRL 2041? 
Hahn said in JRL 2041 that Gorbachevís November 1987 speech on the 70th
anniversary of Soviet power was the "kickoff of the campaign" for
de-Stalinization and drastic changes. I replied that this was wrong, that
the speech was a compromise according to Ligachevís ideological formulas.
In JRL 2070, Hahn says "DíAgostino is correct in a way that the November
speech was a compromiseÖ" So far so good. But a few lines up the page he
again says the speech "kicked off the real de-Stalinization campaign." This
will not wash. It was less like a kickoff than being tackled in your own
end zone. Gorbachevís point man Yeltsin had just lost the Moscow post
(think about the importance of this bastion for past Soviet leaders!) and
Gorbachev had been forced to jump on the bandwagon against him at exactly
the same time the speech was to be approved. This was a big defeat for
Gorbachev. Ligachev was riding high for some months afterward until he
overdid it with the Andreeva letter. 
The de-Stalinization campaign had begun before the speech with historian
Yuri Afanasievís articles in spring 1987, but he was pounced on by a group
of Stalinist historians and never recovered the momentum. This, together
with Yeltsinís troubles with Ligachev, hemmed Gorbachev in. The speech ends
up saying that Stalin was right against all opponents but only wrong to
shoot them. In fact Gorbachev did not go as far on this as Khrushchev in
1956. After the speech and Gorbachevís defeat in the Yeltsin affair, he
reverted to the formula that he was beset on two fronts by both the left and
the right, "vanguardism" and "conservatism." This put me in mind of
Stalinís "struggle on two fronts" in 1932 and Khrushchevís fulminations
after 1957 against both Molotovís "dogmatism" and "Titoite revisionism."
After the Yeltsin affair, Gorbachev acted like a born-again centrist, albeit
one who was capable of zig-zags in either direction as it suited his quest
for greater power. In this sense he followed the pattern of Lenin, Stalin,
and Khrushchev. 
Hahnís ideas are evolving. One never thinks exactly the same things at
the end of a study that one thought at the beginning. 


Kennan Institute for Advanced Russian Studies
Washington DC
Meeting Report 
"Local Heroes" and Political Economy in Russia's Regions
Kathryn Stoner-Weiss
Reportby Jodi Koehn

Some of Russia's provinces have obviously fared better than others in the
transition to
democracy and a market economy, said Kathryn Stoner-Weiss at a Kennan Institute
lecture on 22 January 1998. Stoner-Weiss, Assistant Professor of Politics and
International Affairs, Princeton University, presented the findings of her
recently published book
to explain why higher performance oblast governments or "local heroes"
existed in some regions
but not in others.
Stoner-Weiss examined the performance of four Russian regional
governments: Yaroslavl,
Nizhny Novgorod, Saratov, and Tiumen. In the study, there was a clear and
performance ranking among the four cases. Nizhny Novgorod oblast rated
highest, Tiumen
ranked second, Yaroslavl third, and Saratov consistently lagged. When asked,
political actors in
the two highest performance cases Nizhny Novgorod and Tiumen responded that
they viewed
consensus or stability to be their most significant accomplishment.
Stoner-Weiss argued that relative stability or political consensus in
these regions was a
function of the concentration of the regional economy and the degree to
which regional economic
interests cooperated with one another and with regional government actors.
Where the economy
was concentrated, there was less competition for access to political
resources and key groups of
economic actors could collectively pursue inclusion in the governing
process. Where the economy
was more dispersed, economic interests conflicted, causing sharp competition
for access to scarce
regional resources. The result was lower regional government performance.
According to Stoner-Weiss, in regions with concentrated economies, elites
overcame two
collective action or cooperation problems. The first involved cooperation of
a powerful group of
economic actors who pursued systematic access to regional government. In
Nizhny Novgorod
and Tiumen, well-organized enterprise associations formed in each of the
dominant economic
sectors and commanded a fairly large block of seats in the newly elected
regional legislatures. Not
only did the concentration of the regional economy encourage economic group
formation thereby
overcoming one collective action dilemma, but it also fostered cooperation
between organized
economic interests in the regional government.
In regions with an economy concentrated within a single sector or among a
few large and
important enterprises, the structural context explained behavior and
political outcomes. The
"imbeddedness" of the actions of political and economic interests in such an
environment meant a
more limited and specialized pool from which to draw regional political
actors. Economic and
political behavior in a concentrated economic community also promoted
horizontal networks
between political and economic actors that, in turn, promoted credible
commitments to one
According to the speaker, cooperation between economic and political
actors involves the
state allowing economic interests to play a more active role in policy
formation and
implementation. In return, economic interests deliver indirect political
power to the state by
guaranteeing consensus and by drawing on their own resources to ensure the
effectiveness, and efficiency of state action. The result of this was a
general consensus on political
Where cooperative business-government relations were present, regional
performance was higher. Concentration of the economy in a particular sector
narrowed the elite
pool both in Nizhny Novgorod and Tiumen, the two higher performance regions,
leading to a
consensual rather than conflictual selection of leaders by the oblast
legislature. Economic
concentration also promoted consensus and limited factionalization within
the legislature.
Furthermore, consensus on political goals meant less time spent on
organizational matters than on
policy issues.
Policy outputs and implementation in Tiumen and Nizhny Novgorod were more
coherent and
both had broad economic development programs. Key organized economic
interests participated
in policy formation and used their authority to insure implementation of
economic development
plans. Furthermore, education policy benefitted from the incorporation of
economic interests into
policy output and implementation.
In conclusion, Stoner-Weiss argued, the key variable in explaining
performance variations
among regions is collective action or cooperative behavior between political
and economic elites.
The more concentrated the regional economy, the more likely collective
action will take place.
However, while a certain amount of consensus or elite accommodation is
desirable in every
successful and democratic government, too much elite consensus could
endanger pluralism in the
longer term. It may also jeopardize the growth of market relations if
regional governments
artificially support inefficient enterprises that market forces might
otherwise force into
bankruptcy. Therefore, while regions with concentrated economies may have
achieved more in the
early stage of transition, if cooperative relations persist in the very long
term, there is a risk that
democratic responsiveness will be sacrificed in the interest of stability
and governmental
effectiveness. The "local heroes" of today must therefore be careful not to
become impediments
to the further growth of democracy and the market in the future. 
"Local Heroes: The Political Economy of Russian Regional Governance"
sponsored by the
Kennan Institute for Advanced Russian Studies, was presented 22 January 1998
by Kathryn
Stoner-Weiss, Assistant Professor of Politics and International Affairs at
Princeton University
and former Title VIII-Supported Research Scholar, Kennan Institute. Jodi
Koehn is Program Specialist, Kennan Institute for Advanced Russian Studies.


Heritage Foundation
Washington DC
Executive Memorandum 510: 
NATO Enlargement Is No Threat to U.S.-Russian Relations
By Ariel Cohen
February 24, 1998

Fears that the enlargement of the North Atlantic Treaty Organization
(NATO) to include
Poland, Hungary, and the Czech Republic will disrupt ties between the
United States and
Russia are unfounded. Russia needs Western investment, technology, and
cooperation to
integrate into the global economy. In addition, the Western media
overemphasize anti-NATO
sentiment among Russians. Polls show that Russians worry more about
payments of
chronically delayed wages, low living standards, crime, and corruption.
Russia's real
security concerns, moreover, are with its Islamic neighbors and the
People's Republic of
China, not with the democratic West. Finally, even the Yeltsin
administration, which
vehemently opposes NATO enlargement, admits that the major threats to
Russia are domestic,
and that no foreign country currently endangers Russia's security.

Investment to Modernize Russia. Russia needs Western investment and
to modernize its economy and society. A vitriolic anti-American campaign
and an offensive
military posture hinting at a new Cold War will scare off foreign
investors and might
jeopardize multilateral economic assistance. Russia will not risk access
to the benefits
the West can offer just to derail Polish, Czech, and Hungarian membership
in NATO. Russian
reformers understand that enhanced stability and democracy in Central and
Eastern Europe
are in Russia's interests.
Russian reformers also understand that Russia can benefit from
cooperation with NATO on
such issues as civil-military relations, fighting crime and corruption in
the military,
protecting the rights of enlisted personnel, and cutting the military
budget and manpower.
NATO has expertise in these areas that it will share willingly with Russia.

The Battle Within. Strong opposition to NATO expansion comes from the
foreign policy and security elite, a group composed almost entirely of
Soviet-vintage Cold
Warriors. Anti-Western leftists, imperialists, and nationalists--the so-called
Eurasianists--see Russia as a unique imperial entity spanning Europe and
Asia, dominating
its former vassals and opposing the United States, possibly in an alliance
with China and
Iran. They have attempted to use the NATO enlargement debate to draw
Russia away from the
West. If NATO expands to the east, Eurasianists fear the imperial option
of Russia's
renewed domination in Eastern and Central Europe could be foreclosed forever.
Such democrats as former acting prime minister Yegor Gaidar, however,
and even the
populist-nationalist General Alexander Lebed have asserted that NATO
enlargement is the
business of NATO (and the new members), and that Russia has nothing to
fear of the West.
Reformers eventually would like to see Russia as a part of the West, and
possibly, a
partner in NATO.
A positive step toward this goal was taken in the Founding Act on
Relations between
Russia and NATO signed in Paris on May 27, 1997. In that document, Russia
and NATO created
a bilateral council and permanent missions that are now working in Moscow
and Brussels.
The council gives Russia an opportunity to be part of all discussions on
issues of mutual
interest, and gives Russia a voice, but not a veto, in NATO decisions.
This arrangement
will make Russia a genuine part of the European security equation.
The Average Russian Does Not Care. The battles of the policy elites have had
little effect on the average Russian. The general public paid little
attention to the NATO
debate, rightly considering it an "inside-the-Moscow-Beltway" issue. United
States Information Agency (USIA) polls conducted in October 1996 and April
1997 showed 78
percent of the broad public knew little or nothing about the pending
enlargement. Of those
polled, less than 40 percent opposed enlargement, placing concerns over
wages, the
economy, crime, and corruption far above foreign policy and defense
issues. And 70 percent
of the Russians polled also indicated their belief that the special
relationship with NATO
would be in Russia's interests.

No Real Threat. Some Russians oppose NATO enlargement because they are
of the long history of invasions from the West. They fear that the move
eastward might be
the prelude to another attack. Gennady Zyuganov (leader of the Communist
Party of Russia,
which boasts the largest faction in the State Duma) repeatedly has
compared the pending
NATO enlargement with the eve of the Nazi invasion in 1941.
Ultra-nationalist Vladimir
Zhirinovsky often invokes the specter of a U.S. attack on Russia.
The comparison with the Nazis, of course, is ludicrous. NATO has no
designs on Russia; as a defensive alliance, it has no capability to
achieve them. In
addition, there is no common border between Russia proper and the new
members (except for
the small enclave of Kaliningrad--known as Koenigsberg before 1945--locked
between Poland
and Lithuania) from which to launch an attack.
Moreover, the Yeltsin administration's official national security
doctrine, which was
published in December 1997, clearly states that foreign countries
currently do not pose a
threat to Russia's security. Crime, corruption, a poorly managed economy,
poverty, and
social malaise are the real dangers.
Most Russians, too, understand that their most significant security
challenges today
lie elsewhere. For example, China is pouring half a million immigrants a
year into the
largely empty Russian land between Lake Baikal in Siberia and the Pacific
Ocean. Chinese
economic and technological growth has outstripped Russia's by far.
Friction with Islamic
neighbors in the northern Caucasus, such as the Chechens and possibly
others in the
future, and bloody entanglements in faraway places like Tajikistan
demonstrate where the
real threats are. With conflicts possible to the south and east, Russia
should be
interested in securing its western borders by having democratic
neighbors--and especially
Germany, which twice in this century sparked world wars--in a stable,
democratic alliance.

What the West Can Do. Eventually bringing Russia into the Western
orbit will
benefit both Russia and the United States. Post-communist Russia needs to
be engaged--not
isolated--on the global scene, including on issues of European security.
objections to the current round of NATO enlargement are not widespread
popular sentiments
but rather a facet of Moscow's political games. The United States should
mount a
comprehensive program, using the USIA and other avenues of public
diplomacy, to explain
the truth about NATO enlargement to Russia's media and general public.
Once the facts are
known, Russians will understand that the ascendancy of the new members
into the alliance
in no way prevents the United States from continuing to work with Russia
to enhance
bilateral and multilateral security cooperation.

Ariel Cohen, Ph.D., is Senior Policy Analyst in Russian and Eurasian
Affairs at The 
Heritage Foundation.


Left Paper Hits IMF's 'Humiliating Demands' 

Sovetskaya Rossiya
21 February 1998
Article by Vasiliy Safronchuk: "Camdessus' Prescription.
President's Message Addressed Not to Federal Assembly but to an

There was a cartoon in a Western paper showing Boris Yeltsin
addressing not the Federal Assembly but the only person in the chamber --
IMF managing director Michel Camdessus. The cartoon is the clearest
reflection of the nature of relations between Russia today and the IMF. In
fact, the ruling Russian regime is merely the obedient steward of the IMF,
which is the West's main financial institution. This is why the Russian
president's appeal was addressed not to the Russian Federation Federal
Assembly but to just one listener -- Camdessus.
Yeltsin is aware that it is a sorry sight and that some months ago he
had theatrically declared that Russia was giving up IMF credits. But less
than two days after that Russians learned to their surprise not only that
Russia had been given another three- year credit tranche totaling $670
million but that Camdessus had also consented to extend this credit to a
fourth year -- right up to the end of 1999. The terms for IMF credit
extension are normally kept secret, although some Western observers say
that they will in fact be made public in two weeks' time! Following State
Duma approval of the 1998 budget, evidently. But it is already clear from
Western news agency commentaries that Camdessus' main condition is a budget
cut of R27.9 billion and that B. Yeltsin is prepared to meet this
condition, to which end he included a last-minute demand to the government
to that effect in his address to the Federal Assembly. Moreover, he even
threatened to dismiss the government if the demand is not met. It is said
that Chubays inserted this in the text of the president's speech at
Camdessus' request literally an hour before that president appeared in the
Federal Assembly! From the information that has appeared in the press, it
is clear that there were other humiliating demands as far as Russia is
concerned. In particular, Camdessus demanded the abolition of oil import
duties, at the Western oil monopolies' insistence. He also demanded the
abolition of concessions for capital investments in the Gaz-Fiat project,
recently signed with great pomp and ceremony. This is clearly at the
bidding of U.S. automobile concerns, which do not want their competitors to
have advantages in the Russian automobile market.
But the main thing that Camdessus is insisting on is a review of the
budget, which is now a completed document, has been through three readings,
and was supposed to have its fourth reading on 18 February. Months of hard
work by the government and Duma wasted! Duma speaker G. Seleznev was right
when he said that to rejig the budget the day before it is finally adopted
is not a normal thing to do. It is interesting that the victims of the
Camdessus-Yeltsin- Chubays ax are the very items of expenditure which the
opposition successfully defended after such a difficult struggle with the
antipopular ruling clique: appropriations for schools, for the upkeep of
the North, for the fishing industry, and so on.
Various ways of resolving this situation are under discussion. It is
said that the government will agree to keep this expenditure on paper in
the budget, but will reserve the "right" to sequestrate "if sources of
finance are not found." The opposition insists on keeping the
appropriations until May, when, according to the president's demand, a
global reduction in expenditure on budget- funded institutions is to be
made. There is a proposal from the NDR [Russia Is Our Home] faction that
the budget-authorized upper limit on sequestration of all budget articles
in the event of undercollection of taxes be raised above the established
level of 18 billion rubles [R].
During his three-day stay in Moscow Camdessus constantly praised the
Kremlin for helping the Western economy survive the upheavals due to the
financial crisis in Asia through its tough budget and credit and money
policy. And there are things to be grateful for! After all, the Russian
stock and foreign exchange markets were the source of funds that enabled
Western countries to hang on during the Asian financial typhoon. Experts
estimate that in January-February alone Western investors drew at least $10
billion, that is, R60 billion, off the Russian securities market! More
than R30 billion went from the short-term state bonds market alone. In
exchange Mr. Camdessus gave the Kremlin a pitiful $690 million, that is, a
little over R4 billion! To prevent the stock and foreign exchange market
from collapsing completely the Central Bank had to raise the refinancing
rate from 26 to 42 percent. The market rate for short-term state bonds
soared to 46 percent. Moreover, Central Bank Chair Dubinin stepped in the
way (or put his beard in the way, perhaps) to protect not Russia but the
West! In so doing he created a hole of nearly R28 billion in the budget,
since the cost to the government of borrowing transactions on the
short-term state bonds market increased by that very amount!
Sovetskaya Rossiya predicted this scenario three weeks ago. On 3
February the paper wrote that the 1998 budget was based on a calculation
that the Central Bank rate would be 16-18 percent and raising it would make
the government revise this year's main budget item -- expenditure on
servicing the state debt -- in an upward direction, which would require the
cutting of other budget expenditure items.
This is exactly what happened, and a hole measuring R28 billion opened
up in the budget. Instead of obtaining the missing money through taxation
of the financial oligarchy, the government is following Camdessus'
directions and imposing a tribute on... the entire people! Meanwhile the
oligarchy's private banks are making around R60 billion per year
speculating in short-term state bonds alone. Incidentally, the Central
Bank raised the rate following the collapse of the Russian securities
market. In January alone the share index for 50 major Russian companies
fell by 36.7 percent. The value of government bonds fell by the same
amount. But market speculators, Russian and foreign Soroses, are making
money out of the violent fluctuations in share rates.
Camdessus presented Indonesia with the same prescription. But people
there are not as patient as in Russia. They took to the streets, so the
government was forced to use the army and police against the demonstrators.
The number of victims of bloody clashes there is increasing daily.


Moscow Times
February 27, 1998 
SEASON OF DISCONTENT: Yeltsin Braces For Last Battle To Keep Power 
By Andrei Piontkovsky 

Not since Joseph Stalin has any person in Russian politics had so acute 
an instinct for power as President Boris Yeltsin. This basic instinct 
has helped him survive both physically and politically against 
tremendous odds. 
Somewhere in the middle of Siberia, a gentleman with a gravelly voice 
and threatening grimaces is running for local governor with mixed 
prospects. For two years he had been shouting from every corner that, 
according to exclusive information at his disposal, Yeltsin is about to 
die tomorrow and that he will become president of Russia the day after 
Others buried Yeltsin politically in their minds. They imagined that 
they exerted such overwhelming influence on him that they could 
manipulate him. "We spent a lot of money on Yeltsin's presidential 
campaign," Boris Berezovsky told the Financial Times a year and a half 
ago. "We ensured his victory. Now we have full right to enjoy fruits of 
our victory and take posts in the government." 
Many people in Russia and abroad were shocked by the cynicism of this 
message. But very few realized that it is not only cynical, but 
absolutely false. They did not spend a penny of their own money on the 
campaign. On the contrary, they earned a lot of budget money directly or 
indirectly -- through shares-for-loans auctions and other schemes -- 
during the campaign. The notorious Xerox box of campaign money contained 
just peanuts thrown out contemptuously to lower class servants of both 
sexes from the show business community for their professional services. 
Owners of television stations were rewarded much more lavishly. 
But they repeated this rubbish about their sacrifices to the cause of 
de mocracy so many times that they seemed finally to believe it 
themselves. Moreover, they believed that they succeeded in making 
Yeltsin believe it and that he owed them until the end of his days. This 
was strengthened by the successful privatization of some key members of 
the presidential administration. Here, Berezovsky has demonstrated his 
know-how. Instead of privatizing companies, which is expensive, he is 
privatizing top managers, which is much cheaper. He began his business 
career by getting hold of the AvtoVAZ plant by privatizing its head, 
Vladimir Kadannikov. His ambition now is to culminate his brilliant 
career by taking hold of Russia as a whole by privatizing persons very 
close to the aging president. 
He almost achieved his objective when the president unexpectedly made an 
attempt to rebel and pronounced some innocent words in favor of 
Berezovsky's political opponents. 
The next day, Feb. 6, the furious Great Privatizer rebuffed the old man 
mercilessly in his newspaper, Nezavisimaya Gazeta, under the pseudonym 
Tatyana Koshkaryova. He reminded the president once again how much money 
he and his colleagues spent on his re-election, announced that they had 
already selected his successor and recommended that he not interfere in 
this process of selection. Otherwise he would get himself in trouble. 
"The country needs a much cheaper president," concluded 
Berezovsky-Koshkarova menacingly. 
The last time Yeltsin was talked to in such a way was more than 10 years 
ag o at the Central Committee Plenum. It then marked the end of Party 
Secretary Comrade Yeltsin. Is it now the end of Tsar Boris? I am not 
sure. Behind the Kremlin walls, Yeltsin is waging his last battle for 
political survival against the suffocating embraces of Berezovsky. 


Sergey Kovalev--US 'Mistakes' Behind Iraqi 'Crisis' 

MOSCOW, Feb 22 (Interfax) -- Well-known human rights activist, State
Duma Deputy Sergey Kovalev intends to publish a series of articles in the
newspaper Izvestiya.
He told Interfax in an exclusive interview that by doing so he intends
to step out of the shadow he had been in lately for a number of reasons,
including health which, he said, is improving; organizational duties
connected with the establishment and registration of an institute of human
rights, and little interest in him in most of the media.
He expressed the hope, in comment on the situation in Iraq, that "war
will not break out." He said, however, that Iraqi leader Saddam Husayn must
be made to fulfil all of the United Nations' demands.
He said that behind the current crisis in Iraq stood the United
States' own mistakes, the most serious of which was "the termination of the
1991 war which should have been carried to the complete defeat of the Iraqi
army, the detention of Husayn and his subsequent trial similar to the trial
in Nuremberg.


Europe must help Russian democracy - Ahtisaari
By Adam Jasser 

HELSINKI, Feb 26 (Reuters) - Finnish President Martti Ahtisaari said on
Thursday the European Union should use every opportunity to cooperate with
Russia to help it to make the transition to full-fledged democracy. 
Ahtisaari told Reuters that Finland's large eastern neighbour had already put
in place strong foundations of a democratic state but it needed support from
Europe to complete the transition successfully. 
``Russia has clearly indicated it wants to be part of Europe. We need to
encourage that,'' he said in an interview. ``This comes only through contacts,
but if you isolate a nation, you miss the opportunity.'' 
Finland has sponsored an initiative called the Northern Dimension that
aims to
co-ordinate all of the EU's aid and structural programmes directed at Russia. 
In its economic dimension, the initiative seeks to get the EU involved
exploiting rich natural resources in the northwestern part of Russia bordering
the Nordic region. 
The International Monetary Fund (IMF) and the World Bank have earmarked
billions of dollars to help to mend Russia's economy, but some IMF
disbursements have been halted due to delays in Moscow's efforts to streamline
state finances. 
EU money has also trickled in and Germany, Russia's leading European partner,
promised last November to rally Western leaders for more aid. 
Ahtisaari said signs that the Russian economy was finally picking up and the
emergence of a budding middle class bode well for its democratic future. 
But, pointing to the difficulties of German re-unification, he said post-
communist Russia still faced enormous tasks. ``If it takes so much time in
Germany, it will take a lot of time in Russia,'' he said. 
``This is not an excuse, but it should be an encouragement to all of
can cooperate with Russia to keep promoting democratic institutions
Ahtisaari said Russian President Boris Yeltsin's support for democratic and
ma rket changes had been essential but democracy would not falter when the
67-year-old leader ended his second term. 
'`Democracy has already prevailed and I think the democratic process will
produce new leaders, whoever they may be,'' he said. 
Finland's relations with Moscow took a new turn in 1992 when Yeltsin
apologised for the Soviet Union's often crude way of interfering in the
affairs of its much weaker neighbour during the Cold War. 
Following a lost war, Finland was forced to accept a friendship treaty with
the Soviet Union in 1948 that, while preserving independence, effectively
barred it from joining Western economic and military structures. 
Ahtisaari said democratic change in Russia elevated relations to a new frank
level and Finland, an EU member since 1995, was keen to have good dialogue
with Moscow. 
``There is no longer the Soviet Union, there is Russia and a democratic
Russia,'' he said. ``That's perhaps a greater change for us than joining the
European Union.'' 


Farming Paper Claims George Soros Protects Vice Premiers 

Selskaya Zhizn
24 February 1998
[translation for personal use only]
Report by "M.G.": "We Might Have Guessed..."

President B.N. Yeltsin's incomprehensible "love" for his two first
vice premiers elicits a host of bewildered questions. Why, for instance,
has Anatoliy Chubays, who was involved in the patently criminal saga
involving the removal of half a million "ownerless" dollars from a
government building, which casts a slur on the president, retained his high
office? And what about the even more sensational furor over the gigantic
royalty for an unpublished book: All Anatoliy Borisovich's co-authors were
deprived of their government posts at the time, but he himself got off with
a slight fright. And what about Boris Nemtsov, who does not add to his
lofty patron's prestige either? He has gotten away with abortive
initiatives like transferring officials to Russian cars. There are many
reasons why he got away with all this. Not least the following, probably. 
George Soros, who is known in our country as a major foreign investor and
patron of the arts and elsewhere in the world as a major financial
speculator, sent President Yeltsin a letter bearing an ultimatum saying
that, if Chubays and Nemtsov were dismissed, he, Soros, would be forced to
take his money out of Russia. The result is well known: Even an allusion
to the "writers' case," which is damaging to Chubays, was deleted from the
president's message to the Federal Assembly.


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