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Johnson's Russia List


April 2, 1998  
This Date's Issues:    2129  

Johnson's Russia List
2 April 1998

[Note from David Johnson:
1. Moscow Times: Michael McFaul, Perils of Yeltsin's Passion.
2. The Electronic Telegraph (UK): Alan Philps, Yeltsin offers olive branch 
to resolve government crisis.

3. Interfax: Yeltsin, Speakers, Acting PM Discuss Interaction Between

4. Russky Telegraf: Andrei Serov, KIRIYENKO WINS HEARTS IN FEDERATION 

5. The Independent (UK): Phil Reeves, Russia's PM linked to Scientologists.

7. Obshchaya Gazeta: Dmitry Furman, WILL TO SURVIVE VS. RULING ELITE'S 
INTERESTS. How the Leader Provoked a Split of the Elite.

8. Moscow Times: Chloe Arnold, Russia Spends a Day Suffering Fools Lightly.
9. Reuters: Latvia Seeks Compromise on Ethnic Russians.
10. Reuters: Minister Sets Dates for Major Privatizations.
11. Los Angeles Times: Richard Paddock, Russia Won't Cut Output Despite Drop
in Oil Prices.

12. Financial Times (UK): Chrystia Freeland, RUSSIA: Workers have little


For more articles from The Moscow Times, check out their website at

Moscow Times
2 April 1998
Perils of Yeltsin's Passion 
By Michael McFaul
Special to The Moscow Times
Michael McFaul is an assistant professor of political science at Stanford
University and a senior associate at the Moscow Carnegie Center. He
contributed this comment to The Moscow Times.

In the explosion of rumors, theories and explanations that purported to
account for President Boris Yeltsin's dismissal of Viktor Chernomyrdin as
prime minister last week, most sought to reconstruct a grand strategy or
intricate conspiracy that informed Yeltsin's decision. 
So, for those in the banking world, Chernomyrdin's removal served the
interests of tycoon Boris Berezovsky and Menatep head Mikhail Khordokovsky,
given that the government shakeup improved their chances of obtaining a
controlling share in the upcoming privatization of the coveted Rosneft. For
Kremlin watchers, Chernomyrdin's dismissal served the interests of
Yeltsin's chief of staff Valentin Yumashev and the president's daughter
Tatyana Dyachenko (and Berezovsky again). For those in the
political-consulting world, Yeltsin's move served the interests of an
unnamed successor. By removing Chernomyrdin, Yeltsin cleared away a
sure-bet loser for 2000 and strengthened the chances of finding a new
presidential candidate from the "party of power." 
In the end, all of these interests may be served by the government
shake-up. It is fundamentally wrong, however, to infer that Yeltsin did
what he did to serve these strategic interests. On the contrary, his
decision to remove Chernomyrdin and name Sergei Kiriyenko was driven by
passion and intuition. This is classic Yeltsin -- act impulsively first,
create a crisis situation and then figure out a plan to get out of the
crisis later. Yeltsin's uncanny ability to emerge victorious from such
situations gives him the confidence to continue acting in this way. Yeltsin
does not fear uncertainty; he savors it. 
Yeltsin unexpectedly dismissed Chernomyrdin because he grew tired of
everyone talking about the White House as the new center of power in Russia
and the Kremlin as the old center. In one dramatic decree, he demonstrated
to all that he is still the most important political figure in Russia today. 

The potential negative consequences of his choice of Kiriyenko are
minor. In a worst-case scenario, the State Duma could vote him down and
Russia would have to endure early parliamentary elections. The potential
upside of the choice is also minor. Kiriyenko may provide the stimulus to
jump-start "reform"; any positive change will be a marked improvement over
the years of stagnation under Chernomyrdin. 
The important consequences of Yeltsin's decision, however, are not in
the short term. Rather, the repercussions of Yeltsin's bold move last week
will only become apparent in the run-up to the presidential election. With
one decree, Yeltsin radically transformed the configuration of the next
presidential race. 
When Chernomyrdin was prime minister, he was the unquestioned leading
presidential candidate from the party of power for 2000. The banking
alliance among Berezovsky, Vladimir Gusinsky, Khordokovsky, and Alexander
Smolensky had gravitated to Chernomyrdin's camp, joining Gazprom as firm
economic backers of the prime minister. Potential rivals to Chernomyrdin
within the government such as First Deputy Prime Minister Boris Nemtsov
also seemed increasingly resigned to step aside and let Chernomyrdin run in
Early last week, many within the party of power were relieved to see
Chernomyrdin go, given that few believed he could win a free and fair
presidential election. By the end of the week, however, many of these same
people also realized that they had no obvious new candidate who could both
represent the interests of the current party of power and win the next
The party of power's disarray stands in sharp contrast to the order and
strategic planning that Moscow Mayor Yury Luzhkov and his team have
undertaken in preparations for the presidential race. Without question,
Luzhkov was the big winner of last week's government shake-up. He is the
man to beat in the next presidential race. 
Luzhkov has all the necessary components to win in 2000. He controls a
national television network and is buying up regional stations. Although
many pollsters argue that a Muscovite cannot be elected president, Luzhkov
and his advisers have carefully cultivated the mayor's image as a
"regional" leader who does battle with the center just like any other
governor. His brand of ethnic nationalism combined with his protectionist
rhetoric on economic policy appeals to a wide section of the Russian
electorate. Unlike any other candidate, Luzhkov appeals to democrats,
communists and nationalists alike. 
Many in the West think that a Luzhkov victory in 2000 would represent
continuity and stability. This is a wrong assumption. Luzhkov is the sole
political figure today with the will and capacity to change fundamentally
the rules of the game, both in politics and economics. He is the one
candidate who might unravel earlier privatization deals, introduce
protectionist and statist economic policies or play the ethnic card
regarding disputes with Ukrainians in Crimea or Latvians in Latvia. 
If preservation of the current political and economic order is the
ultimate objective in the next presidential election, even Communist Party
leader Gennady Zyuganov and retired General Alexander Lebed might be less
threatening candidates than Luzhkov. In a run-off between Zyuganov and
Luzhkov in the second round of the next presidential vote, it is not out of
the question that the current party of power would support Zyuganov. 
So, the short-term consequences of Yeltsin's move may be positive, while
the long-term consequences may be more dire. We must remember, however,
that we only have seen Yeltsin's first passionate move. Having knocked all
the pieces off the chess board, Yeltsin and his advisers are now slowly
putting the pieces back on the table in a more strategic manner. Although
he initiated this new period of political uncertainty with no strategic
vision at all, Yeltsin and his team still have two more years to develop a
winning game plan. 


The Electronic Telegraph (UK)
2 April 1998
[for personal use only]
Yeltsin offers olive branch to resolve government crisis
By Alan Philps in Moscow 
CHANCES of resolving Russia's government crisis rose yesterday as
President Yeltsin changed tactics, offering blandishments to parliament
instead of previous threats to dissolve it.
The Kremlin announced that Mr Yeltsin was inviting the speakers of the
two houses of parliament for talks with his Prime Minister-designate,
Sergei Kiriyenko, at his Rus residence outside Moscow today.
The venue is usually designated for meetings with foreign heads of
state, and the site was clearly intended as a peace gesture after the
president's crude threats last week to dissolve the chamber if it did not
approve his nominee.
Mr Yeltsin's spokesman said the invitation was in response to calls for
dialogue. "I understand this means the president is ready to listen to his
guests," the spokesman said. The State Duma, the lower house of parliament,
responded in kind, dropping a demand for the suspension of Mr Kiriyenko's
nomination during the negotiations.
The acting prime minister adopted the opposition's rhetoric in his first
major speech, saying official claims of economic growth were a sham for
most Russians. He told the Federation Council, the upper house of
parliament: "Today in Russia there is hardly a single person who can feel
for himself the economic growth about which the previous government spoke."
He reeled off a list of problems he had to tackle: investment was
falling and 32 million people, or one quarter of the population, were
living below the poverty line. The previous government, in which he was
energy minister, lived off borrowed money, he said, and 70 per cent of the
state budget would be swallowed up by debt servicing in five years' time if
the policy did not change.
To hear such criticisms from the would-be prime minister created a sense
of relief in the chamber, which for years has been hearing predictions that
good times are just around the corner.
His criticisms will make it much easier for the Duma to approve him,
despite widespread opposition to the nomination of an untried 35-year-old -
which was widely seen as a whim of the ageing president.
The Communists have vowed to vote him down, even at the risk of losing
their seats when Mr Yeltsin dissolves the assembly. But few people take
them at their word - there does not seem to be a single party in the
assembly which is ready to risk a general election.
In the murky world of Russian politics, the prize for honesty goes to
the ultra-nationalist Vladimir Zhirinovsky, who said yesterday that his
Liberal Democratic Party would vote for the new prime minister "because the
alternatives could be a lot worse".
Last week's crisis, when Mr Yeltsin dismissed the cabinet for lack of
initiative, caught "Mad Vlad" in St Petersburg, where he was clowning
around in a "gay" bar offering warm embraces to the clientele. He defended
homosexuality as part of the erotic life of the nation, but lamented that
no children could be born of such unions.
While this ensured him lots of television coverage, it is not thought
likely to boost his chances with the mainstream voter at a snap election.


Yeltsin, Speakers, Acting PM Discuss Interaction Between Powers 

MOSCOW, April 2 (Interfax) - The Thursday meeting between President *Boris
Yeltsin*, Duma Chairman Gennady Seleznyov, Federation Council Chairman
Yegor Stroyev and acting Prime Minister Sergei Kiriyenko centered on plans
for partnership between all branches of power, Yeltsin's press service told
The meeting in the Rus residence, outside Moscow, took place "in a
frank, constructive and amiable atmosphere," the press service said. 
Those at the meeting showed profound interest in preparing a government
program of action which would help overcome the crisis in the national
economy, the press service said. 
The four men also showed resolve "to ensure interaction without
confrontation and partnership between all branches of power in the
country," the press service said. 
The meeting was broken down into two parts, each of them lasting about
40 minutes. The president began with a conversation with Seleznyov and
Stroyev. Kiriyenko joined in the talks later. 
The conversation of Yeltsin and the chairmen of the two chambers of
parliament focused on the candidate the president had nominated for prime
It was decided that the coming roundtable meeting between the government
and deputies with the participation of the president on April 7 will center
on the issues discussed at the Thursday meeting at the Rus residence,
primarily ways to settle economic problems in the country. 
Yeltsin proposed that Duma factions and members of the Federation
Council put forward their initiatives on possible candidates for jobs in
the new Cabinet. 
The president believes that "such an approach will allow taking into
account the maximum possible range of opinions and finding unconventional
decisions on personnel," the press service said. 
Kiriyenko detailed basic provisions of the speech he will deliver in the
Duma on April 3. The president praised the acting prime minister for
providing an honest account on the present economic situation. 
"The future government should concentrate on policy aimed at reviving
national industry," Yeltsin told the acting prime minister. He supported
Kiriyenko's plan to form a permanent commission including representatives
of the Cabinet, the State Duma and the Federation Council. 
When exchanging opinions on the economic situation and possible urgent
measures to overcome current problems, those at the meeting acknowledged
"an unprecedentedly broad convergence of opinions among them," the press
service said. 
In conclusion, Yeltsin noted when addressing Kiriyenko that the
Federation Council and the State Duma "are thinking of Russia and the good
of Russia." He wished Kiriyenko success in "the difficult exam" the acting
premier would have to pass, a representative of the presidential press
service said. 


>From RIA Novosti
Russky Telegraf
April 2, 1998
One Way To Do It Is To Give Holdings's Taxes to Regions
By Andrei SEROV

The Governors, members of the Russian parliament's upper

chamber, seem to be fully satisfied with the meeting they had
yesterday with Sergei Kiriyenko. Federation Council speaker
Yegor Stroyev described the speech of the candidate to the
Russian premiership as balanced and competent.
Added Stroyev: "I think he repeated in a concise form the
decisions of the heads of administration and legislature in all
regions of Russia."
The ardent sympathy that the usually highly exacting
grey-haired Governors felt towards a comparatively very young
man who has made a mind-boggling career within less than a year
in civil service to occupy the premier's office on the fifth
floor of Russia's White House and to replace Viktor
Chernomyrdin who has been close to the Governors' hearts, may
look paradoxical at first glance. 
Yet the candidate to the premiership has had to pronounce
only one phrase - in passing, somewhere in between describing
the current economic situation and laying down plans for a
restructuring of the Cabinet - to dispel the paradox. 
Kiriyenko addressed the Federation Council to say that the
current practice where the vertically integrated companies were
paying taxes in Moscow for the government to channel the money
to the region was a hoax. 
But the acting premier did not elaborate on who did what
and, importantly, how he intended to redress the situation, to
go over to his next thesis.
But the Governors were satisfied: they heard, they felt
that the aspirant for the premiership sympathised with their
pet dream of having the national holdings which are
commandeering the main financial flows in Moscow, pay taxes to
the regional budgets. 
The matter Kiriyenko touched upon is a key one in the
economy, finances and politics. It is clearly crucial for the
unity of the state and the well-being of both the
budget-dependent provincial residents and Muscovites, i.e.
effectively the whole nation. 
The crux of the matter is well-known: the holding
companies which have integrated the majority of the regional
producers of oil, gas, electricity and metals, the regional
telecommunications and other operators, in their absolute
majority are registered in Moscow where they pay the local
The Moscow budget is thus getting appreciable tax revenues
from the provincial output of oil, gas, electricity, etc., and
their transportation and export. Thus, Gazprom paid 7.9
trillion roubles to the Moscow treasury last year, and the
integrated pipelines (formerly Transneft), 8 trillion roubles
As a result, the percapita budgetary allocations in Moscow
are four times the national average. 
The Governors not only share Moscow Mayor Yuri Luzhkov's
joy at seeing the capital city become more beautiful; they are
also jealous as hell. They dream of having the vertically
integrated companies pay taxes to the local budgets. 
Thus far, very few holdings have been doing this,
Surgutneftegaz being probably the only one of the biggest. The
top managers of the majority of holdings like to operate in
Moscow - and not only because they are finding their Moscow
offices more comfortable. Simply, they just love the financial

independence from the provincial authorities that the Moscow
registration guarantees them. 
It is so far unknown in what way Kiriyenko intends to
redress the situation or whether he is planning any specific
moves in this direction. The upper chamber's members are
grateful to the acting premier for having raised the matter at
Whether the aspirant for the premiership is serious in his
intentions to improve the system of taxes on the regional plane
will be clear after he presents his programme of action to the
president today and to the State Duma, the lower house,
A working group headed by Yegor Gaidar is known to be
drafting a variant of the programme for Kiriyenko. Since the
one-time acting premier has had an ardent, if not tete-a-tete,
dispute with Yuri Luzhkov on the matter of taxation federalism,
one can expect legislative initiatives to channel some taxes to
the regions - if their variant is approved, that is. 
In politics, it would produce a bomb-shell effect, and the
economy would witness the financial flows turn to where the
material values are produced.


The Independent (UK)
2 April 1998
[for personal use only]
Russia's PM linked to Scientologists 
By Phil Reeves in Moscow 

Russia's youthful, inexperienced and - until last week - almost unheard
of prime minister-designate was yesterday grappling with potentially
damaging allegations linking him with the Church of Scientology. 
Just over a week after being yanked out of obscurity by Boris Yeltsin,
Sergei Kiriyenko, 35, hit his first unexpected skid patch after a German
newspaper, Berliner Zeitung, reported that he had attended a one-week
Scientology course in Nizhny Novgorod when he was head of a bank three
years ago. 
The teachings of L Ron Hubbard are regarded with profound suspicion by
Russian officialdom, particularly by the powerful Russian Orthodox church.
The same views are likely to be shared by many of the parliamentarians due
to vote on Friday over whether to confirm Mr Kiriyenko's nomination. 
Yesterday, Mr Yeltsin sought to dampen the protests over his choice of
prime minister by inviting the two speakers of parliament and Mr Kiriyenko
himself to talks at his residence outside Moscow later today. The
invitation appeared to work: soon afterwards, deputies from the State Duma,
or lower house, dropped demands for Mr Kiriyenko's nomination to be
The minister yesterday tried to brush off the Berliner Zeitung report,
which claimed he arranged for other bankers to attend similar seminars. He
was reported to have declared that he appreciated the "simplicity and
clarity" of Hubbard's teachings. Later, the paper said, he lost interest in
Under quizzing from reporters, Mr Kiriyenko said yesterday it was the
"best April Fool's joke yet". But there was no outright denial. 
Although Scientology has a sizeable following among Russians, the ruling
elite is unlikely to take kindly to the idea of being led by an official
who has any links to it. Last year, hostilities erupted in a landmark court
case over an Orthodox church leaflet which warned of the dangers of
"totalitarian sects", naming, among others, the Scientologists, the Moonies
and the White Brotherhood. 
For all its distaste, Russia has not cracked down as hard as Germany
which, in spite of outcries from human rights groups, US politicians and
Hollywood heavyweights including Dustin Hoffman and Oliver Stone, passed
tough laws controlling the Scientologists. But they were undoubtedly among
the sects targeted by a law signed last year by Mr Yeltsin which restricted
the rights of "non-Russian" religions. 


RFE/RL NEWSLINE Vol 2, No. 64, Part I, 2 April 1998

factions, only Vladimir Zhirinovsky's Liberal Democratic Party
of Russia has endorsed Kirienko. Zhirinovsky told RFE/RL's
Moscow bureau on 1 April that his party considers Kirienko a
"lesser evil" and fears that if the Duma rejects him, Yeltsin will
nominate "far worse" candidates. The Russian Regions and Our
Home Is Russia factions are viewed as possible supporters of
Kirienko. Our Home Is Russia is reportedly seeking guarantees
that its representatives will be appointed to the new
government, but Kirienko has ruled out using cabinet
appointments as bargaining chips to secure his confirmation
(see "RFE/RL Newsline," 1 April 1998). Even if Russian Regions
and Our Home Is Russia deputies support Kirienko, the acting
prime minister would still need some 75 votes from the
Communist, Agrarian, and Popular Power factions. Grigorii
Yavlinskii's Yabloko faction has vowed to vote against Kirienko.

Addressing the Federation Council on 1 April, acting Prime
Minister Kirienko admitted that recent economic indicators do
not show positive trends, RFE/RL's Moscow bureau reported.
Kirienko said year-on-year GDP was stagnant in March and the
average standard of living has declined since the beginning of
the year. He also noted that wage arrears are increasing.
Repeating promises made by government officials in past
years, Kirienko said the new cabinet must improve tax
collection and take an active role in managing "natural
monopolies" in the energy sector. He also promised to reduce
government spending but did not specify where cuts would be
made. LB

Martin Gilman, the IMF's representative in Moscow, on 1 April
told Reuters he is concerned that "precious time is being lost"
because of the government dismissal. Before he was sacked,
Prime Minister Viktor Chernomyrdin was due to sign an
Russian-IMF statement on Russia's economic policies for 1998.
Gilman said the government may make up for the lost time
after the new cabinet is appointed. But he also expressed
concern that First Deputy Finance Minister Aleksei Kudrin was
reprimanded after announcing some proposals for reducing the
number of state employees (see "RFE/RL Newsline," 27 March
1998). Kirienko and Yeltsin both said the government had not
approved those plans, which Kudrin said involved eliminating
more than 200,000 jobs. Gilman told Reuters that the cost-
cutting policies Kudrin had described "form a critical part of
IMF support for the 1998 program." LB


>From RIA Novosti
Obshchaya Gazeta, No. 13
How the Leader Provoked a Split of the Elite
By Dmitry FURMAN

The recent government resignation has been, in fact,
President Boris Yeltsin's spontaneous and irrational decision
not based on any sophisticated calculations. Its psychological
sources are more or less clear. Yeltsin is growing decrepit,
realising ever more keenly the limits to his possibilities.
Many old men, especially those who are strong-willed and

oriented to "manliness", struggle and victory, often have the
urge to take an effort aimed at arresting this inevitable
We do not even suspect what aftermaths Yeltsin's move can
have. All of his previous actions were in the interests of the
elite. It is the first time that his spontaneous impulse runs
counter to these interests.
Wherein lie the interests of the ruling elite? Boris
Berezovsky has summed them up in one of his recent interviews
with clarity and precision that are characteristic of him as
follows: "ensuring the continuity of the reforms" after
Yeltsin's inevitable departure and preventing a new re-division
of property, that is, guaranteeing that the assets acquired
during the Yeltsin rule will stay in the hands of their present
The transfer of power situation is very dangerous for the
ruling elite. The real threat does not stem from the opposition
- the "classical opposition" as represented by the communist
party of the Russian Federation, or KPRF, has made it crystal
clear that it does not pose any big threat, whereas the
"non-classical" opposition (General Alexander Lebed) has also
lost its chances. The danger is emanating from the elite itself
the split of which is absolutely inevitable when Yeltsin
leaves. Even inside the bolshevik party with its omnipotent
politburo and central committee, the death of the leader was
always followed by a fierce power struggle accompanied by an
avalanche of compromising materials and appeals to the lower
echelons of the nomenklatura. Against this backdrop, what can
we expect from our party of power which has not been formalised
and has no rigid organisational frameworks and which comprises
greedy people with an underdeveloped sense of party and
corporate solidarity?
Viktor Chernomyrdin as the Prime Minister who, under the
Constitution, would take over from Yeltsin, in case he left,
and as Yeltsin's most probable successor is not guaranteed
against an outburst of internecine power struggle. However, he
minimised that threat for the ruling elite. He suited many
different people for whom he signified reliability and
To assert himself as the leader of the ruling elite, his
successor Sergei Kiriyenko, first, needs time, which he
obviously does not have, and, second, the character qualities
which can attract the former, older boss to this young man,
namely: modesty, obedience, etc. These are precisely those
qualities which deprive him of any chance to unite the elite's
vying groups and appeal to the mass of Russians who value power
more than anything else.
It appears that Yeltsin has provoked a split of the ruling
elite. Judging by many things, it has already begun.
Chernomyrdin rejected the humiliating and ambiguous role of the
one responsible for no one knows whose election campaign and
announced that he will run for the presidency. A considerable
part of political activists approved of his decision to set
forth his own candidacy. However, without the prime minister's
portfolio and Yeltsin's public blessing it will be more
difficult for him than before to become the one and only

candidate of the ruling elite. There is no doubt that he will
have rivals. This is very bad for the ruling elite. But is it
bad for the people of Russia?
In a situation when Russians have to choose between the
incumbent regime and the opposition, they, who have never in
their history re-elected the ruling authority, prefer to elect
the former, thereby simply demonstrating their desire to
tolerate this regime further. People are helpless against a
united elite. But when the party of power is split, they will
have to choose in real earnest, rather than play extras in the
simulation of elections.
With the opposition like ours and the election victory
ensured in advance, a united elite may practically disregard
the public. But in a situation of a clash between the elite's
different groups each of which will do the utmost to attract
the public to its side, public interests will have to be taken
into consideration to one degree or another. What is more, the
different groups will try to get rid of their most odious
members. So, the elite's split of which Berezovsky is so scared
and which has been made inevitable by Yeltsin, can have very
good consequences for the public and for Russia's democratic
development. Without actually realising it, Yeltsin might have
made an important historic choice by going against the
interests of the ruling elite and thereby clearing the way to
the further democratic development of Russia.


Moscow Times
April 2, 1998 
Russia Spends a Day Suffering Fools Lightly 
By Chloe Arnold
Staff Writer

When DJ Groove checked his pager early Wednesday morning he couldn't
believe his luck. It was a message from President Boris Yeltsin's
administration asking him to call as soon as possible. Groove dialed the
number and was put straight through to the president. 
"Ah, yes, DJ Groove," came the deep, halting voice at the other end. "I
understand you wrote a tune for Mikhail Gorbachev some years ago to give
him a younger image. I was wondering whether you might do the same for me." 
The joke on Radio Maximum's breakfast show was just one of a multitude
played around the world on April Fools' Day. As astonished Iraqis read a
front-page report that U.S. President Bill Clinton had lifted sanctions and
Vietnam heard that Diego Maradonna had been hired to coach their national
soccer team, Russians were regaled with photographs of the country's
bigwigs romping with girls in bikinis. 
The daily Komsomolskaya Pravda newspaper printed a phony letter from a
maintenance worker at the Kremlin, who felt it was time to come clean about
the dubious morals of the nomenclatura. "Exclusive" snaps showedultranation
alist leader Vladimir Zhirinovsky, Yabloko boss Grigory Yavlinsky, Moscow
Mayor Yury Luzhkov and acting Prime Minister Sergei Kiriyenko relaxing with
vodka, cigars and near-naked women. "And they are planning to make the
Kremlin palace into a banya and a set of tennis courts," wrote the
anonymous correspondent. 
The liberal Yabloko faction got in its own laugh Wednesday by
introducing a new line of waterproof suits for State Duma deputies. The
plastic clothing was a clear dig at Zhirinovsky, who caused a scene in
parliament's lower house by throwing water at other deputies. Yabloko said
the special suits would allow lawmakers to keep their reputations from
being dampened. 
The newspaper Moskovsky Komsomolets wheeled out its usual shots of
curious carrots and other saucy root vegetables, while Noviye Izvestia led
with a sepia photograph of Lenin reading a copy of the newspaper. 

Interfax reported that chief Moscow architect Zurab Tsereteli had
received an order for a giant statue of Luzhkov, sitting astride a rearing
horse to symbolize the "riotous conduct of monetarism." Suggestions for
where to place the monolith had flooded the architect's office, Interfax
said, but the hot favorite was opposite Tsereteli's widely detested statue
of Peter the Great. 
Nevertheless, not everybody was horsing around. "Practical jokes?" said
Oleg Mikhailov, at the press office of the Federal Tax Police. "If only.
Everyone is so serious in this office. We could do with a little lightening
Over at the Health Ministry, things weren't looking much better. "They
spread thick apricot jam on someone's chair before he came into work this
morning," said Yury Noarov from the ministry's press office. "But it turned
out to be my chair, so I wasn't particularly amused." 
And at the Fund for Lenin's Mausoleum, the president hadn't even
realized it was April 1. "Is it really?" said Alexei Abramov. "I had
completely forgotten." 
Meanwhile, newspapers world-wide reported all sorts of strange
goings-on. The German branch of People for the Ethical Treatment of Animals
group announced that German Chancellor Helmut Kohl had become a vegetarian.
In a bid to win the support of younger voters, "the stuffed pig lover has
finally made the break," ran the report, which was picked up by several
German newspapers. 
In Australia, early morning radio listeners were surprised to hear that
Sports Minister Andrew Thomson predicted gold for Australia at the 2000
Olympic Games in the new sport of tuna tossing. And Sydney Lord Mayor Frank
Sartor announced that specially-trained kangaroos would patrol the city
center to entertain overseas visitors to the games. 
The Financial Times in London was left with egg on its face when it
printed a statement from drinks giant Guinness. Taking a spoof press
release seriously, the newspaper ran a story claiming that Guinness would
become the official beer sponsor for the Greenwich Observatory in the
lead-up to the millennium. The paper said Greenwich Mean Time would be
renamed Guinness Mean Time until the end of 1999, and the Accurist speaking
clock would be amended to feature "pint drips" instead of "pips" to count
In Dakar, hundreds of Senegalese besieged the U.S. Embassy on Wednesday
after a newspaper reported that the embassy was holding an immigration visa
lottery to mark Clinton's visit. 
Le Soleil, a government newspaper, said visas would be issued to the
first 50 names drawn from would-be immigrants who presented themselves
armed with valid passports and identity photos. Each of the lucky winners
would receive an air ticket and $3,000 in spending money. 
The top story in South Africa's Star newspaper claimed that President
Nelson Mandela had bought neighboring Mozambique for just under $10
billion. Mandela revealed his purchase to a stunned United Nations, the
paper reported, but had not yet decided what the combined country should be
called. Some claimed he favored Gracia, a reference to Mandela's close
relat ionship with Mozambique's former first lady Graca Machel. 
But one of the biggest April Fools' gags of all time has to be the
front-page article of French newspaper Le Figaro some years back. In
keeping with public opinion, the paper announced it was going
environmentally friendly. Readers learned that the daily would henceforth
be printed on edible paper. That morning thousands fell for the spoof as
they literally tried to digest the day's news. 


Latvia Seeks Compromise on Ethnic Russians 
1 April 1998

RIGA -- (Reuters) Latvian political leaders said on Wednesday said they
were trying to thrash out a compromise over the status of ethnic Russians,
in a row that has drawn a threat of trade sanctions from Moscow. 
Parties in the fragile ruling coalition said they had formed a working
group to seek agreement on changes to existing citizenship laws, which
Moscow says discriminate against Latvia's big Russian minority. 
The European Union is also exerting pressure on Latvia, where the issue
divides nationalists and centrists within the six-party government. 
"The seriousness of this situation... will force us to overcome internal
contradictions," said Andrejs Pantelejevs, chairman of Latvia's Way, a
centrist grouping which is third biggest in the government. 
He said the working group would report by April 14. 
Some 2.6 million people live in Latvia. But laws introduced after it
quit the former Soviet Union in 1991 gave automatic citizenship only to
people who lived in the Baltic state before 1940 -- the year it was annexed
by Josef Stalin -- and their descendants. 
Everyone else, including Latvia's 700,000 Russian-speakers, has to go
through a naturalization process, but only a fraction have done so. 
Some 550,000 people still rely on old Soviet internal and international
passports as their main travel papers. They are threatened with being left
stateless when these expire in October. 
Relations with Moscow plunged to a low recently after it accused Latvian
police of using excessive force to break up a protest by Russian-speaking
The Latvian government said on Wednesday it had asked the Economy
Ministry to examine how harshly threatened Russian sanctions would bite. 
Newspapers said some measures seemed to have been applied already, and
heads of various industries reported problems in getting goods through
The head of the fishing industry association was quoted as saying that
Russia had cut its quota for cod fishing in Russian waters from 200 tonnes
to zero. 
Domestic political tensions are heightened by the fact that elections
are due in October. 
"We do not think the government will fall (over the citizenship issue)
as there are no reasons for this. We want to work to the elections," said a
spokesman for Prime Minister Guntar Krasts. 
Proposals include giving automatic citizenship to those born after
independence in 1991, and ending a system whereby young people have
priority over older residents in applying for citizenship. 
The EU's executive Commission has set Latvia a goal of cutting the mass
of effectively stateless people if it wants to start talks on entering the
trading bloc. 
An envoy from the pan-European Organization for Security and Cooperation
in Europe (OSCE) on Tuesday warned that Latvia risked isolation over the
citizenship issue. 
Newspaper Bizness I Baltiya quoted officials in the Economy Ministry as
saying sanctions could lead to a 50 to 70 percent fall in trade with Russia. 
Another paper, Neatkariga Rita Avize, quoted the ministry as saying such
measures could lead to the loss of 4,000 jobs in the food industry and
4,300 in the textile industry. ( (c) 1998 Reuters) 


Minister Sets Dates for Major Privatizations 
1 April 1998

MOSCOW -- (Reuters) Russia's Privatization Ministry on Wednesday announced
a detailed timetable for state property sell-offs this year in the oil
industry and other key sectors of the economy. 
A ministry document obtained by Reuters said terms for the tender of a
5.36 percent block of oil giant OAO Neftyanaya Kompaniya LUKoil would be
set on April 15, while a special cash auction of 0.64 percent of LUKoil
would be detailed on Sept. 15. 
Other major oil sector sales included Slavneft, Eastern Oil and Tyumen
Oil (TNK), terms for which will be announced on Aug. 7, Aug. 1 and Aug. 31,


Los Angeles Times
April 2, 1998 
[for personal use only]
Russia Won't Cut Output Despite Drop in Oil Prices 
By RICHARD C. PADDOCK, Times Staff Writer
MOSCOW--Russian officials said Wednesday that the worldwide drop in oil
prices threatens to impede the country's fragile economic recovery by
cheapening one of its major exports, but they will not cut oil production
in an attempt to drive prices back up. 
"We suffer greatly from the drop in oil prices," acting Deputy Prime
Minister Boris Y. Nemtsov told reporters at the close of a meeting of
energy ministers of eight major industrialized nations here to discuss
international cooperation on energy issues. 
An emergency tax break aimed at bailing out Russia's oil industry took
effect Wednesday. 
A number of oil-producing nations, including OPEC members such as Saudi
Arabia and non-OPEC members such as Norway and Mexico, have agreed in
recent days to reduce production, helping prices to rebound somewhat. 
But Russia is so dependent on the cash it receives from oil exports that
it says it cannot afford to cut back--even if it is losing money at current
prices. And officials say their oil equipment is so antiquated that they
could not restart 30% of the country's wells if they were to shut them down. 
"Russia is not a member of OPEC and is not bound by oil production
quotas," Nemtsov said. "We do not want to be bound by such obligations. We
are interested in the development of the Russian economy and the Russian
fuel and energy sector." 
Because of the Asian economic crisis and an unusually mild winter, an
unexpected worldwide surplus of oil has spurred a plunge in oil prices in
the past few months. The drop has hit Russia especially hard because oil is
such a key export. 
Answering pleas from the oil industry, the Russian government announced
last week that it will cut its pipeline tariffs by half, saving oil
companies at least $37 million. Nemtsov said the tax break will be in
effect for the second quarter of the year, but analysts questioned whether
Russia will be able to roll back the tax cut once prices improve. 
At Wednesday's meeting, energy officials from the United States, Russia,
Britain, Japan, Germany, France, Canada and Italy agreed on a communique
that called for opening energy markets worldwide and encouraging investment
by creating fair laws and taxes. 
The ministers also agreed that safety of nuclear power plants is a high
priority. After the meeting, U.S. Energy Secretary Federico Pena said the
United States had expressed concern to Russia about the unsafe condition of
older reactors still in use, particularly at the nuclear plant in Kursk,
about 250 miles south of Moscow. 

Pena also said the United States had agreed to assist Russia in
developing new industries and businesses in 10 formerly closed cities where
nuclear weapons were designed and made. 
"The idea is to form incubator companies where the scientists can do
regular work as businesspeople, diversifying their economy," Pena said.
"These are brilliant people, and they've got tremendous talents." 
In other discussions, U.S. and Russian officials agreed that the
decision on where to build pipelines to transport oil from the Caspian Sea
should be made for economic, not political, reasons. 
Pena said the United States favors multiple routes through different
countries, reducing security threats in the region and allowing more
nations to share in the wealth. The United States still adamantly opposes a
pipeline route through Iran, he said, but the decision will be made by oil
companies, not the U.S. government. 
"The positions have drawn substantially closer in the past few months,"
Nemtsov told reporters. "The Russian and American sides recognize that
different routings of Caspian oil are possible and the criterion for
choosing priority routes should only be economics." 


Financial Times (UK)
1 April 1998
[for personal use only]
RUSSIA: Workers have little political muscle
Unpaid wages are still well down the political agenda, writes Chrystia

Two months ago, in the dark of Siberian winter, the patience of the
workers at the Kuznetskaya mine snapped. Their wages had not been paid for
nearly three years, their remote village was without telephones, running
water and reliable heating, and their children were dropping out of school
because they could not afford to make the 15km journey to get there.
And so, when Alexander Ternovikh, the manager of their mine, showed up
at his office on a freezing morning in late January, a gang of angry miners
and their wives and children, jammed chairs and tables against his door and
held their boss prisoner.
In the dismal Kuzbas, a depressed mining region in the middle of Siberia
which has come out on the losing end of Russia's bold market reform drive,
the Kuznetskaya miners' revolt made a grim sort of sense.
Yet the real lesson of their protest is not that the nation's army of
under-employed and unpaid workers is on the verge of revolution. On the
contrary, the Kuznetskaya mine, whose manager is now at liberty and whose
workers are still unpaid, is an example of how, for all their fury and all
their desperation, discarded workers have almost no effective means of
Periodically, Russia's degraded proletariat does manage to capture the
Kremlin's attention. President Boris Yeltsin's formal justification for
last week's abrupt sacking of the entire government was mounting wage
arrears. And next week workers hope to seize centre-stage with a
pan-Russian protest. But, occasional government promises and feeble
national workers' demonstrations notwithstanding, the lesson of the past
few years has been that in post-communist Russia, workers have almost no
political muscle.
At Kuznetskaya the protest began boldly enough.

"We had no money!" recalls miner Alexandra Burmotova. "As of this
coming May, it will be three years that we have not been paid. So, we said:
'Pay our wages!' and we held him hostage for five days."
Two months later, with the mine's ownership disputed between a western
investor and the left-leaning local government, Liubov Petrova, a
51-year-old matron, admits: "Our protest brought us nothing. We are the
real hostages here. We don't have democracy in Russia, just thieves and
Throughout the Kuzbas, where snow is black with coal dust and crumbly
concrete barnacles are the main form of housing - as ugly as they are
uncomfortable - disgruntled workers are coming to the same conclusion.
"There is no point in striking, the director told us," explains Piotr
Boikov, who took part in a strike at the nearby Komsomolets mine last
month. "He [the director] said: 'You can stay there, at the bottom of the
mine, as long as you like. You can even live there. There still will be no
money for you'."
The problem, local union leaders say, is that Russia's depressed economy
and its frail political institutions mean that the miners have almost no
means of effective collective action. Discredited by years of co-operation
with the communists and further enfeebled by the country's bleak economic
conditions, even trade unions are barely able to organise worker protest.
It was not always thus. In 1989, the protests of the raging Kuzbas
miners hammered one of the final nails into the coffin of communism and
helped push Mr Yeltsin and his democratic supporters into power.
By contrast, over the past seven years of often painful market reforms,
the Kremlin has discovered, to its own surprise, that an angry proletariat
has little power to shake the country's new political and economic
institutions. At first hesitantly, and now with increasing boldness, the
government has learned that it can pursue the toughest financial
stabilisation programmes with little fear of a political backlash.
Economically, this has not been an entirely bad thing. Cutting subsidies
to loss-making Soviet-era industries, such as the mines of the Kuzbas, is
one of the crucial steps Russia has had to take on the way to reviving its
economy, and the political weakness of the losers in the economic
transition has helped make that possible.
More generally, the impotence of Russian workers, whose wage arrears are
again mounting, is the biggest reason why the Kremlin has managed to defend
its hard won financial stabilisation, especially in the wake of the
financial turmoil caused by the Asian crisis.
In the long run, however, the lack of political institutions through
which everyone, even the dispossessed, can express their grievances, may
prove to be one of the greatest flaws in the emerging new Russia.
"The lack of civil society, the lack of democratic institutions, has
become one of our most important problems," says Grigory Yavlinsky, leader
of Yabloko, the leading democratic opposition party. "The government was
extremely passive in creating civil society - we still have no effective
trade unions, no judicial system, no free press. In such a political
vacuum, strange flowers, which look like monsters, are emerging."
For the Kremlin and its wealthy Moscow backers, the most frightening of
these monsters are the charismatic nationalist and populist politicians who
are emerging as serious contenders for the presidency in elections
scheduled for 2000.

They include Alexander Lebed, the former general, and Yuri Luzhkov,
Moscow's mayor, and if either of these strongmen devises a way of tapping
the anger of the unpaid workers, Russia's post-communist establishment
could be overturned. It may be fear of these "strange flowers" that has
prompted Mr Yeltsin, still endowed with the most sensitive political
antennae, to try to put wage arrears back on the economic agenda.


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