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Johnson's Russia List


April 17, 1998  
This Date's Issues: 2151 2152  

Johnson's Russia List
17 April 1998

[Note from David Johnson:
1. Reuters: Russia has no answer to constitutional riddle.
2. Reuters:-Russia passes tax code, pleases investors.
3. Moscow Tribune: John Helmer, EASTER BUNNY ON THIN ICE.

4. Moscow Times: Tatyana Matsuk, Usual Bureaucrat Rises.
5. Reuters: Russian tycoon Berezovsky sounds two jarring notes.
6. Itar-Tass: First Deputy Defense Minister Urges START II 

7. Interfax: 'Potential Candidates' Reject Cabinet Post Offers.
8. Christian Science Monitor: Judith Matloff, Russia Too Tired 
to Protest Yeltsin's Powerful Grip.

9. Reuters: Russia's stance hints at end to Caspian dispute.
10. Robert Lyle (RFE/RL): Russia Protests G-7 But No One Notices.
11. Reuters: Russia's 1998 grain output may be down on 1997.]


FOCUS-Russia has no answer to constitutional riddle
By Timothy Heritage 

MOSCOW, April 16 (Reuters) - When President Boris Yeltsin flies to Japan on
Friday for an informal summit, he may leave behind a constitutional puzzle
which has Russian legal experts at a loss. 
Who stands in for Yeltsin while he is away? And who would take over from him
temporarily if he were incapacitated? 
These are questions of immense importance in a country where the
president not
only enjoys wide powers and controls the trigger to a vast nuclear arsenal,
but the health of the current head of state is constantly open to question. 
Under the 1993 constitution, the prime minister is the president's legal
The problem is that Russia at the moment has no prime minister and no further
line of succession. 
Sergei Kiriyenko, who is trying to win parliament's approval after two weeks
as acting premier, says he will step in for Yeltsin while he is in Japan at
the weekend. But the Kremlin has scoffed at this, saying no one will be handed
the helm. 
Even the man who should know the answer to this legal riddle admits he has
none -- except to change the rules. 
``This situation is not regulated by our constitution and an unconfirmed
chairman of the government of course cannot carry out the duties of the
president,'' Marat Baglai, the chairman of the Constitutional Court, told a
news conference on Thursday. 
Baglai's comments would appear to rule out Kiriyenko standing in for Yeltsin
while he is away having talks with Japanese Prime Minister Ryutaro Hashimoto.
But the 35-year-old former banker and energy minister does not seem to think
``This week Boris Yeltsin leaves for Japan. He has a lot of international
trips coming up and I will be fulfilling his duties,'' Kiriyenko said in an
interview with CNN recorded on Wednesday and broadcast in Moscow early on
Kiriyenko could live to regret his remark. Yeltsin does not tolerate
anyone in
his immediate circle appearing too hungry for power and is widely thought to
have sacked previous prime minister Viktor Chernomyrdin for having
presidential ambitions. 
Presidential press secretary Sergei Yastrzhembsky refuted Kiriyenko's view on
``Nobody will be in charge. The president himself can be in charge, even when
he is in the Japanese city of Kawana,'' he said, referring to the venue of
Yeltsin's talks with Hashimoto. 
The State Duma, the lower house of parliament, could solve the question at a
It is due to vote on Kiriyenko's candidacy as prime minister on Friday, the
day of Yeltsin's departure. 
But Kiriyenko has already been rejected once by the Duma and faces an uphill
struggle to garner enough votes in Friday's ballot. If he loses that ballot,
and then a third, the Duma would be dissolved and a new election would be
Any immediate fears over control of the nuclear arsenal are in no doubt --
Yeltsin takes the nuclear trigger with him wherever he goes. 
Yeltsin, 67, will also be away only for a few days and said on Thursday:
``I've never been fitter.'' He had heart surgery in 1996 and now intersperses
his work at his Kremlin office with spells resting at state residences outside
But the legal uncertainties would be alarming if he were to die or be
incapacitated before Kiriyenko or another candidate became prime minister.
Baglai did not make clear how the constitutional vaccuum would be filled in
that case. 
Some deputies want the constitution, drawn up to suit Yeltsin, changed so
the head of the upper house of parliament becomes the constitutional number
two. That would let experienced Yeltsin ally Yegor Stroyev step in if
But Yeltsin ruled out such changes on Monday and Baglai said there were no
provisions in the current constitution permitting the upper chamber speaker to
step in. 


FOCUS-Russia passes tax code, pleases investors
By Peter Henderson 

MOSCOW, April 16 (Reuters) - Russia opened the doors to business on Thursday
when the lower house of parliament approved a long-awaited tax code investors
have said is their number one priority. 
The State Duma picked a government version of the code from a dozen on offer,
passing it in a first reading. Analysts said it was cause for celebration but
not for resting easy. 
Russia's tortuous tax system, backed by tax police who carry big guns and a
tax service grabbing for means to raise revenues, will require more than a
simple legal overhaul. 
But the code, which offers reduced regulation, fairer distribution of the tax
burden and more rights for taxpayers, is generally hailed by business. 
Legislators still have the opportunity to make major changes to the code,
which a former U.S. advisor to Russian tax reformers said could hurt the
carefully calculated document. 
"It is a bit of a Pandora's box. Once you open a complex document like
the tax
code to amendments, it could become absurd," said Joel McDonald, a former
advisor for U.S. Agency for International Development and a tax lawyer at
Salans Hertzfeld & Heilbronn in Moscow. 
But he predicted that the new draft code, a rejigged version of a plan
abandoned last year when deputies offered more than 4,500 amendments, would
pass in some form by September and come into effect on January 1. 
Acting Prime Minister Sergei Kiriyenko has said he wants the bill to be
into law by President Boris Yeltsin by September. 
McDonald said it was reasonable to expect passage by September of the
first of
four parts, which sets definitions, divides responsibilities among tax
enforcement authorities and splits federal, local and regional taxation
The other three parts containing the nitty-gritty could be passed by
Duma deputies passed the bill 313 to 17, indicating strong general support,
although deputies have long been in favour of tax reform. 
"The real issue is just how much it is going to get diluted, and if it is
going to get diluted beyond meaning," said Kingsmill Bond, head of Russian
equity research at Deustche Morgan Grenfell in London. The bill goes into
committee now. 
Deputies have disagreed with the government on what reforms to make, but this
year new government authors -- who were last year's opposition -- have excised
controversial provisions to make it more palatable, if less reformist. 
"The people who this year are in charge of pushing through the code from the
government side are exactly the people who sunk the code last year," said
Russian Economic Trends economist Rory MacFarquhar in Moscow. 
"What you have is a much less ambitious code. They have taken out the
controversial bits that made sense to foreign tax advisors but not to domestic
The finance ministry has said the new code would solve most of the problems
facing tax reformers, in part by phasing out instead of banning local-directed
onerous taxes on sales, as opposed to profit. 
Foreign investors look for stability and low taxes, which the code directly
offers, and a government commitment to reform, with political backing for the
code's promises. 
"If it does not go forward, then foreign investors are less likely to invest
at all," said Bond. 
But although almost every portfolio and direct investor in Russia names tax
code passage as the best way the government can improve the business
environment, the scale of change will keep deep-pocketed foreigners on the
sidelines in the short term. 
Tax police need to holster their guns, the courts need to show they can
protect tax payers and the government needs to commit to following the law,
even if it meant fewer deals with major tax payers to get paid fast, analysts
First, though, Russia must put together a new government, Bond said. 


Date: Thu, 16 Apr 1998 
From: (John Helmer) 

The Moscow Tribune, April 17, 1998
John Helmer

For its Easter celebration, the White House in Washington always invites
a horde of children to roll eggs along a grassy sward, and everyone wins
a prize.
In Moscow last Saturday, the International Monetary Fund (IMF) organized
an Easter fantasy of its own, and invited the children from the White House, 
headquarters of the Russian government, to collect their eggs.
This was the signing of the annual economic program, whose terms and
conditions form the commitment the Russian government must make in order
to continue receiving disbursements from the IMF's current loan
to Russia. About $4 billion of that credit remains to be paid out. That
sounds a lot worth signing for. But it won't be enough to cover the 
repayments Russia must make to the IMF this year and next. New debt is needed 
to pay back old, very urgently.
When Michel Camdessus, the IMF managing director, was last in Moscow,
he confided the news that, once signed, this year's economic program would 
be made public. "We have decided to publish the letter of intent," Camdessus 
declared. "We wanted to be as transparent as possible," he announced. 
"Publication of this document is unprecedented in the history of relations 
between Russia and the IMF," he celebrated.
Unprecedented it certainly is, because it hasn't happened. According 
to Camdessus and a string of his retainers in Washington this week, it
isn't about to happen either. 
Camdessus was asked what he judged the legal authority of the Russian 
signatories was last Saturday, before a prime minister had been approved, 
a government formed, or the president's constitutional right to renominate
a rejected candidate had been tested in Russia's Constitutional Court. He was 
also asked to explain why publication of the document that he promised hasn't 
If the IMF Easter Bunny suspected he might have been skating on thin
Russian ice, he wasn't about to stop and look down. Camdessus 
refused to answer, and passed the questions to his director of 
external relations, Shail Anjaria. He requested a fax before he would "do his 
best" to answer. This was the start of an egg-roll of a different kind from 
Saturday's. Camdessus's secretary was upset at the game, and apologized for 
being "only a small wheel", and declined to give her name. "I'm not ashamed," 
she added. 
John Odling-Smee, an Englishman, is in charge of the IMF's Europe-II
division, which covers Russia. He oversees the IMF's Moscow office, and 
was in charge of the negotiations for the 1998 program. He refused
to say why the details Camdessus promised have not been released.
Finally, Graham Newman, head of the IMF press office, said he had the 
answers to "end the grief" which the questions about Russia were causing.
But Newman didn't know who had signed for the Russian government. He
thought the chairman of the Central Bank, Sergei Dubinin, was one
of the signers. He was right. Newman guessed the other was the Finance 
Minister, whose name he couldn't remember. He was wrong. 
"I believe Yeltsin is still the president of Russia, and if he designated 
someone [to sign], then the legal authority existed," Newman claimed.
What Newman didn't know was that Sergei Kirienko signed, the day after
his nomination to be prime minister had been rejected by the Russian
parliament. On the Saturday Kirienko was putting his name to an economic
policy in exchange for a loan, he had no clear authority from Yeltsin or
from the council of ministers to do anything. Just how doubtful was made
clear days earlier, when Yeltsin publicly repudiated a key provision in
the IMF program. This cuts at least 200,000 jobs from the state-funded
health and education sectors. According to Yeltsin, that provision was
either "a provocation or an invention."
Speaking for Camdessus and the IMF, Newman claimed the legalities aren't 
important "because it's a letter of intention, not a legal document." 
Zig-zagging across the ice again, Newman conceded the 
document is a binding one for Russian policy. "If the government doesn't 
carry out the terms and conditions, then there is no disbursement [of IMF 
As for Camdessus's promise to publish the document, that, corrected
Newman, is "up to the Russian authorities. The letter of intent is Russian
property. If they choose to go ahead with publishing, that's their
decision." In the middle of scrabbling for Duma votes to put Kirienko
in office, and head off an election, the Kremlin doesn't want to reveal
the precise economic policy it promised the IMF. In his public speeches
and in his report to the Duma, Kirienko has carefully avoided such
details. Finance Minister Mikhail Zadornov says the IMF document will be
published, but not when.
So what happened to the Easter Bunny last weekend? Why was the IMF in such
a hurry to grab the Russian government's signature, and run? What was 
Kirienko doing with his hand out?
The answer is simple. The IMF has realized there's something much worse
than not paying out installments of its loan to the Russian government, when
the Kremlin fails to make good on its policy commitments. That is when the
Russian government can't pay back what it already owes the IMF. The urgency 
of finding money to begin repayments to the IMF is what drove the two sides 
into last weekend's eggroll. Russia can't afford the damage an IMF default 
would do to its credit rating. The IMF can't afford not to go on lending.
Camdessus has created a little debt pyramid, and to cover that up, he's
pretending the document Kirienko signed will make everything transparent.


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

Moscow Times
April 17, 1998 
Usual Bureaucrat Rises 
By Tatyana Matsuk 
Tatyana Matsuk is a senior researcher at the Academy of Sciences 
Institute for Employment Studies. She contributed this comment to The 
Moscow Times. 

Political commentators viewed Boris Yeltsin's decision to sack the 
government and name the unknown Sergei Kiriyenko to head the new Cabinet 
as yet another of the president's spontaneous and unpredictable actions. 
At the end of the day's events, however, it already appeared to me that 
Yeltsin's political maneuvers were, on the contrary, very strong and 
well thought out. 
It is enough to recall the events leading up to the shake-up. The 
dismissal of the government was preceded by: 
...The fall in world prices of oil and gas -- one of the Russian state's 
main sources of revenues -- against the background of continuing 
nonpayment of wages and pensions as well as the president's most recent 
...The speech of Viktor Ilyukhin on the results of an accounts chamber 
audit of the government's activities, in which the State Duma deputy 
declared his intention to bring court proceedings against then-Prime 
Minister Viktor Chernomyrdin and then-First Deputy Prime Minister 
Anatoly Chubais. 
...An interview with Boris Berezovsky given on the eve of the dismissal 
on the television news program "Itogi" in which he spoke of how big 
business and the power elite had no candidate capable of winning a 
presidential election who could assure that the current authorities 
would remain in power. 
April 9 marked the nationwide day of protest organized by Russia's trade 
unions. If Chernomyrdin had not been fired, he would have been obliged 
to give an account of the government's activities before the Duma the 
following day. The Communists, referring to the mass demonstrations of 
unpaid workers, could have tried to put forward once again a motion of 
no-confidence in the government -- and this time been successful. 
In this case, Chernomyrdin would have found himself in an unenviable 
position, and the already low ratings of the potential presidential 
candidate from the so-called party of power could not have been raised 
by any means. 
This occurred at the same time that former General Alexander Lebed and 
former head of the border guard Andrei Nikolayev essentially began their 
presidential election campaigns -- the first running for governor in the 
Krasnoyarsk region and the other for Duma deputy from Moscow's 
Orekhov-Borisovsky district. 
For all his love for power, Yeltsin, like his inner circle, cannot but 
understand that a third term is more than doubtful for several reasons. 
But even if he succeeded in winning the elections in 2000, the question 
would remain of how to preserve his image and position in the future. 
This could be done only by choosing a successor who would not allow 
everything to be blamed on his predecessor and would let the current 
authorities remain in power. 
Yeltsin and the party of power need a tactical successor for the coming 
elections if the president is not able to run and a strategic one for 
the long-term. Chernomyrdin would have made a good tactical successor if 
he had been able to boost his ratings. Acting First Deputy Prime 
Minister Boris Nemtsov was probably seen as a strategic successor when 
he was brought into the government. But according to the Public Opinion 
Foundation, those who are prepared to vote for him has fallen from 21 
percent polled last April to 7 percent today. 
Moscow Mayor Yury Luzhkov is a strong but controversial candidate who, 
as Berezovsky remarked, does not rule out revising the way state 
property has been divided up, especially large enterprises. 
The 35-year-old "politically innocent" technocrat, Kiriyenko, is another 
matter. He is now entirely manageable by the president, but, by his own 
admission, the ambitious young man could eventually be just the kind of 
figure who would suit all the branches of both old and new nomenklatura 
as well as the International Monetary Fund, and would not raise any 
objections on the part of Western elites. 
You can find in his biography traces of Chubais, Chernomyrdin, Gennady 
Zyuganov, Berezovsky and even Vladimir Zhirinovsky. The Komsomol, 
Communist Party, army, factory, bank, oil company and ministerial 
portfolio are all typical career milestones of a successful post-Soviet 
bureaucrat. He could reach an agreement with all those who are now in 
power, because, in essence, he is not alien to any of them. And for 
them, this is the main thing. The struggles within the circles of power 
since 1992 can be described as what biologists call intraspecific. They 
fight among themselves for territory or a more tasty morsel, but they 
rarely bite each other to death. Their interest in preserving the 
nomenklatura as a privileged species is highest of all. 
Yeltsin used the chess term "castling" to describe his recent move. The 
figures on the board remain the same; only their positions change. Then 
there is a give and take. The supposed opposition parties are trying to 
win back more for themselves and put more convenient figures in the 
freed-up posts. But none of the sides needs changes such as dismissal of 
the Duma. People could then come to power who might deprive them of 
their privileges. 
In this sense, Kiriyenko is an absolutely safe figure, even more so than 
other possible candidates. If there is another economic collapse, the 
prime minister could easily be made a scapegoat. If not, then he is 
entirely suitable for the role of the fresh figure for whom society is 
A strong state, strong, professional government and rule of law -- could 
these not be bad slogans given that the officials, rulers and 
legislators remain the same as before? And the same policy remains of 
beating taxes out of those from whom not everything has been taken. So 
the nomenklatura can sleep soundly. Which is not something you can say 
about the people. 


Russian tycoon Berezovsky sounds two jarring notes
By Andrei Khalip 

MOSCOW, April 16 (Reuters) - Boris Berezovsky, a powerful businessmen with
close ties to the Kremlin, sounded two notes on Thursday that could jar with
Russian President Boris Yeltsin. 
Berezovsky said he saw problems with Yeltsin's choice of young Sergei
Kiriyenko as prime minister and made clear he believed he would be rejected by
parliament on Friday. 
He also confirmed a controversial decision to back sacked Yeltsin aide
Alexander Lebed's campaign to become a regional governor, although the general
is an opponent of the president. 
But Berezovsky did not confirm newspaper reports suggesting that Yeltsin had
reprimanded him this week for being involved in petty intrigues and had
threatened to exile him. 
In a television interview, Berezovsky sang the praises of Ivan Rybkin, an
acting deputy prime minister and former secretary of the Kremlin's Security
Council where Berezovsky also worked. 
``He (Rybkin) is exceptionally intelligent and an exceptionally decent man,''
he told the commercial network NTV. ``I don't think Rybkin would be a worse
candidate than Kiriyenko.'' 
He said he had a positive impression of Kiriyenko, who he said seemed an
energetic leader, but did not know him well. 
``I think there is a problem, a serious one. In our constitution there is
written a scenario where Kiriyenko could be in a situation where he had to
fulfil the president's duties. That worries me,'' Berezovsky said. 
If Kiriyenko is rejected by parliament on Friday, Yeltsin can re-nominate him
for another vote. Failure in the final ballot would force Yeltsin to dissolve
parliament and call a parliamentary election. 
Berezovsky, a friend of Yeltsin's family who has a big business empire and
vast influence, declined to predict how parliament would vote if a decisive
ballot is called. 
Playing a complicated game of political chess, Berezovsky said he was backing
Lebed's bid to become governor of the Krasnoyarsk region in Siberia. 
``I am supporting Lebed in Krasnoyarsk, that is absolutely true,'' Berezovsky
Lebed, sacked by Yeltsin in October 1996 just four months after joining the
president's team, hopes Krasnoyarsk will be the launch-pad for a presidential
But Berezovsky made clear his aim was not to help Lebed become president but
to put him in a position to split the votes of other likely presidential
contenders he does not like, such as Moscow mayor Yury Luzhkov and Communist
leader Gennady Zyuganov. 
``We need continuation of power. Those candidates who are the most noticeable
politicians in Russia...Zyuganov, Luzhkov and Lebed -- they cannot provide
this continuation,'' he said. 
Berezovsky said he knew nothing of Yeltsin's supposed attack on him. 
Two Russian newspapers quoted Kremlin sources as saying Yeltsin, at an awards
ceremony for cosmonauts, had accused Berezovsky of petty intrigues and said he
might exile him. 
``I really do not know the contents of Yeltsin's conversation with the
cosmonauts,'' said Berezovksy. 
He said he had spoken to Yeltsin by telephone last Sunday and added: ``In my
opinion, the conversation was absolutely friendly and constructive.''


First Deputy Defense Minister Urges START II Ratification 

Moscow, April 14 (Itar-Tass)--It would be senseless to speak about the
development of the Russian defense industry if the START-2 is not ratified
in the near future, Russian First Deputy Defense Minister Nikolay Mikhaylov
said at a roundtable meeting at the State Duma on Tuesday.
Russia has to spend approximately one fifth of allocations for the
armed forces on the maintenance of components, which are liable for the
elimination under the Russian-American treaty. The money could be
efficiently used "to revive the defense plants," he said.
"If the parliament does not ratify the treaty, Russia would have to
find about 700 billion rubles for the purposes by 2000. All the rest is
mere hysterics," the first deputy minister said.
Staffer of the Russian Ministry of Economics Andrey Kabanov said they
had submitted a program of the 1998 defense order, coordinated with the
Ministry of Finance, to the government. After the government approves the
program, a schedule of its financing will be made.
Asked about a program of the reduction of defense plants from 1,700 to
600-700, Kabanov said "that is not a planned cut but a rational approach to
the problem. The defense industry has plenty of enterprises which
duplicate each other to a considerable degree."
In his opinion, a multiple production to be formed in the course of
the conversion would be beneficial for plants.


Russia: 'Potential Candidates' Reject Cabinet Post Offers 

Moscow, April 14 (Interfax) -- Except for Sergey Kiriyenko, almost all
Russian politicians mentioned at the recent roundtable between government
officials and parliament deputies on April 7 as potential candidates for
prime minister have rejected the possibility of taking over the office.
The Federation Council chairman, Oryol Region Governor Yegor Stroyev,
told Interfax that he regarded all talk about his planned inclusion in the
Cabinet with humor.
"My reaction is a smile," he told Interfax. "I had been invited to
lead the government once. If I had wanted to, I would have moved to Moscow
as far back as then," Stroyev added.
He said he hoped that the Duma would avert tough confrontation with
the president and would approve Kiriyenko as prime minister. "The main
point is not to divide portfolios, but to form a professional Cabinet that
will take Russia out of the crisis and make it a prospering country,"
Stroyev said.
Kiriyenko is a person capable of coping with the position of prime
minister, he said. "Despite his young age, he is smart, well- educated and
energetic," Stroyev added.
The head of government should "work in accord with the Federal
Assembly," he said. "Everybody, including factions in the State Duma and
the Federation Council, needs a stable and strong Russia," Stroyev said.
The new Cabinet should include representatives of the regions, he
said. There are many professional politicians and experienced economic
managers in regional administrations, he said.
Moscow Mayor Yuriy Luzhkov, who was also named as a potential
candidate for prime minister, told Interfax that he was not going to leave
City Hall. He met with President Boris Yeltsin Monday [13 April], but
denied that they discussed any personnel issues.
Luzhkov said Kiriyenko should be approved as prime minister. "This is
a person with novel ideas and views. Our positions converge on a great
deal of important issues," the Moscow mayor said.
Saratov Region Governor Dmitriy Ayatskov has also refused to lead or
join in the new Cabinet.
He told Interfax Tuesday that he was not going to join in the
government, but was ready to propose "several promising candidates" to the
new Cabinet from among regional politicians.
"I am not going to become part of the government. I have enough work
as governor," Ayatskov said. He said he was certain that the Duma would
approve Kiriyenko for prime minister on April 17.
It is not in the interests of the leaders of Duma factions to stall
for time and put the Duma under threat of dismissal, he said. "If he finds
himself out of the Duma job (Communist faction leader Gennadiy) Zyuganov
will be left without his aides and will not collect even 4% of the vote in
the next elections," Ayatskov said.
He said he supported President Yeltsin's resolve to see Kiriyenko as
prime minister. "I have come to respect Boris Nikolayevich (Yeltsin) even
more. We need a stable rather than a provisional government," Ayatskov
Former Russian Minister for Cooperation with the CIS Aman Tuleyev, now
the governor of Kemerovo Region, ruled out the possibility of his joining
in the Cabinet, although the leftist opposition has named him as a possible
Tuleyev told Interfax that he had held a telephone conversation with
Duma Chairman Gennadiy Seleznyov on Tuesday. Seleznyov asked him about his
plans. "I replied that I think it immoral to leave the region for Moscow
after having received 95% of the vote in the gubernatorial elections," he
Tuleyev said he supported Kiriyenko's possible appointment as prime
minister. More representatives of the regions, "solid managers with
extensive experience," should join the Cabinet, he said.
Samara Region Governor Konstantin Titov said acting Deputy Prime
Minister Oleg Sysuyev was a good candidate for a government job. Titov told
Interfax he had proposed Sysuyev for a Cabinet position last year and was
ready to do this again.
Titov said he himself had not been offered to take up a position in
the Russian Cabinet. "Even if there were such an offer, I would turn it
down decisively. However, I am ready to suggest more candidates to the
government, as when I recommended that (former Prime Minister) Viktor
Chernomyrdin appoint our mayor, Oleg Sysuyev, as a deputy prime minister,"
he said.


Christian Science Monitor
APRIL 17, 1998 
[for personal use only]
Russia Too Tired to Protest Yeltsin's Powerful Grip
Judith Matloff 

Will it be strike two, or a hit for Sergei Kiriyenko, President Boris 
Yeltsin's candidate to be prime minister of Russia?
The Communist-dominated Duma, or lower house of parliament, is scheduled 
to hold a second vote today, after rejecting his nomination last week.
SERGEI KIRIYENKO: Expected to become new prime minister, despite 
Communist leader Gennady Zyuganov says he remains convinced that the 
thirtysomething technocrat, with less than a year's experience in 
national government, "doesn't fit the job of prime minister."
The party is pushing for an open ballot to discourage further defections 
to the president's side. On Tuesday, another prominent Communist, Duma 
speaker Gennady Seleznyov, announced support for Mr. Kiriyenko, saying 
he would rather see him approved than have President Yeltsin disband 
parliament. "For me, the fate of the State Duma is 1,000 times more 
important," he said.
Most pundits believe Kiriyenko will be approved on either the second or 
third try, underscoring Yeltsin's firm grip on power. Under the 1993 
Constitution, the president can dissolve parliament and call new 
elections if lawmakers reject his nominee for premier three times.
"We must cooperate with the government [in] power, whether we like it or 
not, for the interest of the nation," says Alexei Podberyozkin, a 
Communist member of the Duma.
Salaries at risk
"Certainly their financial situation will influence the deputies' voting 
decision. If parliament is dissolved, a lot of deputies will lose their 
salaries, their apartments, their savings, and their medical care," he 
says. Loss of jobs and possible humiliation in new parliamentary votes 
are a prospect many legislators do not want to risk.
Despite an ongoing economic crisis - one-fifth of Russian workers have 
gone unpaid for months - the party that held total power here for 74 
years until the collapse of the Soviet Union in 1991 has been unable to 
tap into social discontent.
"The opposition [has been able to] change the government only twice in 
history," says Vladimir Pribuilovski, president of Panorama, a 
Moscow-based political science center. That was during the 1917 
revolution and in 1991, when people came out in the streets, inspired by 
Yeltsin dramatically standing on a tank, to oppose a coup attempt 
against Mikhail Gorbachev. "But they can't today," Mr. Pribuilovski 
says. "Institutionally, our opposition is very weak and divided. It is a 
historical tradition dating back hundreds of years to the czars."
He and other analysts have several explanations for why there has been 
no effective political opposition, and with it civil unrest, as there 
might have been elsewhere in the world. Opposition parties are shackled 
by a political system devised by Yeltsin during his seven-year 
presidency, which gives him power to override the Duma with few checks 
and balances. Before that there was a long history of popular passivity 
and virtually no political opposition, first under the monarchy and then 
under Soviet rule.
Fear of change
"It's our mentality to support the powers that be because of our fear 
that another government could be worse," says Dmitri Furman, a political 
scientist at the state-run Institute of European Countries in Moscow. 
Even some Communists say they have only themselves to blame. Many of 
Russia's 150 million citizens still connect the party with years of 
Soviet totalitarianism. The party also lacks a charismatic leader, 
experts say, and an imaginative vision for economic reform.
Opposition from other ideological flanks is even more flaccid. 
Ultranationalist Vladimir Zhirinovsky lost his once-vibrant support with 
his clownish antics, and usually backs Yeltsin on crucial Duma votes. 
The small, mainstream Yabloko Party is vocal, but simply too out of 
touch with the grass roots to mobilize much support, say analysts.
On the streets, popular opposition has been equally weak. Trade unions 
called nationwide demonstrations April 9 to protest record unpaid wages 
estimated at more than $1 billion. Only about a million people turned 
out - far short of the 20 million that organizers boasted they would 
Pribuilovski and other analysts don't expect the opposition to gain much 
ground, in the short term at least. They say Russia's economic ills are 
minor suffering compared with the million of deaths from war, purges, 
repression, and revolution this century. People are simply too tired or 
too busy to go out and protest. "There has been no social explosion 
because there is no unanimity among the opposition of what is to be done 
next," he says.
"Although people are not paid their salaries, they are working in the 
underground economy. They don't have time to participate in rallies. 
They are too busy trying to earn money," he says.


Russia's stance hints at end to Caspian dispute
By Sebastian Alison 

MOSCOW, April 16 (Reuters) - Years of bitter wrangling over who owns what
resources under the oil- and gas-rich Caspian Sea appear to be drawing to a
close, as diplomatic activity among the five coastal republics picks up pace. 
The Caspian has long been touted as the world's next great oil province, but
while its reserves and potential are not in doubt, seemingly endless political
and geographical problems have held up progress on exploiting its resources. 
But now a softening by Russia on its hard line over the status of the Caspian
is leading analysts to believe that the political will is there to allow
development to proceed. 
``It appears Russia is accelerating the process of licensing oilfields in the
Caspian,'' said analyst James Henderson of MFK Renaissance on Wednesday. ``The
argument about the Caspian Sea being a lake is getting left behind.'' 
The Caspian, surrounded by Russia, Azerbaijan, Iran, Turkmenistan and
Kazakhstan, has no outlet to the sea. This has been the major sticking point
in talks over its development, as neighbouring states quibble over whether it
is a sea or a lake. 
If a lake - as Russia has maintained, supported by Iran - then it should be
jointly owned, with each bordering state having the right to develop whatever
project it chooses, with no geographical barriers. 
If a sea, as others say, then each republic would have a clearly defined
maritime border within which it can operate - exactly as exists between
Britain, Norway and others in the hydrocarbon-rich North Sea. 
At stake are tens of billions of dollars in investment. 
Even without a resolution to the status question, an $8-billion international
consortium led by British Petroleum and Statoil of Norway is already producing
off the shores of Azerbaijan. 
And another giant venture is underway near the Kazakh coast. 
Russia's First Deputy Foreign Minister Boris Pastukhov said in the Azeri
capital Baku last month that Russia was at last willing to compromise. 
``Russia has decided to take a serious step towards a compromise on the
delineation of the Caspian Sea, as the drawn-out uncertainty over the status
of this body of water is holding up strategic investment plans,'' he said. 
The Russian proposal, supported by Kazakhstan with which it has agreed to
a deal by April 28, involves dividing the seabed, but not the water itself,
into national zones. 
Azerbaijan is still not happy about the final terms of the Russian proposal,
with Foreign Minister Tofik Zulfugarov saying recently that Azerbaijan wanted
to see the water itself and the surface divided into national sectors. 
But he added that he regarded the agreement between Kazakhstan and Russia
as a
``positive process,'' even though he held a slightly different position.
Azerbaijan and Turkmenistan issued a joint communique recently setting out
their views. 
The diplomatic activity continues. Russian first deputy Prime Minister Ivan
Rybkin was in Turkmenistan earlier this week as part of a Central Asian tour,
where he held talks with President Saparmurat Niyazov and said agreement was
MFK Renaissance's Henderson said that a meeting of leaders of littoral states
was scheduled for May or June in Moscow, and the signs were increasing that an
agreement could be reached. 
But he warned that dividing the sea into national sectors could immediately
create new headaches. 
``The next problem comes when fields straddle the border,'' he said, pointing
out that arguments on who had the right to what could drag on even if a
division of the sea is agreed. 
But for all the satisfaction that strongly-held positions are shifting,
getting agreement on the status of the Caspian is simple compared to the
problems of getting the oil and gas to where they are needed. 
The reserves are landlocked, and there several possible routes to markets,
none without problems. 
All involve long pipelines, and the main proposals concern lines across
to the Black Sea; across Azerbaijan and Georgia to the Black Sea; across Iran
to the Middle East Gulf; or across Turkey to the Mediterranean. 
There are also a host of more exotic ideas, including proposed lines to China
and Japan, and one plan to send oil and gas south from Turkmenistan through
Afghanistan to Pakistan and possibly India. 


Economics: Russia Protests G-7 But No One Notices
By Robert Lyle

Washington, 16 April 1998 (RFE/RL) -- Russia staged a protest Wednesday
against being treated as a second-class member of the G-7 group of major
industrial countries -- and nobody appeared to notice.
Russian Central Bank Chairman Sergei Dubinin said that for the first time
in over five years, he and other senior finance officials would stay away
from the meeting -- demanding that the group be officially made the G-8,
including Russia, at all meetings.
Britain, which is hosting the annual summit of the heads the meeting the
G-8. British advance billing says Russia has been officially included in the
expanded group.
Russian President Boris Yeltsin has been taking an increasingly larger
role in the summits over the past few years, but when the finance ministers
met, Russian officials were only invited to join for a period to report on
progress of Russia's economic reforms.
Dubinin said it was time that distinction ended. He told the G-7
countries -- the U.S., Britain, Germany, France, Italy, Japan and Canada --
that he wouldn't attend the finance get-together except as a full participant.
But the host of the regular spring meeting in Washington, U.S. Secretary
Robert Rubin, professed ignorance as to why Russia stayed away. "You'd have
to ask them why they weren't here," he told reporters following the meeting.
He said Russia had been invited and Moscow officials would have been
"enormously welcomed" had they shown up. Actually, he said, they been a
"very good part" of the process over the last several years, and it would
have been good for the other countries to discuss Russia's circumstances. 
But the Russians didn't show up, so Russia was never mentioned in the
discussion, he said.
The U.S. has supported increased Russian participation in the summit
meetings, but has said Moscow is not yet ready for full membership on
economic and financial matters. The U.S. has, however, avoided discussing
the question publicly.
Canada also believes there is a "difference" between the G-7 political
and financial arenas, and that Russia is not yet ready to join the economic
side. "That's why we dropped the word economic from the summit meetings,"
said a Canadian official.
A German official said Bonn supports the full integration of Russia into
the G-7 process, including the economic and financial areas, as a
"complement to our policy of supporting and strengthening reform in Russia."
Dubinin is in Washington at the head of a delegation to attend the spring
leadership meetings of the International Monetary Fund (IMF) and the World Bank.
Not only will he and other senior Russian finance officials see the G-7
ministers in the IMF's Interim Committee today, and the Bank's Development
Committee on Friday, but also at a special conference of 22 nations tonight.
The conference, called by the U.S., is an attempt to draw up a basic
blueprint for remodeling the architecture of the international financial system.
Russia and Poland are among the 22 rich, poor and transition countries
invited to help see how the system can be restructured and strengthened to
deal with the new situation of the global economy.


Russia's 1998 grain output may be down on 1997

MOSCOW, April 16 (Reuters) - Russia plans to produce at least 70 million
tonnes of grain this year, but output could be well down on 1997 levels, a
senior agriculture official said on Thursday. 
Yuri Zakharov, deputy head of the economic department of Russia's Agriculture
Ministry, told Reuters that a government order outlining state financial
support for the agricultural sector had been drawn up. 
Acting Prime Minister Sergei Kiriyenko was due to sign the document, he
``We plan to harvest not less than 70 million tonnes of grain this year,''
said Zakharov. 
Russia produced a net 88.5 million tonnes of grain last year, a sharp
on 1996's 69.3 million tonnes. 
Volumes look set to fall again in 1998, although officials have said it
is too
early to give concrete forecasts for the forthcoming harvest campaign. 
``It would be great for us if we could produce no less than 70 million tonnes
this year, as the situation in the regions is not at its best,'' he said. 
Zakharov said the bleak outlook was largely the result of poor weather
conditions across Russia this year. 
Meteorological and agricultural experts have said recent heavy snowfalls in
the European part of Russia would slow up spring planting, while floods
earlier in the year in the southern Krasnodar grain belt also damaged winter
Zakharov said the 1998 campaign was further complicated by the lack of funds,
equipment and fuel. 
Russia's farming industry is regularly dogged by ageing equipment, lack of
fertilisers and seeds, and cash shortages. 
Zakharov also said the order to be signed by Kiriyenko envisaged sugar beet
production of at least 18 million tonnes, a significant increase on last
year's paltry 13.8 million. 


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