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Johnson's Russia List
19 April 1998
[Note from David Johnson:
1. Newsday: Michael Slackman, Much of Old Russia Part of New
2. InterPress Service: Sergei Blagov, POLITICS-RUSSIA: Conspiracy
Theorists Disappointed By 'Oligarchy.'
3. Moscow Times: Andrei Plakhov, Russian Cinema Reborn. Nearly
obliterated in the social and financial chaos of perestroika, Russian
film makes a strong comeback, led by energetic, young directors.
4. Journal of Commerce: John Helmer, Where's the beef? Not on Russian
5. Chicago Tribune editorial: NOW THE VOTE THAT COUNTS IN RUSSIA.
6. Reuters: US senator touts Silk Road Bill in Central Asia.
7. Interfax-Argumenty i Fakty: Sergei Belov, RUSSIA, CIS CONTINUE TO
18 April 1998
[for personal use only]
Much of Old Russia Part of New Moscow
By Michael Slackman
Albany Bureau Chief
Moscow -- Everything is gray. The cars. The buildings. The streets. All
are covered with a fine mixture of soot and mud. Even the snow
transforms to a gray slush moments after it touches the ground.
In New York, tulips already have bloomed. And this city lies beneath
inches and inches of snow and slush and gray sky.
The weather is no laughing matter here, but then neither is much of what
goes on: There is no government. The economy is sagging. The pollution
is stiffling. Traffic is horrendous. Corruption is rampant. And for
many, wages have not been paid in months.
So they rail at the weather.
Two days after a second snow storm slammed into the city this week,
Mayor Yuri Luzhkov fired the federal weather service and announced he
was starting a forecasting business of his own. Though officials
acknowledged it will prove near impossible to by-pass the federal
weather service, the symbolism of the action was not lost to the public.
The people, grim faced, wrapped in winter overcoats and hats, slog
through their city streets, past the eclectic mixture of architecture.
The massive towering stone buildings constructed under Lenin.
Dilapidated concrete apartments built under Nikita Krushchev. Store
windows that under Boris Yeltsin have filled with Reebok shoes, designer
dog food, snowmobiles and other pricey goods that few can afford.
"The aim of our government should be to help us all lead independent
lives," said Anatoly Ivanovich, 60, an engineer who braved a strong
winter wind recently to protest outside the national government
headquarters known as the White House. "Instead it does nothing."
The White House is where Yeltsin cemented his future by climbing atop a
tank and shaking his fist at Soviet hardliners trying to overthrow
Mikhail Gorbachev. Two years later, public attention again focused on
the White House in another coup attempt and Yeltsin ordered tanks to
fire on the building.
But this building that became a symbol of reform has become the focus of
anger for Russia's older citizens who built their lives around the old
Soviet system only to see their pensions go unpaid and the promised
security of their later years vanish.
A recent protest rally by pensioners drew the usual assortment of
disenchanted, those who are having difficulty finding a place in the new
post-Soviet order. There were those nostalgic for the Russia's czarist
past, the Communists and even one woman who kept screaming that Ukraine
is controlled by Mars. Together they waved red, white and blue banners
-- the colors of the Russian flag -- held up unflattering caricatures of
the president, and demanded a meeting with government officials to
insist that $10 million in owed wages be paid.
'THE MOST important thing for the government is to ensure a normal life
for the country," said Vladimir, a 62-year-old engineer who declined to
give his surname. "Our government is not meeting its obligation."
But the protests were about as effective as ranting at the weather
service. The building was largely empty since Yeltsin had fired the
entire government a week earlier. The leaders of the rally did get to
meet with the man selected by Yeltsin to serve as the new prime
minister, 35-year-old Sergei Kiriyenko. Hoping to build support and win
confirmation by the Duma, the lower house of the Russian Legislature,
Kiriyenko agreed with their concerns and assured them he would work to
see to it that back wages were paid.
But before this previously unknown businessman with only eight months
experience in government would have the power to help, he too would have
to navigate the country's evolving and convoluted government system. A
few days after meeting with the protesters, Kiriyenko, a short, slight
man with a thinning hairline and a boyish face, stepped before the 250
members of the Duma hoping to win support, and Friday, failed.
Even when the government tries to improve a situation it seems to make
matters more confusing.
Take, for example, the situation with the currency, the ruble. Its value
was so low, prices for everyday items ran to hundreds of thousands, even
millions, of rubles. So the government decided to re-denominate its
money. Ten thousand rubles became 100 rubles, 1,000 rubles became one
ruble -- and so on.
But most pricing is done along the old system, which inevitably leads to
confusion. If, for example, a customer tries to purchase a 4,000-ruble
loaf of bread with a new 100-ruble note, the cashier will likely ask for
a smaller bill. Adding to the uncertainty, the old ruble notes are still
in circulation, so an old 500-ruble note is only worth half a ruble
under the new system while a new 100-ruble note is worth 100,000 rubles
under the old system.
Through it all, the people have learned to make do. Drivers, for
example, will pull over and, for a fee, pick up anyone on the street
looking for a cab. Old women line the stairs to the Metro stations
holding in their hands one or two pieces of baby clothing, merchandise
they purchased outside the city and hope to sell at an inflated price.
English speakers approach foreigners strolling outside the Kremlin,
offering their services as a tour guide. At the flea market, unpaid
physicists, doctors and academics sell traditional Russian crafts.
But living in a society where the rules change almost daily, has not had
a positive effect on the public psyche. That, observers said, is why the
people lash out at the terrible weather, when in fact that is the one
constant throughout most of Russian history.
"The problem," said one Russian government official, "is that there is
no system. There is no balance. Nobody knows how to get things done."
>From InterPress Service
Title: POLITICS-RUSSIA: Conspiracy Theorists Disappointed By 'Oligarchy'
By Sergei Blagov
MOSCOW, Apr 14 (IPS) - It has become fashionable to ascribe
the powers of the old-style Soviet state to new-style tsars --
the almost ludicrously rich gaggle of business tycoons who have
sprung from Russia's post-communist society.
They are the 'oligarchs' of media gossip, described by many
as a privileged, unaccountable elite that virtually run the state.
President Boris Yeltsin is allegedly in their pocket. His decision
to sack his entire government last month was seen by some as
a futile attempt to resist their power, or simply carried out
on their direct orders, by others.
Abroad, especially in the United States, they are becoming
the stuff of policymakers' nightmares. ''Russia is on the verge
of becoming a crime-dominated oligarchy,'' concluded Washington's
Center for Strategic and International Studies in September,
''controlled by shady businessmen, corrupt officials and outright
But many Russian experts think that, whatever their financial
strengths, their political powers are overrated.
''The oligarchs' alleged omnipotence is very much exaggerated,''
says Ygor Bunin, director of the Moscow think-tank, the Centre
of Political Technologies. ''The oligarch hierarchy is very
volatile, due to the in-fighting within their ranks.''
Put simply, the stakes are so high, the rewards so great, and
trust is in such short supply, that the oligarchs cannot build
the mergers and commercial alliances needed to build an
unassailable common front against the government.
''Financial-industrial groups have emerged as very important
players in Russia's economy,'' says Viktor Vereschagin, deputy
director of the Expert Institute in Moscow.
''However, the bankers' infighting has split the political
establishment and torn apart the alliance of banking groups --
and the media they own -- which together helped underwrite
Yeltsin's re-election campaign in 1996.''
At the moment more than 80 financial-industrial groups, including
1,000 industrial enterprises and 100 banks, are registered in
Russia. There were just six in 1994. Their trading powers are
measured in billions, especially in sectors dealing with natural
resources, such as diamonds, gas and oil, all of which Russia
has in abundance.
But this power did not stop the Kremlin asserting its independence,
infuriating the bankers in the process, when the time came for
Yeltsin to repay his election debt to the oligarchs in mid-1997.
To their ill-disguised fury, the bankers were told that instead
of an ordered division of spoils, the country's remaining unsold
state-owned industries would go to the highest bidder.
The result was a internecine war between the big financiers.
It broke out when the giant Uneximbank first won control of the
equally huge Sviazinvest telecoms group, and then the resource-
stuffed Norilsk Nickel combine in July-August 1997.
The deal was done under privatisation procedures strongly
criticised by the other banks. Calling in every journalist they could
influence, they furiously charged the government, notably Russian first
deputy premiers, Boris Nemtsov and Anatoli Chubais.
Nemtsov and Chubais returned fire, accusing the bankers of
trying to exercise improper influence over the government.
Yeltsin finally intervened in September, summoning the bankers
to a meeting, to knock heads together and warn them that this
kind of 'pirate' capitalism was unacceptable.
The guest book read like was a Russian oligarchs' Who's Who:
former vice-premier and president of Oneximbank, Vladimir Potanin;
president of the Most group, Vladimir Gussinsky; Inkombank chief
Vladimir Vinogradov; Rosprom-Menatep boss Mikhail Khodorkovsk
i; SBS-Agro (formerly Stolitchni Bank) chief Alexandre Smolenski;
and Alfa-Bank boss Mikhail Fridman.
A ceasefire was agreed, but did not last. The resulting hostility
between the major players has made it impossible to create the
kind of corporate operations that could wield real power in
Russia's ill-regulated political-economic environment.
Yakov Pappe, co-author of one of the first major studies into
the oligarchy, 'Financial-Industrial Groups in Russia: Economical
and Political Impact' suggests their economic lead could be short
lived as their share of the economic cake is reduced by expa
nding competition. ''Russia's only hope is small and medium
business,'' he says.
Nemtsov, bloodied by his tangle with the oligarchs, does not
agree. In March he warned of ''authoritarian, semi-military''
tendencies of the state; its response to the pressures caused
by the widening gap between millions of poor Russians and the
oligarchic clans, enriched by ''dirty money''.
Bunin warns against Nemtsov's apparent wish to declare all-out
war against the most country's most powerful 'biznesmeni', not
least because Nemtsov himself owes his rise, in part, to the
support of some of these oligarchs.
More importantly, while the oligarchs' power is weakened by
division at present, a direct challenge to them and their supporters
could unify them into an unchallengable force between own and
the next presidential elections in 2000.
According to Nemtsov, 38, at one point considered a future
president, the future of the country hangs on the 2000 elections,
in which Russians will be offered a choice between democracy
and ''an oligarchic regime of mongrels''.
And according to Bunin, this scenario may have been made more
likely by Yeltsin's recent actions.
Yeltsin sacked his prime minister Viktor Chernomyrdin and his
entire cabinet on Mar. 23 and ordered little-known energy minister
Sergei Kiriyenko, 35, to form a new government that would ''inject
fresh vigor into economic and social reforms''. So far he
has failed to get the appointment past parliament.
Chernomyrdin, prime minister for more than five years, has
announced he would contest the presidency in 2000. But Russian
media speculate that if the constitutional court rules later
in the year on whether Yeltsin can stand for a third term, Yeltsin
will indeed contest Chernomyrdin for the job.
''Yeltsin has no chance for a third term and his decision was
absolutely irrational,'' says Bunin. By sacking Chernomyrdin
Yeltsin sparked the disintegration of the 'party of power' --
Russia's informal alliance of political leaders who are members
of no one single party but rule the country as one.
''Now we face a lunar landscape of Russian politics,'' he added.
Chernomyrdin already enjoys a slim three percent lead in the
polls and most analysts believe his presidential bid will secure
huge business backing. Chernomyrdin founded Russia's wealthiest
company, Gazprom, which produces a quarter of the world's natura
l gas, is still 40 percent state-owned, and is turning in reported
net profits of around eight billion dollars a year.
Chernomyrdin could be supported not only by Gazprom, Berezovsky
and Gussinsky, but also by the Unexim group, who has no feasible
candidate of its own to back, Bunin said.
Already hatchets are being buried. The very day before Chernomyrdin's
sacking, Berezovsky described the stolid former gas industry
boss as ''unelectable''. Since then he has changed his mind and
has urged Russian business to back Chernomyrdin's bid.
Berezovsky is also challenging Russian resistance to mergers,
uniting his oil company Sibneft with the Russian producer YUKOS
to create YUKSI. It now produces 1.3 million barrels per day,
making it the biggest producer in Russia and the third largest
publicly held oil producer in the world.
And Berezovsky also proves that cash turnover need not be the
only means to political influence in Russia. ''Berezovsky himself
is just a political intermediate,'' says Bunin, ''but a very
Berezovsky, 53, was one of the leading businessmen who threw
their financial and media weight behind Yeltsin's re-election
campaign in 1996. Close to Valentin Yumashev, Yeltsin's Kremlin
chief of staff and Yeltsin's daughter and imagemaker-in-chief,
Taty ana Dyachenko, he served as deputy secretary of Yeltsin's policy-
making Security Council until sacked last November.
Bunin admits that the financial-industrial groups could play
a positive stabilising role as they did in 1996, ''contributing
to the consolidation of the 'party of power' in Russia,'' when
no one party or manifesto had taken precedence.
Whatever their eventual intentions, he says, ''their backing
is vital for whoever represents the Kremlin in the next
For more articles from The Moscow Times, check out their website at
April 18, 1998
Russian Cinema Reborn
Nearly obliterated in the social and financial chaos of perestroika,
Russian film makes a strong comeback, led by energetic, young directors.
By Andrei Plakhov
The centennial of Russian film, in 1996, nearly went down as the year of
its death. Just 20 films were released that year, rivaling only the
repressive years leading up to Stalin's death in 1953 in dearth of
production. Amid unprecedented inflation and the collapse of the state
filmmaking and distribution system, the industry had spiraled downward
to a historic low. It appeared making a movie in Russia had become an
Now a new Russian cinema appears in the making. The influx of Hollywood
films, together with a mood of nostalgia, has revived interest in
moviegoing. Last year production jumped with the release of 50 films.
Dominating the directing scene is a younger generation of filmmakers who
use contemporary plots and characters but borrow themes from classic
film and literature. The industry is slowly moving toward making films
with universal and commercial appeal.
Last year's most talked about film was provocative director Alexei
Balabanov's "Brat" (Brother), about a disillusioned Chechen war veteran
who becomes a violent, lone vigilante in St. Petersburg and Moscow.
Reflecting the influence of American movies in its moralistic plot, this
Russian "Rambo" has been phenomenally successful on video, especially
among younger audiences. The antihero -- played by Sergei Bodrov Jr.,
whose career took off after the 1996 "Kavkazsky Plennik" (Prisoner of
the Caucasus) -- is a killer with ideals and morals. In the West, such a
character would be identified with the far right. In Russia, the
nationalistic -- and anti-Semitic -- soldier falls in step with the
left, embodying a working class protest against a harsh system with no
concern for the weak.
The recurring role of the social avenger, in "Brat" and many other
current films, has been transformed from the Soviet revolutionary hero
to one who fights to vindicate people who suffered under communism.
Up-and-coming Denis Yevstigneyev is currently shooting "Mama," loosely
based on a true incident, about a woman and her five children who hijack
a plane in order to free a son from a psychiatric institution. Sergei
Ursulyak's just finished "Sochineniye ko Dnyu Pobedy" (Victory Day
Essay) also features a hijacking, by World War II veterans fed up with
corruption and post-Soviet bureaucracy. Russian viewers will find
"Victory Day Essay" especially poignant because the aging avengers are
played by film idols from the 1960s and 1970s: Vyacheslav Tikhonov,
Mikhail Ulyanov, Oleg Yefremov and Nonna Mordyukova.
Most recent films are heavily populated with the so-called New Russians,
but even these characters often embody traditional roles. In Ivan
Dykhovichny's "Muzyka dlya Dekabrya" (Music for December), a flabby,
unkempt rich man commits hara-kiri Russian style, fatally stabbing
himself after an all-out drinking bout. Addressing the suffering of the
new rich, the film's other characters are also unhappy, psychologically
shattered individuals. Their sadomasochism and anger toward society
recall the wandering souls from a Dostoevsky novel.
Dostoevsky also shows up in Valery Todorovsky's "Strana Glukhikh" (Land
of the Deaf). In this film, two young girls fight for survival in harsh,
mafia-infested Moscow. One values money above all else. The other, who
lowers herself even to prostitution in her self-sacrificing love for her
boyfriend, is a modern-day version of Sonya Marmeladova from "Crime and
Punishment." In "Moskva," screenwriters Alexander Zeldovich and Vladimir
Sorokin parody Chekhov's "Three Sisters." After finally moving to the
capital and buying a hip night club, a mother and two daughters still
cannot overcome their hang-ups and neuroses.
To understand the significance of the budding new Russian cinema, it is
necessary to view the background from where it came. Although the
country has produced some of the world's finest films, until the
collapse of the Soviet Union the industry was never free of political
constraints. Pre-revolutionary films -- mostly literary adaptations --
heeded the censorship of the tsar. After the revolution, the Bolsheviks
were among the first to recognize the medium's value as a propaganda
tool. Two of the most brilliant Soviet directors, Sergei Eisenstein and
Alexander Dovzhenko, managed to make some of their greatest works in the
1920s under Bolshevik command. In the 1930s, an attempt was made to
combine ideology and Hollywood-style entertainment, typified by Grigory
Alexandrov's musical comedy "Jolly Fellows." The 1960s celebrated the
triumph of intellectual directors such as Andrei Tarkovsky. In the early
1980s, another attempt was made to emulate Hollywood, which produced the
Oscar-winning dramatic comedy "Moscow Doesn't Believe in Tears" -- a
classic story of a provincial girl trying to make it in the big city.
Such Hollywood adaptations of Soviet realities was declared the new
pattern for the industry.
Then, in May 1986, everything turned upside down. At the Fifth Congress
of Soviet Filmmakers, the Soviet Filmmakers Union proclaimed market
reforms and broke up their organization into individual guilds. It gave
studios financial and creative independence, and assumed perestroika
filmmakers would seize the opportunity of new freedom to avenge the
years of political censorship, making movies with the penetrating style
of Tarkovsky as their model.
Awaiting a perestroika revolution of message-laden films, the union was
caught off guard when the newly freed industry produced a rapid series
of sensational political exposés, the most notable of which was Georgian
director Tengiz Abuladze's satire about Stalin, "Repentance." Veteran
directors, like Nikita Mikhalkov who directed the Oscar-winning "Burnt
by the Sun," continued their painstaking craft. Most of the industry
then threw itself into exploiting the once-prohibited but popularly
longed-for subjects of sex and violence. Prostitutes, killers, mafiosi,
homosexuals and drug addicts became the favorite characters. A few, like
Vasily Pichul's enormously popular "Little Vera" -- about an alienated
working class girl -- were fresh, insightful portraits of contemporary
society, but the overwhelming majority offered nothing substantial or
entertaining. Most films were hastily made by upstart private companies
as production soared to 400 films a year. At first enticed by the
novelty of the seedy societal snapshots, the public quickly cooled
toward them. Russia's perestroika cinema was a theater of horrors.
Just as it rejected the perestroika film, the Russian audience balked at
the poor representation of American movies entering the market. Fearing
piracy, in the early 1990s, major U.S. filmmakers refused to risk their
better products, exporting only B-grade films. Low quality equipment and
uncomfortable seats, not to mention growing street crime, pushed
moviegoing further out of fashion. People turned to television and
But some investors still gambled their faith on Russia's love of the
movies. In October 1996, Eastman Kodak and Los Angeles-based Golden Ring
Entertainment opened Moscow's first modern movie theater for Russian
audiences, Kodak Cinema World. Media mogul Vladimir Gusinsky and Sergei
Livnev, president of Gorky Studios, have plans to open new theaters in
cities throughout Russia. From observing the success of Kodak, investors
have reason to be optimistic. Tickets at the theater cost an average of
$20 and were twice that much for the Moscow premier of "Titanic." Still,
the theater is often full, with scalpers doing good business by the
entrance. The new theaters specialize in Hollywood films with Russian
dubbing or subtitles.
Despite predictions that American blockbusters would muscle out domestic
films, on the contrary, Hollywood whetted the appetite for Russian
movies. Television has also revived interest in domestic productions by
airing old films -- many of which have cult followings -- and by
investing in film production. NTV launched its own studio, NTV-Profit,
and ORT has financed various films. Indicating Russian cinema's
transformation from perestroika's theater of horrors to one of hope and
pride, these days there is often patriotic applause when the symbol of
the former state film company, Mosfilm, a giant Soviet sculpture of a
factory and a collective farm worker, appears on the screen.
Perestroika's 10-year-span also ushered out the old guard. Mikhalkov --
equated by many in the West with the Russian film industry -- is
currently the only successful director beyond 50 years of age. At just
under $30 million, his nearly completed "Sibirsky Tsiryulnik" (The
Barber of Siberia) is the most expensive movie production in Russian
cinema history. Mikhalkov's older brother, Andrei Konchalovsky, has been
spending more time at social gatherings or writing his memoirs recently
than in film studios. Elem Klimov, who oversaw the perestroika of the
industry as the 1986 head of the filmmakers union, hasn't made a film
since his 1985 "Come and See." Living classics Alexei German and Gleb
Panfilov are struggling with their respective drawn-out projects, a film
noir on Stalinism and a movie on the family of the last tsar.
The majority of active directors today are in their 30s and 40s. Many of
them work closely with Gorky Studios, which has become a driving force
behind low-budget filmmaking and the explosive numbers of new films.
Gorky Studios specializes in sexy, sometimes quirky, thrillers, styled
after Alfred Hitchcock, David Lynch and Quentin Tarantino. But the films
all center around current Russian reality, such as Nikolai Lebedev's
"Zmeiny Istochnik" (Sudden Spring), a portrayal of provincial morality,
and Ilya Makarov's "Telo budet predano zemle. A starshy michman budet
pet" (The Captain's Body Will be Buried and the Senior Warrant Officer
Will Sing his Song) about the subculture of St. Petersburg youth.
The more mainstream films are coming out of NTV-Profit and Mosfilm --
which, like Gorky, still remains almost completely in state hands.
Mosfilm had some success with the comedy "Shirli-Myrli" (What a Mess),
directed by Vladimir Menshov, who made "Moscow Doesn't Believe in
Tears." A noteworthy project from NTV-Profit is Kira Muratova's twisted
and engaging "Tri Istorii" (Three Stories). The director began her work
during the Khrushchev thaw and has managed to successfully continue
making films in her intense and ironic style.
As Russia's first completely private studio, NTV-Profit's interests lie
primarily in creating films that appeal to the widest audience. Pavel
Chukhrai's "Vor" (The Thief), nominated this year for a Best Foreign
Film Oscar, has been its biggest success so far. Most of "Vor" takes
place in the early 1950s. The film opens with Katya, a young widow, and
her 6-year-old son, Sanya, meeting a handsome military officer on a
train. The young woman falls for the officer, Tolyan, and they begin
living together, traveling from city to city. Sanya, strikingly
performed by child star Misha Filipchuk, is initially jealous of Tolyan,
but later takes to him as a father-figure. Katya and Sanya soon realize
that Tolyan is not the man he makes himself out to be, but rather a
professional thief. They still continue to give him their love,
effectively becoming his accomplices. After Katya dies, Sanya is sent to
an orphanage. The boy carries feelings of love and hate for Tolyan
throughout his life.
Sanya's complex feelings for Tolyan are a metaphor for an entire
generation's love-hate relationship with Stalin. The film carries a
relatively new political perspective, but is seeped in the Soviet film
tradition of treating themes of war and humanity. "Vor" is strongly
reminiscent of the works of the director's father, Grigory Chukhrai, who
was among the first directors to attempt to convey the horrors of
Stalin's rule in films such as the 1959 "Ballad of a Soldier" and the
1961 "Clear Skies." That period coincides with the heyday of Italian
neorealist film, led by Vittorio De Sica's "Bicycle Thief" and Federico
Fellini's "The Nights of Cabiria." "Vor" is a combination of these two
films -- about a father and son united in their fight against poverty,
and about a woman who gives selfless love to a thief.
At the end of "Vor," the adult Sanya is commanding a war in a place
highly suggestive of Chechnya. The abrupt leap in time is the film's
major flaw. But that wasn't the ending American viewers saw. Chukhrai
made a new, shorter and more heart-rending ending for his Oscars
submission and the American video market. In a similar emphasis on
broad, commercial appeal, Sergei Bodrov refrained from touching on the
political issues surrounding war in his 1996 "Prisoner of the Caucasus,"
which starred his son. The film never mentions Chechnya although it is
obviously based on that conflict. "Prisoner of the Caucasus" was a 1997
Best Foreign Film Oscar nominee and won the International Critics Award
at Cannes that year.
The new awareness of the mass audience won't completely eradicate the
finer and more progressive forms of Russian filmmaking tradition. "Mat i
Syn" (Mother and Son), Alexander Sokurov's 1997 portrayal of a dying
mother and her caring son, is a visually striking masterpiece that
captures the universality of human intimacy. Sokurov and a handful of
other directors are likely to survive, although in the narrow genre of
the art film.
The recent string of good films and the surge in production has proved
the vitality of the Russian film industry. Its strong emergence from the
chaos of perestroika is a good reason for optimism.
Journal of Commerce
17 April 1998
[for personal use only]
Where's the beef? Not on Russian tables
BY JOHN HELMER
JOURNAL OF COMMERCE SPECIAL
MOSCOW -- U.S. meat exports to Russia face a shrinking future, traders
and market analysts said, as Russian consumers shift their dwindling
incomes to meat substitutes.
Nathan Hunt, a leading American meat trader in Moscow, said a cyclical
or seasonal trend for meat purchases to falter, when wages were delayed,
has turned into a steady fall in meat consumption. That, combined with a
drop in domestic production, competition and worries about the economy,
has given rise to a bleak outlook.
"The decline is no longer seasonal," Mr. Hunt said. "It continues and
continues. It looks like Russians have stopped eating meat."
Russia has become a huge market for U.S. meat products. Last year, meat
sales totaled $892 million of the $3.2 billion exported to Russia, about
25% of total sales. Machinery exports, the second-largest export, in
1997 totaled $685 million. The latter are imported mainly in connection
with investment projects.
On April 9, Russia's unions organized a nationwide protest against
delays by the federal government, regional governments and companies in
paying workers their wages. The total wage backlog to have accumulated
by the end of March was a record at almost $10 billion. At the same
time, the federal government has admitted delays in federal pension
payments are also becoming more common and widespread.
As a result, Mr. Hunt said, "all the Moscow meat plants have seen a
significant drop in sales."
A similar finding is reported by the Boston Consulting Group, whose
Moscow office recently surveyed the Moscow market for small goods,
sausages and pates.
"Local meat producers are having a difficult time because of dropping
meat consumption," says Stanislav Tsyrlin, a Boston Consulting Group
"A shortage of cash, not increasing health consciousness, is behind this
drop," he adds.
At Soyuzkontrakt, one of Moscow's largest meat importers, a trader said
that American meat sales are being hurt by cheaper imports from the
Czech Republic and Poland.
More chicken imported
He also acknowledged that his company is importing less red meat, more
At Tyson Foods, the largest U.S. exporter of chicken to Russia, a
marketing official expects the meat consumption decline to hit red meat
imports, but not chicken.
"More than 50% of Russian chicken consumption is imported," he said,
"and it's almost impossible for Russian poultry production to improve.
Last year, U.S. exporters delivered 1 million metric tons of poultry to
Russia, while the domestic production was about 600,000 tons. I expect
this balance will be repeated this year."
Mr. Hunt said that in the United States, it was possible for pork
producers to mount an effective campaign to promote consumption of "the
other white meat."
But "there is no concerted effort like that here," he observes, and he
does not expect one. "How am I dealing with the decline? I'm expanding
the client base to keep volumes up. I'm also selling less meat," he
Nadezhda Gravenko, who heads the food statistics department of the State
Statistics Committee (Goskomstat), believes the decline in meat
consumption is correlated with the drop in domestic meat production.
In 1990, she says, Russians were consuming 121 pounds of fresh meat a
person each year. By 1996 this was down to 112 pounds. Goskomstat hasn't
prepared the figures for last year, but according to Ms. Gravenko, the
trend will continue downward.
Domestic production falls
Russia's meat production in 1997 was down 2% on the 1996 level,
according to other Goskomstat figures. The share of the shrinking meat
market filled by imported meat rose from 26% in 1996 to 30% in 1997.
Ms. Gravenko noted that at the same time as many Russian consumers have
been unable to afford higher-priced meat imports, there has also been
less subsidized meat available. She said that state reserves of meat,
which are released on to regional and city markets at lower prices,
dropped from 1 million tons in January 1995 to 800,000 tons in January
1996. The most recent data are not available, but are believed to be
Ms. Gravenko and another Goskomstat analyst, Olga Mukhanova, whose
department analyzes consumer purchasing power, believe that Russian
consumers are shifting to potatoes and cabbage, because domestic
supplies have held up, and their prices have not grown as fast as meat
The Russian economy as a whole has suffered from low global oil prices,
which have hurt equities.
Threat to reforms
Investors are worried that needed economic reform could be derailed by
political uncertainty. President Boris Yeltsin stunned the international
community when he fired the entire Cabinet and appointed an unknown,
little-experienced junior minister as acting prime minister.
Threats to dissolve the Parliament if the Duma refused to approve Mr.
Yeltsin's prime minister further shook up investors.
In addition, there is continued worry about the level of the ruble,
which is appreciating in real terms.
18 April 1998
NOW THE VOTE THAT COUNTS IN RUSSIA
The first two votes by the Russian Duma rejecting Sergei Kiriyenko as
prime minister were more political theater than serious parliamentary
action. The third vote, expected to take place next week, will be a very
different affair. If the Duma rejects Kiriyenko once again, it will be
voting itself out of existence. For that reason, most analysts in Moscow
expect it will finally, if reluctantly, approve President Boris
Yeltsin's choice to head a new Russian cabinet.
Based on his performance since being nominated, Kiriyenko deserves to be
confirmed. Concerns about his limited experience working in the federal
government have been offset by his refreshing frankness in discussing
the most burdensome problems besetting the Russian people--economic
malaise and the epidemic of crime. Kiriyenko gives the impression he
sincerely understands that a true democracy cannot be created in Russia
unless the leaders deal honestly with the citizenry and inspire popular
confidence in the political process.
In the wrenching years since the collapse of the Soviet system, most of
Russia's self-styled "democratic" politicians have displayed the same
contempt for the common people as did their communist predecessors.
Their cynical dissembling about everything from economic reform to the
disastrous war in Chechnya has devalued democracy in the eyes of many
Russians, who believe that their new government of elected officials is
no more responsive to their wants and needs than was the Soviet
In admitting that economic change has been of meager benefit to the
average Russian and by putting the lie to government claims that crime
is on the decline, Kiriyenko stirs hope he may be the forerunner of a
new generation of more enlightened public figures. While his youth and
newness to the Moscow power scene raise questions about his readiness to
be prime minister, they could instead prove invaluable assets in a
Kremlin where far too many officials are handicapped by political values
and habits formed in the totalitarian era.
Of course, Duma members may yet opt to fall on their swords rather than
confirm Kiriyenko. Under Russia's Constitution, the president must
disband the Duma if it rejects his candidate for prime minister three
times running. Because this Duma has been a do-nothing body dominated by
hard-liners and buffoons, few tears would be shed at its demise. But
given the low esteem in which democrats and reformers are held, the
chances that a new Duma would be an improvement are not promising.
The best thing for Russia would be a yes vote for Kiriyenko, even if it
means extending the life of this thoroughly discredited Duma.
US senator touts Silk Road Bill in Central Asia
By Dmitry Solovyov
ALMATY, April 18 (Reuters) - A visiting U.S. senator said on Saturday
Washington should do more to support energy-rich countries in the former
Soviet Union and that his draft ``Silk Road Bill'' could go a long way to
``This (bill) will focus U.S. policy in Central Asia and the Caucasus,''
Senator Sam Brownback told reporters after meeting Kazakh President Nursultan
Nazarbayev and Foreign Minister Kasymzhomart Tokayev.
The draft bill aims to improve regional security and boost economic
cooperation, especially in the lucrative oil and gas sector in which U.S.
companies have already taken the lead in most of the projects.
``I think the United States should do much more to support free and
independent nations in Central Asia and the Caucasus,'' said Brownback, a
Republican from Kansas.
U.S. First Lady Hillary Clinton visited Central Asia last November, a trip
foreign policy analysts said was intended to promote stability and help secure
access to oil reserves.
Two months earlier, U.S. paratroopers took part in the longest airborne
mission in history to stage a drop in the Kazakh steppe as a way to underscore
Washington's strategic interest in the region and ability to reach it.
Brownback said his Silk Road Bill was pending in both chambers of the U.S.
legislature. It takes its name from the mediaeval caravan route for Asian silk
and spices which stretched to Europe via Central Asia and the Caucasus.
The bill outlines U.S. strategies for the huge region -- the newly
Central Asian states of Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and
Tajikistan as well as Georgia, Armenia and Azerbaijan in the Caucasus.
``We hope we can get it passed this year, and if this is the case it may
being implemented next year,'' Brownback said.
Under the bill, President Bill Clinton would be able to use all diplomatic
means practicable to tackle regional violence.
Smouldering conflicts in Georgia's separatist South Ossetia and Abkhazia
regions, the dispute between Azerbaijan and Armenia over the Nagorno-Karabakh
and Tajikistan's shaky civil peace might hamper the region's multi-billion-
dollar energy projects.
U.S. officials say they would like to see more U.S. investment reaching the
oil-rich region and stress the importance of regional stability for the
proposed route for Azeri and Kazakh oil from the Caspian Sea to Turkey's
Mediterranean port of Ceyhan across the Caucasus.
The route, preferred by the U.S. government to other oil export alternatives,
is also featured in the Silk Road Bill.
``It could be an aggressive regional cooperation effort for oil and gas
exports out of the region to Ceyhan,'' Brownback said.
He said the draft bill would also provide for insurance of those U.S.
companies which wish to invest in the region.
>From RIA Novosti
Interfax-Argumenty i Fakty, No. 15
RUSSIA, CIS CONTINUE TO DRIFT APART
By Sergei BELOV
In spite of all those numerous statements about more
profound intra-CIS integration, statistics show only too
clearly that relations between CIS member states are marked by
Real CIS GDP volumes had soared by an average of 0.7
percent in 1997. According to Russian experts, CIS economic
stabilization was accomplished mostly with the help of foreign
loans last year. Apart from that, the CIS GDP had increased
against the background of low initial levels (just because the
GDP dropped considerably over the last few years).
For example, in 1997 CIS member states had produced just
over 50 percent of their 1990-vintage GDP.
CIS countries have so far failed to create long-term
prerequisites for economic growth. Their economies are being
mostly financed with the help of loans and credits.
Incidentally, the volume of Western credits granted to CIS
member states exceeds the volume of similar Russian credits
many times over.
According to the Inter-State Economic Committee, in the
past few years Russian investment accounted for about one
percent of all foreign investment being channelled into the
As a rule, various CIS-support monies that are being
annually stipulated by the Russian federal budget, are
allocated within the framework of tied credits (and not in full
Russia's Specific Share in CIS Foreign Trade
Country Exports Imports
Belarus 87.1 80.2
Moldavia 84.6 54.5
Kazakhstan 75 84.7
Armenia 73.7 46.4
Ukraine 66.8 79.9
Georgia 51 41.3
Azerbaijan 44.1 46.9
Kirghizia 30 46.5
According to statistics, CIS member states, which keep
announcing additional integration initiatives, continue to
trade with third countries. As a matter of fact, centrifugal
trends are becoming more and more pronounced.
Whereas in 1996, third countries accounted for 72 percent
of all CIS exports and 56 percent of their entire imports, on
In 1997 these volumes soared to reach 73 percent and 61
According to the Inter-State Economic Committee, the
volume of mutual intra-CIS export operations dwindled by an
average of 3.7 percent last year.
Belarus, Kirghizia and Moldavia, where the CIS accounts
for the bulk of their export-import operations, are seen as the
only exception here.
CIS countries have also failed to make any progress in the
creation of a regional free-trade zone. The relevant agreement
was signed on April 15, 1994; however, that zone is still
nowhere to be seen. The signatory states concerned are still
unable to work out a common customs policy and to coordinate
the range of exciseable goods, as well the required excise-tax
Apart from that, Russia and Ukraine, which are major trade
partners accounting for over 50 percent of the entire CIS trade
turnover, have not yet ratified the free-trade agreement.
Consequently, intra-CIS relations were mostly based on
bilateral free-trade agreements throughout the 1996-1997 period
(to quote Svyatoslav Perfilov in charge of one of the
Inter-State Economic Committee's departments).
The outlines of a CIS free-trade zone are clouded in mist.
Nonetheless, the free-trade agreement signed four years ago
enabled Russia to consolidate its economic positions in CIS
According to the CIS Inter-State Statistics Committee,
Russia used to be the main trade partner of CIS countries
throughout 1997. Besides, Russia's First Deputy Minister for
Cooperation With CIS Countries Pavel Smirnov says that the
aforesaid agreement made it possible to avoid even more
pronounced CIS industrial decline over the 1994-1997 period, to
prevent the mutual trade turnover from plunging to an even
lower level and to avoid any more drastic reductions in GDP