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Johnson's Russia List


May 11, 1998  
This Date's Issues: 2173  2174  

Johnson's Russia List
11 May 1998

[Note from David Johnson:
1. Reuters: Tanya Pang, Grey spring in Russian far north.
2. U.S. News and World Report: Christian Caryl, Rapping in Red Square.
Russia's 'abandoned' generation is divided into rappers and skinheads.

3. Reuters: Peter Henderson, Russian reformers line up targets.
4. Sovetskaya Rossiya: Vasiliy Safronchuk, "Cabinet of Tax Farmers. 
What Has the Country Obtained as a Result of Yeltsin's Government
Reshuffle -- A Government of Technocrats or a Coalition of Oligarchs?"

5. Reuters: Aleksandrs Rozens, Construction cranes share Moscow skyline 
with cupolas.

6. AP: Azerbaijan Agrees on Oil Pipe Route.
7. Pravda: Vadim Gorshenin: "Lebed: Tiraspol, Khasavyurt, Krasnoyarsk. 
Next Everywhere?..."


FEATURE - Grey spring in Russian far north
By Tanya Pang 

LOVOZERO, Russia, May 11 (Reuters) - In an Arctic corner of Russia, life has
grown harsher since the Cold War despite new ties with Nordic nations and a
wealth of resources from fish to rare metals and reindeer. 

The Lovozero district, which covers a third of the icy Kola peninsula in
northwest Russia, has been hit hard by the collapse of the Soviet Union.
Moscow funding has dried up and the pioneering spirit of the far north has
given way to a feeling of isolation and abandonment. 

Revived links to neighbouring Norway and Finland, shut off during 70 years of
communist rule, have so far brought little but disappointment. 

The closure of a nearby mine in Revda, producing tantalum and other rare
metals, and a downturn in reindeer farming have further ravished the local

``Some African countries we used to help are in better economic shape than
ourselves,'' said Nicolai Brylyov, the district's mayor. 

Official unemployment is around 7.5 percent but Brylyov said it is probably
closer to 10 percent and likely to double when the Revda plant is finally
declared bankrupt. Four years ago the Revda mine contributed 75 percent of
income to the local budget. 

Lack of investment has left the mine uncommercial. The area relies on
agriculture -- reindeer, crops, milk and fur production -- and from handouts
from the Murmansk regional authorities. 

``We live here now on donations...We are in a condition of merely existing,''
Brylyov, 53, who arrived in Lovozero from Siberia aged seven, told Reuters. 


Lovozero town, founded in 1575, has a population of 3,700 and is a scattering
of tired-looking concrete buildings 180 km (112 miles) east of Murmansk and
1,350 km north of Moscow. It is the administrative centre for the district. 

Nearby Revda is the largest community with 9,700 inhabitants. Three tiny
villages -- Krasnoshelje, Kanezka and Sosnovka -- lie deep in the snow-covered
plains and are reachable only by air. 

The district's 14,500 population is a mix of 10 ethnic groups including Sami,
or Lapps, and Komi, as well as Russians, Ukrainians and Belarussians. 

Living on Russia's vast Kola plains is harsh. The winters are long and hard
with snow for nine months between September and May when temperatures drop to
an icy minus 40 Celsius (minus 40 degrees Fahrenheit). 

Brylyov estimated that 60 to 65 percent of the population has an income below
subsistence level. ``How do they survive? That's a question we all ask. They
borrow, they make do. Everyone tries to help,'' he said. 

Life expectancy is just 47 years for men and 48.9 for women. Rates of
alcoholism, depression and violence are high, especially among ethnic
populations, who are striving to regain identities stripped away in more than
70 years of Soviet rule. 

A hospital at Revda has been under construction for more than 14 years and
remains unfinished. Much of the equipment due to go there has either
deteriorated or been pilfered. 

Medical supplies and transport are in short supply and hospital buildings are
in disrepair. Much of the cement has fallen from between the breeze blocks. 

Marina Dubovtseva, a Sami and paediatrician at Lovozero since 1990, said
health in the district was deteriorating with malnutrition at the top of the
list of causes. 

``This (malnutrition) is a universal problem in many countries where people
are not paid regularly,'' Dubovtseva said. 

Sexual diseases, virus infections in winter and illnesses related to thyroid
problems probably linked to pollution from the Revda mine were also prevalent,
she said. 

Offers of help from the outside do little to help. Last year Norway sent
300,000 crowns($40,000) of medical supplies but Russian customs refused to
clear it and it was sent back. 


Boris Yacobovsky, a 61-year-old pensioner who arrived in Lovozero from Ukraine
in 1966, has started selling seeds in Lovozero's tiny market place to pad out
his pension. 

The market has just a handful of stalls selling clothing, shoes, Yacobovsky's
seeds and the odd gadget. 

``Things are getting more and more difficult, there is very little money to go
round. Unemployment has increased and it will only get worse,'' Yacobovsky
said through an ice-encrusted beard. 

``The government should do something to the economy, but the people also need
to help themselves.'' 

Indigenous people like the Samis are trying to do just that. Lovozero's
cultural centre, helped by funding from Sami communities in Nordic countries,
has set up programmes to revive the Sami and Komi languages and train people
in traditional crafts such as tool making, carving, beading, weaving and
sewing traditional costumes from woven fabrics and reindeer skin. 

The programmes are as much to resurrect local culture as to start up cottage

But one important local industry, reindeer farming, has suffered setbacks and
the district's two reindeer farms are also struggling to survive. Many
processors, making products like sausages, have gone out of business. 

In addition, exports to Sweden and Finland were stopped after they joined the
European Union, leaving Russian reindeer farmers mostly reliant on Norway to
sell their meat. 

Lovezero's two reindeer farming cooperatives herd 65,000 animals. The Tundra
cooperative, based in Lovozero, employs 300 people and slaughtered 9,600
reindeer in 1997. 

Eighty percent, or 200 tonnes, of Tundra's output was sold to Norway last year
but now those revenues are under threat. In February, Norway increased taxes
for Russian reindeer meat almost a thousand-fold to 32 crowns per kg (2.2lb)
from three crowns. 

Tundra director Olga Nufrieva said farmers aimed to send their children to
Norway and Finland to learn slaughtering and processing to save the industry. 

``Our most precious contacts are the Samis in Finnmark (Norway's reindeer
farmers),'' she said. 


Mayor Brylyov said Lovozero and other areas were looking to foreigners for
investment in the absence of support from distant Moscow. 

One such programme, the Barents Cooperation, was set up in 1993 by Denmark,
Norway, Russia, Finland, Iceland, Sweden and the EU Commission to develop
education, trade, business, culture and healthcare. 

It also aimed to clean up pollution from out-of-date metal works and the
abandoned nuclear submarines from the former Soviet Union's mighty Northern

Brylyov said such aid had so far proved to be little more than the goodwill
talk of politicians. ``People know how to pronounce good words. The Barents
Cooperation hasn't reached here, nothing has been done,'' he said. 

``To ask foreigners for help is humiliating of course. We were once proud that
we could help other countries, but now we have turned into beggars

Others were more stoic. 

``We're not looking for pity. We've been in this situation before and we have
overcome our difficulties. We will do it again but with a friend's help we
will do it a day earlier,'' said Nine Ivanova, head of education at the
mayor's office. ($ - 7.446 Norwegian Crowns) 


Date: Sun, 10 May 1998
From: Christian Caryl <>
Subject: Rappers & Skinheads

U.S. News and World Report
[for personal use only]
Rapping in Red Square
Russia's 'abandoned' generation is divided into rappers and skinheads

MOSCOW--Being a "rapper" isn't easy in Russia. Most of the rap music
devotees in backward baseball caps, oversize pants, and puffy parkas who
hang around the food court in the Manezh Shopping Center, an underground
mall just off Red Square, have already had run-ins with the law.
Eighteen-year-old Sergei is well acquainted with the local precinct's
obyezannik, the "monkey cage" reserved for drunks and petty criminals.
"When you go in there, they beat you up first and ask what you did
afterward. They kick you in the kidneys and say, 'Don't let us see you
around here again.' "

But it's no easier being an enemy of the rappers. Sergei's most recent
visit to the police station came after he and a friend jumped a skinhead in
one of the dark tunnels that allow pedestrians to cross under Moscow's
broad avenues. Their goal was to steal the skinhead's black leather boots,
the ultimate insult in the rivalry between two great armies of Moscow
youth, skiny (skins) and rappery (rappers).

"My mom's against rap," says Sergei with an unsettling grin. "She says all
black people are bandits and drug addicts. She says that they don't work
and only rob and kill. Which makes them like me, she says."

The skins and the rappers are not exactly gangs. They are broader and more
fluid than that. Russian teachers, psychologists, and police say that at
almost every high school in Moscow, some teenagers divide themselves into
these two camps. All together, they probably number in the thousands.

The rapid spread of these categories-- based on hair, dress, and musical
styles that are utterly foreign--casts a curious light on the
work-in-progress that is post-communist Russia. Both the skinheads, who
listen to heavy metal music and emulate Western European neo-Nazi youth,
and the rappers, who are not musicians but ardently follow American
inner-city style, were in the early grades of school when the Soviet Union
collapsed. To them, perestroika and glasnost are ancient history. They grew
up watching MTV.

"This is the first truly post-Soviet generation," says Anatoly Zhuravlev, a
social psychologist at the Russian Academy of Sciences who is conducting a
long-term study of adolescent mores. And to an alarming degree, it is also
"an abandoned generation," adds Mikhail Topalov, a sociologist at Vox
Populi, a think tank and public-opinion research center. Russians used to
be known for doting on their children, swaddling them in tight blankets as
infants and tight discipline as teenagers. Then came a decade of political
upheaval and economic depression that forced parents to scramble to earn a
living and broke apart many families. "Nowadays no one pays any attention
to our young people," says Topalov.

Tension between skiny and rappery is ubiquitous; violence is increasingly
common. At the mall near Red Square, a ripple of excitement suddenly runs
through the rappers at the mere sight of a skinhead. Run-ins with the
"fascists" are common--and even welcome, the rappers say. "I will fight for
my entire life," says Denis, 17, "for the right to wear pants that hang
down to the knees."

One of the main hangouts for the rival skins is the Gorbushka open-air
market, a wooded park on the northwest edge of the capital. Ordinary
Russians flock to Gorbushka to buy computer software, videotapes of the
latest Hollywood movies, and compact disks of popular Western music--all
available in dizzying abundance, and almost all pirated. But a gloomy
concrete building at one edge of the market is reserved for the booming
trade in heavy metal music, Gothic paraphernalia, and neo-Nazi chic,
including pamphlets with names like "Streetfighter for Race & Nation" and
"International Skinhead Bulletin." Other popular items are Confederate
flags, heavy paratrooper boots, and German Army T-shirts.

Few foreigners visit Gorbushka--and for good reason. On May 2, four
skinheads attacked and beat up an African-American visitor to the market,
who turned out to be a Marine guard from the U.S. Embassy. Police arrested
one of the suspected assailants, who bragged to a television crew that
black people "seem to be attracted to my fists like metal to a magnet.
Everywhere I go they bite me on the fists."

In an interview a few weeks before that attack, another skinhead, Dima, 16,
gave a chilling preview. "I believe in White Europe, a new order," he said,
underlining the point with his shaved head, combat boots, black bomber
jacket, and the black-and-yellow scarf of his favorite German soccer team.
Dima attends a magnet school in northern Moscow with students from Angola,
but "I don't associate with them in any way," he says. When he leaves
school each day--walking past a schoolyard graffito proclaiming "NO
JEWS!"--what he sees is not a fledgling democracy but post-Soviet Babylon.
Drug dealers, he claims, ply their trade on the sidewalk by the Lyubyanka,
headquarters of the former KGB. The square in front of the Bolshoi Theater
has become a hangout for homosexuals, a word he spits rather than speaks.
Moscow's markets are filled with Vietnamese and Chechens who, he says, have
come "to take away our jobs." To Dima and his friends, the popular daily
Moskovsky Komsomolets is a "yid newspaper," rife with Jews and equally
detested "democrats."

Hunters with shiny boots. But especially worthy of scorn are the rappery,
with their passion for "alien" black music. "People here who love rap
probably don't even know what they're singing," says one of Dima's friends.
"They have lyrics that say things like, 'Let's kill all the white people.'
" Dima's pals listen mainly to "Oi! music," a genre also popular with
skinheads in Germany and the United Kingdom. ("Oi!" is the Cockney slang
pronunciation of "hey!") A special point of pride for the skins: keeping up
the polish on their black boots. "It's a matter of style," says Dima. "We
shouldn't look like punks or bums. [Blacks] are sloppy. Everything just
hangs off of them. We're proud of Russia; we should look good." One of
Dima's friends recounts with excitement and pride how the group cornered a
lone African man on the street, beat him senseless, then photographed
themselves posing over the prone body like hunters over a kill.

Ask Dima about his parents and he shrugs. His father is an unemployed auto
worker, but his mother has kept her job as an accountant. Dima spends
little of his time at home; he prefers to hang out with friends who think,
and look, very much the way he does. They pass the hours drinking beer or
hanging around the headquarters of the National People's Party, whose
leader, a former film director who claims that his career was frustrated by
a "yid cabal," hopes to channel their energies into ultranationalist

"Today Russia doesn't have any way of teaching children a healthy
patriotism," says Yevgeny Karamyan, a journalist at Moskovsky Komsomolets
who writes about political extremism. "Lots of kids think of themselves as
the losers of the cold war, and that's why they go to these organizations.
It's like the situation in [post-World War I] Weimar [Germany]."

Both the skiny and the rappery, says sociologist Topalov, are reflections
of the growing disparity between rich and poor in Russia. "The rappers are
usually from families that are somewhat better off, but where the parents
are struggling to keep up and have no time at all for their kids. The
skinheads come mainly from working-class families where one or both of the
parents have lost their jobs," he says.

To visit the neighborhood of Kefir Crew, a group of rappers in southeast
Moscow, is to understand why its members feel an affinity for American
ghettos. Ranks of identical high-rise apartment blocks, wan beige in the
late winter sun, cluster around a muddy courtyard the size of a football
field. On the wall of a passageway someone has scrawled an English phrase:
RED-BLUE HOOLIGANS. The housing project's younger kids, playing pickup
soccer on the snow in a chicken-wire cage, pause respectfully as the older
Kefirs pass by. Viktor, the group's leader, lets the wooden door of the
entryway fall shut behind him with a bang. Then the five boys, ages 14 to
16, crowd into a shambolic elevator that takes them to the one place that's
really theirs: a gloomy landing where every inch of the walls is covered
with hip-hop graffiti, much of it in English.

Ilya, 16, is the philosopher of the group: "We live only for ourselves. We
devote all our time to break dancing and graffiti and rap music." Their
clothes are emphatically streetwise--Reeboks with floppy tongues, hooded
sweat shirts, and camouflage pants "10 sizes too big."

Territory. The costume has its disadvantages. The Kefirs tell of constant
run-ins with cops and skinheads. "The skinheads are everywhere," says Ilya.
"They usually don't come into our part of town, but there are other parts
of Moscow where we could never go in these clothes."

For all their enmity, rappers and skins share one essential attribute: Both
have found new identities in cultural imports that bewilder and outrage
older Russians. The skinheads wear the symbols of the Nazis who wreaked
devastation on the Soviet Union, while rappers replay America's racial
conflicts on the gray streets of Moscow. "There's a vacuum here," says
Viktor Maksimov, a Moscow police spokesman. "The kids who are growing up in
Russia today have lost their national idea. Today they aren't being raised
on Chekhov or Dostoevsky. They're being raised on the Terminator movies and
cheap foreign TV series."

Not to mention music, drugs, and sex. Kolya, 17, admits having two
addictions: to the music of Snoop Doggy Dogg, and to heroin. He says he
supports those habits with "work on the street" but refuses to elaborate.
The world of his favorite rap lyrics looks a lot like his own: mean streets
and missing dads, brutal cops and pointless schools. These days he finds a
surrogate home at the Russian University of People's Friendship, formerly
known as Patrice Lumumba University, where he hangs out with African
students. "I don't think that I'm entirely white," he says. "My skin color
may be white, but I don't feel that way inside. I don't consider myself a
white person." Not that that matters, he adds. After all, just wearing the
wrong kind of pants can be enough to provoke a beating in Moscow.


Russian reformers line up targets
10 May 1998
By Peter Henderson 

KIEV (Reuters) - Russia will slash jobs and shut down parts of its bloated
government this year as its new government puts reforms on track, senior
officials said Sunday. 

At least 200,000 federal budget-funded workers will be turned out in an effort
to trim $11 billion this year, First Deputy Finance Minister Alexei Kudrin
told the European Bank for Reconstruction and Development's annual meeting. 

Russia, which last year binned its budget when revenues did not live up to
unrealistic expectations, was finally facing festering problems, he said. 

``Non-payments continue, barter continues, low government budget receipts
continue and governemnt debt remains,'' he told the meeting. ``The government
receives services but does not pay for them, or only with a long delay.'' 

His team would recommend a 68 billion ruble ($11 billion) cutback in this
year's 500 billion ruble budget, and 55 billion of the cuts would be
irreversible job and administration cuts. 

Kudrin, who some policital analysts expected to lose his job in March when he
made similar remarks questioned by President Boris Yeltsin, said the bold tack
was led by new Prime Minister Sergei Kiriyenko. 

The cuts will surely be met with fear and loathing by the public, and perhaps
by Yeltsin who told the young technocrat heading his government to improve
life for the average Russian. 

But Kiriyenko and his young team are following through with pledges to clean
up the government made to the International Monetary Fund last year. 

Central bank chairman Sergei Dubinin said the IMF, which is considering
whether Russia deserves a $700 million quarterly loan tranche, had agreed
during talks in Washington last month that Russia was a victim of world market

``The fall of prices of exporters Russian of oil, oil products and other
natural resources cannot but reflect on economic growth and also on budget
income,'' he said. 

``It is a typical external shock.'' 

An IMF mission which cut short its visit before early May holidays would
return late this month, he said. 

``Discussions with the Internation Monetary Fund are not about who is guilty
but about what to do,'' he said. 

Dubinin showed in his presentation that the bank expected gross domestic
product to rise by a slim 1.5 percent this year, although Kudrin said it would
be closer to 1 percent. 

He said low world oil prices would hit budget revenues to the tune of $1.5
billion this year, but he said jobs added to the budget during years of
growing bloat could and should be excised for good. 

``Two hundred thousand is a minimum,'' he said. 


Russia: Kiriyenko Appointments Serving 'Oligarchy' 

Sovetskaya Rossiya
5 May 1998
[translation for personal use only]
Article by Vasiliy Safronchuk: "Cabinet of Tax Farmers. What
Has the Country Obtained as a Result of Yeltsin's Government
Reshuffle -- A Government of Technocrats or a Coalition of

Speaking on the "Podrobnosti" program 30 April G. Yavlinskiy
experienced great torments in trying to give any kind of logical answer to
Sorokina's question: Why had his "most opposition-minded faction," after
Zadornov had already gone over to the government, agreed to the appointment
of yet another deputy from Yabloko -- Oskana Genrikhovna Dmitriyeva -- to a
ministerial post in Kiriyenko's government? After all, only five days
before this his faction had voted against Kiriyenko. Yavlinskiy twisted
and turned for a long time in an effort to extricate himself from the
obvious contradiction. He claimed that this was "Dmitriyeva's personal
decision," that he understood her "from the human point of view," but her
decision had no bearing on the faction or on politics in general, and so
on. In the final analysis, "it's just the same as if she'd gotten
married," he stated.
From the Yabloko faction leader's subsequent arguments it emerged
that, anyway, he is by no means actually against Kiriyenko's government,
that he is in favor of giving this government time -- "Let it prove
itself." Yavlinskiy exploited the fact of the appointment of yet another
member of his faction as a minister to claim that only the Yabloko faction
has "the professional, serious people" necessary to fill ministerial posts
and with sufficient skills to run the country. He then boastfully revealed
that Kiriyenko had offered posts to other members of the Yabloko faction.
As for Kiriyenko, unlike the Biblical Adam, he himself "took a bite"
from the "oppositionist" apple ["apple" is the literal meaning of Yabloko],
tempted Dmitriyeva, and acquired yet another "democratic" lady (in addition
to the Ministry of Culture's Natalya Dementyeva) in his cabinet. In so
doing it never entered his head that, in passing himself off in words as a
"professional" far removed from politics, he was committing political
original sin, and so he felt no pangs of conscience. This new-fledged Adam
understands deep down that he and Yavlinskiy are political soul mates. The
Yabloko leader's attempts at self-justification made no impression on his
Duma colleagues. They hastened to expose his backroom deals with the
government. A. Shokhin, leader of the NDR [Russia Is Our Home] faction,
ironically noted: "He (Yavlinskiy) is 'roughing up' the government, as the
saying goes, but promoting his own people to key posts." Shokhin warned
that, as a result of this double-dealing, in the distribution of the Duma
committees Yabloko might not obtain those belonging to it under the package
principle, in particular the Budget Committee.
The maneuvers of Yabloko and the other pro-Yeltsin Duma factions
during the government crisis and the formation of the new government
vividly highlighted which of the deputy factions are truly
opposition-minded and advocate a radical change of course in the name of
saving Russia. These are the CPRF [Communist Party of the Russian
Federation] and its allies. Kiriyenko's government, as G. Zyuganov noted,
is "the third edition of Gaydar's government with Chubays' teeth." To
satisfy yourself that this is so you only have to look at the composition
of Kiriyenko's "new" cabinet and the structural changes that have been made
in the government. The Ministry for CIS Affairs has been abolished. This
means that the Kremlin has dropped any pretence that it is committed to the
integration of the former Soviet republics in the framework of the
Commonwealth. Now this task will be performed (presumably with advantage
in terms of increasing their capital) by Berezovskiy and Russia's other
oligarchs, together with their partners in crime in the other CIS
countries. Integration will henceforth definitely proceed along a purely
capitalist path; that is to say, the path of accelerating the privatization
of remaining state property throughout the post-Soviet area -- which means
along the path of further attacking the living standards of the working
people and the even greater subordination of the CIS countries' economies
to foreign capital. Here Russia's oligarchs hope to seize the tastiest
morsels for themselves. The difference between the "near" and "far" abroad
is now disappearing. The Ministry of Foreign Economic Relations has been
abolished and its functions have been transferred to the newly formed
Ministry of Industry and Trade. This means the further weakening of
control over foreign trade and hard currency deals. It is hard to think of
a better gift for the oligarchs! Now currency will flow abroad in an
ever-wider current. A new Ministry for Land Policy, Construction, and
Housing and Utilities has been formed. This means a rush to introduce,
without waiting for the Land Code, the practice of buying and selling land.
It also presages an increase in charges for municipal services. The posts
of first deputy government chairmen have been abolished and the number of
deputy chairs reduced from six to three. This measure is supposedly aimed
at reducing administrative expenditure and increasing government efficiency
and ministerial responsibility. But the reduction is fictitious, since a
new structure has been created -- the so-called government presidium, whose
members will effectively be additional vice premiers.
As for personnel changes in the government, they are cosmetic in
character, despite the inclusion of representatives of certain Duma
factions. The most ominous and cunning aspect of the way that the
government was formed is that, after the Duma's ratification of Kiriyenkov
as head of government, the most odious and hated figures in the eyes of the
people were given senior appointments. Sovetskaya Rossiya has already
commented on B. Berezovskiy's appointment as CIS executive secretary. At
the end of April we learned of Chubays' appointment as chairman of the
board of the YeES Rossii [Unified Energy System of Russia] RAO [Russian
Joint-Stock Company]. But after all, three weeks before his ratification
by the Duma Kiriyenko was tying himself into knots in an attempt to conceal
the Kremlin's plans for Chubays. In an interview with the "Vremya" program
the acting premier, in response to [moderator] Dorenko's persistent
questioning, revealed that Kudryavyy -- the former deputy minister of the
fuel and energy complex -- had been appointed chairman of the YeES Rossii
RAO Council of Directors and that through him the state would "absolutely
control" this monopoly. Kiriyenko gave assurances that a "ruthlessly
professional approach" would be displayed in appointing the chair of the
YeES Rossii RAO Board. He went on to say: "It is important for you to
know whether Chubays will be in the government and whether he will be in
charge of any part of the economy. I can tell you right now: No, he will
not. Chubays will not be in the government and he will not be in charge of
significant economic blocks." Kiriyenko expatiated at length about how the
alienation of people from the authorities was impermissible, how people
should understand what the government is doing and why, and how everything
that the authorities do should be transparent and clear to people, and so
on and so forth. But all this, it turns out, was demagoguery of the first
water. Basically, Kiriyenko deceived public opinion, deceived the people,
and deceived the Duma. If the Duma had known in advance that Berezovskiy
and Chubays would be appointed to vitally important posts, who knows
whether Kiriyenko would have been confirmed as government chairman even at
the third vote, when blackballing Kiriyenko again would have meant the
Duma's committing hara-kiri? Nor did the Duma know in advance that
Kiriyenko's first step would be to sharply reduce the expenditure side of
the budget -- by 62 billion rubles (over the year), or 15 percent. 
"Yablokite" Finance Minister Mikhail Zadornov described this as "the
guaranteed minimum," but intimated that the cuts would not affect the power
structures. Kiriyenko deceived pensioners, declaring only after his
ratification that the level of average pay on which the pension is
calculated is to be reduced.
Typically, Dorenko, who earlier had fulminated furiously against
Chubays and had not spared Kiriyenko, now drastically softened his tone. 
Basically, on 2 May he shielded the premier from criticism, claiming that
he had never stated that Chubays would be appointed chairman of the YeES
Rossii RAO Board; his statement only applied to the chairmanship of the
Council of Directors. That is untrue. It can be seen from Kiriyenko's
statement cited above that he promised not only not to include Chubays in
the government, but also not to entrust him with responsibility for
"significant economic blocks." But YeES Rossii RAO is actually the most
significant economic block in Russia. Let us recall that YeES Rossii RAO
accounts for 87 percent of the electricity generated in Russia, that it
controls 83 regional companies and owns 35 electric power stations; that it
owns all the electrical power lines and supplies one-fourth of all tax
revenue paid into the state budget. Thus Chubays will control the biggest
financial flows in the country, since as chairman of the Board he will
exercise day-to-day management of the company. However, his appointment is
illegal even from the viewpoint of the rules governing the management of
joint-stock companies. Chubays represents the interests of foreign
shareholders, who own only 28 percent of the company's shares. On 22 April
the Federation Council overturned the president's veto on a law limiting
the foreign stake to 25 percent. The remaining 72 percent of shares are in
the hands of the federal government and the regional administrations.
According to the rules, the chairman of the Board should be not Chubays,
but a representative of the government or one of the regions. It is
perfectly obvious that the appointment of Chubays to this post pursues two
goals: 1) to mobilize YeES Rossii's resources to fund a presidential
candidate suitable to the oligarchy in 2000; 2) to sell the controlling
block of shares in YeES Rossii to foreigners on the pretext of plugging the
holes in the budget.
The unusually conciliatory tone of the mass media outlets controlled
by the oligarchy toward Kiriyenko's government is to be explained by the
fact that in its makeup it is a coalition government of the oligarchy, and
the main financial industrial groups are represented in it. B. Nemtsov
always operated in tandem with Chubays, who is his patron. Both are
connected with Potanin's group. It was Uneximbank that through a shell
company paid Chubays a fee for an unwritten book. The other day the
Presnenskiy People's Court, rejecting Chubays' suit against Minkin, thereby
acknowledged that the book fee was a form of bribe. It is well known that
Nemtsov brought Kiriyenko with him from Nizhniy Novgorod and maneuvered
Brevnov into the chairmanship of YeES Rossii RAO. Even after Brevnov was
fired from that post for financial abuses he remained on the company's
Council of Directors. Another vice premier, Khristenko, is also Chubays'
man. He was one of Chubays' deputies during the latter's time as finance
minister, and before that ran B. Yeltsin's election campaign in Chelyabinsk
Oblast and as a reward was appointed the president's representative in
The influence of Berezovskiy, Khodorkovskiy, and Gusinskiy in the
government is just as strong. Fuel and Energy Minister S. Generalov has
occupied in the past the posts of deputy president of Menatep Bank, which
is part of Khodorkovskiy's Menatep-YUKOS-Rosprom group, and deputy chairman
of the board of the YUKOS Oil Company. At the end of last year YUKOS
merged with the Sibneft Oil Company, creating a joint company, YUKSI,
controlled by Khodorkovskiy and Berezovskiy. Science Minister Bulgak is
another protege of Berezovskiy and Gusinskiy; as minister of communications
he granted NTV -- a private company controlled by Gusinskiy's Most group --
the right to pay for the services of postal and telecommunications workers
according to the tariffs of state enterprises. We could continue the list
of these examples. But even this is enough to agree with the conclusion of
a BBC analyst: "Kiriyenko's government is a government of tax farmers, or
rather, representatives of tax farmers, that is to say, the oligarchs. 
They are interested only in the opportunity to derive private profit from
state activity."
Having shared out spheres of influence in the government, the
oligarchs clashed in the battle for control over Krasnoyarsk Kray.
According to the testimony of Russian and foreign observers, Zubov is
supported in the kray's gubernatorial elections by Potanin's group, while
Berezovskiy and his allies are offering powerful financial support to
Lebed. While the oligarchs divide up Russia, the Kremlin's power grows
ever weaker, and the country plunges ever more quickly into anarchy. The
kidnapping of Valentin Vlasov, the Russian president's representative in
Chechnya, is only one of many proofs of this. The oligarchy's screen --
the increasingly senile B. Yeltsin -- is demonstrating his complete
impotence. The significant number of votes cast for Lebed in the first
round is only a manifestation of a yearning for strong leadership....


FEATURE - Construction cranes share Moscow skyline with cupolas
By Aleksandrs Rozens 

MOSCOW, May 11 (Reuters) - Moscow's proud Stalinist skyscrapers face
competition from a growing army of cranes now dotting the city's horizon as
the property market booms in Russia's capital. 

Gone are the days of the Soviet ``Dolgostroi'' building sites that for years
teemed with workers and trucks, while walls never quite seemed to rise above
chest level. 

Hakan Sozeri, the manager of building projects assembled by Enka Construction
& Industry Co says construction projects are forging ahead at a startling

Enka, a Turkish firm, has been involved with construction development projects
in Russia for more than a decade. The company is best known here for restoring
the White House government headquarters after President Boris Yeltsin blasted
it with tanks in 1993 to quell a rebellion. 

Enka has been focusing in recent years on developing office space for
multinational firms and residential space for expatriate executives -- two of
the most active niches in Moscow commercial real estate. 

``Things are really happening here. The sort of expansion seen in commercial
real estate has been incredible,'' according to Will Irving with Estates News,
a monthly trade publication which tracks real estate in Russia and Eastern

Greater comfort with the developing market economy has prompted a flurry of
investor interest. But within Moscow, much credit has been given to the city's
Mayor Yuri Luzhkov, who has encouraged real estate development and is often
seen wearing a hard hat at ground-breaking ceremonies. 

In fact, part of Moscow's 850th anniversary celebration last year was marked
by the opening of a vast new underground mall near Manezh Square in the shadow
of the Kremlin walls. 

Many of the projects are joint ventures and financing is provided by Western
firms, among them real estate speciality groups with U.S. and British pension
fund and institutional investor money in their coffers. 


The appetite for office property has forced up Moscow rents, making them
comparable to those of Hong Kong and surpassing those in London, according to
market watchers. 

Rents for ``Class A'' Western standard offices can run between $700 and $1,000
per square metre each year in Moscow, according to Enka's Sozeri. 

Moscow residences for businessmen range from $1,200 for ``decent'' flats to
$10,000 a month for a 350 square metre flat, said Sozeri. 

One of the newcomers to the Moscow commercial real estate market is U.S.-based
Nomura Capital, a unit of Nomura Securities International which specialises in
commercial real estate lending. 

``I was extraordinarily impressed with the quality of opportunities that
existed there,'' said Ethan Penner, head of Nomura Capital. 

Nomura, which plans to invest in commercial real estate properties throughout
all of Russia, expects to be involved with all property types, among them
retail and multi-family. 

Penner said the investments would be made directly into developments as well
as via a fund. ``We will be focused on a broad spectrum of income-producing
properties,'' he said. 

Meanwhile, the London-based Regent Pacific Group announced that it had raised
$30-35 million for its Russian real estate fund. 

``Supply (in Moscow) has been unable to meet demand principally because
reasonably priced debt or equity finance for development is scarce,''
according to Regent Pacific Group sales material. 

Demand for office space stems not only from multinationals who need larger
floor space, but also newly-privatised Russian firms in need of large

``These companies...are still prepared to pay high rents for the right
accommodation in the right location,'' according to a report by DTZ Debenham
Zadelhoff, an international property advisory firm with offices in Moscow. 


Market observers report that Moscow commercial real estate gets snapped up

Total demand for office accommodation within Moscow is at about 350,000 square
metres each year, and within the next six to nine months demand will sop up
100,000 square metres of prime Western standard space, according to Estates

As the pace of real estate development heats up, there is a greater
availability of capital. Market participants said some projects in recent
years faltered when funding dried up, but the heady demand allows developers
to partially finance projects with pre-leases. 

Alp Doguoglu, managing director and board member of Enka, said prospective
tenants create trust funds and pre-leasing agreements which partially
contribute to the financing of developments to companies with a proven track

The ``dolgostrois'' may be a thing of the past but completing a project on
time can nonetheless be a daunting task in Moscow where municipal paperwork
can be as intricate as the cupola onion-dome designs on Saint Basil's

``Everything you do architecturally has to be approved by the City
Architectural Committee before you lay any cement,'' said Sozeri. 

The initiation of a project calls for as many as 50 permit documents which not
only address architectural issues, but involve land lease documents,
archaeological and engineering surveys. 

Assembling the documents could be costly, and, Sozeri warned, ``Individuals
can be crushed by bureaucracy.'' 

It is not just the weight of the bureaucracy that tells. 

Some businessmen complain that all too often the path to completion of any
project can be blocked by corrupt officials.


Azerbaijan Agrees on Oil Pipe Route
May 10, 1998

MOSCOW (AP) - Azerbaijani President Geidar Aliev on Sunday endorsed
construction of a pipeline that would carry Caspian Sea oil through Georgia
and Turkey instead of through Russia.

Aliev told visiting Turkish President Suleyman Demirel that he favors the
pipeline running from Baku, Azerbaijan's capital on the Caspian, through
Georgia to the Turkish Mediterranean port of Ceyhan.

Aliev did not elaborate on his decision, saying only the Turkish route is the
``only, one'' one for Azerbaijan. A pipeline running from the Caspian to
Russia's Black Sea port of Novorossiisk has also been proposed.

Oil from Azerbaijan started flowing through a preliminary Russian pipeline
last fall.

Aliev said preparations for the Turkish pipeline must be completed this year,
the Interfax news agency reported.

The 1,075-mile pipeline is expected to cost $2.5 billion and would be capable
of carrying 6.4 million barrels of oil a year.

Azerbaijan's state oil company is part of an international consortium
developing the country's Caspian Sea reserves, which are believed to be the
world's richest after the Middle East.


Kremlin Watching Krasnoyarsk Election Race 'Calmly' 

8 May 1998
[translation for personal use only]
"Our Commentary" by Vadim Gorshenin: "Lebed: Tiraspol,
Khasavyurt, Krasnoyarsk. Next Everywhere?..."

The Krasnoyarsk political and business elite is already starting to
chew its nails: The results of the second round of the gubernatorial
elections are already clear to it. The 10-percent gap in kray inhabitants'
preferences that developed in the first round is too big for Zubov to
bridge. But this testifies first and foremost that the kray administration
has itself been unable to become a unified and effective team.
Otherwise it would have been able to draw conclusions and build a
harmonious action program, bringing very specific mechanisms into play. 
First, starting to work with the Communists even before the first-round
results were announced. A massive campaign by Petr Romanov's supporters
could have cut the gap between Zubov and Lebed to 5 percent. This was not
done, and the recent statement by Gennadiy Zyuganov, who thought long and
hard about which side to take in the battle, is not capable of changing
anything now. His fellow party members in Krasnoyarsk had already adopted
a decision to vote against both contenders or not participate in the
election at all.
The second thing the kray administration could have done was to reduce
the number of polling places. Since, for example, more than 72,000 Norilsk
voters cast their votes for the general and only 10,500 for the current
governor it would have been possible to carry out a simple ploy: Keep only
one polling place and make it highly inaccessible for the majority of
voters. Zubov could have organized similar actions in some other rayons
This was not done, and the result is obvious. Zubov's ultimatum to
Boris Yeltsin yielded nothing, merely confirming the assumption that it is
Lebed who will be the next governor of Krasnoyarsk Kray. Incidentally, a
Pravda source in the Presidential Staff assessed the current governor's
statement as a major stupidity, saying that the kray is a donor and does
not get transfers from the federal center.
All the indications are that Zubov intended this step as a loud
slamming of the door. The sound that came out was a squeak. The governor
failed to offload his headache onto the Kremlin. Although, as the saying
goes, all is not lost. The center will worry about the situation only if
the elections in Krasnoyarsk are deemed invalid, and this is something
within the power of Zubov and the local elite.
As is known, Lebed already has two warnings for violating campaigning
rules. Zubov has as yet received only one. If the Krasnoyarsk Electoral
Commission treats all the candidates equally and, for example, gives them
each two more warnings, lo and behold - - a way out of a hopeless
situation. Such an action would achieve the planned goal: The Kremlin
would start twitching. But Lebed would not start seeking nomination again:
Why should he, when he can tell voters' meetings about the provocation
perpetrated against him by the center. Just as he previously used to talk
about Khasavyurt.
As yet, however, our information is that people in the Presidential
Staff are watching what is happening calmly. This is precisely why Boris
Berezovskiy has backed the hero of Khasavyurt so openly.
The person actually to blame for the fuss is triumphing. As
Krasnoyarsk Electoral Commission official Natalya Suboch told Pravda, today
there is to be a court session to examines Lebed's suit against the
electoral commission at which the question of rescinding the warnings
against this candidate is to be examined. The former army commander is
confident of winning.
But even he has something to rack his brains about today: What to do
after he wins. He does not have a team of professionals; nor does he have
a vision of how to turn the situation around in the kray given the
possibility that the Kremlin will ignore his every action. What has he to
set before voters as a serious claim for the president's seat in Moscow in
a year's time? How can he avoid making a fool of himself after his loud
descriptions of himself as a professional in all things? And, finally, the
main question that Lebed is asking himself today is: Will victory at the
gubernatorial level not be the beginning of the end for him as a contender
for the Kremlin apartments?



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