May 16, 1998  
This Date's Issues: 2180 •• 

Johnson's Russia List
#2180
16 May 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Jonathan Sanders: Harriman Institute story.
2. AP: Kim Gamel, Experts Debate Russia's Future.
(DJ: This is the story referred to by Jonathan Sanders
which I earlier transmitted in a garbled version.)
3. Reuters: Gleb Bryansky, Russia's Lebed coy about Kremlin 
plans.
4. Moscow Times: Dmitry Zaks, Krasnoyarsk Gets Ready for 
Life With Lebed.
5. Toronto Sun: Matthew Fisher, For old Reds, the party's over.
6. Nezavisimaya Gazeta: Armen Khanbabyan, RUSSIA IS NO LONGER 
A BIG BROTHER. (Berezovsky and CIS).
7. VOA: Ed Warner, CHINA AND RUSSIA: DIVERGING PATHS.
8. Finanical Times (UK): Anatol Lieven, RUSSIA: No longer a nation 
worth dying for.
9. New York Times: Michael Gordon, Russia, I.M.F. Disagree on How 
to Cut Deficit.
10. RFE/RL NEWSLINE: DUMA CONCERNED ABOUT CHUBAIS APPOINTMENT...
FORMS COMMISSION TO INVESTIGATE FALL 1993 EVENTS.]

********

#1
Date: Fri, 15 May 1998
From: Jonathan Sanders <room101@interport.net>
Subject: Harriman Institute

Dear David:

God knows (or maybe she doesn't) I love your list. More than that I admire
your singlehanded dedication. The
list is a national, perhaps international asset. The contrarian in me loves
the out of the mainstream reporting, comments, even the ego puffing
pathetic attempts at self promotion that sometimes make it past your tired
eyes.
Everyone is entitled to an opinion and we all know for all of our triumphal
isn't-america-great-we-won-the-cold-war
insular self-satisfaction, the real freedom of the press belongs to those
who own a (or the) press. You bring different press perspectives. The
internet possibilities are expanding our democratic horizon's--and your list
is a good example of what Lawrence K. Grossman talked about, at least in
part, in his book THE ELECTRONIC REPUBLIC: RESHAPING DEMOCRACY IN THE
INFORMATION AGE.

HOWEVER, we have had (and aired) differences over approaches to what is
appropriate and what forms of journalistic exchanges are appropriate to the
list. Again a point of irritation may prompt a clarification of list
operations. item #2 Harriman Institute--excerpts. I don't mind being
misquoted or smeared Reed Irvine once
said I was soft on Gorbachev (at the time--before he become the bloody
murderer of Chechen children, not to mention old Russian women living in
Grozny) I rather favored Eltsin; an American Ambassador in Moscow told my
boss Larry Tisch I was communist stooge dressed up as a reporter and should
be fired or sent to Mongolia.
But, I don't like annonymous misquoting or mislabling. 

Journalism 101: unless there is an unusual reason of
secrecy we should know who wrote something; if the editor in you sees
something that doesn't seem right he or she should have the facts checked;
when there is any doubt go to the source (I sometimes was know to call
Yegor Timofeevich and say 'listen you fat little ex-pravdist new exploiter
of the proletariat and people [a play on NEP] I'm about to go on live and
say the following about you...what is your comment or reply'..ok..I admit
this was FUN--
it was also the proper thing to do. Who wrote this account? Who excerpted
it--was the way I was listed on the program distributed at the conference
"Veteran CBS Moscow Correspondent" mangled in truncation? If not you know I
am no longer with CBS....if you see something that--excuse the
expression--sends up a red flag
question....if you had asked I would have told you what I did say and you
could decide how much you wanted to put into pixels...among otherthings--I
said the Jeffrey Sacks 'one size fits all--lets impoverish all the babushky
crude and cruel (and corrupt)' reforms had brought 32 million people (21.8%
of the population) to be earning less than subsistence level monthly
incomes according to PM Kiriylenko (who i noted was described by Padma
Desai as bespectled, balding and bambi-like; BAMBILIKE). I also noted about
1/3rd the population lived at or below the poverty subsistence level. I did
praise the recent gov't for the twin accomplishments of budget restraints
and taming the beast of inflation (largely by not paying workers and
intellectuals) and in that context quoted Agumenty i fakty
/Interfax (you can buy it at my nieghborhood kiosk) that official figures
hide a shadow economy of perhaps 1/2 gdp--that the treasury loses some $13
billion dollars on this--and note that that might not be a bad thing
because it acted as shock absorber for the people....I also observed that
one quarter of the officially registered corporations in Russia paid no
taxes in the last year. and even Larry Summers who I described as another
cheerleader for whatever the boys in pink pants do is great has warned that
"CRONY CAPITALISM" threatened to bring bad things ala the asian financial
crisis. I'll spare you the comparison between students protesting the
undercutting of a great soviet legacy free higher education in Ekat getting
beaten up by police with students at Michigan State students demonstrating
for the right to get drunk.

I also had a few choice words for people who believe in the 'science of
transition economics' 

I praised Professors Desai and Ericson for their combination of economic
wisdom and underlying morality
that they shared a feel for the Russian people and actually cared about
them; that they both had skeptical, informed but not cynical approaches to
conventional wisdoms. [Hint unlike the Harvard Kennedy School crowd or
their washington and mosgo branch offices]

What you chose to put out is up to you. I would suggest that if something
doesn't ring true (especially if you know the quoted figure) you ring them
up and ask. I would further suggest you ALWAYS indicate who is doing the
reporting or what from what sources you are drawing your materials.

I know there is a heavy burden on your shoulders; as we all into the
digitial age we need to workout reconfigured or new standards. I suspect
that many readers find your list SO useful that they read fewer Russian
papers SO your responsibility is even heavier. 

However, as you put things on the list and then out into cyberspace it may
help to keep in mind the words of the late Fred Friendly, "Just because you
have a right to do it doesn't mean it's the right thing to do."

your comrade,
Jonathan

p.s. Mr. Kokh will be flying back to Moscow on the Aeroflot flight that
departs from Kennedy on the 17th. He, like many Russian flies Aeroflot not
out of patriotism, but now that they are flying Boeings across the Atlantic
(and now that the thrill of Delta has worn off) they prefer an airline that
allows them to smoke and where 'shisky' are shall we say well lubricated
during the flight (without pert stewardfolk worrying over sobriety and FAA
regulations)

*******

#2
Experts Debate Russia's Future
By KIM GAMEL
13 May 1998 

NEW YORK (AP) - The Russian economy is moving slowly toward recovery,
weighted heavily by corruption and a need for revenue, experts said Wednesday. 

``Russia is treading water,'' Richard Ericson, an economics professor at
Columbia University's Harriman Institute, said at an annual conference on
Russian-American relations. 

The conference was sponsored by The Associated Press and Columbia
University's Harriman Institute. 

Russia's economy grew 0.4 percent last year. That's the first expansion
since President Boris Yeltsin began to implement economic reforms in 1992, a
year after the breakup of the Soviet Union. 

The reforms have focused on transferring companies from state ownership to
private hands. But the move toward capitalism has caused many factories to
close and left millions of people without jobs. Those who still work often
go unpaid for months. 

Jonathan Sanders, a Moscow correspondent for CBS, said a thriving shadow
economy has absorbed much of the shock suffered by ordinary Russians. 

The shadow economy, which ranges from private businesses not officially
registered with the government to individuals who use their private cars as
informal taxis, accounts for almost 50 percent of Russia's economy,
according to some estimates. 

Several of those gathered at Columbia's School of International and Public
Affairs pointed to numerous problems that continue to plague Russians. They
include pervasive corruption and the need for legal and tax reform. 

Ericson said a bloated military and state sector, a weak banking system with
heavy debt and expensive social welfare services left over from the Soviet
period were absorbing funds that could be used to spark the economy. 

``Russia equals capitalism without real capital,'' Ericson said. 

Despite the problems, the necessary institutions for economic recovery have
emerged, including a strong central bank, privatization of state-owned
businesses and a stock market, said Professor Padma Desai, another economist
at the Harriman Institute. 


*******

#3
INTERVIEW-Russia's Lebed coy about Kremlin plans
By Gleb Bryansky 

KRASNOYARSK, Russia, May 15 (Reuters) - Reserve general Alexander Lebed,
running for the governorship of Krasnoyarsk, said on Friday his presidential
ambitions did not mean he would neglect the vast Siberian region. 

Lebed, a tough-talking veteran of Russia's Afghan war, has been widely seen as
using Krasnoyarsk as a springboard to the Kremlin if, as seems likely, he wins
Sunday's election run-off. If he loses he has said he will quit politics for
good. 

``I will work on the region just as long as it takes for it to be prosperous.
I will get into the presidential election only when I am sure I will come
first,'' Lebed told Reuters when asked about his plans for the presidential
campaign in the year 2000. 

``I shall not be fighting for second, third or any other lower place,'' he
added in typically blunt fashion. 

Lebed, who came third to Yeltsin in Russia's 1996 presidential vote, won the
first round of the election in Krasnoyarsk on April 26, polling a surprisingly
strong 45 percent, nearly 10 points more than his nearest rival. 

Sunday's run-off against Kremlin-backed incumbent Valery Zubov had to be held
because no one secured more than 50 percent of the vote in the first round. 

Since then, the gloves have come off in Krasnoyarsk region, a vast mineral-
rich expanse that stretches from the Arctic north virtually to the Mongolian
border -- all but dissecting the country and covering a seventh of its
territory. 

Lebed, targeting widespread discontent with Russia's shaky economy, portrays
himself as a tough, honest third force between Yeltsin's new establishment and
the communist opposition. 

But governor Zubov, mounting a vigorous counter-attack, has tried to paint
Lebed as an opportunist whose interests lie not in Siberia but in Moscow. 

Lebed's comments on Friday seemed aimed at countering that charge among the
local voters by stressing his commitment to help Krasnoyarsk realise the
potential of its mineral wealth and industrial base. 

Lebed has won endorsements from some diverse quarters, including French film
star and personal acquaintance Alain Delon and former Soviet president Mikhail
Gorbachev. 

``Lebed is seen as a man of the people,'' Gorbachev was quoted last week as
saying. ``He is devoted to Russia.'' 

Alla Pugachova, Russia's biggest pop star, flew to the Krasnoyarsk region on
Thursday on her private jet to lend her support to Zubov, but she said she
would probably vote for Lebed in the year 2000. 

Zubov, 44, met Pugachova with a bunch of roses but could only cringe at her
less than ringing endorsement. He sees Lebed as a carpet-bagger who could
spark civil war if he wins. 

Communist Party chief Gennady Zyuganov, who is likely to face Lebed in 2000,
is equally suspicious of the 48-year-old, deep-voiced general. 

``The election of Lebed would mean misfortune beyond your worst dreams,'' he
told reporters recently. His party has urged supporters in Krasnoyarsk to
support Zubov, despite his close ties with the Kremlin, in a bid to block
Lebed. 

Lebed gave Yeltsin a leg-up into the presidential saddle in 1996 by backing
him against Zyuganov in the second round. He was rewarded with the influential
post of Security Council chief but sacked just four months later for being too
ambitious and has been in the political wilderness since then. 

If Lebed wins Krasnoyarsk, he also gains a seat in the upper house of
parliament and probably greater access to financial backers. The influential
business tycoon Boris Berezovsky has helped fund Lebed's Krasnoyarsk campaign.

An indication of how Sunday's vote has gone will come late in the evening but
a full result is unlikely before Monday. 

Lebed aides, keen to project an image of a relaxed and confident boss, told
Reuters he would spend Saturday fishing.

*******

#4
Moscow Times
May 16, 1998 
Krasnoyarsk Gets Ready for Life With Lebed 
By Dmitry Zaks
Staff Writer

KRASNOYARSK, Western Siberia -- The anxiety was almost tangible in 
executive suites and government offices across Krasnoyarsk on Friday as 
people pondered just what might happen if -- as now appears likely -- 
General Alexander Lebed is elected governor Sunday. 

Business leaders wondered aloud whether the money they poured into 
Governor Valery Zubov's re-election campaign would turn out to be enough 
to get the job done. Bureaucrats in the Krasnoyarsk region 
administration building whispered about job security. And the regional 
legislature plotted ways to water down the governor's powers in case 
Lebed takes office. 

Lebed, who is counting on victory here to boost his chances of winning 
the presidency in 2000, came from nowhere to beat Zubov by 10 percentage 
points in last month's first-round vote. 

Now, few except for the incumbent governor himself think that Zubov can 
claw back the lead ahead of Sunday's second-round runoff and keep Lebed 
from marching into the regional administration building next week. 

"I will win. I will win," Zubov said at a news conference Thursday. "The 
situation since the last vote has changed drastically." 

But Krasnoyarsk's businesspeople -- the ones with the most to lose -- 
did not sound too convinced that the pro-market governor was right. 
Instead, they voiced serious concerns that their companies might soon be 
ruined because Lebed, whose economic policies have never been clearly 
defined, is about to take power. 

"What he says about economics scares me," said Yevgenia Kuznetsova, the 
president of Pikra, the region's largest brewery. 

"I don't want a new person to come here and learn everything by his own 
mistakes," said Kuznetsova, an executive education diploma from Duke 
University in the United States hanging prominently on the wall behind 
her. A photograph of her showing off a bottle of Pikra beer to a 
grinning President Boris Yeltsin hangs just next to it. 

"Lebed would make the perfect defense minister," she said. "But it would 
take him at least five years to learn about the economy. Meanwhile, I 
have a business to take care of." 

So fearing that Lebed just might accidentally run her profitable beer 
and soft-drink factory into the ground, Kuznetsova said she has spent 
"as much money as the law allows" to fund Zubov's re-election campaign. 

Kuznetsova conceded that she is not too happy with Zubov either. "We 
have had our arguments," she said. Nevertheless, she, like most other 
business leaders in this region, has arrived at a working relationship 
with the governor. 

People who work in the Krasnoyarsk region administration building voiced 
similar concern. 

Zina Borisova, who deals with social issues like schools and medicine, 
said employees in her office are wondering if they will still have their 
jobs a few days after Sunday's election. 

"Lebed is financed by his own people, but all debts have to be repaid 
with jobs," Borisova said. "Of course, all of us are voting for Zubov. 
It has been nice working with him. I don't know if I have a legal right 
to keep my job. But even if I can, I would hate to work with Lebed." 

Perhaps sensing that the old guard is turning against him, Lebed made a 
point Friday to say that he will work with everyone, including the local 
legislature. 

"I am a well-trained military man. At a certain point, I learned that 
using reason brings much better results than using aggression," Lebed 
said. 

But Lebed got a taste of what might be in store for him should he become 
governor of this mineral-rich but economically troubled region when he 
visited the local parliament building Friday. 

In an apparent attempt to insure themselves against a Lebed victory, 
deputies are now circulating a bill that would let them, and not the 
governor, appoint people to the highest local ministerial posts. 

Members of Lebed's Law and Order party, who hold about one-fifth of the 
house seats, invited their leader to speak before the session. Lebed 
showed up. But after an angry hour-long debate, deputies voted down a 
motion let the general have his say. 

"There are no hurt feelings," Lebed said cordially as he walked out of 
the chamber. "Let's move on." 

Besides antagonism from local politicians, Lebed has a recurring problem 
with voters -- something he also tried to address Friday. Many people 
who say they will vote against Lebed explain their choice by saying that 
he will simply forget their region once he wins the election and 
launches his presidential campaign. 

So Lebed said in an interview with a radio station on Friday that he 
would not run for president should it take him longer than two years to 
revive the region's floundering economy. He said Krasnoyarsk was his 
main concern. 

"Lebed meant what he said," said Lebed's press secretary, Vladimir 
Yakushenko. "We cannot speak now about what might happen two years down 
the road." 

Maybe the only people who did not sound too concerned about what might 
happen after election day were the ones promenading down the streets of 
central Krasnoyarsk on Friday's sunny afternoon. 

"I plan to vote for the lesser of two evils," giggled Nastya, 19, who 
supplements her college tuition bill by dancing in a local bar. "I am 
not sure which one that is though." 

*******

#5
Toronto Sun
May 15, 1998
[for personal use only]
For old Reds, the party's over
By MATTHEW FISHER (74511.357@CompuServe.com)
Sun's Columnist at Large

 MOSCOW -- Spring is marching season in the Russian capital. 
 Their chests weighed down with medals, veterans march smartly through 
Red Square to celebrate the Soviet victory over Nazi Germany. Young 
Russians with punk hairdos and studs in their ears and noses march after 
their own fashion through Gorki Park in search of love, amusement or 
trouble. Old Communists, dressed in what we would call our Sunday best, 
march defiantly to remember the glorious days when their party was a 
world force which commanded respect and fear. 
  The old Communists have turned out twice this month. The usual crowd of 
about 15,000 diehards celebrated Victory Day last Saturday by gathering 
in the centre of Moscow. The same crowd of 15,000 diehards met under 
Lenin's statue on October Square on May Day and then marched down 
Leninsky Prospekt to within loudspeaker hailing distance of the Kremlin 
Walls. 
  As is my custom every spring, I joined the Communists for their May Day 
parade. These sad-sack folks are definitely not to be confused with 
their ruthless old masters who now style themselves democrats and 
western-oriented capitalists. 
  Unlike the old Communist elite, who have swapped their dowdy Zils for 
flashy German sedans, the true believers are almost all elderly common 
people. Unable to shake the lies they were force-fed about the virtues 
of communism, they feel betrayed by Boris Yeltsin and others of his ilk 
who have forsaken the feeble ruble for bricks of Yankee greenbacks. 
  Surrounded by a forest of purple silk flags carrying Lenin's cameo in 
gold or silver, and behind a red and white banner proclaiming "Our Force 
is in Unity of Action," I set out for the heart of the city with this 
proud, godless generation as traditional Soviet music filled the air. 
  Not long after passing a billboard for Christian Lacroix and big ads 
for Marlboro and Winston cigarettes and Konica film and before reaching 
a gaudily refurbished Orthodox church and posters for Yardley toiletries 
and Yamaha water scooters (which are wildly popular with Russia's 
criminal class), I began to study some of the many homemade signs 
carried by the marchers. 
  "Let's Get Rid of the Bloody Monarch, Boris the 2nd," said one. Another 
portrayed Yeltsin with a pig's head and an American flag for a body. A 
third depicted a bloated, dissolute Yeltsin bursting out of a sheepskin 
jacket. 
  There was a crude picture of the West's favorite couple, Mikhail and 
Raisa Gobachev, surrounded by gun-toting bodyguards and a bag apparently 
containing millions of dollars. A green sign simply said: "Gorbachev is 
a rotter." Another screamed, "Revolt." 
  But for all the dour policeman and plainclothes types with video 
cameras strung out along the parade route, there will be no revolt. 
 Western politicians have repeatedly said that for all his faults, it is 
necessary to blindly support Yeltsin in order to prevent the Communists 
from returning to power. This is nonsense. 
  For starters, the Russia mafia and government elites would never allow 
this. It would interfere with their plundering of the national treasury. 
Even if there was a chance, what is left of the Communist party is an 
unprincipled shambles capable of nothing but organizing pathetic 
demonstrations. 
  Many of the Communists elected to speak for the 30%-40% of Russians who 
still claim to be Marxist-Leninists disgraced themselves two weeks ago 
by abstaining or by voting for Yeltsin's choice as prime minister. They 
did so not out of conviction, but because they feared that if they 
didn't President Yeltsin would dismiss the Parliament, thereby depriving 
them of perqs such as free travel, chauffeur-driven cars and choice 
apartments in Moscow. 
  Passing the Parliament, which is now in a sombre grey building across 
the street from the equally grim Moscow Hotel, a lonely soul with a 
megaphone shouted, "Let's put the union together again, hurrah!" 
  Fat chance. 
  
********

#6
>From RIA Novosti
Nezavisimaya Gazeta
May 15, 1998 
RUSSIA IS NO LONGER A BIG BROTHER 
By Armen KHANBABYAN in Yerevan

Boris Berezovsky, the new executive secretary of the
Commonwealth of Independent States, has made a one-day visit to
Armenia in the course of which he had meetings with president
Robert Kocharian and premier Armen Darbinian. 
Berezovsky explained the need to visit Armenia by his
desire to discuss urgent transformations in the CIS with the
Armenian leadership. 
Russia is no longer the Big Brother of the other Soviet
republics, and relations in the territory of the late Soviet
Union should be built on a different basis, while the
integration processes can only develop on the basis of mutual
economic benefit, Berezovsky believes. 
This approach fully tallies with the opinion of official
Yerevan. 
In particular, Armenia's deputy foreign minister Sergei
Manaserian noted in connection with Berezovsky's visit that,
for all its strong and weak points, the CIS has every right to
exist, but integration should begin with the formation of a
common market to emulate the European model, while the overly
politicised relations of the day can only harm the cause of
integration. 
Manaserian feels that the CIS executive committee, headed
by Berezovsky, should not stand above the member states.
Instead, it should coordinate, as best it can, the relations
between the Commonwealth members, economic relations in the
first place. 
President Kocharian is known to feel no joy in connection
with Berezovsky's appointment the CIS executive secretary. But
the latter sees no problem: the former has his doubts because
the two men do not know each other well enough. 
"This visit is important in that we will get to know each
other and understand each other better," Berezovsky said.
It was only natural that the sides discussed the matter of
Nagorno-Karabakh: Berezovsky's visit coincided with four years
since the truce had been concluded along the line of the
Karabakh confrontation. 
In Berezovsky's opinion, any conflict in the post-Soviet
space is a common concern of all Commonwealth members. For
economic integration is only possible when the land does not
burn under your feet, to quote the CIS executive secretary.
Berezovsky told the media in this connection that in the
course of his meeting with Geidar Aliyev in Baku he had had the
impression that, the considerable differences of opinions
between the parties to the conflict notwithstanding, there was
still a considerable room for understanding. 
Later in the day, Berezovsky left Yerevan for Baku.

*******

#7
Voice of America
DATE=5/15/98
TITLE=CHINA AND RUSSIA: DIVERGING PATHS
BYLINE= ED WARNER
DATELINE= WASHINGTON

INTRO: WHILE RUSSIA AND CHINA WERE BOTH COMMUNIST COUNTRIES, 
THEY HAVE PURSUED SHARPLY DIFFERENT POST-COMMUNIST PATHS. V-O-A'S
ED WARNER REPORTS A DISCUSSION OF THESE CONTRASTS AT A MEETING 
OF THE CENTER FOR AMERICAN-EURASIAN STUDIES AND RELATIONS IN 
WASHINGTON.

TEXT: RUSSIA HAS TRIED TO COMBINE ECONOMIC WITH POLITICAL 
REFORM. CHINA HAS OPTED ONLY FOR ECONOMIC. 

IN A MEETING AT RUSSIA HOUSE IN WASHINGTON, SPECIALISTS AGREED 
THERE IS SOMETHING TO BE SAID FOR BOTH STRATEGIES, THOUGH CHINA 
IS AT PRESENT THE MORE SUCCESSFUL.

BACK FROM A RECENT TRIP TO RUSSIA AND THE CAUCASUS, ARIEL COHEN 
OF THE HERITAGE FOUNDATION SAID FREE MARKET REFORM IS UNDER WAY 
WITHOUT THE POLITICAL AND FINANCIAL INSTITUTIONS TO SUPPORT IT. 
AS A RESULT, RUSSIA CANNOT ATTRACT THE FOREIGN INVESTMENT IT 
NEEDS TO REVIVE THE ECONOMY. FAR MORE CAPITAL FLEES THE COUNTRY 
THAN ENTERS IT. 

BUT MR. COHEN EXPECTS CHANGE TO COME FROM A YOUNGER GENERATION 
THAT HAS GROWN UP IN A POST-SOVIET FREE MARKET ENVIRONMENT. MANY 
HAVE BEEN TRAINED IN THE WEST AND ARE GOING INTO GOVERNMENT: 
// COHEN ACT //
SO WHAT YOU HAVE IN SOME CASES OR MANY CASES IS THE 
SENIOR LEADERS LIKE (RUSSIAN PRESIDENT BORIS) YELTSIN 
AND (GEORGIAN PRESIDENT EDUARD) SHEVARDNADZE 
LEAPFROGGING THE GENERATION OF THE FORTY PLUS OR FIFTY 
YEARS OLD'S AND GOING TO THE THIRTY YEAR OLD'S. AND I 
THINK IT IS A VERY POSITIVE DEVELOPMENT, AS BRASH AS 
THESE PEOPLE SOMETIMES ARE.
// END ACT //
YOUTH IS NOT REALLY THE ANSWER, SAID ISAAC TARASULO OF THE 
EURASIAN BUSINESS COALITION. THE NEWCOMERS CAN BE TURNED OUT WHEN
PRESIDENT YELTSIN GOES. THE NEED IN HIS OPINION IS TO CREATE A 
CIVIL SOCIETY IN WHICH PRIVATE PROPERTY IS SECURE AND RESPECTED, 
AND WEALTH IS NOT CONFISCATED BY A SOMETIMES TERRIFYING TAX 
POLICE: 
// TARASULO ACT //
THE PROBLEM WITH RUSSIA AND THE OTHER REPUBLICS - THEY 
DO NOT HAVE A CLEARLY DEFINED, MANAGEABLE TRANSITION 
PERIOD. THEY DO NEED TRANSITION. YOU CANNOT STEP FROM 
COMMUNISM TO CAPITALISM JUST AT ONCE. IT IS THE MISTAKE 
OF THE WEST. WE WERE SO AFRAID THAT THE COMMUNISTS WOULD
COME BACK THAT WE WERE URGING THEM TO BE VERY BOLD AND 
PLUNGE INTO CAPITALISM WITHOUT ANY PREPARATION.
// END ACT //
CHINA TOOK THE OPPOSITE COURSE, SAID DEAN CHENG, A CHINESE 
ECONOMIST NOW WORKING IN THE WASHINGTON AREA. POLITICAL REFORM 
HAS LAGGED FAR BEHIND ECONOMIC CHANGE. THE THEORY IS THAT A 
PROSPEROUS PEOPLE WILL REMAIN CONTENT WITH LIMITED POLITICAL 
FREEDOM, WHICH CAN BE PUT OFF INTO THE DISTANT FUTURE:
// CHENG ACT // 
IF RUSSIA HAS NOT NECESSARILY DONE AS WELL ECONOMICALLY,
THERE HAS ALSO BEEN MUCH LESS IN THE WAY OF A TIANANMEN 
SQUARE. BUT THE FLIP (OTHER) SIDE OF THAT IS THAT THE 
CHINESE HAVE UNDERTAKEN PRIVATIZATION FAR MORE THAN IT 
IS MY UNDERSTANDING OF WHAT HAS GONE ON IN RUSSIA OR ANY
OF THE C-I-S REPUBLICS. (CHINESE) PEOPLE CAN OWN THEIR 
OWN LAND. PEOPLE CAN START THEIR OWN BUSINESSES.
// END ACT //
MR. CHENG NOTED ENERGY AND TRANSPORTATION PROBLEMS LIE AHEAD FOR 
CHINA AND ROVING MILLIONS OF THE UNEMPLOYED. BUT AT THE MOMENT, 
CHINA IS ENJOYING A RAPID RATE OF ECONOMIC GROWTH, ALONG WITH 
SUBSTANTIAL FOREIGN INVESTMENT AND SOME OF THE WORLD'S LARGEST 
FOREIGN CURRENCY RESERVES. LAST YEAR CHINA HAD A TWENTY-FOUR 
BILLION DOLLAR TRADE SURPLUS WITH THE REST OF THE WORLD. UNLIKE 
RUSSIA, CAPITAL DOES NOT FLEE CHINA.

*******

#8
Finanical Times (UK)
16 May 1998
[for personal use only]
RUSSIA: No longer a nation worth dying for
The Cossacks as fearless warriors? Just another myth that shows how much 
Russia is misunderstood, argues Anatol Lieven

"On Russia's windswept steppes, the Cossacks ride again," read the 
headline, as the western press recently lauded the "fearsome Cossack". 
It is the hype of an instantly recognised celluloid character, a matinée 
hero, half-sinister and half-romantic. The Cossacks are a classic 
example of how a stereotype of Russia persists in the face of 
overwhelming evidence to the contrary.

For if the Cossacks are indeed Russia's sword, in Chechnya it proved to 
be made not of steel, but of wet cardboard. Their members showed no 
desire whatsoever to fight, and there was certainly no flood of militant 
volunteers to their ranks. And this was true even though the result of 
the war was to confirm Chechen possession of certain areas which were, 
for several centuries, inhabited by Cossacks.

By December 1995, when I met Yuri Galkhin, ataman of the Russian 
Cossacks in Chechnya, for the last time in the ruined city of Grozny, he 
was a broken man. Eight months before a Chechen victory which, in 
effect, ended the war, he was already trying to leave. This was despite 
the fact that he and the other ethnic Russians were supposedly under the 
protection of tens of thousands of Russian troops, who outnumbered and 
vastly outgunned the Chechen forces facing them.

"How could the Cossacks help us?" Galkhin asked me. "They are scattered 
among a dozen different subjects of the federation, and they have no 
serious weapons." His contempt for the Cossack movement was unconcealed.

"All this talk of partitioning Chechnya, of a Cossack region here, is 
just talk by people sitting safely hundreds of miles away. I don't care 
if they call themselves

Cossacks, they can call themselves whatever they like for all I care. I 
know what I call them . . . The Chechens now, they are a strong people, 
physically and spiritually . . ."

Galkhin, like most Russian civilians in Chechnya, also had nothing but 
contempt - wholly justified by the event - for the Russian army for its 
unwillingness to seek combat with the Chechens: "The soldiers just sit 
behind their concrete blocks, and if a Chechen takes a shot at them, 
they blaze away in all directions and kill anything that moves."

The failure of the Russian army and the Cossack movement in Chechnya 
illustrates the most important characteristic of Russia today: the 
desperate weakness both of the Russian state and of Russian society. 
Together, they make for a country which is radically different from any 
Russia that has existed in the past.

Russia more closely resembles a weak, oligarchic, heavily- criminalised 
Latin American country of the recent past than it does the Soviet Union 
or the Russia of the tsars, with which so many western commentators 
obsessively compare it.

At its simplest, the weakness of the Russian state means that it has 
been unable to raise the taxes to pay or supply its army properly, or to 
prevent corrupt bureaucrats and officers from stealing what resources 
are available. The result has been hungry, badly equipped, demoralised, 
literally suicidal soldiers and junior officers who despise the state 
for which they are asked to risk their lives.

As "Valery", an interior forces conscript told me in Chechnya: "The 
Chechens are fighting well because they're fighting to defend their 
homes . . . and we're fighting because our commanders tell us to fight. 
And who are our commanders? Thieves who steal from us and then send us 
to die to cover up their own political mistakes."

The weakness of Russian society comes from 70 years of Communist rule, 
during which - especially of course under Lenin and Stalin - every 
autonomous, spontaneously generated social, cultural and political 
institution was remorselessly smashed, and society atomised.

The lack of real democratic control has allowed the plundering of 
Russia's resources by the new elites in what was dubbed "privatisation". 
This process had strong analogies to "land reform" in liberal states 
such as Mexico and Italy in the 19th century - enormous tracts of land 
were transferred to officials, businessmen and politicians with links to 
the liberal regimes. The mass of the population either did not benefit 
or actively suffered as a result.

However, the lack of true democracy and civil society in Russia, the 
apathy and cynicism of the mass of the population have also had one good 
effect: they have prevented mass mobilisation behind political causes - 
and after all, given the economic suffering and moral chaos in Russia 
today, there is no guarantee whatsoever that these causes would not have 
been chauvinist ones.

The failure of the Cossacks to mobilise large numbers of Russians - even 
in the most ethnically mixed and sensitive areas like the North Caucasus 
- behind paramilitary nationalism is a case in point. This has been a 
key part of the failure of Russia so far to take the Serbian path; that 
is, mobilising large numbers of people, in Russia itself, but much more 
important, in the Russian minorities outside Russia, to fight for a new, 
ethnically based Russian empire.

To its credit, the government of Boris Yeltsin has never adopted such a 
strategy - but as the fail ure of the Cossacks demonstrates, even if 
Moscow were to try to mobilise Russians behind such a policy, the apathy 
of the population would make it unlikely to succeed.

As Chechnya demonstrated, when the Russian army failed, there was no 
mass movement of Russian nationalism - let alone of Russian volunteers - 
to insist that the government fight on to protect Russians in Chechnya 
and suppress Chechen separatism. Most Russians make no secret of their 
acute dislike for Chechens, but as opinion polls repeatedly 
demonstrated, the war against them never enjoyed wide popularity and, by 
1996, a large majority of Russians wanted only to end the fighting.

As for the vast majority of young Russians, their abhorrence of military 
service, their utter unwillingness to go to fight for Russia in Chechnya 
or anywhere else, indeed their overwhelming indifference to Russian 
"national causes", should be blindingly apparent. The commander of an 
elite Russian military unit told me: "Who'd be a soldier if you could 
get a job in a bank?"

Modernisation and urbanisation mean that Russians have over the years 
been exposed to many of the same demilitarising influences as their 
equivalents in the west, albeit of a peculiar kind. This process was 
greatly assisted by the futile and bloody war in Afghanistan. Most of 
Russian society today is profoundly cynical, individualist and 
materialist and exactly the reverse of nationalist, let alone 
militarist.

But here lies the problem for western analysis. Too many senior western 
analysts of Russia, most of whom were "experts" in Soviet studies, do 
not know contemporary Russian youth at all. They have never spent time 
in a Russian discotheque or night club, and they have never talked to 
young Russians about their real beliefs and aspira-tions.

It is, perhaps, hardly fair to expect these elderly professors and 
retired generals to have to jig around to Russian pop music. It is fair 
to ask some of the professional Russophobes, given their absence from 
the contemporary Russian scene, whether they should be a little less 
categorical about asserting that a basically unchanging Russian nation 
has a permanent commitment to imperialism and conquest.

This stereotype of Russia is a virtual litany for many US commentators 
in particular. These views are a striking example of how, like the 
Cossacks, when a certain national stereotype has lasted long enough and 
taken sufficiently deep root, it can be almost impervious to evidence or 
rational argument.

As for the new Russian elites, it should be obvious that they have been 
obsessed with filling their own pockets at the expense of the Russian 
state, not with restoring it as a "great power".

There has certainly been no evidence of concern for the Russian armed 
forces in any of their actions. Under their rule, Russia has become a 
state for which no sane soldier would wish to die - certainly not to die 
without even being paid.

•Anatol Lieven's Chechnya: Tombstone of Russian Power, from which this 
article is condensed, is published by Yale University Press at £25 

********

#9
New York Times
16 May 1998
[for personal use only]
Russia, I.M.F. Disagree on How to Cut Deficit
By MICHAEL R. GORDON

MOSCOW -- Russia is at odds with the International Monetary Fund over the
politically charged question of how to reduce the nation's huge budget
deficit. 
The dispute has emerged as a major challenge for Russia's new prime minister
and comes at a sensitive time for the Russian economy. 
On one side of the debate is Sergei Kiriyenko, who has embraced the same
strategy Washington has used to attack its deficit: slash billions of dollars
in spending without raising taxes. 
IMF officials, however, are skeptical about the government's ability to make
such deep cuts. Instead, they are urging Kiriyenko and his team to draft a
politically unpalatable series of tax increases. 
The debate has cast a shadow over the IMF's next infusion of money in its
three-year Russian loan program. So far, the fund has disbursed $5.2 billion
of the $10 billion called for under the program. 
But the next $700 million installment has been delayed by the wrangling. An
IMF team is scheduled to renew negotiations here on Monday and top fund
officials are expected to come to Moscow for talks later this summer. 
Nervous foreign investors are anxiously following the deliberations. The
Russian stock market has slumped in recent days because of a general concern
over the strength of the Russian economy. The central bank's reserves for
defending the ruble also have been shrinking. 
The dispute not only underscores the monumental budgetary pressures
confronting President Boris Yeltsin's new government but also raises searching
questions about the strategy of the IMF, which is already being scrutinized
for its handling of the economic crisis in Asia. 
Critics here say Russian taxes are already very high and that there is no
chance that they would be raised by the Communist-dominated Parliament. Also,
Kiriyenko's position would be weakened if he proposed tax increases just as
his new, pro-reform government is trying to overhaul the nation's archaic tax
system and get down to work. 
Yegor Gaidar, the pro-capitalism reformer and former prime minister, said
the IMF's position "is politically unrealistic and economically not very
sensible." 
Lawrence Summers, the deputy treasury secretary of the United States,
indicated on Thursday that Washington had some sympathy for the Russian
position, though he was careful not to publicly criticize the IMF. 
"The current economic team is more cohesive and more united in its
commitment to economic reform than any government Russia has had in the last
five years," Summers said after meeting with Russian officials here. "I think
there is large scope for expenditure reduction." 
The IMF and Russia have long had a rocky relationship. Economists say that
the IMF has helped Russia control its money supply and reduce inflation. But
the fund has sometimes been wrong, as when it sought unsuccessfully to make
the ruble a common currency for the former Soviet republics. 
One critical matter on which the two sides agree is the need to reduce
Russia's budget deficit. The deficit for this year is projected to be around
150 billion rubles (about $25 billion) or around 5 percent of Russia's gross
domestic product, Finance Ministry officials say. 
Financing such a deficit has required Russia to issue high-yield treasury
bonds and take out loans. The result is that about a third of the government's
spending is devoted to interest payments. 
"If we cannot solve the problem of government debt servicing within the next
two to three years, it will be a major blow to the defense capabilities and
economic security of the country," Kiriyenko told his Cabinet earlier this
month. 
Where the IMF and the Yeltsin government disagree is over how to attack the
deficit. The IMF wants a greater crackdown on tax delinquents, in addition to
budget cuts. The Russian government puts more emphasis on spending reductions.
The fund says that Russia should raise 315 billion rubles (about $52
billion) in tax revenue in 1998. But the Finance Ministry says Russia can only
expect to raise about 290 billion rubles (about $48 billion). Those figures do
not include the money raised through non-tax sources, including the sale of
state property and gold. 
The difference between the two revenue targets is significant because it
comes on top of other serious budgetary problems. Even if Russia met its
revenue target, it still would have to cut government programs to bring them
into line with budgeted spending. 
In insisting on additional cuts, the Russian Finance Ministry is saying
there is still enormous inefficiencies in the budget. The 1998 budget passed
by Parliament this year is 493 billion rubles (about $82 billion). The Finance
Ministry would like to reduce it to 432 billion rubles (about $72 billion). 
To accomplish that, the Russians are considering laying off 200,000
government workers, closing underutilized universities and cutting subsidies. 
"We should have the right to decide what course we need," Oleg Vyugin, the
deputy finance minister, said in an interview. "It should not be the job of
the IMF." 
IMF officials, however, doubt that the solution can be found in spending
cuts alone. One big risk in relying on cuts, they maintain, is that government
agencies will appear to go along with the budget reductions but will avoid
tough decisions, and opt instead to delay payments to workers or let bills go
unpaid rather than lay off employees or take other harsh measures. Wage
arrears and postponed payments have been a chronic problem in the Russian
economy. 
The IMF has told Russian officials in confidential negotiations that it is
wiser to make less severe spending cuts, allowing for a budget of about 467
billion rubles (about $78 billion), according to Russian participants in the
negotiations. 
The fund has argued that the Russians should draft an emergency package of
tax increases to make up the difference if additional revenue is not raised by
tougher tax collection. Specifically, the IMF says, the Russians should be
prepared to increase the value-added tax, excise taxes on gasoline and import
tariffs. 
But Gaidar said that increases in the value-added tax and excise taxes
cannot be put into effect without the approval of the Parliament, or Duma, and
would embroil Kiriyenko in a debilitating and ultimately unsuccessful
legislative battle. One casualty, Russian officials say, would be tax reform,
which the government wants desperately to push through the Legislature. 
"Of course, there should be improvements in tax administration and tax
collection," Gaidar said. "But there is substantial evidence that tax
increases will not be supported by the Duma and cannot be implemented. Import
tariffs are the only thing that can be changed without the support of the
Duma." 
Rory MacFarquhar, an economist with the Russian-European Center for Economic
Policy, says that the problem is not that Russia as a whole does not collect
enough taxes. The problem, he says, is that regional governments get more than
their fair share. 
Some Western bankers say that the Russians should be given leeway in dealing
with the budget crunch, as long as Moscow and the IMF agree on the overall
goals. 
"What is important now is that the Russians get serious about their fiscal
problems," said Charles Blitzer, the director of emerging markets research at
Donaldson, Lufkin and Jenrette. "The new government is younger and more
vigorous and committed to reform. It should decide what is the feasible way to
meet the deficit target." 

*******

#10
RFE/RL NEWSLINE Vol. 2, No. 92 Part I, 15 May 1998

DUMA CONCERNED ABOUT CHUBAIS APPOINTMENT... The Duma on 14
May instructed its committees on legislation, privatization,
and industrial policy to examine the Audit Chamber's
findings on an April shareholders' meeting at the
electricity giant Unified Energy System (EES), Russian news
agencies reported. The board of directors elected at that
meeting later chose former First Deputy Prime Minister
Anatolii Chubais as the company's chief executive (see
"RFE/RL Newsline," 30 April and 7 May 1998). The Audit
Chamber says the meeting was conducted in violation of
Russian legislation and the EES charter. Also on 14 May, the
Duma appealed to President Boris Yeltsin to reconsider his
decision to eliminate the State Committee on Youth Affairs,
which was among several committees abolished under a recent
presidential decree (see "RFE/RL Newsline," 4 May 1998). LB

...FORMS COMMISSION TO INVESTIGATE FALL 1993 EVENTS. The
Duma on 14 May formed a commission to investigate the events
that took place in Moscow in September-October 1993, ITAR-
TASS reported. On 21 September of that year, Yeltsin issued
a decree disbanding the Supreme Soviet. His opponents did
not comply with the decree, which the Constitutional Court
declared unconstitutional, and sought to replace Yeltsin
with then Vice President Aleksandr Rutskoi. Yeltsin
ultimately settled the standoff by ordering tanks to shell
the parliament. According to official estimates, almost 150
people died during the street fighting in the capital (other
estimates put the figure at several hundred). LB

*******