May 22, 1998  
This Date's Issues: 2189 •2190• 

Johnson's Russia List
#2189
22 May 1998
davidjohnson@erols.com

[Note from David Johnson:
1. RIA Novosti: RUSSIAN GOVERNMENT TO FOCUS ON THREE TOP PRIORITIES.
2. Reuters: Yeltsin to address Russia on miners' protest.
3. AP: Clinton Signs NATO Expansion.
4. Reuters: Russia government needs success in 100 days-source.
5. Washington Post: Jim Hoagland, New Man in Moscow.
6. Moscow Times: Andrei Zolotov Jr., Sakharov's Widow Slams Ruling Elite.
7. Sovetskaya Rossiya: Opposition Paper Views Lebed Win in Krasnoyarsk.
8. Tel Aviv Vesti: Kiriyenko Outlines State Economy's Goals.
9. The Independent (UK): Phil Reeves, Islamic gunmen challenge Yeltsin's
rule.
10. VOA: Michele Kelemen, Russia and World Bank.
11. Moscow Times: Leonid Bershidsky, MEDIA WATCH: Media Not Business of 
State.]

*******

#1
RUSSIAN GOVERNMENT TO FOCUS ON THREE TOP PRIORITIES 
MOSCOW, MAY 21, /RIA-NOVOSTI CORRESPONDENT REGINA 
LUKASHINA/ -- The Russian Government must focus on the following 
three top priorities, namely the budgetary, structural and 
social policies, in the near future. 
This paragraph is contained inside various documents that
have been prepared by the Ministry of Finance for the Russian 
Government's session. 
Apart from that, the ministry's documents state expressly 
that Russia has recently chalked up a negative balance within 
the framework of its balance-of-payments operations. This is 
largely explained by a less favorable export environment. As of 
early 1998, the value of Russian exports, as well as its 
physical volumes, began to dwindle. 
As far as the budgetary policy is concerned, the Cabinet's 
top priorities in the given field include measures aimed at 
boosting federal-budget revenues. Incidentally, plans are in 
place to start floating state-backed securities, which would 
subsequently be sold to private individuals. 
The implementation of this measure would enable Russian 
citizens to save money in a new way. For its own part, the state 
would reduce borrowing costs somewhat (by offering more 
substantial financial resources). 
A number of measures are aimed at streamlining the 
appropriate budget-fulfilment rules and procedures; for example, 
some measures would be expected to streamline the relevant 
legislative base that aims to strengthen tax and payments 
discipline. 
Besides, it's intended to work out a procedure for 
fulfilling specific bills , which are not backed by budgetary 
appropriations. Quite a few such bills have already been 
approved. And so, the Government intends to ensure the 
proportional fulfilment of the federal budget's spending items. 
A number of measures aiming to rationalize budgetary 
incomes should also be implemented. For example, federal 
executive-power bodies should be forbidden to borrow money. 
Meanwhile the structural policy is called on to perfect 
property relations, to solve all kinds of problems now plaguing 
the nation's military-industrial complex, to ensure state 
regulation of natural monopolists and to apply bankruptcy 
procedures. 

*******

#2
Yeltsin to address Russia on miners' protest
By Oleg Shchedrov 

MOSCOW, May 22 (Reuters) - President Boris Yeltsin will offer his ideas on
Friday on how to end protests by the country's unpaid coal miners that are
challenging the new government and damaging the fragile economy. 

A Kremlin spokesman said on Thursday the president will focus on the miners in
his traditional weekly radio address at 0500 GMT. 

Week-long protests have paralysed vital rail routes across Russia and are
costing one Siberian aluminium smelter alone $5 million a day. Union bosses
urged the miners on Thursday not to return to work until they are paid. 

Yeltsin, worried by the pace of the wildcat protests, discussed the issue at a
``Big Four'' meeting with Prime Minister Sergei Kiriyenko, speaker of the
State Duma lower house of parliament Gennady Seleznyov and the head of the
Federation Council upper chamber Yegor Stroyev on Thursday. 

Stroyev said after the meeting that Yeltsin had agreed to convene a crisis
commission with Kiriyenko and parliamentary representatives in the first 10
days of June. 

Yeltsin also apparently urged his government to take prompt steps to end the
protests by the miners, whose action in the late 1980s helped the Kremlin
leader in overthrowing communism. 

Deputy Prime Minister Boris Nemtsov, who sped to the southern Rostov region on
Yeltsin's order, will visit miners blocking rails in the town of Shakhty. 

Kiriyenko told the cabinet he had found 526 million roubles ($84 million) from
cutting red tape to help pay the miners. However, he said he would not rob
Peter to pay Paul. 

``We cannot take money from some people to put out a temporary fire in another
place,'' he said referring to other sectors where workers face similar
problems of wage arrears. 

Kiriyenko, prime minister for barely a month, is under pressure to take a
tough stance from ailing markets badly hit by the turmoil in Indonesia. 

A senior government source gave a grim outlook for gross domestic product
(GDP) growth and visiting World Bank President James Wolfensohn said Russia
was suffering a monetary crisis. 

``Bad -- zero,'' the government source told reporters about prospects of GDP
growth after meeting with Kiriyenko. 

Russia had hoped for at least two percent 1998 GDP growth, but high domestic
interest rates sparked by Asian market turmoil and Russian fiscal problems
have gnawed at that estimate. 

``It is clear that there is a crisis in the monetary arena although it is a
little better in the last 24 hours,'' Wolfensohn told a news conference after
talks in Moscow with senior Russian government officials. 

Kiriyenko said Russian financial markets were under control. 

But the benchmark RTS share index closed 1.26 percent down at 230.23 on
moderate turnover after rising at the open on domestic factors and in response
to Indonesian President Suharto's decision to quit. 

Adding to economic and social woes, bad news came on Thursday from the
southern region of Dagestan on the border with rebel Chechnya, where hundreds
of armed men loyal to a Duma deputy briefly occupied a local government
building. 

No one was killed but the city on the Caspian Sea was thrown into chaos for
most of the day. The situation was defused after the Dagestani government
agreed to summon parliament on Friday or Saturday to address the demands of
the attackers. 

Some Russian media described the action as an attempted local coup d'etat by a
group favouring more Islamic rule but others suggested it was a case of an
unruly local strongman enraged by a clash between his bodyguards and police. 

Nonetheless, some Moscow politicians, including Stroyev, said they feared
Dagestan could unravel into another Chechnya. 

Yeltsin showed he was taking the problem seriously by recalling Interior
Minister Sergei Stepashin from a visit to France to take charge. Stepashin
left for Makhachkala on Thursday. 

********

#3
Clinton Signs NATO Expansion
May 21, 1998
By ROBERT BURNS

WASHINGTON (AP) - Capping one of his biggest foreign policy victories,
President Clinton formally approved expanding the NATO military alliance to
include the former Soviet satellite countries of Poland, Hungary and the Czech
Republic. 

In a White House ceremony Thursday, the president signed the instrument of
ratification the Senate passed April 30. It adds the three nations by amending
the 1949 North Atlantic Treaty. 

``Today, we welcome Hungary, Poland and the Czech Republic, finally erasing
the boundary line the Cold War artificially imposed on the continent of
Europe, strengthening an alliance that now, clearly, is better preserved to
keep the peace and preserve our security into the 21st century,'' Clinton said
before putting his signature to the document. 

``For the 16 of us already in NATO, enlarging our alliance will create three
new allies ready to contribute troops and technology and ingenuity to
protecting our territory, defending our security and pursuing our vital
interest,'' the president said. A larger NATO, he said, means American youth
``will be much less likely to cross the Atlantic to fight and die in a war.'' 

NATO membership means for the 60 million people in Poland, Hungary and the
Czech Republic that they can ``know that what they build in peace they will be
able to keep in security,'' the president said. 

At the Pentagon, Army Gen. Wesley Clark, NATO's top commander in Europe, said
the Polish, Hungarian and Czech militaries ``are enormously pleased and proud
to be accepted'' as allies. ``We should be proud to have them with us in
NATO,'' Clark said. 

Reflecting bipartisan support in the Senate, Clinton was joined in the Rose
Garden ceremony by Sens. William Roth, R-Del., and Joseph Biden, D-Del.,
prominent Senate backers of enlargement. The ambassadors to Washington from
Poland, Hungary and the Czech Republic also attended. 

``NATO enlargement is not only a necessary and logical outcome for the most
successful security alliance in history,'' Roth said, ``but it is the bold
delivery of a promise - a promise made almost 50 years ago, a promise to keep
the door open to any European democracy.'' 

In a lighter moment just before Clinton was to speak, a gust of wind rose and
blew one of the ratification documents off the ceremonial signing table.
Clinton bent over and retrieved it. 

He chuckled and said: ``I would hate to lose this document after all the
effort we've put into getting to this point.'' 

All 16 NATO members must ratify the amendment to the North Atlantic Treaty to
bring in the new countries. The treaty, signed in Washington on April 4, 1949,
created NATO as a bulwark against the former Soviet Union. So far, Canada,
Denmark, Germany, Greece and Norway have ratified the eastward expansion, in
addition to the United States. 

It is the first enlargement of the alliance since Spain joined in 1982. 

NATO leaders are planning a ceremony to welcome the new members at a summit
meeting in Washington April 24-25, 1999, to coincide with NATO's 50th
anniversary. 

Although the Senate vote on ratification was 80-19 in favor, the debate
included some dire predictions about the implications of expanding NATO over
Russia's strong opposition. Moscow views a bigger NATO as a potential security
threat close to its borders. 

The Clinton administration argues that including three former Soviet bloc
nations in the Western alliance will mean a greater chance of stability in
central Europe, despite Moscow's objections. 

As to cost, the administration estimates enlargement will cost roughly $1.5
billion over 10 years, of which $400 million would be borne by the United
States. Critics estimate $60 billion to $125 billion over the same period -
with Americans paying tens of billions. 

*******

#4
Russia government needs success in 100 days-source
By Peter Henderson 

MOSCOW, May 21 (Reuters) - Russia's new government has 100 days to squeeze
results from the economy and has the political know-how as well as a plan to
achieve success, a senior government source said on Thursday. 

The government will risk political unrest by slashing spending to balance the
budget, the source told reporters after speaking with Prime Minister Sergei
Kiriyenko. 

Explaining that the government had been goaded to move quickly by the fiscal
crisis shaking the country, he said: ``The government has 100 days to show
results.'' He added the clock began ticking a month ago. 

The source predicted an International Monetary Fund (IMF) team currently in
Moscow would shortly show its approval of the government's economic tactics by
recommending that its board should pay a $670 million loan tranche. 

The government is trying to convince the IMF that it should concentrate on
cutting spending rather than increasing revenues, as this was the key to
balancing the budget, the source said. 

The government plans to cut ballooning debt service costs by borrowing up to
$2 billion in extra foreign issues, currently trading at yields of slightly
over 10 percent, in order to buy back rouble-denominated debt with expensive
yields of over 40 percent, he said. 

Political observers say the technocrats who lead the administration, led by
Kiriyenko, know they are treading on dangerous ground by concentrating on
budget numbers rather than rising public discontent. 

Miners clamouring for back wages have shut down Russia's east-west railways,
leading the IMF to question the wisdom of spending cuts. But the source said
any damage would show in political unrest rather than have an impact on the
economy. 

``I think the (IMF) mission won't leave Moscow without a positive decision
this time...,'' he said. 

*******

#5
Washington Post
May 21, 1998
[for personal use only]
New Man in Moscow
By Jim Hoagland


MOSCOW—Sergei Kiriyenko is a man you can do business with. In fact, he 
wishes you would. And soon.

Kiriyenko is the new, already embattled prime minister of Russia. In 
office a month, he is fighting off attacks on the ruble, trying to 
attract new foreign investment (yours is welcome), and declaring war on 
waste, fraud and abuse in the Russian budget.

For Kiriyenko, the chief business of Russia is business, not big-power 
geopolitics or ideology. He fits the famous formula that Margaret 
Thatcher used to express early confidence in Mikhail Gorbachev far 
better than the former Soviet president ever did. Unlike any previous 
top leader here, Kiriyenko has actually experienced the ups and downs of 
working in the free market as a banker and oil company executive.

Yesterday, Kiriyenko quickly took control of the first interview he has 
given a foreign journalist since being confirmed in office by a hostile 
Duma to reassure nervous investors, foreign and domestic, about the 
state of the Russian economy and the firmness of spine of his new 
government.

He promised to indemnify or otherwise protect foreign shareholders 
adversely affected by a new Duma law reducing their holdings in Russian 
utilities. He ruled out a devaluation of the Russian ruble, which came 
under attack this week and had to be defended by the Central Bank. And 
he emphasized throughout the 30-minute conversation that his young, 
reform-minded government was here to stay, despite widespread doubt in 
Moscow that this 35-year-old technocrat will last out the year under the 
mercurial Boris Yeltsin.

"This government does have the will to secure its own interests," 
Kiriyenko said in his precise, cool way. "It is important that no one 
doubt this government's seriousness" and determination to undo the 
budgetary tangles that did in his predecessor, Viktor Chernomyrdin, who 
was peremptorily fired by Yeltsin in April.

Physically, the stolid, gray Chernomyrdin was the Central Casting 
version of a Soviet apparatchik. When I interviewed him a year ago at 
the Russian White House, we met in the vast meeting room where the prime 
minister chairs the Russian cabinet. Chernomyrdin spent our talk hurling 
verbal thunderbolts at NATO's expansion and speaking unpersuasively 
about economic reform.

Kiriyenko comes from a different era and mind-set. Seated in his office 
overlooking the Moscow River, he spoke with a detailed and specific 
command of the day's interest and currency rates, and praised the "the 
classical measures" the Central Bank took in raising short-term interest 
rates sharply to steady the markets, which calmed yesterday.

Yeltsin reached far across generational, political and temperamental 
divides to elevate Kiriyenko from his post as energy minister, where he 
had been less than a year. Kiriyenko, who went from university to 
private enterprise in the Volga River city of Nizhny Novgorod, added to 
the cabinet new faces who also have practical experience in Russia's 
fragile free-market economy in the provinces.

Those appointments, and my conversation with Kiriyenko, suggest that 
Yeltsin at some point a few months ago recognized that the Russian 
economy had reached a dead end and needed a dramatic new start. It is 
said in Moscow that he was pointed toward Kiriyenko by former prime 
minister Yegor Gaidar and Anatoli Chubais, the abrasive ex-privatization 
chief who took the opportunity of the April change to leave the 
government.

With refreshing candor, Kiriyenko acknowledged that the abruptness of 
his appointment and his battles with the Communist-dominated Duma had 
contributed to the economic turbulence that has hit Russia. Equally 
damaging, he said, was "the new wave of the Asian crisis, which keeps 
investors cautious."

A quarter smile plays at the corner of his mouth as he speaks. His is a 
well-ordered mind dealing with a chaotic situation. Kiriyenko gives the 
impression of knowing exactly what his last sentence will say when he 
begins a paragraph.

Kiriyenko hopes to carve out the same privileged relationship with Vice 
President Gore enjoyed by Chernomyrdin through twice-yearly meetings. "I 
spoke to Vice President Gore on the telephone this week, and we began to 
make plans to meet in Moscow this summer," Kiriyenko said.

Although he is satirized here as a boy scout dropped deep into a 
threatening jungle with little training, Kiriyenko's youth and 
inexperience are seen as assets by some serious students of Russia. 
"There is some experience that is worth not having," says one U.S. 
official delighted to deal with Kiriyenko after making a career of 
dealing with people formed in the Soviet era. 

*******

#6
For more articles from The Moscow Times, check out their website at
www.moscowtimes.ru

Moscow Times
May 22, 1998 
Sakharov's Widow Slams Ruling Elite 
By Andrei Zolotov Jr.
Staff Writer

Yelena Bonner, the widow of dissident Andrei Sakharov and the doyenne of 
Russia's human rights movement, marked her husband's 77th birthday 
Thursday by blasting Russia's rulers and voicing her support for 
Alexander Lebed. 

Bonner said the issue of human rights, which a decade ago was at the 
forefront of Russian politics, had now been sacrificed in favor of a 
self-serving political agenda. 

"We have called the wrong people democrats. The people who came to power 
on the wave of the [early] 1990s used democratic rhetoric, but quickly 
abandoned it as unnecessary wrapping," Bonner said. "The country is 
ruled by a [corrupt] elite, who are united by a corporate cover-up -- 
from the president down." 

Bonner, 75, was speaking at a chaotic news conference -- which coincided 
with a performance of conceptual art -- to commemorate the 77th birthday 
of her late husband, and the 50th anniversary of the signing of the 
United Nations Universal Declaration of Human Rights. 

Sakharov, who died in 1989, was one of the Soviet Union's most 
celebrated dissidents and was awarded the Nobel Peace Prize for his 
work. 

Bonner said that the international community must bear some of the blame 
for what she called the worsening state of human rights in Russia 
because it increasingly puts international politics before human rights. 

"It is unclear why such mass violations of human rights as the war in 
Chechnya did not cause protests of the world community, which proceeded 
from greater geopolitical interests," Bonner said. 

Lebed, elected last weekend as governor of the Krasnoyarsk region, 
represents a refreshing change, Bonner said. 

As a paratroop officer, Lebed reportedly lined up soldiers he suspected 
of hazing and punched them in the jaw one by one. Since he embarked on a 
career in politics, he has been censured for making derogatory comments 
about Jews. 

Nevertheless, Bonner said she backed Lebed because he "is an outsider 
for the current ruling elite, and he broke through this chain, which is 
connected by a system of mutual favors." 

Valery Borshchyov, a liberal deputy in the lower house of parliament, 
was more optimistic about Russia's human rights movement. He said at the 
news conference that the disorganized mass movement of the early 1990s 
had "crystallized" into a network of professional human rights workers. 

"That's gratifying," he said. 

Immediately before the news conference, artists handed out "human rights 
identity cards" with the bearer's name and photograph, the text of the 
Universal Declaration of Human Rights and the fax number for the UN High 
Commissioner for Human Rights. 

"It is a purely absurd document," said Nikolai Polessky, the artist who 
came up with the idea for the stunt. "But it would be good to teach the 
cops to look at this document." 

*********

#7
Opposition Paper Views Lebed Win in Krasnoyarsk 

Sovetskaya Rossiya
19 May 1998
[translation for personal use only]
Report by K. Zharova under "Regional Elections" rubric: "Three
New Governors"

Last Sunday's [17 May] result: The Smolensk Oblast gubernatorial
election was confidently won with a 41-percent margin by Aleksandr
Prokhorov, who was nominated for the election by the Communist Party of the
Russian Federation's oblast organization. His rival, former oblast
Governor Glushenkov, was for people the personification of the central
authorities. By their choice Smolensk inhabitants once again demonstrated
that their oblast is, according to the colorful expression, the soldier's
buckle in Russia's "Red belt." In the elections the raw material regions
-- Karelia and Krasnoyarsk -- rejected candidates supported by the
opposition and preferred Petrozavodsk Mayor Sergey Katanandov in the first
case and General Aleksandr Lebed in the second. It must be said that in
their election campaigns they both actively utilized not only criticism of
the regime as such but even the opposition's vocabulary. While in
Katanandov's case the voter's logic can be understood because he is a
well-known person in the republic who has done something for the city and
there is hope that he will also do something for the republic as a whole,
in Lebed's case everything is somewhat different.
The Kremlin did not want Lebed to win in Krasnoyarsk Kray. In exactly
the same way as Gorbachev, having himself spawned Yeltsin, was afraid of
him and did not want him to win the 1991 presidential election. Then all
official spin doctors were let loose on him. It is no accident that the
electronic mass media are now drawing the following parallel: The Yeltsin
of 1991 in Russia and the Lebed of 1998 in Krasnoyarsk Kray. It is said
that the people always vote against the authorities. Surely we all recall
that then, seven years ago, many people and probably the majority voted not
for Yeltsin but against Gorbachev, to spite Gorbachev. It was only later
that the concept of a "protest vote" came into use. Yes, the people are
voting against the hated authorities, there is no doubt about that. But
what happens as a result is the same as what happened to the contrary guy
who said: "I will gouge my eye out so that my mother-in-law's son-in-law
becomes blind in one eye." At any rate, in relation to Yeltsin this rule
worked a full 200 percent -- the son-in-law was overzealous in his hatred
of his mother-in-law (the authorities) and became blind in both eyes. 
There is no need to say what Yeltsin did to the country and to the people
who voted against Gorbachev. But it is not irrelevant to recall the second
presidential election -- after all, in this case well begun is half done. 
In present-day Russia the executive branch's mastery almost automatically
-- for many people, at least -- means unlimited and uncontrolled access to
all kinds of resources, be they finances or natural resources, which are
often the same thing. As Gorbachev begat Yeltsin, Yeltsin begat Lebed. In
turn will this general and governor palm somebody off onto us? But in the
last two cases Berezovskiy acted as midwife. By his own admissions in the
press, Yeltsin won the second election with the aid of his money and it is
he who has funded Lebed.
It is also a good thing if at least something from election
munificence comes the way of ordinary people. One would not, of course,
like events in Krasnoyarsk Kray to develop as they did in Russia as a whole
after the 1991 presidential election, but since this analogy has been drawn
let us recall the consequences. Ex- Governor Valeriy Zubov stated that
"Lebed was forced to pay the price of the governorship by abandoning the
struggle for the presidency." It cannot be ruled out that there was thus
some pact between the Kremlin and Lebed, which yet again confirms from
whose nest such birds as Aleksandr Ivanovich fly. And to which they
eventually nonetheless return despite their menacing cry and criticism of
the regime.
One must give due credit to former kray Governor Zubov, who found the
courage to congratulate his more successful rival on his victory. But at
the same time one cannot fail to criticize him for the fact that before the
first round of the election Zubov's headquarters directed most of its fire
not at Lebed but at the Communist Romanov. This was a clear tactical
miscalculation and this was possibly precisely why people perceived Zubov's
readiness to enter a dialogue with Communists and his other compromise
steps in relation to the opposition as an election ploy rather than the
genuine moves of a farsighted politician.

*******

#8
Kiriyenko Outlines State Economy's Goals 

Tel Aviv Vesti in Russian
17 May 1998
[translation for personal use only]
Article by Russian Prime Minister Sergey Kiriyenko: "The Urgent
Goals of Russian Economy"; "exclusive to Vesti through RIA Novosti"

What path will Russia take? What is happening in its economy today? 
To be honest, the situation is extremely complicated. The GDP growth has
stopped, and capital investments are again sharply falling. The positive
foreign trade balance is dropping, while government expenditure is growing.
The latter now constitutes nearly 30 percent of all budgetary
expenditures.
The economy registered growth in the past six months, but the growth
has now stopped. The state economy encountered dire difficulties at home
and abroad, which obliterated many achievements.
The Asian financial crisis led to higher interest rates on government
loans. Because of the large volume of debts, the budgetary expenditures
grew by 18-20 billion rubles, which was a heavy blow to Russia's financial
condition. 
This new situation cannot be resolved without a clear definition of
the state's place and role in the market economy. I disagree with the
theory that there is no room for government influence in a market economy. 
On the contrary, there is greater need for such influence during transition
periods.
We have to define the areas of direct government control of and
participation in management. First of all, the government cannot lose
control over the natural resources monopolies, such as Gazprom, ES Russia,
Transneft, and so forth. Selling the controlling shareholdings of these
companies would be unthinkable.
Another direction can be the manufacture of alcoholic beverages, where
the government should play a considerably more prominent role. Second, the
following areas require the regulating influence of the government: the
agro-industrial systems, science, and other economic sectors. In free
market competition, the government's role is limited to setting rules and
passing laws.
We have to clearly demarcate the distribution of powers and
responsibilities of the government and the regional and local authorities. 
The demarcation must be civilized, based on lawful relationships and mutual
commitments.
The demarcation should be based on budgetary federalism, the equal
distribution of taxes among the districts, concurrently with vertically
integrated companies and with predictable government activities, prudent
tax and customs policies, and so forth.
A modest government is a strong government in the present
circumstances. We must live within our means. We will be unable to avoid
a moratorium on the construction and renovation of government buildings. 
To claim a moral right to demand, the federal government must start by
making demands of itself.
Which is precisely what we are doing right now: We are reducing the
White House staff and limiting the use of heat and energy in federal
ministries and departments.
Where can money be obtained? An inflation rise will destroy the
conditions needed for industrial growth. A tax hike is equally
unacceptable. Which means we have only two recourses: increasing the
revenues and optimizing the expenditures.
First, taxes must be collected. The entire tax burden today lies
mainly on large enterprises, which manufacture 60-65 percent of the GDP,
while the rest of the GDP remains out of reach.
We must learn how to raise taxes from businesses such as lotteries,
casinos, self-service gas stations, taxi companies, wholesale markets, show
business, and the entertainment industry.
We will wage a battle against off-shore businesses and unreasonable
tax exemptions. To succeed, we will need a tax reform -- namely, a tax
code and the necessary incentives enterprises will be offered.
It is completely unnecessary to sell government assets to generate
revenues from them. We have to learn to generate revenues from management,
including that of overseas properties, leases on buildings and
installations, and stock.
One of the immediate measures that will boost the economy is a more
effective exploitation of natural resources. This should include an
enterprising utilization of the mechanism of production distribution
agreements and firm licensing regulations.
But a thorough solution of the budget problem will be unattainable
without promoting domestic production growth. To achieve that, we will
stimulate the domestic solvency demand, restructure debts, and create a
favorable climate for investment.
We have become accustomed to the concept that the quantity of goods is
the main criterion for evaluating industrial production. It is time to ask
the question: At what price? This is the problem of the 21st century,
this is the problem of our competitive capability, and hence, of Russia's
global role. The instrument here is science, and the lever is the creation
of the necessary incentives.
Production growth and a responsible fiscal policy will create
appropriate conditions for solving current social problems and, mainly, for
beginning to solve the state's basic strategic problem. They will assist
our battle on poverty and our struggle for a higher standard of living for
workers. This means encouraging a higher real-term income for the
population, as well as a phased reduction of the tax burden on the
population's income.
To achieve these goals, we will need public support. We must overcome
the estrangement between the people and the administration. Accord and
cooperation are the underlying strategy.
[Description of source: Independent Russian-language newspaper
belonging to the Yedi'ot Aharonot group]

********

#9
The Independent (UK)
22 May 1998
[for personal use only]
Islamic gunmen challenge Yeltsin's rule
By Phil Reeves in Moscow

THE WEB of woes enmeshing Boris Yeltsin and his new government tightened 
yesterday after several hundred armed men stormed into a government 
building in Russia's turbulent southern republic of Dagestan and hoisted 
an Islamic flag. 

The fresh threat of trouble in the Caucasus - one of the Kremlin's 
recurring nightmares - comes as the President and his month-old 
administration grapples with a host of problems, from a coal miners' 
protest that brought trains to a halt, to a national budget ravaged by 
the Asia crisis and low oil prices. 

Russian Interior Ministry troops were yesterday patrolling the streets 
of Dagestan's capital, Makhachkala, after gunmen said to be supporters 
of a Muslim politician in the Russian parliament seized control of the 
republic's government headquarters, installed machineguns on the roof, 
and began firing skywards shouting "God is Great!". 

Reports said that as the stand-off unfolded, several thousand 
protesters, some armed, gathered outside and then marched on the central 
square, demanding the resignation of Dagestan's regional government and 
new elections. 

The flare-up was serious enough to prompt Mr Yeltsin to recall his new 
Interior Minister, Sergei Stepashin from a trip to France and place him 
in charge of an emergency security services centre in the Dagestan 
capital, where local security services sealed off the main streets. The 
President was said to be receiving hourly reports on the situation in 
the republic. 

Last night the situation seemed to be calming. The gunmen were reported 
to have agreed to leave the building in return for a promise of no 
prosecutions. But the incident has served as unwanted reminder to Moscow 
that ethnic and religious strife in Dagestan, which has been simmering 
ominously for months, could erupt into prolonged civil conflict. 

The fear is not that Dagestan, a mostly Muslim republic of two million, 
will rise up in a war of independence against Russia, like neighbouring 
Chechnya. Dagestan is too divided and too reliant on federal subsidies 
to mount a realistic bid to split from Russia. Yesterday, significantly, 
the gunmen's green Islamic flag fluttered alongside a Russian one. 

The risk is rather that it will slump into a nasty local war, adding a 
further burden on Moscow's dwindling resources and increasing 
nationalist sentiment in the rest of Russia. Dagestan occupies a crucial 
route for Caspian oil and includes a key port. 

The motive for yesterday's trouble was uncertain, but it seems to have 
arisen from a complex local feud. It reportedly began with a clash 
between the police and bodyguards for Nadir Khachilayev, a member of the 
Russian parliament and head of Russia's Muslim Union, a leading Islamic 
group. At least two police died. 

Ethnic tensions in Dagestan, which lies on the western shores of the 
Caspian, are as native to the region as sheep, mountains and guns. 
Though only the size of Scotland, Dagestan has 29 different languages 
and at least 30 ethnic groups, vying for resources and power in one of 
the poorest corners of Russia. Loyalty to clan, village and mosque far 
outweigh the fragile bonds which hold it within the Russian Federation. 

This unstable cocktail became more explosive with the collapse of the 
Soviet empire. Crime, corruption, power struggles over control over 
Caspian caviar rackets, and precipitous economic decline have added to 
the tension with their distant Moscow masters. 

Violence from neighbouring Chechnya has regularly spilled over the 
border. And, fuelled by internal rivalries, it has repeatedly flared up 
on their own soil with bombings, shootings and hostage taking. These 
have rumbled on, despite efforts to counter them by the Moscow-backed 
regional leaders - still dominated by the Communist-era nomenclature. 

In recent years, a new spectre has loomed: inter-Islamic strife. The end 
of Soviet religious repression has seen the arrival of clerical 
emissaries from Saudi Arabia and elsewhere in the Muslim world. To the 
dismay of the local Muslim leaders, they have launched a campaign of 
proselytising, recruitment and mosque building. 

All this is adding to the hefty burden now facing Boris Yeltsin and his 
inexperiencedPrime Minister, Sergei Kiriyenko. Yesterday their problems 
grew worse, after trade unions called for Russia's coal miners to stop 
work until they get long-overdue wages. For almost a week, the miners 
have been staging wildcat protests, including cutting off the 
Trans-Siberian rail artery. Mr Kiriyenko claims to have found some cash 
for the miners but is fighting to defend a budget under pressure from 
low tax revenues and a market nosedive triggered by the Asian crisis and 
a drop in oil prices. 

********

#10
Voice of America
DATE=5/21/98
TITLE=RUSSIA/WORLD BANK (L-ONLY)
BYLINE=MICHELE KELEMEN
DATELINE=MOSCOW

INTRO: THE PRESIDENT OF THE WORLD BANK, WRAPPING UP HIS LATEST 
TRIP TO MOSCOW, SAYS RUSSIA'S ECONOMY IS CLEARLY IN A CRISIS 
PERIOD. BUT JAMES WOLFENSOHN SAYS HE IS CONFIDENT THE NEW 
GOVERNMENT IS ON THE RIGHT TRACK. V-O-A'S MICHELE KELEMEN HAS 
DETAILS.

TEXT: RUSSIA'S NEW GOVERNMENT HAS BEEN BATTLING A CRISIS ON 
FINANCIAL MARKETS AND GROWING LABOR UNREST AMONG COAL MINERS 
DEMANDING BACK PAY. THESE HAVE BEEN THE FIRST BIG TESTS FOR 
PRIME MINISTER SERGEI KIRIYENKO. 

WORLD BANK PRESIDENT JAMES WOLFENSOHN SAYS THERE IS CLEARLY A 
CRISIS SITUATION, BUT MARKETS HAVE CALMED A LITTLE IN THE PAST 24
HOURS. HE URGED THE GOVERNMENT TO START THINKING ABOUT HOW TO 
AVOID AN ASIAN-STYLE CRASH AND RESTORE INVESTOR CONFIDENCE IN 
RUSSIA.
//// WOLFENSOHN ///
YOU HAVE HAD CRISES IN THIS COUNTRY QUITE OFTEN BEFORE. 
I'VE BEEN HERE WHEN YOU HAVE HAD THEM. THEY ALWAYS MAKE
GOOD HEADLINES, BUT SOMEHOW YOU GET THROUGH THEM. I 
HOPE THIS IS ANOTHER SUCH EXAMPLE, BUT I THINK IT IS 
ANOTHER LESSON. IT IS CERTAINLY ONE WE SHOULD TAKE 
SERIOUSLY. /// OPT /// BUT I'M NOT THROWING MY HANDS
UP IN THE AIR AND QUITTING RUSSIA. I THINK IT IS A 
MOMENT TO START THINKING HOW WE CAN DO IT BETTER AND GET
THINGS ON THE ROAD FOR ANOTHER PERIOD. /// END OPT ///
/// END ACT //
MR. WOLFENSOHN SAYS HE WAS IMPRESSED BY HIS MEETINGS WITH THE NEW
ECONOMIC TEAM AND IS HOPEFUL OFFICIALS WILL COME UP WITH A 
BALANCED FISCAL POLICY THAT WILL BE STRICT BUT WILL ALSO DEAL 
WITH SOCIAL ISSUES.
/// WOLFSENSOHN ///
IF I WERE LOOKING AT THIS AS A COMPANY TO MAKE AN 
INVESTMENT IN, I WOULD SAY TO YOU THAT IT LOOKS LIKE YOU
HAVE A YOUNG DYNAMIC MANAGEMENT -- WITH A CHAIRMAN OF 
THE BOARD THAT APPEARS TO BE IN CHARGE. SO, I WOULD 
PROBABLY PUT SOME MONEY IN IT AND I THINK THAT IS NOT A 
BAD BET.
/// END ACT ////
THE WORLD BANK PRESIDENT SAYS THE BANK IS CONTINUING ITS PROJECT 
TO REFORM RUSSIA'S COAL INDUSTRY, WHICH HE SAYS HAS COME A LONG 
WAY. 
/// REST OPT ///
/// WOLFESOHN ACT THREE ///
THE COAL INDUSTRY HAS BEEN ABOUT AS TOUGH A PROBLEM TO 
FACE IN RUSSIA AS ANYTHING I HAVE EVER SEEN. I HAVE 
BEEN OUT TO THE MINES. THEY HAVE BEEN HIGHLY 
UNPRODUCTIVE IN CERTAIN AREAS, THEY HAVE BEEN 
EXTRAORDINARILY UNSAFE, WITH A LOT OF PEOPLE KILLED AND 
THEY JUST DON'T WORK IN A MODERN SYSTEM. THEY JUST 
DON'T WORK. /// OPT /// THERE ARE A LOT OF PEOPLE 
EMPLOYED BY THEM WHO HAVE BEEN MINERS ALL THEIR LIVES 
AND ARE IN REMOTE AREAS AND WHERE THE TOWN DEPENDS ON 
IT. IT WOULD BE AMAZING IF YOU COULD REFORM THE COAL 
INDUSTRY WITHOUT SOME PROBLEMS. IF YOU HAD ALL THE 
MONEY IN THE WORLD, YOU PROBABLY COULD DO IT. BUT 
RUSSIA DOES NOT HAVE ALL THE MONEY IN THE WORLD. /// 
END OPT //
/// END ACT ///
HE SAYS, WITH HELP FROM THE WORLD BANK, RUSSIA HAS CLOSED 
ONE-THIRD OF ITS MINES. PRIME MINISTER KIRIYENKO, MEANWHILE, 
SAYS HIS GOVERNMENT IS DRAWING UP MORE PLANS TO CLOSE MORE 
MONEY-LOSING MINES AND FIND WORKERS OTHER JOBS. IN THE MEANTIME,
THE RUSSIAN CABINET IS TRYING TO PAY BACK (WAGES TO) WORKERS AND 
END THE GROWING STRIKE. (SIGNED)

*******

#11
Moscow Times
May 22, 1998 
MEDIA WATCH: Media Not Business of State 
By Leonid Bershidsky
Special to The Moscow Times

When Prime Minister Sergei Kiriyenko recently proposed reducing by a 
quarter the amount of money the government spends on itself, the 
opposition in the State Duma all but gave him a standing ovation; 
ultranationalist Vladimir Zhirinovsky even suggested cutting the 
allocations by half, although that would mean less funding for the Duma 
and his faction. 

Both Kiriyenko and the legislators were full of nonsense. There may be 
some temporary cuts in, say, gas money for the fleet of government 
Mercedes and Duma Audis. But neither branch of power is looking to cut 
one spending article that they consider vital to their political future: 
allocations to state-owned media. In fact, these allocations are set to 
grow. 

President Boris Yeltsin has just set up a huge state-owned television 
holding based on RTR television. The holding will comprise all the 
stations that were previously controlled by local governments. Few of 
these stations are self-sufficient. That means the federal budget will 
have to cough up some extra money. At the same time, the Duma has 
founded a newspaper, called Parlamentskaya Gazeta, which should go daily 
in the next few months. The paper is to have a staff of 160, and its 
editor, Soviet-era television boss Leonid Kravchenko, wants 31.4 million 
rubles ($5.1 million) a year in federal funding for the newspaper's 
upkeep. He won't get that much, of course, but Parlamentskaya Gazeta 
will have its own line in the budget, which ensures some financing that 
can't be cut by the government. 

That is in addition to the government-owned Rossiyskaya Gazeta, which 
has a staff of 400 -- no less than four times the number needed to 
produce a paper of Rossiiskaya's size and quality. 

A frugal government? No, a philanthropic builder of unprofitable, 
swollen media empires. 

There is some logic to the creation of the extra-large state TV network 
(although I detect none at all in the start-up of Parlamentskaya 
Gazeta). Come election time -- and it's only just more than a year away 
-- the establishment will need a nationwide TV machine to back its 
candidates. It cannot be sure Boris Berezovsky and Vladimir Gusinsky, 
who control the other two big networks -- ORT and NTV -- will be rooting 
for the same people. 

Of course, the state owns 51 percent of ORT, but Berezovsky has all the 
control there and the government could not change that situation quickly 
even if it wanted to: the billionaire has been paying ORT staff salaries 
the state cannot match. If a serious attempt were made to oust 
Berezovsky from the channel, it would mean hiring an entire new staff 
and weakening RTR, which does not have much depth to its lineup even 
now.So the Kremlin has placed its bet on RTR, hoping to make it more 
powerful than ORT by administrative means. In fact, the new holding's 
nationwide reach matches or exceeds ORT's. 

No matter what people may say about the influence of financial magnates 
on the Kremlin, the officialdom, headed by Yeltsin himself and 
represented by such figures as his business manager Pavel Borodin or 
Unified Energy Systems chief Anatoly Chubais, is a clique in its own 
right. There may be squabbles inside it, but it is a force united in its 
basic interest -- the perpetuation of its political dominance. While 
financial empires' power comes from money, the Kremlin establishment's 
power is based on rules and decrees. If other cliques have their media, 
the Kremlin team should have its own. 

And you and I are paying for them, unless we can somehow cheat the 
taxman. 

Unfair competition is the nature of the government media empire. 
Competitors will have to pay for the use of transmitters that the TV 
network will now control. The state-owned newspapers do not need to sell 
any advertising space at all. They also have access to official 
information that is often denied to independent publications. 

But then unfair competition is what the Russian government is all about. 
Some get tax exemptions, others don't. Some know the right person in a 
ministry, others don't. 

We will only be able to start trusting the government with anything at 
all when it gets rid of its media. That will be a sign that the people 
in power are not a cabal but representatives of the people. But I'd 
better climb down from that soapbox before you stop reading my column. I 
need you to keep that up: The Moscow Times, after all, is not 
government-owned. 

*********