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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

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


Johnson's Russia List
#2190
22 May 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Greg Myre, Yeltsin Scolds Striking Miners.
2. Finansovye Izvestia: Dmitry Lvov, RUSSIA IS NOT YET CAPABLE OF ASSESSING 
ITS RICHES.

3. RFE/RL NEWSLINE: YELTSIN REPLACES HEAD OF RUSSIAN TELEVISION.
4. Jamestown Foundation Monitor: LAWMAKERS TO MOVE ON START II. 
5. The Economist: The Russian Economy in Crisis.
6. New York Times: Michael Gordon, Journal: Scandal Surrounds Book by
Former 

Russian Official. (Kokh).
7. Reuters: Russia's Lebed rejects efforts to impeach Yeltsin.
8. Journal of Commerce: John Helmer, Russia, Kazakstan again delay
Caspian treaty.

9. NTV: Zyuganov Tops Polls Opinion Poll for President.
10. Sovetskaya Rossiya: New Parliamentary Paper Promises Investigative
Journalism.

11. Reuters: Russian senior govt source sees no '98 GDP growth.
12. Reuters: Russian govt to streamline bankruptcy procedures.
13. AP: Russia Companies To Discourage Smoking.
14. Rossiiskaya Gazeta: Vladimir Kucherenko, END OF THE ERA OF "LIMITED 
LIABILITY." The Government is Giving Effect to an Anticrisis Programme.

15. The Economist: President Alexander Lebed of Russia?
16. RIA Novosti: COLLECTION OF ALL TAXES IN FIRST QUARTER OF 1998 COULD 
HAVE PARALYSED PRODUCTION IN RUSSIA, HIGH-LEVEL TAX OFFICIAL SAYS.] 


********

#1
Yeltsin Scolds Striking Miners 
By Greg Myre
May 22, 1998

MOSCOW (AP) -- President Boris Yeltsin scolded striking coal miners today,
saying they had ``gone beyond reasonable boundaries'' by blockading several
of Russia's key railroads. 
``The strikers are unwilling to hear cool-headed arguments or reasonable
explanations and want to have their problems resolved at once and at any
cost,'' Yeltsin said in his weekly radio address. 
The president's message was not likely to be well-received by protesting
coal miners demanding back pay that is up to six months overdue. Yeltsin
has often expressed sympathy with unpaid workers -- delayed wages are a
chronic problem in Russia -- but he had harsh words for the miners today. 
``Who should the government take the money from -- pensioners, students,
medics, teachers, metallurgists?'' Yeltsin said, citing several other
groups who are awaiting overdue wages and stipends. ``Do they need (money)
less than the miners?'' 
Later, Yeltsin asked Prosecutor General Yuri Skuratov to investigate
whether the miners' actions were legal. 
``The state has suffered multi-million (ruble) losses and they have to
account for that,'' he said. 
Still, he stressed that the government had no plans to call in security
forces against the protesters. 
The scattered protests have been gathering momentum for two weeks, and
there are thousands, perhaps tens of thousands, of miners on strike out of
about 500,000 miners nationwide. 
Strikers in central Siberia have been camping out on the Trans-Siberian
railway for the past week, and protesters have also blocked rail lines and
highways in northern, southern and eastern Russia. 
Hundreds of passenger and freight trains have been backed up in a
country that relies heavily on its railways. 
Teachers, students and other workers have also held protest rallies, but
so far the demonstrations have been restricted mostly to remote mining
towns and have had only a limited impact on regional economies. 

Still, Yeltsin and his administration fear that the strikes could
snowball quickly in a country where millions of workers are not receiving
wages on time. 
By blocking railways, the miners ``have obviously gone beyond reasonable
boundaries,'' Yeltsin said. They have ``ceased to be a tool to resolve
economic issues and have become a factor which threatens to do incalculable
damage to the whole country.'' 
``Nobody has the right to make the hard life still harder,'' he said. 
Meanwhile, the miners pressed ahead with demonstrations in several
regions today. The coal miners' union said it was trying to organize a
nationwide strike, but many workers have remained on the job. 
The miners say they are owed an estimated $1.45 billion. 
Prime Minister Sergei Kiriyenko has pledged to quickly resolve the
strike, but said the government could not endlessly subsidize mines that
are losing money. The government wants to shut unprofitable mines, but it
has been reluctant to act because many of the mines are in isolated
regions, and no other jobs are available. 

********

#2
>From RIA Novosti
Finansovye Izvestia
May 21, 1998
RUSSIA IS NOT YET CAPABLE OF ASSESSING ITS RICHES
BY Dmitry LVOV, academician, secretary of the economics 
department of the Russian Academy of Sciences

The national wealth of Russia is estimated at almost $400
trillion. The calculations made by the State Statistics
Committee and the Russian Academy of Sciences according to
different methodologies show the figure of $340-$380 trillion.
The national wealth includes all the economy's accumulated
resources, both reproducible and non-reproducible. The latter
(natural resources) account for 80-85 per cent of the entire
national wealth whereas the share of production capital is only
10-12 per cent. However, the very assessment of the country's
potential is one of the central problems of today's Russia. 
If the calculated value of the national wealth is
compared, even if in approximate terms, to the number of the
country's population, Russia will be among the richest
countries of the world. The indicator of the national wealth
value per capita of the population is twice as much as in the
USA, six times as much as in Germany and 22 times as much as in
Japan. 
Meanwhile, it is well known that the picture with Russia's
rating according to the share of GDP per capita of the
population is quite the opposite. The point is that the
mechanism of using the national wealth remains extremely
ineffective. 
The detailed assessment of the country's resources itself
cannot, of course, instantly change the mechanism of their use.
Likewise, it is impossible to get revenues at once from the use
of the entire national wealth. Nevertheless, regular
assessments of what we have will in the final account help us
learn to derive greater benefits from this as well. 
To some extent this task is raised by the all-Russian
conference entitled; "Assessment of the Country's National
Wealth" which is due to take place in Moscow late in May. 

********


#3
RFE/RL NEWSLINE Vol. 2, No. 97 Part I, 22 May 1998

YELTSIN REPLACES HEAD OF RUSSIAN TELEVISION. Yeltsin on 21
May appointed Mikhail Shvydkoi as the chairman of the fully
state-owned Russian Television (RTR) network, which is being
transformed into a holding company for state-owned
electronic media. Shvydkoi, up to now chairman of the
Kultura television network, replaces Nikolai Svanidze, a
close ally of former First Deputy Prime Minister Anatolii
Chubais who had chaired RTR since February 1997. According
to "Kommersant-Daily" on 22 May, Svanidze will continue to
host RTR's Sunday analytical program, "Zerkalo." The
newspaper said Shvydkoi was chosen as a "compromise figure"
who is "not associated with any financial-industrial
groups." On 19 May, Prime Minister Kirienko signed a
resolution transforming the state-run RIA-Novosti news
agency into a subsidiary of RTR, which will be called RIA-
Vesti. RTR first deputy chairman Eduard Gindeleev will be
the new director of the news agency. LB

********

#4
Jamestown Foundation Monitor
22 May 1998

LAWMAKERS TO MOVE ON START II. The speaker of Russia's Federation Council,
Yegor Stroyev, said yesterday that he and Gennady Seleznev, the speaker of
Russia's lower house, had agreed to speed up parliamentary ratification of
the START II nuclear disarmament treaty. The agreement to step up the
proceedings on the treaty reportedly came at the behest of President Boris
Yeltsin during yesterday's "Big Four" meeting in Moscow. (Itar-Tass, May 21)

Aleksei Mitrofanov, a member of Vladimir Zhirinovsky's Liberal Democratic
Part and the Head of the Duma's geopolitics committee, had announced on May
19 that closed door hearings by the Duma on the treaty, scheduled for June
9, had been postponed until September. His announcement followed statements
by the heads of the Communist and the Liberal Democratic Parties indicating
that the chances for quick ratification of the START II treaty by the Duma
were slim. (See Monitor, May 19-20) It remains unclear now whether the June
9 hearings will go forward as originally scheduled.

Speaking to reporters in Washington on May 20, another Russian lawmaker
dismissed Mitrofanov's postponement announcement. Duma First Deputy Chairman
Vladimir Ryzhkov said that the postponement had not been agreed to by the
Duma as a whole. He said that the hearings, which will include testimony by

Defense and Foreign Ministry representatives, will indeed take place next
month. But Ryzhkov also suggested that ratification was no sure thing. He
said that he had made clear in his consultations with U.S. lawmakers that
Russian parliamentarians are still likely to link ratification to a host of
other contentious issues, including NATO enlargement or a decision by the
United States to impose sanctions on Russian companies. (Itar-Tass, May 20)

*********

#5
The Economist
May 23, 1998
[for personal use only]
The Russian Economy in Crisis
FINANCE AND ECONOMICS 
A hope and a prayer 
M O S C O W 
For the third time since Asia’s crisis broke, Russia’s financial markets 
have taken a battering. Will the rouble hold? 

“WHEN you hear talk of devaluation,” said Sergei Dubinin, the usually 
avuncular chairman of Russia’s central bank on May 20th, “spit in the 
eye of whoever is talking about it.” Mr Dubinin has reason to feel 
venomous. This week Russia’s financial markets weathered their third and 
worst storm in six months, a run of bad luck made worse by bad 
management. Unsettled by the upheavals in Indonesia, a looming 
current-account deficit and the inexperience of a newly appointed 
government, investors lighted on the Russian rouble as the currency at 
next-greatest risk of collapse. 
Treasury bills slumped on May 15th and again on May 18th as foreigners 
and Russians alike pulled money out, fearing a devaluation. The central 
bank hit back by raising its main refinance rate from 30% to 50%, or 
roughly the level touched by short-term rates in the treasury-bill 
market, where the government finances the majority of its deficit. The 
stockmarket staggered. A 12% fall on May 18th, following a bad previous 
week, left prices 40% below their levels of January 1st. Not since 
President Yeltsin underwent heart surgery in November 1996 had the 
markets looked so sick. 
Investors hoped that delegations from the World Bank and the 
International Monetary Fund, making previously arranged visits, would 
help the government find a way to calm nerves. But whatever they said in 
private, visitors and hosts alike were making the sort of noises in 
public that no sane investor wanted to hear. The stockmarket “appears to 
be in crisis,” said James Wolfensohn, head of the World Bank, when he 
arrived in Moscow on Wednesday. “The current situation is nothing other 
than a crisis,” echoed Dmitry Vasiliev, chairman of the Russian 
Securities Commission. Even President Yeltsin chimed in, saying he would 
“not let [the financial markets] collapse,” though not explaining how he 
would pull off this trick. Small wonder there were few takers at the 
government’s weekly treasury-bill auction that day. Yields stuck at an 
eye-watering 45%. 
Few investors argued with the central bank’s determination to prop up 
the rouble (though devaluation was being talked up by a newspaper under 
the control of Boris Berezovsky, a power-hungry Kremlin crony, 
suggesting that some covert political game might also be under way). The 
restoration of public confidence in the rouble has been a fragile 
process, and a sharp devaluation would undo it overnight. 
Devaluation might also claim victims among Russian banks, which have at 
least $15 billion in short-term foreign borrowings. Worries about the 
banking system quickened this month when the central bank sent officials 
to take over the running of Tokobank, a medium-sized bank which was once 
considered a model of reform: international auditors had signed its 
accounts and the European Bank for Reconstruction and Development is 
among its shareholders. Tokobank had raised at least $125m in foreign 
loans. If not dealt with neatly, these unpaid debts will damage 
confidence in this market too. 
But necessary as high interest rates may be to keep the rouble stable, 
they threaten another set of problems for the Russian economy if they 

last for long. They will destroy any chance of economic recovery in 
Russia for yet another year. They will also throw public finances 
horribly off balance. This year’s federal budget assumes a deficit of 
almost 5% of GDP, down from 6.1% in 1997. It also assumes an average 
interest rate on government debt of 25%, a level at which debt servicing 
consumes a quarter of public spending. Push the interest rate up to 40% 
or 50%, and the main occupation of the government will become the 
pyramiding of domestic debt. 
Some investors smell blood. When the rouble came under pressure in 
March, the central bank acted at once and raised interest rates sharply. 
This month, however, Mr Dubinin spent $500m of his precious 
foreign-exchange reserves to prop up the rouble before resorting to 
higher interest rates. The fear is that the new government has neither 
the courage nor the political muscle to hold interest rates high enough 
to keep the rouble steady. 
Bring interest rates down, however, and investors will not lend to the 
government. They distrust, almost paradoxically, its dependence on 
borrowed money. The natural alternative to borrowing, tax collection, 
has never caught on in Russia. The government has huffed and puffed 
about improving the collection rate. But federal tax revenues are still 
only 10% of GDP, far below the level in most developed economies. The 
tax service is simply not equal to the job of collecting taxes in any 
comprehensive fashion, and many politicians prefer things that way. Low 
oil prices have cut another main source of revenues for government and 
industry alike. 
As fit as a rouble One obvious solution, at least in arithmetical terms, 
is to cut public spending further. The government did so brutally last 
year, and wrote into this year’s budget a right to do so without even 
asking parliament’s permission. The notion that the public itself might 
object to its systematic pauperisation was dismissed as fantastic. But 
it may be that even the Russian public has finally had enough. This week 
striking miners were blocking the country’s main railway lines with an 
anger so contagious that the government took fright. This is a dangerous 
moment. If public spending cannot be cut further for fear of civil 
unrest, the government has no quick fixes left at all. 

Whence salvation? 

So, with or without Indonesia to provoke them, the markets were probably 
right to worry deeply about Russia this week. It has reached a pass from 
which it will need luck, as well as prudence, to escape. With politics 
and the economy about to be disrupted further by two successive election 
years—for the parliament in 1999 and for the presidency in 2000—even 
relatively sanguine investors must be wondering whether the economy will 
ever function normally in their lifetime. The false dawns of the past 
five years threaten to be followed by a permanent twilight of non-growth 
and non-investment in which most of the country bumps along pretty much 
as miserably as it does at present. 
Some parts of the economy will bump along worse than others if it 
stagnates. Russian banks, for example, did almost half of their foreign 

borrowing last year when international markets yielded briefly but 
enthusiastically to their charms. Sooner or later foreign lenders are 
going to want to know where their money is at work. And whatever the 
answer, so far not much of it has flowed very visibly into ordinary 
commercial banking, the humdrum business of making loans. 
A comfort for the Russian government is that it need have few immediate 
worries about its own $130 billion of foreign debt, mostly inherited 
from the Soviet Union. Restructuring deals agreed with both private and 
foreign government creditors, mean debt servicing costs it only $7 
billion a year, or 1.2% of GDP. But here, too, a day of reckoning 
awaits. In 2002 the repayments will start mounting. By then the Russian 
economy needs to be growing strongly and durably. So it had better start 
soon. Otherwise, Russia risks a loss of international confidence beside 
which the past week’s buffeting will seem a mere spring breeze. 

*********

#6
New York Times
22 May 1998
[for personal use only]
Journal: Scandal Surrounds Book by Former Russian Official
By MICHAEL R. GORDON


MOSCOW -- The most famous author in Russia is not a novelist or a poet. He
is the former head of Russia's privatization agency whose main preoccupation
these days is simply staying out of jail. 
For months, Alfred Kokh has been defending himself against allegations that
a lucrative book advance he received was merely a thinly disguised payoff from
one of Russia's richest business tycoons. 
But the scandal is turning out to be a boon -- at least in terms of what
authors often need the most: publicity. On Thursday, Kokh waved his book
before a crowd of Russian reporters and was featured on the evening television
news. 
In an odd twist, the tome will make its debut not in Russian or in Russia
but in English and in the United States. That's the brainchild of Danny Baror,
an aggressive New York literary agent who thinks scandal and profits go hand
in hand. He has repackaged the work, given it a punchy title and billed it as
an insider tell-all about Russian privatization. 
For all the hoopla, however, the much touted book has already begun to draw
criticism for its wide margins, big print and small revelations. 
"There are some interesting things in it and some self-serving things," said
Marshall Goldman, the Russian expert and Wellesley College professor, who was
asked to write the book's introduction. "It is also clear that he slapped this
thing together to show that there was a book and to answer those critics who
say the book advance was just a bribe." 
In dedicating his book, Kokh acknowledged his debt to the authorities who
have been threatening to jail him. 
"To Yury Skuratov, Prosecutor General of Russia, without whose intervention
this book would only have been received as an economic treatise!," he wrote. 
The origins of Kokh's project go back to his days when he presided over the
sale of hundreds of millions of dollars in state-owned businesses. 
Kokh said he wrote the book to give the subject the serious treatment it
deserved. Kokh provided a copy of the book to The New York Times and it does

contains some interesting nuggets. 
Describing Russia's rough and tumble version of capitalism, Kokh recalls how
he was forced to surround himself with armed guards when he visited a
Krasnoyarsk aluminum plant simply to talk to the management about their abuses
of shareholders' rights. 
On another occasion, Kokh describes how he screwed up the courage to ask
George Soros, the billionaire financier, for a bridge loan to help pay Russian
pensions. More than anything, the story tells you more about Soros' bank
account. Soros immediately said he would make the loan and provided a $700
million two-week loan at a favorable annual interest rate of 9.25 per cent. 
"By the way, the money was a loan from Soros' personal account, not from one
of his various investment funds," Kokh writes. 
The book, however, largely sidesteps the furious war among Russian
financiers over the privatization of the huge government telecommunications
company, Svyazinvest, that led to Kokh dismissal. 
Kokh said that he avoided a blow-by-blow account to spare himself the
expense and burden of defending himself from libel suits from deep-pocketed
financiers. 
Much of the attacks against Kokh, however, surround the way the book was
financed. 
Kokh recounted Thursday that he initially had trouble finding a publisher.
But then a senior official at Uneximbank, one of Russia's largest banks,
suggested he try Servina, a small Swiss publishing house. Kokh received a
$100,000 advance. 
When it later emerged that Servina had links to Uneximbank, critics charged
that the deal was simply an effort by the Big Russian bank to curry favor with
an important Russian official. 
"At that time, I had no idea that the company was connected with
Uneximbank," Kokh insists. "But I don't see anything criminal about it." 
Still, the uproar over the deal put Kokh under tremendous pressure to finish
the book and demonstrate that there was, in fact, a book to finish. 
Kokh's luck, however, changed for the better, when Baror, the New York agent
and the president of Baror International, became interested in the book. 
Baror said he was intrigued because Kokh had a bird's eye view of Russian
privatization. After buying the rights to the book for $130,000, Baror set out
to recast the book for an American audience. 
He changed the title to "The Selling of the Soviet Empire." (The Russian
title is "Privatization in Russia.") And he asked Kokh to include a few
anecdotes. 
To speed publication, Baror turned to two small, New York-based publishing
houses: SPI Books and the Liberty Publishing House. About 30,000 hardback
books will initially be printed and will sell for about $25 each, Baror said. 
Baror says he hopes the worldwide rights he has acquired will yield $250,000
to $500,000. But Kokh will not get a dime beyond the $100,000 he has already
been paid. 
Whether Kokh will able to persuade Russian prosecutors of the probity of his
book advance and stay out of prison is another question. 
The Moscow prosecutor has summoned him for interrogation on Friday regarding
the advance and the apartment he managed to acquire from the state in central

Moscow. 

*******

#7
Russia's Lebed rejects efforts to impeach Yeltsin

MOSCOW, May 22 (Reuters) - Alexander Lebed, a likely Russian presidential
candidate, on Friday dismissed Communist attempts to impeach President Boris
Yeltsin as ``strange and ridiculous,'' Itar-Tass news agency said. 

The opposition Communist Party, prompted by social unrest over chronic delays
in wage payments, has been collecting signatures in parliament to start the
long and complicated impeachment process. 

Lebed, the newly-elected governor of the vast Krasnoyarsk region in Siberia,
has said previously that Yeltsin should step down for health reasons but is
also an enemy of the Communists. 

``This is a late reaction to the humiliation during the vote to confirm the
new prime minister and nothing will come of it,'' Tass quoted Lebed as saying
of the impeachment efforts. 

Lebed, who was speaking after receiving documents confirming him as
Krasnoyarsk's new governor, was referring to Yeltsin's success in winning
parliament's approval of Sergei Kiriyenko as prime minister despite Communist
opposition. 
Yeltsin congratulated Lebed on Thursday on being elected governor in last
Sunday's election runoff in Krasnoyarsk, and said he was counting on
constructive cooperation from him. 

Other Yeltsin foes, including Kursk region governor and former vice-president
Alexander Rutskoi, have toned down or halted criticism of Yeltsin after being
elected governors. 

Lebed, a former paratroop general, came third in the first round of the
presidential election in 1996 before offering his support to the Kremlin to
help Yeltsin see off a Communist challenge in the election runoff. 

Yeltsin dismissed Lebed as his national security adviser in October 1996 for
openly harbouring presidential ambitions. The reserve general has made clear
he wants to succeed Yeltsin when the president's term ends in the year 2000.

*******

#8
Journal of Commerce
22 May 1998
[for personal use only]
Russia, Kazakstan again delay Caspian treaty
BY JOHN HELMER
JOURNAL OF COMMERCE SPECIAL

MOSCOW -- Russia's President Boris Yeltsin and Kazakstan's President 
Nursultan Nazarbayev failed last month to resolve fresh disputes between 
the two states over the demarcation of the Caspian Sea.

The conflict is stalling investments by several major U.S. and European 
oil firms. They want to end the uncertainty on the legal status of 
offshore Caspian oil deposits. They also want to secure access to 
international oil markets through expensive new pipelines. Mr. Yeltsin 
and Mr. Nazarbayev's promise last January to sign a treaty between the 
two states by March has been postponed once again -- until July, when 
Mr. Yeltsin is to make an official visit to Kazakstan.

But officials on both sides don't express much confidence that the 
disagreements will be resolved by then. 

Kazak officials, who are hostage to the changing moods of Mr. 
Nazarbayev, declined to reveal what the obstacle to agreement actually 
is. Rafik Rakhimbekov, the Kazakstan delegation's press secretary, 
confessed that he finds it "hard to say what was the reason for 
non-signing of the agreement."


At a summit this week of Central and South Asian states, including Iran 
and Turkey, Kazak officials fulminated against Russia's Caspian Sea 
position in private. Publicly, though, they buried their differences. 
Their Russian counterparts, unrepresented at the Almaty meeting of the 
Economic Cooperation Organization, are hardly more talkative. Felix 
Kovalev, the Ministry of Foreign Affairs' special envoy for Caspian Sea 
affairs, has retired and has not been replaced. The legal department of 
the ministry says it is no longer in charge of Caspian Sea issues. 

Meeting confidential

Valery Kalugin, deputy head of the ministry's department for Kazak 
affairs, claims he is unaware of the reason for the failure to sign the 
treaty, "since the meeting between Yeltsin and Nazarbayev was 
confidential. The official communique stated 'readiness to continue work 
on realization of a common approach' toward the legal status of Caspian 
Sea."
Yury Merzlyakov, head of the Caspian working group at the Russian 
Foreign Ministry, said the dispute with Kazakstan is over Russia's 
proposal to divide the seafloor into national territorial zones, but 
retain collective control by all five Caspian littoral states to the 
seawater.

This is viewed by the Kazaks as a major stumbling block to their 
attempts, backed by U.S. oil firms, to build a subsurface oil line 
across the Caspian to link up with the Azerbaijan and Georgian routes to 
Turkey.

"We have prepared for the signing of the treaty," Mr. Merzlyakov said in 
interview. "But it has been decided to sign it later."

Original position

Mr. Merzlyakov added, "I wouldn't say that Kazakstan was originally 
opposed to the idea of sharing the shelf and not the water. Kazakstan's 
original position was in accordance with the U.N. convention on sea law, 
although the Russian side claimed that the Caspian Sea had a special 
status, and the convention couldn't be applied. So, to put it briefly, 
Kazakstan was against dividing the sea into national sectors." 

'Ecologically dangerous'

The current legal status of the sea doesn't prevent the construction of 
subsurface pipelines, Mr. Merzlyakov conceded, "although it is 
ecologically dangerous."

He said the Kazaks not only have failed to make up their minds on the 
principle of distinguishing between seabed and seawater, but also 
haven't agreed to the precise delineation of the territorial lines.

"It is to be a modified median line," Mr. Merzlyakov said, "which will 
take into account the islands. After the signing of the (presidential) 
agreement, a special commission will be established which will negotiate 
the line. The protocol on actual coordinates of the line is to be 
adopted later, but it will be part of the agreement." 

********

#9
Zyuganov Tops Polls Opinion Poll for President 

NTV
17 May 1998
[translation for personal use only]
>From the "Itogi" program presented by Yevgeniy Kiselev

[Kiselev] Let us see if the election campaign in Krasnoyarsk has had
any effect on voters' preferences for the main realistic contenders for the
post of President in 2000. We follow the changes every week with the Public

Opinion Fund's all- Russian poll.
The election ratings for the main contenders for the post of President
of Russia in 2000 are almost the same as last week.
If the presidential elections were held this Sunday, General Aleksandr
Lebed and Yabloko leader Grigoriy Yavlinskiy would each receive 11 percent
of the votes of those polled. Last Sunday, both could have counted on 10
percent.
The position of the mayor of Moscow [Yuriy Luzhkov] has improved
slightly. Last Sunday, Luzhkov would have received the votes of 10 percent
of those polled. Now he would be supported by 12 percent.
[Communist Party leader] Gennadiy Zyuganov is still in the lead. His
election rating is now 20 percent, two points below last week's. [video
showed stills of contenders with their ratings]

********

#10
New Parliamentary Paper Promises Investigative Journalism 

Sovetskaya Rossiya
16 May 1998
[translation for personal use only]
Unattributed report: "Bon Voyage, Parlamentskaya Gazeta!"

The first edition of the newspaper published by the Russian Federation
parliament -- the Federal Assembly -- has come out. The issue opens with
an appeal to readers from Parlamentskaya Gazeta Chief Editor Leonid
Petrovich Kravchenko, a highly respected professional in Russian
journalism, who recently celebrated his 60th birthday. L.P. Kravchenko,
who in Soviet times was head of the editorial collectives of Trud and
Stroitelnaya Gazeta, TASS, and the USSR State Committee for Television and
Radio Broadcasting, asserts his credo as an editor and journalist in his
address to Parlamentskaya Gazeta's readers: "A newspaper is happy when the
reader trusts it."
Like Parliamentary Hour on television, the new newspaper emerged as
the result of an agreement reached last fall between all branches of the
Russian authorities to be a forum for active dialogue between deputies and
their voters. The publication aims to provide honest coverage of the
activity of both chambers of the Federal Assembly in order, as
Parlamentskaya Gazeta's chief editor stressed, "to fully reflect as far as
possible viewpoints and opinions in the work of both chambers of parliament
and adeptly relay them in its articles."
The first edition of the new newspaper contains articles which allow
us to hope that the editorial collective will not seek to smooth off the
rough corners, guided by the well-known maxim: "Everyone gets a hard time."
For instance, under the "Cutting Edge of the Problem" rubric the edition
publishes an article headlined "Chubays Rides Into YeES Rossii [Unified
Energy System of Russia] Russian Joint-Stock Company on Presidential
Steed," and on the "Regional Life" page an equally topical article on B.
Nemtsov, A. Klimentyev, and the "Navashino millions" under the headline
"Where Are the 'Million Greenbacks' Klimentyev Put in His Friend's Pocket."
Parlamentskaya Gazeta will be published weekly until 1 July and
thereafter will be an eight-page daily. The newspaper has proclaimed its
task to be "to direct its gaze into the heart of Russia and examine social
ills at the level of the ordinary person, the family, and the production
collective."


*********

#11
Russian senior govt source sees no '98 GDP growth

MOSCOW, May 21 (Reuters) - Russia's economy, hemmed in by high interest rates,
will not see real growth this year, a senior Russian government source said on
Thursday. 

Speaking to reporters after discussions with Prime Minister Sergei Kiriyenko,
the source said that the outlook this year for gross domestic product (GDP)
growth was poor: "Bad -- zero." 

The official said government forecasts of moderate growth were too optimistic
and that real growth would be possible only in 1999. 

Russia had hoped for at least two percent GDP growth this year, but high
domestic interest rates sparked by world market crises and fiscal problems at
home have made that seem less and less likely. 

*********

#12
Russian govt to streamline bankruptcy procedures
By Peter Henderson, 

MOSCOW, May 21(Reuters) - The Russian government is to streamline bankruptcy
procedures and cut tax arrears penalties in order to make companies work more
efficiently, Prime Minister Sergei Kiriyenko said on Thursday. 

He told a news conference that a new government order, to be signed on
Thursday, would include a bankruptcy procedure which would force companies to
become competitive or be sold to more effective owners, while tax fines and
penalties would be decreased to one fifth of current levels in order to give
indebted companies room to operate. 

"First of all, it is the right to freeze outstanding debts owed a company and
to sell them at auctions, and it is also a quickened bankruptcy procedure,
under which a company lists and sells its entire property complex. 

"This rapid bankruptcy is a kind of reprivatisation, changing owner,"
Kiriyenko said, adding that he expected the first bankruptcies by the end of
June. 

He said that effective use of property would be stimulated by the punitive
measures he described. 

"As a result, in half a year we can give a company a chance to move ahead with
a clean balance sheet and debts, without destroying it, changing ineffective
ownership," he said. 

Kiriyenko said the measure was extreme. "But it is the only measure, which
stimulates not only tax collection for the budget, but the effectiveness of
companies." 

Russia passed a new bankruptcy law earlier this year, but it has not been
widely used, leading many to question Russia's political will to sacrifice
major companies. 

*********

#13
Russia Companies To Discourage Smoking
21 May 1998

MOSCOW (AP) - Leading cigarette manufacturers and the Moscow city government
are sponsoring a one-month campaign to discourage young people from taking up
one of Russia's favorite vices, smoking.

The ``Smoking? No Time for That'' campaign begins June 5, said Olga Kostina,
head of Moscow's public relations department.

The campaign involves the American companies Philip Morris and R. J. Reynolds,
Rothmans of Canada and Reemsta of Germany.

The campaign will encourage teen-agers to do things other than smoke, such as
take up sports, Kostina told a news conference, according to the Interfax news
agency.

Philip Morris spokesman Pyotr Lidov said the four tobacco companies are
prepared to lose money as a result of the campaign.


The campaign, to involve posters and billboards, will cost about $100,000,
Interfax said.

Russian health officials estimate that 40 percent of teen-age boys and more
than 25 percent of girls smoke cigarettes.

*********

#14
>From RIA Novosti
Rossiiskaya Gazeta
May 22, 1998
END OF THE ERA OF "LIMITED LIABILITY" 
The Government is Giving Effect to an Anticrisis Programme
By Vladimir KUCHERENKO

Yesterday's government meeting was marked by the
appearance of a plan of top-priority measures. Prime Minister
Sergei Kiriyenko called it the programme of anticrisis action.
The programme is necessary like air. In the premier's
opinion, last week Russia had a foretaste of a severe financial
crisis provoked by speculators. The situation was saved, but
the crisis may break out again in September unless we change
our previous policies.
The premier said that the government has to act in the
conditions of economic and information pressure from the
outside. For example, the intensity of the present miners'
strikes is largely explained by the fact that people do not
know of the actions of the cabinet, feeding mainly on rumours
and conjectures. The premier also reported that an emergency
anticrisis staff is being set up in the government, and that
foreign trips of vice-premiers and government presidium members
are being cancelled. They will have to act in the role of
emissaries of the federal centre in the regions engulfed by
miners' protests. Thus, Vice-Premier Boris Nemtsov will set off
for Rostov, Oleg Sysuyev for Kemerovo, and Yakov Urinson for
Komi.
What is the essence of the emergency measures being
proposed? Their point is already known to our readers: to
maximally cut down on and rationalise state expenditures, and
to mobilise all the sources of revenue. The premier declared
that the government can no longer introduce any new taxes (they
are already too many), it must tidy up their collection and the
way it manages its own property.
The balancing of the budget by itself cannot raise
production and the level of living, but will create conditions
for that. To take anticrisis steps is all the more necessary as
Russia is burdened with a huge public debt. It is the root
cause of the current "precrisis," it is placing the country on
the verge of bankruptcy. To give up paying external debts is
impossible. And any talk of a possibility of such a step Sergei
Kiriyenko intends to nip in the bud. Income will have to be
searched for in order to buy out the state's own debts, along
with borrowing money for the shortest possible periods and at
the least interest.
However, there some truly sensational aspects in the
government programme of action presented. Thus, one of the
sections of the programme means an end to the "era of
parasitising owners" and gives the start for a new redivision
of property on the scale of the country. This includes a check
of the fulfilment of investment promises and the exaction from
nonpayers into the budget of the money which their clients owe
them and the introduction of the already familiar simplified
procedure of bankruptcy.

But the most impressive move will be the future bill
prohibiting the registration in the country of companies with
limited liability. Thanks to it our capitalists in the case of
bankruptcy will be liable not only in their own (often
symbolic) share of the authorised capital, but also in their
personal property. A strict market code will enter into force:
if you go bust--you are left naked, and bankruptcies will cease
to be a means for lining the purses of false owners.
The government is so planning things that now only those
will be able to register firms with limited liability who by
several years of work have proved their ability to manage and
have not sullied their business reputation.
Taxes on land and subsoil resources that are not used for
their designated purpose will be raised. This is a truly
revolutionary measure. There are in this country too many
enterprises that, having grabbed land and deposits for future
use, have become like a dog in the manger. Tax regulation must
force them to hand over this wealth into the hands of more
resourceful managers. Unless they make maximum use of it.
One more bold step by the government is to raise import
duties on food being brought into Russia. Above all foodstuffs
will be more highly taxed, for the import of which into our
country foreign governments pay subsidies to their agrarians.
And this amounts to no less than 6 billion dollars annually.
And therefore reciprocal, compensatory duties will appear. Both
our own agrarians and foreign investors in our food industry
have long since demanded such a step.
The sphere of state monopoly will expand. Not only will
the struggle for its establishment in the trade in alcohol
continue, but the exceptional right of the state to hold
lotteries will also be established.
Industry is to expect forced measures--a shift to the
method of paying taxes upon the shipment of products. Alas, the
power engineers and gas producers will groan in the first
place, suffering from mass nonpayments. However, "carrots" are
being prepared for the rest of industries. For example, prices
for gas supplied to wholesale buyers will be frozen. The rates
for supply of electricity will fall by 5-10 per cent. The rates
for railway transportation will also be reduced.
Contrary to the demands of the finance ministry,
government will cut by five times the penalties and fines that
have accrued over the last few years for nonpayment of taxes.
The government is also adopting a plan to cut state
expenditures. Here one should note the ban on borrowings which
is being introduced for federal executive bodies and off-budget
funds, except the Pension Fund.
The government will make a complete inventory of the
publicly financed network and reduce inefficient expenditures.
Sergei Kiriyenko again cited an eloquent example: whereas
in 1997 the education sector received from the state 12
trillion roubles, the balances on the off-budget accounts of
educational institutions totalled a whole 9 trillion. Yet
everybody is shouting about the teachers' plight! Here it is
necessary to work with trade unions, and negotiations with them

often proceed fruitfully. But only until, the premier smiled
sadly, a television camera appears.
There are quite a few reserves in the state organism. In
Moscow alone, in the buildings occupied by structures of
federal power 50,000 square metres of space have been found
that is ready for leasing.
Thus, the country already has an impressive programme of
emergency action. It now depends on its implementation.

*********

#15
The Economist
May 23, 1998
[for personal use only]
President Alexander Lebed of Russia?
Getting to know the general 
M O S C O W 

“WE SHALL win, and then we shall see,” said Napoleon when quizzed about 
his intentions. A similar strategy brought victory on May 17th for 
Alexander Lebed, a Russian ex-general of comparable ambition and rather 
greater height. Mr Lebed was running for governor of Krasnoyarsk, a 
region of Siberia one-quarter the size of the United States, with a 
population of 3.1m and an abundance of minerals. He promised tough 
government, and won by a landslide. 
Now comes the difficult bit: Russians will see if Mr Lebed’s 
administrative skills match his undoubted martial and rhetorical ones. A 
good record in Krasnoyarsk will strengthen still further his chances of 
winning the next Russian presidential election, set for 2000. He 
finished third in the 1996 election, with 15% of the vote, when barely a 
year out of uniform. 
He inherits plenty of problems from his enlightened but ineffectual 
predecessor in Krasnoyarsk, Valery Zubov. Some may well be susceptible 
to a more pugnacious approach. Tax collection is one place to start. In 
principle, Krasnoyarsk’s natural resources and prosperous metal industry 
should ensure it strong revenues. In practice, the government has been 
too soft a touch. Last year it managed to collect less than half the 
taxes it was owed. Faced with the frankly terrifying Mr Lebed at their 
door, more firms may decide to pay up. 
Wage arrears are another big problem. Across Russia, workers go unpaid 
because employers are corrupt or incompetent. (This week, unpaid miners 
in Siberia and elsewhere were blockading Russia’s main railways, calling 
for money and for President Boris Yeltsin’s resignation.) Krasnoyarsk 
has one of the worst arrears records in the country. That fact did much 
to bring about Mr Zubov’s defeat. He was mocked openly by workers whose 
votes he sought. A human bulldozer like Mr Lebed may be just the man for 
unblocking overdue wage payments—certainly in the state sector, perhaps 
in the private sector too. 
Krasnoyarsk could also make a fine proving-ground for Mr Lebed’s 
self-proclaimed role as a fighter of crime and corruption. “The region 
has plenty of crooks to spare,” observed a Russian investment bank, MFK
-Renaissance, in a recent research note. But the overlap of business and 
criminality in Krasnoyarsk may present Mr Lebed with something of a 
dilemma. Either he can fight corruption seriously on his turf, and 
burnish his image among Russian voters. Or he can cosy up to the local 
bosses, and count on them to finance his campaign for the Kremlin. 
Others may also help. It is widely assumed that Boris Berezovsky, 

perhaps Russia’s biggest tycoon and one whose manipulation of 
politicians is notorious, has been offering the ex-general his hand. 
So far, the gravel-voiced Mr Lebed has said little about his detailed 
policy plans, especially for the economy. This week he promised to rule 
“sensibly, cautiously and delicately”. The choice of adverbs was as 
encouraging as it was improbable. If Mr Lebed manages only the first of 
them, Krasnoyarsk should be well enough pleased. And Russians elsewhere 
will take friendly note. 

**********

#16
COLLECTION OF ALL TAXES IN FIRST QUARTER OF 1998 COULD HAVE 
PARALYSED PRODUCTION IN RUSSIA, HIGH-LEVEL TAX OFFICIAL SAYS 
MOSCOW, MAY 21. /Report by RIA Novosti's correspondent 
Gennady Migalevich/ -- If the State Tax Service (STS) of the 
Russian Federation had collected all taxes due in the first 
quarter of 1998, i.e. some 70 billion roubles, this could have
paralysed the production in Russia, Vladimir Kashin, the STS 
department head, said at a press briefing in Moscow today. 
According to the Russian tax official, in the course of 
1998 the average monthly tax collection rate in Russia was equal 
to 12 billion roubles, and together with the tax revenues of the 
road fund the number totals 14 billion roubles per month. The 
power sector enterprises, petro-chemical companies and Gazprom 
are now bearing the main part of the tax burden. Kashin also 
pointed out that the tax revenues from Gazprom accounted for 21 
percent of all tax disbursements. In the course of the first 
quarter of this year, a total of 11.5 billion roubles' worth of 
taxes was contributed by Gazprom, the railways sector, and the 
UES Rossii. This amount make up a third of the overall taxes 
collected in cash. The department head of the Russian State Tax 
Service complained that the tax arrears run by these major 
Russian taxpayers is still high and makes up 38 percent of the 
total tax arrears vis-a-vis the federal budget. Kashin said 
these enterprises keep a high profile, and will be the first to 
shoulder the brunt of a higher tax burden. 
In addition, Vladimir Kashin pointed out that in the course 
of the first quarter of this year, over half of the Russian 
regions managed to collect more tax revenues compared with the 
same period in 1997. However, the taxpayers registered in Moscow 
accounted for 41.2 percent of the tax revenues disbursed in 
cash. 

**********


 

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