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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

May 26, 1998  
This Date's Issues: 2194•  2195 

Johnson's Russia List
#2195
26 May 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: President Inks Gov't Austerity Plan.
2. AP: Russian Stocks Fall Again.
3. Fred Weir on plight of disabled people in Russia.
4. Dmitri Gusev: Re: Lebed quote.
5. RFE/RL NEWSLINE: DUMA DEPUTIES SUGGEST WAYS TO PROMOTE START-2 
RATIFICATION and GOVERNOR ADVOCATES CONSTITUTIONAL CHANGES. 

6. Interfax: Yeltsin To Make Fewer Weekly Radio Messages.
7. Argumenty i Fakty: Profile of Saratov Governor Ayatskov.
8. Moscow Times: Jean MacKenzie, CONFESSIONS OF A RUSSOPHILE: 
Cassandras and Pollyannas.

9. Jamestown Foundation Monitor: STATE OF RUSSIAN DEMOCRACY LEAVES
SOMETHING 
TO BE DESIRED. (Views of Yuri Boldyrev, deputy head of the Accounting
Chamber).

10. Boston Globe editorial: Central Asia's uneasy frontier.
11. Peter Reddaway, testimony on US-Russia relations before Senate Foreign
Relations Committee.]


********

#1
President Inks Gov't Austerity Plan 
May 26, 1998

MOSCOW -- (Reuters) President Boris Yeltsin approved a government plan on
Tuesday to stabilize the national budget and signed a plan to cut state
spending, Interfax news agency sid. 
It quoted Kremlin spokesman Sergei Yastrzhembsky as saying Yeltsin
signed the decree after a meeting with Prime Minister Sergei Kiriyenko. The
agency gave no further details. 
Kiriyenko, who replaced veteran Victor Chernomyrdin in March to boost
reforms, has said his government would focus on cutting state expenses to
reflect Russia's poor record on collecting tax. Kiriyenko ultimately aims
at drafting a realistic budget, something his predecessor failed to achieve. 
The efforts of the new government have been marred by the Indonesian
crisis and political troubles at home, where unpaid coal miners blocked key
railways for 10 days, striking another blow to an already struggling economy. 
Following the latest troubles, Russian markets have plummeted in the
last two weeks. 
Economic troubles were discussed among other things at a meeting of
Yeltsin's Security Council of top government and Kremlin officials on
Monday. Yastrzhembsky said the situation carried a threat to national
stability.

********

#2
Russian Stocks Fall Again 
By Vladimir Isachenkov
May 26, 1998

MOSCOW (AP) -- Russian markets resumed their tailspin today, with investors
dumping stocks and bonds in fear that the government had no effective plan
to shore up financial markets. 
The finance minister, meanwhile, said the government was not seeking
additional international aid to stabilize the situation, as several Asian
countries did when their economies began crumbling last year. 
The ruble was also weaker today, forcing the Central Bank to intervene
on behalf of the currency. 
Seeking to reassure investors, President Boris Yeltsin signed a decree
today that pledged to cut government spending and reduce the government's
budget deficit. 
Yeltsin said he hoped to improve Russia's weak economic performance when
he dismissed the entire Cabinet in March. But the new team so far has been
unable to win the confidence of investors, and there are growing concerns
that Russia could face an Asian-style financial crisis. 
But investors seemed to view Yeltsin's latest move as too little, too
late. 

Stocks dropped sharply as today's session began, and the main Russia
Trading System index had fallen almost 4 percent by early afternoon. 
Meanwhile, yields on one-year treasury bills soared to 57 percent today,
up from 50 percent at the close of trading Monday. The ruble was down,
trading at 6.184 to the dollar. 
Finance Minister Mikhail Zadornov admitted that something must be done
soon, but said Russia was not seeking emergency funds from the
International Monetary Fund or World Bank. ``The situation can't fluctuate
like that for long,'' he told a news conference today. 
The Russian economy has lurched from crisis to crisis this month, badly
hit by miners' strikes and railway blockades throughout Russia and the
ongoing exodus of foreign investors. 
The main economic dangers facing Russia are soaring interest rates and a
potential currency collapse. As interest rates rise, it costs the
government more to borrow money. That means the government will have even
more difficulty in meeting basic obligations such as paying workers. 
Also today, the head of Russia's tax service said revenue collection was
expected to be lower this month than last. 
Tax collection has been a chronic problem for the Russian government,
which expects to raise $1.94 billion this month, down from $2.05 billion
last month, the ITAR-Tass news agency quoted tax chief Alexander Pochinok
as saying. 
Last week, the government sent high-level representatives into mining
regions to try to appease the striking miners. It promised to pay some of
the miners' back wages, aid miners who are laid off as unprofitable mines
are closed and punish managers who have misappropriated wages. 
In northern Russia today, several thousand miners still blocked railroad
tracks following failed talks with the government. 
Before meeting with Premier Sergei Kiriyenko today, Yeltsin expressed
confidence that the 60-point new program could bring an end to the labor
crisis. He did not, however, divulge any details of the plan. 
Yeltsin today also backed Kiriyenko's proposal to cut government
spending. The new Russian prime minister says up to 26 percent of this
year's budget is not backed by revenue and may have to be scrapped. 

*******

#3
From: fweir.ncade@rex.iasnet.ru
Date: Tue, 26 May 1998

By Fred Weir
MOSCOW (CP) Antonina Bastrykina smiles and looks
embarrassed as three friends haul her wheelchair up a flight of
stairs and through two cramped diagonal doorways, just to reach
one of Moscow's trendy new coffee shops.
``Every little step of life is outrageously complicated,
or just plain impossible for a disabled person in this country,''
says Bastrykina, a 48-year old professor of medicine and
chairperson of Russia's Society of Disabled People.
``The hardest thing is the social attitude that does not
accept the idea of disabled people trying to live normal lives.''
In Soviet times people with severe disabilities were kept
at home, or in institutions, from which they almost never
emerged. Post-Soviet poverty and social-service cutbacks have
put thousands of disabled people into the streets of Russian

cities as beggars. 
Russia has an estimated 10-million seriously disabled
people, yet almost no public facilities are wheelchair
accessible. The picture is bleak, but activists maintain that
some things are changing for the better. 
``There has been progress in altering the perception of
disability from a health problem to a human rights issue in
Russia,'' says Tanya Packer, an associate professor of
occupational therapy at Queen's University, and director of a
3-year, $1.9-million Canadian government sponsored project to
introduce new expertise and attitudes into the Russian health
community.
Under the plan, 13 medical lecturers from two colleges in
Moscow and the central Russian city of Volgograd have received
instruction at Queen's and the University of Western Ontario. 
They have since returned to Russia and implemented a new
curriculum for training nurses to work with disabled patients.
``You may say it's a drop in the bucket, but 90 nurses
have already graduated under the new curriculum,'' says Packer.
``The main point we are getting across is that disabled
people themselves must be active participants in finding
solutions.''
Igor Markov, 25, has cerebral palsy. He was abandoned by
his parents at birth and brought up in a psychiatric hospital.
Regarded as mentally deficient by doctors, he was given only 2
years of rudimentary schooling.
He now lives in a state-run dormitory, which takes most
of his 350 rubles (about $80 Cdn) monthly disability pension to
pay for his upkeep.
But friends have taught him to read and write in the past
couple of years, and he is learning to work on an old computer
that Bastrykina's organization gave him.
``I was taught that I couldn't do anything,'' he says.
``But now I think, maybe I could find a job and move into my own
place one day. It's possible.''
Bastrykina, who has worked closely with the Canadian
project, is another example of what a disabled person can
accomplish even in Russia's harsh social environment. 
While polio deprived Bastrykina the use of her legs from
the time she was two years old, she refused to let society
deprive her. With strong family support, she went to university
and became a pediatrician.
She says she sometimes tries to raise consciousness among
her students about the problems disabled people face by asking
them to take her for a walk in some familiar locale near the
college.
``They huff and they puff trying to get me up and down
staircases and over all the obstacles that clutter the streets,''
she says. ``Even with a bunch of healthy young students escorting
me, crossing a Moscow road is a hair-raising adventure.
``Forget about taking a trolley bus or going down to
catch a subway train.''
While the physical hurdles facing disabled Russians may
be awesome, Bastrykina says social prejudices are the biggest
problem.
She is scathing about the Russian medical profession,
which she says seems incapable of seeing disability as anything
other than a debilitating illness.


``We don't want to be locked up and cared for, we want a
chance to do things for ourselves.''
``That's the attitude shift we need in this country.'' 

*******

#4
Date: Mon, 25 May 
From: dmitri gusev <dmiguse@cs.indiana.edu>
Subject: Re: Lebed quote

Danzer quotes the AP release by Landsberg, where Lebed
was quoted as follows. 

"I am interested in earthly reform. Land reform to stimulate
production, local tax collection..."

It am pretty sure that "earthly reform" is merely
a poor translation of "zemel'naya reforma", i.e., in essense,
"the argrarian reform". "Zemlya" has several meanings
in Russian: Earth, land, turf...

********

#5
RFE/RL NEWSLINE Vol. 2, No. 99 Part I, 26 May 1998

DUMA DEPUTIES SUGGEST WAYS TO PROMOTE START-2 RATIFICATION.
Duma Defense Committee Chairman Roman Popkovich of the Our
Home Is Russia faction told Interfax on 25 May that
agreements between Russia and NATO member states on not
expanding the deployment of nuclear weapons in Europe would
speed up the process of ratifying the START-2 arms control
treaty. During negotiations before the Russia-NATO Founding
Act was signed in May 1997, NATO refused to make a binding
pledge not to deploy nuclear weapons on the territory of new
member states. Meanwhile, Duma Foreign Affairs Committee
Chairman Vladimir Lukin of Yabloko argued on 22 May that the
Duma would be more likely to ratify START-2 if Yeltsin
agreed to drop his attempts to change the system for
parliamentary elections, Interfax reported. Meanwhile,
Communist Duma deputy Albert Makashov published an article
in the 26 May edition of "Sovetskaya Rossiya" arguing
against ratification of the START-2 treaty on principle. LB

GOVERNOR ADVOCATES CONSTITUTIONAL CHANGES. Novgorod Oblast
Governor Mikhail Prusak advocates changing the constitution
to alter procedures for electing leaders. Speaking to
Interfax on 24 May, Prusak called for indirect presidential
elections whereby elected regional representatives would
choose the president. (Article 81 of the constitution
stipulates that direct elections must be held to choose the
president.) In an interview with "Argumenty i fakty" last
month (No. 15), Prusak also called for doing away with
elections for regional and local leaders. Instead, he
advocated giving the president the right to appoint
governors, who themselves would appoint local leaders. He
argued that elections "continually destabilize the
situation. Every time it's a shock for the state. Enormous
amounts of money are spent, to no avail." Prusak has been
widely praised in Russia and abroad for managing his
region's economy. In terms of per capita foreign investment,
Novgorod ranks second among Russia's 89 regions, after the
city of Moscow. LB

**********

#6
Yeltsin To Make Fewer Weekly Radio Messages 

MOSCOW, May 21 (Interfax) -- From now on, President Boris Yeltsin's
radio addresses will occur less frequently than once a week, presidential
spokesman Sergey Yastrzhembskiy told Interfax Thursday.
The frequency of presidential messages "will depend on the acuteness
of this or that home or foreign policy issue," he said
The need for Yeltsin to keep a high profile on radio has tapered off

because even without such radio statements "the president regularly appears
on TV and meets with journalists." Yastrzhembskiy said explaining the
change.
The president has made radio addresses on Fridays, spotlighting
issues, ranging from tax discipline to youth problems.
The next presidential message is expected Friday, May 22.
Meanwhile, the Public Opinion Fund told Interfax Thursday that more
than half Russians (54%) regard regular presidential addresses on radio as
necessary.
However, only 16% of the polled wish the regularity of such addresses
would stay unchanged. Twice more respondents (38%) contend that
presidential radio speeches make sense only on important events.
Some 30% of Russians see the main sense of radio addresses in
clarifying the country's current policy to the nation, 29% in bringing the
presidential view on certain events across to people, and 26% in cementing
the president's contact with the nation.
The figures came through on an All-Russia poll among 1,500 urban and
rural residents May 10.

*********

#7
Russian Paper Profiles Saratov Governor Ayatskov 

Argumenty i Fakty, No. 21 
May 1998 
[translation for personal use only]
Profile of Saratov Region Governor Dmitriy Ayatskov by Svetlana
Baulina entitled "Is Dmitriy Ayatskov a Future President"

Boris Yeltsin has not let down fans of his unpredictability and has
again caused consternation in the ranks of Russian politicians. During the
Birmingham summit he introduced Saratov Region Governor Dmitriy Ayatskov to
Bill Clinton as "the future president of Russia," no less. Here is a brief
biography of Ayatskov.
Dmitriy Fedorovich Ayatskov was born on 9 November 1950 in the village
of Kalinino in Baltayskiy District in Saratov Region (Stolypino before the
1917 revolution and since 1991) as the third son in a large family (he also
has three younger brothers and a sister). His parents spent their whole
lives working on the Kalinin collective farm on which the future governor
also started work at the age of 14.
On completing his studies he qualified as an agronomist at Saratov
Agricultural Institute in 1977 and on completing a correspondence course at
the Moscow Cooperative Institute in 1985 qualified as a economist. As for
foreign languages, he has some command of German (using a dictionary).
He is married with two children: a son called Sasha and a daughter
called Katya. Both are law students. His son is continuing his studies
after completing his military service.
He remains a member of the Communist Party of the Soviet Union. He
neither left the party nor tore up his party card.
He was appointed head of Saratov Region administration on 15 April
1996 by decree of the Russian president. On 1 September the same year he
was elected governor of Saratov Region. There were three candidates in the
election. He won 82 percent of the vote.
He was actively involved with the Russia is Our Home movement but
announced at the end of April 1998 that he was setting up his own party. 
His two years as governor have seen a significant improvement in the
agricultural situation in the Region: the grain harvest in 1996 was 3.5

million tonnes, but in 1997 it rose to 6.1 million tonnes and this year's
target is 10 million tonnes. Without waiting for the Land Code to be
approved, he introduced private ownership of land in Saratov Region.
He told Saratov journalists at a news conference that he thinks the
president was only joking when he made his remark [that Ayatskov is a
future Russian president] on 17 May. "It is not in his interests to destroy
Governor Ayatskov. I am fully aware of what chance I would stand and am
not suicidal," Ayatskov said. However, Ayatskov is part of the delegation
accompanying the Russian president on his upcoming visit to Kazakhstan.
In the coming month Ayatskov is expecting a visit to Saratov by Prime
Minister Kiriyenko and in July he will be host to the president himself.

**********

#8
Moscow Times
May 26, 1998 
CONFESSIONS OF A RUSSOPHILE: Cassandras and Pollyannas 
By Jean MacKenzie 

Remember Cassandra, the prophetess of gloom, whose dire predictions so 
amused her fellow countrymen in Troy? I'm starting to understand how she 
felt. In fact, Cassandra was probably nothing more than an enterprising 
hack trying to worm her stories onto the front page of the Trojan Times. 
I'm sure she had a juicy 1,500-word analysis all ready for the next 
edition, outlining the perfidy of Troy's political opponents. She may 
even have had a tentative title: "Beware of Greeks Bearing Gifts," for 
example. But the editors dismissed the piece -- "too boring" -- and 
replaced it with a fluff feature on Helen's beauty secrets. 
Cassandra would have a ball in today's Russia. Miners' strikes, a stock 
market in free fall, collapsing streets, skinhead attacks -- it doesn't 
require clairvoyance to see disaster coming. 
But alarmism is no more popular now than it was in ancient times. 
Through all the upheavals of recent years, the Western press corps has 
remained resolutely upbeat, even when devoting acres of copy to 
human-interest stories highlighting the victims of Russia's 
transformation. 
While the president shot up his parliament, established dictatorial 
rule, handed the country's wealth to private cliques and co-opted the 
press, we applauded enthusiastically, heaving huge sighs of relief that 
the "bad guys" were out of power. 
But even that old morality play had lost its punch. The column acres 
have dwindled down to centimeters, the story has grown stale, and much 
of the Western public is just plain bored by news from Russia. Forty 
years of Cold War hysteria, followed by a decade of minute and effusive 
coverage of the disintegration of the dread Soviet Empire, have just 
about saturated the market. Even the journalists are getting jaded. 
"I have to go write another 'Russia is collapsing' story," one prominent 
foreign correspondent was heard to remark recently, causing general 
indignation among the local staff. "To you, it's just an interesting 
experience, but we have to live here," grumble my Russian friends. 
This, unfortunately, is true. No matter how passionately some of us care 
about Russia and its sad, turbulent history, most of us will eventually 
move on, in search of a better story, an easier life or just a hot 

shower in the summer. 
But in the meantime, here we are, driving ourselves crazy trying to 
figure out which way this country is headed. 
Over the weekend, I spent a day at a dacha with other members of the 
scribbling class, where the main topic of conversation centered around 
who would be worse for Russia: Alexander Lebed or Yury Luzhkov. Friends 
have been made and lost over this issue, and more than one discussion 
has nearly degenerated into a brawl. 
Almost no one, mind you, thinks that either the basso general or the 
roly-poly mayor would be anything less than a catastrophe. "Civil war or 
mafia rule?" seems to be the choice on offer. 
Another heated argument pitted those who think Russia's president is 
totally non compos mentis against those who think he still has lucid 
moments. Again, neither option was conducive to sound sleep. 
Is Russia sliding into the abyss? This question really gets people 
going. One friend, a journalist with a historical bent, tried to be 
reassuring: "It's not inevitable. I think Russia is somewhere near where 
it was in, say, 1906. Some upheavals are behind it, some reforms are in 
place. Things could develop normally." 
Thanks a lot. A quick review of Russia history since the beginning of 
the century could send me plunging into the abyss all by myself. 
We all trooped home to the Sunday evening news programs, where uprisings 
in Dagestan jostled for space with the collapsing stock market. NTV had 
a bizarre public opinion poll which, with pretzel logic, showed that 
Luzhkov was the strongest presidential candidate for 2000, because "the 
fewest number of respondents indicated that they would not vote for him 
under any circumstances." 
Many of us wrote features the next morning about slick new shopping 
malls, overpriced night clubs and other diverting episodes in Russia's 
long march to freedom and prosperity. 
It's almost enough to get me to dust off my wailing robes and set up 
shop under the Kremlin walls. But I'm sure no one would listen to me 
there, either. 
So I'll call off the alert and propose a puff piece on Russian canine 
names ("Jack" and "Linda" are popular for German shepherds). 
But one little thought keeps flickering at the back of my mind: 
Cassandra was right. 

*********

#9
Jamestown Foundation Monitor
26 May 1998

STATE OF RUSSIAN DEMOCRACY LEAVES SOMETHING TO BE DESIRED. Yuri Boldyrev,
deputy head of the Accounting Chamber, presented an incisive but gloomy
analysis of the state of Russian democracy to a conference at Oslo
University on May 14. Boldyrev, a St. Petersburg-based politician, was one
of the founders of Yabloko but subsequently left the party. He has since
tried to position himself as a leader in the fight against corruption and
for the establishment of rule of law.

Noting the May 14 comment of Prime Minister Sergei Kirienko that Russia is a
poor country, Boldyrev said the reason for this is the failure to construct
an effective and responsive political system. He argued that there are
several institutional deficiencies which have prevented the emergence of a
healthy separation of powers in the Russian constitutional system. First,

there is the overarching power of the presidency. "The president has
unlimited power and the government cannot make any step without his
approval." The president is essentially unaccountable: the impeachment
procedure makes it virtually impossible to remove him, specifying that he
must commit treason or a serious felony, such as murder (corruption would
not count).

Second, Boldyrev argued that the whole role of government ministers is
opaque due to the absence of legislation defining their powers. Nobody seems
quite sure what constitutes a decision of the government--whether it can be
announced by the prime minister, or must be voted on by the cabinet of
ministers. If the government makes decisions about spending, privatization
etc. which are later found to be illegal, there is no way to hold any
individual to account.

Third, democracy has been stillborn due to the failure of political parties
to emerge. Boldyrev argued that there is no incentive for parties to form
because the parliament has proved incapable of exerting any influence over
the formation of the government. Only where parliaments form the government
is there an incentive for voters to take the parties competing for
parliamentary seats seriously. Boldyrev frankly admitted that the only
reason he formed Yabloko with Grigory Yavlinsky and Vladimir Lukin back in
1993 was to be able to compete for party list seats in the Duma. The three
had no common ideology or policy platform. Russian voters have learned, over
the past five years, that there is no connection between how they vote in
parliamentary elections and the selection of the government. Boldyrev said
other factors constraining Russian democracy are government control over
much of the media and lack of reliability in the vote-counting and general
electoral process.

Most Western commentators have welcomed the recent government reshuffle as
evidence that the political pendulum has once again swung towards reform.
The appointment of the new government, however, does nothing to address
Boldyrev's structural concerns. On the contrary, it confirms his
analysis--since it can be argued that President Boris Yeltsin is setting up
the new government to take the blame for economic failure. Yeltsin has
staffed the new administration with relatively weak and inexperienced
ministers, and has pledged to give it more "independence" than its
predecessor. A cynic would say this merely means he can absolve himself of
responsibility for its actions. (Vek, 15 May)

********

#10
Boston Globe
26 May 1998
[for personal use only]
Editorial
Central Asia's uneasy frontier 

ALMATY, Kazakhstan 

During the last century it was called ''The Great Game'' - the struggle for
influence in Central Asia. The British, from their base in India, sought to
outmaneuver and impede the southward sweep of imperial Russia. The man
who coined the phrase, Captain Arthur Conolly, ended up having his head
cut off on the orders of the Emir of Bukhara after having done hard time in a
vermin-infested pit. 
Today, as Russian power has retreated, a new struggle for influence in
Central Asia has emerged, this time not for empire but for energy and

mineral resources. In the five former Soviet republics of Central Asia and in
the three in the Caucasus, 70 million people live in areas endowed with gold,
uranium, copper, and other valuable minerals. It is the countries on or near
the Caspian Sea, however, that are sitting atop vast oil and gas reserves -
with Kazakhstan, Azerbaijan, and Turkmenistan in the forefront. 
No one knows for sure how much energy is locked below, but estimates are
running between 100 billion and 200 billion barrels of oil and the equivalent
in natural gas. This makes the Caspian region the greatest source of
untapped wealth in the world - a mecca for oil companies and a potential
alternative to the present overdependence on the Middle East. 
But while the oil of the Middle East is close to the ocean, where
tankers can
easily come to take it away, the newly independent countries of the Caspian
are landlocked in the remotest part of Asia. Also, unlike the Middle East,
Russia is still the dominant power here, and Russia bitterly resents the
intrusion of Western interests into its former empire. 
Today's Great Game is for oil and gas contracts and the proposed pipelines
that will take the wealth of the region to market. At present, Russia controls
almost all the pipelines leading out of the Caspian basin, but the future
of the
new republics depends on alternatives to Russian control. Even countries
without oil and gas would benefit substantially from having pipelines crossing
their territory. Routes under consideration would run through Iran, perhaps
even Afghanistan, Georgia, or Armenia, while the Chinese are interested in
running a pipeline from Kazakhstan east to the Pacific. 
All of these routes, however, pass through lands fraught with varying
degrees
of instability. To the south, Afghanistan and Tajikistan are in the midst
of civil
wars, and Iran remains an ayatollah-dominated enigma. To the west lie
unstable Chechens, warring Georgians, irredentist Armenians, Kurdish
separatists, and the unpredictable tribal chieftains of the Caucasus. Even
China has its problems with disgruntled Uighurs, a Turkic-speaking, Muslim
minority on the borders of the Central Asian republics. 
Central Asia's republics have their own internal problems, with their
boundaries having been set arbitrarily by Stalin. Corruption is rife and
politics unstable. Laws governing contracts and agreements scarcely exist.
As one Western diplomat put it: ''Bargaining here begins after the contract
has been signed.'' The potentially oil-rich republics run the familiar
danger of
slighting broad-based development, and the example of Nigeria rather than
Norway hangs over them. 
Most of these countries along Russia's southern flank are run by former
communists, dictators whose rule is as absolute as the emirs of old. They
have the power to remove an offending head and the capability to assign
Western companies to the business equivalent of a vermin-infested pit. 
So far most of these leaders have kept ethnic tensions and budding
Islamicists at bay. But human rights and democracy do not exist in any
meaningful sense in Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and

Kyrgyzstan, and no logical order of succession is in sight. 
The United States is universally looked up to as the potential protector
against Russia as well as a major player in the new Great Game. The United
States has a role to play not only in the commercial extraction of Central
Asia's wealth but in the greater game of helping these former Soviet
backwaters develop in all the aspects of a free-market, democratic, and
open society. 
H.D.S. GREENWAY

********

#11
Date: Tue, 26 May 1998 10:19:25 -0400
From: "Peter Reddaway" <105660.3437@compuserve.com>
Subject: Testimony on US-Russia relations

US Congress : Senate Committee on Foreign Relations : Sub-Committee on
European Affairs
Hearing on Russian Foreign and Domestic Policy
10.00, May 20, 1998 

Statement of Peter Reddaway (Revised text), 
Professor of Political Science, George Washington University 
Interpreting developments in Russia is difficult. Some analysts
accuse others of holding Russia to an unreasonably high standard, given the
ravages of 74 years of communism, and even of being "anti-Russian". A
typical response by the second group of analysts is that the first one
ignores or downplays the dangers inherent in many Russian trends, wanting,
for whatever motives, to be cheer-leaders, and thus ill-serves both Russia
and the West.
I belong to the second group, but not out of any anti-Russianness.
I believe that the US government and the West have, in general, pursued
unwise policies towards Russia, and either do not realize this, or, for
understandable if not laudable reasons, prefer not to acknowledge it by
changing their policies.
Growing Anti-Americanism
One of the main consequences of this approach is already visible.
When communism fell in 1991, pro-American feeling was widespread and strong
in Russia. In recent years, however, resentment of the United States and
bodies like the International Monetary Fund has grown sharply, both among
the Russian elite and among the population at large, because the economic
"shock therapy" that we prescribed is working badly. The U.S. is widely
seen as bossing and trying to control Russia, as overwhelming it culturally
through the invasion of US pop culture, McDonalds and Pizza Hut, and
religious missionaries. Letters of instruction to the Kremlin from senior
American officials are leaked to the Russian press and published. Thus when
Russians have been asked in representative opinion polls to comment on such
statements as "The US is utilizing Russia’s weakness to reduce it to a
second-rate power and a producer of raw materials", some 60-70% of them
have "completely agreed" or "somewhat agreed" with the statement, while
only about 20% have somewhat or completely disagreed. In the perception of
most Russians, both the US and President Yeltsin told them in 1991-92 that
if their country followed the US’s prescriptions, democracy and free
markets could be built in a few years, without much pain, and before too
long Russia would become stable and prosperous. Six years later, most
Russians feel let down, and say that Yeltsin and the US did not deliver

what they promised. As a result, the Russian government lacks legitimacy,
and theUS’s motives are seen, however mistakenly, as self-interested and
unfriendly to Russia. Among the elite, this perception has been
strengthened by the eastward expansion of NATO in the face of strong
opposition from the entire spectrum of Russian elite opinion.
Popular Frustrations
Here are some of the frustrations that typical Russians now feel :
"Our political system", they say, "is not a tyranny, it’s an attempt at
democracy. Yet we don’t have the rule of law. To a large extent we still
have the rule of men. Our institutions are very fragile." Also, "We now
have a lot of personal freedom, and plenty of enterprising people, but we
don’t have spare cash, and economic conditions are very difficult, so we
can’t make much use of our freedom." As an example, they might say :
"Censorship is gone, but the media are owned by the government and the
financial oligarchs, so we can’t actually express ourselves very freely".
On Russia’s federalism, a typical view would be : "The regions are now more
autonomous from central government than ever before in our history, but
ordinary people don’t benefit, because the local oligarchs are almost as
corrupt and non-accountable to us as the Moscow ones are." To quote an
actual poll, 84% of those asked to comment on the statement "Our public
officials do not care much about what people like me think" either
completely or somewhat agreed with it. The public approval ratings of
leading politicians are remarkably low, and popular confidence in public
institutions is typically in the 10-30% range, except for the army, which
usually scores around 40%. 
The Government’s Lack of Legitimacy
In other words, while the government is formally legitimate,
because elections have so far been held, it lacks much real legitimacy.
People see it - accurately in my view - as being much more concerned about
the power and private interests of a small elite than about the public
interest, or, in foreign policy, the national interest. Corrupt cliques
control politics and economics, and care little about the population. They
are not worried that social Darwinism is at work on the weak, the old, and
the poor. As Boris Nemtsov, a deputy prime minister, said, "Russia,
including its national leadership, must enter the 21st century only with
young people". Or as Igor Chubais, brother of Anatoly Chubais, who ran the
economy for Yeltsin until March, wrote in a book : "Russia… is of
absolutely no interest to the present elite." The elite is concerned only
with "power, money, and privileges". It sees the Russian people as "simply
an annoying, tiresome nuisance, which, moreover, for some reason has to be
paid wages." 
The Scourge of Official Corruption
An important cause of the alienation of many Russians from the
political system is the prevalence of official corruption. Especially
worrying is the fact that, because corruption enables the whole political
and economic system to work, it has seemingly become endemic. It
substitutes for the rule of law. As Igor Chubais writes, "All-pervasive

corruption… strange as it may seem, carries out important social functions…
In the absence of other social regulators, it has become one of the most
important unifying forces in our country. Different sections of society and
the state become inter-linked and acquire common interests. They… become
capable of - at least in some fashion - functioning." All this explains
why, although the Yeltsin administration has gone through the motions of
six anti-corruption drives in six years, and hundreds of senior figures
have been publicly accused of large-scale scams and machinations, and a few
arrested, still not a single highly placed politician, businessman, or
general has been both sentenced and jailed. 
The Government’s Non-accountability
Also, the government listens to the Russian people only when it is
forced to. It wages a two-year war against Chechnya, one of Russia’s
constituent republics, without consulting the nation, and ends the war only
when it finds it cannot win, and the death toll has mounted to some 80,000,
most of the dead being civilians. It allows the payment of wages and
pensions to be delayed for months, until, say, the miners become desperate
and physically block the Trans-Siberian and Moscow-Vorkuta railroads. Then
Prime Minister Kiriyenko offers to pay them a mere 14% of what he admits is
a $600 million backlog .
The government’s excuse for this chronic pattern of behavior is
that despite six years of the IMF’s loans, ministrations, and
conditionalities, it does not have the cash to pay wages and pensions on
time. At the same time, the top 5-10% of the population lives a life of
ease and conspicuous consumption. How serious, then, is the economic
situation, and how long will it last?
The State of the Economy
Here is a snap-shot of the economy. According to the Organization
for Economic Cooperation and Development (OECD), Russia’s GDP has declined
by a little over 40% since 1989 and has now bottomed out. The most recent
estimates for its likely growth in 1998 vary from about zero to 2%.
Inflation has been successfully brought down to an annualized rate of about
8% last month, however economists warn that "Russia’s success in reducing
inflation is undercut by the fact that the economy remains only partially
monetarized, and the use of barter, dollars and money surrogates appears to
be on the increase." Last year’s budget deficit was 6.8% of GDP, and it is
unclear whether this uncomfortably high figure will be reduced in 1998. Tax
collection has become a chronic problem and is currently running at only
65% of projected levels. In 1996, as the OECD reports, "26 tax inspectors
were reportedly killed, and many more injured or physically threatened,
while 18 tax offices endured bomb blasts or shootings". Illegal capital
flight is widely estimated to have been running at a rate of $10-15
billion a year for the last few years, easily outstripping Russia’s total
of aid loans and grants from abroad. The latter have nonetheless mounted
fast, and, given the high level of domestic debt too, the OECD foresaw the
possibility that "the total public debt could exceed 50% of annual GDP" by

the end of 1997. 
Investment has fallen substantially throughout the 1990s, declining 5% last
year (less than usual), but continuing to decline in 1998. Thus the
economy’s capital stock has steadily aged. In particular, investment has
been drastically squeezed by high interest rates. For most of this year the
treasury bond rate has been 30%, and on May 18 the government defended the
rouble by raising basic interest rates to 50%. For Russia’s able but
struggling entrepreneurs, these facts of life come on top of a business
environment in which, first, racketeers routinely tax small and medium
businesses, and second, contracts are hard to enforce, because criminals
and corrupt officials can usually intimidate the courts. The media have
reported the assassination of some 600 senior businessmen and a score or
two of politicians over the last three years. 
Since 1992 most prices have been freed, so goods are freely
available. A few key prices are still controlled, such as those for
apartment rents and household gas, the latter still being only 10-15% of
the world market price. However, most prices are not much different from
American levels, while average real incomes are only about one tenth of the
US level. This gives some idea of the average Russian’s standard of living.
Moreover, 22% of the population now have incomes below the meager official
level for subsistence, and real unemployment is about 10% and rising - in
a country which is used to a virtual absence of joblessness. Russian
agriculture has seen very little serious reform, and about half of the
country’s food supply is imported.
More generally, the Russian economy is dominated by crony
capitalism, a phenomenon greatly facilitated by the above mentioned Anatoly
Chubais. Last year Chubais switched his stance and began a campaign against
crony capitalism. But it may have become so deeply embedded that it cannot
be rooted out. Certainly, official efforts to combat the lack of
transparency and the monopolistic tendencies in the economy have so far
made only slow and intermittent progress, and have also suffered some
reverses.
Finally, on the economy, the public sector has been neglected.
Outside of Moscow, which is a different world from almost all the rest of
Russia, the economic infrastructure and the environment have suffered
badly. How deeply Russians are worried by environmental degradation can be
seen from a new U.S.I.A. survey . This reports that some 68% of those
polled hold that "protecting the environment should come first, even if it
slows the growth of our country", while only 22% think that "economic
growth should come first, even if the environment suffers as a result". In
addition, the health, education, and research sectors have also
deteriorated sharply. For example, because of the declining public health
system and other negative factors, demographers expect the Russian
population to decline from its present 147 million to about 135 million in
2020. Lastly, morale and discipline in the Russian military are at a
worryingly low level, thanks in large part to a chronic lack of funding. 
In short, six years of economic depression, continuing uncertainty

about when, or whether, real growth will replace the current stagnation,
and the fear that even if real growth develops it will take many years to
improve the lot of ordinary people, have made the Russian people deeply
skeptical about the IMF and its supposedly universal recipes for economic
recovery. It is widely perceived as a tool of Western interests which will
always put these interests and those of the Russian Establishment above the
welfare of ordinary people. Most Russians did not like communism. Now they
are wondering if they like capitalism - in the perverted form they see
before them - any better.
Foreign Policy
Against this background it is not surprising that Russian foreign
policy has become increasingly critical of the U.S. and the West. Although
the Yeltsin government is too dependent on the West to turn sharply against
it, a continued cooling of relations, with more Russian acts of defiance
over issues like Iran, Iraq, and Serbia, seems likely. More worrying is the
danger that anti-Western feeling will continue to grow among ordinary
Russians, thus creating the potential for future Russian governments to be
more hostile towards the US and the West than the present one.
Politics and the Future
President Yeltsin gives cause for many concerns, partly because his
erratic physical (and even mental) health continues to deteriorate. Above
all, though, his deep desire to hang on to power for as long as possible
creates a situation fraught with danger. He fashioned the 1993 Constitution
to give the presidency very broad powers, and has used these with great
skill to rule largely by decree, and also to co-opt and outmaneuver most of
the communist, nationalist, and democratic opposition, even though it has
in general commanded much more popular support than he has. With strong US
approval, he dispersed the first Russian parliament with tank fire in 1993,
and he has often shown disdain or even contempt for its constitutionally
weak successor. By deploying cleverly his extensive powers of patronage, he
has bought off most of his opponents, giving them small stakes in the
status quo, and thus alienating them to a considerable extent from their
political bases in the population. 
In the business world, from 1991 onwards he quietly allied himself,
first with the dynamic elements of the communist Establishment, who were
appropriating many of the state’s assets for themselves, and secondly with
the emerging non-communist entrepreneurs. These groups, whose leaders are
now known as the financial and business oligarchs, have been somewhat
harder for him to control than the politicians, because the most skilful
among them have developed a certain degree of autonomy from the government.
In 1996 the oligarchs decided to get Yeltsin re-elected, even though his
popular approval rating was around 5%, because their help would
subsequently increase his dependence on them. However, the next
presidential election, which, though not due until June 2000, has already
obsessed the Russian Establishment for a year, is almost certain to be much
more problematic than that of 1996. 

At present Yeltsin shows every sign of intending to run, even though he
will have already served two terms. His surrogates maintain that although
the present Constitution allows only two terms, Yeltsin’s first term was
served mainly under the old Constitution, so a third term would be
permissible. The bigger problem may well be, though, that this time the
oligarchs do not seem to see him - given his all-round erraticness - as a
candidate they want to back. On top of this, the oligarchs are currently
divided among themselves, so the real possibility, or even probability,
arises that the Establishment may be split two or even three ways in 2000.
This means that the fragile Russian polity might easily be destabilized, if
one or more of the contenders decides to try to win at all costs, and not
to play by the rules. It also means that an only semi-Establishment figure
like Alexander Lebed could possibly have a chance of winning. Without
doubt, too, serious competition between Establishment rivals, or between
one or more of them and a non-Establishment figure, could carry promise as
well as dangers : candidates would be more likely to address the real needs
of the long-suffering Russian people.
In any case, Yeltsin is clearly on the move. His impulsive removal of
Chernomyrdin as prime minister in March - when he at first appointed
himself as Acting Prime Minister without realizing that this was forbidden
by the Constitution - looks like a strong, possibly fatal blow to
Chernomyrdin’s already slim hopes. However, Mayor Yuri Luzhkov of Moscow is
emerging as perhaps the strongest runner at this stage. Though closely
linked by sections of the Russian press to criminal figures, he has
skillfully managed to attract support from the three main sectors of public
opinion, the nationalists, the communists, and the democrats, as well as
from the Establishment. By contrast, the communist leader Gennady Zyuganov,
who showed no will to win in his 1996 run-off with Yeltsin, is now faced
with a slowly fracturing communist party, and in my view is not electable.
And the leader of the democratic opposition, Grigory Yavlinsky, even though
his Yabloko party is doing better than ever on the strength of its
principled opposition to the government’s economic policies and
authoritarian tendencies, is probably too much of an intellectual to become
President.
Conclusion
Thus Russia faces a future full of uncertainty. Big question marks
hang over its political system, its economy, its military, its territorial
integrity, and, at least under a post-Yeltsin government, its foreign
policy. US and IMF policies towards Russia have, in my view, yielded little
fruit. But they have contributed a lot to Russia’s problems. The
pro-American goodwill that we accumulated in Russia up to 1991 has, despite
our good intentions, in many ways been squandered. We were much too sure we
had the right recipes, and much too assertive in pushing them on the
Russians. When we suspected they might not be right after all, we declined
to stop and review them. We plowed on and hoped for the best. Now we are
beginning to pay the price. If we stop now and review our stance, the price

may be containable. Above all, we need to admit our mistakes, stop our
continuous meddling in Kremlin politics and Russian economic policy, and
have the Russian government take full responsibility for its decisions. If
we don’t do this, the price we pay for our mistakes will rise. We will
increasingly alienate the Russian people - with consequences for our own
interests and for Russian democracy and capitalism that could be very
serious.

********


 

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