June 1, 1998   
This Date's Issues: 2202  •

Johnson's Russia List
#2202
1 June 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Clinton Endorses Aid for Russia.
2. Reuters: Russian PM sees worst of crisis over.
3. Baltimore Sun: Kathy Lally, Russia returns to its normal worries.
Economic crisis fades, but some ask how long forbearance can last.
4. Nicholas Pilugin: Moscow expat email list.
5. Edward Lozansky: Conference on Russia in Washington, June 7-8.
6. Voice of Russia World Service: Duma Committee Head Lukin Expresses 
'Alarm' Over Some US Views.
7. NikSt: Web site of Alexander LEBED.
8. Los Angeles Times: Steven Merritt Miner, A New Government and a New 
Crisis Will Test Yeltsin's Staying Power.
9. Novoye Vremya: Interview with Anatoliy Chubays, "Battle With Oligarchs 
Cannot Be Treated Like a Political Campaign; Former Vice-Premier Believes 
That Kiriyenko Government May Turn Out To Be Better Than Chernomyrdin 
Government."]

********

#1
Clinton Endorses Aid for Russia 
By Sonya Ross
May 31, 1998

WASHINGTON (AP) -- President Clinton is endorsing additional international
aid for Russia that it needs to put its reeling economy on a more stable
footing. 
In a brief statement issued Sunday, the president expressed U.S. support
for aid to Russia from such multinational institutions as the World Bank and
the International Monetary Fund. Washington's vote is essential to loans and
other forms of help from them. 
``The United States endorses additional, conditional financial support
from the international financial institutions, as necessary, to promote
stability, structural reforms and growth in Russia,'' Clinton said. 
He said he based his decision on his conversations with Russian President
Boris Yeltsin and consultations among other U.S. and Russian officials. 
Clinton administration officials insisted the statement does not
foreshadow a bailout for Russia such as those arranged through the
international lenders for more troubled countries in Asia. The focus was on
providing support from international firms and on Russia's efforts to raise
resources from the private sector, said a senior official who briefed
reporters on condition of anonymity. 
The official declined to say when the IMF would provide the aid to Russia
or how much there would be. ``We are in active dialogue,'' he said. ``It's
too early to know amounts or precise methods, which will depend very much on
how the situation evolves.'' 
Russia has not requested financial help, and direct bilateral assistance
from the United States is not anticipated, the official said. The
administration has said it considers efforts by Russia's Central Bank to
prop up the ruble against devaluation is ``an appropriate strategy.'' 
Clinton reiterated his backing for a new economic program Russia
announced Friday, which includes the ruble supports. The program will
``strengthen the fundamentals of the Russian economy and foster maintenance
of a stable ruble,'' the president said. 
IMF officials have said that, based on the new measures, they will
recommend releasing a delayed $700 million loan installment to Russia. 
Russia's new program includes a crackdown on tax dodgers and a stepped-up
effort to collect taxes, so as to ensure enough cash to pay workers and fund
social programs. 

********

#2 
Russian PM sees worst of crisis over 
By Oleg Shchedrov
May 31, 1998

MOSCOW (Reuters) - Prime Minister Sergei Kiriyenko said Sunday the worst of
Russia's financial turmoil was over, but predicted new attacks by political
foes of his month-old government.
In yet another sign of backing for Kiriyenko, the United States said it
would support extra funding for Russia from international lending agencies
to calm markets and help Moscow cope with the knock-on effects of Asia's
economic crisis.
Asked in an interview with NTV commercial television whether the worst
was over, Kiriyenko replied: "Yes, we may say so."
"But this does not mean at all that we can relax," added Kiriyenko, who
gave the interview at his country home. "Even when the temperature goes
down, the patient stays unwell for some time."
Last week shares sank to prices not seen since the end of 1996 and
treasury bill yields soared, forcing the central bank to triple interest
rates to 150 percent to protect the ruble.
The bank's tough action was backed by the government and shares partially
recovered by the end of the week when the International Monetary Fund
promised Russia over $500 million by the end of June.
On Sunday U.S. President Bill Clinton gave Kiriyenko's government an
extra boost.
"The United States endorses additional conditional financial support from
the international financial institutions, as necessary, to promote
stability, structural reforms and growth in Russia," he said in a statement
released by the White House.
Economy Minister Yakov Urinson said the Central bank would soon start
reducing its refinancing rate.
"The refinancing rate will start moving down this week or the next week
for sure. Financial markets will get back to normal then," he told state-run
RTR television.
But Kiriyenko was more careful with his predictions.
"The rate will remain high as long as needed to stabilize markets," he said.
Kiriyenko said the crisis has been prompted by a chronic growth of state
debt as a result of borrowings at home and abroad to cover soaring budget
deficits.
He said the situation was aggravated by Asian financial turmoil, falling
oil prices and recent protests by unpaid Russian coal miners, who blocked
key railway arteries for nearly a fortnight earlier this month.
Kiriyenko said his government, installed by Yeltsin in March and
confirmed by the Communist-dominated parliament a month later, had worked
out a plan to make Russia live within its means.
The program includes austerity measures aimed at cutting spending and
boosting revenues mainly through tougher tax collection.
But Kiriyenko admitted that last week's market turmoil had left his
government little time to act.
"When we drafted our program in early May, we thought we would have a bit
more time," he said. "The crisis left us none."
Kiriyenko said he expected the State Duma lower house, which resisted
Yeltsin's attempts to nominate him, would try to force through a
no-confidence vote in his government in the autumn.
"No matter how it (the economic situation) develops, I can predict with a
high degree of probability that this is likely to happen," he said.
"But we need to stop the vicious circle of covering deficits with new
debts," Kiriyenko added. "We must undertake complex measures to achieve
structural changes in the economy, whether or not there is a vote of
no-confidence."

*******

#3 
Baltimore Sun
29 May 1998
[for personal use only]
Russia returns to its normal worries
Economic crisis fades, but some ask how long forbearance can last
By Kathy Lally 
Sun Foreign Staff 

MOSCOW -- With the ruble strengthening and stock prices rising yesterday,
the latest Russian economic crisis began to subside. Ordinary citizens
returned to what they do best -- persevering and hoping for the best.
Some, however, were wondering how long that forbearance could last.
"The economic situation is very critical," said Ludmilla Telen, deputy
editor of Moscow News. "And what is the government doing? They're calling
out the firemen and putting out another fire. [Prime Minister Sergei]
Kiriyenko is doing it well. He's organized and decisive. But he's only
putting out a fire."
The latest blaze flared up Wednesday as panic selling forced the stock
market down and pressure mounted on the ruble. The central bank tripled the
interest rate it charges on loans to banks, from 50 percent to 150 percent,
to help protect the ruble because collapse would have been disastrous for a
country living on imports. "I want to hope as always, but honestly speaking,
I'm worried," said Svetlana Osina, an unemployed economist who stopped to
talk on a downtown street yesterday. "In principle, the economy is a
constant problem, and I worry that the longer it goes on the worse the
consequences will be."
While Osina worried about the possibility of rising prices, newspapers
and television broadcasts were raising alarm about the stock market, which
had fallen to 50 percent of its earlier value by Wednesday. Oleg Vyugin,
deputy finance minister, tried to explain yesterday what had happened.
"It can be described in one word, `panic,' " he said at a news
conference. "This panic was provoked by the fact that the professional
market players had been informed or had come to the conclusion that the
securities they held could fall even further and that they should get rid of
them."
Though the stock market here is frequently cited as an economic
barometer, few Russians actually have a stake in it.
"The stock market is a great thing," said Bruce W. Bean, chairman of the
American Chamber of Commerce of Russia, "but it's totally unrelated to
anything. Do you know any Russians who own stock? It's totally unrelated to
average Russians -- and rich Russians. It's a media event."
The real economy is not the capital market, he said, so the effect of
plunging stock prices in Moscow is limited. "It means a couple of the
brokers won't be able to put gas in their Blazers or Jeeps," he said.
The crisis more likely is because of an attack on the ruble by currency
traders, Bean said. "It comes from computer terminals which are not located
in Moscow."
Vyugin, the deputy finance minister, said Russia was bedeviled by a
number of negative factors at one time -- including speculation.
The Asian financial crisis has made investors more cautious, Russia has
been sapped by low world oil prices, and internal politics have taken their
toll, he said. President Boris N. Yeltsin's dismissal of his prime minister
and the time it took for Kiriyenko's confirmation meant the government
worked very slowly for a month.
And, he said, the State Duma shook investor confidence by passing a law
limiting foreign shares in the giant UES electric company to 25 percent --
even though foreign investment was already close to 30 percent. How that
contradiction will be sorted out has not yet been resolved.
That's the kind of thing that scares off foreigners and threatens what
Russia needs most from them, Bean says.
"What's important about investors is the jobs they bring," he says.
"McDonald's has trained around 13,000 to 14,000 people to smile. And that's
why you still have Russians lined up outside on a rainy weekend, waiting to
get in. They've created a comfortable place. That's real. That's meaningful
for Russia in the long run."
Investors also say Yeltsin cannot achieve stability unless he can push a
tax code through the Duma. The country's troubles have been aggravated by
low tax collections blamed on an arbitrary and avaricious tax system.
The tax laws are held in such contempt that well-known public figures
have no compunction about saying openly that they don't pay what they
should. Yesterday, Yeltsin promised to go after such celebrities and
threatened that heads would roll in the tax collection department. He
planned to sign a decree today allowing authorities to seize tax debtors'
property.
And some officials were still hoping that the International Monetary Fund
would step in with a loan to bolster Russia's financial reserves.
"It would play a big positive role and quickly normalize the situation,"
Vyugin said.
The financial crisis will be a long time in the resolution, most experts
said, but at least the panic was dying down.
Vladimir Gusinsky, a billionaire banker and media magnate, looked
positively calm by yesterday afternoon. He declined to admit any uneasiness.
Had he slept last night?
"Very badly," he said, then smiled. "But maybe because I had an argument
with my wife."

*******

#4
From: "Nicholas Pilugin" <nwpilugin@glasnet.ru>
Subject: Moscow expat email list
Date: Sun, 31 May 1998 

David:
I've launched an email listserv for expatriates living in Moscow. Primarily
a way for expat here to seek and share information, discuss life in Moscow,
make new friends, etc. I would appreciate it if you could add information
about the listserv in one of your dispatches.
Regards,
Nicholas Pilugin

ANNOUNCING…
THE MOSCOW EXPAT EMAIL LIST

The EXPAT list is here - ready to help you get in touch, correspond and
trade information with fellow English-speaking expatriates living in
Moscow.

Looking for a store that sells your favorite hot sauce, information about
visas, or tips on where to spend a long weekend? Want to find someone with
an interest in Dostoyevsky, a dining club, or advertise a club or social
event? The EXPAT list is the place to inquire.

TO SUBSCRIBE:
All you need to do is send a message to: listserv@irex.ru and in the
message on a single line write: subscribe expat. The email server will
automatically add your email address to the list. The list is located on
the Russian Internet server of IREX, the International Research and
Exchanges Board, which is providing the service free of charge.

HOW IT WORKS
Whenever someone send a message to the list it will be automatically
forwarded to you email address. The message will be downloaded with the
rest of you email. You can then reply to the entire list by simply using
the autoreply function of your email program, or if you prefer, you can
send a message directly to whoever sent it in the first place.

A COUPLE OF RULES
The list is intended as a community service. There is no charge to
subscribe (other than what you email service provider charges you for
connect time and mail volume). 

The list is non-commercial; no advertising or solicitations to purchase
commercial goods or services will be allowed; personal "for sale" notices
and help-wanted ads are permitted. 

List subscribers are expected to treat one another with courtesy. Anyone
violating these rules will be stricken from the list.

QUESTIONS?
If you have any questions contact the list manager, Nicholas Pilugin, at
nwpilugin@glasnet.ru.

********

#5
Date: Sat, 30 May 1998 15:07:30 -0400
From: Lozansky@aol.com (Edward Lozansky)
Subject: Conference on Russia in Washington, June 7 -8

Third International Conference on 
PAST, PRESENT, AND FUTURE OF RUSSIA
June 7 - 8, 1998
Dedicated to the founder of Kontinent Magazine Vladimir Maximov 
Organized by: American University in Moscow, Russian Academy of Sciences,
International Pen Club, Kontinent Magazine, Russia House.
(First Conference was in Paris in 1996, Second in Moscow in 1997)
Leading cultural, political, and literary figures from Russia and the West
will discuss Russian history, analyze the current situation, and discuss the
future of democratic reforms. The Program will feature the following plenary
and concurrent sessions:
Literature, History, Culture, Education, Foreign Policy, National Security,
Crime, Law, Economics.

Conference proceedings will be published in a special edition of Kontinent
magazine. 

Those interested in participating with or without a paper should fill out the
form below and mail or fax it to the following address: American University in
Moscow, 1800 Connecticut Avenue, NW Washington, D.C. 20009. Tel. 202-
986-6010; Fax 202-667-4244; e-mail: Lozansky@aol.com 

-------------------------Fill out and mail or
fax--------------------------------
Last_____________________________First_________________________

Organization___________________________________________________

Address________________________________________________________

City______________________State_________Zip_______Country_______

Phone____________________Fax________________E-mail____________

Proposed paper topic____________________________________________

_____________________________________________________________

$125 registration fee which covers conference materials and opening and
closing receptions at Russia House can be paid by check made out to American
University in Moscow or charged to a credit card.

Visa___Mastercard___AE___Account_______________________________
Expiration Date_________Signature________________________________ 
For more information please contact:
Edward Lozansky 
President, American U. In Moscow 
1800 Connecticut Ave, NW 
Washington, D.C. 20009 
Tel(202)986-6010;Fax(202)667-4244 
E-mail: Russia@Russia-House.com
P.S. If you are interested in participating with or without a paper please
send by regular mail, e-mail or fax your registration form and a short
abstract. 

THIRD INTERNATIONAL CONFERENCE
PAST, PRESENT AND FUTURE OF RUSSIA
June 7 - 8, 1998 Washington, D.C.
Conference at Hotel Ritz Carlton, 2100 Massachusetts Avenue, NW, Tel.
202-293-2100
Receptions at Russia House, 1800 Connecticut Avenue, Tel. 202-986-6010
Dedicated to the Founder and Editor-In-Chief of Magazine Kontinent,
Vladimir Maximov

PROGRAM
Sunday, June 7
2 - 3.30 pm Remembering Vladimir Maximov
Chair Edward Lozansky, American University in Moscow 
Andrei Dementiev, poet, Russian TV journalist
Aron Katsenelinboigen, University of Pennsylvania
Tatiana Maximova, Kontinent, France
Mihajlo Mihajlov, George Washington University 
Ernst Neizvestny, sculptor
Gennady Osipov, Russian Academy of Sciences
Igor Vinogradov, Editor-in-Chief, Kontinent
Solomon Volkov, writer
3.30 - 4.00 pm Coffee break
4.00 - 6.00 pm Russian Economy and Law
Chair Andrei Vavilov, Russian Institute of Economics
Vitaly Bruckman, Context Solutions
Aron Katsenelinboigen, University of Pennsylvania
J.T. Kotilaine, Harvard University
Kirill Novoselskiy, Ural State University of Economics
Larissa Piyasheva, economist, Kontinent, Russia
Noah Rubins, Harvard Law School
Stuart Umpelby, George Washington University
6.00 - 8.00 pm Cocktail Reception
Monday, June 8
10 - 12 am Foreign Policy and US - Russian Relations
Chair Ariel Cohen, Heritage Foundation
Steve Biegun, Senate Foreign Relations Committee
Mark Gage, House Foreign Relations Committee (invited)
Alexei Golovkov, Russian State Duma
Edward Lozansky, American University in Moscow
Gennady Osipov, Russian Academy of Sciences
Michael Ryan, Pentagon (invited)
Martin Sieff, Washington Times
John Windhausen, St. Anselm College
Stephan Wolff, Keele University, England
Nikolai Zlobin, Webster University
12 - 2.00 pm Lunch Break
2 - 6.00 pm Literature, Culture, Ideology, Education, Religion
coffee break
from 3.30 to 4 Chair Igor Vinogradov, Editor-in-Chief, Kontinent
Marina Adamovich, Kontinent, USA
Boris Gershunsky, US - Russian Center "Education and Future"
Georgiy Kochetkov, Russian Orthodox Church
Taira Koybaeva, Utah State University
Yakov Krotov, Kontinent, Russia
Georgiy Priachin, Publishing House "Voskresenie"
Nikolai Rzhevsky, State University of New York at Stony Brook
Andrei Zdanski, Kontinent, Russia
Andrei Zubov, Kontinent, Russia
6 - 8.00 pm Cocktail Reception 

********

#6
Duma Committee Head Lukin Expresses 'Alarm' Over Some US Views 

Voice of Russia World Service
27 May 1998

On the threshold of the new millennium, humankind is now seriously
pondering the world order of the next, 21st, century. We asked the
chairman of the Committee on Foreign Relations of the lower house of the
Russian parliament, Vladimir Lukin, to express his views on the matter.
[Begin recording] [Lukin, in Russian, fading into English translation]
A new, more effective, world order is necessary in the 21st century, but it
is easier said than done. I think the establishment, and then development,
of this new world order will be linked with the strengthening of the role
of the United Nations and its regional organizations. But there is a
possibility that this salutary process may be hampered by a desire for
global domination of some influential circles in the United States.
The United States could play a major role in the formation in the 21st
century of a new democratic world order. It will remain the most powerful
country and it has strong democratic traditions. But what is happening in
the United States now cannot but cause alarm among all sober-minded people,
and I saw this during a recent visit to the United States by a Russian
parliamentary delegation.
The position of the US Congress on some major international issues
does not correspond with the realities of the modern world. A number of
Congressmen speak of America's absolute leadership in the world. They do
not want to take into account the interests of other countries and the key
role of the United Nations in international affairs. This position of the
American lawmakers is disappointing. It is a good thing that the Clinton
administration is not heavily influenced by lawmakers.
But Russia and most countries of the world are not fully confident
whether America will be able to give up its claim to global domination. 
The future world order and the future of the United States in the next
millennium depends on this question. [end recording]
An opinion from Vladimir Lukin, chairman of the Committee on Foreign
Relations of the lower house of the Russian parliament.

*******

#7
From: "nikst" <nikst@glasnet.ru>
Subject: Web site of Alexander LEBED'
Date: Mon, 1 Jun 1998 05:37:02 +0400

Dear David,
Here is the (new) web site of Alexander LEBED:
http://www.alebed.org/

In Russian only

Here is the URL of the Press-Center

http://www.alebed.org/win/index.htms/PRESS

E-mail to RNRP: RNRP@public.krasnet.ru

Obviously, it was created *before* the Gubernatorial election,
but there is already new information on the site right now:
about results of the election etc.

********

#8
Los Angeles Times
May 31, 1998 
[for personal use only]
RUSSIA 
A New Government and a New Crisis Will Test Yeltsin's Staying Power 
By STEVEN MERRITT MINER
Steven Merritt Miner, Associate Professor of History at Ohio University, Is
Author of "Stalin's Holly War," to Be Published This Year

COBHAM, ENGLAND--Russian President Boris Yeltsin is a man who
thrives on crisis, yet he always has found day-to-day governance more
problematic. Now he faces an economic emergency much like those still
sweeping through Asia, toppling governments in their wake. Unfortunately
for Yeltsin, the causes of Russia's economic ills run too deep to be solved
by the sorts of grand gestures that have served him so well in the past. 
Russia's latest political and economic crisis has been brewing at least
since March, when Yeltsin disappeared from public view, suffering from one
of his increasingly frequent and obscure medical complaints. His absence
triggered another round of speculation about the inevitable succession. The
issue is a vital one, since the presidency is the overwhelmingly powerful
post in Russia. The legislature, or Duma, has only two significant powers:
the right to vote on the budget and to approve ministers nominated by the
president. 
When Yeltsin returned to center stage, he promptly fired his prime
minister, Viktor S. Chernomyrdin, and virtually his entire Cabinet.
Chernomyrdin was widely respected, had secure political connections with
Russia's vital energy industries and seemed to be unswervingly loyal to his
president. The reasons for his firing remain unclear. 
Yet, the most plausible reading of Yeltsin's dramatic governmental
reshuffle is that he was seeking, by means of the grand gesture that he
always favors, to demonstrate that he is tackling Russia's key problems.
These problems are grave indeed. Every poll suggests that the Russian
people feel at least as disengaged from politics today as they ever did
under communism, despite the trappings of democracy. 
The economy stagnates as miners and other workers strike for pay arrears of
many months, interest rates have risen to an unsustainable 150% per annum
and as much-needed foreign capital flees the political, legal and social
volatility of Russia. In the last week alone, the Russian stock market lost
10% of its value and the ruble came under enormous pressure as foreign
speculators dropped their Russian currency holdings. 
Average Russians, who do not have the kind of retirement investments that
have boosted Western stock prices, do not much care about the fate of
investments. But should the government be forced to devalue the ruble, this
almost certainly would reignite hyperinflation, the ending of which is one
of Yeltsin's few economic achievements. Furthermore, the lots of average
Russians are deteriorating even as they watch the so-called "new Russians"
enrich themselves on the pickings of the Soviet industrial carcass, once
touted to be the common property of all citizens. 
In the years since Mikhail S. Gorbachev's failed attempts to revitalize the
U.S.S.R., Russia almost has ceased to be an industrial economy. Instead,
like other developing nations, it survives by selling raw materials and
commodities to the more advanced West. Above all, this means energy. Russia
sits astride roughly 20% of the world's known oil reserves and 40% of its
natural-gas fields. Although the prices for both resources have been
dropping recently, Russia's holdings represent the last great frontier in
the energy business. Furthermore, following a great deal of political and
back-room wrangling, Russia's oil industries are scheduled for
privatization later this year. It is as though a vast, continentwide
bankrupt estate is about to go under the auctioneer's hammer. 
Accordingly, the terms of privatization are critical. Understandably,
virtually all Russians agree that ownership must be kept in Russian hands.
There, however, agreement ceases. Some hope, idealistically, that ordinary
Russians might be able to share in the bonanza. More realistically,
Russia's robber-baron banking elite wants to carry off the juiciest bits of
carrion without the bother of open competition. In fact, led by the media
king and banking magnate Boris A. Berezovsky, they contend openly that this
is no more than their just desserts. 
When Yeltsin ran successfully for reelection in the summer of 1996, these
shady financial titans opened their purses and provided lavish and glowing
television and radio coverage favoring his campaign. As a result, Yeltsin
soared from a 5% public approval rating in early 1996 to defeat a strong
challenge from the communist candidate, Gennady A. Zyuganov. Their
assistance did not stop after the election. Yeltsin's government
consistently has proved unable to collect taxes from outlying regions and
from businesses. The president's generous banking friends stepped in with
bridging loans, accepting as collateral the choicest plums of the
state-owned economy. As the Russian state defaults on its debts, the
country's wealth has thus fallen into private hands. 
Berezovsky has crafted a Social Darwinian theory to justify this outcome;
in his view, the state ought to be unashamedly controlled and managed by
the most able financial men, whose abilities can be gauged by their
capacity to amass wealth. In this way, Berezovsky says, Russia as a whole
will benefit. Clearly, this is a view with limited public appeal, and it
confirms most Russians' gloomy--and, sadly, not entirely misplaced--beliefs
that one set of communist masters has been replaced by another gang of
capitalist bosses. 
With his latest round of government appointments, Yeltsin may be trying to
address this growing problem. His appointee to the post of prime minister,
whom he drove through a reluctant Duma, is Sergei V. Kiriyenko, a
35-year-old too young to have held a responsible position under the Soviet
order. Unlike Chernomyrdin, who rose to prominence in the energy sector and
seemed ready to sell off the Russian oil company Rosneft on favorable terms
to the banking elite, Kiriyenko is less tainted as an insider. He has
served as Yeltsin's energy minister since last November, so he has some
experience in what is clearly the most important sector of the Russian
economy, but he has not been around long enough to gain notoriety. 
Kiriyenko began his political career as a protege of Boris Y. Nemtsov, the
former mayor of Nizhny Novgorod, the old industrial city on the Volga that
has managed to retool and is now the closest thing to a success story
Russia's wounded economy has to offer. For unclear reasons, perhaps related
to Kremlin infighting, Kiriyenko leapfrogged his old patron to gain the top
position. Nemtsov was left with the still-significant energy ministry.
Yeltsin apparently believes that his new, younger and more reformist team
can convey the image that his government is earnest about countering the
corruption of money and creating a functioning market economy. He may also
see it as a way to distance himself from his erstwhile big-money backers. 
His former allies may see things the same way. Berezovsky has financed the
successful campaign of Alexander I. Lebed for the governorship of the
Krasnoyarsk region, an area almost as rich in natural resources as it is in
idle, obsolescent factories. Lebed placed third in the presidential voting
of 1996 and is a former general who trades on his image as an incorruptible
patriot. It is a politically powerful image in a country that still names
the army as its most trusted institution. That Lebed is accepting financial
assistance from the same man who helped keep Yeltsin in office may indicate
that Russia's big money is already jockeying for the post-Yeltsin era. 
It is too early to tell whether Kiriyenko's steely determination to halt
the speculative attack on the ruble will preserve the stability of Russia's
currency and forestall the return of hyper-inflation. It is even more
doubtful that, by means of Cabinet reshuffles, Yeltsin can distance himself
in the public mind from the corruption and stagnation that have
characterized his second term. Nonetheless, if he makes any headway at all
in these directions, he will once more have confounded his critics and
proved yet again that he is a very impressive political escape artist indeed. 

********

#9
Chubays on New Government, Economic Policy 

Novoye Vremya
3 May 1998
[translation for personal use only]
Interview with Anatoliy Chubays, former vice-premier, conducted by
Andrey Kolesnikov: "Battle With Oligarchs Cannot Be Treated Like a
Political Campaign; Former Vice-Premier Believes That Kiriyenko Government
May Turn Out To Be Better Than Chernomyrdin Government"

In essence, nothing has changed. Anatoliy Chubays, as before, has very
little time. As always, he is terribly busy. His apparatus works like a
machine. On his desk is the customary picture: Two operating computers. The
unfailing political mechanism called Chubays continues to operate in the
customary regimen...
From Compromise To Command Government
[Correspondent] Anatoliy Borisovich, let us, after all, return to the
circumstances of your second resignation. On the first day of the
government crisis, you said that you set for yourself the task of leaving.
But, specifically, why leave?
[Chubays] I had worked 7 years. That"s enough. Is that not
convincing?
[Correspondent] But is that an answer?
[Chubays] I can say one thing: This was my own decision and, beginning
with the end of January, I built the technology of its realization,
understanding that it would not be easy, that this event would be
unexpected for the president. Then there was also the dismissal of
government. But, honest to God, this did not enter into my plans. I was
resolving my own problems.
I believe that, in the sum total of the adopted decisions, the
dismissal of cabinet may bring a positive result, and that Kiriyenko is
capable of making a government better than ours. This will mean that the
entire set of decisions was correct.
[Correspondent] And why will the new cabinet be better than the
government in which you worked? Because the former one was a coalition, and
now it will become a command government?
[Chubays] The former government was not a coalition
government--that is not an entirely precise definition. Nevertheless,
Chernomyrdin held a singular position within the cabinet of ministers.
Rather, it was a compromise government. The Chernomyrdin government was
seeking--and in a certain sense this was inevitable--a compromise
position between the primary forces: The communists in the Duma,
Berezovskiy, and so forth, trying to please everyone. I will repeat once
again--it really was inevitable. It is ludicrous to talk about the
fact that there can be a government independent of everyone. The question
lies in the degree of independence. As I believe, this degree was somewhat
excessive.
It is good that Kiriyenko had a hard time getting approval. This is
proof of the fact that there is a real possibility of building a government
which is significantly less compromising and significantly more
goal-oriented. Or, if you will, a possibility of achieving economic
dynamics and economic impetus at the price of a certain complication or
even exacerbation of the political situation. The president opted for this
exacerbation--moreover, both with the Duma communists and with the
oligarchs. That means we have the opportunity to formulate a government
capable of taking steps which are absolutely necessary for the economy and
for the state, and which are very much not to the liking of the opposition
and Berezovskiy.
[Correspondent] But the negotiations which Kiriyenko conducted
indicate an entirely opposite general direction. It seemed that he was
agreeing to concessions wherever possible. It is understandable that these
were tactical concessions, but is not the strategic perspective lost here?
[Chubays] In order to get to sort out this matter, we must answer the
question: What, specifically, was conceded? What did Kiriyenko proclaim
that could be appraised as a concession of positions? To conduct
negotiations with everyone&mdash;that is direct official duty. I believe
that he did everything correctly.
The Economy "Without Chubays"
[Correspondent] What is happening in the Russian economy "without
Chubays?"
[Chubays] January, February, March&mdash;this was the period during
which there was a certain complication of the situation. There are sime
sore points, as for example the growth of indebtedness on wages&mdash;from
one billion to three. (At the same time, if you recall where we began... In
the Summer of last year, the indebtedness comprised 14 trillion "old"
rubles (R)). The situation is similar also for pensions. Things are not
going too well on the finance market, either. The GKO [state short-term
bonds] market is slowly deteriorating, and the corporate market is
gradually declining. The Russian economy is not so strong that it does not
notice the absence of government.
If we speak of basic parameters, the situation is not so dismal.
Specifically, the tendency of inflation is positive. We are moving at a
good pace toward negative inflation this summer. If there are no glitches,
the annual indicator may prove to be less than 7 percent.
Thus, we have a certain complication of the situation, but not a
return to the situation of Spring-Summer of last year. We need strict
concentration of the government, firm pressure of action. And many steps
are already begin undertaken. Certain decisions which we prepared have been
"pushed through." However, we could not "push through," specifically, the
very important decision on restructuring the indebtedness of enterprises to
the budget. Rational solutions have been prepared, which should remove the
problems with wages in the regions. We simply paid out the wages--the
term was very strict: We asked the president for a year, and he gave us
half a year. We proceeded at the maximal level of that which the federal
budget allows. But now the government is ready to take a principally new
step: Not simply to pay wages, but to reform the budget and finance system
of the regions. In other words--to accelerate reforms in the regions.
[Correspondent] Do you have the opportunity to influence governmental
policy? Have they come to you for advice, or do you yourself help the
cabinet of ministers for "old time"s sake"?
[Chubays] I try to do this as little as possible now. Especially since
there have been people who consciously used the bugaboo of Chubays"
influence on the cabinet of ministers as an instrument for undermining the
vote on Kiriyenko. I did not even participate in development of the
program.
Generation X and the Oligarchs
[Correspondent] One gets the impression that the Kiriyenko cabinet may
turn out to be a government of a new type. A new generation is coming to
power--the "very young reformers" are coming to replace the "pragmatic
economic managers" and the "young reformers." Moreover, this generation is
free of the complexes of its predecessors, has already worked in the
market, and knows the administrative mechanisms. Do you agree with this
appraisal?
[Chubays] This government really can turn out to be just as you say.
Even as compared to me, Kiriyenko represents a different generation. This
has its pluses and its minuses. The minuses are those which have been
mentioned in the Duma: Insufficient experience for managing a huge country.
But the pluses outweigh them: These are not simply young people&mdash;they
already have certain things to their credit. That very same Kiriyenko has
experience in managing an enterprise in a principally new economic
environment. It seems to me that this provides the opportunity to make the
remaining two years until the election years of economic breakthrough. The
government may become absolutely accessible and highly professional,
understanding deeply and precisely what must be done and how, devoid of
excess love for compromises with everyone, and capable of acting in a
consistent manner to ensure economic uplift. The prerequisites for this do
exist. Perhaps it is correct that slightly different people, with a
different mentality, must ensure the uplift of the economy.
[Correspondent] Does this mean that the time of the oligarchical model
of capitalism is coming to an end? Or do the oligarchs still retain the
channels of influence on politics?
[Chubays] Perhaps this idea may seem strange on my lips, but I believe
that the channels of influence of the oligarchs must always exist. To cut
off these channels means to deprive the government of feedback, of the
ability to understand how its actions are being perceived. Therefore, we
cannot treat the battle with the oligarchs itself as a political campaign.
Instead, we must treat it as a problem of state construction, which
significantly changes the emphasis.
[Correspondent] Many speak today of the fact that the Kremlin
administration in fact controls the government. Does this correspond to
reality, and will Kiriyenko be able to become a figure independent of the
Kremlin leaders?
[Chubays] He should not become a figure which is absolutely
independent of the Kremlin leaders. The President of Russia is in the
Kremlin. According to the constitution, we have a presidential republic.
Therefore, it seems to me that there is Kremlin work, and there is
government work. Kremlin work consists of building and re-building the
government. At the same time, it would be a mistake if the administration
begins to solve problems for the government.
When I worked in the president"s administration, I was
persistently asked, especially at first, to formulate a strong economic
administration. However, I rejected this idea. Aside from the
president"s economic adviser, Sergey Ignatyev, there were no economic
subsections. I believe that is as it should be, because, in the
administration, the absence of influence on the president is just as
dangerous as too much influence on the cabinet of ministers. In the sphere
of political policy, as I call it, in the sphere of political interaction
with the mass media&mdash;the administration holds all the cards. In the
sphere of economic policy, even the very participation of the
administration is extremely harmful.
[Correspondent] Does Viktor Chernomyrdin retain influence on political
processes today, or has he been dealt out of the big "game?" 
[Chubays] No, he has not been dealt out. Of course, my influence is
retained. Although I know by my own experience how difficult a period
Viktor Stepanovich will now have to undergo. What you said yesterday was
pereived as the truth in the latest instance. And then, suddenly, it evokes
total discontent, or simply ironic laughter. This is a very difficult
stage, including also in a psychological sense. There is one more danger
during this period: The appearance of false friends.
When this difficult time passes for Stepanovich, his influence on
politics will be retained. Although, of course, it will be less than
before.
The State and Monopolies: Period of Mutual Understanding?
[Correspondent] The primary tasks of the government for this year are
economic growth and restructuring of the natural monopolies. What are the
natural monopolies in 1998? Are they capable of "breaking" the government,
or is this not among their tasks?
[Chubays] The natural monopolies have passed through several stages in
their history. There was the stage when they were generally considered to
be sacred cows which could not be touched. Then there was the stage when
certain radical decisions were outlined with somewhat excessive zeal. Yet
there has never been a stage which is constantly being attributed to us,
called "break-up." This is something from the sphere of a judicial-medical
expert investigation... Now the stage of a meaningful and sensible approach
has ensued, when we may clearly define what must be controlled by the state
in the sphere of the natural monopolies, what it must control in the sphere
of tariffs and investment policy, how flexible this control should be, by
what methods it should be implemented, how the state represents its own
interests on the board of directors, what the powers and authorities of the
collegium and Mingosimushchestvo [Ministry for Administration of State
Property] are, and what right the state gives to its representatives. To
say the least, the mutual cautiousness of the state and the managers of
natural monopolies is gradually fading away, and the period of mutual
understanding is ensuing, with recognition of the interests of both sides.
It seems to me that in the general political plane, we have come to that
stage when we may deal with these sectors in a meaninbgful manner.
[Correspondent] The Chernomyrdin "clan" is currently leaving the
government. Will this make Gazprom"s life more difficult?
[Chubays] Yes and no. We may criticize Gazprom for more rapid or less
rapid transformations within its own internal structure. However, in my 6
years of work in the government, I cannot cite any blatant examples of
Gazprom"s intervention into state policy. I did not feel that
Vyakhirev exerted any pressure on me or fought for implementation of some
general political decisions. It is specifically for this reason that there
will not be any gigantic decline in Gazprom"s role in the political
life of the country today. Gazprom did not persistently impose this as its
role during the preceding stage. Especially if we compare this natural
monopolist with some of our other oligarchical structures...
[Correspondent] Some strange things are happening today with
privatization--with that very same Rosneft, for example. The process
of its sale is becoming long drawn-out and tormenting. As yet, there is
still no clarity in regard to the list of privatized enterprises and the
privatization program. And so forth. What is this stage which has ensued in
the history of Russian privatization?
[Chubays] This stage began a bit earlier--with Svyazinvest, when
we managed to drastically move ahead in terms of the quality of
privatization itself. Not to mention the fact that the budget received
interest-free income. Even the most fervent opponents of what was going on,
those who had built a forceful campaign of pressure exerted on the state,
admit certain advantages of this stage of privatization. One of our
opponents recently told me: "You know, Anatoliy Borisovich, after
Svyazinvest it became very difficult to give a bribe." Then, I must admit,
he added: "And that is good."
This was a breakthrough for which we had to pay a very high political
price. However, if we judge by the ratio of the price and the obtained
result, it was worth it.
Rosneft was the second step in the same direction. There were also
fierce battles over it. People who believed themselves to be the current
owners of Rosneft fiercely opposed holding an auction. Their last hope was
the attempt to organize a conspiracy of buyers who refused to participate
in the auction. In this way, the deal was to have fallen apart. So that the
second stage is also proceeding in a difficult manner, with concentration
of all the government"s political forces. However, this is not
specifically the second stage&mdash;it is a stage called "second b)." The
stage "second a)" has passed. The program of privatization may now be
adopted: After all, Chubays is gone, and communists, having adopted the
program, can save face... Although, of course, if the Rosneft auction is
undermined, this will become a landmark event.
[Correspondent] Anatoliy Borisovich, when will your book on the
history of privatization be published?
[Chubays] The editing of the book is in its concluding stage. It will
see the light somewhere between June and August.

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