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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

June 9, 1998   
This Date's Issues: 2211  2212



Johnson's Russia List
#2211
9 June 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Financial Times (UK): Stephen Fidler, RUSSIA: $10bn federal 
budget 'misspent.'

2. Yeltsin Radio Address Reviews Financial Situation.,
3. Informatsionnoye Agentstvo Ekho Moskvy: Businessmen Urge Support 
For Government Economic Measures.

4. Reuters: Russian tax collection tough to improve.
5. Reuters: IMF sees no urgent need for more Russia aid.
6. Kris Worrell: Nikolai Bukharin book.
7. Hippocrene Books: Lynn Visson, "WEDDED STRANGERS: The Challenges 
of Russian-American Marriages."

8. Moscow Times: Dmitry Zaks, U.S. Reviewer Pans Kokh's Pricey Book. 
(Marshall Goldman).

9. NTV: Yeltsin Addresses Governors, Calls for Economizing.
10. Interfax: Russia's Interior Minister on Growth in Crime Rate.
11. Reuters: Drug-taking threatens Russian AIDS explosion.
12. Komsomolskaya Pravda: Acquaintances Recall Kiriyenko Formative 
Years.]


******

#1
Financial Times (UK)
9 June 1998
[for personal use only]
RUSSIA: $10bn federal budget 'misspent'
By Stephen Fidler in Washington

At least one-sixth of Russia's federal budget was misspent last year, 
according to a senior auditor who is also a critic of President Boris 
Yeltsin's reformist government.
Venyamin Sokolov, head of the Chamber of Accounts of the Russian 
Federation, indicated that the equivalent of at least $10bn had gone 
astray through mismanagement, corruption and for other reasons.
In an interview in Washington, he said Russia's finance ministry had no 
systematic way of accounting for income and expenditure and had resisted 
attempts to persuade it to put a transparent accounting system in place.
Control over state money is a long-standing problem for the finance 
ministry. However, Russian officials and the International Monetary Fund 
say the situation has improved markedly this year with the introduction 
of a western-style treasury system.
Mr Sokolov said that last year about $10bn had not been spent as legally 
directed - about one-sixth of the federal budget. "This is only the sum 
we've got documentary evidence for. My estimate is the real total is 
double that amount."
Mr Sokolov said the finance ministry resisted pressure to improve its 
accounting because "it allows them to do what they want with the federal 
budget".
The Chamber of Accounts, which was established in 1995 to monitor 
government spending, is an agency with a strong Communist contingent 
which has long been viewed with suspicion by Russia's market reformers. 
Mr Sokolov was deputy head of the old Supreme Soviet which was dissolved 
in 1993 after becoming involved in an uprising against Mr Yeltsin.
Mr Sokolov said that audits for 1995 and 1996 indicated that "not a 
single article of the federal budget law was observed".
Mr Sokolov cited one case where a $150m government credit was provided 
to the Moscow Aircraft Production Combine to manufacture Mig-29 jets for 
delivery to India. "As a result of our audit, we found that there did 
not exist and still does not exist any contract with India for the 
delivery of aeroplanes. In any case, the planes had already been built 
and were in place on factory land," he said.
The money ended up in speculative financial markets and a criminal 
investigation is under way.
Hundreds of millions of dollars aimed at the reconstruction of the 
Chechen economy also never arrived, he said.
Mr Sokolov said he did not have precise information about what happened 
to foreign aid because the government did not release data and the 
Chamber of Accounts had not made it the subject of an evaluation.
However, he said much of the foreign aid found its way into Russia's 
financial markets. "There needs to be a radical change in the policy of 
the IMF and the US government," he said.

******

#2
Yeltsin Radio Address Reviews Financial Situation 

Informatsionnoye Agentstvo Ekho Moskvy 

Russian President Boris Yeltsin delivered his traditional address to
the people of Russia on 5 June. The address was broadcast by the Ekho
Moskvy radio at 0900 [0500 GMT].
Here is the full text of the address:
Esteemed people of Russia:
The Russian financial system is being put to a serious test. It has
been possible to make the situation considerably less acute but major work
still lies ahead. Why did the exacerbation of the situation on the
financial market become the focus of the government's attention? Why is
everyone talking and writing about it? Because the development of the
financial crisis might affect the stability of the Russian ruble and,
hence, result in price raises and a higher cost of living which we will not
allow, of course.
The main thing for us now is to protect the Russian ruble, which means
stability of prices. The government and the Central Bank acted clearly and
decisively to this end. In the last few days the shares of leading Russian
companies have fallen. This did not directly affect many ordinary citizens
but in the long run investment in our economy and industry encourages
growth of production and helps to create jobs. Therefore we simply ought
to protect our major companies, which are the main taxpayers, from the
aftermath of the crisis because their financial problems might cause
another delay in the payment of wages to state sector employees and others.
It is necessary to understand the causes of what happened and, above all,
we must be honest and admit that we ourselves are to blame for our
difficulties. The solution of a whole number of problems was in fact
disrupted. The most important of these problems is, of course, the
deficits in the federal, regional, and local budgets. We must all finally
learn to live within our means. We have said more than once that laws,
presidential decrees, and government resolutions must be supported by
funding. If funding is not provided for them, they will not be adopted. 
As president, I guarantee this to you.
The government's most important task is to stop incurring debts and to
use the budget rationally. Of course, it is impossible to achieve this
straightaway but we have no alternative. Tax policy should become tough in
the extreme and it is important that everyone knows about that. At a
meeting with the heads of tax departments I said: It is time to stop
asking and persuading. The time has come to demand and punish, including
criminal proceedings.
Under-collected taxes are salaries which people have not received. We
must learn from the West about tough tax discipline. Tax evasion is
regarded as one of the worst crimes there and punishment for it is most
severe. However, by tough measures alone one will not resolve the problem.
An efficient and flexible tax system should be set up which will be
convenient for everyone, the state as well as taxpayers. Such a system
will encourage economic growth, income growth for both enterprises and
private individuals and a curtailment of shadow businesses.
There are other reserves for replenishing the budget -- for example,
increasing revenue from the control of state property, including property
abroad. We often get less from its use than we spend on its upkeep. We
have also begun to reduce drastically expenditure on the state apparatus --
and, what's more, in all the branches of power. Excessive numbers,
extravagance, and duplication of functions are features not only of the
federal authorities but also of agencies of local power. It's time to stop
building luxurious administrative complexes. Take a look, after all as a
rule these are local administration buildings, treasuries, or nonbudgetary
funds of some kind. How can you look people in the eye who have not
received wages, pensions, or child benefits owed them for months after
that?
In a word, all power agencies must finally become zealous managers. 
Of course, one of the reasons for the crisis is the lack of experience of
working in conditions of an open economy but this has to be learned and as
quickly as possible. If we do not learn, we shall again see empty shelves
in shops and the words "shortage," "queue," and "ration coupons" will come
back into our lives. We are already fed up to the teeth with this. Entry
into the world economic community provides obvious advantages but also
harbors plenty of dangers. The government, the Central Bank, and other
economic structures, including nonstate ones, should be prepared to
overcome them or, even better, to prevent them occurring altogether. And of
course, in conditions of a market economy, laws should not appear which
drastically change the rules for domestic and foreign investors. If we ask
for long-term investment, then the rules must be stable and guarantees must
exist for many years to come.
Esteemed citizens of Russia! The state exists on taxpayer's money and
you have a right to demand efficient work from the executive, legislative,
and judicial branches of power. But the state has the right to expect from
its citizens a responsible attitude to their obligations as conscientious
taxpayers. Therefore, the combined efforts of everyone without exception
are required -- the authorities, the industrialists, the bankers, and the
ordinary citizens.
Thank you for your attention.

********

#3
Businessmen Urge Support For Government Economic Measures 

Informatsionnoye Agentstvo Ekho Moskvy
5 June 1998
"Full text" of appeal by senior Russian businessmen in support
of economic measures taken by the government as broadcast by Moscow
Radiostantsiya Ekho Moskvy in Russian

Russia is living through a serious economic crisis caused by a whole
set of objective and subjective reasons. The economic problems which have
accumulated led to a situation in which people are not being paid their
wages. Social tension is increasing. The alienation between various
branches of power and inter-clan fighting in the highest echelons of power
result in increased political tension.
Having met the Russian president [Boris Yeltsin], and the prime
minister [Sergey Kiriyenko], we, the heads of the country's largest
financial and industrial corporations are declaring our support for the
urgent steps which have been taken by the president, the government, and
the Central Bank during the biggest financial crisis of recent years.
The government is now taking tough measures. But they are necessary
and without them it will not be possible to boost the economy.
We support the reorganization of the tax system whereby the pressure
on enterprises and citizens is being eased. At the same time, tougher
steps are being taken against tax dodgers. We are awaiting the beginning
of implementation of a new industrial policy which envisages creating a
more favorable environment for effective enterprises and making loss-making
ones bankrupt.
In this connection we are appealing to our colleagues and heads of
enterprises, irrespective of form of ownership and size. We have been able
to take the responsibility for our business and we should recognize our
responsibility before the country and support the steps outlined by the
government in spite of the risks which are possible in this situation.
We also appeal to those who work at enterprises facing either
bankruptcy procedures or change of ownership. It may be a painful process.
However, the bankruptcy or restructuring of an enterprise does not
necessarily mean that there will be job losses. The creation of an
efficient management system at each enterprise or company is the only way
out of the vicious circle of nonpayments and wage arrears.
We appeal to foreign entrepreneurs. You often hear scary reports that
someone is trying to restrict the activity of foreign capital in Russia. 
This is not true. We are for the open market and for fair competition
between Russian and foreign companies. Russia is an immensely rich country
with vast economic potential. Those who are first in securing positions on
the Russian market will undoubtedly win.
We appeal to the members of the government and of the presidential
administration, to the deputies of the Federal Assembly, and to the local
authorities. Now is not a time to indulge in political games. Now, as
never before, Russia badly needs modern legislation. Flaws in our
legislation mean everyday losses amounting to billions of rubles. Only
through constructive cooperation by all branches of power will it be
possible to change the situation.
We are prepared to continue supporting all sensible steps by the
country's leadership and are convinced that such steps will find support in
our entire society, provided that today's promises materialize into
decisive and consistent actions. Today, this is the only way to get the
country out of a period of economic stagnation.
(Signed) President of the Alfa-Group M. Fridman
Chairman of the executive board of the Gazprom joint-stock company R.
Vyakhirev
Chairman of the executive board of the Unified Energy System of Russia
joint-stock company A. Chubays
President of the Interros holding company V. Potanin
President of the LUKoil company V. Alekperov
President of the Media-MOST V. Gusinskiy
President of the Rosprom-YUKOS group M. Khodorkovskiy
President of the Rossiyskiy Kredit bank V. Malkin
Chairman of the board of directors of SBS-AGRO A. Smolenskiy
President of the Surgutneftegaz oil company V. Bogdanov

*******

#4
ANALYSIS-Russian tax collection tough to improve
By Peter Henderson 

MOSCOW, June 8 (Reuters) - Russia is a long way from proving it can sharply
improve tax collection despite loud promises to do so, analysts said on
Monday. 
The economy's dynamo, the energy sector, has been hurt by falling oil prices,
and the biggest firms cannot be squeezed much more, leaving revenue rises
mostly dependent on improving the tax system and taxpayer attitudes, all of
which takes time. 
``Companies don't really have that much cash flow now,'' said United Financial
Group strategist Inna Francis in Moscow. ``They are pretty strapped.'' 
Real revenue collection appears to be rising over last year, though tangled
and varying accounting practices make it difficult to be sure, and the
government has already begun pressuring tax debtors and has a new programme to
pry for more taxes. 
But the new tax chief has said improvement would be incremental while the tax
system unfairly distributed the tax burden on a few major firms. 
Francis saw Russian revenues falling some 30 billion roubles ($5 billion)
short of a revised 1998 target of about 290 billion. 
``The revenue side is a kind of longer time strategy,'' she said. ``There is
no way they could show results as quickly as they would want.'' 
Results are difficult to gauge since Russian tax numbers are calculated in a
variety of ways. 
Prime-Tass news agency quoted a government source as saying budget revenue
collection in the first five months of the year was 15 percent down on a year
ago at 71 billion roubles. 
But Russian Economic Trends economist Rory MacFarquhar said those figures
probably included non-cash operations, known as offsets, which the government
has abandoned this year. 
``You have a rise in tax collections, but you have a massive decrease in
offsets, and that is a good thing,'' he said. The future, however, was less
than certain. ``There is a big credibility gap from the past that needs to be
overcome.'' 
Political will for change has gradually risen to the point where President
Boris Yeltsin joined the International Monetary Fund in calling for fast
action. 
The government squeezed natural monopolies, Gazprom, electricity company UES
and the railways ministry, for two billion roubles more than planned in the
last few days of May. 
Subsidiaries of Russia's sixth and seventh largest oil producers, SIDANKO and
Sibneft, on Friday were ordered to pay taxes before July 1 or face bankruptcy
and other new sanctions. 
New tax service chief Boris Fyodorov has said he would take on big fish
previously ignored and has targeted 1,000 wealthy people as well as major
corporations. 
The government has already said it would bankrupt some second-tier companies
which have not paid up. 
MacFarquhar said the fastest-acting measures target small groups. ``Sometimes
you are squeezing money that these companies should have and could have paid
long ago, but basically by forcing them to pay in full, you are for the most
part making them pay more than they can sustainably pay.'' 
He said the government generally collected enough money, especially at the
regional level which has not faced major tax reform, but used it poorly.
``They collect much too much as it is,'' he said. 

*******

#5
IMF sees no urgent need for more Russia aid
By Adam Entous 

WASHINGTON, June 8 (Reuters) - The International Monetary Fund said on Monday
it saw no need to speed extra aid to Russia, dampening speculation about an
Asian-style international bailout for Moscow's ailing economy. 
But IMF First Deputy Managing Director Stanley Fischer said the fund was in
``exploratory'' talks to help Russia if conditions deteriorated further. 
The statement cast doubt that a major rescue package -- similar to those put
together for Indonesia, South Korea and Thailand -- would be assembled for
Moscow as top finance officials from the world's leading industrialised
countries gathered in Paris to discuss Russia's economic woes. 
``We're...in exploratory discussions on what could happen down the road if
something were needed,'' Fischer told reporters at the end of an IMF
conference in Washington. 
But Fischer said market conditions had improved, and insisted that Russia's
ailing economy did not need additional help at this time. ``At the moment, the
market has stabilised and we don't see the need,'' he said. 
President Boris Yeltsin and his new government have been battling a major
crisis of confidence among investors sparked by Russia's chaotic finances and
Asia's economic woes. 
Financial markets calmed after the Clinton administration announced last week
that the United States was in talks with other Group of Seven (G7) major
industrial nations on providing more financial help to Moscow if needed. 
Deputy finance ministers from the G7 were scheduled to meet this week in Paris
to discuss Russia's economic problems, fuelling speculation that the IMF had a
major international rescue package in the works. 
But the IMF and a senior U.S. Treasury official sought on Monday to play down
expectations for a bailout. 
Deputy U.S. Treasury Secretary Lawrence Summers said on Monday that deputy
finance ministers meeting in Paris would not focus solely on Russia's problems
and were unlikely to make any policy announcements. 
``Certainly, we'll look at the Russian situation, the situation in Asia, the
situation in all of our economies,'' Summers told reporters at the IMF
conference. 
But he added: ``These are informal meetings of deputies -- out of which we
hope we make progress, we hope we have good discussions on a range of issues
-- but not meetings out of which we make policy announcements.'' 
Fischer said Moscow could count on the IMF releasing the next $670 million
instalment of an existing $9.2 billion credit in mid-June. ``We're looking
somewhere around the middle, or just after the middle, of June,'' he said of
Russia's upcoming loan tranche. 
Experts say Russia may soon need billions of dollars in additional aid to back
up low foreign reserves and restructure a crushing domestic loan portfolio. 
Fischer said the IMF was open to helping Moscow if needed. ``We're talking
about what could be involved,'' he told reporters, adding: ``We're very remote
from anything concrete.'' 
But Fischer added: ``The situation could change and we'll have to stay up with
it,'' Fischer said. 

*******

#6
Date: Mon, 08 Jun 1998 
From: Kris Worrell <kaw27@columbia.edu> 
Subject: Nikolai Bukharin

Dear Mr. Johnson:

Readers of your list may be interested to know that Columbia University
Press has just published the long secret prison novel by Nikolai
Bukharin, an autobiographical account of his childhood, HOW IT ALL BEGAN
(May 28, 1998; $28.95). Stephen F. Cohen has provided a long
introduction recounting the extraordinary history of the novel called
"Bukharin's Fate." Please let me know if you would like more
information.

Sincerely,
Kris Worrell
Publicity Manager
212-666-1000, ext. 7126

*******

#7
From: "hippocre" <hippocre@ix.netcom.com>
Subject: WEDDED STRANGERS: The Challenges of Russian-American Marriages
Date: Mon, 8 Jun 1998 

HIPPOCRENE BOOKS, INC.
171 Madison Avenue
New York, NY 10016

FOR IMMEDIATE RELEASE Contact: Carol Chitnis
hippocre@ix.netcom.com
phone (212) 685-4371
Fax: (212) 779-9338

Hippocrene Books, Inc. is pleased to announce the publication of
"WEDDED STRANGERS: The Challenges of Russian-American Marriages"
by Lynn Visson
Publication date: June 1998
ISBN: 0-7818-0646-1

Despite the often strained relations between their countries, for years
hundreds of American and Russian journalists, diplomats, performers,
students, scientists, businessmen and tourists have sought--and continue to
seek--romance on the other side of the ocean. 
With numerous examples and case studies garnered from ten years of
research and interviews with nearly 100 couples, Lynn Visson provides
significant and often startling insights into the unique challenges and
questions facing Russian-American couples: Why are Americans and Russians
so intensely attracted to each other? What do they expect from romance and
marriage? For better or worse, how do they live together? Why do these
couples have such frequent misunderstandings when they are fluent in each
other's languages?
Lynn Visson received a Ph.D. from Harvard University and taught Russian
language and literature at Columbia University. A professional simultaneous
interpreter of Russian background, she has written, edited and translated
numerous books and articles on Russian language, literature and culture.
She is married to a Russian and resides in New York.

*******

#8
Moscow Times
June 9, 1998 
U.S. Reviewer Pans Kokh's Pricey Book 
By Dmitry Zaks
Staff Writer

Kokh reportedly plans to cut the unfavorable introduction out of the 
book. 
Harvard University Professor Marshall Goldman has just written the 
introduction for the long-awaited book by former privatization minister 
Alfred Kokh. He did not think much of it. 
In fact, according to Goldman, about the only thing going for the book, 
for which Kokh received a $100,000 advance, is the scandal that has 
preceded its publication. 
"Nothing attracts attention to a new book like the threat of a 
scandalous court trial and a possible jail sentence," Goldman writes in 
the introduction's first sentence. 
The text in question, called "The Selling of the Soviet Empire," is 
perhaps the most famous book to come out of Russia in years. 
Few, except for Goldman -- one of the most distinguished of 
Kremlinologists -- have read it. But judging by the shoddy, last-minute 
quality of the book, Goldman hints heavily that the hefty advance was 
paid to Kokh is in recognition, not of his literary genius, but of other 
more corrupt services. 
"Look what he produced for $100,000," the respected Russian studies 
professor quips in the introduction. 
Kokh, a friend and ally of former First Deputy Prime Minister Anatoly 
Chubais, last summer presided over the sale of a chunk of Svyazinvest, a 
mammoth state-owned phone company. 
The phone company went to Uneximbank, whose management is on close terms 
with Kokh and Chubais. 
Just days after the results of the sale were announced, the Russian 
press reported that a little-known Swiss accounting firm called Servina 
SV had just paid Kokh $100,000 for rights to a book. 
Servina was set up by lawyers from Uneximbank. At the time, there was 
still no book. 
Goldman notes the coincidence with irony. "Seemingly out of nowhere a 
publisher that turned out to be owned by Uneximbank, (by chance the 
winner of the Svyazinvest auction) offered him a $100,000 advance on a 
book which skeptics claim did not exist at the time and would not be 
written," Goldman writes. "Nor were these cynics dissuaded when, after 
he quit his government post, Mr. Kokh accepted a job as the head of 
Montes Auri, a Moscow investment firm which again by coincidence was 
also owned by Uneximbank." 
Although U.S. publishers asked Goldmann to write the introduction, the 
author himself is unhappy. Kokh reportedly plans to cut the introduction 
out of the book, which should sell for about $25 in the United States. 
"He hates all things Russian," Kokh said of Goldman, the associate 
director of the Davis Center for Russian studies at Harvard in an 
interview published by the Kommersant Daily newspaper. 
"I looked into his background and discovered that in the past few years 
he has not written anything positive about Russia at all," Kokh said. 
"He is not satisfied with any Russians." 
Goldman said he had been told that his introduction should be included 
in the first print run. 
Goldman argues he has nothing personal against Kokh. He just thinks that 
the veteran Kremlin bureaucrat understands little about market 
economics. He noted that the print is large and the margins are wide. 
"I read it over the course of two evenings," Goldman said in a telephone 
interview Monday, "but that was mostly because I had exams to grade. 
There was not much prose to read. It's not a very thick manuscript." 
"There were a few things that I learned for the first time," Goldman 
added. "The rest of it is a lot of puff. There's some theoretical 
analysis there, but who cares? Kokh doesn't understand most of those 
things." 
Kokh is in trouble and not just with book critics. Last month he was 
charged with embezzling state property. Moscow prosecutors have alleged 
that in 1993 Kokh, then deputy head of the State Property Committee, 
handed out a few dozen apartments to both himself and some friends. 
If Kokh is convicted, he may spend five to 10 years in jail. 
But prosecutors have not yet filed charges against Kokh's book advance. 
Uneximbank charges that the whole book scandal was orchestrated by 
losers of the Svyazinvest sale. 

*******

#9
Yeltsin Addresses Governors, Calls for Economizing 
NTV
June 5, 1998
[translation for personal use only]
>From the "Segodnya" newscast

Now General Lebed will sit in the Federation Council and will again be
able to communicate directly with the President, for example in his
meetings with governors. Just such a meeting was held in Moscow today.
[Begin recording] [Correspondent Anton Grishin] Boris Yeltsin said
that May had been a very difficult month politically, and admitted honestly
that if it had not been for his personal participation, the world community
would have started thinking quite seriously about whether it was worth
being friends with a financially unstable Russia. Everything was decided
by a late night phone call to his friend Bill [Clinton], who in the space
of 30 minutes persuaded the G-7 to support Russia and Yeltsin. Thus the
Russian financial markets and financial friendship with the West were
saved.
[Yeltsin] We have not been going around begging for money for a year
now. Instead we must work.
[Grishin] In order to improve their work, the President suggested that
the Russian constituent parts think seriously about economizing. According
to Yeltsin, the presidential apparatus has already been cut by 30 percent. 
The Kremlin is ready to give up extravagant receptions and other expensive
undertakings.
[Yeltsin] We insist, we simply insist and demand that equivalent cuts
be made in the apparatus of the Federation Council and the State Duma. We
must all think about how to reduce our expenditure because otherwise we
will not survive.
[Grishin] In the President's opinion, governors in the regions should
take power into their own hands more often but not abuse that power or act
against the center, like for example in Dagestan.
[Yeltsin] Are you going to brawl with the federal authorities? That
would be either an absolute misunderstanding, or a desire to go for broke. 
Would it be easier for you to puff out your chests to appear big and
strong? We are big and strong enough as it is; just look at that dome
above us!
[Grishin] Yeltsin has still not decided which region he will visit
first. He said he was thinking about it. Each governor should also be
thinking and be ready, when Yeltsin comes, to give a precise answer to the
question of what should be changed.
[Yeltsin] We signed an agreement. Have a look at it now. Perhaps it
really is out of date in some way. Time is passing so quickly. A year or
two passes and you look at those positions on which everything seemed to be
okay, and now you think, who was I then? Not a good person.
[Grishin] Finally, Yeltsin is convinced that we have a good
government. Further confirmation of that was the favorable reaction of the
West. And that means that the governors should help the White House [the
government], not hinder it and not distract it with regional problems, but
settle them themselves, that is, locally. [end recording]

*******

#10
Russia's Interior Minister on Growth in Crime Rate 

MOSCOW, June 5 (Interfax) - The state of crime in Russia remains grave
with the number of registered crimes increasing 4% in the first four months
of the year compared to a similar period of 1997, Interior Minister Sergey
Stepashin told Interfax on Friday.
He said the number of solved crimes in January through April went up 
16.5% and the number of suspects 12.7% to 426,000. "Over 5,500 persons were
held responsible for crimes committed by organized groups," Stepashin said.
"Unfortunately, one must admit that Russian organized crime has
entered a new stage: it is entering legal business and coming to power. 
The active use of terrorist methods of intimidating the authorities and
competitors and achieving other objectives is a specific feature of Russian
organized crime," he said.
"As you see the situation is quite serious though on the whole control
over crime has not been lost, on the contrary, it is gradually increasing,"
Stepashin said.
"Russia to qualitatively change the crime situation has developed and
is applying a programmed purposeful approach concentrating the efforts of
the whole society on combatting crime. Intensive work is under way on the
adoption of new federal laws regulating anti-crime efforts," he said.
An anti-corruption program is being drafted with other interested
agencies, he said.
He said the Interior Ministry has started developing a new system of
evaluating operational efforts for motivating the solution of crimes,
removing the conditions allowing crimes to be concealed from registration
and increasing the public influence of the police.

********

#11
Drug-taking threatens Russian AIDS explosion

MOSCOW, June 8 (Reuters) - Russia will be spending its entire health budget on
people with the HIV virus in a few years unless steps are taken now to stop
the disease spreading, especially among drug addicts, a senior government
official said on Monday. 
First Deputy Health Minister Gennady Onishchenko told a parliamentary hearing
that financing for a three-year federal programme aimed mainly at educating
Russians about AIDS ran out in 1996, just as the number of AIDS cases took
off. 
The number of people registered as having the HIV virus which causes AIDS is
still relatively low at 8,313. But it has almost quadrupled since 1996, mainly
because of a rapid spread in intravenous drug-taking among young people. 
``If the current trend continues, then in the coming years the number of
people infected with HIV will reach a million, and then treatment will cost
the same as is currently spent on the whole health system,'' Onishchenko said.
Drug addicts account for 71 percent of those infected with HIV, and most
addicts are thought to favour home-made concoctions taken intravenously, as
synthetic drugs are too expensive. 
``In the last five years the number of drug-takers has tripled and if the
tendency continues, by the end of the year one can say that the total will be
three million people,'' Onishchenko said. 
``Since most addicts are 13 to 23 years old and an addict's life span is about
four to four and a half years, practically 30 percent of the young generation
is under threat,'' he said. 
Of Russia's 317 registered sufferers from AIDS (Acquired Immune Deficiency
Syndrome), 110 were children, he said, and 72 children are among the 209
people killed by the disease since records began in 1987. 
Olga Beklemishcheva, deputy head of the health committee of the State Duma
lower house of parliament, said a drug-linked explosion in the AIDS epidemic
was just around the corner. 
A government ban on chemicals used to make the drugs in 1996 may have
contributed to the spread of the disease, because addicts had begun replacing
them with their own blood, she said. 
This factor could sharply reduce the effectiveness of any needle-exchange
programme, Onishchenko said. 
``The problem of HIV infection is becoming a national threat to Russia,'' said
Beklemishcheva, calling for coordinated efforts to tackle what she said was
also a large number of registered HIV cases in neighbouring Ukraine and
Belarus. 
Officials admit that current statistics probably underestimate the problem,
but the government is struggling to bridge a yawning budget gap which has
helped scare off foreign investors, and the prospect of extra funding is some
way off. 

********

#12
Acquaintances Recall Kiriyenko Formative Years 

Komsomolskaya Pravda
23 May 1998
[translation for personal use only]
Article by Komsomolskaya Pravda special correspondent
Yelizaveta Mayetnaya: "Kiriyenko Loves Hunting Bears and Cooking--
And Insecticide Almost Cost the Prime Minister's Wife Her
Education"

Sochi--Sochi's intermediate school No. 7. One of the best in
the city--with an emphasis in mathematics. Peeling paint on the
walls, broken windows. Famous tennis players Kafelnikov and Zverev
went to this school. And the current prime minister of the Russian
Government Sergey Kiriyenko spend his best years here, too.
Seeing the Komsomolskaya Pravda correspondent, Kiriyenko's
former counselor Tamara Vasilyevna Prutskaya sighed:
"You are the 20th person to come to see me."
She continued, sounding rehearsed:
"Yes, of course, he was a good student, just a regular boy...
We are so happy, we are so happy!.."
Looking at this elderly woman who has worked in the school for
40 years, it was easy to imagine Gagarin's first teacher, also
probably pestered by journalists. I had no choice but to take a trek
through the current prime minister's childhood addresses to learn
details from the life of the youngest head of the Russian
Government.
"Serezha was 10 when we divorced," says Sergey Kiriyenko's
mother Larisa Vasilyevna, who still lives in a shabby apartment
house not far from the city market. "We lived in Nizhniy Novgorod
then. You know, when you have a full family, a surname like our old
one--Izraitel--is not that noticeable. But when there were only two
of us left... In short, when I got divorced I assumed again my
maiden name. And changed Serezha's name as well. We moved to Sochi
as Kiriyenkos. With Serezha's father, everything was civilized, I
never prevented him from seeing his son. Serezha frequently visited
Nizhniy Novgorod and spent summers with my ex-husband's parents in
Abkhazia."
Larisa Vasilyevna was born in Sukhumi. Which is where she had
her son. During the Georgian-Abkhazian war a bomb hit the apartment
where Kiriyenkos had lived; nothing was left of it.
"Serezha's grandmother lived in Sukhumi through the entire
war--only recently could I talk her into moving to Sochi," continues
Larisa Vasilyevna. Generally, she does not give interviews to
journalists. "What can I say about Serezha--let his actions speak
for him. But I have no complaints. Even when he was in school, he
was always busy--karate, film studio, or suddenly attracted to
mountain climbing. Mathematics, physics, and chemistry always came
easily to him, and he decided to continue his education in the
technical field while he was still in ninth grade. By then, he
started taking his studies more seriously.
"Serezha would skip classes together with others. When he got
a failing grade, it did not upset him much," his former classmates
say about Kiriyenko. "Once, a girl fell ill at school and went home.
On the way home, she fainted. Fortunately, Sergey saw this. He
helped her up and walked her home. And then got mad at everyone: Why
did nobody walk her home?!"
Gennadiy Seleznev was wrong when he called Kiriyenko a "good
child"--Serezha could get into a fight, too. One gets the impression
that he never thought seriously about his future--otherwise he would
have graduated from school with honors. "He certainly had the
capability," say teachers with assurance.
There are many photos from that period--out-of-focus, yellowed
photos.
"Photography was a popular hobby in our class back then,"
classmates remember. "Kids brought their cameras to school and took
pictures of everybody. Serezha also ran around with a small camera.
He took very funny photos. Girls even got upset with him--they
always came out ugly. Our class was very tight-knit. We frequently
went on field trips and took trips around the country, the whole
class."
In ninth grade Kiriyenko fell in love--at first sight and for
life.
In September 1977, a new girl showed up in the 9-B group--
Masha Aistova. Petite, slim, with huge gray-blue eyes. The boys
immediately nicknamed her "pop-eye." Masha's hobby from childhood
was ballroom dancing, and she even won some city
competitions.
On the very first day, Masha's book bag was covered with
drawings and touching scribblings: "Masha-Manyunya." A day later the
book bag disappeared altogether--it got tied to a tree. This was the
boys' way of flirting with Masha.
"Our girls were all quite assertive, never at a loss for
words. While Masha was very gentle and calm. She would not even call
the boys Serezhka or Vitka--always Serezha, Vitya. We could not
believe it--how can anyone talk this way to our boys?" recalls
Kiriyenko's classmate Aleksandr Nikitenko. "In our class there were
twice as many boys as girls, and so each one tried to get noticed:
They would put a dead rat in a book bag, or a grass-snake. We were
used to such antics, but for Masha it was a shock. She got the most
aggravation from Sergey Kiriyenko--he literally pursued her."
About a month and a half after her transfer to the new school,
Masha came home in tears. It turned out that Kiriyenko threw a
gingerbread cake at her and hit her right in the eye.
"I am not going back there!" Masha said at the doorstep, and
threw her book bag into a corner.
"I started to question her carefully--who was bothering her
most? It turned out to be Serezha," says Masha's mother Lyudmila
Grigoryevna. "She would not hear about school anymore. I did not
know what to do and went to the teachers for advice."
Together with the class counselor, they went to see
Kiriyenko's mother.
"This is not like Serezha at all! He has never hurt girls,"
Tamara Vasilyevna defended him.
"He told me that they had a new girl in the class. And said
that Masha was very beautiful and smart," Larisa Vasilyevna was
puzzled.
It was only then that the teacher figured it out: Serezha had
fallen in love!
the next day, as Masha's mother was walking home from work,
Serezha approached her.
"Please, forgive me if I did something wrong. I really did not
want to hurt Masha. I like her very much..."
Kiriyenko became Masha's most ardent suitor. He walked her
home from school. At dances, he asked only her to dance.
"Many boys swarmed around Masha, but she never gave preference
to any one," classmates remember. "Once the whole class went to a
drama theater. The play was boring, and after the first act we all
left and went to the beach--to swim. Only Masha and Serezha stayed.
We came back close to the end of the third act and found this
picture: Masha was eating chocolate, which Serezhka had bought
during the intermission, and was watching the play, while he just
stared at Masha..."
When Serezha and Masha quarreled, the whole class knew it.
Serezha would become quick-tempered and nasty.
In tenth grade they were already inseparable. They went to the
library together and copied each other's notes. Then Masha went to
Leningrad to enroll in medical school, and Sergey--to Nizhniy
Novgorod, to his father.
Right before the exam, in the old Petersburg apartment Masha
got bitten by bedbugs. She sprayed them with insecticide. All the
allergist could say was: "It is best that you return to Sochi--it
will all go away," says Lyudmila Grigoryevna.
Masha's father (a KGB officer working in government
communications) died in a car crash when she was six. Lyudmila
Grigoryevna worked all her life as a nurse in a railroad hospital
and raised Masha and her older brother alone.
"In order not to waste time, Masha enrolled in a nursing
college. While Serezha was in Nizhniy Novgorod--he got accepted at
the transportation institute there. Letters came every day.
Sometimes two or three a day. We have saved a whole bag of them.
Things were moving toward a wedding. But at that point Sergey's
father objected to an early marriage. 'Don't even think about it
until you are in your third year in school,' he said firmly.
Immediately after finishing the second year, Sergey took a summer
job with a Yakutsk construction brigade--to earn money for the
wedding. Masha wanted to contribute her share, so she sold her
piano."
Before the wedding, the family gathering decided that the
young couple would live separately. Their future mother-in-law
offered to exchange her two-room apartment. The one-room apartment
in Sochi went to the older son Viktor, while Serezha and Masha moved
to Nizhniy Novgorod. Lyudmila Grigoryevna stayed with her second
husband--during the war, when he was still a child, he lost both
feet to a bomb and he needed care.
It was a student kind of a wedding, and took place in Sochi.
Nevertheless, the young couple received as gifts a refrigerator and
a television set. The bride's dowry consisted of a sewing machine,
and with this luggage the newlyweds went back to Volga.
In Nizhniy Novgorod, Masha enrolled in medical school. She
finished the first year of school in the last month of her
pregnancy. It was difficult for the tiny girl to carry a baby--mama
sent her all her salary so that Masha could take taxicabs to the
institute.
Vovik was born with blond curls and blue eyes--truly an
angel.
As the son grew up, his father started taking him hunting.
There is a photo in the family album: Vova is holding a huge wood-
grouse, and next to him on a table is a small fowl. Sergey Kiriyenko
hunted wild boar and elk, too. There is a rumor that once he took
down a bear--like his predecessor Chernomyrdin, actually. Masha
frequently went to the Volga region forests together with her
husband, where she ate his hunter's stew. But once in a while she
did remember that chocolate bar in the movie theater.
After Sergey Kiriyenko was appointed minister of fuel and
power generation, he moved to a state dacha in Arkhangelskoye. His
spouse tried to find a job--in Nizhniy Novgorod she was considered
one of the best pediatricians, treating children with herbs. But it
turned out to be impossible without a permanent residence permit in
Moscow.
Her son's fast career swing came as a complete surprise for
Larisa Vasilyevna Kiriyenko. She was unable to get through to
Serezha on the phone when he was confirmed as prime minister, and so
she went straight to Arkhangelskoye.
"I talked to him, but Serezha's mind was someplace else,
absent, making me uncomfortable. He gets back past midnight, tired.
Masha complains that she hardly ever sees him."
These days the prime minister no longer spends any time in the
family kitchen. In the past he liked to cook when he had time. He
was particularly good at baking sweets--tortes and pastries. His
mother-in-law continues sending to Arkhangelskoye his favorite
preserves--feijoa, sour plum, and peach.
She has been working for almost 20 years now at the Sochi bus
terminal. Larisa Vasilyevna has her own small office there. On the
desk is a pretty color picture of her son, taken at a government
meeting. On the side table--fresh carnations.
"Serezha's classmates congratulated me on my son's
appointment. But from the city administration--not even a telephone
call. Maybe it is for the best," Larisa Vasilyevna is not upset.
"This way, they will not be asking for favors. You know, the way I
am--I have never asked for anything for myself, and will not plead
for others. Especially now that Serezha has so many problems to
handle! God help him!"

*******




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