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Johnson's Russia List


June 10, 1998   
This Date's Issues: 2213  2214

Johnson's Russia List
10 June 1998

[Note from David Johnson:
1. Reuters: Russia purges tax chiefs in anti-crisis move.
2. Interfax: Stroyev Certain Yeltsin Will Run for Reelection.
3. Invitation from The eXile.
4. Itar-Tass: Russian Anti-Crisis Package To Support Domestic

5. Interfax: Kemerovo Governor: Early Russian Presidential Poll 

6. RFE/RL: Charles Fenyvesi, Russia: Soviet Negotiating Style Survives.
7. RFE/RL: Robert Lyle, Russia: Concerns, Charges About Its Financial 

8. Christian Science Monitor: Judith Matloff, Russian Elite Creates 
Glut of Think Tanks.

9. AP: Russia: $25 Billion Smuggled Out.
10. Moscow Times: Katy Daigle, Tax Chief to Target Foreigners.
11. Trud: WEAPONS OF THE 21ST CENTURY. (Interview with Col.-Gen. 
Vladimir YAKOVLEV, commander-in-chief of the Strategic Missile Force).

12. Financial Times (UK): Chrystia Freeland, FYODOROV: Crackdown 
planned for Russia's tax dodgers.

13. The Hindu (India): Vladimir Radyuhin, Growing fundamentalism 
worries CIS leaders.

14. Interfax: Russia's National Wealth Valued at $320-380 Trillion.
15. Interfax: List of Russian Oligarchs Published on Internet.]


Russia purges tax chiefs in anti-crisis move
By Timothy Heritage 

MOSCOW, June 9 (Reuters) - Russia announced a purge of tax chiefs on Tuesday
and detained a prominent state official to step up efforts to root out
corruption, boost dismal tax collection and end a lingering financial crisis. 

President Boris Yeltsin returned from his first foreign trip since the crisis
began last month with pledges of support from German Chancellor Helmut Kohl
which he said would boost investors' confidence in Russia. 

"Chancellor Kohl's personal support, as a major political figure in the world,
is important (to show) that our policies are right," the Kremlin leader told a
news conference in Bonn before flying home on Tuesday evening. 

Kohl offered no bilateral financial help but said Germany fully supported
Moscow's reforms and the measures it has taken to try to end the turmoil. A
Kremlin aide said Yeltsin had come seeking political, not financial help. 

Kohl's backing, and the sweep of a new broom through the federal tax service,
overshadowed the formal launch of efforts by the opposition Communist Party to
impeach Yeltsin which even a top communist acknowledged were doomed to fail. 

Boris Fyodorov, the new head of the federal tax service, sent a tough signal
which will be music to the ears of international financial organisations who
say boosting tax revenues is vital for restoring investors' confidence. 

"I now have to purge my office," said Fyodorov, appointed just over a week ago
to stamp out rampant tax dodging. "Some of my deputies are leaving today, some
will leave tomorrow. There is corruption. I have to deal with it, though I
would prefer not to," he told a news conference. 

His announcement followed the detention of Yuri Yurkov, the head of Russia's
state statistics committee, on suspicion of distorting information about major
companies to help them avoid paying taxes. A government spokesman said the
heads of the statistics committee's computer centre had also been detained. 

Tax problems were cited by rating agency Standard & Poor's among the reasons
for cutting Russia's long-term foreign currency issuer credit and unsecured
ratings to B+ from BB-. 

The move signals a drop of confidence in Russia, although Standard & Poor's
said the long-term outlook was stable and praised Russia's commitment to low
inflation, running at an annual rate of 12 percent. 

Russia hopes the International Monetary Fund will soon release the next $670
million slice of a $9.2 billion loan to help it through the crisis and help
reduce the risk of political instability or coordinated social unrest. 

Russian shares sank and treasury bill yields soared at the height of the
crisis two weeks ago, forcing the central bank to push up interest rates to
150 percent until late last week. 

Russian government officials and Yeltsin say the worst of the crisis is over,
although the situation remains fragile. 

Shares fell on Tuesday after a statement on Russia from a meeting of finance
officials from the Group of Seven (G7) industrial nations in Paris failed to
materialise and the sovereign debt rating was cut. 

The Russian Trading System's benchmark RTS index closed 4.31 percent down at
196.45 after thin trading. "The news we're getting about everything -- cutting
the rating, the complicated negotiations about a credit for Russia -- is not
impressing people," said MFK Renaissance trader Mikhail Koltsov. 

Investors will still be looking for encouraging signs, and perhaps financial
assistance, from the G7 financial meeting which will continue on Wednesday. 

A potentially positive sign came from Russia's gas giant Gazprom, whose chief
executive Rem Vyakhirev said he had proposed that the state raise $1 billion
through selling two to three percent of the firm to a strategic partner. 

The government is also trying to sell a big stake in large oil company Rosneft
at a price of $1.6 billion. It had to lower the price from $2.1 billion after
a tender last month failed to attract investors. 

Despite the moral support from abroad, the government has been accused by the
opposition of mishandling the crisis. 

The Communist Party formally presented to the State Duma lower house of
parliament a request to launch impeachment procedures against Yeltsin for
alleged violations of the constitution since the break-up of the Soviet Union
in 1991. 

The procedure, if it goes ahead, is long and complex and widely regarded as
unlikely to succeed. At least 300 votes are needed in the 450-seat Duma just
at the initial stage. 

"It is very difficult to count on getting the 300 votes needed under the
current circumstances," senior Communist Viktor Ilyukhin told reporters. 


Stroyev Certain Yeltsin Will Run for Reelection 

MOSCOW, June 7 (Interfax) -- Chairman of the Federation Council Yegor
Stroyev is certain that Russian President Boris Yeltsin will run for
re-election in 2000.
"It is quite clear that Yeltsin will put forward" his candidacy,
Stroyev, the Orlov governor told Interfax-AiF weekly.
However, let Yeltsin "himself say whether he will run or not," he
Asked about a presidential bid of Aleksandr Lebed, the recently
elected Krasnoyarsk governor, Stroyev said that "given his previous remarks
and actions, Lebed doubtless prepares for the upcoming presidential polls."
But having become a governor, Lebed will shoulder the burden of
responsibility to people.
Stroyev said he would have a precise answer after his meeting with
Lebed at the next session of the Federation Council.
Commenting on Yeltsin's recent statement on "a certain gap" separating
him from governors "the way it is presented by Stroyev," the latter said
that "contradictions exist between Yeltsin and regions." They are prompted
by the current situation which "cannot but worry governors," he said.
Stroyev said he briefed Yeltsin on governors' positions at the latest
meeting of the four, comprising the president, the prime minister and both
parliamentary chairmen.
"The government must submit an anti-crisis program to the Federation
Council as early as possible. According to the latest meeting with Prime
Minister Sergey Kiriyenko, the government has such a program of 60
clauses," he said.
Members of parliament will study, amend, coordinate and approve this
program, he said. "The program will not be viable from the very beginning
unless it is coordinated in regions. It will only breed mistrust and
confrontation," he said.
The interview is published by the Interfax-AiF weekly in full on June


From: "matt" <>
To: <>
Subject: subscription
Date: Wed, 10 Jun 1998 01:41:34 +0400

To the readers of the JRL:

As part of a special promotion, the eXile will be giving away a limited
number of free mail subscriptions to readers around the world. If you are
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home or office in Moscow. 

The eXile is a satirical biweekly newspaper which has achieved renown and
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Matt Taibbi
the eXile


Russian Anti-Crisis Package To Support Domestic Production 

Moscow, Jun 8 (Itar-Tass) -- An anti- crisis programme, now in work in
a Russian government residence outside Moscow, will shift Russia's domestic
policy from that of firm fiscal action to a systemic effort to support
domestic manufacturers, its authors say.
The team working in Volynskoye say that the programme is close to
completion. President Boris Yeltsin is expected to present it at a meeting
with the premier, two speakers, and deputies of both houses after June 20.
The team is composed of members of Sergey Kiriyenko's cabinet,
representatives of Russia's most influential industrial and financial
groups, and expert economists. The work was started in late April when
Russia found itself in the midst of a crisis over wage arrears, with the
debt to state employees estimated at billions of roubles.
The authors told Itar-Tass the programme will definitely include firm
and unpopular measures to stabilize Russia's financial and economic
situation. They hold that the government cannot do without them,
especially now, amid a lengthy -- and still uneased -- turbulence on
Russia's financial market, plummeting revenue and a drop of world prices
for oil dominating Russian exports.
Noteworthy, Kiriyenko's nominees had spared no effort to leave out of
the authors's team followers of ex-premier Yegor Gaydar whose monetarist
and pro-western approaches to the economic processes going on in Russia
apparently do not suit the premier.
In fact, the new premier's cabinet already started to implement the
plan. Since early May, they ordered a 25-percent federal spending cut,
speedy bankruptcy proceedings against major corporate tax debtors and
replacement of managers of state-run companies with the largest debts to
budget. Yeltsin approved government programmes to raise revenue collection
and reduce expenditures.
At the same time, the government understand fairly well that rush
fiscal measures can have only a short-term effect. The Bank of Russia
skyrocketing its interest rates to defend the rouble, as well as other
measures to stabilise the financial market brought costs of interest to
exorbitant levels, making them not affordable for Russian enterprises.
Industry is the main taxpayer. Reckoning that tax regulation alone
will not lead to economic stabilisation and growth when the industry is in
deep in crisis, the government resolved to add to fiscal measures a package
aimed at supporting domestic manufacturers.
Government sources told Itar-Tass that Kiriyenko intended to emphasize
three tracks in the anti-crisis programme.
First, the premier is going to push at least the first reading of
Russia's Tax Code through the State Duma before parliament holidays
starting in July. Kiriyenko's argument is that the new tax code will
decrease taxes charged from the industry and farming sector to feasible
levels. In particular, the government plans to shift to a broader use of
imputed tax practices when reducing excises on direct goods manufacturers.
Second, the government plan to curb tariffs of natural monopolies such
as the national energy system RAO YeES, the Railway Ministry, etc.
Third, they are going to write off manufacturers's debts to budget in
a try to improve their balance.
Government experts believe these measures to help domestic producers
"take a free breath" and build their investment in production and
technologies. The cabinet's logic is quite simple: the richer the producer
will be, the more freely it will act on the market, the more it will
produce, the greater will be the tax revenue and the smaller its
Kiriyenko is set to implement the plan without emergency aid
injections from the West. However, the government are going to further
cooperation with the International Monetary Fund and the World Bank, and
counting on the already agreed tranches. Also, they are planning to ask
international financial organisations for new loans in order to buy out
part of domestic liabilities which are more expensive than cheap and
long-run IMF loans.
Actually, the young Russian cabinet hopes to kill several birds with
one stone. Emphasizing defence of domestic producers, they hope to win
support for the package from the Russian public. For its turn, this may
help consolidate the society, set all government branches for pragmatic
work and make them refuse from irresponsible political mongering,
government officials say.


Kemerovo Governor: Early Russian Presidential Poll Possible 

Moscow, Jun 8 (Interfax) -- Kemerovo Governor Aman Tuleyev has said it
is possible early presidential elections will be held in Russia if "the
authorities continue their current policy toward coal miners."
The chief demand of the strikers who blocked the Trans-Siberian
railroad in May was that Russian President Boris Yeltsin step down, Tuleyev
told a press conference at the Interfax head office Monday [8 June]. "The
clause on paying overdue wages was last on the list," he said.
Asked whether he would run for president, Tuleyev said "we'll see when
we get there."
If the government fails to fulfill its obligations by July 1, the coal
miners in Anzhero-Sudzhenks will block the railroads again, he said.
Social tension might surge in the autumn, when payments should be made
to teachers, agricultural workers for harvesting, in the utilities sector
for winter preparations, etc., he said. "We won't hold out past autumn,"
he said, adding that violence may break out then.
Regarding the role of law enforcement bodies in settling the situation
in the region, Tuleyev said that criminal persecution of "rail war"
activists could trigger unrest. Punishment should be imposed on those "who
led the people to the rails, who brought them to such a state," he said.
The agreement with the government includes a clause on dropping
criminal persecution of the protesters, he said.
The Russian Prosecutor General's Office will help "to instill order
and ease social tension," he said. "We asked Prosecutor General Yuriy
Skuratov to send a brigade here to bring to an end at least one thing," he
The local taxation service is corrupt and has "joined ranks with
criminal structures, he said. Therefore, representatives from the federal
center should investigate embezzlement in the coal mining industry, he


Russia: Soviet Negotiating Style Survives
By Charles Fenyvesi

Washington, 9 June 1998 (RFE/RL) -- A new book suggests that Americans 
are likely to find that negotiating with Russians today may be even more 
difficult than talking to Soviet officials was in the past.

Not only has the once familiar Soviet negotiating style survived in many 
cases, Jerrold Schecter argues in his book "Russian Negotiating 
Behavior," but the impact of the collapse of the USSR has intensified 
many of these patterns.

A former Moscow bureau chief for the American magazine Time and U.S. 
National Security Council staff member, Schecter says the operational 
code of the Soviet leadership, first described by American sociologist 
Nathan Leites in the 1950s, remains in force. 

That code specifies that all politics is a zero-sum game, one in which 
the winner takes all and the loser gets nothing. And it calls for the 
use of force and rudeness to force a negotiating partner to make 

Underlying all of this, Schecter notes, is the conviction that no 
opponent will ever be willing to accept the Russian position on the 
basis of rational argument.

In support of this point, Schecter cites former U.S. Secretary of State 
Henry Kissinger's observation that the Russians in Soviet times were 
always "too unsure of their moral claims to admit the possibility of 
error." As a result, Schecter cites Kissinger as saying that Russian 
negotiators almost always moved "from infallible dogma to unchangeable 

According to Schecter, Russians continue to behave this way when they 
talk to foreigners, including Americans. And he argues that the collapse 
of the Soviet system has made this pattern more complicated.

Not only did the end of the USSR lead to bureaucratic chaos, a situation 
many Russians find unsettling, but it has led to even more corruption, 
to a concern with maximizing personal return regardless of what happens 
to the broader interests involved.

Some have argued that this new Russian interest in wealth provides a 
lever that Americans and others can use to get their way, but Schecter 
suggests that money alone will rarely allow outsiders to overcome the 
operational code that most Russians continue to follow.

In all these respects, the Russian approach is very different from the 
American. Consequently, Schecter says, Americans talking to Russians 
should first of all understand these differences if they are to achieve 
their goals.

And Schecter provides a list of basic rules for American negotiators to 
follow: be sensitive to Russian problems, treat Russian negotiators with 
respect but do not give in on all points, insist on carefully defined 
rules and verification procedures, and set up penalties if either side 
fails to perform.

Such rules, Schecter says, will not guarantee success, but they will 
help Americans to negotiate better and Russians to learn the democratic 
rules of the game. 


Russia: Concerns, Charges About Its Financial Future
By Robert Lyle

Washington, 9 June 1998 (RFE/RL) -- Russia's chief representative at the 
International Monetary Fund (IMF) says he's concerned that the financial 
markets will overreact to whatever the G-7 deputy finance ministers say 
about Russia after their meeting in Paris today.

The deputy finance ministers of the seven major industrial nations -- 
the U.S., Germany, Japan, Great Britain, Italy, France and Canada -- are 
holding a regular meeting in the French capital to discuss a number of 
global financial situations, including Russia's recent troubles.

U.S. Deputy Treasury Secretary Larry Summers says the session is 
informal and that there is no intention of putting together an 
international financial rescue package for Russia at this meeting.

But Russia's IMF Executive Director, Alexei Mozhin, says he's been 
hearing investors and market observers saying that unless there is an 
announcement of a "huge package" for Russia, the markets will collapse 
and money will flow out of the country.

"We have to take these statements with a grain of salt," he told a 
gathering at the Carnegie Endowment for International Peace in 
Washington Monday. Many in the markets want large amounts of external 
financing, he said, but wondered whether there wasn't "an element of 
extortion" in those statements. 

Some investors in Russia, both foreign and domestic, are already reaping 
"enormous amounts of interest -- up to 60 percent in real terms -- and 
at the same time want it risk free," he said. "That is not fair."

Mozhin said the latest financial crisis came when the Moscow government 
was actually doing far more correct things than at any time in the past. 
He said the new government has dedicated itself to a "draconian" cut in 
budget expenditures while pushing ahead with reforms and working to 
reduce debt.

The markets have been concerned about Russia's short term debt, he said, 
because while it is only about 15 percent of GDP (gross domestic 
product) or around $70 billion, it is due for repayment in between three 
and 12 months.

That is a dangerous situation because of the high interest rates the 
government is having to pay to protect the ruble while financing its 
operations. It's a "huge burden" on the budget, Mozhin acknowledged, but 
said that if those interest rates can slowly be brought down, the 
servicing of the debt will no longer be a problem.

To help that along, he said, the government is going to try to reduce 
domestic financing and increase both external financing and the money 
coming from privatization. 

One major American investor in Russia, the President of Dart Management 
group, says the lack of new international financing packages is not what 
is scaring investment money out of Russia. "The important question to 
ask at this junction is not 'where's the public sector bailout?,' but 
rather why is private capital shunning Russia," said E. Michael Hunter.

He told the meeting that private capital is fleeing Russia because a 
handful of "powerful and unscrupulous men" in the country are bleeding 
legitimate businesses and stealing all of their assets.

"To put it bluntly," he said, "investors are waiting to see whether the 
Russian government can wrest control of its economy from the grip of the 
financial barons that now dominate large segments of that economy."

Hunter said Dart has filed suit against the Yukos oil holding company, 
accusing it of draining all the resources from two oil production 
companies -- leaving them nearly bankrupt -- while at the same time 
cutting minority stockholders out of all the value of their investment. 

Said Hunter: "The phrase 'bad corporate governance' is a breathtaking 
euphemism for what is actually going on in Russia today.


Christian Science Monitor
JUNE 10, 1998 
Russian Elite Creates Glut of Think Tanks
Judith Matloff 
Staff writer of The Christian Science Monitor


Economist Alexei Vedev saw disaster coming in 1991. The Soviet Union was 
crumbling. Foresight told him state subsidies would dry up - and with 
them his job.

So he decided to form his own think tank.

While many academics found themselves driving taxis or cleaning people's 
homes, others like Mr. Vedev have done well thanks to a touch of 
free-market chutzpah.

Vedev built up an influential client base of contacts he had cultivated 
at the state-run Academy of Sciences. In time, he developed his own unit 
of researchers and analysts specializing in the emerging capitalism. Now 
he runs a respected economic analysis center in Moscow linked to 
DialogBank, a commercial bank. "Creating my own think tank was the only 
way to survive," he says.

Vedev didn't know it, but he was in the vanguard of a new growth 
industry springing out of the ruins of the Soviet Union. Independent 
research institutes and think tanks have sprouted like mushrooms in the 

At least 300 political-science organizations are based in Moscow alone, 
many of them operating without state support. Some are headed by 
scientists turned financial analysts. Businessmen and politicians also 
have set up policy centers to influence public opinion. Even former 
Soviet leader Mikhail Gorbachev has joined the bandwagon, setting up his 
Gorbachev Foundation in 1992 after his retirement.

Observers say such a phenomenon could only come in a country that boasts 
one of the world's highest standards of education. During Communist 
times, the government bankrolled thousands of academics, scientists, 
intellectuals, experts, and specialists in various fields. Once the 
Soviet state shriveled away, however, so did publicly funded research 

"A good institute gives intellectuals prestige, access to top levels of 
power, and the chance to be quoted and obtain funds," says analyst 
Alexei Mukhin of the independent information center known simply as 

A glance at Moscow's telephone directory reveals a profusion of research 
groups so similar in name that the public often mixes them up. But 
political analyst Nikolai Petrov at the American-funded Carnegie Center 
says the fancy-sounding names can be tricky. "Now prresearch groups so 
similar in name that the public often mixes them up. But political 
analyst Nikolai Petrov at the Amer

This does not seem to detract from the influence many think tanks wield, 
particularly those with links to the government. Despite professed 
independence, many think-tank experts keep close relationships with top 

A case in point is Alexei Ulyukayev, deputy director of the Gaidar 
Institute, run by former Acting Prime Minister Yegor Gaidar. Mr. 
Ulyukayev was recently summoned to advise the team of new Prime Minister 
Sergei Kiriyenko.

Russians might be forgiven for wondering whether there is too much hot 
air in Moscow. With the recent financial crisis, rampant unemployment, 
and millions of rubles in wages going unpaid for months, does Russia 
really need so much theorizing?

Yes, thinks Mr. Gorbachev.

"Our Russian policies need to have intellectual support," he told the 
Monitor. "What is happening is an embodiment of democracy. Only free 
thought can help us to understand what we are today."

Newcomers to the think-tank scene complain the market is saturated. 
Financing - usually from banks, politicians, private companies, or 
individuals - is ever more elusive. Mr. Mukhin says stiffer competition 
might not be bad. "Do you know why we have so many institutes?" he asks. 
"We have too many ex-officials. It's too much."
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Russia: $25 Billion Smuggled Out
June 9, 1998

MOSCOW (AP) - More than $25 billion has been smuggled out of Russia illegally
since the Soviet collapse, Russian security services said in an estimate
released today.

Most of the money has gone to bank accounts in Switzerland, Cyprus, Britain
and Israel, the Interfax news agency reported, citing Russian security
services that are investigating capital flight.

Between $25 billion and $27 billion has been smuggled by companies and
individuals, usually to evade taxes, Interfax reported.

Investigators said they have leads on $5 billion of the money and are trying
to track it down, it said.

Russia's economy has been contracting since the late 1980s and went into a
virtual freefall in the first years after the 1991 breakup of the Soviet
Union. In 1996, the gross domestic product was estimated at $767 billion.


Moscow Times
June 10, 1998 
Tax Chief to Target Foreigners 
By Katy Daigle
Staff Writer

Under pressure to haul in tax revenues and help pay a huge government 
debt, state tax chief Boris Fyodorov said Tuesday that his agency will 
target expatriate tax offenders, dismiss corrupt officials, and create 
an umbrella collection agency to boost efficiency. 

His remarks follow an announcement last week that Russia would go after 
the richest residents -- many of whom are avoiding paying tax -- and 
would boost tax collections in the country, where only one-fifth of the 
workers pay tax. Collection procedures have been increasingly 
scrutinized since a financial crisis erupted in Russia just over two 
weeks ago. 

To improve the collection rate, no stone will remain unturned. For 
example, Fyodorov estimates that missed revenue from expatriate tax 
payments could be several billion dollars and that many financial 
executives are delinquent in paying taxes. "Our big friends who advise 
us to improve tax collection do not pay these taxes in this country," he 
said. "I think [the lesson will be learned] after a couple of leading 
bankers are stopped by customs officers and told that they have to stay 
here for a couple of years because they have to pay taxes." 

He also promised to improve the efficiency of the tax collection system, 
going beyond reforms proposed in new tax legislation being considered by 
the state Duma. Fyodorov would put tax collection agencies such as the 
tax inspection unit, the tax police, currency export and import control 
and the alcohol inspectorate, under one umbrella organization, a 
so-called revenue ministry. 

"We have too many agencies going around and making checks," he said. 
"Naturally, this breeds lack of coordination because different agencies 
have different interests." 

This would put Fyodorov at the helm of all revenue-collecting services, 
improving his personal authority, said Rory McFarquhar, an economics 
analyst and tax specialist with the Russian-European Center for Economic 
Reform. "If you have one minister in charge of it all, there's a lot 
more authority to make life very unpleasant for those who don't pay." 

Fyodorov also called for the creation of a special tax inspectorate 
based in Moscow to follow the accounts of the country's repeat tax 

Fyodorov reiterated his plans to fire tax officials suspected of 
corruption. "I have to shake up the whole service," he said. 

"There will be serious changes, and we cannot do without this," he 

Fyodorov's fighting words on Tuesday coincided with the arrest of the 
head of the government's statistics service, Yury Yurkov, and other 
senior data workers on charges of helping tax dodgers by doctoring 
statistical data and of selling confidential data. 

However, Fyodorov said he did not know anything about the arrest. "I am 
responsible for my agency, and no member of my agency was arrested as of 
this morning," he said. 

Last week the tax chief said he would set up a database of over 1,000 
well-known earners to monitor their tax-paying practices. The database 
would grow yearly and eventually include balance sheets on everyone in 
Russia, he said. 

The figures for collection in May under the previous head of the State 
Tax Service were "not very comforting," Fyodorov said, although he was 
not prepared to give exact figures. 


>From RIA Novosti
June 6, 1998
Col.-Gen. Vladimir YAKOVLEV, commander-in-chief of the 
Strategic Missile Force, talks with Pavel ANOKHIN 
about the START-2 Treaty

The nuclear tests held the other day by India and Pakistan
put a fresh light on the question of compliance with the
obligations of international treaties on the prohibition of
nuclear tests, nuclear non-proliferation, and reduction of
nuclear weapons. 
The State Duma is getting ready for hearings on the
ratification of the START-2 Treaty, designed to greatly reduce
the nuclear arsenals of Russia and the USA. The US Senate
ratified the treaty back in 1996, but the Russian legislators
are procrastinating in the belief that the treaty infringes on
Russian interests. For the past few years, the national mass
media have been debating if the treaty would be profitable to
Russia now that its armed forces are being slashed. 
Here is what Col.-Gen. Vladimir YAKOVLEV,
commander-in-chief of the Strategic Missile Force, told this
newspaper at its request. 
The fundamental changes which are taking place in the
world after the end of the cold war will eventually make us
review the role of nuclear weapons and change the nuclear
policy of states.
The world is becoming a safer place to live in,
predictable and collectively governed. On the other hand, there
will be no absolute tranquillity as long as it consists of
countries with different economic development levels, different
political regimes, ethnic and religious aspirations.
Contradictions and conflicts between states are inevitable.
They happened in the past, we have them now, and we will not
avoid them in the foreseeable future. That is why each state is
searching for ways, means and possibilities to ensure its own
Thanks to the general thaw in the international situation,
the doctrines of states, including nuclear ones, are gradually
becoming more transparent, understandable and largely designed
to maintain stability in the world. This thaw was precipitated,
to a large degree, by positive changes in the nuclear
strategies of the world's nuclear superpowers, the USA and
The directive of the US President on the potential use of
strategic nuclear forces prompts the conclusion that the USA
has not abandoned the basic provisions of the nuclear
deterrence concept, by which it lived in the past. On the other
hand, new trends appear which are designed to ensure mutual
reduction of nuclear arsenals and a transition from a policy of
confrontation to partner relations. 
The present US nuclear policy and the nuclear strategy of
Russia are not aggressive with regard to each other, although
they are openly based on nuclear weapons as the guarantee of
their military security. One example. The US and the Russian
presidents decided that their missiles will not be targeted at
each other. The two countries regard nuclear weapons above all
as the guarantor of strategic stability.
For Russia, the strategic nuclear force is, and will
possibly remain for quite some time, the main and probably the
only instrument of the state capable of warding off major
military threats in the current situation, when all other,
general-purpose forces have grown weak and the country is
straining to carry out the military and economic reforms. And
the Strategic Missile Force, which has 60% of nuclear warheads
of the country's strategic nuclear forces and can fulfil up to
90% of tasks set to the strategic nuclear forces, is making the
main contribution to the fulfilment of the task of deterrence. 
The specific feature of the Russian and US nuclear
strategies is their striving for the mutual reduction of
strategic armaments and for maintaining the nuclear balance at
a lower ceiling. This is a positive process which should be
carried on, moving from START-1 to START-2 and on to START-3,
and which should involve other nuclear powers. It would be
reasonable not to stop at the START-3 treaty but change the

general philosophy of movement from nuclear arms reductions to
a creation of a system of strategic stability. 
Strategic stability in the world depends not only on the
amount and level of strategic armaments, but also largely on
missile defence and missile attack warning systems. As a
professional missile man, I regard these elements as
inalienable, making up a single whole, which should not be
divided. We should make the first steps towards creating a
system of strategic stability already now. Such steps could
include exchange of information about the missile attack
warning systems, which would reduce to a minimum the threat of
unwarranted actions owing to false alarms. 
The limitation of tactical nuclear weapons and pin-point
systems, which are becoming as effective now as strategic
nuclear weapons, should be handled separately. 
It will be very difficult to create a global system of
security and strategic stability, but we must begin now at the
regional levels, and gradually shift the process to a higher
level. This is an uphill road, and it takes strong will and
patience to cover it without lagging behind developments or
taking rash decisions the proper conditions for which are not
yet ripe. But, he who moves will eventually cover the road, as
they say.
A few words about the Topol-M missile system of the
Strategic Missile Force. This year we will put on combat duty a
regiment armed with ten of these strategic intercontinental
missiles. Our people, worried by everyday problems, do not see
the significance of this event. The thing is that for the first
time since 1992 we have put on combat duty a new-generation
missile system. A practical step has been made towards reviving
Greater Russia. 
The Topol-M missile system is a weapon of the 21st
century, which is 5 or even 6 years ahead of its foreign
analogues and has no rivals in terms of flight and technical
characteristics. This system is much better than the systems of
the previous generation in such basic assets as combat
readiness, manoeuvrability, viability, and target effectiveness
in the most complicated conditions. The Topol-M will determine
the image of the Strategic Missile Force in the next century,
and form the core of the national strategic nuclear forces. At
the same time, this system complies with all international
obligations under the START-1 and START-2 treaties. 


Financial Times (UK)
10 June 1998
[for personal use only]
FYODOROV: Crackdown planned for Russia's tax dodgers
By Chrystia Freeland in Moscow

Russia's new tax supremo yesterday launched a purge of officials in his 
agency and pledged to crack down on tax evaders, as the Kremlin 
struggled to pull the country out of lingering financial turmoil.

Boris Fyodorov, the investment banker recently appointed to run the 
federal tax service, launched a campaign to root out tax evasion in one 
of Moscow's most prestigious central blocks of flats, saying his 
officials would check to see that all tenants and landlords were paying 

In an interview, Mr Fyodorov also said he had fired half a dozen senior 
tax officials in an effort to eradicate corruption and improve 

The former finance minister warned that western businessmen suspected of 
evading Russian taxes could be targeted in the crackdown.

"Once a couple of important western businessmen who are resident here in 
Moscow are stopped at the border and are told, 'Hey guys, you cannot 
leave, you are tax offenders, probably you have to spend a couple of 
years in Siberia,' I think that will make a very good example," Mr 
Fyodorov said.

His pledge to toughen tax collection followed the high-profile arrest on 
Monday night of Yuri Yurkov, the head of the state statistics committee.

Mr Yurkov is accused of falsifying statistics to help companies evade 
taxes and of selling statistical information to business rivals. 
Investigators said they had found $1m in cash when they raided Mr 
Yurkov's home.

The crackdown on corrupt officials and the aggressive new drive for tax 
collection are part of government attempts to revive Russia's ailing 

The RTS index of leading Russian shares fell 4.3 per cent yesterday 
after Standard & Poor's, the credit rating agency, downgraded Russia's 
sovereign rating and President Boris Yeltsin's visit to Germany failed 
to produce the financial support for which investors had been hoping.

Mr Yeltsin played down suggestions that his country had sought direct 
financial help from Helmut Kohl, the German chancellor. "For us, more 
important is the support - the personal support - of Helmut Kohl as a 
major politician in the world," he said.

Russia's weekly Treasury bill auction, scheduled for today, will be a 
measure of investor confidence. The ministry of finance must roll over 
more than $1bn in rouble-denominated bonds and will be intent on keeping 
yields below the 60 per cent central bank refinancing rate. Yields on 
Treasury bills crept back up to nearly 50 per cent yesterday.

The Russian authorities, increasingly open in their hopes for a western 
rescue package, will now look for indications of support to senior 
finance ministry officials and central bankers from the Group of Seven 
industrialised nations, due to meet in Paris today.

Mr Fyodorov, the former finance minister credited with having made a 
significant contribution to Russia's financial stabilisation, said that 
if he were prime minister he would press for a western aid package. 


The Hindu (India)
June 8, 1998
Growing fundamentalism worries CIS leaders 
By Vladimir Radyuhin 
MOSCOW, June 7. 

The former Soviet republics have warned of a growing threat of Islamic 
fundamentalism to the Commonwealth of Independent States and called for 
joint efforts to fight it. 

The Interior Ministers of Russia, Uzbekistan and Kirgyzstan said their 
countries faced a security threat from Wahabism, a brand of Sunni Islam. 

``For Russia, Wahabism is no longer a theoretical problem,'' Russia's 
Interior Minister, Mr. Sergei Stepashin, said after a meeting of 
Interior Ministers of the CIS countries in Tashkent, Uzbekistan, on 
Thursday, the daily Russky Telegraf reported. ``We must trace the flow 
of money and guns to Wahabis and the establishment of their military 
training camps.'' 

The Russian Minister called for setting up a special unit within the 
newly established CIS coordination bureau for combatting organised crime 
to fight religious extremism. 

Uzbekistan's Interior Minister, Mr. Zakir Almatov, said that Tajik and 
Uzbek Wahabis were linking up with extremist groups in Georgia and 
Russia, including Chechnya. He disclosed that ``five bandit groups of 
Wahabis'' had been broken up in Uzbekistan in the past 18 months. 

For his part, the Interior Minister of Kirgyzstan announced that his 
government was close to taking ``a political decision'' to join a 
``troika'' union set up by Russia, Uzbekistan and Tajikistan last month 
to combat religious extremism. 

Wahabism is fast becoming the scourge of post-Soviet leaders. 

``We feel the need to lend strategic character to our relations in the 
face of an ideological threat from the south,'' the Russian President, 
Mr. Boris Yeltsin, said, explaining the reasoning behind the formation 
of the ``troika.'' 

The leaders of Uzbekistan and Tajikistan have accused Afghanistan, 
Pakistan and Iran of hosting underground centers training Islamists who 
then disturb peace in their states. 

Last month, the regional court in Namangan, Uzbekistan, sentenced 12 
men, described as members of an extremist Wahabis organisation based in 
Pakistan, to prison terms for terrorism, undermining constitutional 
order and organising a criminal group. 

Russia rang an alarm bell over Islamic fundamentalism last month, when 
clashes between Muslim activists and local authorities in Dagestan, an 
autonomous republic located on the western shore of the Caspian Sea, 
raised the spectre of renewed conflict in the North Caucasus, less than 
a year after Moscow's humiliating defeat at the hands of Muslim 
separatists in neighbouring Chechnya. 

Fundamentalists jailed 

The Supreme Court of Uzbekistan sentenced seven Wahabite Muslim 
fundamentalists to jail terms of between six and 12 years after finding 
them guilty of conspiring to destabilise the regime and of propagating 
racial and religious hatred, Interfax reported. 

``These fanatical supporters of Wahabism tried to destabilise the 
situation, undermine confidence in the justice system and set up an 
Islamic state in Uzbekistan,'' the court ruled yesterday. 

Five of the accused had fought alongside the Islamic Opposition in 
neighbouring Tajikistan. 

The convictions are the latest in a crackdown launched by Uzbekistan 
against the Wahabites one of the most radical of Islamic factions. 

Series of public trials began at the beginning of May, with the 
sentencing of 12 people to between five and eight years imprisonment. 

Uzbek authorities say they fear infiltration by Muslim fundamentalists 
from Afghanistan and Tajikistan. The Uzbekistani President, Mr. Islam 
Karimov, said recently that Wahabite fundamentalism was ``a real 
threat'' to Central Asia. 


Russia's National Wealth Valued at $320-380 Trillion 

Moscow, June 7 (Interfax) -- Russia's national wealth is valued at
$320-380 trillion, according to a national conference held to appraise the
country's wealth.
Some 80-85% of this sum comes from natural resources, and the
country's intellectual assets are estimated at $400 billion, the
Interfax-AiF weekly cited the conference as saying.
The appraisal concept of national heritage has long been obsolete, and
the West has given up the theory of economic growth factors popular in
Russia today. Foreign experts now focus on human evolution and production
potential, the criteria for which are the material and intellectual wealth
of individual people rather than the overall abundance of goods and
services in a country.
Interfax-AiF claims that Russia has neither well-trained experts and
appraisals nor proper legislation for property revision.
The full report on Russia's national wealth will be published in the
Monday, June 8, issue of Interfax-AiF.


List of Russian Oligarchs Published on Internet 

Moscow, June 6 (Interfax)--A detailed register of Russian oligarchs,
as well as former and prospective members of this group, has been published
on a Russian web page on the Internet.
The list, compiled by Grigoriy Belonuchkin and the staff of the
Panorama analysis group, is to be updated and expanded regularly. It
currently includes 10 financial-industrial-political groupings. They are
Unexim Bank-MFK, Logovaz-Sibneft, Gazprom, Most, Rosprom- Menatep,
SBS-Agro, Lukoil, Alfa, a "Moscow" group and the federal center itself,
described as "the Russian Federation as a market subject."
The authors of the site offer several versions for the origin of the
term "oligarchy" in the modern Russian political context. The term was
apparently used by Aleksandr Privalov of Izvestiya and by Andrey Fadin of
Obschaya Gazeta a year and a half ago. But the organizers of the web page
say it achieved widespread popularity after December 1, 1997, when
then-First Deputy Prime Minister Boris Nemtsov used it in a press interview
to contrast Russia's current "oligarchical capitalism" with his own vision
of "popular capitalism."
Since 1992, various groups of entrepreneurs have been named that have
been able to or have claimed to influence the political and economic
situation in Russia, the authors of the site say. This includes the
consortium of bankers and businessmen who were dubbed the Election-96 group
that supported Boris Yeltsin in his bid for reelection.
In November 1996, Boris Berezovskiy, then deputy secretary of the
Russian Security Council, listed seven people in an interview with the
Financial Times whom he said controlled over half of the Russian economy. 
This led to the introduction in the Russian language of the term
"semibankirschina," to describe the seven bankers listed.


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