June 12, 1998   
This Date's Issues: 2217  •2218

Johnson's Russia List
#2218
12 June 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Yeltsin: Reforms Moving Slowly.
2. Dale Herspring: Lebed. (DJ: I encourage discussion of Lebed.)
3. Albert Weeks: Lenin/Leonardo.
4. Eric Margolis: WEALTHY "NEW RUSSIANS" PARTY ON.
5. Itar-Tass: Russian Security Council To Discuss START II Ratification.
6. Moscow Times: Natasha Fairweather, Reporter Writes Novel on Expat Life. 
("In a Place like That" by Lesley Chamberlain).
7. Chicago Tribune: Michael Kilian, GORBACHEV CHIDES U.S. ON WEAPONS.
8. Bloomberg: Russia Names 7 Companies as Priorities in Asset-Sale Program.
9. Washington Post: Leon Aron, What Stalled Russian Reform.
10. Zavtra: Aleksandr Dugin, "Postliberal Era."
11. Financial Times: Peter Oppenheimer, Devalue the Rouble.]

*******

#1
Yeltsin: Reforms Moving Slowly 
By Mitchell Landsberg
June 12, 1998

MOSCOW (AP) -- President Boris Yeltsin conceded today that Russia's reforms
are moving slower than expected and warned Russians that it will take more
time for the country to become prosperous and stable. 
In a nationally televised address, he admitted that Russians had good
reason to be disappointed by the slow pace of reform. 
While there have been successes, Yeltsin said, ``they have not resulted
in a noticeable improvement in living conditions. Russia's economy has not
become prosperous and stable, nor are its citizens well provided for or
confident of their future.'' 
His remarks came on Russia Day, which commemorates Russia's declaration
of sovereignty from the Soviet Union in 1990. Roads out of Moscow were
clogged with people headed to the country for a long weekend. 
In his speech, Yeltsin said the past eight years had ``not been an easy
test for any of us. It was difficult, but we withstood, we didn't give up,
we didn't turn back.'' 
While it's true that prosperity has so far eluded most Russians, Yeltsin
reminded them of the one ``tangible achievement'' of post-Soviet Russia. 
``The freedom to speak one's mind. The freedom to pursue one's religion.
The freedom to elect the mayor, member of parliament, governor,
president,'' Yeltsin said. 
``However, freedom ... can only be won, sometimes by sacrificing your
calm, your convenience and well-being.'' 

*******

#2
Date: Fri, 12 Jun 1998 09:18:55 -0500 (CDT)
From: Dale R Herspring <falka@ksu.edu>
Subject: Lebed - Again

In response to my last intervention on Lebed, one individual wrote to ask
who I thought had a better shot at the next Presidential election; Luzhkov
or Lebed. While I realize I am opening up myself to a blast from Lebed's
opponents, I see this as a "no-brainer" to use a Mid-Western expression.
Lebed would have to be considered an odds-on favorite at this point in
time, and not only because he won the election in Krasnoyarsk and the
polls seem to be favoring him at present. 

I think most analysts -- who tend to be intellectuals and have a certain
distain and lack of understanding of the role of the military in a
country like Russia -- underestimate the importance of this general in
this "time of troubles." First, Lebed is different from all of the other



candidates -- he is outside the system -- in fact, he was kicked out of
the system by Yeltsin. No matter that Luzhkov may disagree with Yeltsin,
in the eyes of most Russians he is still part of the system. Second,
despite the sad state the Russian military finds itself in, Lebed still
comes across as different from other candidates in that he is a soldier,
and from most indications fairly honest, and straight foreward in his
thinking and statements. Third, just as Lebed has protested the system, a
lot of Russians are in a state of protest. What better way to vote
against the system than to vote for the protest candidates? As far as
Zhirinovskiy is concerned, I think most people are beginning to recognize
him for what he is -- a clown. Zyuganov doesn't appear to be going any
where -- as the old communists die off, I suspect his fortunes will go
steadily down hill. Yavlinskiy may have some interesting ideas -- and
some of them might be good -- but he comes across as an elitist. Ivan
Ivanovich is looking for someone he/she can relate to. Yeltsin could
always run again (assuming he is still alive), and if he does and the
situation within Russia continues to deteriorate, the only question will
be whether or not the election is fair. If it is, Lebed stands a very
good chance. 

This brings me to my last point. We have had some good work done on Lebed
(I am thinking particularly of Jake Kipp's Foreign Affairs piece), but it
may be time for our political analysts and pundits to devote some time to
studying the Russian military. You can certainly take the general out of
the army, but I suspect that no one will succeed in taking the army out of
the general. Seldom have I seen an area where pundits fall back on
generalizations in describing such individuals. "Militaries are the same
the world over!" is a phrase I have heard many times. Unfortunately, for
those of us who have lived and worked with the American and Russian
militaries, reality is not that simple. Russian military officers may
bear a strong resemblence to American military officers in some ways, but
they also have some very different and unique features. All of this to
say, that you cannot understand Lebed without understanding the world he
came from. It will certainly influence how he governs -- assuming he wins
the presidential election. And to make things more interesting, he will
not respond in the way our "rational actor" mentality tells us he will.
It is time for some homework. Dale Herspring

********

#3
Date: Fri, 12 Jun 1998 09:32:01 -0400
From: Albert Weeks <AWeeks1@compuserve.com>
Subject: Lenin/Leonardo

News of Leonardo DiCaprio's romantic interest in the
Russian beauty, Alisa Suvorova, is a reminder of an interesting 
coincidence relating to another Russian: Dicaprio's facial 
resemblance to the young Vladimir Ilyich Ulyanov (Lenin). 
On my Home Page, you can see the likeness. I have juxtaposed two 
pictures, one of Dicaprio, the other of teenaged Lenin. My URL is: 



http://www.geocities.com/athens/olympus/2638 
Once there among the Planets, proceed to Pluto (Hell) and to 
my piece on the movie "Titanic," its reception in Russia, and



the paired pix of Lenin/Leonardo. 
Beyond their stunning facial resemblance, both Lenin 
and Leonardo are linked to Capri, Italy. It was one of Lenin's 
places of residence abroad, and it is DiCaprio's hometown.

*******

#4
Date: Fri, 12 Jun 1998 01:01:01 -0500 (EST) 
From: margolis@foreigncorrespondent.com
Subject: ForeignCorrespondent WEALTHY "NEW RUSSIANS" PARTY ON

WEALTHY "NEW RUSSIANS" PARTY ON
By Eric Margolis
June 11, 1998

Zurich, Switzerland - The Swiss, never a cheery lot, are glummer than
usual these days. Tourism is down. The sky-high Swiss Franc has even
scared away many of the Japanese tourists who used to flock here searching
for Heidi. 
The country and its banks has been under siege by world Jewish groups and
the US government over dealings in Nazi gold during World War II. But
there is one bright spot: the Russians are back, in force. 
Russia's long interest in Switzerland dates back to Czarist days when
Russian aristocrats used to come here to take the waters. A great plaque
inscribed in Cyrillic adorns the Gothard Pass, commemorating the epic feat
of Marshall Suvaroff, who took his Russian army, with all its guns, across
the pass in the dead of winter during the French Revolutionary Wars. A
Geneva cafe I frequented as a university student proudly displays a table
onto which Lenin carved his name. 
Today, Russians are everywhere in Switzerland, buying gaudy jewellery and
flashy clothes at expensive boutiques, and meeting with their Swiss
bankers. These are the 'new Russians,' grown immensely wealthy under
post-communist robber capitalism. Burly men, describing themselves as
'business consultants,' with tarty girlfriends, flashing wads of crisp US
$100 bills. 
Over recent weeks, Russia has plunged into a grave financial crisis. One
of the main reasons is because virtually every Russian businessman,
bureaucrat, and gangster has stashed their hot money in Switzerland and
other financial havens. 
Last week, the International Monetary Fund, under heavy pressure from the
Clinton Administration, granted US $675 million in new loans to Moscow to
defend the imperiled ruble. The IMF has already allocated US $1.1 billion
in loans to Russia. To finance its huge government deficit, Russia must
keep borrowing from abroad. To keep President Boris Yeltsin in power, the
US consistently backs these highly dubious 'loans.'
Some of this money will go to paying off foreign investors. The rest will
be stolen, and secreted abroad. Gangsters, who control at least 60% of
Russian business, have become adept at money laundering. All Russian
businessmen and bankers routinely set up front companies in Switzerland,
or in shady foreign tax havens like the Bahamas, Cayman, Monaco, and
Cyprus. 
These shell firms are used as conduits for Russian imports and exports,
skimming off profits from business deals, and minimizing both import
duties and taxes. Russia's government consequently collects barely any
taxes from business or mobsters. Little wonder the Kremlin is broke. 
It's hard to blame Russians for hiding their money abroad. During my
recent trip to Russia, I found everywhere a sense the nation was in a



perilous transitional stage. Robber capitalism that enriched a few, while
pauperizing the masses, cannot long continue. But no one knows what will
replace it - fascism, dictatorship, even a return to communism. 
The great Russian moralist, Alexander Solzhenitsyn has just published a
new book in which he perfectly captures his nation's agony: 'criminal is
the government that throws the national property up for grabs and its
citizens into the teeth of beasts of prey in the absence of laws.'
While the 'beasts of prey' shop on Zurich's elegant Bahnhofstrasse, Russia
sinks deeper into misery. Wages go unpaid Devaluation has wiped out the
savings of tens of millions of Russians, the very people who were to have
formed a middle class, the essential foundation of a stable democracy. 
Unable to come up with a better alternative, the US and the west keep
financing this rotten, mafia-ridden kleptocracy. In a terrible blot on
America's honor, the Clinton Administration even funded Russia's brutal
war against tiny Chechnya, that killed 100,000 civilians and left that
country in ruins. 
The west simply does not have enough money to stave off the inevitable
explosion that is coming in Russia. 
Copyright E. Margolis June 1998

********

#5
Russian Security Council To Discuss START II Ratification 

Moscow, June 10 (Itar-Tass) -- The Russian Security Council is
expected to convene on June 26 to discuss the prospects of the development
of the country's strategic nuclear forces and ratification of the START-2
treaty, sources in the Defence Ministry told Tass on Wednesday [10 June].
However, the administration of the Security Council has neither
confirmed nor denied this information so far.
The Foreign Ministry and the Defence Ministry have recently boosted
activities aimed at convincing Russian MPs of the necessity to ratify the
START-2 treaty as soon as possible.
On June 5, Defence Minister Igor Sergeyev and Foreign Minister
Yevgeniy Primakov met leaders of the State Duma lower house to discuss the
issue.
On June 16, the Academy of the Russian Armed Forces General Staff is
expected to hold a conference on START-2 ratification, in which Primakov,
Sergeyev, and foreign intelligence chief Vyacheslav Trubnikov will
participate.
About 150 Duma members have applied for participation in it, but all
of them are unlikely to be invited and only a limited number of those who
have access to state secrets will attend it.
According to Duma deputy chairman Vladimir Ryzhkov, preparations for
START-2 ratification constitute "an issue of principle", and MPs, together
with the Foreign Ministry and the Defence Ministry, are to discuss the
whole range of related problems and the parameters of a future Russian-US
START-3 treaty.

********

#6
Moscow Times
June 12, 1998 
Reporter Writes Novel on Expat Life 
By Natasha Fairweather
Special to The Moscow Times

Not content to dismiss Russia, as Winston Churchill once famously did, 
as a riddle wrapped in a mystery inside an enigma, Lesley Chamberlain 
has spent much of her career, first as an academic, then a Moscow-based 
Reuters correspondent and finally a writer, peeling away the opaque 



layers of Russian culture to uncover what lies within those mysterious 
onion domes. 
Russia and its troubled relationship with the rest of the world is a 
philosophical problem for Chamberlain -- an intense, intelligent writer. 
Yet the reader has a nagging suspicion that the primary riddle with 
which she tussles in her books -- which have ranged from a travelogue 
about a journey down the Volga River to a Russian recipe book and now a 
novel -- is why she is still so drawn to the country. 
There is no simple answer to this question, for Chamberlain or other 
Western Russophiles like her. And "In a Place Like That" does not 
pretend to offer a cohesive world view. Instead, it is a collection of 
generally unlinked portraits of individuals who find themselves drawn 
into Russia's magnetic field. Some feel a positive pull, others are 
repulsed; but no one gets away from Russia -- and Russians -- untouched. 
The stories divide chronologically into two periods. The late stories 
take place, simply enough, in a post-Communist Russia that is struggling 
to come to grips with capitalism as it absorbs the lessons of the past. 
But the early chapters are set in a country called Bezzakonia (literally 
"without laws" in Russian) which is engaged in a Cold War with Arcadia 
(the West). The leaders of Bezzakonia are called Bezum (Insane) I, II & 
III, and the street and city names fit into this punning scheme, 
offering a weak joke for the benefit of Russian speakers, but leaving 
other readers mystified. 
The purpose of this technique may be to allow readers to contemplate the 
Soviet Union afresh, without Cold War rhetoric ringing in their ears. 
But Chamberlain's portraits -- of fellow travelling working-class 
students, of the pampered progeny of emigres, and of correspondents 
reaching boiling point in the Soviet pressure cooker -- although 
extremely authentic in tone, have the comfortable feel of cliches. 
Another possibility is that Bezzakonia is designed to provide a 
fictional gloss on events and characters that are essentially real. Some 
readers might, for example, recognize the circumstances of the untimely 
death of Michael Glenny, the distinguished English translator, in the 
story about Ninel and Reg. In the early days of perestroika, a 
still-young Glenny died of a heart attack in the apartment of a 
well-known female Moscow literary editor, who was forced to arrange for 
the transportation home of her dead house guest in the face of hostility 
from Glenny's family. 
The same is true for the fictional Reg Bowman, who flees the 
frustrations of a dull marriage and an unrewarding academic career in 
order to visit Moscow and explain to himself what makes Russians 
Russian. "You know how the Russians are," Reg expounds passionately to 
students unmoved by his ardor, "up all night drinking vodka, a bottle an 
hour, then at work at dawn, stoking furnaces, driving taxis, hunkering 
down in obscure institutes to dusty ideological tasks, making love on 
park benches, writing the only lyric poetry left in the world -- you 
have to get into their shoes to understand." But for Reg, they turn out 



to be dead men's shoes. 
Other readers may detect clear traces of Jennifer Louis -- the 
Peredelkino-based English widow of a former Soviet journalist who was 
repeatedly linked to the KGB -- in the portrait of Belinda Byam-Pring, 
who lives in Mnogoderov with a Rolls-Royce in the garage and sons at 
Eton. 
If a Soviet Museum of the Consumable ever did exist in a run-down corner 
of a pre-revolutionary house in Moscow, as it does in the book, complete 
with meals made of wax and paper and varnish and reminders of 
central-planning's periodic culinary directives based on the latest 
surplus product, then some readers will regret that they never visited 
it before it was "privatized" by the mob. 
In one of the stories, a male expatriate in Bezzakonia turns on a female 
journalist many years his junior and tells her how, during seven years 
spent in Moscow, "I've seen how women like you, intelligent and 
demanding a lot of themselves, tend to idealize this place." But if 
someone ever did address Chamberlain in this way during her Reuters days 
in Moscow in the late 1970s, she has worked hard in the intervening 
years to strip away that idealistic gloss. 
The Russians she presents to us for inspection in this book are a 
slippery, unscrupulous lot. The Soviet system has its in-built 
absurdities and craven reward schemes, but her citizens are all too 
willing to exploit them. The authorities can be used as an excuse for 
failure, to explain cowardice of all sorts and to justify manipulating 
most of the foreigners they encounter. 
But beneath the cynicism, there is still a whiff of the heady excitement 
of Soviet-era contact with the Cold War enemy, which in the end offers 
the best explanation for the enduring addiction of Russophiles. 
Chamberlain has clearly thought hard about Russia. Her observations 
about both the country and its people are always carefully measured and 
elegantly expressed. And at their best, such as in the moving story 
about Sofka-the-Babushka's visit to Paris, these tales encapsulate a 
truth about the human condition and the nature of relationships between 
strangers that goes beyond the Russian context. 
"In a Place Like That" is presented as a novel, but as a novel, it 
fails. For while there are some poignant scenes in these tales of 
marriages broken or mended by exposure to the Russian magnet, of 
journalistic and academic careers that veer off course and of 
cross-cultural love affairs, the disjointed narrative never gathers 
enough momentum to steer us across the divide. 
"In a Place like That" by Lesley Chamberlain. Quartet Books. 254 pages. 
pounds 10 ($16.33). 

*********

#7
Chicago Tribune
June 11, 1998
[for personal use only]
GORBACHEV CHIDES U.S. ON WEAPONS
DISARMAMENT DELAY, ARMS SALES SPUR NUCLEAR RACE, HE SAYS 
By Michael Kilian, Washington Bureau. 

WASHINGTON 
Former Soviet President Mikhail Gorbachev on Wednesday blamed the United
States for contributing to the India-Pakistan nuclear crisis by stalling the
nuclear disarmament process and becoming the world's largest arms merchant.
Speaking at the Smithsonian Institution during the First International



Conference on Addressing Environmental Consequences of War, the onetime Nobel
Peace Prize winner said the U.S. was setting a bad example not only for the
Indian subcontinent but for Russia as well.
"The process of nuclear disarmament has been stalled . . . and is just
marking time," Gorbachev said, speaking through an interpreter.
"I believe this is one of the things that pushed them, in addition to the
conflict on the (Indian) subcontinent."
In recent weeks, former Soviet ally India and U.S. ally Pakistan have
reported detonating 11 nuclear devices between them in underground tests,
raising fears of a nuclear conflict that had been largely dormant since the
Cold War ended in 1989.
"In 1985, President Reagan and I, at our first summit, said nuclear war
cannot be won and should not be fought," he said. "It would be a threat of the
very extinction of life on Earth. . . . We must condemn these tests, but we
cannot be of two voices on this."
Gorbachev said that India and Pakistan cannot be expected to relent in
their nuclear competition if members of "the nuclear club" persist in
maintaining their own atomic arsenals.
He said that sales of missile technology around the world have aggravated
the nuclear danger.
He charged that instead of trying to reduce armed conflict around the
world, the U.S. has exploited the end of the Cold War to take over the weapons
market.
"Suffice it to say, after the breakup of the Soviet Union, when Russia was
mired down in social problems and the U.S. acquired 70 percent of the world
arms market, that did little for disarmament," he said. "The result is that
Russia, too, has decided to step up its arms manufacturing. . . . We see
increasing sophistication of weapons. We see arms going to poverty-stricken,
backward nations."
Gorbachev was joined by fellow Nobel laureate and former Costa Rican
President Oscar Arias, who said that 80 percent of U.S. weapons sales go to
undemocratic governments in underdeveloped nations.
"In sub-Saharan Africa, military expenditures totaled nearly $8 billion in
1995, while economic aid came to $700 million, about $1 a person," Arias said.
"This figure is appalling, considering that this region's population--which
doubles about every 20 years--has the highest proportion of poor in the world.
"India spent more than $12 billion on weapons purchases from 1988 to 1992
alone. . . . For its part, Pakistan increased its defense budget sevenfold
from 1978 to 1991, so that defense now accounts for nearly 40 percent of all
government spending," Arias said.
Asked if the Soviet Union shouldn't take some of the blame for helping
India with its nuclear program, Gorbachev said, "It's very difficult to say."
He said Canada, the U.S. and Britain also contributed to India's nuclear
progress.
The three-day conference, sponsored by the Smithsonian, the Washington-
based Environmental Law Institute and the Kuwait government, has drawn
political, military and scientific experts from all over the world.
Its agenda includes a proposal to levy a heavy international tax on arms
transactions and for rewriting military "rules of engagement" to prevent the



kind of environmental disasters
that ravaged Kuwait and portions of Iraq during the 1991 Persian Gulf war.
Since the collapse of the Soviet Union, Gorbachev has remained active in
world affairs as president of the Green Cross international environmental
organization.

********

#8
Russia Names 7 Companies as Priorities in Asset-Sale Program

Moscow, June 11 (Bloomberg) -- Russia named seven companies as priorities in
its program of state asset sales this year to raise revenue for the state
budget and lure investors back to Russia's financial markets. 
First Deputy State Property Minister Alexander Braverman prioritized the
sale
of 75 percent plus one share in RAO Rosneft, the eighth-biggest oil producer,
and stakes in OAO Lukoil Holding, the biggest oil company, OAO Svyazinvest, a
telecommunications holding company, AO Slavneft, AO Sibur, AO Novosibirsk
Electrode Plant and AO Moscow Telephone Systems. 
Braverman said Russia plans to earn ``much more than the 8 billion rubles
($1.3 billion) the budget foresees for proceeds from the sales,'' although he
didn't disclose a figure ``because the market is changing all the time''. 
The Russian government needs to raise money to trim its budget deficit and
ease a cash crisis which is threatening the stability of the ruble. The
government failed to raise enough money to cover debt obligations at five
successive weekly auctions and is looking to sell stakes in state assets and
Eurobonds and boost tax collection to cut spending and pay off $33 billion in
maturing debt this year. 
With investors fleeing emerging markets worldwide, sending stocks, bonds and
currencies tumbling, Russia is hoping to lure foreigners back to its stock
markets by offering stakes in some of its biggest companies. 

Road Shows 

The first of the asset sales will be Rosneft next month and the
government is
launching a series of road shows in the U.K. and the U.S. in the next few days
to attract investors, Braverman said. 
The government has cut the starting price for Rosneft by about a quarter to
$1.6 billion after it received no bids for the company in May at a minimum
price at $2.5 billion including investment. 
Stakes in Svyazinvest, the national phone holding company, and Lukoil, the
country's biggest oil producer, are likely to be the most attractive
offerings. 
American Appraisal, a U.S.-based company, valued a stake of 25 percent minus
two shares of Svyazinvest at $995 million to $1.25 billion, Braverman said.
The government will announce the starting price for the stake later. 
A group led by Russia's Uneximbank and Deutsche Morgan Grenfell bought 25
percent plus one share of Svyazinvest for $1.875 billion at an auction last
July. 

Lukoil, Gazprom 
The government may sell 5.36 percent to 14.36 percent of Lukoil, Braverman
said. He said the government is still considering what stake to sell and
declined to reveal a possible price. 
Braverman said the government supports a proposal by RAO Gazprom, Russia's
natural gas monopoly and largest company, to sell part of the government's
40.85 percent stake in the company. Gazprom Chief Executive Rem Vyakhirev said



earlier this week Italy's ENI SpA gas company or Royal Dutch/ Shell Group
would be likely buyers of the 2 percent or 3 percent stake. 
A 3 percent stake of the company, if sold abroad, would raise about $1
billion, based on the market capitalization of the company. 
Gazprom now holds 35 percent of the company in trust management for the
government. The rest of the state-owned stake is managed by the government
itself and the sale of this part of the stake, 5.38 percent of the company, is
forbidden by presidential decree. 

Unblocking' 

Braverman said the State Property Ministry will draft a presidential decree
``unblocking'' the stake ``within few weeks.'' He said the government would
then consider possible ways to sell a stake in Gazprom. 
The government's sale plans may still be blocked by the country's
parliament. 
The lower house, or Duma, passed a law yesterday demanding the government
seek
Duma approval for each sale of a stake in companies included in a list of
``strategically important enterprises.'' The list comprises 737 companies,
including Lukoil, Rosneft, Svyazinvest, Gazprom and RAO Transneft, the
country's oil transportation monopoly. According to the regulation, the sale
of a stake in each of the companies should be approved by a separate federal
law. 
To be enacted, the law must be approved by the upper house of the
parliament
and signed by the Russian president. 
Last March, the upper house blocked the draft and later negotiated with the
Duma to cut the list from 2,861 companies to 737 companies. 
I hope the upper house will not let the law through,'' Braverman said. ``And
the president's structures will resist it. If it's enacted, then the situation
will become really difficult.'' 
The president has a right to veto a law. His veto may be overruled by the
two-
third majority in both chambers of the parliament. 

*******

#9
Washington Post
12 June 1998
[for personal use only]
What Stalled Russian Reform
By Leon Aron
The writer is a resident scholar at the American Enterprise Institute. 

Since the Russian stock market "crash," much has been said about the
"inconsistency" and "half-heartedness" of reform in that country. But
unless we take Russian politics into consideration, we can neither analyze
the current predicament nor devise ways to escape it.
Quite apart from the malfeasance, venality, ignorance and wrong choices
that have marred their implementation, Russia's reforms have been
"inconsistent" and "half-hearted" because Russian voters themselves have
been deeply divided. In the most recent parliamentary elections (December
1995), 21.4 million votes were cast for pro-reform blocs and parties and
22.3 million for the four leftist parties, chiefly the Communist Party. In
the presidential elections, 54 percent (40 million) voted for Boris
Yeltsin, 40 percent (30 million) for the Communist Party's chairman,
Gennady Zyuganov.
The Communist-led plurality has been setting the tone in the Duma. In
virtually every vote on economic matters, the Communists were joined by
Grigory Yavlinsky's Yabloko faction. For both the Communists and Yabloko,

vehement opposition to virtually anything the government undertook was the
key to keeping faith with their electorates. For both, the worse for the
regime the better for them.
Take the two measures rightly mentioned as the key to Russian market
transition: land privatization and a new tax code. In October 1993 Yeltsin
signed the decree that gave former collective farmers legal title to the
land and property shares, and revoked a moratorium on land sales by private
citizens. In March 1996 he signed another decree confirming peasants' right
to dispose of their land in any way they wish, including selling,
mortgaging, leasing or deeding as a gift. But in the past two years,
Yeltsin twice has had to veto the Land Code, passed by the Duma, because it
effectively forbids the sale of land. And in both cases his veto was
overridden.


Similarly, in March 1997 Yeltsin declared a new tax code the central
task of his economic policy. A new system would have reduced the number of
taxes from more than 300 to no more than five and would have significantly
lowered the rate for both individuals and businesses. Because of the
resistance in the Duma (where the Communists again were supported by
Yabloko), the tax overhaul was repeatedly postponed.
The Duma has been equally resistant to another vital measure: the
breakup of "natural monopolies" in gas, electricity and transportation. The
last straw that touched off the stock sellout was a Duma law that limited
to 25 percent (from the current 30 percent) foreign ownership of the
state-operated Unified Energy System electric monopoly. Yeltsin vetoed the
measure. The Duma overrode the veto.
None of this, of course, should have come as a surprise -- either in
Russia or in other post-communist nations. "Velvet revolutions" allowed the
parties and leaders of the ancien regime to organize and participate freely
in the country's politics. More to the point, the speed and "consistency"
of reforms can hardly be expected when private property, capitalism (and,
thus, institutionalized inequality) are introduced from scratch in a
functioning, one-man, one-woman, one-vote democracy.
Yet what democracy complicates, democracy also untangles. To break the
logjam, Yeltsin ought to follow the example of Charles de Gaulle and call a
referendum in accordance with Article 84 of the Constitution. He should put
directly to the Russian voters the questions of land privatization, tax
reform, natural monopolies and several other measures that could not be
implemented for years.
What torments Russia today is not just a case of economic mismanagement
and structural deformity (as in South Korea), or of government corruption,
ignorance or inertia, as in Indonesia. It is a manifestation of an
underlying political reality: a democratic dilemma that must be dealt with
-- directly and now.
An emergency standby loan to Russia must be organized to calm the
markets and prevent devaluation of the ruble -- and with it, a severe
political crisis. But the money must not be released at once and solely on
the vague promises of "reforms" and "improved tax collection" (because a
month from now, the Duma will, "disavow" these measures, and the same

crisis will erupt later with even more devastating consequences). The key
condition to assistance must be implementation of radical reforms. If the
Duma again votes them down or postpones them, the decision must be the
Russian people's.

********

#10
Aleksandr Dugin Ponders Post-Yeltsin Era 

Zavtra, No. 21
26 May 1998
[translation for personal use only]
Article by Aleksandr Dugin: "Postliberal Era"

1. Your Time Is Up
We live in a period of a change of eras. End of the
millennium, end of the century, end of the ideological era. All
these are global frontiers challenging us to just as global
responses, large-scale reflexes.
But within the framework of a narrower cycle in the life of
our Russian society also an obvious volte-face is occurring which in
its significance and consequences is entirely comparable to


perestroyka and "democratization."
Perestroyka was in the ideological sense a transitional stage
between the post-Soviet, nominally socialist society and the
liberal-democratic model. The term "post-perestroyka" pertained to a
description of the political-ideological and cultural model that
would emerge after the radical break with the Soviet past and the
establishment in Russia of a counterpart of the Western, capitalist
market system.
This "post-perestroyka" ensued after August 1991 and has
lasted in general outline until this time.
The period 1991-1998 is the era of the post-Soviet liberal-
democratic period of modern Russian history.
The essence of the ideological aspect is that "post-
perestroyka" is moving swiftly toward its end. The time of Russian
liberalism is running out.
We are standing on the threshold of an entirely new cultural
and ideological reality, which also differs profoundly from the
preceding years of "Yeltsinism," as "Yeltsinism" itself differed
from the Soviet era.
Certain conclusions concerning the structure of this new,
ensuing era of contemporary Russian history may be drawn even
now.
Let us take a somewhat closer look at the future.

2. Slow Change of ConsciousnessThe basic postulate of the liberal
period, which is coming to
an end, among the Russian ruling elite was the certainty that
confrontation with the West ensued exclusively on account of the
difference in socioeconomic ideological models. The entire economic,
political, foreign policy, cultural, and defense strategy of the
Russian Federation was built on this. The national leadership
seriously believed that the abandonment of Marxist philosophy and
socialist economics would automatically lead to the creation of a
balanced system in Russia itself with the active and friendly
participation of the West.
This was a fatal mistake. It has taken approximately 10 years
to recognize it.
When geopolitics came to the forefront, it was clear to
everyone that the Cold War was not a manifestation of a
philosophical duel of ideology but the expression of a historical
constant independent of sociopolitical specifics. This was simply
one stage of the "great war of the continents."
When the West in response to the disbandment of the Warsaw
Pact and the disintegration of the Union found nothing better than

to continue to strengthen the structures of NATO, picking up for its
aggressively Atlantist, dominator bloc all that escaped from our
influence, the Russian political elite and intelligentsia gradually
began to sober up.
The spokesman for this process was Nezavisimaya Gazeta, but it
is easy to discover similar motifs in other publications that once
unhesitatingly extolled Westernism and glorified liberalism.
A considerable role was performed also by the patriotic
forces, which together with archaic propositions in defense of their
positions sometimes appealed to more modern and adequate terminology
also. Had it not been for this conceptual creativity in the
opposition (primarily the line of Den, Zavtra, Sovetskaya Rossiya,
Elementy, and so forth), it would have taken the center, conformist

press much longer to have reached the same conclusions. A similar

function was performed also by the patriotic opposition in politics,
pushing the authorities toward a recognition of obvious geopolitical
truths.
Whatever the case, it is now obvious that no authorities in
the Kremlin (other than outright maniacs or direct agents of
influence) can fail to rely on geopolitics and, consequently, can
fail to be critical in regard to both the West and its philosophical
banner--liberalism, which has been, in fact, a screen for the direct
predatory and egotistical, colonial interests of the Atlantist
civilization building its own "new world order" to the detriment of
all other states, peoples, cultures, and traditions.

3. Path of Revolution and Path of EvolutionThe conclusive finalization
of the postliberal model in Russia may take two different paths.
The first path is revolutionary. It
presupposes a political revolution (possibly as a result of
perfectly democratic presidential elections), whereby people from
the patriotic opposition camp assume supreme power. This process
will be extremely complex and painful since a revolutionary
situation that could secure substantial support for restorationist
actions has patently not matured in the country. In addition, the
external reaction would be so negative that all structural
mechanisms of influence within the Russian Federation would be put
into effect immediately to quickly trigger the catastrophic
processes of separatism.
An opposition disaccustomed to executive power, not modern,
and with a narrow outlook, deprived, in addition, of a realistic
cultural-philosophical program, mediacratic structures, a
futurological plan, and so forth, would hardly cope with the global,
almost insupportable task and turn back all the destructive
processes, especially since there could now be no counting on any
outside support. In addition, it is obvious that to hold on to
power, the patriotic leadership, should it accede to the highest
authority in the state, would have, on the whole, to repeat all the
steps and verbal promises that are being distributed in abundance
(although increasingly less sincerely) by the present authorities.
There are clearly no prerequisites for mobilizing the national
forces for total confrontation, autarky, and a new stage of the Cold

War. It is paradoxical, but in the event of a victory of the
patriotic opposition, Russia's real geopolitical position not only
would not improve but would, most likely, deteriorate. And in order
to simply maintain the status quo its leaders would have to agree to
the same (if not greater) compromises with the West to which today's
authorities are assenting. But since the liberal era in Russia is
doomed to a speedy end, the very objective logic of events makes
such an outcome more than likely.
The second path is evolutionary. It
presupposes the gradual and gentle movement of the Russian political
elite toward Eurasian positions. It would not be accompanied by
radical slogans or the declaration of a "new course." On the
contrary, the authorities would actively and extensively practice a
double standard, outwardly continuing to declare their commitment to

"democratic values," but inwardly--economically, culturally, and

socially--to revive by degrees the prerequisites of global autarky,
following the postwar example of Germany and Japan on this issue.
This would be a kind of "Eurasian capitalism" not that much
different by geopolitical standards from moderate and limited
socialism with clearly expressed patriotic underpinnings. This
process is already thoroughly under way, and it is connected
precisely with the actual administration and the figure, personally,
of Boris Yeltsin, who in any situation remains true to himself--he
has a fine sense of a change in philosophical winds and knows how to
avail himself of this effectively to seize and preserve power. But
not only Yeltsin personally is associated with this evolutionary
path. All the other realistic presidential candidates--from Luzhkov
and Chernomyrdin through Nemtsov--will be forced to pursue the same
line also.

4. The Mad General--the West's Last ChanceThe only thing that could
impede the inevitable onset of the
new postliberal era is the intrusion of an unconcealed,
catastrophic, chaotic factor that could knock all of Russia's
political reality from the logical path of development. This threat
has today an identity and a name. The excellent name conceals a
historical monster entirely comparable in significance to the stages
of the activity of Gorbachev and Yeltsin that were the most
catastrophic for the country and the people.
The "general" from hell carries with him such
unpredictability, such suspicious nonsense, and such a subhuman, but
chemically active impetus that in a particular situation and
selected by the corresponding forces with no interest either in
Russia's revolutionary or evolutionary development in the direction
of a life-saving Eurasian position, he could be brought to supreme
power. The condition of the people is distracted, stunned, and
confused. Keeping pace with the rapidly changing philosophical
strata is practically impossible. And advantage could perfectly well
be taken of this general national concussion by the most negative,
absolutely Atlantist forces persistently and, with gigantic
financial levers, fatally pushing upward the figure who is alone
capable of plunging the unfortunate state and its people into a

third convolution of the nightmare.
Only this fatal character could cancel the end of liberalism
in Russia, and analysts of the West and his local fanatical
disciples understand this full well, alas.

5. What There Has Not Been BeforeThe postliberal era in Russia is
ensuing as obviously as could
be. Aside from the sole (and, for all that, improbable) alternative,
all other models of subsequent political development will ultimately
lead to a process of gradual Eurasian revival, a normalization of
the historical course, and the recognition of the need of a unique
cultural, geopolitical, and socioeconomic path for Russia.
We are currently living at a pivotal moment. The authorities
and the semi-official cultural press are maturing to the point of
opening the way to the patriotic line. This process began with the
most compromise versions and was reminiscent more of humiliation,

bribery, and corruption than a full-fledged dialogue. But these

times are gone. Whoever ran after the gingerbread man too soon fell
away almost instantly. In addition, Russia's political elite today
needs original, nonconformist, artistic, creative structures, myths,
models, and interpretative, philosophical, and cultural forms. They
will be needed even by the authorities that come in the course of
the political patriotic revolution.
There can be no direct return to the past, no direct
restoration. This is ruled out with any scenario. Nothing of what
belonged to the departed philosophical eras--both Soviet and
liberal--can once again be made much of without thorough
reconceptualization, without revision, without a comparison with the
realities of the modern historical and geopolitical picture of the
world.
New names and new terms, new concepts, and new mythologems
have to be found for everything. Clearly, no one can invent
everything from scratch. We are talking about an appeal to
traditional values, to eternal Eurasian constants, and also to the
latest vanguard technology and systems developing the world over,
but all this has to be conceptualized, illustrated, and critically
revised in the new manner.
It is this, not a new convolution of the social and cultural
buying and selling, that is required of us by the times, by
history.
The postliberal era in Russia is in the offing.
What will it be like?
Like nothing that there has been before.
And very much here will depend on us. On our imagination, on
our will, on our intellect, and on our sincerity and readiness for
the umpteenth time to begin everything from the beginning.

********

#11
Financial Times
12 June 1998
[for personal use only]
Personal View
Devalue the Rouble
By Peter Oppenheimer
Peter Oppenheimer is fellow in economics at Christ Church, Oxford

Russia's government is paying an alarmingly high price for a currency 
regime that is inappropriate anyway at a time of falling oil prices
The Russian authorities have refused to allow financial market panic to 
push them into a disorderly devaluation of the rouble. This is 
commendable. A forced and excessive depreciation of the currency could 
trigger a nasty run on the country's national savings bank (Sberbank), 

where most of the population keeps those parts of its savings that are 
not in dollars.
The government's determination was underlined by its willingness to lift 
the central bank refinance rate to 150 per cent a year, borrow secretly 
abroad and reinforce budgetary tightness. Additional spending cuts were 
announced, as was the appointment of the belligerent former finance 
minister Boris Fyodorov as chief tax collector.
When calm returns, however, the question of exchange-rate management 
deserves further consideration, especially as periodic bouts of sky high 
interest rates are damaging to the budget position and to the economy's 
medium-term prospects.
Many commentators have taken to declaring that the rouble's nominal peg 
to the dollar has been the bedrock of Russia's stabilisation policy. 
This is quite untrue. The bedrock has been central bank restraint on 

growth of the monetary aggregates and government consolidation of the 

public finances. These policies were established in 1995 (after a false 
start in 1993-94) in the presence of a freely floating rouble exchange 
rate. In the summer of that year the "exchange-rate corridor" was 
introduced as a pragmatic means of limiting exchange-rate movements. The 
problem at that time was not depreciation but excessive appreciation.
Excessive real appreciation posed little threat to Russian manufacturing 
competitiveness, which remains a theoretical concept except in armaments 
and aerospace. Most of Russia's exports are primary commodities and 
semi-manufactures subject to standard dollar prices on world markets. 
Exchange-rate changes affect mainly the profits of exporters, and only 
indirectly, if at all, the volume of exports.
There is, however, an important impact on the budget. Russia, far more 
than western countries, has been dependent for its budget revenues on 
corporate taxes. Exchange rate appreciation squeezes profits, especially 
export profits, and thus aggravates revenue shortfalls. For example, 
between 1994 and the first half of 1996 corporate tax receipts shrank 
from 8 per cent of gross domestic product to just 4.4 per cent, largely 
as a consequence of the rouble's real appreciation in 1995.
Since the establishment of the rouble-dollar corridor, policy has 
focused on ensuring a gradual depreciation of the nominal exchange rate, 
so as to keep the real exchange rate approximately - though not rigidly 
- constant. In the jargon, there has been a pre-announced but 
discretionary crawling peg with a variable band-width. This is a long 
way from the simple nominal anchor falsely attributed to Russian policy 
in recent days and weeks.
As the chart shows [not here], the rouble depreciated against the dollar 
by more than 5 per cent in the six months to March, without generating any 
threat to Russia's financial stability.
Over the past 18 months the world price of oil in dollars per barrel has 
fallen from more than $20 to less than $14. Oil and gas account for half 
of Russia's exports. Such an oil price fall is tantamount, other things 
being unchanged, to a sizeable real-term appreciation of the rouble. The 

Russian oil sector's profits have been squeezed, as has its contribution 
to budget receipts. The price drop also led to the failure to find 
bidders for Rosneft, the state-owned oil group, at the initial asking 
price. Russia's revenue problems are not all due to tax evasion.
Prospects for the world economy after the Asian turmoil do not encourage 
short-term bullishness about the dollar price of oil. What matters, 
however, for Russian corporate earnings and tax payments is the rouble 
price, and this would be enhanced by a somewhat lower exchange rate.
Of course, other domestic prices, especially of imports, would also be 
raised by such a move. But so they would by alternative steps to 
increase tax revenue, notably higher indirect taxes such as the excise 
duties whose planned reduction has just been annulled or deferred. There 
is no reason for moderate adjustments of this kind to trigger a flight 

from the currency.
In today's circumstances, containment of speculative panics on the 
exchange markets is one half of the challenge confronting the Russian 
authorities in managing their currency. The other half is to secure a 
modest downward adjustment of the exchange rate path, which more than 
any other single measure will enhance tax revenues and reduce pressure 
on the government to borrow large sums at extravagant interest rates.

********