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Johnson's Russia List
 

 

June 15, 1998   
This Date's Issues: 2222  2223


Johnson's Russia List
#2223
15 June 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russian Defense Minister Blasts NATO Exercises.
(Kosovo).

2. Toronto Sun: Matthew Fisher, Investing in Russia is a risky business.
3. Carl Olson: U.S. Businessmen in Russia.
4. New Worker Online: Russian miners strike and march.
5. Yulia Mineeva: Talk at Woodrow Wilson Center in Washington on
Samara.

6. JAMESTOWN FOUNDATION PRISM: Yelena Dikun, WHO WORKS, AND
WHO RULES, IN THE KREMLIN.

7. Reuters: Yeltsin Not to Attend Czar Burial.
8. RIA Novosti: ABOUT 30 ROMANOVS TO ATTEND LAST TSAR'S FUNERAL.
9. Segodnya: Oleg Odnokolenko, RUSSIA SET TO IMPLEMENT SWEEPING MILITARY 
REFORM.

10. Argumenty i Fakty: SCALE OF VIOLATIONS AND PUNISHMENT INCOMPARABLE.
(Interview with Khachim Karmokov, chairman of the Counting Chamber).

11. RFE/RL NEWSLINE: RUSSIA'S DEMOCRATIC CHOICE PLANS FOR DUMA 
ELECTIONS...AS GAIDAR REFRAINS FROM BACKING GOVERNMENT. ]


*********
#1
Russian Defense Minister Blasts NATO Exercises 
NATO says recall of Russian envoy has no political significance 
15 June 1998

MOSCOW -- (Reuters) Russian Defense Minister Igor Sergeyev
said on Monday NATO had misled him over its air exercises
in the southern Balkans which he described as "unexpected," Interfax
news agency said. 

"We discussed the Kosovo problem (during my trip to Brussels).
We all agreed that first of all it was necessary to resolve it with
political measures. And as soon as I get back to Moscow I find out
the exercises have begun. This was unexpected for me," Sergeyev
told Interfax after talks with visiting U.S. Gen. Hugh Shelton. 

"As a soldier, I am used to valuing honesty in people. I cannot
understand why they treated me in this way," Sergeyev was quoted
as saying. 

Russia is uneasy about NATO's increased presence in the southern
Balkans where Serbs are battling ethnic Albanians in the Yugoslav
province of Kosovo. 

Earlier on Monday, the Russian Defense Ministry confirmed that it
was recalling its military representative to NATO, Lt.-Gen. Victor
Zavarzin, to Moscow but declined to say whether this was a protest
against NATO's air exercises. 

"There are questions we have to work on," the Russian Chief of
General Staff Gen. Anatoly Kvashnin told reporters after talks with
Shelton, chairman of the U.S. Joint Chiefs of Staff. 

Shelton said NATO wanted a peaceful, diplomatic solution to the
Kosovo crisis and said the Western alliance was pinning its
hopes on
planned talks in Moscow later on Monday and on Tuesday between
Russian President Boris Yeltsin and Yugoslav President Slobodan
Milosevic. 

NATO played down the report that Russia had recalled its top
military envoy and said the official's return to Moscow had no
political significance. 

"We've checked this out with Zavarzin's colleagues, and with the
Russian embassy here, and the reason is that he has to renew his


visa," a senior NATO official told Reuters. "There is nothing
unusual
about the visit. It has no political significance." 

A NATO official earlier confirmed the alliance believed Zavarzin's
trip was "a routine visit." "There's no connection with what is
going
on (in the Balkans)," he said. 

NATO began air exercises on Monday to show the West was
serious in its intention to stop bloodshed in the Yugoslav
province of
Kosovo, where Serbian police are battling ethnic Albanian
guerrillas.

Moscow has traditional ties with Serbia, and opposes the use of
military force in the region. 

Interfax quoted Russian Defense Ministry sources as saying the
decision to bring Zavarzin back to Moscow had been partly
motivated by NATO air maneuvers over the Balkan region. 
Zavarzin is head of Russia's military representation at the North
Atlantic Treaty Organization which overseas military, links with
the
alliance. Russia last year signed an agreement setting out the
terms of
a new partnership structure. 

********

#2
Toronto Sun
June 15, 1998 
[for personal use only
Investing in Russia is a risky business
By MATTHEW FISHER (74511.357@CompuServe.com) 
Sun's Columnist at Large

MOSCOW -- With all the palaver about the Russian economy in crisis, who
better to chat with than a Canadian investment fund manager with years of
experience here and in Hong Kong. 
Over American beef and French game hen at a grossly overpriced Moscow
restaurant, the fund manager, a Montreal Expos fan from British Columbia
working for an international firm, painted a devastating picture of
corruption, incompetence and decay and explained the often shameful part
westerners have played in this ugly drama. 
"We spoke about 10% annual growth in Asia when there really wasn't that
kind of growth," my still youngish Canadian friend said. "It has been a
different sort of scam here. 
"Because there wasn't any growth here at all a new benchmark was created
based on asset value. Investments were based on things like megawatts
produced or oil barrel reserves. What was great about these assets was that
they were dirt cheap. It didn't matter that they were all losing money. 
"At the end of 1997 it was realized that using asset value to attract
money was no longer working, so a new story emerged that Russia was poised
for growth. There were headlines such as 'Russian bear ready to pounce' or
whatever BS you like. But the economy was anemic and couldn't bear out such
predictions. So investors left." 
As they have money to spend, fund managers have a privileged inside
glance at how many of Russia's best companies and top executives do
business. It has often proven to be "a shocking experience." 
"The story of Russia for the last seven years is the misappropriation of
state assets from hockey teams to schools to the biggest oil companies," my
friend stated, grimly. "I don't think many of these companies are being
well run, but our expectations are so low that when we see any level of
competence we tend to go overboard and say it is well run even though the
executives involved might not understand such basic things as their own
cost structure." 
One of the most surreal experiences has been visiting Russian business
offices. Some have been drab, Soviet-style affairs. Others "were right out
of James Bond, ridiculous and extremely tacky." 

"In terms of material desires there probably is no difference between
Russian and western executives. The difference is that there are no
restraints on executives here. They drive Mercedes and pay themselves so
fantastically it is often downright embezzlement." 

TUMBLEDOWN FACTORIES 

That few major Russian companies outside the oil industry and a few
mining conglomerates are prospering has long been obvious to anyone who has
visited the tumbledown factories which blight the landscape. The few bills
that get paid are often not paid in cash but in barter. But that has seldom
stopped company brass, most often old Communist factory bosses, from
treating themselves like kings. 
"We once thought that non-payment was an unfortunate, unavoidable phase
on the way from communism to capitalism," the Canadian, who is also a
lawyer, said. "We now realize it wasn't just a phase because it has been in
the interest of company managers to leave things as they are. 
"If only partial payment is received you don't have to pay taxes or pay
your workers, which can be very convenient. What managers do is accept
barter which they valued as they like with a minimum cut of at least 15% of
the real value for themselves. They can in this way run a company into the
ground while profiting greatly themselves. 
"We sometimes take pity on them and consider it unfair to expose them,
but maybe they need more of that. A lot of times it's truly pathetic what
they are doing to their companies." 
Having heard all this, it was hardly surprising that the fund manager
wanted to warn his compatriots to be very careful before putting any of
their dollars in Russia. 
"If you're a Canadian you probably don't want anything to do with direct
investment unless you're a big firm with big-time connections in the
government. If you're a passive investor with a highly diversified
portfolio, you might consider putting 1% or 2% of your money here, but it's
hard to make a case for any more than that. Only sophisticated investors
with eyes wide open should come." 
So why was he sticking around? 
The fund manager's answer was that he, and most of the thousands of
western money men who have swarmed into Moscow in the past few years, would
probably clear out over the next 12 months. 

********

#3
Date: Fri, 12 Jun 1998 
From: olson@lafn.org (Carl Olson)
Subject: U.S. Businessmen in Russia

In response to Timothy Thompson's inquiry about why U.S. businessmen are 
so turned off by business in Russia (2217 #8), it seems so obvious.

At the macro level, the Russian ruling class has been taking tens of 
billions of dollars per year out of Russia for the last decade and is
now primarily living off its foreign investment income from the U. S. 
and other Western investments. As such, they are not investing much of 
anything back in Russia (the euphemism is "capital flight"). And they 
are certainly not going to allow foreigners to make any significant 
profits in Russia if they aren't getting much themselves.

Also at the macro level, the Russian economy is prodigiously 
UNproductive. Can anybody think of anything that he or she in the U. S. 

has bought that has been made in Russia? The Russian economy is not 
customer oriented, whether domestic or foreign. For an American 
businessman, there has to be some real prospects of profits.
At the micro level, Mr. Thompson has correctly outlined all the 
obnoxious, dangerous, and boring aspects of doing business in Russia. 
For a businessman from the U. S. or anywhere else, the truth is that the 
grass is much, much greener elsewhere. Why try to beat one's head up 
against a brick wall in some sort of macho exercise, instead of going to 
a much more business receptive and friendly country? Americans are not 
dummies. 

Sincerely,
Carl Olson
Chairman
State Department Watch

********

#4
Date: Mon, 15 Jun 1998
From: New Worker Online <ncp@geocities.com>
Subject: Russian miners strike and march

----------------------original
message-----------------------------------------
From: 
"Evgeniy Sahonko" <intcentr@aha.ru>

The current economic and political situation in Russia is worthening day by
day. The crisis is so deep that the govt has no courage to start
nagotioantins with the miners demanding impeachemt of the President/ The
last month agreemnts between miners strike committees and russian govt's
representatioves are not being realized. Kuzbass delagtion came back from
Moscow totaly unsatisfied . "President and his govt do not keep up the word
and we will go on fighting untill they are thrown down".

Vorkuta and Inta miners came to Moscow on the 11th of June and have been
staging 24-hour picket since then outside the govt building. They have
recently been joined by representatives from Tula, Rostov-on-Don,
Kuzbass, Primorie that is to say from all the coal basins of Russia.
On the 18th of June russian scientists will also join miners. They will
stage a rally in Moscow and talks have been started in order to have it
jointly with miners protesting outside the govt building. The main demand of
the scientists is to stop cutting gusts on science and pay off all the
debts. They support the idea of Yeltsin's impeachemnt, but their demands are
far less radical than the miners'.

The miners now demand first nationalization of the caol industry, second
resignment of President and his govnt, third the payoff of the wages and not
only to miners. They have authorisation to stage their 24hours picket till
the 16th of June. They have refused to accept proposal by Moscow govt to
leave for one of the Moscow region sanatorium to have holidays there and
nobody knows if they will be allowed to go on with the picket after the 16th
of June.

But they do not give any importance to the legal aspect. "We will not move
untill the regime is down. We will stay here as long as necesarry", - say
miners. They keep in contact with their respective regional strike
committees providing them all the information on the action and its
consequencies. They say more miners are coming this week to the capital.
Besides the protesting miners have decided to make an appeal to the Moscow
workers to support the campaign. On the sunday night the draft was
eleborated, tomorrow the final version will appeare. It will be distributed

on Moscow plants and factories.

MGO VLKSM
press centre http://www.aha.ru/~mgo/index.htm

http://www.aha.ru/~intcentr/index.htm

http://www.geocities.com/CapitolHill/Lobby/3198/
---------------------------ends-----------------------------------------------
New Worker Online http://www.geocities.com/CapitolHill/2853/

********

#5
From: "Julia Mineeva" <jmineeva@hotmail.com>
Subject: Talk at Woodrow Wilson Center in Washington
Date: Sun, 14 Jun 1998 20:56:08 PDT

Dear David:
I'm doing presentation in Woodrow Wilson Center on Wednesday, June 17, 
in Room 429 at 12:00 about my region, Samara. I would greatly appreciate 
it if you could place this information on your list. 

*********

#6
THE JAMESTOWN FOUNDATION
PRISM
A BI-WEEKLY ON THE POST-SOVIET STATES
June 12, 1998 Vol.IV Part 2 
WHO WORKS, AND WHO RULES, IN THE KREMLIN
By Yelena Dikun
Yelena Dikun is a political columnist for Obshchaya gazeta.

In the "late Brezhnev" era, the Kremlin leadership semi-officially
established for itself a four-hour working day. The aged General Secretary
and the other elderly leaders were physically incapable of sitting in their
offices for eight hours straight. And those whose health permitted it saw no
sense in sticking around if the bosses were gone.
After his operation, Russian President Boris Yeltsin has also adopted a
more forgiving work schedule. He usually arrives at his Kremlin residence at
about 9:30 AM and stays there only until lunchtime, spending the rest of his
time in seclusion outside the city. The circle of his working contacts, the
number of documents he looks at, the number of meetings and public events --
all that has been reduced to "a medically-justified minimum." 
It is no wonder that this has led to speculation that it is not Yeltsin who
rules in the Kremlin, that power long ago has slipped from his hands to
certain shadowy figures and structures which some call "the family," "an
oligarchy," "a 'collective Yeltsin'," etc. 
But from time to time, events (like the firing of the Chernomyrdin
government) take place on Russia's Olympus which do not fit in with the
image of Yeltsin as a symbolic and weak-willed figure. One cannot say that
Boris Yeltsin "reigns, but does not rule." At least, not yet.
After private consultations with a number of informed sources in the
presidential administration, I get the sense that the real configuration of
supreme power in Russia today is much more complicated than the
one-dimensional construction of a president in name only and an oligarchy
behind the scenes.

Correcting Past Mistakes
Of all the institutions of power, Boris Yeltsin prefers the oldest: that of
the favorite. This had been noticed about him before as well, but as he has
grown older, his preference for ruling through "favorites" has become almost
a disease. Today, Yeltsin is surrounded by figures who owe their status to
Yeltsin's favor alone. Now, it is impossible to imagine him having
confidantes such as Gaidar, Burbulis, Soskovets, Shakhrai, or Korzhakov --
in short, anyone who has either a party or a professional corporation behind
him, anyone who has independent political weight or capital, anyone who has

any ambitions for himself. Such people are unreliable as favorites, and
therefore are no longer brought close. Anatoly Chubais, who had led the
presidential administration in such a way that he was given the nickname of
"The Regent," was Yeltsin's last personnel mistake. No matter how hard he
tries, Berezovsky is no longer allowed into the "inner circle" -- it is
better to keep the banker, who has ambitions of becoming the "puppeteer," at
a distance.
On the other hand, the "rootless" young Prime Minister, Sergei Kirienko,
who has nothing and no one behind him, is an ideal candidate for the role.
His candidacy is ideal in another respect as well. Recently, the aging
president has begun to show a weakness for young officials. Since 1996, his
administration has become noticeably younger. The average age of his
presidential assistants today is just over forty. Yeltsin understands quite
well what an oppressive impression was made by the mumbling Brezhnev and his
entourage of people as old as he was, and is trying to create a more
attractive image -- that of a patriarch, surrounded by talented and admiring
young advisers.

The Journalist, the Diplomat, and the Daughter
Yeltsin's current "troika" of favorites is made up of the leader of his
administration, Valentin Yumashev, his press secretary Sergei Yastrzhembsky,
and his image-maker and younger daughter Tatyana Dyachenko. All three meet
the standard demands made of such people: they love their boss, do not try
to upstage him, and are not independent political figures. And, as their
role suggests, they have influence far beyond their modest positions on the
formal "Table of Ranks."
Anatoly Chubais, who had done quite a bit in his time to advance Valentin
Yumashev's career, could hardly have supposed that the unkempt ghostwriter
of the president's memoirs, who appeared in the Kremlin in faded jeans and
sweaters, would become a clever apparatchik. Veterans of the bureaucracy
simply laughed at Yumashev's appointment. But no one laughs anymore.
Valentin Borisovich not only quickly adjusted to wearing a tie, he also took
over many functions the Constitution assigns to the head of state.
Yumashev has taken over all of the Kremlin's paper flow, passing on to his
patron only those documents which he knows will, in principle, be of
interest to him. For example, the chief of the presidential administration
is ever more frequently taking the president's place in official meetings
with high-ranking government officials. Insofar as the president, for health
reasons, is not able to keep his schedule of meeting with the leaders of the
most important ministries and departments, the line of officials in his
office has moved to Yumashev's office -- there, one can meet deputy
premiers, "force" ministers, and heads of security services. Frequently,
Yumashev also represents the president in meetings with the leaders of the
Duma and the Federation Council, and with representatives of the federal
courts.
Another presidential favorite -- Sergei Yastrzhembsky -- is also considered
to be a Chubais protege. But nobody speaks of this as an unfortunate
miscalculation. The role of interpreter of the words and thoughts of the

Russian president is one that you wouldn't wish on your worst enemy.
Yastrzhembsky has performed like a virtuoso: he has extricated himself from
the most absurd situations while maintaining his dignity. The press, which
Sergei Vladimirovich oversees, has not written anything nice about his boss
for a long time, but the press secretary has managed to maintain even,
diplomatic relations with them, which they reciprocate. 
Ever since Vyacheslav Kostikov's time, it has become customary to see the
presidential press secretary as a fussy, low-level official, whom rollicking
higher-level staff single out for throwing off the presidential boat into
the river, (1) or for similar amusements. Yastrzhembsky's position is not at
all like Kostikov's. Even the press secretary's formal status -- Deputy
Chief of the Presidential Administration for Foreign Policy -- is
unprecedentedly high. In reality, Yastrzhembsky is one of those who is
allowed in on the most important presidential decisions.
The press secretary secured his place among the president's favorites in
the summer of 1997. If, on his vacation at Shuiskaya Chupa, he was assisted
by the deputy chief of his administration, Yuri Yarov, Boris Nikolaevich
took Yastrzhembsky to "Volzhsky Utyos," and clearly, the president enjoyed
his company. It must be noted that his closeness to the president has
created some difficulties for Yastrzhembsky. He would not be against
returning to diplomatic service, or more specifically, becoming Foreign
Minister. And later, "after Yeltsin," this dream may not be realized. It's
not that the president doesn't want to give up the Foreign Ministry
position; he simply is reluctant to let Yastrzhembsky go. Love, as they say,
has its reasons.
Unlike favorites of previous years, who fought among themselves, Yumashev
and Yastrzhembsky are on quite friendly terms. Both at work and on the
tennis court (where they make a good doubles team) they call each other
"Valya" and "Seryozha." And their relations with the third member of this
"coalition," "Tanya," -- i.e., Tatyana Borisovna Dyachenko -- are on the
same footing.
Tatyana Borisovna has ascended to the rank of presidential favorite by
virtue of her birth. It wasn't easy for her to get settled in the midst of
these political whiz-kids, but later, she mastered it so well that there
were rumors that she had plans to start an independent political career of
her own -- by running, for example, for the State Duma from her native
Yekaterinburg. But the latest information does not confirm these rumors.
Political service only interests Tatyana Borisovna as a way to help her
father. Kremlin sources maintain that Dyachenko's influence on the making of
important decisions is usually exaggerated: Boris Nikolaevich is not
inclined to rely on his daughter's authority. Her main value to her father
as an "adviser on his image" is that with her, he has his own person in the
presidential administration, a guarantee that no one in the Kremlin or
Staraya Ploshchad is trying to double-cross him.
In addition to the "first troika" -- Yumashev, Yastrzhembsky and Dyachenko
-- Kremlin insiders say there is another "outer troika." It is made up of

Yumashev's deputy Yuri Yarov, who is called "The Nurse" behind his back
(because he usually stands watch when the president is in the hospital or on
vacation), another of Yumashev's deputies, Mikhail Komissar, and Security
Council Secretary Andrei Kokoshin. Unlike the "first troika," the members of
the second circle do not make up a team and keep to themselves.

No Need for Heirs to Hurry
The influence of Yeltsin's current favorites on matters of state is far
greater than that of his former confidantes. But one would have to know very
little indeed about Yeltsin to think that the "old man" is completely out of
touch. He is, of course, no longer capable of working at full capacity, but
"working" and "ruling" are not the same thing. The president has entrusted
the "work," i.e., the routine of running the government, to his favorites,
but he continues to keep tight control over everything which affects his own
power, and above all, this means control over the top bureaucracy. Yumashev
and Yastrzhembsky can make up a list of recommendations, and can "prepare
the ground," and Dyachenko can "put a word in his ear," but the president
has not yet let anyone come to him with a personnel decision already made --
that would be taking an intolerable liberty.
Boris Nikolaevich's current favorites -- to give them their due -- have a
better sense of the bounds of what is permissible than their predecessors.
Unlike Chubais or Korzhakov, they try to stay in the shadows, do not form
outside relationships with people who are not part of the president's
circle, and have no outside interests. Yumashev may be close to Berezovsky,
but those are legal, sanctioned relations, maintained in the boss'
interests. In his interest, Yumashev and Yastrzhembsky, at every convenient
opportunity, try to stress the insignificance of their own roles at court,
which, naturally, is to their benefit.
Although he has, by necessity, limited his own power to control over the
state apparatus, Yeltsin defends this "last inch" more jealously than he did
in his best years. From all indications, he made the decision to dismiss the
Chernomyrdin cabinet back on February 26, after an expanded session of the
government, at which he had expected to hear apologetic speeches, not a
report on the government's achievements. Boris Nikolaevich left that meeting
very upset; he was even upset that they didn't give him a glass of water
when he was coughing.
But three weeks passed before Yeltsin let Yumashev and Yastrzhembsky in on
his plans. And even then, he feared that they would not be able to hold
their tongues and that the people who would be fired would be warned days
before the signing of the decree. Such excessive suspicion is a sign that
Yeltsin is not inclined to trust even his most trusted advisers.
"His love of power clearly has not gone away over time," noted a
high-ranking Kremlin official. "Boris Nikolaevich will hold on tightly to
the throne to his last breath. So successors need not be in any hurry."

NOTE:

1. Translator's note: According to Aleksandr Korzhakov, once, when Yeltsin
and Krasnoyarsk Governor Zubov were taking a boat trip along the Yenisei,

Yeltsin ordered that Kostikov be thrown overboard for annoying them.
[Aleksandr Korzhakov: Boris El'tsin: ot rassveta do zakata. (Moscow, 1997)
p. 253.]

Translated by Mark Eckert

*********

#7
Yeltsin Not to Attend Czar Burial 
15 June 1998
MOSCOW -- (Reuters) President Boris Yeltsin has decided not to
attend the burial of the remains of the last czar Nicholas II
following
a similar decision by the Russian Orthodox patriarch, RIA news
agency said on Monday. 

RIA quoted Deputy Prime Minister Boris Nemtsov as saying after
meeting Yeltsin that the burial would still take place on July
17 in St.
Petersburg, exactly 80 years after the czar and his family were
murdered by Bolshevik rulers. 
Nemtsov oversees the government's involvement in the ceremony,
which was originally intended to be a major act of national
reconciliation. In the absence of Yeltsin and Patriarch Alexiy
II, it
will be seriously downgraded. 

The Kremlin could not immediately confirm the news agency report. 

The Holy Synod decided last week to allow only relatively
low-ranking clerics to conduct a requiem over the remains,
unearthed from a forest near the Urals city of Yekaterinburg in
1991. 

The Synod explained the decision by saying it did not want to take
sides in a row over the identity of the bones, which have a huge
political resonance for post-communist Russia. 
Nemstov's aide, Victor Aksyuchits, has said the Holy Synod's
decision was rather a reflection of power struggles within the
church
than of genuine doubts over the remains. 

He said church representatives had previously accepted the results
of research conducted both in Russia and abroad indicating the
remains were indeed those of Nicholas, his wife Alexandra and three
of their five children. 

The Kremlin had hoped the funeral would be a way to reconcile a
society still bitterly divided over its past.

********

#8
ABOUT 30 ROMANOVS TO ATTEND LAST TSAR'S FUNERAL
GENEVA, JUNE 15. /RIA-NOVOSTI CORRESPONDENT IGOR SEDYKH/ --
About 30 members of the house of the Romanovs are to visit St.
Petersburg, attending the burial of remains belonging to the
last Russian emperor Nicholas II and his family at the Peter and
Paul cathedral.
This was disclosed in an exclusive RIA-NOVOSTI interview
here the other day by the Romanov family's eldest member Nikolai
Romanovich Romanov.
We are going to come there in order to cherish the memory
of our near and dear because we are convinced by the degree of
those remains' authenticity, which has been verified by US,
British and Russian experts (approximately 98 percent). And
we'll take part in the burial of Nicholas II, his family members
and those people, who had remained loyal to them till the very
end, July 17, Romanov went on to say.

Nikolai Romanovich also noted that he has talked to Mikhail
Feodorovich Romanov over the phone, with the latter denying a
statement to the effect that most Romanovs won't attend the
funeral. According to Nikolai Romanovich, Mikhail Feodorovich
intends to make a statement and to set forth his position.
However, Mikhail Feodorovich won't be able to come for family
reasons, Nikolai Romanovich added.
Replying to a question about the Russian Orthodox Church's
position, Nikolai Romanov stressed that he is embarrassed by
that confusion between the church and the Romanov family because
the clerical position and that of laymen should not be mixed up.
We understand the church's position to the effect that it can't
recognize the authenticity of the tsarist family's remains at a
time when such authenticity is still being doubted to some
extent (all the more so as the question of canonizing the tsar
and his family is now being posed).
However, this doesn't concern us, laymen, who have the
right to make their own choice, he added.
Should, God forbid, they fail to confirm the authenticity
of such remains, in that case we are going to cherish the memory
of unknown people, who will symbolize all the victims of that
ruthless period -- Whites and Reds, men and women alike
(including Col. Nicholas Romanov and his family).
Nikolai Romanov thanked the authorities of St. Petersburg
for their efforts to contact all members of the Romanov family
and to invite them to attend the forthcoming ceremony. 

*********

#9
>From RIA Novosti
Segodnya
June 15, 1998
RUSSIA SET TO IMPLEMENT SWEEPING MILITARY REFORM
Marshal Sergeyev Will Conduct Such a Reform
Meanwhile Col. Yeltsin Will be Responsible for its Results
By Oleg ODNOKOLENKO

The Russian State Duma has already okayed the bill "On the
Military Reform" in the first reading. This is heartening news,
indeed; however, nobody knows when this long-awaited legal act
will turn into a working document. Consequently, the military
reform won't be regulated by the state for some more time; that
reform will be largely affected by the whimsies of those
particular bureaucrats in charge of this country's defense
potential. We've already grown used to such developments.
Besides, no one can change the main principle of national
military development, which suggests that actions, rather than
thoughts, come first; besides, all this should apparently be
covered by some legal act (as a fait accompli).
The draft document states expressly that, instead of
economizing, the military reform aims to create a common
state-run military organization. Even the new military bill's
authors, who are not inclined to over-estimate the merits of
their "brain-child", note the importance of this provision
alone; in their words, the remaining text is something
irrelevant.

The previous and continued reformation of this country's
military establishment mostly resembles intra-departmental
transformations. The Federal Border-Control Service (FPS) has
now started creating its own navy. At the same time, the
Interior Ministry's Security Force is busy stockpiling heavy
weapons. And the Defense Ministry now regards the Strategic
Missile Force as its favorite fighting service; well, this
approach is only too natural. As a result, the army alone owes
45.5 billion roubles. Meanwhile the Russian Railroads Ministry,
which expects all "military" departments to pay it 2 billion
roubles, has already threatened that it won't allow servicemen
to ride in its trains.
The most interesting thing is that the state views all
this "mischief" on the part of Russia's generals as something
quite tolerable and even understandable. For example, a rather
wise decision (on placing military builders and other
"sectoral" middlemen outside the jurisdiction of this country's
armed forces) was made at the beginning of perestroika.
However, the army's construction battalions didn't toss off
their shoulder straps, subsequently becoming subordinated to
the Ros-Spets-Stroi agency. A presidential decree on abolishing
that odious organization once and for all was issued several
days ago. In real life, though, the time-tested
"communicating-vessels" mechanics have worked once again. As a
matter of fact, all the 40,000 Ros-Spets-Stroi workers and
their generals have once again been subordinated to the Defense
Ministry's structures. This seems to be a somewhat strange
approach toward the military reform -- combat elements and
formations are currently being pruned, with the share of
"supply trains" continuing to increase. It's still unclear
whether a spade-wielding soldier can fight off his potential
enemy; however, Russian generals will have no trouble building
their dachas for a long time now.
One relatively short bill is highly unlikely to rectify
the situation inside this country's "military" departments. It
goes without saying that we need a joint body capable of
ensuring a close-knit performance on the part of all those
"big-league" and low-ranking commanders alike. The bill's
initial version had stipulated that the National Security
Council should play such a role. However, that provision was
omitted in the course of law-making activities. This can be
explained by the fact that the General Staff and the NSC have
been fighting furiously and irreconcilably for the right to
supervise the military-development effort for a long time now.

********

#10
>From RIA Novosti
Argumenty i Fakty, No. 24
June 1998
SCALE OF VIOLATIONS AND PUNISHMENT INCOMPARABLE

Khachim Karmokov, chairman of the Counting Chamber of the
Russian Federation, the country's highest organ of financial
control, talks to Galina Valyuzhenich and Veronika Sivkova


Question: Russia is a very rich country, isn't it? So then
why are we constantly being told there's no money, there's no
money?
Answer: Yes, we truly are a rich country. Even
notwithstanding the serious decline in production. And there is
no money because the government does not know how (or does not
want) to properly collect taxes and to manage state property.

Question: Can it all be that simple: you just wish to
collect taxes - and you have them in?..
Answer: It is not simple, of course - but quite possible.
Let us take a look at how they are being collected in this
country. In October 1997 20.4 trillion roubles was received, in
November 20.8 trillion, in December 45.3 trillion (!). Then in
January an almost 70% drop - a mere 15.8 trillion. The entire
first quarter of 1998 accounted for practically the same amount
as December 1997 alone - or maybe just a little higher. But why
is it not possible to collect evenly? Why even the excise
duties on petrol are being planned to collect only 59%, and the
excises on gas, only 64%? This field is easy to manage: if they
pay - you open the tap, if they don't pay - you shut off the
tap... All of which suggests that it suits the government when
there is a lack of money in the budget: you can spend it at
your discretion, giving somebody a rouble, somebody ten...

Question: Now let us call a spade a spade - to whom do the
"ten" roubles go? Last year, for example, there were budget
spending cuts for all, but not for the presidential
administration: they had a 115% allocation. These are the
results of your own check.
Answer: The presidential administration is not the only
example. Budgetary discrimination is altogether an
impermissible thing. Take, for instance, the transfers to the
Federation's constituent territories. Judging by data from the
Finance Ministry, the Arkhangelsk Region last year received 50
billion roubles less, and the Republic of Karelia 70 billion
roubles more than what was fixed by the budget. Although both
are located in the north, they are neighbours... The same holds
true for central Russia: a shortfall of 100 billion for the
Moscow Region, while the Vladimir Region was "overfed" by 120
billion... This year the parliament introduced an article to
the budget law: even if financing is to be cut, it shoud be
done proportionally. However, already in the first quarter
seven regions were "infringed" in their rights: the Orenburg
Region, for example, received 4.1% of what had been fixed for
the year, and the Vologda Region got 45.1%.

Question: The government is now going to reduce the
public-sector workers. A great saving is expected...
Answer: It's rather an illusion. Only 12 billion roubles
is envisaged in the 1998 budget for state administration. This
is less than a tenth of the share of the budget deficit. 11.4
billion has been appropriated for health care, and 18.5 billion

for education. Well, what can be done by saving these few
crumbs?
As a result of financial voluntarism the budget is
becoming a primitive scheme for distributing wages and
allowances. A scientist is hardly given more than his salary, a
serviceman is given no more than his pay... But public debt
servicing (the payment of interest on it) in the first quarter
took 34.3% of all the budgetary expenditures--twice as high as
defence spendings, and 20 times those for all of science.

Question: Is the percentage that high?
Answer: That's it. Last year each new rouble borrowed by
the state increased our internal debt by more than three
roubles. But particularly indicative is the policy of the
government and the Central Bank. Our Central Bank (Sergei
Dubinin has mentioned this on several occasions) keeps its
foreign currency reserves at the best foreign banks, which
however, offer no more than 5% per annum. And along with this
the Finance Ministry obtains credits with an interest of 10%
per annum. That is, the state gives with one hand, and borrows
with the other. I won't stretch the point if I say that the
West has been lending us our own money, while making quite good
a profit on it.

Question: Maybe, it's a funny story you're telling?
Answer: What, it doesn't make sense to you? Yet we have
not yet counted up exactly how much we are losing on it. The
Counting Chamber has established that in 1995 fictitious
transactions were made in the course of which the government
supposedly sold to the Central Bank 92 tons of gold - in the
aggregate amount of over 5,155 billion roubles. In reality, no
gold was ever sold...

Question: That is to say, 92 tons of gold disappeared
without a trace?
Answer: There was no gold at all. They just allocated the
money to the government, but received no gold. We qualify this
as a concealed issue of money.

Question: But does the Counting Chamber check the Central
Bank?
Answer: The fact is that it doesn't. Although the bank is
fully state owned. Consequently, it must be open to the
Counting Chamber as a constitutional organ of state financial
control. The question, we feel, needs to be settled at the
legislative level.

Question: Are the methods of "sripping people off their
money" being perfected?
Answer: Let us look at a specific phenomenon: paper
credits. Under the law, housing grants must be provided to
citizens leaving the Far North. So what does the Finance
Ministry do, having no cash available? It concludes agreements
with commercial banks: a bank gives people the money, the state
then reimburses the bank for it. But instead of cash the banks
(for example, UNEXIMbank) issued promissory notes. And
immediately reduced the sum, taking the interest rate into
account. The notes handed over to the suppliers (house

builders) "shrank" further still. Whereas the ministry then
reimbursed their full value to the banks. The federal budget
loss on this came to as much as 25%.

Question: Don't you sometimes feel that your work might be
useless? Checking on year after year, uncovering violations...
Year after year the same ones... Haven't you got tired?
Answer: No, I wouldn't say that the efforts of the
Counting Chamber are useless. Last year we carried out 475
checks in more than 2,000 entities at all levels, and revealed
over 100 trillion old roubles' damage caused to the federal
budget in 1994-1997.

Question: And where is this money?
Answer: For the most part - with the violators. But during
the past year we did help return more than 4 trillion to the
treasury.

Question: Only?
Answer: I think the results will become more substantial
if the parliament so amends the law that the Counting Chamber
can withdraw the money from violators' accounts to the budget.

Question: Are you for personal responsibility?
Answer: The question of personal responsibility can hardly
raise any doubts. What's needed is a political will. Over the
last five years six finance ministers have changed, five deputy
prime ministers for the economy, several heads of the State
Property Management Committee, the State Tax Service and so on.
Recently the whole cabinet resigned - also a punishment of its
kind...

Question: But what is resignation! One resigns today,
one's back tomorrow. Somebody may even benefit from retirement:
spend a week or so "on leave," launder all your incomes (see, I
did not earn them as a state employee)... Yet people thirst for
justice. It is not a thirst for blood - simply a thief must be
in prison.
Answer: Of course, the scale of violations and punishment
today, to put it mildly, is incompatible. For example, Mikhail
Kislyuk, the former governor of the Kemerovo Region, up until
recently held a senior administrative job. Although in the
region under his leadership and with his direct participation
there were many serious financial violations. In particular, 16
billion roubles in a coal loan were given to business
structures.
Last year the Counting Chamber in 76 cases sent the
evidence of its checks to law enforcement agencies. The cases
often get mired in red tape, being sent through all the stages.
But there is hope that the situation soon will change. The
Prosecutor-General has instructed one of his deputies to work
with the Counting Chamber. You will agree, this is a step
forward.

********

#11
RFE/RL NEWSLINE Vol. 2, No. 113 Part I, 15 June 1998

RUSSIA'S DEMOCRATIC CHOICE PLANS FOR DUMA ELECTIONS...
Russia's Democratic Choice (DVR) leader Yegor Gaidar on 13
June called for creating a broad "center-right coalition"
for the December 1999 parliamentary elections, Interfax

reported. In a speech to a special party congress in Moscow,
Gaidar admitted that the DVR has "a very low level of
electoral support" and said it would be "unrealistic" for
the party to claim a "dominant role" in a coalition. (In
December 1995, the electoral bloc headed by the DVR gained
less than four percent of the vote.) Instead, Gaidar called
for aligning the DVR with "the most influential and the
strongest non-communist and non-fascist organizations in the
regions." In some areas, such as Saratov and Novgorod
Oblasts, alliances with governors may be possible, Gaidar
said. In other regions, the DVR may work with business
groups in order to recruit strong candidates for Duma seats.
LB

...AS GAIDAR REFRAINS FROM BACKING GOVERNMENT. Many Russian
commentators and some political opponents of the government
have compared Prime Minister Kirienko's cabinet to the
government of 1992, when Gaidar was acting prime minister.
However, Gaidar told delegates to the DVR congress that it
is too early for the party to declare its support for the
new cabinet, Russian news agencies reported on 13 June. He
argued that "the government has announced a worthy
[economic] program, but it still has to do a great deal of
work to convince society, investors, and markets that it is
able to implement this program." LB

********





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