June 22, 1998   
This Date's Issues: 2232• 2233 • 

Johnson's Russia List
#2232
22 June 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Dmitri Gusev: Illegal Borrowing on Behalf of Russia?
2. Financial Times (UK): Chrystia Freeland, New pressure for rouble 
devaluation.
3. Reuters: Yeltsin to meet his PM on anti-crisis plan.
4. St. Petersburg Times editorial: Chubais' Post Proves Power of IMF,
Oligarchs
5. New York Times: Philip Taubman, A Gentler Breeze Is Blowing 
Through Moscow.
6. AP: Mitchell Landsberg, Russia's Lebed Remains a Mystery.
7. Laura Belin: Ulyanovsk. (Helmer).
8. William Mandel: Comment on Fisher RE Women.
9. Boston Globe editorial: Investing in the ruble.
10. Lynn Turgeon: Re: 2231 Zaks/Yeltsin in Kostroma.
11. Komsomolskaya Pravda: Facilities Controlled by Kremlin's Borodin.
12. Interfax: Duma Workshop on Nuclear Forces Helps Deputies
Understand.
13. The Times (UK) editorial: A CHURCH'S SHAME. Russian Christians 
should lay their Tsar to rest.
14. Itar-Tass: Zadornov: Russia To Have No Growth in 1998.
15. Komsomolskaya Pravda: Government Hit for Handing Money to 'Coal
Mafia.']

*******

#1
Date: Sun, 21 Jun 1998 
From: dmitri gusev <dmiguse@cs.indiana.edu>
Subject: Illegal Borrowing on Behalf of Russia?

I noticed the following claim made by Chikin and
Prokhanov in their article published in
"Sovetskaya Rossiya" on June 9, 1998.

"...the law demands that any international
loan in excess of $100 million needs to be 
ratified by the State Duma!"

Given that Chikin and Prokhanov are not exactly
the most credible Russian journalists, my
first question is, "Is this true at all?"

If their claim is correct, then I have many more
questions. What is the name of the law 
they are referring to? When was it signed by Yeltsin?
Since then, how many foreign credits were
obtained by the Russian officials illegally
on behalf of Russia? Who signed the papers in
each case? How much money was borrowed
illegally, and how much money has already
been paid to foreign financial institutions
from Russia's public coffers as
interest on these improperly obtained loans?
Has there ever been an attempt to get the Duma
ratify a loan agreement? If so, how many?

Either Chikin and Prokhanov are blatantly lying,
or I don't know what the Western journalists
are thinking. Granted, few people care about 
the law in Russia. Still, lending money to
people who are not properly authorized to 
obtain the loans may be a questionable practice on
the part of the representatives of the
international financial organizations or the creditor
countries. And we all know that the State Duma
does have its ratification procedures, remember
the story of the START-II treaty?

By golly, the whole matter of the alleged illegal borrowing
by Russian government officials should be unbelievably easy 
to investigate, in my opinion. And I don't see how such 
illegal borrowing, if it ever took place, could be 
anything better than, say, illegal arms sales to Iran 
exposed in the course of the notorious Iran-Contras scandal. 
At best, that looks like fraud, or swindling. And if, indeed,
some illegal payments disguised as interest on loans 
were made by the Russian government to the foreign 
financial bodies, then this comes closer to high treason than
anything usually named by Yeltsin's opponents, does it not? 

Chubais is now asking for another 10 to 15 billion
dollars. Is he properly authorised to do so, according 
to the Russian law? If not, he should not be given
the money. Has he signed loan agreements in the past, that did
not undergo the proper ratification procedure?
If so, he should not be given the money.

******

#2
Financial Times (UK)
22 June 1998
[for personal use only]
RUSSIA: New pressure for rouble devaluation
By Chrystia Freeland in Moscow

The Russian government came under further pressure over the weekend as 
leading trade union officials and a prominent financier publicly 
suggested that the rouble might be devalued.

>From the president downwards, the authorities have been adamant that 
they will defend the rouble's exchange rate against the dollar, despite 
the turmoil rocking the financial system.

However, the government, already battling a crisis of confidence among 
foreign investors, faced a fresh attack over the weekend as some 
domestic interest groups suggested the rouble could be devalued.

The comments come on the eve of a visit from senior officials from the 
International Monetary Fund. Moscow is pressing the IMF and the Group of 
Seven industrialised nations for a $10bn-$15bn (£6bn-£9bn) stabilisation 
fund to help rescue the rouble.

Western investors are counting on the emergency package, but over the 
weekend a senior Kremlin official warned that the terms proposed by the 
IMF were unacceptable to Russia. IMF officials have also warned that 
Russia may be asking for too much by raising hopes of a big bail-out.

Boris Berezovsky, a financier turned politician who at times has enjoyed 
tremendous backroom influence in the Kremlin, yesterday said that a 
devaluation of the rouble was "possible", according to the news agency 
Interfax. However, he said that "not all the resources which could 
prevent this have been exhausted".

Mr Berezovsky is the acting secretary of the Commonwealth of Independent 
States, a loose grouping of some of the former republics of the Soviet 
Union. He made his comments in Baku, the capital of Azerbaijan.

Political analysts have speculated that Mr Berezovsky, who has 
significant interests in the oil sector, may be in favour of a 
devaluation because it would improve the position of sian exporters. 
Others have accused Mr Berezovsky of seeking to exacerbate Russia's 
financial troubles in an effort to install a government stacked with his 
allies.

Mr Berezovsky's comments were echoed by union leaders, who said the 
government should either devalue the rouble or relax its tough monetary 
policy and print roubles. They argued the measures were necessary to 
enable the authorities to pay overdue wages.

Russian leaders disagree, warning that the rouble is the anchor of the 
country's fragile financial stabilisation, one of the greatest 
achievements after nearly a decade of painful market reforms.

******

#3
Yeltsin to meet his PM on anti-crisis plan
By Oleg Shchedrov 

MOSCOW, June 22 (Reuters) - President Boris Yeltsin was due to meet Prime
Minister Sergei Kiriyenko on Monday to finalise a government programme drafted
to help Russia avert a further financial crisis. 

``The situation is pretty difficult, but I would not call it dramatic because
the dramatic situation is the one when one does not know what to do,''
Kiriyenko told RTR state-run television on Sunday. 

``It is crystal clear for us what to do, but it is far more difficult to
accomplish any programme,'' he added. 

Over recent months Russian shares have plunged and yields on government
securities soared following turmoil on Asian markets, burying government hopes
for modest economic growth in 1998. 

The financial squeeze, aggravated by poor tax collection, was accompanied by a
series of protests across Russia by workers and state employees outraged by
chronic wage delays. 

Russia has lined up again for international financial aid, primarily from the
International Monetary Fund, to keep up the shaking national currency. 

Kiriyenko, a 35-year-old former energy minister and banker, has announced plan
of austerity measures which could together with foreign loans streamline
national finance. 

The plan includes tough disciplinary measures against tax dodgers, both
companies and individuals, and severe cuts in budget spending. 

Kiriyenko needs backing for what is likely to become a set of unpopular
measures from Yeltsin, the business community, influential regional bosses and
the opposition-dominated parliament. 

The anti-crisis plan will be considered at a government meeting on Tuesday,
chaired by Yeltsin and attended by parliamentary leaders and regional chiefs. 

``We are going to make the final touches on the plan tomorrow,'' Kiriyenko
said. 

Government efforts to shore up the economy suffered a setback last week by the
International Monetary Fund's decision to postpone debate on granting Russia a
$670 million instalment of an existing $9.2 billion loan. 

The IMF is worried that Moscow had not yet fulfilled its promises on economic
reform. 

The decision was especially discouraging for Moscow which seeks a new loan of
up to $15 billion from the IMF. 

An IMF delegation headed by its first deputy managing director Stanley Fischer
is expected in Moscow on Monday. 

Deputy Prime Minister Anatoly Chubais, in charge of negotiations with
international financial institutions, said on Friday he hoped to sort out
problems at talks with Fischer due on Tuesday. 

``The problem is not only getting the money, but having our interests met,''
said Kiriyenko outlining Moscow's concern about possible demands by the IMF. 

Aside from dealing with the economy, Yeltsin is due on Monday to take part in
ceremonies marking the anniversary of the Nazi invasion in the Soviet Union in
1941. 

He will lay flowers at the tomb of the unknown soldier near the Kremlin wall
and address Russians on the radio. 

Russia and other former Soviet republics lost more than 25 million people in
World War Two. 

*******

#4
St. Petersburg Times
June 19, 1998
EDITORIAL
Chubais' Post Proves Power of IMF, Oligarchs 

THE appointment of Anatoly Chubais as special presidential envoy for 
liaison with international lenders makes it official: Russia is to be 
run by the International Monetary Fund for the benefit of the Russian 
oligarchy.

The reforms that Chubais has been so closely associated with have 
beggared the majority of the population while allowing an avaricious 
elite to grow ever richer through their access to state funds and their 
acquisition of public property through corrupt, bargain-basement 
privatizations, thereby earning him the deserved hatred of an 
overwhelming majority of the Russian people.

But their wishes count for little in this "democratic state." 

President Boris Yeltsin placed Chubais back at the nerve center of his 
administration apparently because only Chubais has the full backing of 
both the oligarchs and international financial figures.

The appointment thus represents a massive vote of no confidence by the 
captains of foreign and domestic capital in the recently appointed 
government of Prime Minister Sergei Kiriyenko. To underline this aspect 
of the affair, Chubais has been given the "status" of deputy prime 
minister, although he will not be part of the government. 

His new role makes Chubais potentially as powerful as the prime 
minister. Chubais - like Kiriyenko - will be reporting directly to 
Yeltsin. Chubais also has a long relationship with Yeltsin, one that has 
been fruitful for both sides. 

And unlike Kiriyenko, Chubais has a power base outside of the Kremlin. 
Since becoming the head of Unified Energy Systems, Chubais has 
transformed himself into an oligarch in his own right - his appointment 
was made after Kiriyenko met Tuesday with the oligarchs.

Tuesday's meeting was the lastest of a series of forums where the 
oligarchs have been able to at the very least influence the government's 
agenda. 

This is hardly surprising, when you consider that, "the government has 
no other real base of support," as Boris Berezovsky said after this 
week's "council of state."

The frightening side of all this is the seemingly blind hero worship 
that the IMF and other foreign investors display regarding Chubais. 

Such attitudes ignore all manner of ethically dubious acts on Chubais' 
part, such as the $90,000 book advance he received last year from a 
publishing house controlled by Uneximbank, a bank that benefited greatly 
from Chubais' actions, and sell-off of valuable state property for a 
song; property that has mostly been asset-stripped and mismanaged by the 
oligarchs who received it. 

They also ignore Chubais' appallingly bad record on his own terms. 
Chubais has been an integral part of the Yeltsin regime for most of the 
past six years, during which time almost nothing has been done to raise 
Russia's low tax base or to reign in spending - the two cornerstones of 
the IMF-sponsored reforms that Chubais was supposedly so good at 
carrying out.

Billions of dollars in Western credits given by the World Bank and 
others to Russia for it to fix all manner of problem areas - from the 
mining sector to the conversion of defense industries and the 
reimbursement of funds lost by pyramid scheme investors - have been 
siphoned away, usually without a kopeck going to the intended 
recipients.

The Chubais appointment ensures that this sorry track record will 
continue. 

******

#5
New York Times
June 21, 1998
Editorial Observer: A Gentler Breeze Is Blowing Through Moscow
By PHILIP TAUBMAN 

MOSCOW -- The warmth and lingering daylight of a Moscow summer could make
even the harshest periods of Soviet rule seem less demented. The appearance of
flowers and fresh fruits and vegetables in barren markets temporarily lifted
the city's spirits, creating the illusion that this was just another European
capital marking time until the August holidays. 

Now it is no longer an illusion. Moscow may not be Paris or Rome, but it is
no longer a world apart. The differences of dress, demeanor and politics that
made Moscow so distinctively depressing have melted away. From its monumental
traffic jams to its supermarkets, boutiques and elegant restaurants, Moscow is
a big, bustling, brash metropolis exploding with energy and entrepreneurial
activity. 

To see the city again after an absence of three years, and to compare it to
the Soviet citadel of 10 years ago where I worked as a correspondent, is to
appreciate anew how far Russia has traveled since the demise of Communism. 

The economy is shaky, corruption is ubiquitous and the power of the
wealthiest bankers and businessmen remains largely unchecked, but these and
other deformities should not overshadow the political and economic changes
that have transformed Russia in just a few years. Almost as swiftly as the
1917 Bolshevik Revolution sealed Russia in hermetic isolation, the arrival of
democracy and capitalism have set it free and tied it to the West, culturally
and economically. 

Moscow is the epicenter of change, and the locus of wealth, in the new
Russia. It will be some time before the rest of the country, including St.
Petersburg, comes anywhere close to matching the standard of living now
enjoyed by many Muscovites. 

One of the best seats for observing the new Russia is on the terrace outside
the cavernous McDonald's at Pushkin Square. Though the novelty of Big Macs has
faded, the restaurant still has cachet with Russians and serves as a mecca for
affluent young Muscovites. They arrive in Jeep Cherokees and Toyota Land
Cruisers, cell phones in hand. The men are dressed nattily in light-weight
pleated trousers, colorful sport shirts and tasseled loafers, the women in
short skirts, tight tops and stylish Italian shoes. The scene seems almost
unimaginable to someone who lived here a decade ago. 

The McDonald's also attracts working-class customers who have become
indistinguishable in appearance from their counterparts in London or New York.
The nondescript Soviet wardrobe has almost entirely vanished, replaced by
jeans, colorful outfits and Nike or Reebok shoes. Even eyeglasses and
sunglasses are sleek. 

After decades of enforced conformity in everything from clothing to
politics, Russians have seized the chance to assert their individuality. 

Across from the McDonald's is a small plaza that is part of the boulevard
that circles central Moscow. Once a cheerless place with a few scruffy benches
and an expanse of dirt, it is now the site of a leafy beer garden where people
congregate after work, engaging in easy conversation as the daylight stretches
far into the evening. The talk is of business and politics, romance and
vacation plans. The fear that once permeated Moscow and made it so
inhospitable to such gatherings is gone. 

The press is full of lively debate and invective, the television news a
cascade of irreverent reports. Even more remarkable is the Internet, where
information of all kinds is available about the Government and the economy.
Where implacable customs agents once enforced Soviet censorship at
Sheremetyevo airport, there is now an unobstructed "green channel" for
passengers with nothing to declare. 

The new Russia is an unfinished work. It is a land that favors the young and
those unbroken by Communism and has little patience or compassion for those
unable to adapt. But Moscow, at least, is increasingly a city where people can
enjoy life. Considering its history, that is no mean feat. 

********

#6
Russia's Lebed Remains a Mystery
June 20, 1998
By MITCHELL LANDSBERG

KRASNOYARSK, Russia (AP) - In Russian, the word ``lebed'' means ``swan,'' and
Alexander Lebed must surely believe in the childhood story of the Ugly
Duckling.

By his own accounting, he's not much to look at: square head, pockmarked
cheeks, a body like a baby bull and a voice so supernaturally low it seems
designed for the ears of some other species. When he talks, he has a nervous
twitch that makes his lip curl up on the left, giving the impression -
presumably not intended - of a sneer.

Until now, no one could really say if Lebed, who badly wants to be president
of Russia, was the ugly duckling or the swan.

Now they'll know. On May 17, Lebed was elected governor of the Krasnoyarsk
region of Siberia, and soon he'll have a track record as a leader of something
other than a battalion. One way or another, his feathers will show.

Depending on how he does, Lebed could be in a strong position to become
president of Russia in 2000 or 2004. The Cold War may be over, but the
president still exercises vast power in his region, and still carries the code
to the nuclear button.

And so the question arises: Who is this man?

The first thing that strikes a reader of his autobiography, ``My Life and My
Country,'' is that this is a man of overwhelming ambition. Time and again
throughout his career, Alexander Ivanovich Lebed has been underestimated. Time
and again, he has suffered setbacks. And time and again, he has been patient
and he has won.

``His strengths include charisma and his ability as a strategist, and also his
courage in dealing with all branches of power,'' says Alexei Chaplygen, an
analyst with a Moscow think tank, the Center for Studies in Civil Society

``As for his weaknesses, I can name excessive straightforwardness. For a
politician, this is not a very good quality. And also ... he doesn't know his
limits. He's unpredictable and unmanageable.''

Lebed didn't know his limits when he ran for president against Boris Yeltsin
in 1996. He did surprisingly well and was brought into Yeltsin's
administration as national security chief. His tenure was short and stormy,
but included his greatest accomplishment, negotiating the peace in the
breakaway republic of Chechnya.

Nor did he know his limits when he ran for governor of Krasnoyarsk, a region
four times the size of Texas, with a Texan pride in its independence and
distrust of city slickers.

Lebed had never lived in Krasnoyarsk, and early polls suggested he stood
little chance against the incumbent governor, Valery Zubov, a relative bright
light among Russia's provincial leaders.

Lebed campaigned tirelessly, short-hopping the region by plane, tromping
through the snow and permafrost in more than 100 towns and villages, from
close to Mongolia to the Arctic Circle.

In the end, he confounded the naysayers, forcing Zubov into a runoff. Then he
floored him like the boxer and streetfighter he once was. People throughout
Russia took notice.

Now, once again, Lebed has his work cut out for him. Although Krasnoyarsk is
in better shape than many regions in Russia, and has some of the world's
richest deposits of timber and minerals, it also has enormous problems.

Whole industries are at a standstill; workers go without pay and, often,
without work. To the extent that factories work, they are responsible for some
of the worst industrial pollution on earth. Organized crime flourishes in the
cities.

The question everyone has been asking since Lebed's victory is whether he can
turn things around in time to run for president in 2000.

``From my point of view, he possesses good prospects to become a good
governor,'' said Vyacheslav Novikov, host of a public affairs program on
Krasnoyarsk television.

But in two years? ``Definitely not.''

Then again, many people believe that, once again, Lebed is being
underestimated.

So far, the names most frequently bandied about for president in 2000 are
Viktor Chernomyrdin, the former prime minister; Gennady Zyuganov, the
Communist Party boss; Grigory Yavlinsky, a leader of the country's liberal
forces; and Moscow Mayor Yuri Luzhkov.

All share one trait: They are Moscow insiders. In a country that increasingly
resents the capital and its perceived prosperity, this is not an asset. And
Lebed, despite his brief stint in the Kremlin, could be in a prime position to
capitalize on that.

``He's a very strong personality in all respects,'' Chaplygen said. ``We've
observed that, in recent months, his team became very strong. He wouldn't lack
either ideas or the people to carry them out.''

The big question that remains is: What are his ideas? The thing about
Alexander Lebed is, no one really knows.

His platform in the election in Krasnoyarsk was so vague as to be meaningless:
He wants the region to keep a larger share of its taxes. He intends to crack
down on corruption. He'll get industry working again.

Most people assume Lebed is a nationalist and populist with vaguely centrist
economic ideas and vaguely authoritarian views on law and order. He is
generally perceived as honest, and apparently sincere in his distaste for
Soviet totalitarianism.

What kind of president would he be? Ask the people of Krasnoyarsk - two years
from now.


********

#7
Date: 21 Jun 1998
From: "Laura Belin" <belinl@rferl.org>
Subject: Ulyanovsk

I have a few questions and comments regarding John Helmer's piece for the
"Moscow Tribune," called "World Bank Says Reform Bad for Business" (JRL 2231).

First, the questions: The first sentence states that "A little known World Bank
survey of Russian entrepreneurs has discovered that Russian regions which have
resisted the government's privatization and reform policies are regarded as less
corrupt and better places in which to do business."

The rest of the article seems to talk only about Ulyanovsk Oblast. Did the World
Bank survey point to examples of any other regions that have pursued different
economic policies and are now considered better places to do business? I
noticed that Primorskii Krai (which has had more than its share of differences
with the federal authorities) was included in the study cited by Helmer. Was
that region also deemed less corrupt and a good place to do business? If so,
that would be a very surprising conclusion.

Also, I wonder whether certain factors could have distorted the responses given
by local entrepreneurs in various regions. Are more local businesses in
"semi-socialist" Ulyanovsk receiving subsidies from the regional budget? Are
they more afraid to speak freely concerning their attitude toward the regional
authorities?

I ask this because the media in Ulyanovsk are under immense pressure from the
authorities. For anyone who is interested in background about the media
restrictions in the oblast, I recommend an illuminating article by Elizabeth
Tucker, "The Russian Media's Time of Troubles," published in "Demokratizatsiya"
in the summer of 1996.

In December 1995 I heard a talk in Moscow by the editor of "Simbirskii kur'er,"
an independent newspaper in Ulyanovsk that has had all kinds of problems with
the authorities. Businesses have been threatened by oblast officials not to
place advertisements in that newspaper. At one time (I am not sure whether this
is still true) the newspaper could not be printed in Ulyanovsk and was brought
in from Nizhnii Novgorod.

In a region where there is intense pressure not to criticize Governor Yurii
Goryachev and his administration, I wonder whether entrepreneurs would have felt
secure enough to reveal concerns about corruption, etc. to people doing a survey
for the World Bank--even if the researchers promised not to release the names of
those questioned.

I frankly find it hard to believe that the courts in Ulyanovsk are more fair or
independent than in other Russian regions. I say this because Governor Goryachev
has filed several successful libel lawsuits against local journalists. Sometimes
courts have found in his favor even when the offending article did not mention
the governor by name. Last October, the governor won damages of 1 million rubles
(more than the average monthly wage) from a local journalist who published an
article in "Izvestiya" questioning how agriculture credits have been allocated
in Ulyanovsk Oblast. According to RFE/RL's correspondent in Ulyanovsk,
journalists who criticize the regional authorities are routinely denied access
to basic information about the Ulyanovsk administration.

I know little about business in Ulyanovsk Oblast, and it is of course possible
that regions with repressive political environments could be "good places to do
business." I am not familiar with the details of Robert McIntyre's study.

Still, it seems to me that a lot of confounding factors could distort the
results of surveys of local entrepreneurs. And if, as Helmer implies, the World
Bank survey involved only seven regions across Russia, I don't think that's a
large enough group to draw sweeping conclusions. I would like to see a more
thorough study about the relationship between economic policies adopted by
regional governments and the business environments in their respective regions. 

Of course, none of this is justification for the World Bank not to publish the
results of research it commissioned. I hope Randi Ryterman's and Barbara Weber's
report will be published, whether or not the World Bank agrees with that
report's conclusions.

Yours,
Laura Belin
Radio Free Europe/Radio Liberty, Prague 

*******

#8
From: bendix@earthlink.net (William Mandel)
Date: Sun, 21 Jun 1998 
Subject: From William Mandel Comment on Fisher RE Women

Matthew Fisher's interview with Michele Berdy was of particular interest to
me because, a quarter century ago I obtained, in Moscow, the first
interviews with Russian women about sex, for my book Soviet Women
(Anchor-Doubleday, 1975). I have no argument with Fisher-Berdy about
attitudes female and male, but the effort to explain them rests in part on
faulty information. The statement that "since World War II there has been a
severe shortage of men" is erroneous insofar as it applies to males in the
principal marriageable age. By 1989 the numbers of each gender were equal up
to age 30 (Michael Ryan, Contemporary Soviet Society, a statistical
handbook, Elgar, 1990). The overwhelming majority of marriages occur by
then. The higher mortality rates among men begin to show at 30. But there is
no question that the belief that a woman has to go out and get a man is
affected by the fact that the living grandmothers of today's young women
spent most of their lives without men as a consequence of World War II, and
passed attitudes based on that down to the generation that followed.
Incidentally, tables I read in researching this, including data on
numerical gender discrepancies since the founding of the USSR, showed the
gap in favor of women to have increased in the Soviet Union as a whole by
2,000,000 between 1922, after World War I and the Civil War, and 1940, after
the purges but before Hitler invaded. Since those killed by Stalin were
almost exclusively male, how can one justify the vastly higher numbers
murdered one usually reads? The writing of history should be based on fact.

*******

#9
Boston Globe
21 June 1998
EDITORIAL 
Investing in the ruble 

Economic instability is the midwife of totalitarianism, so the world has 
much at stake in Russia's severe problems. Favorable treatment by the 
International Monetary Fund of an impending Russian request for an 
additional $15 billion in credit is justified. While Russia's economic 
performance has been seriously flawed, a major collapse of the ruble, 
which the additional credit could avert, would benefit no one. 

The IMF has been pressing the Russians for economic reforms and 
improvements in fiscal practices that are essential to stabilize the 
economy and make the most of Russia's considerable assets. 

Stiff requirements for reducing Russia's budget deficit to 2.5 percent 
of gross domestic product are tough in a country with dreadful tax 
compliance and millions of unpaid public and private workers and 
retirees. The new administration of Prime Minister Sergei Kiriyenko has 
shown a promising willingness to tackle the problem, and President Boris 
Yeltsin has joined in the process by hectoring delinquent business 
leaders. 

But stanching the flow of money out of the ruble and into other 
currencies cannot wait for these efforts to work their way through the 
system. It is essential that confidence in the ruble be reestablished 
among Russians themselves as well as in the international financial 
community. 

Economic instability is dangerous in more than one way. It becomes the 
breeding ground for political opportunism of the worst kind, and Russia 
has no shortage of figures eager to play on nationalistic impulses in 
the pursuit of power. 

Stability will not come easily for Russia. If the prosperous democracies 
decline to help Russians reach for stability, they will court disaster. 

********

#10
Date: Sat, 20 Jun 1998 
From: "LYNN TURGEON, PROFESSOR EMERITUS OF ECONOMICS, HOFSTRA UNIVERSITY
<ECOELT@hofstra.edu>
Subject: Re: 2231 Zaks/Yeltsin in Kostroma

Your report on Yeltsin's trip to Kostroma was fascinating to me.
You may remember my report on Kostroma last fall. I had been there in 1994 and
I was convinced that things had actually deteriorated over the three year
interim. Judging from the Helmer post, Yeltsin should visit Ulyanovsk again.
Earlier he had tried to sack their popular Mayor and was met with an
anti-Yektsin demo at their airport.
Jerry Hough remarks that people have forgotten both Keynes and
Schumpeter. This is more true of Keynes than Schumpeter. But as Stan Menshikov
pointed out in his last Newsletter, the new right0of-center Hungarian
government has a Keynesian program.
As for Schumpeter, Skidelsky who was a Thatcherite, claimed that her
intellectual roots went back to Schumpeter and Hayek. The Bush Administration
also exolained the "success" of Clinton by giving credit to the "creative
destruction" that tooh place after Reagan. IMHO the ghosts of both Keynes and
Schumpeter are still very much with us! Lynn

*******

#11
Facilities Controlled by Kremlin's Borodin

Komsomolskaya Pravda
4 June 1998
[translation for personal use only]
List of Facilities of the President's Administrative
Department: "Will Pal Palych's Empire Enter the Third
Millennium?"

The facilities of the Administrative Department of the
President (director P.P. Borodin) are a real industrial-agrarian and
financial-service empire. None of the world's rich could compare
with the presidential wealth. Here's a list (incomplete!).
Health Centers, Holiday Hotels, and Recreation
FacilitiesThe Kirov Yusengi Holiday Hotel (Kabardino-Balkaria); Desna;
Yantarnyy Bereg (city of Yurmala); Tetkovo; the Zhukovka
Ozdorovitelnyy Kompleks state unitary enterprise; Vatutinki; Lesnyye
Dali; Polyany; Ayvazovskoye (city of Alushta); Arkhangelskoye;
Marino; Volzhskiy Utes; Voskresenskoye; Klyazma; Uspenskoye; Los;
Mamontovka; Novyye Gorki; the Nepetsino children's recreation
facility; Nagornoye; Senezh; Snegiri; Sputnik; Tuapse; Prielbrusye;
the Barvikha clinical health center; the Podmoskovye integral health
center; Zagorskiye Dali; the Polyany children's health center;
Golubaya Yakhta (Tuapsinskiy Rayon); Dubovaya Roshcha (city of
Zheleznovodsk); Krasnyye Kamni; Zarya (city of Kislovodsk); Moskva
(city of Yessentuki); A.I. Gersten Sochi; Valday; the Nepetsino,
Voskresenskoye, and Tavriya fitness complexes (city of Yalta),
Dagomys (city of Sochi); Bor, Sosny; the Serebryanyy Bor Dachnoye
Khozyaystvo health center and recreation facility.
HotelsPresident Hotel, Zolotoye Koltso; Arbat; Mir; hostels.
Restaurants and CafeteriasApproximately 20.
Medical EstablishmentsThe Central Clinical Hospital and outpatient
clinic; Republic
Clinical Hospital No 1; the Rehabilitation Center; an outpatient
clinic (26/28 Sivtsev Vrazhek); a consultative-diagnostic outpatient
clinic; outpatient clinics Nos 1 and 2; a children's outpatient
clinic and the State Sanitary-Epidemiological Inspection Center; the
Central Clinical-Diagnostic Laboratory; the Central Prescription
Drug and Medical Measurement Quality Control Laboratory; an inter-
hospital pharmacy; an educational and scientific center; the Central
Medical Archives; a scientific medical library; a medical school; an
outpatient clinic and pharmacy; a clinical hospital; the central
pharmacy; the Medtekhnika maintenance and installation facility; the
Medik sports grounds association; and also more than 30 creches and
kindergarten and children's remedial-fitness establishments.
Out-of-Town FacilitiesIstra; Malakhovka; Skhodnya; the Ostafyevo and
Voskresenskoye
private subsidiary farms; the Barvikha agricultural enterprise; the
Usolskoye (Samara Oblast) and Zelenogorsk (city of Kislovodsk)
private subsidiary rural farms and others.
Motor Vehicle EnterprisesThe central car pool; car pools Nos 1, 2, and
3; a truck
garage; motor vehicle enterprises Nos 1 and 2.
Maintenance and Construction OfficesDepartment for Maintenance of
Buildings of the State Duma;
Department for Maintenance of Government House; Department for
Maintenance of Administrative Buildings and the Housing Stock; the
State Kremlin Palace; management board for the construction and
reconstruction of facilities of the highest institutions of federal
power; a construction association (township of Arkhangelskoye); the
Nepetsino construction administration; a repair and construction
administration; a construction and installation administration;
repair and construction administration (city of Kislovodsk). And
four other such facilities.
Consumer Service EnterprisesA laundromat (2, ulitsa Serafimovicha,
Gorki-X); an integral
laundry (29, ulitsa Marshala Timoshenko); a consumer service center;
a workshop; consumer service enterprise (4, ulitsa Kulneva).
Commercial EnterprisesThe Tekhnotorgservis wholesale brokerage firm;
the Nazaryevo
agro-industrial enterprise; the Soyuz agro-firm; the Rossiya state-
owned transport company; a delivery enterprise (16, ulitsa
Tverskaya-Yamskaya); the Stroitelnaya Firma Sapsan closely-held
corporation; the Rossiya passenger ship; the Tsentr Russkiye Remesla
unitary state enterprise; a production engineering association
(Nikitnikov Street, Moscow) and two printing houses; a state-owned
book trade enterprise (9, ulitsa Varvarka); a furniture
factory; numerous properties and a House of Friendship abroad.

[begin box]
The Only Thing Not Requisitioned Was the Party's Brain
At the 28th Congress of the CPSU, the last before it was
dissolved, its delegates received a memorandum on party property.
The delegates learned from the memorandum that there were on the
party's books 114 publishing houses, 23 health centers and
recreation facilities with 7,100 beds, an academy and institute of
social sciences, 16 higher party schools, 5,254 buildings, and so
forth. All these assets pertained, according to the constitution of
that time, to socialist property and were protected by the
state.
Explanation of Nikolay Kapanets, former deputy administrative
officer of the CPSU Central Committee:
"After Yeltsin's edict banning the activity of the Communist
Party of the RSFSR was issued, we first transferred party property
to the president's Administrative Department for temporary
management, that is, we handed it over for temporary use, as it
were. The Nagornoye dacha facilities, the Skhodnya, Uspenskoye, and
Usovo suburban settlements, the Polyany holiday hotel, a furniture
factory, and multitude of other properties passed to the president's
Administrative Department. The Bolshevo suburban settlement was
transferred to Vice President Rutskoy, he was the director of the
Vozrozhdeniye Fund at that time, and this also now, I believe, is
the property of the Administrative Department. Had we not made this
transfer at that time, I am sure that the party assets would have
been embezzled and plundered. As was the case with the CPSU
finances." [end box]

********

#12
Duma Workshop on Nuclear Forces Helps Deputies Understand 

Moscow, Jun 17 (Interfax) -- The workshop in the Russian General Staff
Academy on strategic nuclear forces "was a success and made a noticeable
contribution" to the ratification of the START II treaty, State Duma
Defense Committee Chairman Roman Popkovich, of Our Home Is Russia movement,
told Interfax Wednesday. Most Duma deputies attending the workshop reject
the very idea of ratification and their views did not change, he said. On
the other hand, the deputies heard many things they did not know and now
can appreciate the complexity of the issue, Popkovich said. Service
commanders, head of the Main Intelligence Board, head of the General Staff
and officials from certain ministries attended the event, he said. While
the political aspects of the issue could not be avoided, the workshop
unanimously decided that a law on financing the country's nuclear forces
was urgently needed, Popkovich said. Furthermore, everybody understood
that ratification of START II will reduce the US nuclear arsenal to
Russia's level, he said. The large-scale NATO exercises near the border of
Yugoslavia did not win Duma support for normal relations between Russia and
the West, Popkovich said. Liberal Democratic Party leader Vladimir
Zhirinovskiy, who attended the workshop, told a news conference Wednesday
[17 June] that those who hope for ratification of the treaty will be
disappointed. What is needed is a START III because START II is already
outdated, he said. The ratification of START II would not be useful to
anybody except Russian Foreign Ministry bureaucrats who need to show that
they are doing their job, Zhirinovskiy said. Only 44 State Duma members,
not the expected 150, attended the workshop because it did not raise enough
interest, Defense Committee Deputy Chairman Mikhail Surkov, of the
communist faction, told Interfax. He quoted Finance Minister Mikhail
Zadornov as having reported at the workshop that only 20% of the amount
appropriated for army development had been made available in the first
quarter of the year. Even before START II is ratified, talks on START III
must be launched, Surkov said. "If the government guarantees that the
development of new missiles will be financed, the deputies will not, I
think, doubt the need to ratify START II, he said.

*******

#13
The Times (UK)
June 20 1998
LEADING ARTICLE (Editorial) 
A CHURCH'S SHAME 
Russian Christians should lay their Tsar to rest 

The murder of Tsar Nicholas II, his wife, children and servants by 
Bolshevik guards in 1918 remains on the Russian conscience. For more 
than 70 years the assassinations in the basement of the Ipatiev House in 
Yekaterinburg were shrouded in mystery and political taboo. The 
Communists well knew the shame that this regicide caused, and did their 
best to suppress every relevant document and archive. It was the Russian 
Orthodox Church, once headed by the Tsar, which quietly kept alive the 
memory of a man who, though a poor ruler and politician, was secretly 
revered as a martyr. 
The extraordinary discovery of his remains and their authentication by 
DNA analysis shed unexpected light on this murky chapter in Russian 
history. It also gave Moscow a unique opportunity for national and 
spiritual reconciliation. President Yeltsin's Government proposed the 
interment of the imperial family's remains in the Peter and Paul 
Fortress in St Petersburg, the resting place for most of the Romanov 
tsars. He and the Patriarch, it was hoped, would attend a glittering 
ceremony that would be a symbol of reconciliation between State and 
Church, lay to rest the taboos as well as the bones and heal the chasm 
opened up by the Bolsheviks in Russian tradition and history. 

The patriarchate, now a free and independent body, gave every indication 
that it, too, would welcome such a step. But, allegedly because of the 
the growing movement to have Russia's last tsar canonised, it insisted 
that the verification of the remains had to be beyond doubt. The bones 
were subjected to further analysis. The Church still voiced doubts. 
Earlier this month, Patriarch Aleksi announced that he and the entire 
Church hierarchy would boycott the proceedings. 

The reason has nothing to do with science and everything to do with 
bigotry. The Russian Orthodox Church is in the grip of extreme 
nationalists and anti-Semites. Their views, which Patriarch Aleksi has 
yet to repudiate, are rapidly returning the Church to the political 
wasteland that polluted its spiritual authority before the Revolution. 
The Church was once happy to utter unctious endorsements of the former 
communist Government. Now it appears to regard Russia's post-communist 
Government as some creation of the devil. 

A witch-hunt has begun against all manifestations of liberalism. A 
book-burning ceremony was ordered in the Yekaterinburg seminary to burn 
the works of two "heretic" priests whose broadcasts from exile kept 
faith alive in the communist time. Gleb Yakunin, a priest whose struggle 
against communist persecution made him a beacon of integrity, has been 
defrocked. Foreign missionaries and non-Orthodox clergy have been 
hounded out of Russia. Most disgraceful of all, crude anti-Semitism has 
been propagated by the Metropolitan of St Petersburg with no check or 
rebuff by the Patriarch. Somewhere on the road from servitude to 
reconciliation the Church has lost its way. Unless the Patriarch 
reconsiders his decision, a critical chance for a new spiritual 
beginning will be lost. 

*******

#14
Zadornov: Russia To Have No Growth in 1998 

MOSCOW, June 18 (Itar-Tass) -- Russia will have no growth this year,
Prime-Tass cited Fiance Minister Mikhail Zadornov as saying at the
government meeting on Thursday.
He said the Economics Ministry predicts a 1998 gross domestic product
0.5 per cent above or below the 1997 figure, adding that its remaining
unchanged would be best.
Zadornov said this year's budget deficit would make 14 billion roubles
and revenue is expected to be five-seven billion rouble short of the budget
projection.
Cost-effectiveness of the Russian industry has fallen off two times in
1998, Zadornov said.
He said world oil prices had plunged over the period of the financial
crisis to nine dollars for a barrel, from 18 in 1997.
The wage debt to state employees is six-seven billion roubles,
Zadornov said.
He said the Finance Ministry is three billion roubles short to pay off
its part of the wage debt.

********

#15
Government Hit for Handing Money to 'Coal Mafia' 

Komsomolskaya Pravda
17 June 1998
[translation for personal use only]
Commentary by Nikolay Yefimovich: "On the Other Hand"

Miners have again gotten the government by the throat. Vice Premier
Boris Nemtsov defends himself as follows: All the money, down to the last
kopek, has been sent to the regions.... Who is kidding here? The
government does not actually pay the miners their wages. It merely
supports the coal industry with subsidies. The mines have to earn the bulk
of the money themselves. But it is not working out for them. The Tulaugol
association, for example, has obtained a mere 0.1 percent of the money for
coal sold in cash. The rest is made up of debts or barter.... The miners
find it easier and simpler to block the main railroad and demand the
resignation of the government and president than to stand up to their own
directors -- who are amateurs, if not crooks. This suits the coal barons
down to the ground. And not just them. "Capital" has long been skillfully
made out of the mines' difficulties by politicians, trade unions... The
government indulged the Russian Independent Coal Industry Workers' Trade
Union during the "rail war." The organizer of the picket of the White
House, the Independent Miners' Union, wants to satisfy its ambitions, too. 
Miners have been oblivious of how they have become the hostage of others'
interests.
The government is to blame for having handed out coal-loan money to
smart operators. For example, the Demidovskiy Stil company, headed by
former Tula Oblast administration officials, appeared in Tula. They
acquired a mansion which they called the Social and Business Center. 
European decor, carpets.... Miners will allegedly be retrained as
businessmen and managers there.... The reality is a few people making
shoddy venetian blinds. The mansion does not, of course, belong to the
state. The creation of a job for a mythical miner has cost a total of
340,000 rubles. Would it not be simpler to distribute this money among
unemployed miners? There are a myriad such examples countrywide. The
government seems incapable of overcoming the coal mafia. And it could pay
for that.

********