July 14, 1998  
This Date's Issues: 2263  •2264  2265

 
Johnson's Russia List
#2264
14 July 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Komsomolskaya Pravda: Interview with Frants Sheregi, director 
of the Center for Social Forecasting and Marketing, "Will Russia Take 
up Pitchforks? Any Spark Might Now Cause Social Explosion in Country.
2. Financial Times (UK): Charles Clover, Russia waits on investors'
judgment.
3. Moscow Times: Gary Peach, THE ANALYST: Lack of Foreign Investment
Helps Fuel Economic Crisis.
4. Journal of Commerce: Lee Hamilton, The Caspian conundrum.
5. Christian Science Monitor: Ronald Pope, Inching Toward Justice in 
Russia.
6. Boston Globe: David Filipov, In Moscow, an unwelcome mat rolls out.
7. Reuters: New Yorker names David Remnick as new editor.
8. Reuters: Russia seen as worlds No 3 holiday spot by 2002.
9. The Independent (UK): Helen Womack, Street Life - Help! My 
grass-selling granny has been banished.
10. Reuters: TEXT-IMF statement on Russia deal.
11. Reuters: TEXT-World Bank statement on Russia deal.]

******

#1
Survey Shows Risk of 'Social Explosion' 

Komsomolskaya Pravda
8 July 1998
[translation for personal use only]
Interview with Frants Sheregi, director of the Center for
Social Forecasting and Marketing, by Aleksey Makurin; place, date
not given: "Will Russia Take up Pitchforks? Any Spark Might Now
Cause Social Explosion in Country"

The hot fall of 1993 might be repeated, Frants Sheregi, director of
the independent Center for Social Forecasting and Marketing, believes. 
Many well-known Russian politicians use this sociologist's forecasts. He
told our correspondent Aleksey Makurin about the results of a study of
public opinion conducted in June.
[Makurin] Frants Edmundovich, on what are your alarming conclusions
based?
[Sheregi] We polled inhabitants of 64 cities, settlements, and
villages. This took in all of Russia, from Kaliningrad to Vladivostok, and
people of different ages, professions, and social position. The overall
picture is as follows: On average, 89.6 percent of Russians regard the
situation in the country as critical or disastrous.
This figure was far lower in 1997. But now people's sentiments
coincide almost fully with those that we recorded five years ago. Then, 92
percent of the people who answered our questions expressed extreme
displeasure with the situation in the country.
The awakening of students is another alarming signal. Some three
years ago only 2-2.5 percent of students were prepared to participate in
protest actions. Now those who would take to the streets without a
moment's hesitation make up almost half. The spring clashes between young
people and the authorities in Yekaterinburg showed that it is very hard to
stop students. Along with the miners and employees of budget-funded
organizations worn out by the months-long trouble over wages, they could
become a driving force for mass acts of civil disobedience.
The present socioeconomic crisis in Russia has affected all regions
and all sections of the population. Not only workers, teachers, or
pensioners are dissatisfied with their life. Many entrepreneurs engaged in
small and medium business are on the brink of bankruptcy. It would be
naive to think that Russians will suffer endlessly. People are sympathetic
to appeals which might change the development of events in the country and
their own position. Any spark might cause an explosion.
[Makurin] What response did the rails war which the miners declared
on the government elicit among the population?
[Sheregi] The May blockade of the railroads was approved, one way or
another, by a majority of the people whose opinion we canvassed. This
means that an overwhelming proportion of the country's citizens are
convinced that all means are good in the struggle for their rights. Some
41.5 percent of Russians are prepared to join the striking miners. Taking
into account those who have not yet decided on their position, 64 percent
could be potential participants in protest actions.
The use of force would be the most stupid thing the regime could do in
this situation. The criminal proceedings with which the prosecutor's
office might threaten the instigators of new disturbances will frighten no
one. Hardly anyone would approve of the breaking up of pickets and
demonstrations by the Special-Purpose Police Detachment. On the other
hand, counter waves of indignation might cover the whole country.
[Makurin] But the Army's intervention in October 1993 halted the
disturbances in Moscow.
[Sheregi] The social situation in Russia was different five years
ago. Psychologically the population was at a crossroads, as it were. The
majority did not want a return to socialism, for whose defense the
Communists were trying to raise the people. At the same time people were
not aware how the reforms scenario proposed by the government threatened
them personally. This was why other regions did not support the actions in
the capital.
Today the Russians are fully aware of what kind of state they live in.
Colossal fatigue from the trials that have fallen to the country's lot in
recent years has built up in society. It is a case not only of material
adversities. Many people have adapted to the market and have learned to
just about make a living. Most of all, people are tired of the
hopelessness and of the weak will of the regime, which is unable to explain
to them where it is leading the country.
Russians do not trust their state. They see that it cannot protect
them from economic tyranny and burgeoning crime. At every step they
encounter the regime's inertia and corruption. This is the main reason
that pushes people into rallies and pickets today. They are not class
actions. They are citizens' actions against the state, whose system they
would like to change. The ultimate goal is clear to very many people. 
Therefore protest actions are on a more mass scale than before and are not
confined to individual cities of the country.
[Makurin] Is there a force capable of heading these actions?
[Sheregi] It is hardly likely to be any of the existing parties. 
Russians trust them even less than they trust the state. Ideologized
slogans are unpopular. The trade unions also are not influential enough to
confidently direct mass street demonstrations. Russians will not erect
barricades at a call from party and trade union leaders. A social
explosion will most likely be spontaneous. It is possible, if the regime
itself provokes it. [Sheregi ends]

Who Has a Hard Life in Russia [subhead]

One-third of Russians regard the situation in the country as
disastrous.
Workers -- 38.1 percent.
Engineering and technical personnel -- 30.8 percent.
Humanitarian and creative intelligentsia -- 28.3 percent.
Working people in trade, the services sphere, transport, and
communications -- 32.4 percent.
Employees -- 31.3 percent.
Entrepreneurs -- 20.4 percent.
Rural inhabitants -- 42.7 percent.
Servicemen -- 34.0 percent.
Urban pensioners -- 52.2 percent.
Students -- 18.6 percent.
Unemployed -- 40.0 percent.
On average, among all inhabitants of Russia -- 38.9 percent.
(According to the data of the Center for Social Forecasting and
Marketing)

********

#2
Financial Times (UK)
14 July 1998
[for personal use only]
Russia waits on investors' judgment
By Charles Clover in Moscow

Russian financial markets reacted with cautious optimism to yesterday's 
news that the International Monetary Fund, the World Bank, and the 
Japanese government would lend Russia an additional $12.6bn (£7.6bn) 
this year. "It is enough for a half year," said one equity fund manager 
in Moscow.

The bail-out programme had to wait for the recommendation of the IMF 
mission to Moscow. Now Russia's unpredictable parliament must still 
consider the many macro-economic reforms which have been made conditions 
for the loans and the IMF's board must give its approval.

The market reaction itself is critical to the success of the programme, 
and will determine whether the IMF has brought Russia out of its crisis 
or just bought it some more time.

"The government has a tight programme now, tighter than anything we have 
seen in the past," said Philip Poole, east European economist at ING 
Barings. "The trick is now to turn the psychology of the market. But my 
fear would be about whether investors simply see this as an exit route 
from the market and continue to sell."

He said Russia's markets were likely to bounce in response to the IMF 
package but would need to see solid evidence that the government was 
serious about reform for that rally to be sustained.

The government has said it would like to increase its total financing 
package, implying that it plans to raise more funds from commercial 
borrowers. Financial analysts believe Moscow plans to launch more 
eurobonds in September.

"To my mind the most important thing is that there is a sustainable 
story for investors," said Mr Poole.

The reforms, such as budget-cutting, require the co-operation of the 
Duma, the lower house of parliament. And despite positive statements 
from the body's leaders on their commitment to reform, no one is taking 
them for granted.

To head off a political stalemate over its proposals for reform, the IMF 
has asked that a package of crisis measures, dealing mainly with tax 
reform and expenditure cuts, be passed by the Duma before the Fund's 
board releases the funds.

But Alexander Zhukov, the head of the Duma's budget committee, yesterday 
restated his opposition to passing the whole package as one unit, saying 
that the Duma will consider each law separately and make amendments as 
necessary.

The Duma "in reality will approve around 80 per cent of the laws that 
are suggested by the government's [stabilisation] programme," he said.

Two critical pieces of the crisis package remain stuck in the Duma. The 
first problem bill provides for a 5 per cent sales tax, which failed by 
only four votes last week, while the second gets rid of loopholes in the 
law on personal income tax. Vladimir Avirchev from the liberal Yabloko 
faction, said that the sales tax bill was likely to pass this week with 
minor modifications, but the income tax law "will face some difficulty".

In the end, the IMF may not get all it asked for, or it may have to 
settle for having the measures passed by presidential decree.

Eric Kraus, chief strategist at Regent European Securities, a 
Moscow-based stockbroker, said: "I think the $20bn can basically provide 
the wherewithal to defuse the crisis on the GKO [treasury bill] market. 
It is now up to the Russian government to take advantage of this window 
of opportunity."

*******

#3
Moscow Times
July 14, 1998 
THE ANALYST: Lack of Foreign Investment Helps Fuel Economic Crisis 
By Gary Peach
Gary Peach is a Moscow freelance writer. 
Special to The Moscow Times

To repeat a trite textbook rule, an economic crisis is the result of 
poor policies and structural flaws. If everyone agrees that Russia is 
undergoing a deep fiscal and monetary crisis, then what exactly are the 
policies and flaws that have led to this dangerous economic predicament? 

Saying that low commodity prices are the cause is not enough. After all, 
we haven't seen such negative market reactions in Mexico or Venezuela, 
two major commodity exporters. Admittedly, Russia's problems started 
when oil, metal and other goods lost 25 percent to 40 percent of their 
value, but it would be more correct to assert that cheaper commodities 
helped to uncover the real underlying weaknesses in the national 
economy, which then mixed and coalesced into the present powder keg. 

Russia has been driven into a tight, airless corner by its own errors 
and insufficiencies. The dominant one is taxes: They are too high, and 
they are not being collected. Thankfully, a sufficient amount of 
material has been written on this subject, and nothing new can be added 
here. 

The second debilitating flaw is the government's suicidal maintenance of 
a budget deficit of 4 percent to 7 percent of GDP. Russia's ministers 
should be reminded that budget deficits are a luxury for those who can 
afford them. Once it resigned never to resort to the printing press, the 
government should have established a deficit of 1 percent to 2 percent 
of GDP -- no more. 

Finally, perhaps Russia's most damaging weaknesses, and the focus of 
this column, the virtual dearth of foreign investment. Last year, 
according to one official estimate, Russia attracted $4.5 billion in 
foreign direct investment (FDI), or roughly 1 percent of GDP. Since 
1992, only $10 billion in FDI has trickled in. 

This is egregious. Last year alone Brazil received almost $18 billion 
(2.5 percent of GDP), and China, which has far fewer natural resources 
than Russia, drew in over $45 billion. Looking at other former Soviet 
republics, Kazakhstan is close to attaining a FDI rate of 5 percent of 
GDP in 1998. (Ukraine, on the other hand, has attracted all of $2 
billion in FDI since becoming an independent state, so maybe this "FDI 
funk" is an Eastern Slavic thing.) Basically, FDI is so pitifully low 
that it has long ceased to play a part in the country's strategic 
economic development. It wasn't even being addressed anywhere in the 
recent package of emergency bills thrown together by the government. 

If Prime Minister Sergei Kirienko and his ministers were to ever get one 
thing out of this column, then let it be this: Russia will not, under 
any circumstances whatsoever, achieve qualitative economic growth 
without a significant increase in foreign direct investment. The 
legendary revivals of the West European, Asian and Japanese economies 
over the past 50 years were accomplished by means of a deluge of capital 
from abroad. In one instance, a massive plan, by the name of Marshall, 
was required. 

Thus, it follows from this fundamental truth that Russia's federal and 
regional governments, as well as the business community, should purchase 
several tons of satin from China for all the carpets they will need to 
knit and unfurl for foreign investors over the next few years. Also, all 
lofty talk about how the government should not show any undue favoritism 
to foreigners is plain nonsense and should be thrown in the garbage. In 
six years, this idealistic drivel has failed to work. 

Granted, we could discourse for hours as to the many reasons why money 
has been as slow as molasses to flow into Russia, but the bottom line is 
the country's reputation. To rephrase what is often repeated from week 
to week at capital markets conferences -- what the "Elite 10" 
businessmen brought to President Yeltsin's attention -- there is a lack 
of an investment culture in Russia or of a business ethic, so to speak. 

Investing in Russia is regarded as a tedious, frustrating and often 
corrupt process; some say it is the financial equivalent of spitting 
into the wind. How many times have we been reminded of this? Primorsk 
Shipping, Novolipetsk Metal, Krasnoyarskenergo, Segezhabumprom, 
Purneftegaz, Moscow City Telephone and UES. Share dilutions in Sidanco, 
transfer pricing at Eastern Oil, tender annulments in Timan-Pechora. The 
head starts to ache; the stomach spins in anguish. 

The Moscow Times Index has careened below the 100 threshold, where it 
began in September 1995, and justifiably so, because so little has 
improved over the past three years. Had the government made it a 
priority to defend the interests of those who have taken the risk to 
invest their money in Russia, the economy would be better off today. 

Had the government undertaken intense efforts to attract foreign 
investment, given all the necessary guarantees, the Central Bank's 
reserves would not be in such an exiguous state, and the nation's 
current-accounts balance would be less vulnerable. What we have instead 
is a low-inflation, low-solvency, low-growth economy where the one 
conspicuous accomplishment -- a stable ruble -- is engaged in a mortal 
struggle. 

*******

#4
Journal of Commerce
July 14, 1998
[for personal use only]
Guest Opinion
The Caspian conundrum
BY LEE H. HAMILTON
Rep. Hamilton, D-Ind., is the ranking Democrat on the International 
Relations Committee. 

The Caspian basin and its energy resources are receiving great attention 
from governments and oil companies. What are U.S. interests in this 
energy-rich but volatile region, and how can we best pursue them?

The main U.S. national interest in the Caspian basin -- comprised of 
Russia, Iran and new states of the former Soviet Union (Azerbaijan, 
Turkmenistan, and Kazakstan) -- is getting energy to market. The Caspian 
may contain as much oil as the North Sea, and as much gas as the Western 
Hemisphere. Bringing these resources to market would diversify world 
energy supplies and help meet growing demand. Income generated from 
energy exports would promote the sovereignty and independence of the 
region's new states, and deter outside meddling.

Current U.S. policy has four objectives:

To support multiple pipelines, so no country has a monopoly over energy 
routes from the Caspian.

To support an east-west route for the major oil and gas pipelines, to 
link the Caspian states to the west through Turkey. These lines would 
run to the Mediterranean in order to bypass the congested Bosporus 
Strait.

To include Russia in developing Caspian resources. Russia could disrupt 
plans to build a pipeline through Turkey that bypasses Russian territory 
-- unless it has a stake in getting Caspian energy to market.

To oppose a north-south route across Iran until Iran's troubling foreign 
policies change.

The key question is how best to get Caspian energy to market. So far, 
the main oil routes run to the Black Sea. A small pipeline ends at a 
Russian port, a second small line to a Georgian port will open next 
year, and a large pipeline to a Russian port will be complete in 2001. 
Until there is better information about the amount of Caspian oil, there 
may at most be a need for one more large pipeline. Whether that pipeline 
runs through Turkey or Iran will have a large impact on the region's 
economic and political future. Several factors will determine the 
outcome.

Energy companies differ on which route is preferable. Some analysts 
believe a line through Iran is the best route, especially to Asian 
markets. The major advantage is that private sector investment could 
take place step-by-step, in response to actual levels of production. 
Initially, oil could be "swapped" for use in northern Iran, and an 
equivalent amount of Iranian oil exported from the gulf and credited to 
the Caspian producer. If demand were to grow, a large pipeline through 
Iran could be built later. U.S. policy on oil swaps with Iran is now 
under review. An application for one such swap is pending.

Studies show that costs do not differ greatly for large pipelines across 
Iran and Turkey, but the east-west route across Turkey would require 
up-front investment. Unless there are sufficient volumes of oil to 
transport through that pipeline, the large initial investment may not 
attract enough commercial support.

Political decisions also will play a role. Energy producers worry about 
political and economic instability associated with pipeline routes. 
Russia and Iran are both large energy producers and natural competitors 
with the Caspian states for markets. Over the long term, Russia and Iran 
might choose to export their own energy instead of Caspian resources. 
Both countries face unpredictable political and business environments.

There also are risks associated with the east-west line. Leadership 
succession in Caspian countries and political commitment to this route 
are uncertain. The proposed pipeline would pass near areas of conflict 
between Armenia and Azerbaijan, and in Kurdish areas of southeastern 
Turkey. Russia could pressure parties and disrupt this pipeline route.

The Iran-Libya Sanctions Act could seriously impact the development of 
the north-south route. Despite President Clinton's recent decision to 
waive ILSA sanctions related to energy projects in Iran, he has made 
clear U.S. opposition to pipelines transiting Iran. Less clear is 
whether foreign firms find this threat to sanction pipeline projects 
credible.

Where do we go from here? First, the United States should support an 
east-west pipeline that links Caspian countries to the West -- but 
should not finance or subsidize that pipeline. Unless oil prices rise 
and sufficient oil volumes become committed to it, no single large 
pipeline may be commercially viable in the near term. Upgraded smaller 
lines, water and rail transport, and oil swaps may be sufficient to get 
Caspian oil to market.

Second, we should include Russia in the development of Caspian energy. 
If Russian firms profit, Russia will be more cooperative in getting oil 
to market. The United States should push for resolution of the problems 
that have slowed construction of the large oil line from Kazakstan to 
Russia, and encourage Russian firms in energy exploration and east-west 
pipeline construction.

Finally, long-term U.S. interests are best served by multiple pipeline 
routes and letting market forces work. The key obstacle to a market 
solution is U.S. policy that bars investment in Iran, and the ILSA 
statute that punishes foreign investors in Iran's energy sector.

Caspian energy offers an economic opportunity for U.S. companies, and a 
political opportunity for the United States to promote energy security 
and the sovereignty and stability of the new Caspian states. In the long 
run, U.S. interests are best served when no single party controls export 
routes from the Caspian, when the Caspian states are linked to the West, 
and when countries and companies are competing in peace to bring oil and 
gas to market.

******

#5
Christian Science Monitor
JULY 14, 1998 
[for personal use only]
OPINION/ESSAYS
Inching Toward Justice in Russia
By Ronald R. Pope
•Ronald R. Pope is president of Serendipity: Russian Consulting & 
Development Ltd. and an associate professor of Russian politics at 
Illinois State University at Normal.

Under the Communist regime, the Russian criminal justice system had a 
reputation as a sham - and for good reason. A phone call could initiate 
or halt an investigation and determine a verdict, regardless of the 
evidence or the law. It was called "telephone justice." Even today, the 
general assumption among Russians is that if you have the right 
"contacts," the law doesn't really apply to you. And if all else fails, 
a bribe or two should do the trick.

So when it was discovered in the fall of 1995 that my firm's former 
executive director for operations in Vladimir - about 100 miles 
northeast of Moscow - had embezzled about $33,000, we were advised to 
conceal the theft. Two Russian accounting firms pointed out that if we 
reported the stolen money and failed to obtain a guilty verdict, we ran 
the risk of being forced to pay the back taxes on the full amount that 
had been taken, plus huge fines and penalties. However, I wasn't going 
to commit a crime by concealing the theft.

The initial investigation fit the predicted pattern. After a superficial 
review of the facts, in August of 1996 the criminal charges were 
dismissed. In his written decision, the young investigator accepted the 
former executive director's argument that she had "earned" the money she 
had personally taken, and that she had used the remainder for the 
"benefit of the firm," or had paid it to me. Initially she had stated 
under oath that she had given me a "lot of the money," but that I had 
"refused to sign any documents." Later, however, she claimed she had 
"found" three receipts covering a total of 20 million rubles - about 
$5,000 at that time. These were clearly forged - but accepted by the 
investigator.

Further demonstrating the influence of her "contacts," we were not 
immediately informed of the decision to drop the charges. Apparently she 
hoped the time limit for an appeal would expire and she'd be permanently 
off the hook.

When our Russian attorney learned of the decision to end the 
investigation, we immediately submitted an appeal. In addition to our 
legal arguments, we enlisted the support of the US embassy and others. 
We did our best to make it clear to the Vladimir authorities that their 
handling of this case would not go unnoticed in Moscow.

The investigation was reopened with a new, much more diligent 
investigator. As a result, the accused became increasingly hostile, and 
she made a number of threats. She sent two young men to inform our 
attorney that she and her family would be much less likely to be at risk 
from, say, a "reckless driver" if she ceased to assist us.

After the second investigation resulted in formal charges of grand theft 
and forgery, I was given an unsigned note threatening a series of 
actions if I did not withdraw charges. At the trial, the accused 
acknowledged she had written the note. Her threats undermined her 
defense, but the authorities took no direct action in response to her 
blatant efforts to obstruct justice. This is a weakness in the legal 
system that needs to be addressed, along with strengthening - and 
enforcing - the laws governing perjury.

On the other hand, there is at least one feature of Russian criminal 
procedure which bears positive review. In the Russian system, both the 
accused and the plaintiff are given the opportunity to confront each 
other directly at trial, and not just through attorneys. It is assumed 
that this will assist in uncovering the truth. This worked particularly 
well in our case - and it was definitely satisfying to be able to fully 
participate in the proceedings.

The trial began on Jan. 12 - two years after the crime had been 
reported. The judge and the two "people's assessors" assigned to hear 
the case proved to be uncorrupted and professional.

The accused was found guilty and was sentenced to five years in a penal 
colony and ordered to repay all the money she'd taken. On April 21, the 
Vladimir Regional Court upheld the verdict on appeal.

When I've discussed the case with Russians - and with Westerners 
familiar with the machinations of the Russian system - they've 
invariably been surprised.

One experienced consultant said the guilty verdict gave him hope for the 
future.

Justice is possible in Russia - but you have to work at it, and you have 
to take into account some significant cultural differences.

*******

#6
Boston Globe
July 13, 1998
[for personal use only]
FOREIGN JOURNAL
In Moscow, an unwelcome mat rolls out 
By David Filipov

The raid descended on Moscow's Luzhniki outdoor market so rapidly and 
stealthily that no one noticed anything until riot police had surrounded 
the sprawling stadium where the bazaar is located. 

Panicked buyers fled to the exits. Vendors folded up their metal stands. 
Within minutes, police started making arrests and escorting large groups 
out of the stadium and into a convoy of buses. 

This was no drug bust - in fact, the suspects had not broken any laws at 
all. Rather, this crackdown was the latest example of what city 
officials call an effort to ''clean up'' Moscow. 

The occasion is something called the first annual World Youth Games, 10 
days of competition among athletes ages 13-17 from about 130 countries 
that begins today. The games, which have the blessing of the 
International Olympic Committee, are more than a sporting event. 

Moscow authorities want the games to showcase their city as a possible 
host for the 2012 Summer Olympics. Streets have been repaved and tunnels 
repainted. Workers are planting grass and flowers, and hanging up 
Olympic flags and posters that say ''Welcome to Moscow.''

But the welcome is not for everybody. For months, police have been 
detaining homeless people and putting them on trains out of Moscow - a 
favorite tactic of the old Soviet police state that the capital's 
current mayor, Yury Luzhkov, has adopted. 

Moscow requires residents to carry with them a passport bearing a permit 
that allows them to live in the city. The rule, which excludes most 
homeless, refugees, and migrants from other parts of Russia, violates 
the country's 1993 Constitution, which grants all citizens freedom of 
movement. But it is popular with many Muscovites, who see homeless 
people and migrants as the source of much of the capital's crime. 

Human rights organizations protested when Luzhkov swept the homeless off 
Moscow's streets during the 50th anniversary of the end of World War II 
in 1995, and again last September, for the city's 850th birthday. But 
Moscovites applauded the crackdowns, and Luzhkov shrugged off the 
criticism. 

With his latest showcase event for Moscow getting underway, the mayor, a 
potential frontrunner for presidential elections in the year 2000, is at 
it again. 

During preparations for the youth games last month, police closed down a 
mobile medical screening center for the homeless run by the 
international relief agency Doctors without Borders. The police's 
explanation: Young athletes arriving at a nearby train station might be 
exposed to infectious diseases homeless people might carry.. 

Never mind that the point of the clinic was to provide proper medical 
care to sick homeless people, with such diseases as tuberculosis, to 
reduce the risk of spreading infection. 

At Luzhniki Market, the people detained in the recent raid were not 
homeless, but were found to have violated the city's residence rule. The 
market was one of several huge outdoor bazaars closed down for the 
duration of the games. 

The markets are so lucrative that vendors from throughout the former 
Soviet Union are happy to pay high rents, plus a monthly fee to 
extortion rackets that averages $12,000. But evidently, the chaotic 
markets do not present the image Luzhkov wants to project. 

Luzhkov has ordered into the streets 32,000 police, who have stepped up 
document checks of anyone with dark features, figuring they might be 
illegal migrants from the Caucasus region or Central Asia. 

One victim of the crackdown was an employee from the Council of Europe, 
a Dutch citizen with dark features who was detained twice in Moscow in 
recent weeks. Ironically, he was here to attend seminars on human 
rights. 

David Filipov is chief of the Globe's Moscow Bureau 

******

#7
New Yorker names David Remnick as new editor
By Ellen Wulfhorst

NEW YORK, July 13 (Reuters) - The New Yorker magazine on Monday named staff
writer and Pulitzer Prize-winning author David Remnick as its new editor,
succeeding Tina Brown, who resigned last week. 

Remnick, 39, has been a staff writer at the weekly magazine since 1992. 

Brown, in a move that attracted much attention in media circles, said on
Wednesday that she was leaving the influential publication to join a new
venture at Walt Disney Co. unit Miramax that would create movies, a magazine,
television programs and books. 

Brown spent six years at The New Yorker and made several controversial changes
to make the legendary yet staid magazine more lively, with more space given to
celebrities and pop culture trends. 

But while the magazine attracted more readers and circulation grew, it
continued to lose money. 

Brown's departure had prompted a sort of parlor game among members of the New
York media as to who her successor might be. 

Other names that had been tossed around included Conde Nast editorial director
James Truman; The New York Observer editor Peter Kaplan; House & Garden editor
Dominique Browning; and Slate editor Michael Kinsley. 

S.I. "Si" Newhouse, chief executive of Advance Publications, owner of The New
Yorker and other magazines under the Conde Nast umbrella, announced Remnick's
selection at a late morning meeting at the magazine, a spokeswoman said. 

"David is one of the most respected journalists in America today," Newhouse
said in a statement. "His standards of writing and reporting epitomize all the
best qualities of The New Yorker's heritage." 

Remnick was one of the first people Brown hired when whe took the helm of the
magazine. 

Since then, he has written more than a hundred articles, including a piece in
the latest issue on the Amish community in Pennsylvania. 

He also has been a consulting editor in recent years, the magazine said in a
statement. 

Prior to writing for The New Yorker, Remnick worked at The Washington Post for
10 years, the last four of which he spent in the newspaper's Moscow bureau. 

He has written several books, including "Lenin's Tomb: The Last Days of the
Soviet Empire," which won the Pulitzer Prize for non-fiction in 1994, and
"Resurrection: The Struggle for a New Russia." 

His latest book is the soon-to-be published "King of the World," about boxing
great Muhammad Ali. 

Remnick's starting date as editor was not set, the spokeswoman said. 

Brown is still at the magazine, laying out editions through Sept. 14, the
spokeswoman added. 

*******

#8
[excerpt]
Russia seen as worlds No 3 holiday spot by 2002
By Hester Abrams

LONDON, July 13 (Reuters) - The number of people going on vacation to Russia
will double by 2002, making it the most popular holiday destination after
France and Spain, new travel forecasts predicted on Monday. 

The Russian Federation has been the fastest growing of the major tourism
markets, despite its lack of high-quality facilities, high crime rates and
bureaucratic visa requirements, consumer markets analyst Euromonitor said. 

Tourism arrivals to Russia could reach 45.9 million in 2002, up 109.9 percent
on 1997 and compared to just 5.9 million in 1993, it said in its European
Tourism report. 

Russians are also joining the most-travelled nations, with departures from the
country up 94 percent in the five years to 1997.... 

*******

#9
The Independent (UK)
14 July 1997
[for personal use only]
Street Life - Help! My grass-selling granny has been banished
By Helen Womack
Samotechny Lane, Moscow 

Moscow has been cleaned up in preparation for the World Youth Games. 
Now, however, there is no grass to be had on the city streets. 

I am not talking about marijuana, but rather parsley, dill and basil, 
the fresh herbs that Russians buy in bunches and call simply "travi" - 
or grasses. 

I always buy grass from Marifat, a smiling Uzbek grandmother who, winter 
and summer alike, squats on the pavement on Samotechny Lane with herbs 
brought up by train from her native Tashkent. In this way, rouble by 
rouble, she is saving to build a house for her son, who is a policeman 
back in Uzbekistan. 

Along with all the other "human garbage" (tramps, prostitutes, 
unlicensed traders), Marifat has been swept out of town for the duration 
of the games. Strange how the ethnic Russians, who sell unrefrigerated 
dairy produce from trestles in the July heat, manage to get licences, 
yet the Asians have a harder time selling harmless leaves. 

The burning issue now is where I am going to get my herbs? I have 
invited a Western colleague, long absent from Moscow, to come to dinner 
to discuss all the "changes" that have taken place in Russia. 

As usual in a crisis, I call my friend Tamara, a housewife. Loyal 
readers of The Independent will remember how, back in 1991, I dragged 
Tamara with her full purse round the empty Soviet shops to demonstrate 
how difficult it was for her to buy anything at all. Then, 
hypocritically, I went off and bought my own food in a hard-currency 
store open only to foreigners. 

Thank goodness that apartheid-like system has been abolished. Russians 
and foreigners now have equal access to a wide range of goods. The only 
question is whether the housewife has enough money for a shopping 
expedition. 

"I've got enough to buy grass, anyway," says Tamara, "and I think I know 
where we can get some. From old Tanya." 

"Not 'Tanya the shop assistant from Hell'?" I ask. 

"The very same". 

I have not had cause to patronise Tanya for several years. She works in 
one of the few remaining state shops. The rudeness of theformer Soviet 
staff has to be experienced to be believed. Tanya, with rings on every 
finger and filthy fingernails, literally flings vegetables into the 
faces of customers. 

Full of trepidation, we ask for herbs. "There on the counter, haven't 
you got eyes?" Tanya snarls. Meekly we pay for the limp bunches. The 
rest of our shopping we will do elsewhere. 

Fortunately there are now alternatives. Often Tamara and I go to the 
"optovy rynok" (wholesale market) near Samotechny Lane. It is chaotic 
and you have to be on your guard against imported goods past their 
sell-by date, but there are real bargains to be had from the "chelnoki" 
(shuttle traders) who bring groceries from Poland and Turkey, and sell 
them out of metal containers. 

We never risk buying meat or fish, but there can be no danger of 
salmonella in pasta and rice. Tamara and I save money by buying for two 
families, then sharing. 

Russia was never a nation of shopkeepers, but the "chelnoki" will be the 
shop-owners of the future. A local container market is to close to make 
way for a new glass and concrete shopping centre for the Samotechny Lane 
area, which is being gentrified. Even the successful shuttle traders 
will move into proper shops in the complex. 

Already my area boasts several Western-style stores. On the corner is a 
mini-mart run by two delightful former teachers, since they cannot earn 
a living wage in the classroom. Their shop cannot fail because, good 
manners aside, it is open all hours and sells alcohol. 

Next door is "Belinda", a supermarket with French delicacies. The prices 
are astronomical which only rich New Russians can afford. 

On my way home, I realise I have not got toilet paper. I can hardly 
expect my guest to use Pravda like a Russian. At this late stage, 
"Belinda" is the only option. 

"Do you have any toilet paper?" I venture. The chic salesgirl inclines 
her head slightly, then contemptuously goes on polishing her nails. Not 
"Tanya from Hell" but "Daughter of Tanya". Is there an inherent 
masochism in the nature of Russians that makes them long to be abused by 
shop assistants? 

*******

#10
TEXT-IMF statement on Russia deal

WASHINGTON, July 13 (Reuters) - The following is the full text of the
International Monetary Fund's statement on the IMF-led economic rescue package
for Russia: 

Michel Camdessus, Managing Director of the International Monetary Fund (IMF),
said today that: "The IMF team currently in Moscow has reached agreement with
the Government of Russia on a major strengthening of Russia's economic program
which I intend to recommend to the IMF's Executive Board as the basis for an
immediate and significant increase in the IMF's financial support for Russia.
This support will help Russia face its difficult problems which have been
exacerbated by the sharp decline in commodity prices, in particular oil. 

"Under the new economic program, Russia's fiscal position is being
strengthened markedly. The federal budget deficit is expected to fall to 5.6
percent of GDP in 1998, from 6.8 percent in 1997. As a result of the measures
agreed with the Russian government, the deficit is targeted to fall further to
2.8 percent of GDP in 1999. Many structural reforms of the fiscal system,
including major measures to improve the tax system, as well as additional
reforms agreed in the context of the program supported by the World Bank, will
be implemented. 

"The additional support that I will recommend to the Executive Board of the
IMF will amount to SDR 8.5 billion (about US$11.2 billion) in 1998. Half this
amount (about US$5.6 billion) will be provided as soon as the agreed actions
of the Russian government have been taken, by legislation where necessary, and
upon IMF Executive Board approval. The rest would be made available during the
remainder of the year. Together with the resources provided under the current
EFF credit for Russia, total financing from the IMF during the remainder of
1998 would amount to SDR 9.5 billion (about US$12.5 billion). I expect the IMF
Executive Board will consider the program of the Russian government on July
20. 

"Given the systemic nature of the problem, the size of the additional
financing, and the IMF's liquidity position, I have initiated consultations
with the participants in the General Arrangements to Borrow (GAB) to activate
the GAB to secure most of this additional financing for Russia. 

"The Russian government has also informed me that it intends to request a new
EFF for the years 1999-2001. I welcome its intention and expect that, with
continued reform, I would recommend further IMF financial support for Russia's
medium-term economic program on a scale to similar to that of the present EFF,
approximately SDR 2 billion (about US$2.6 billion) per year. 

"I understand that the World Bank's management has reached agreement in
principle with the Russian government on a far-reaching structural reform
program, and intends to recommend to its Board of Executive Directors the
approval of structural adjustment lending which would make available an
additional US$800 million in 1998. Together with disbursement of already
committed adjustment loans, total adjustment loan disbursements by the World
Bank to Russia during the remainder of 1998 could then amount to US$1.25
billion. The World Bank plans a total disbursement of some US$3 billion in
adjustment lending for Russia in 1999, subject to strong progress of the
reform program and to approval by the Bank's Board of Executive Directors.
Total World Bank disbursements to Russia during the remainder of 1998 and
1999, including adjustment and investment lending, could reach up to US$6
billion. During the same period, as previously announced, the Japanese
authorities plan to make available to Russia US$1.5 billion in balance of
payments support, co-financed with World Bank adjustment loans. 

"The Russian government is announcing today its intention to offer to holders
of Treasury Bills (GKOs) the opportunity to convert the bills into medium or
long-term bonds denominated in US dollars. I welcome this initiative, which
will ease pressures in the GKO market that have arisen in rolling over
maturing bills, and will reduce the burden of interest payments on the budget.
The strengthening of Russia's economic policies--both fiscal and
structural--the large additional financial resources, and the debt conversion
scheme should fundamentally improve the financial situation of the Russian
government," Camdessus said. 

"The strengthening of Russia's economic policies--both fiscal and structural,
the large additional financial resources, and the debt conversion scheme,
should fundamentally improve the financial situation of the Russian
government," Camdessus said. 

******

#11
TEXT-World Bank statement on Russia deal

WASHINGTON, July 13 (Reuters) - The following is the full text of the World
Bank's statement on its economic reform package for Russia: 

The World Bank's management has reached agreement in principle with the
Russian Government on a far-reaching structural reform program which the
government plans to implement over the next eighteen months. As a complement
to the short-term measures aimed at addressing Russia's immediate economic
problems, the Bank believes that implementation of this program will lay the
basis for sustained economic growth and social recovery in Russia. It
addresses the key issues of enhancing transparency and fiscal accountability,
including the prompt removal of payment arrears; promoting the private sector;
strengthening competition and corporate governance; and fostering sound
financial intermediation. 

To support this program, the Bank is planning to negotiate in the next few
days a third Structural Adjustment loan to Russia for US $1.5 billion, with
the aim of presenting it to the Bank's Board of Directors for approval in the
next few weeks. Under this loan, US $800 million would be made available in
1998. Together with disbursements of already committed adjustment loans, total
adjustment loan disbursements to Russia during the remainder of 1998 could
then amount to US $1.25 billion. The Bank plans a total disbursement of some
US $3 billion in adjustment lending for Russia in 1999, subject to strong
progress of the reform program and subject to approval by the Bank's Board of
Executive Directors. Total World Bank investment lending could reach up to US
$6 billion. As in the past, an important element of World Bank support will be
activities aimed at improving the social conditions of the Russian population
during the difficult economic times currently facing Russia. During the same
period, as previously announced, the Japanese authorities plan to make
available to Russia US $1.5 billion in balance of payments support, co-
financed with World Bank adjustment loans. 

I am delighted the new Russian Government has developed this ambitious program
of structural reform," said James D. Wolfensohn, President of the World Bank.
"Its implementation will send the clearest signals that Russia's economic
management is on track - it should quickly rebuild confidence and create the
basis for the emergence in Russia of the prosperity that we all want to see.
The World Bank stands ready with substantial financial support to Russia for
the implementation of this program and for mitigating the severe social
problems which the Russian people currently face." 

*******