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Johnson's Russia List


July 25, 1998   
This Date's Issues: 2281  

Johnson's Russia List
25 July 1998

[Note from David Johnson:
1. Reuters: Yeltsin, PM discuss govt, loan, Chechnya.
2. Reuters: Russia PM answers live questions in Internet chat.
3. Agency for Social Information: THE EFFECT OF THE POST-SOVIET 

4. Jamestown Foundation Prism: Aleksandr Buzgalin, RUSSIA: CAPITALISM'S 

5. The Economist: Russia’s farms. A backbreaking job.
6. Rossiyskaya Gazeta: Fascist Group's Popularity, Ambitions Eyed. 
(Russian National Unity-RNE).

7. Komsomolskaya Pravda: 'Unprecedented' Security Surrounds Yeltsin 
Karelia Stay.]


Yeltsin, PM discuss govt, loan, Chechnya
By Martin Nesirky

MOSCOW, July 25 (Reuters) - President Boris Yeltsin rocked the boat again on
Saturday, interrupting his forest-and-lakes holiday to announce a government
shake-up and warn Russians to expect a politically tough time after the

Speaking at talks with visiting Prime Minister Sergei Kiriyenko, the 67-year-
old Kremlin chief also said the country needed to start thinking how it would
pay back a huge international loan package and clear domestic debts. 

``We'll go for a stroll and enjoy the fresh air,'' Yeltsin said in televised
comments as he welcomed Kiriyenko to his Shuiskaya Chupa retreat in the
northwestern region of Karelia. 

Yeltsin, in an olive suit and open-neck shirt, looked somewhat stiff in the
footage shown on Russian television. 

Interfax news agency quoted Yeltsin as saying he was signing a decree on
Saturday dismissing ``one government member'' and appointing another. But he
declined to name those concerned. He said his press service would release
details later. 

``This will be more ethical for the person covered by the decree,'' he was
quoted as saying. 

Kiriyenko's reformist team has been in place only since early May. Yeltsin
stunned the world in March when he sacked the old government, saying reforms
needed to be made more tangible for average Russians, and appointed the
little-known Kiriyenko. 

Yeltsin, alluding to tensions with parliament and unpaid workers, said autumn
was likely to be ``politically difficult.'' 

``As always, there's a little breather and then it starts again,'' Interfax
quoted him as saying. 

The summer has hardly been a lull for Russia. 

The International Monetary Fund, World Bank and Japan have pledged $22.6
billion overall as a rescue package to bolster Russia's reserves, ease
pressure on the rouble and help the country overcome a persistent financial

Yeltsin said it was already time to work out how those loans and domestic
public sector debts -- such as unpaid wages -- could be cleared. 

``All of this is our work,'' Itar-Tass news agency quoted Yeltsin as saying
before starting talks with Kiriyenko. ``Of course, it's not much fun but it is

Underscoring the importance of tackling wage arrears, unpaid workers kept up
pressure on the government across the country. 

Miners maintained a blockade of part of the trans-Siberian railway and others
in the southern Urals threatened to join in. 

On the island of Sakhalin in Russia's far east, officials were forced to start
cutting power to homes because a blockaded electricity plant was running out
of coal. 

Kiriyenko said Yeltsin had signed a number of decrees needed to push through a
government stabilisation plan to overcome the crisis, which was sparked by
Asian economic chaos, a fall in the global price of oil -- Russia's major
export -- and domestic problems such as low tax revenues. 

The plan is one of the conditions demanded by the IMF in return for its $11.2
billion loan, the first $4.8 billion tranche of which was handed out this

Kiriyenko held talks on Friday with U.S. Vice President Al Gore, who praised
the young premier's commitment to reform and gave an upbeat view of Russia's
chances of turning the corner. 

Kiriyenko said after his talks with Yeltsin the president had told him to meet
the leader of the breakaway region of Chechnya next week. Chechen President
Aslan Maskhadov escaped an assassination attempt last Thursday. 

``We support the government of the Chechen republic and personally Aslan
Maskhadov,'' Interfax quoted Yeltsin as saying. ``There is no point doubting

It was not clear where the meeting would be held, assuming Maskhadov agreed to

Yeltsin has been on holiday for a week. Kremlin sources say he is unlikely to
be back at work before the second half of August. Yeltsin was quoted as saying
on Saturday he had only managed to take half a day off so far, spending the
rest of the time working on documents. 


Russia PM answers live questions in Internet chat
By Andrei Khalip

MOSCOW, July 24 (Reuters) - Russian Prime Minister Sergei Kiriyenko gave a
live Internet interview on Friday night, answering questions on topics ranging
from economic issues to the millennium bug problem and his preferred Web site.

Kiriyenko said Russia and the United States would jointly tackle the
millennium computer bug problem, seen by international experts as very serious
for Russia which has a vast nuclear potential heavily dependent on computers. 

"We agreed to give attention to this problem through the work of a special
working group," Kiriyenko said after negotiations with U.S. Vice President Al

Gore, who was initially scheduled to take part in the public Word Wide Web
computer chat session, did not participate. 

"This (millennium bug) is a serious issue not only for America, in fact it is
a problem which affects all users of computer networks in the world. I believe
that indeed Russia has many top-level experts who could help resolve this

He was generally upbeat on the prospects of Russia's stabilistaion programme
of mainly fiscal laws, only partly approved by parliament last week, going
into full swing soon. The programme is intended to help Russia overcome an
acute economic crisis. 

He also said Russia would pay off all that it owes the International Monetary
Fund, which only this week approved a multi-billion dollar loan for Russia,
"in time and under the agreed schedule." 

Kiriyenko returned to the issue of the U.S. Jackson-Vanik amendment, which
blocks Most Favoured Nation trading status for any country that does not have
open emigration policies, which in principle applies to Russia. 

He said the scrapping of this amendment was "a matter of principle" for
Russia, and if scrapped could sufficiently help boosting confidence in the
country's economy and trade. 

Replying to a message by a Communist parliament deputy who predicted his
resignation in autumn, Kiriyenko said: 

"I am glad to be able to talk to Communist deputies via the Internet. What a
change in the public mindset!" 

Kiriyenko did not say what his preferred Internet Web site was, but said the
one where the chat was taking place ( "could become one
from now on." 

Kiriyenko has followed the example of President Boris Yeltsin who earlier this
year pioneered the Internet, becoming the first Russian politician to chat


Date: Fri, 24 Jul 1998 
From: Center for Civil Society International <>
To: Multiple recipients of list <civilsoc@SOLAR.RTD.UTK.EDU>
Subject: Post-Soviet Shocks and Youth in Russia

CCSI periodically receives special "info-analytical" bulletins from the
Agency for Social Information, its partner in Moscow. The following
excerpts from ASI's Special Bulletin No. 28 on the problems of youth in
Russia were translated by CCSI intern Maria Kozhevnikova. For a full copy
of the bulletin (in Russian) please send an e-mail request to:

The main theme of the current Bulletin may be found in the statement: 
"According to survey data, deviant behavior today is the only way of
social adaptation for a significant part of the youth." The bulletin
contains four articles: a report for the International Youth Fund; a
survey, conducted by the Institute of Youth in Moscow; an interview with a
member of the Moscow Bar, Nonna Nikonova; and a cooperation project
between the UNICEF and the Russian Federation. 


"Youth: Deviant Behavior" (from a report for the International Youth Fund
by Olga Zdravomyslova and Irina Shurygina) 

" the "fear scale" young Russians assign first place to the crime
rate. One quarter of participants characterize their generation as
criminalized, according to the surveys conducted within the last three
years by the research center of the Institute of Youth in Moscow..."

"...lack of support for teenagers who begin their working career after
high school, as well as cruelty and mistreatment in families, are among
the factors contributing to the increase in crimes committed by teens..." 

"...surveys conducted in Moscow indicate that teenage boys from
middle-class families drink most. Perhaps, this can be explained by the
fact that these children face more psychological and social discomfort,
because their families are in an "in-between zone". Many families with an
average income are in danger of becoming "the new poor". As a result the
children have to live under constant stress, the effects of which are
reflected in their behavior..." 

" the same time the number of alcohol and drug addicts in Russia is
growing rapidly. From 1991 to 1995 the number of 15-19 year old teenagers
first diagnosed with drug addiction increased by 617% (the number of
teenagers diagnosed with alcohol addiction grew by 32%)..." 


"On Juvenile Delinquency" (materials from sociological surveys by Boris
Ruchkin, Institute of Youth)

"...the main difficulties faced by children, teenagers and young people
are caused by the problems of social adaptation and changes in the
socialization context. The transition period brought about a new success
model. Maximum independence from the society is considered the highest
achievement, which encourages deviant behavior rather than prevents it. 
Money is the criterion of success, whereas education is not. Among
youngsters, illegal ways of obtaining money are tolerated, whereas the
moral norms regulating attitudes towards illegally obtained material
wealth have become vague. 

"...Among high school students from 21 cities in Russia, surveyed in 1997,
every third student considers various property crimes permissible.
Approximately the same number of students think that such crimes are
inadmissible, or do not have any opinion on the matter. 

These are some of the ways of obtaining money (percentage), which young
people consider normal:

Working (full time or part time) 76
Asking parent for money 39
Re-sale of goods 33
Marrying into money 16
Lying 15
Stealing 5
Prostitution 4
Taking by force 3

(1997 data from the Institute of Youth and the sociological research
center of the Moscow State University)"

"...the most significant factors contributing to the increase in deviant
behavior of youth in Russia are:

--lack of understanding among the general public about the difference
between legal and illegal, moral and immoral, ways of achieving success
and obtaining material wealth; 

--identification of social success with money and independence from the
society ;

--the "immorality" of mass consciousness: people believe that they can
succeed only by cheating or breaking the law, that "everybody does that";

--extreme income inequality, the sense that one can only be rich or poor,
successful or unsuccessful (and nothing in between);

--the "material revolution" in youth consciousness;

--an understanding of democracy as unlimited individual freedom;

--confusion and social maladjustment of adults, among whom are parents of

" choices of young people reflect the tendency to go for a high
salary. These are some of the professions chosen by them and rated from
zero to ten according to their scale of social prestige: 

Owner of a commercial bank 8.0

Manager 6.9

Bodyguard 5.9

Criminal 5.2 

The profession of a bodyguard is equal in prestige to being a lawyer or a
doctor; the criminal authority is equal to that of a university professor
and a parliament member. They are all considered more prestigious than the
professions of an army officer, engineer and a researcher "

"...the events of 1991-1997 demonstrated that protest movements in the
society are growing (strikes, hunger strikes, marches to Moscow, student
protests). If all the measures planned by the government turn out to be
another lie, the power elite may lose the support of a significant part of
the population. Furthermore, there is a danger that one more factor of
social instability may appear, as 8 per cent of the survey participants
stated that they would take part in protests and 6.1 per cent indicated
that they would participate in armed protest actions"


"Only Specialists Should Handle Juvenile Cases" (interview with the
member of the Moscow Bar, Nonna Nikonova)
by Liudmila Pis'man

" reforms and reforms in law-enforcement are not a solution. There
should be an understanding that only qualified and trained specialists
should handle juvenile crimes. Today one can only hope for the decency of
certain police and court officials " 

"...a 16 year old girl from a provincial town came to Moscow to study. She
was overwhelmed by the "sophistication" of life in the capital--pictures
of models at every corner, beautiful shop windows. She was caught by
security when trying to steal a box of chocolates and a pair of pantyhose. 
Petty crime? She was tried in court. One should be grateful to the judge
who stopped the case..." 


No.15 7/24/98 Part 4_

By Aleksandr Buzgalin
Aleksandr Buzgalin is a Doctor of Economics and a professor at Moscow State
University. In the perestroika period, he was a leading member of the reform
wing of the CPSU. He is now one of the leaders of the Democratic Socialist
Movement in Russia.

Today, it has become almost a cliche to say that the Russian economy, and
Russian society in general, are the place where the largest
financial-industrial groups collide. Their fusion with the state apparatus,
and the corruption of the latter have become just as much of a cliche.
Likewise, the oligarchic character of the country's government (the
so-called "semiboyarshchina") can hardly be in doubt. 
But there has been little analysis of the nature and role of these
formations (from now on, I will use the term "clan-corporate groups") in

* * *

In order to understand the nature of the power of these groups, one must
examine the socio-economic system in Russia today, understand who its master
is, (above all, in the economic sphere), who benefits from the model of
transition as it exists in practice, and how the mechanism of their
"competition" has been set up.
It is possible to understand this system, if one goes a step beyond the
traditional analysis of economists (plan or market? private or public
property?) and political scientists (right or left? pro-presidential,
regional and other elites). One needs, at a bare minimum, to analyze what I
have called "capitalism's Jurassic Park." I am referring to the
state-corporate model of capitalism which has taken shape in Russia, full of
the "relics" of Soviet society, with its authoritarian political system,
paternalist bureaucracy; its passive population, accustomed to social
dependence; a narrow stratum of entrepreneurs, concentrated in the "shadow
economy"; its "deficit economy" with limited resources, dominated, not by
the mythical central planning of 20,000,000 different forms of production
"down to the last nail," but by "planning deals," -- the semi-legal
horse-trading between bureaucrats and enterprise directors over prices,
resources, etc., etc., etc...
The key social link of this economic system is the clan-corporate group.
The author calls these structures capitalism's "dinosaurs." Today, two types
of dinosaurs dominate the landscape. Some -- the "herbivores" -- are
gigantic, unwieldy structures: the former state enterprises. Others -- the
"predators" -- are much smaller, but much more active: the mean and hungry
private corporations, who actively "gnaw away" at the former state structures.

To understand these "dinosaurs," let's look at the structure of a typical
clan-corporate group. At the bottom, there are several enterprises (which,
in most cases, have gone through nomenklatura privatization), and together
with them, one or two banks and several private marketing (or simply
"parasitic") firms, and over them, a "superstructure," in the form of an
organization which lobbies for them in government structures. Real ownership
rights in this system belong to a narrow circle of persons, concentrated in
the administration of former state enterprises, the leadership of banks and
lobbying structures and the real owners of the private "daughter firms."
Again, I stress: we are talking about real ownership rights, about economic
power, and not simply of percentages of shares (although this is also
What are the sources of power for the real owners of such structures? The
most important one is the ownership of shares. To exert real control over a
clan, it is enough to own 10 to 15 percent of its shares, as long as: 1) the
rest of the shares are scattered among many small shareholders, who are
unable to coordinate their actions; 2) the owners of the 10 to 15 percent,
on the contrary, are united in their business activity (i.e., they make up a
"clan); and 3) these owners hold in their hands the other threads of
economic power and control.
Who, today, has such a consolidated packet of shares in most former state
enterprises in Russia? According to the estimates of experts, the typical
picture is as follows. The state owns 10 to 15 percent of the shares. About
40 percent of the shares are in the hands of the workers, and thus, are not
consolidated. Moreover, most workers in Russian enterprises continue to be
passive, are not united in associations (the labor unions are either
fictional or refrain from addressing the issue of property), and are
incapable of acting together even as property owners, much less as
entrepreneurs. In the overwhelming majority of cases, they place too much
trust in the ownership rights of the administration of the enterprises in
which they work. 
The enterprise's administration, on the other hand, is a consolidated
structure, tied together by decades of working and living together as
members of the same "caste": the low-level nomenklatura. By 1995, these
people had up to 15 percent of the shares in their enterprise and were
actively continuing to buy up more shares. 
Moreover, a significant number of shares (up to 30 percent) belongs to
"external investors" (Russian and foreign private firms), who, as a rule,
have close personal ties to the enterprise's administration. A significant
number of these shares could be controlled (through intermediaries) by the
bank (or banks) which have become part of the informal clan. In total, the
elite controls from 30 to 50 percent of the shares, i.e., substantially more
than the minimum necessary for control over an enterprise if the
aforementioned three conditions are present.
Administrative power is the elite's second important channel of control
over the clan. In Russia, with its age-old tradition of submission to the
authorities, the administrative power of top management plays one of the key
roles in forming stable clan structures. This power is combined with the
administration's control over housing, social infrastructure and other
areas, such as kindergartens and clinics.

Under these conditions, a chain of financial dependence has been developed.
At the very bottom of this chain is the worker, who can either be paid or
not paid (this depends on the administration). Salaries are delayed from one
to five months, and quitting doesn't solve the problem: over the reform
years, unemployment has grown sevenfold. 
Then there is the administration's dependence on the banks. The bank may or
may not give the enterprise credits, and if it does, then on what
conditions? The administration can also use its services (usually, through
dummy firms) to divert, for two to three months, and sometimes, for up to
half a year, money intended for the payment of salaries and contractors,
often doubling the original amount through short-term currency, commercial,
and other transactions, most of them speculative. Some of this additional
money goes to the enterprise, but a large share of it goes, through the
bank, to the bosses of the clan.
Above that, there is the dependence on government -- all the way from the
low-level bureaucrat in a regional administration to the president and
parliament. At all these levels, government resources are distributed and
redistributed. Add here the active influence of the State Property
Commission on the privatization process, that of the agencies concerned with
foreign trade on the conditions for export-import deals, that of the
presidential administration on tax loopholes, and that of the parliament on
the budget... and we get a complicated system of mutual financial ties
between enterprises, banks, and various federal, republican and regional
government bodies. 
And we must not forget another channel of economic power -- personal
connections. This crowns the whole pyramid of dependence, welding together
(like wolves joining together into a herd) the elite of enterprises, banks,
commercial structures and government agencies. These personal ties are all
the stronger, since the overwhelming majority of clan elites originally came
from the same groups of the former nomenklatura.

And finally -- what gives these clans such solidity is their close ties to
underworld structures. One must keep in mind that the criminal economy of
the past (and until the end of the 1980s, almost every private business in
the USSR was illegal, and hence, closely tied with criminal elements) was
one of the main sources for the birth of private business. Today, private
firms are always attached to state or former state enterprises, so that the
corporation's money may be conveniently be diverted into the pockets of
their real owners. In view of this, one must realize that most corporate
structures have at least some ties to the criminal economy. Moreover,
lobbying, in and of itself, in a country with shaky legislation, constantly
changing governments, and a high degree of corruption at the top, has the
character of a semi-legal, or directly illegal, activity.
As a result, all structures are mutually drawn into activity which is more
or less dubious, from a legal point of view. This doesn't have to be
racketeering, contract murders, blackmail, extortion, or bribe-taking
(although there is more than enough of that in Russia). It could "just" be
delaying the payment of salaries and "diverting" them through commercial
organizations, giving credits on favorable terms in exchange for the
company's support in an election campaign, or other steps which link the
clan elites by making them share the responsibility for some illegal action.

These clan-corporate structures form the basis, not just for economic
power, but for political power as well. Here, the link isn't so simple. Most
clans support several blocs and parties simultaneously, and most parties
have the support of more than one clan. Thus, a complex intersection of
interests arises, which is relatively remote (but not absolutely cut off)
from the parties' ideologies or programs. 

These clan-corporate structures may be divided into four types. (Here, the
author will be using information from the master's thesis of P. Demeshchik
of the economics department of Moscow State University, "Problems in the
Redistribution of Rights of Ownership in Contemporary Russia's Transition
First, there are the clans which are based on a single sector of the
economy. Contrary to popular opinion, there are several such clans, which
compete fiercely against each other. As an example, let us look at a
gigantic structure such as Gazprom (which has a monopoly over 95 percent of
natural gas extraction, 100 percent of natural gas transportation, etc.).
Although 40 percent of the shares in this enterprise belong to the state, in
reality, this gigantic corporation has, as it were, "privatized itself,"
since most of the shares (distributed among the administration and the
workers of its enterprises, regional elites, etc.) are under the control of
its bosses.
Several banks fall within this corporation's orbit, including Gazprombank,
Natsionalny rezervny bank, Imperial, and others. 
Gazprom plays a very significant role in political life, having become, for
example, in the last parliamentary elections, one of the biggest (according
to some figures -- the biggest) sponsors of the "Russia is Our Home"
movement, which supported, and continues to support, President Yeltsin. The
regional governments of a number of northern territories are virtually
completely dependent on Gazprom.
There are other "sector-based" clan organizations -- both in the raw
materials sectors and in the defense industry, the agro-industrial complex
and many other sectors of the economy.
The second type of clan is the regional clan. These clans are built, as a
rule, around a powerful regional leader (the governor of a region or the
mayor of a large city). One example of such a formation is the group of
firms surrounding the Moscow city government. Among the main regional Moscow
banking structures closely linked in strategic partnership and mutual
dependence are the Bank of Moscow, Mosbiznesbank, GUTA-Bank, and others.
The third type of clan structure is a departmental-functional organization.
For example, Russian federal and local governments, over the course of the
last five years, have fulfilled, and continue to fulfill, the function of
redistributing state property on a massive scale. This function was, and is,
carried out by a single agency -- Russia's State Property Committee and is
personified by one of Russia's leading politicians -- Anatoly Chubais, the
adept of "shock therapy."
The fourth type of clan structure -- arises on the basis of private
commercial enterprises, by means of the accelerated primary accumulation of
capital. In just seven or eight years, financial-commercial (in Russia,
private business is only rarely involved in production) structures have been
formed with very modest amounts of capital, in comparison to the largest
corporations in Japan or the U.S., although still gigantic by Russian
standards -- on the order of US$100-300 million. 
Most of these structures have made it down a long road, beginning with
legalized "shadow capital," money from the defunct political and party
structures (the CPSU, the Komsomol, and many others), and only rarely --
from private persons (in this case, we are not looking at banks and firms
which arose on the basis of former state enterprises or institutions). After
that, there was a period of massive speculation in currency, real estate,
vouchers, imported gods, accompanied with the large-scale use of
non-economic methods (racketeering, corruption, etc.), mergers, and,
finally, the formation of more or less "clean" structures, which have
changed their image three to five times and, at least formally, have no ties
with organized crime or corrupt officialdom.

* * *
So how do these groups interact?
It would be a gross oversimplification to see Russian socio-economic life
as strict market competition (within a carefully-defined framework and
rules) between these supercorporations. The Russian economy is transitional,
in the full sense of the word, and this means the following.
First, the clan-corporate structures themselves are still evolving. Their
borders are amorphous and mobile. Firms, banks, bureaucrats, and even entire
agencies (and sometimes, even the top people in the government) change their
orientation, sympathies and antipathies, move from one clan to another, or
try to join a number of clan structures. Moreover, most clans are unformed
organizationally and un-institutionalized. Gazprom is the exception here; as
a rule, it is almost impossible to come up with a definitive definition or a
formal description of a clan's structure.
Second, the clan-corporate structures, in most cases, are characterized by
mutual diffusion and flow into one another; this is their distinctive
feature, which is specific to transitional societies.
Third, clan-corporate structures compete in various ways, non-economic as
well as economic. The most important form of struggle between them is
informal, non-economic interaction. Forms of the latter may include personal
connections, deals, agreements to divide markets and spheres of influence,
"rules" of competition, etc., as well as racketeering, bribery, blackmail
and the like. 
Market competition has only just emerged. It is not simply imperfect (in
the sense of the word used in economics textbooks); it is deformed, mutant
from birth. It is not so much an interplay of elemental forces, where the
one who has lower costs, higher quality, etc., prevails, but a battle
between forces which are trying to regulate the market. Each clan tries to
regulate the market in its own favor. These clans clash, and the strongest
clan -- not the most competitive product -- prevails. It's like a sack race
-- where it isn't the fastest runner who wins, but the person who can run
best inside a sack. 
Finally, the modified mechanism of "plan deals" (where the object is no
longer directives on planned output, but tax and credit privileges) also
plays a substantial role.
Fourth, in a transitional economy, the redistribution of the rights and
objects of ownership, and together with that, of economic power, takes place
very quickly and on a large scale. Hundreds of billions of dollars have been
redistributed in the privatization process, and this redistribution makes up
the most important form of interaction of clan-corporate structures in Russia. 
As a result of this interaction, an economy like the Russian economy is
formed, where price liberalization has led to inflation and a decline in
production, where this decline in production and institutional chaos creates
the most favorable environment for the accelerated concentration of money
and property, and therefore, economic power, into the hands of a limited
circle of clan-corporations, while most workers have lost one-third of their
incomes, and virtually all of their savings, social protection, law and
order, and stability.

* * *
This paper's rather pessimistic conclusions should not be seen as evidence
that our economy has reached an absolute dead-end. 
First of all, in a few years, as the redistribution of property and power
is completed, the largest clan-corporate structures will still have to
modernize production, and will find the money (quite limited by Russian
standards, barely US$10 billion) for it. But this money will go, not to
modernize the economy as a whole, but only to certain spheres, for the most
part (if one proceeds from the "clans'" present structure), in the
raw-materials sectors. As for such areas as science, education, high
technology, etc., hopes that the "clans" will pay for their modernization
will remain unrealized.
Second, one can hope that the power of the clan-corporate groups in Russia
will be overcome through a qualitative change in property relations and the
political system -- a transition to a real democracy as a new form of
economic and political power -- which could serve as the prerequisite for
implementing a strategy for recovery. But this is already another subject.

Translated by Mark Eckert


The Economist
July 25, 1998
[for personal use only]
Russia’s farms 
A backbreaking job 
M O S C O W     
The reformers are a long way from improving Russian agriculture 

THE Belaya Dacha farm, about an hour from Moscow, is “probably the most 
efficient and most profitable farm in the region”, says one big 
customer. It has supplied McDonald’s fast-food restaurants in Russia for 
the past seven years. Its packaged salads fill the shelves of smart 
supermarkets. Its meat goes into the best local salami. And when a new 
government took office in the spring, the farm’s boss, Viktor Semyonov, 
became Russia’s agriculture minister. 
He grandly promised to “change things”—but may now have been in charge 
long enough to realise that one minister will probably not be able to 
change much. Russia will need decades to undo the damage done by decades 
of Soviet collectivisation. But, at last, some of the right noises are 
being made. Mr Semyonov has said that his ministry should “move from 
running a sector of the economy . . . to overseeing a market”. With 
luck, the market will eventually rescue Russian farming. 
Productivity on Russian farms remains abysmal—by one measure, a quarter 
of that achieved by Chinese peasants working in identical conditions. 
Marketing and financial management are scarcely attempted; nor, often, 
is the maintenance of equipment. Barter and bad debts are the currency 
of the industry. Few farms have paid cash for the seeds sown this 
Agriculture is managed so badly because the old collective-farm system 
has survived the collapse of communism almost intact. In 1990 Russia had 
27,000 state-owned and collective farms (the distinction meant little in 
practice). It still does, less a few hundred. Under 5% have made any 
attempt to reorganise their operations to take account of the new market 
economy. Most have become the property of their workers, but with few 
ways for workers to exercise the property rights they have acquired. 
Collectives can be broken up only by common consent. Federal law does 
not allow for the free sale of farmland. 
Some hope has been fostered by the rise of new private farms. Many have 
been created by workers breaking off parcels of land from collective 
farms, in regions where local law or practice has permitted it. The 
trend-setting region has been Nizhny Novgorod, where the International 
Finance Corporation, an arm of the World Bank, has been helping 
collective farms break up amicably and efficiently. But such schemes 
need lots of outside cash and expertise. Debts must be paid off, local 
authorities must agree to take over farm schools and clinics. Where such 
help is not available, the results from the new private farms are much 
less encouraging. Rarely are they more productive than the collective 
farms. By 1997, about 280,000 private farms had sprung up in Russia; 
but, for every 100 new farms registered, 96 were going bankrupt. 
Very small farms, created not by breaking up collective farms but by 
pooling family allotments, have done better. Even under Stalin, families 
were allowed to keep plots. Since 1991, their number has risen from 18m 
to more than 30m. The typical one is about 60 square metres (645 square 
feet) in size and produces fruit and vegetables. But neighbours can join 
forces to create mini-farms of two or three acres, capable of supporting 
livestock. According to Zhores Medvedev, a Russian scientist, these 
mini-farms and private plots account for half Russian meat production 
and a third of dairy products, though they occupy less than 5% of all 
farmland. The enthusiasm with which they are cultivated reflects low 
wages and lack of work elsewhere in the economy. A pensioner can triple 
his annual income by selling home-grown food. 
In strictly cash terms, Russia might be well advised to declare defeat 
on the big-farm front, scaling it back to the few regions in the 
south-west and around the big cities where it can be practised 
profitably, and buying more food more cheaply overseas. But politicians 
think food imports, a third of consumption, are already too high. They 
worry, too, about further depopulating the countryside. So Mr Semyonov 
probably hits the right note when he speaks of agriculture as a 
“strategic industry”, worthy of state help for that reason. Farms hold 
rural Russia together. If they could only produce food too, everybody 
would be happy. 


Fascist Group's Popularity, Ambitions Eyed 

Rossiyskaya Gazeta
July 10, 1998
[translation for personal use only]
Unattributed article in the Legal Impasse column: "They Are
Already Here"

What does the weak man dream of? Becoming strong. It is no
accident that the ideologists of the Russian National Unity (RNE)
movement and its leader, Aleksandr Barkashov, inculcate in their
supporters a love of "iron" discipline and paramilitary clothing and
suggest to them superiority to other people.
Since there has been no Communist Youth League, no one,
essentially, has been involved with youth in Russia. Economic
problems, miners' protests, the environment, demographics, whatever
you like, only not youth policy, are at the forefront today. It is
thought for some reason or other that it is easier for the young
than for anyone else to accommodate to market schemes and to take
care of themselves. And the times of lessons and instructions on the
part of their elders, many of whom have found themselves bankrupt
under the new living conditions, have gone forever, it is
Decades after the appalling carnage of World War II, the
dirtiest word on earth is becoming popular in Russia. The occupants
of the White House in October 1993 shouted at the special police
forces: "Fascists," and the crowd outside the Moscow City Council
building that had gathered in accordance with Gaydar's nighttime
appeal chanted: "Fascism will not pass!"
Today Hitler's "Mein Kampf" may easily be purchased at a book
bazaar. The stanch immunity to fascism that protected Russians for
many years has today been weakened.
The growing popularity of the RNE recruiting to its ranks
young people from the middle and lower strata of society is a
response to our myopia and irresponsibility. And national socialist
and fascist views are now being propagandized publicly, with banners
and the spread of the corresponding slogans and literature.
An oblast conference of the regional branch of the RNE was
held recently in Kaluga. It had everything--stiff-arm salutes, the
spider's symbol of the "solstice" 90 percent aping the swastika, and
angry heated speeches about the spread of the Russian idea.
Paramilitary organizations are strengthening not only in the
vicinity of Moscow. There are in the North Caucasus and on Sakhalin
also. Following the victory over fascism, an immunity to the
dreadful phenomenon, which resulted in the loss of tens of millions
of people, had been cultivated in our compatriots, it might have
seemed. Alas, the erosion of memory has led to the appearance of an
organization on whose banners calls for the incitement of racial and
national discord are inscribed.
What is most paradoxical is that the RNE has no right to
exist: This public association is not registered with the Russian
Federation Ministry of Justice. The Ministry of Justice has twice
already denied the RNE official registration, and the
representatives of Barkashov's party are doggedly trying to get
their way, applying to the court. At the start of this year the
Taganskiy Intermunicipal Court dismissed Russian National Unity's
suit, deeming the Ministry of Justice's decision lawful.
There is a simple explanation for RNE members' increased
activity: Russia's nationalists are straining after power, and it is
best acquired by the parliamentary route. There is an example that
they can follow: this was how Hitler acquired power. This is how the
ultranationalist Le Pen entered France's National Assembly.
The RNE has essentially already begun the campaign for seats
in the State Duma. There will probably forces that will support the
association. For the Barkashovites patrol the electric commuter
trains, can take in hand merchant newcomers from the south, and are
keeping an eye on order in municipal parks of culture and rest. Many
people like this.
Today the Barkashovites are acting openly, aggressively,
confidently. Just try calling an RNE supporter a fascist in the
newspaper--the journalist is dragged around the courts and has to
apologize in the press. There is no law on fascism in Russia. And
while the learned gentlemen are attempting to define what precisely
fascism is under modern conditions, they, the black shirts with the
"solstice," are already here, among us.


'Unprecedented' Security Surrounds Yeltsin Karelia Stay 

Komsomolskaya Pravda
21 July 1998
[translation for personal use only]
Report by Igor Chernyak: "While Yeltsin Is Vacationing, the
Chupa Border Guards Are Hard at Work. Unprecedented Security
Measures Adopted on Occasion of President's Arrival in Karelia"

According to sources in Karelia, hundreds of servicemen have been
redeployed to guard the repose of the country's beloved president: In the
woods there, 300 km from the state border, soldiers and officers of the
Border Troops have been placed in ambushes and patrols; they are backed up
by Internal Affairs Ministry and Federal Security Service staffers, and at
the last line the "body" is guarded by Yuriy Krapivin's disciples from the
Federal Protection Service. People have been put in charge of fishing,
hunting, tennis, and other small pleasures -- no unfortunate mishap must
spoil Ye.B.N.'s [Boris Nikolayevich Yeltsin's] rest, no matter how much
effort or funds this might require.
From whom is the leader being protected so heavily? Why? What for? 
Rumors of a coup seem to have subsided, or perhaps the guards know better,
and a second Foros is after all looming on the horizon?
The authorities in a number of other Russian regions are also on the
alert: Who knows, what if the president suddenly decides to pay visits to
them too? Here too the officials' servility is truly boundless.
In Murmansk Oblast the wives of naval seamen are imploring Yeltsin to
come either as soon as possible or else in the fall: In expectation of the
president's possible visit to the cruiser Petr Velikiy, their husbands are
not being allowed to take leave. "Not only are our children deprived of
sunshine, we now also have to cope with these senseless bans," they write
to Komsomolskaya Pravda.
The streets in Novgorod, where Boris Yeltsin may also pop in, are
being meticulously swept. And in Saratov Oblast, on the banks of the
Volga, the reconstruction of the Tantal Tourist Base, which Governor
Ayatskov has decided to turn into a presidential residence, is proceeding
with the greatest possible speed. There is only a one in 100 chance that
Boris Yeltsin may find time to visit the "remote corner -- Saratov" but,
all the same, hundreds of workers plus military school cadets have been
rushed to the "construction project of the century." Foreign furniture is
being purchased, building materials are arriving from Germany, Italy, and
Finland, and special barges are even delivering fluvial sand. According to
tentative estimates, a total of several tens of millions of rubles from the
oblast's meager budget will be spent on all those things -- just to make
sure that the Boss is pleased with Comrade Ayatskov.
"Condition one readiness" has been declared in Samara Oblast too. It
is most unlikely that the high-ranking guest will turn up there, but if he
does, the Volzhskiy Utes government sanatorium and the Okhotnichiy Domik
residence will be ready to instantly open their arms wide to welcome the
president and his large entourage.



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