July 31, 1998   
This Date's Issues: 2291 • 2292 • 

Johnson's Russia List
#2292
31 July 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Economics not only cause of shorter Russia lives.
2. Douglas Merrill: Re Baltic Challenge 98 (NATO exercise).
3. Karen Segar: Re Ulsaker: Mike Snow's Piece Response. (Russian 
women), etc.
4. Mark Temperley: re lindalucia green's comments.
5. Jamestown Foundation Monitor: RUMORS OF GOVERNMENT SHUFFLE PERSIST.
6. Reuters: Yeltsin thanks Russian debt negotiator Chubais.
7. RIA Novosti: ALEKSANDR SHOKHIN: IT WOULD BE LOGICAL IF ANATOLY 
CHUBAIS HAS BEEN APPOINTED FIRST VICE-PREMIER.
8. Rossiiskaya Gazeta: Andrei Shcherbakov, TAMING RUSSIA'S LEADERS: 
THE BIG-TIME ELECTION GAME. Business Tycoons Lavish Money on Local 
Politicians.
9. The Economist: Russian economy. What bail-out? 
10. The Economist letter: Reforming Russia.
11. Moscow Times: Konstantin Preobrazhensky, A New Era for the FSB.
12. Russky Telegraf: Semyon Novoprudsky, RUSSIA FACES CHOICE OF 
ECONOMIC STRATEGY.
13. Reuters: Russia govt sees anti-Nazi law passed within month.
14. Financial Times: Lex, Boris a-borrowing.
15. Washington Times: James Morrison, No Ukrainian threat.]

*******

#1
Economics not only cause of shorter Russia lives
By Patricia Reaney

LONDON, July 31 (Reuters) - The life expectancy of the average Russian fell by
more than six years in the early 1990s because of social factors, crime,
income inequality and vodka, public health experts said on Friday. 

While health has improved markedly in Poland and the Czech and Slovak
republics since the start of the decade, the dramatic decline in Russia is
unprecedented, there and in other industrialised countries. 

``All of the former Soviet Union has demonstrated a broadly similar pattern,''
Professor Martin McKee, of Londons European Centre on Health of Societies in
Transition, said in an interview. 

McKee, along with colleagues in Sweden and Russia, examined the socio-economic
factors of Russian's transition from a socialist to market-led economy to
discover why it had been accompanied by such a severe decline in health. 

In a study published in the British Medical Journal they found that the
greatest falls in life expectancy had been in some of the wealthiest regions
of the country, suggesting that there was more to the matter than poverty. 

Between 1990 and 1995 life expectancy fell by 6.3 years for men and 3.4 years
for women, and though the trend started in the late 1980s, 1992 was a
particularly severe year. 

``The regions with the largest falls were predominantly urban, with high rates
of labour turnover, large increases in recorded crime, and a higher average
but unequal distribution of household income,'' the researchers wrote. 

Most of the fall in life expectancy was due to more deaths of people aged
between 30 and 60 years old and the major contributing factor was heavy
consumption of alcohol. Deaths of children or the elderly did not contribute
to the change. 

The researchers found that diet and smoking, which played a crucial part in
the long-term trend, could not account for recent changes, nor could the
deterioration of the health-care system. 

``There is a whole chain of causation. What we have tried to do in the paper
is say you've got to look at the socio-economic factors but then you also need
to look at the immediate factors. Alcohol comes in as a major factor as the
final link in the chain,'' McKee explained. 

The researchers concluded that the rapid pace of change, low social cohesion
and inequality lead to a decline in health, which in Russia is worsened by
alcohol consumption. 

``It is not just impoverishment and we shouldn't depend on economic recovery
in Russia to bring about improvements in health. We need to look at other
factors such as instability, fear of change, change itself and crime as a
marker for a certain social cohesion,'' McKee said. 

``It may be that you can intervene at a number of points and you don't just
have to wait for economic recovery.'' 

*******

#2
From: merrilld@mindspring.com (Douglas Merrill)
Date: Fri, 31 Jul 1998
Subject: Baltic Challenge 98 (NATO exercise)

Here is a different take on Baltic Challenge to contrast with the one
published from Rossiiskaya Gazeta in JRL 2290, showing the importance of
considering non-Russian views of these matters.
best,
Douglas Merrill
Univ. of Munich

II. INTERNATIONAL RELATIONS
FOUR PRESIDENTS MEET AT CLOSE OF BALTIC CHALLENGE '98 MILITARY EXERCISE
IN KLAIPEDA

The closing ceremony of Baltic Challenge '98 held last Saturday in
Klaipeda was attended by Lithuanian President Valdas Adamkus, Estonian
President Lennart Meri, Latvian President Guntis Ulmanis and Polish
President Alexander Kwasniewski. The Baltic Challenge exercises were held
over the past two weeks in the Klaipeda district and in the Baltic Sea
and involved 5,000 troops from 11 countries.
In his address to the assembled troops, President Adamkus termed Baltic
Challenge '98 a significant phase in the process of strengthening
security in the Baltic Sea region and Europe as a whole. Adamkus declared
that the exercise was an historical event for all the countries of the
Baltic Sea which seek to contribute to the establishment of a European
collective security system.
Recalling the international exercises which took place in Latvia two
years ago, President Ulmanis noted the enhanced professionalism of the
troops and their ability to adapt to NATO standards. "This reflects the
determined efforts of the Baltic states to build their defence structures
in concert with other states," Ulmanis said.
Speaking about the importance of the Baltic countries to collective
security, Polish President Kwasniewski once again supported their
aspirations to integrate into the European Union and NATO. Kwasniewski
noted the significance of Baltic Challenge '98 for establishing new civil
security mechanisms. At the same time, the Polish President stressed the
role of Russia and called on this country to take a more active part in
similar exercises.
The four presidents issued a communique which stated that Baltic
Challenge '98 effectively contributed to trans-Atlantic security and
stability and was not directed at other countries. They invited all
interested countries to join in other Partnership for Peace exercises
which will occur in the Baltic states. President Adamkus was asked by
journalists if inviting CIS countries to participate in international
military exercises in the Baltic states would not contravene Lithuanian
laws which prohibit CIS military forces from taking part in such
exercises on Lithuanian territory. Adamkus replied that he did not
exclude the possibility of correcting these laws. "There is no need to
cut anybody off," he said.
According to Kwasniewski, the European Union and NATO are open to all
countries. "Our aim is to ensure that the views of the Baltic states
should also be heard," declared Kwasniewski. Every country has the right
to take independent decisions affecting its security and Poland is
morally obligated to remember its neighbors. (Lietuvos rytas July
27)[translated by the Lithuanian Foreign Ministry, distributed by
Lithuanian Embassy to the USA]

*******

#3
Date: Thu, 30 Jul 1998 
From: Karen Elise Segar <ksegar@indiana.edu>
Subject: Re: Ulsaker: Mike Snow's Piece Response. (Russian women), etc.

I've found much of the tone and content of this discussion to be too
colored by personal experience (as Lucialinda Green has already pointed
out) to warrant serious attention, but I find the subtext of Tate
Ulsaker's response to Mike Snow's piece on Russian women to be too
disturbing to let pass without comment.

The first thing he states is that feminism has nothing to offer in Russia. 
Then he goes on to mention Russian men's violence against women. If only
to address this particular problem, I would say feminism has a lot to
contribute to Russian society. But almost as alarming as the mere fact of
violence against women in Russia is Ulsaker's preference for this
society over that in the US, where gender roles are supposedly warped by
feminism. His reasoning can be boiled down to this: men are more brutal
to women in Russia, so I, as a non-brutal male, will be treated like a
king there. The cross-cultural and gender exploitation in this type of
thinking is appalling.

I also take issue with the notion that feminism can never take hold in
Russia. Feminism didn't happen overnight anywhere. Contrary to the
impression that has been left by Snow and Ulsaker, some Russian women and
men do take issue with the current state of gender relations and use a
feminist framework to interpret it and guide their efforts to change
society (see, for example,
http://www.russ.ru/journal/media/98-03-27/ushak.htm). Of course Russian
feminism has its own flavor. I doubt that the etiquette of chivalrous
door-opening and parcel-carrying will come under attack. As Elena
Kochkina, a women's activist in Moscow, once remarked to me, "I have
nothing against a man holding my coat for me, as long as it doesn't mean I
have to do the dishes."

Far from the "we like our men just the way they are" sentiment Snow found,
I have heard rather disparaging comments from Russian women about Russian
men. I once remarked to a student of the Higher Women's Courses at Ural
State University that my American male friends in Ekaterinburg were
constantly asked, "So how do you like our women?" but nobody ever asked me
how I liked Russian men. Of course she asked, but before I could find the
words to phrase my answer diplomatically, she said, "Well we think they're
egoists."

Ulsaker complains that in the US "men are asked to be the impossible
combination of woman and man at the same time." Historically, women are
more often called upon to expand their gender role to include functions
formerly reserved for men. Several Russian women have told me they think
this kind of flexibility allows them to adapt better to social change. It
can be argued that men's confinement to the provider role is a threat to
their identity when economic conditions make it impossible to fulfill the
expectations of the traditional male role, while women have their role as
nurturer to sustain them through times of economic crisis. Their
self-worth does not depend so heavily on occupational and economic status. 

A society where "men can be men and women can be women," with perfectly
complementary and interdependent roles, is unrealistic. Even if we could
agree on a definition of masculinity and femininity, which are highly
variable by culture and time, conditions would eventually change such as
to make that arrangement unworkable. Personally, I would rather live in a
society where I could value a generally desirable trait in someone
regardless of how many X chromosomes they have.

Karen Segar
Department of Sociology
Indiana University

*******

#4
Date: Fri, 31 Jul 1998 12:59:07 +0200
From: Mark Temperley </G=MARK/S=TEMPERLEY/OU=VAX/@tetrapak.400NET.tip.net>
(Tel +7 095 960 2658)
Subject: re: lindalucia green's comments

Dear David, Lindaluci Green, Jenni Bennet, , 

I'm sure I speak for most readers of DJ's list when I say I'm bored with the
banal comments expressed by Miss Green and Miss Bennet. The facts as expressed
so well by Mike Snow are simply this - American men are fed up with American
women and having read the comments by Miss Green and Miss Bennet, I can very
well understand why. Like most foreigners in Russia I find Russian girls to be
attractive and refreshing. Can we now drop the issue or are we going to have
another prolonged EXILE style correspondence from lots of ideologues who really
should be doing other things?

*******

#5
Jamestown Foundation Monitor
July 31, 1998

RUMORS OF GOVERNMENT SHUFFLE PERSIST. The appointment of former Gosplan
chief Yuri Maslyukov to the government as Minister of Industry and Trade has
upset many. The leadership of the Communist Party, to which Maslyukov
belongs, are angry that he accepted the job, since they had ordered him to
turn it down. They are now threatening to expel Maslyukov from the party.
This is unlikely to happen because a number of Maslyukov's party comrades
support his decision and the leadership will want to avoid a split in the
party ranks. (Itar-Tass, July 24) 

Economy Minister Yakov Urinson is equally upset. He has threatened to resign
if Prime Minister Kirienko agrees to Maslyukov's six conditions for joining
the government. These include Maslyukov's being given oversight of both the
distribution of investments by tender and the military-industrial complex,
with which Maslyukov has long associations. Maslyukov has, moreover,
appealed over Kirienko's head to President Yeltsin directly, the kind of
action for which a minister in any normal cabinet would find himself fired.
(Kommersant-Daily, July 29; Itar-Tass, July 30)

Instead, Kirienko is said to be thinking of bringing a new heavyweight into
the government to place between himself and Maslyukov. This accounts for the
persistent rumors that Anatoly Chubais may be brought back into the
government. State Duma Deputy Speaker Aleksandr Shokhin yesterday told
journalists that he expected the post of first deputy prime minister,
abolished when the last government was last shuffled in March, to be
re-introduced and given to Chubais, Yegor Gaidar or Aleksandr Livshits.
Shokhin said the rationale for creating such a high-ranking post would be to
bring into the government whoever is entrusted with negotiations with
international financial organizations such as the IMF and the World Bank. At
present, this is Chubais, who also has a "civilian" job as chairman of
Russia's electricity monopoly. Speculation was fueled by an announcement
that President Yeltsin would meet with Chubais today to discuss Russia's
implementation of the IMF-agreed program of economic reform. (RTR, July 30)

*******

#6
Yeltsin thanks Russian debt negotiator Chubais

MOSCOW, July 31 (Reuters) - President Boris Yeltsin praised his chief debt
negotiator Anatoly Chubais on Friday for securing new foreign credits that
have eased Russia's financial problems, the Kremlin press office said. 

Confirming news agency reports, a Kremlin spokesman said Chubais, ousted as
first deputy prime minister in March, briefed Yeltsin in detail during three
hours of talks at his Gorky-9 residence outside Moscow. 

Chubais reported on his negotiations with international lenders who, led by
the International Monetary Fund, offered $22.6 in credits this month to see
Russia through its financial crisis. He also discussed how the government was
implementing the conditions of the loans. 

Yeltsin, the Kremlin said, had noted that the negotiations had been difficult
and that he himself had had to press his allies among Western leaders to
secure the funds. 

"Boris Yeltsin gave a positive assessment of the results of the activities of
his special representative (Chubais)," the Kremlin spokesman said. 

There has been speculation that Chubais, architect of privatisations in the
early 1990s and a hate figure for communists, could make a comeback in a
cabinet reshuffle. 

Chubais said officials were ready to brief IMF deputy managing director
Stanley Fischer, who arrived in Moscow for two days of discussions on Friday
on the next tranche of IMF loans. 

Yeltsin praised the government and central bank for the way they calmed
tensions on the Russian financial market last week. 

Chubais briefed the president on the so-called Zadornov-Dubinin plan -- named
after Finance Minister Mikhail Zadornov and central bank chairman Sergei
Dubinin -- which is designed to ensure Russia keeps to its debt servicing
commitments this year. 

It includes a sharp reduction in foreign borrowing and a tightening up on tax
collection. 

Interfax news agency quoted unnamed sources as saying that they doubted there
would be a proposal to bring Chubais back into the government at Friday's
meeting with Yeltsin. 

Russian media have speculated that Yeltsin, who returned early from a holiday
on Wednesday, would discuss appointing a deputy prime minister in charge of
macroeconomics. 

The Sevodnya daily said there were rumours that Deputy Prime Minister Viktor
Khristenko would soon be removed from his post, and that he would be replaced
by either Chubais or leading liberal parliamentarian Grigory Yavlinsky. 

The Kommersant business daily said on Thursday that Prime Minister Sergei
Kiriyenko wanted Chubais for the post but that Yegor Gaidar, who headed the
first 1992 reformist government, was a leading contender. 

It said presidential economic adviser Alexander Livshits and State Duma lower
house of parliament deputy speaker Alexander Shokhin were also candidates. 

******

#7
ALEKSANDR SHOKHIN: IT WOULD BE LOGICAL IF ANATOLY CHUBAIS
HAS BEEN APPOINTED FIRST VICE-PREMIER
MOSCOW, JULY 31. /FROM RIA NOVOSTI CORRESPONDENT/-- If
Anatoly Chubais is appointed first vice-PREMIER, it would be
logical. This was stated by leader of the Duma faction of the
Russia is Our Home /NDR/ movement Aleksandr Shokhin. "This is

not normal, when a person who is negotiating with international
financial institutions on behalf of the Russian government is
not a member of the Cabinet," Shokhin said in a live interview
with the Ekho Moskvy radio-station. According to Shokhin, the
man holding talks with the Interventional Monetary Fund should
be responsible for both [Russian] economy and finance as it
always existed in the Russian government. 

******

#8
>From RIA Novosti
Rossiiskaya Gazeta
July 31, 1998
TAMING RUSSIA'S LEADERS: THE BIG-TIME ELECTION GAME
Business Tycoons Lavish Money on Local Politicians
By Andrei SHCHERBAKOV

The financing of this country's political parties and
movements is still seen as a great big secret. The Russian
Justice Ministry has now started actively re-registering all
parties that would like to take part in the 1999 parliamentary
elections. Consequently, this issue has now riveted the public
eye. Indicatively enough, but various State Duma members
representing Russia's leading parties have recently approved a
set of amendments to the federal Law "On Public Associations";
such amendments deprive all professional, ethnic, racial or
confessional organizations of the right to take part in
elections. This would apparently make it possible to cut off
all exotic parties, which are seen as something attractive by
the underworld (that wants to reach into high places). It
ought to be mentioned here that the Russian Party, the Party
of Beer-Lovers and the Union of Municipal Utilities Workers
were particularly active in this respect during the 1995
parliamentary elections.
The Duma has been working on the political parties bill,
which would encompass all the most important parties in line
with the Central Election Commission's standards for too long.
This hesitant attitude is quite understandable because no one
wants to ensure the transparency of partisan budgets, as such
transparency would expose some utterly unexpected funding
sources, which don't tally with party leaders' public
statements.
However, most partisan leaders keep saying that they have
no financial problems, and that their parties boast powerful
sponsors; nonetheless, they fail to mention such sponsors in
most cases. For instance, Sergei Shakhrai didn't conceal the
fact that he has found some new sponsors for his party during
the latest congress of the Party of Russian Unity and Accord
(PRES). Shakhrai also added with a smile that Chernomyrdin and
Luzhkov are just about the only ones, who so far didn't set
aside money for the party's revival.
Still we have failed in our efforts to find any other
evidence of PRES' improved financial standing. Shakhrai's
party has a long way to go, if wants to match the Liberal
Democratic Party of Russia (LDPR), which tops the list of all
political organizations of present-day financial mess and
legal muddle domineering in the political life of the state.
Since the very beginning, the LDPR had staked on
close-knit cooperation with all conceivable businessmen.
Zhirinovsky's crony Zhebrovsky had suggested a concept late in
1992, viewing the LDPR as a veritable political-economic
entity buttressed with a rather impressive material base. The
party had scored an impressive success during the 1993
parliamentary elections, thereby making it possible to
translate Zhebrovsky's concept into life.
According to some estimates, the LDPR now boasts real
estate and other property to the tune of $80-100 million;
incidentally, a considerable share of such property is held by
Zhirinovsky, his relatives and cronies. The property is being
managed in a very obscure manner; consequently, Zhirinovsky
was even invited for a chat to the State Tax Service by its
top executives.
The LDPR maintains close contacts with businessmen; and
this is proved by the fact that quite a few middle-of-the-road
entrepreneurs take an active part in partisan affairs. For
example, Mikhail Sadykov, president of a children's
Greco-Roman wrestling club, used to serve as LDPR regional
organisation coordinator in Omsk some time ago. Sadykov also
used to operate a fixed-route taxi fleet, engaging in vodka
sales, too. However, the local vodka mafia, which didn't
sympathize with liberal-democratic ideas, had issued a
contract on Sadykov. Meanwhile local analysts are sure that
the LDPR will manage to find yet another coordinator with
entrepreneurial flair in Omsk.
Naturally enough, the management of such a mighty
political-economic entity requires tough financial control
from the center. This is proved by the latest Samara scandal.
The LDPR leadership claims that party coordinator Ivan Maslak
was relieved of his duties for embezzling money out of the
partisan treasury. However, many Samara residents are positive
that Maslak has fallen out of favor just because of his
excessive activity and independence in search for new
sponsors; and the same can be said about his business
operations.
It's already an open secret that the budgets of leading
Russian parties are being formed as a result of cooperation
with big-league banks and companies. We give money to
everyone, a spokesman for a bank, which ranks among the top 10
Russian banks, openly told me. In his words, the bank doesn't
subsidize members of Barkashov's movement, Anpilov's
supporters and those remaining "democratic schizoids" because
all of them don't have any real plans for making it into the
Duma. But we're going to help them, in case such plans are
conceived, he added.
Such cynical logic is quite understandable. Those
specific banks and companies, which help political parties,
hope that their deputies won't let them down at a time of
trial. However, I'd like to repeat once again that Russia
still lacks a law for regulating such sponsorship. Such a law
won't apparently be approved in the foreseeable future.
Consequently, it's pretty hard to prove various facts of the
parliamentary lobbying practice. But why have so many deputies
(mostly those from opposition parties) rejected the
Government's proposal to drastically increase gambling tax?
Why do many deputies oppose the approval of a bill dealing
with people's moral health and stipulating state control over
those huge incomes of shady porno-business barons? These are
very good questions, indeed. 
Big-time capital keeps sponsoring partisan budgets all
over the world; and this is seen as standard practice.
However, we have managed to expose yet another unusual
fund-raising method, i.e. the sale of ID cards of State Duma
deputies' public assistants. This method was also authored by
the LDPR, which is an absolute leader in terms of its
deputies' assistants, who are directly linked with the
underworld and who have fallen prey to gangland wars. All
other parties cooperate with their prospective helpers in a
more prudent manner and are not usually involved in any
serious scandals whatsoever.
The glitter and pseudo-poverty of partisan life prompts
one to ask yet another simple question: Why don't Russian
parties use other means (except anonymous sponsorship) of
replenishing their respective budget, e.g. membership dues,
the partisan press, celebrations and festivals?
Membership dues account for an insignificant share of
Russian parties' budgets. Even the Communist Party of the
Russian Federation (CPRF), which possesses the most ramified
territorial chapter chain, uses its membership dues to form
just 15-20 percent of the entire partisan budget. Partisan
press is also seen as a loss-making venture because not a
single party has so far managed to set up its own massive
popular paper.

********

#9
The Economist
August 1, 1998
[for personal use only]
Russian economy 
What bail-out? 
M O S C O W     

DID anyone notice the IMF’s bail-out of Russia? Barely two weeks after 
the first dollops of western cash started to fill Russia’s coffers, 
short-term interest rates were again hovering around 70%, 
dollar-denominated bonds were at all-time lows and the equity market had 
fallen back to its pre-rescue level. 
If nothing else, the $22 billion bail-out gave the government the chance 
to procrastinate. Announcements—for example on a new policy on 
short-term debt—were promised but postponed. A big gathering of foreign 
investors on July 30th heard some encouraging noises, and the usual 
cheerful promises—but even the most optimistic see plenty of bumps in 
the road ahead. 
The most pressing financial question is how to deal with around $24 
billion in short-term debt falling due by the end of the year. None of 
the options looks appealing. A devaluation is seen as politically 
impossible. Refinancing the debt by borrowing abroad (a centrepiece of 
the original bail-out plan) has fallen foul of international investors’ 
mistrust: spreads on Russian eurobonds are now a staggering 11 
percentage points over American Treasuries. “Even the word that we were 
prepared to take money at this rate would lead to further 
destabilisation,” says Anatoly Chubais, the government’s top financial 
negotiator. Asset sales—such as a plan to sell 5% of gas giant 
Gazprom—make good headlines, but are tricky to pull off in the current 
dismal climate. 
A forced rescheduling for domestic investors looks inevitable. The 
central bank and Sberbank, the main savings bank, between them hold 
around half the outstanding short-term debt. If the government asks, 
both will agree to extend the maturity of their loans, giving the 
government a little more time to persuade the rest of the world to start 
investing again. 
Leaving aside the question of how rescheduling your debts can improve 
your credibility, Russia’s financial future still looks dreadfully 
precarious. The government’s attempt to close the most crucial gap in 
its finances, by raising taxes more sensibly and equitably, seems to 
have lost momentum: in a face-to-face confrontation, Rem Vyakhirev, the 
head of Gazprom, is said to have chastised the 35-year-old prime 
minister, Sergei Kiriyenko, for trying to squeeze more money from his 
company with the words: “Who do you think you are speaking to me like 
that? You’re just a little boy.” Much of the government’s anti-crisis 
package, such as a 3% import surcharge and discretionary taxes on small 
firms, is hardly the stuff of liberal reform. 
None of this, however, deterred the Chicago Board of Trade, the world’s 
biggest futures exchange, from signing a deal this week to create a 
derivatives market in Russia wth the Moscow Stock Exchange. Cliff Lewis, 
the CBOT’s vice-president, says: “We like volatility.” If the past 
fortnight is any guide, he will not be disappointed. 

*******

#10
The Economist
August 1, 1998
Letter
Reforming Russia 

SIR—You imply that there are only two choices for policy towards Russia 
(July 11th): either support Boris Yeltsin or face a fascist regime. The 
West is repeating an old error. In 1990-91, when Mikhail Gorbachev’s 
government was about to fall, the West supported it, fearing and 
distrusting Mr Yeltsin. Now the West is putting all its eggs in Mr 
Yeltsin’s basket, fearing a change of government in Moscow. This is 
sterile thinking. Reform will not happen without trust and a bit of 
honesty. The current financial crisis is due to a lack of trust which 
has prompted a capital flight. 
Political change in Moscow is coming. Regional leaders, some big 
businessmen and the opposition in parliament want early parliamentary 
and presidential elections. The West fears ideological change in Moscow. 
The current crisis is not ideological, but ethical. That is why IMF 
Credit is not the solution. 

YURI GORBANEFF 
Bogota, Colombia 

******

#11
For more articles from The Moscow Times, check out their website at
www.moscowtimes.ru

Moscow Times
July 31, 1998 
A New Era for the FSB 
By Konstantin Preobrazhensky
Konstantin Preobrazhensky is a former KGB lieutenant colonel. He 
contributed this comment to The Moscow Times. 

The dismissal of Federal Security Service director Nikolai Kovalyov and 
the false praise heaped on the outgoing minister reminded me of former 
Prime Minister Viktor Chernomyrdin's dismissal. The similarities are not 
coincidental. 

Kovalyov was appointed by Chernomyrdin, who was known for his sympathies 
toward the Communists. The Yeltsin administration's efforts to rid 
itself of the last representative of Chernomyrdin's ousted Cabinet is 
the primary, hidden reason for Kovalyov's dismissal. 

It is also possible that with his appointment of Vladimir Putin as the 
new FSB director Yeltsin is hoping to reduce the Communists' influence 
on Lubyanskaya Ploshchad in the runup to the presidential elections. 

But the FSB is not the military, and its director is completely 
dependent on the opinions of its officer corps. If he begins to express 
democratic or pro-Western views, they will simply alienate him as was 
the case with Yevgeny Savostyanov. Until now the only democrat to ever 
get into the KGB since the 1991 putsch, Savostyanov was eventually 
forced out of his post as head of the FSB's Moscow division. 

>From the day of his appointment, the chekists continually declared that 
"Savostyanov is not one of us." Today, Savostyanov coordinates the power 
structures for the presidential administration and could very well have 
been named to the post of FSB director. But the Lubyanka apparatus still 
harbors a sacred hatred toward him, associating Savostyanov with 
Yeltsin, Gaidar, Burbulis and the other democrats who destroyed the 
Soviet KGB. 

And although Putin is himself from the FSB's ranks, when Prime Minster 
Sergei Kiriyenko presented him to the FSB board, its members simply 
grinned in displeasure. Putin is from the Leningrad KGB directorate, and 
today's FSB is run by the Moscow clan, which is made up of Kovalyov's 
cronies from the Moscow FSB directorate. 

The Moscow directorate has always been considered third rate and was 
never included in the KGB's central apparatus. And although situated 
right at Lubyanka, it has always been considered provincial. Its 
officers always received fewer benefits than we first-class intelligence 
and counterintelligence officers received. 

Even its operations were of a lower degree of urgency because all the 
interesting cases were taken over by the central apparatus, leaving the 
poor Moscow chekists with nothing to do but pull spies out of a hat. 

However, the coups in 1991 and 1993 discredited the KGB's upper 
echelons, and the third-rate Moscow directorate moved up to become 
Russia's premier directorate -- but without the qualifications it 
needed. 

The quality of work at the FSB fell dramatically while Kovalyov was at 
the helm. It was during his tenure that the service began its attacks on 
environmentalists and mentally deranged spies like the diplomat Platon 
Obukhov began to appear. 

During the personnel deficit of the 1990s, Kovalyov rose to the position 
of deputy chief of the Moscow FSB directorate. He remained true to his 
communist ideals, and when giving newspaper interviews he has always 
emphasized his pride in having defended communism at the infamous Fifth 
Directorate. 

This would be tantamount to the current chief of German 
counterintelligence expressing approval of the Gestapo's activities. 
Imagine the fury it would cause in the world press. Our own Russian 
press should be stirred up over Kovalyov's remarks, but it is silent. 
They see nothing threatening in Kovalyov's words, as if they've 
forgotten how the Fifth Directorate once controlled the press. 

Kovalyov's FSB rule was the rule of a Communist who had broken into the 
upper echelons of power and was dedicated completely to the return of 
Soviet order. 

It was characterized by anti-Western spymania; encouragement for 
friendly communist countries like North Korea and for Iraq; arrests of 
environmentalists; the establishment of a cult of secrecy; sealing up 
archives that reveal communist crimes during the Soviet period; the 
beefing-up of the law on state secrets and lobbying for a law on 
espionage that would define spying as any cooperation with a foreign 
organization; attempts to gain control of Western business in Russia 
under the false pretense of defending it from the mafia and the creation 
of a reactionary union with President Alexander Lukashenko's KGB in 
Belarus -- the first step in the communist dream of merging with the 
totalitarian Belarus regime. 

It was no accident that Viktor Ilyukhin, chairman of the State Duma's 
security committee, expressed unconcealed remorse over Kovalyov's 
departure on behalf of the Duma's Communist faction. Kovalyov did not 
hesitate to name former KGB chief Viktor Chebrikov as his official aide. 
He was one of the darkest figures from the Andropov period. Chebrikov 
persecuted dissidents, vehemently hated the bourgeois West and was a 
fanatical proponent of communism. 

But none of this has disturbed the government, which has eloquently 
declared its attitude to the FSB by continually delaying its salaries. 
After all, it has its own, truly devoted FSB -- the presidential 
security service. 

No complaints about salary arrears are ever heard coming from there. And 
the presidential security service is significantly higher in stature 
than the FSB. There is only one thing that has the government worried -- 
the possibility that the FSB could revolt and side with the military in 
the case of a military coup. For its other business, the government does 
just fine without the FSB. 

Vladimir Putin's appointment as director is an indication of three 
specific things: that Yeltsin is planning to run for a third term, that 
he doesn't trust the FSB and that he is very fed up with the Communists. 

******

#12
>From RIA Novosti
Russky Telegraf
July 31, 1998
RUSSIA FACES CHOICE OF ECONOMIC STRATEGY
By Semyon NOVOPRUDSKY

By all appearances, an ordinary inter-departmental war
has begun in the Russian Government. The newly-created
Ministry of Industry and Commerce is trying to take over from
the Economics Ministry the main powers (from the viewpoint of
financial and political influence in the country). The latter,
naturally, does not want to give them away.
Prime Minister Sergei Kiriyenko knew what he was doing
when he insisted that Yuri Maslyukov be appointed Minister of
Industry and Commerce. The only communist member of the
Russian Government, he demanded that his ministry have control
over the defence sector, form and place the state order,
oversee arms exports and formulate foreign trade policy. If he
is not given these powers, Maslyukov will quit the Government
forthwith.
In reality, more important things are happening in the
Russian government than inter-departmental struggle or a
personal standoff between Yuri Maslyukov and Yakov Urinson.
These two ministers symbolise conflict between two
fundamentally different economic strategies, one of which the
Government now has to choose.
Maslyukov is a representative of the "party of
stagnation". He and his followers want to keep the country's
production and financial potential basically unchanged and to
prevent new deep structural reforms. If they prevail, the
state will receive power to keep things as they are and try to
prevent social unrest. Inviting Maslyukov to the Government,
Kiriyenko wanted to curry favour with top managers of the
depressed sectors of the Russian economy. 
Urinson is an activist of the "party of economic growth".
Since 1992 his associates have determined Russia's economic
strategy. This group wants to accelerate reforms as much as
possible, leaving the state a minimum of economic functions,
leap over the critical phase of the reform and create
conditions for the beginning of sustained economic growth.
Their job is akin to that of the field engineer: they must
defuse as soon as possible the mines of state debt, poverty
and industrial recession.
It is clear that the time has now come for Russia to
choose between the two development strategies. To patch up
holes in the budget, the Kiriyenko Government will have to
build up fiscal pressure on economic agents, that is increase
the role of the state in the economy and thus bring grist to
the mill of the proponents of stagnation.
On the other hand, owing to his age and connections in
government and economic circles, Kiriyenko may count on a
successful completion of economic liberalisation. Boris
Yeltsin counts on this too. That is why all talk about the
possibility of Anatoly Chubais and Yegor Gaidar,
representatives of the "mine-clearing party", being appointed
vice-premiers.
Faced with the crisis, the Russian leadership has to make
a strategic choice of the country's economic development
during the next 5 to 10 years. Both strategies have its merits
and flaws. A "liberal breakthrough" will precipitate economic
growth, while the policy of stagnation ensures the status quo,
which is not unimportant at the time when many gloomily
predict the restoration of the late Soviet regime.
Yuri Maslyukov's appointment is a sign of a very likely 
return of the state to the economy, but it's hard to say
whether the "Maslyukov line" becomes the general line of
Russian economic policy in the next few years or not.
Kiriyenko's headache, caused by the need to choose between
Maslyukov and Urinson, is the headache of the entire Russian
bureaucratic system, which is trying to survive in the harsh
conditions of reforms.

*******

#13
Russia govt sees anti-Nazi law passed within month

MOSCOW, July 31 (Reuters) - The Russian government, alarmed at what it sees as
a rise in neo-fascist political tendencies, expects parliament to ban Nazi
symbols and propaganda before the end of August, the justice minister said on
Friday. 

Pavel Krasheninnikov told a news conference party leaders had already
indicated they would pass the law, agreed at a cabinet meeting on Thursday, at
a special mid-vacation session which is intended principally to debate
austerity measures. 

The Communist-led State Duma lower house has yet to confirm it will return
from holiday to debate tax and other bills ministers say are needed to stave
off financial crisis and meet conditions set by Western creditors. 

Last month, President Boris Yeltsin warned that, half a century after more
than 20 million Soviet people died in the war against Nazi Germany, Russian
youngsters were being drawn to neo-fascist groups offering a solution to
today's social chaos. 

``Our country saved the world from fascism, but today it is in Russia that it
is rearing its head,'' Yeltsin said on June 22, the 57th anniversary of
Hitler's invasion of the Soviet Union. 

Both the Soviet and Russian constitutions banned the stirring up of racial or
ethnic hatred. But the new law would be the first time Moscow had felt the
need to spell out Nazism and fascism as specific evils and define penalties
for various offences relating to their propagation in the criminal code. 

Making, distributing or displaying the emblems of Nazi Germany or fascist
Italy would be offences under the new law, which, Krasheninnikov said, gave
clear definitions of what these emblems are. Academic research or works of
fiction that were ``obviously anti-fascist'' would be exempt from the ban. 

A number of small groups, mostly attracting young men, have adopted fascist-
style symbols and uniforms, though they glorify a Russian, rather than German,
ideal of nationhood. Some have already been refused registration as social
organisations. 

The activities of such groups have been fairly limited, although Jewish groups
have complained of intimidation. There have been attacks on synagogues and
people from ethnic minorities have been attacked by skinhead gangs in Moscow. 

The sweeping gains by Vladimir Zhirinovsky's nationalist Liberal Democratic
Party, which topped a parliamentary poll in 1995, raised fears of a right-wing
ascendancy in Russia. 

The party's fortunes have since waned but opinion polls show authoritarian
leaders are more popular than liberals in a country with virtually no
tradition of democracy. 

*******

#14
Financial Times (UK)
30 July 1998
[for personal use only]
Lex column
Boris a-borrowing

After a rapturous reception, the International Monetary Fund-led package 
for Russia is unravelling. True, there is no immediate threat of 
devaluation - the central bank now has enough hard cash to deal with 
foreign exchange needs. The problem is that the government does not have 
enough cash to deal with its enormous financing problem. Only $2bn of 
the IMF's $11bn package is available to plug that hole - and, even then, 
not until the second tranche due in September.

Consider the scale of the gap. Between now and the end of the year, 
about $20bn of short-term rouble bonds are maturing. The government must 
also find roughly the same amount again to pay interest on its debts.

Of course, if confidence were high, the government could borrow the 
needed $40bn or so from foreign and domestic investors. Indeed, that was 
the object of the IMF programme. The snag is that Russia's parliament 
has queered the pitch by voting down large parts of the accompanying 
tax-raising plan. President Yeltsin has implemented it anyway by decree. 
But given the current nervous attitude towards emerging markets, 
investors are reluctant to put up new cash.

Yields on rouble and dollar debt have shot up. Instead of the hoped-for 
virtuous circle - with lower yields cutting funding costs and in turn 
producing still lower yields - Russia is now staring at a possible 
vicious spiral. The worry is that the country will either default or 
resort to printing money. In either case, the rouble would plummet and 
the economic reforms of recent years would be thrown out of the window.

The government is trying to buy time by auctioning shares in Gazprom, 
the energy giant. It is also pillaging companies for taxes on an ad hoc 
basis. But what is really needed is a quick change in sentiment. Good 
news over the next month on the budget deficit might just do the trick. 
That would unlock the next tranche of IMF money. But the situation is 
extremely risky.

*******

#15
Washington Times
July 31, 1998 
[for personal use only]
Embassy Row 
By James Morrison

No Ukrainian threat
     For Ukraine, giving up its nuclear missiles may have been a 
mistake.
     At least that is the opinion of some observers in the former Soviet 
republic who are complaining that the United States is feverishly 
working to bail out Russia, still armed to the teeth, but doing little 
to help Ukraine, which disarmed after the collapse of communism.
     Ukrainian Ambassador Yuriy Shcherbak is well aware of the grumbling 
in the opposition press, but he believes Ukraine has Washington's 
attention.
     Last week's meeting between Vice President Al Gore and Ukrainian 
President Leonid Kuchma in Kiev is evidence that the United States 
realizes Ukraine's importance, Mr. Shcherbak said.
     "There is a chemistry between our president and the vice 
president," he told reporters over breakfast this week.
     The second session of the Kuchma-Gore Binational Commission 
underscored a "strategic partnership" between the two countries and 
emphasized U.S. support for Ukraine's economic reforms, Mr. Shcherbak 
said.
     "Our president and the vice president spent 12 hours in talks in 
different forums," he said of the two-day meeting July 22 and 23.
     The ambassador said Ukraine is seeking a $2.5 billion loan from the 
International Monetary Fund and $1 billion from the World Bank.
     "If we get the loans, we will solve our problems," he said, 
referring to the need to stabilize Ukraine's currency and make payments 
on its $10 billion national debt.
     "I have the impression the vice president understands our 
situation."

********