This Date's Issues: 2293 • •
Johnson's Russia List
1 August 1998
[Note from David Johnson:
1. Mark Jones: Russians and alcohol.
2. Financial Times (UK): RUSSIA: Magic realist economy. John Thornhill
on the bizarre logic driving the emerging capitalism of Russia.
3. New Worker Online: Re Russian women. (DJ: I realize some recipients
are weary of this subject but others are attentive and there are
substantive issues. Let's be tolerant. And I'm interested.)
4. Voice of America: Barry Wood, Interview with Leon Aron on Russian
5. Journal of Commerce: John Helmer, How to succeed in publishing business
in Russia: distribution.
6. Maris Ozols: Re Financial Times.
7. Maris Ozols: Re 2292-Temperley/Women.
8. John Nighswander: Temperley's comments, Russian Women.
9. David Rowell: In praise of Russian Women.
10. Alan Fahnestock: Temperly, temperly.
11. Nezavisimaya Gazeta: Sergei Dunayev, LEBED REMAINS THE LEADER.
12. Moscow Times: Sugata Rao, Who's Afraid of the Big Bad Tax Collector?
13. Moscow Times: Igor Zakharov, BOOKWORM: Memoir, Collection Tap Into
14. Reuters: Alan Crosby, Emerging Europe shrugs off Russian cold.]
Date: Sat, 01 Aug 1998
From: Mark Jones <Jones_M@netcomuk.co.uk>
Subject: Russians and alcohol
Why has Russian alcohol consumption increased and with it
mortality rates (JRL 2292)?
There are 2 reasons: motive, and availability.
Excessive alcohol consumption has always been a feature or Russian
culture. Part of it may be due historically to such things as extreme
weather conditions, and to a general macho idealising of drink. In the
Brezhnev era, social peace was lubricated by a massive supply of cheap
booze, including not only vodka but passable brandy, wines and
champagnes, all domestically produced. The technology for brewing Asti
Spumanti and similar fizzy substitutes for champagne is actually Soviet
in origin; instead of prolonged secondary fermentation, the champagne is
ready in about forty minutes.
When the Soviet Union collapsed in 1991 there were anxieties in the West
of complete social breakdown and even famine (in fact Russian calorie
intake has declined in this decade). Food 'aid' was provided; long
convoys of trucks brought supplies from France, Holland, German, Britain
and other EU countries, along the same Warsaw-Minsk-Moscow highway that
Hitler's panzers once travelled.
This so-called food 'aid' had a number of consequences, all of them
deliberate and intended by the Western agencies which were supervising
the dismantling of the Soviet Union.
First, the food was not given away: it was distributed thru the class of
mafia merchants which already had a stranglehold on the Soviet retail
trade. Thus the 'aid' aided first of all the most corrupt and
criminalised 'commercial structures'. The superprofits they derived from
selling food to Russian consumers helped found the fortunes of the
oligarchs who now own Russia.
Second, food 'aid' destroyed much of Soviet agriculture and light
industry. Losses of livestock for example have exceeded those which
occurred during collectivisation in the 1930s. This has served to make
Russia completely dependent on foreign imports of many basic consumer
Third, a principal commodity in the 'aid' that was publicly meant to
off famine was alcohol: cheap vodka from France, Britain, Germany and
the Netherlands, mostly manufactured from apples and other
non-traiditonal raw materials. Vodka with names like 'Rasputin' began
appearing in vast quantities, mostly sold thru the kiosks which the
criminal public authorities in Moscow and other cities lined the streets
(and their own pockets) with. The Russian booze industry was destroyed,
of course. You could buy German over strength vodka for a dollar a
bottle. The effect of this was to produce an epidemic of drunkenness.
People literally did not notice the disappearance of the
Soviet Union. Whatever anguish they felt was thoroughly anaesthetised by
this ocean of EU moonshine.
In the same way that the Native Americans lost their birthright to bad
whisky, a demoralised, defeated and cowed Soviet working class was given
the consolation of the bottle. The trucks (not always metaphorically
either) headed back to Europe loaded with plunder -- icons, precious
objets d'art, priceless cultural artefacts; gold, precious stones;
non-ferrous metals (many Western aluminium refineries have now gone out
of business, unable to compete with the flood of cheap Russian-smelted
alu); gas, and oil above all of course.
Ah, it was so easy to rob the Russians, make them ill, kill them
off like flies, and then to send in highly-paid teams of
anthropologists, social workers and doctors to analyse the malaise of
the Russian soul, and reflect on their liking for booze...
Financial Times (UK)
1 August 1998
[for personal use only]
RUSSIA: Magic realist economy
John Thornhill on the bizarre logic driving the emerging capitalism of
Summer in Moscow is an unreal season. As Muscovites cast off their
winter cares - and clothes - escaping to riverside bathing holes or
country dachas - the city always seems to lose its grip on reality.
The mood was captured perfectly in Mikhail Bulgakov's magical novel,
Master and Margarita, in which the devil and his associates wander the
sunny streets of the Russian capital.
The devil's entourage included a big, black cat called Behemoth, who
smoked cigars and toyed with his Mauser pistol.
This summer too, Moscow has been full of strange sights and events.
Water-melons, piled high on street corners, have been mysteriously
contaminated with mercury. Mushrooms, plentiful this year just as they
were on the eve of Hitler's invasion, have been found to be radioactive.
A minor hurricane recently tore through the Kremlin gardens.
In this slightly weird world, few things seem more surreal than the
Russian economy itself - especially as described in a recent paper by
two American scholars, who claim that Russia has created the world's
first "virtual economy". Fund managers who last year thought that Russia
was one of the great investment opportunities of the 21st century have
been passing the article around in trepidation as they watched the value
of their share-holdings plummet.
"We call the new system Russia's 'Virtual Economy' because it is based
on illusion, or pretence, about almost every important parameter of the
economy: prices, sales, wages, taxes, and budgets," the two authors,
Clifford Gaddy and Barry Ickes, say in a paper for the Brookings
"Over the past six years of 'radical reform', Russian companies,
especially those in the core manufacturing sectors, have indeed changed
the way they operate. Only, they have done so not in order to join the
market but rather to protect themselves against it."
The article suggests that the bulk of the country's Soviet-era
enterprises is still subtracting value from inputs rather than adding it
(this means the value of, say, a Russian fridge is lower than that of
the metal, plastic and other raw materials used to make it). In Russia,
companies disguise their destruction of value by charging arbitrary
prices for their products, the argument goes.
The increasing share of barter trade in the economy, which now accounts
for half of all economic activity, means this massive bluff has never
been called. Companies could pay their suppliers and, until recently,
even their taxes with barter goods "priced" far higher than their true
It is only workers who do not accept this pretence and want hard cash:
hence the problem of wage arrears.
Given that bankruptcies are rare, companies are able to stagger on,
accumulating massive inter-enterprise debts. Whereas 27 per cent of
companies were reporting losses two years ago, 47 per cent are today.
Yet these businesses are not restructuring or withering away. Rather
they actually increased their total payroll during 1997.
The bizarre logic of this "virtual economy" means that, as in the Soviet
era, production increases should often be counted a bad thing since they
subtract value from the nation's wealth. Similarly, gutting a company of
its assets may be a good thing, since it transfers assets into the real
The IMF's recipe for squeezing more tax out of such enterprises, the
authors argue, may only make the economic and social situation worse. In
the absence of mass bankruptcies, cash-starved enterprises will simply
be faced with the alternatives of paying taxes or wages.
"Russia needs to downsize its economy just like Russian companies
downsize their businesses. But people still believe in this myth that
big is good," argues Boris Jordan, the head of MFK Renaissance, a
"It is better to be a profitable oil company with 5bn barrels of
reserves than an unprofitable one with 15bn barrels. But people have a
hard time understanding that."
Over the past year, foreign investors have swung from blind optimism to
blind pessimism. At the moment, it seems, some are willing to believe
almost anything about Russia's economy - even, in Bulgakov's words:
"Well, citizens, we have now seen a case of so-called mass hypnosis. A
purely scientific experiment, proving most convincingly that there are
no miracles in black magic . . . In a moment citizens, you shall see
these alleged banknotes disappear as suddenly as they appeared."
Date: Sat, 01 Aug 1998
From: New Worker Online <firstname.lastname@example.org>
Subject: Re: Russian women
Dear David and all the other contributers on this subject,
As someone who is neither Russian nor American, I have found the the
discussian about Russian women has more to do with the attitudes of
American men than anything else.
If you go to any bar in any major city in the world you will have the same
conversation with a leery American male - slagging-off awful feminists at
home and telling you how the locals are real women who know how to treat a
man! The closer you are to the local red-light district, the stronger those
opinions are expressed.
I am not trying to say that British males are any better in their attitudes
- they would just express them differently. They are generally more
concerned with which nationalities "go" or not - to put it crudely, but
Russian women and men need to change if they want to end violence,
alchohlism, corruption, sexual exploitation, and all the other rotton
things about their society. Exactly the same goes for American men and
women, British, French, German, Filipino, South African ....
At which point I could get into working class politics, but I'll leave that
for another time.
I try to take people as I find them - I have American friends, and Russian
friends (both male and female) and I've got no problems with any of them.
So the stereotype attitudes do not go across the board.
Voice of America
TITLE=RUSSIA ECONOMY (L-ONLY)
INTRO: AS THE NUMBER TWO MAN AT THE INTERNATIONAL MONETARY FUND
HOLDS EMERGENCY TALKS IN MOSCOW, A TOP RUSSIAN EXPERT AT A
WASHINGTON RESEARCH ORGANIZATION SAYS FAILURE TO RESTORE
CONFIDENCE IN RUSSIA'S FRAGILE FINANCIAL MARKETS THEATENS THE
SURVIVAL OF THE RUSSIAN GOVERNMENT. V-O-A'S BARRY WOOD REPORTS.
TEXT: LEON ARON, A SCHOLAR AT THE AMERICAN ENTERPRISE INSTITUTE,
SAYS THERE WILL BE SOCIAL UNREST IN RUSSIA WITHIN SIX TO EIGHT
MONTHS UNLESS STABILITY RETURNS TO MOSCOW'S FINANCIAL MARKETS.
MR. ARON SAYS THE I-M-F IS CORRECT TO INSIST ON A BALANCED
BUDGET AND TAX REFORM. BUT HE FEARS THAT PARLIAMENT WILL NEVER
AGREE TO SUCH MEASURES. HE SUGGESTS THAT PRESIDENT YELTSIN HOLD A
REFERENDUM TO FORCE THE MEASURES APPROVAL.
MR. ARON SAYS THE CURRENT RUSSIAN LEADERSHIP IS MORE COMMITTED TO
MARKET BASED REFORM THAN ANY GOVERNMENT IN MOSCOW SINCE THE
COLLAPSE OF COMMUNISM. BUT HE SAYS POPULAR DISTRUST OF
GOVERNMENT AND A TRADITION OF TAX AVOIDANCE MAKES IT ALMOST
IMPOSSIBLE FOR RUSSIANS TO AGREE TO THE KIND OF COMPREHENSIVE TAX
REFORM RECOMMENDED BY THE I-M-F. BUT, SAYS MR. ARON, GIVEN THE
DRASTIC DEMILITARIZATION OF THE RUSSIAN ECONOMY AND THE
GOVERNMENT'S ENTHUSIASM FOR BUILDING A MARKET ECONOMY, THE WEST
MUST FINANCIALLY SUPPORT RUSSIA IN ITS TIME OF NEED. MR. ARON, A
RUSSIAN EMIGREE WHO IS WRITING A BIOGRAPHY OF PRESIDENT YELTSIN,
SAYS THE I-M-F IS SUGGESTING THE RIGHT POLICIES.
WHAT THE I-M-F IS PRESCRIBING FOR RUSSIA WITH SOME
EXCEPTIONS IS WHAT RUSSIA REALLY NEEDS. THE MAJOR BLOCKS
OF THE I-M-F DEMANDS ARE: CLOSE THE BUDGET DEFICIT; TRY
TO COLLECT TAXES SO YOUR SPENDING DOES NOT EXCEED YOUR
REVENUES; TRY TO HAVE A STABLE CURRENCY AND A LOW
INFLATION. THAT IS WHAT THE I-M-F WANTS AND THAT IS WHAT
MR. ARON SAYS WESTERN OBSERVERS ARE GENERALLY UNAWARE OF JUST HOW
SIGNIFICANTLY ECONOMIC ACTIVITY HAS BEEN SHIFTED AWAY FROM THE
MILITARY IN RUSSIA. THE RUSSIAN DEFENSE BUDGET, HE SAYS HAS
FALLEN BY 90 PERCENT AND NOW COMPRISES ONLY FIVE PERCENT OF GROSS
DOMESTIC PRODUCT INSTEAD OF 30 PERCENT TEN YEARS AGO. HE SAYS
ARMED FORCES PERSONNEL HAS BEEN REDUCED BY 50 PERCENT AND THAT
HOUSING SUBSIDIES FROM THE FEDERAL BUDGET ARE NOW LARGER THAN
DEFENSE SPENDING. (SIGNED)
Journal of Commerce
August 3, 1998
[for personal use only]
How to succeed in publishing business in Russia: distribution
It was a dark and stormy night when a shot rang out, a woman screamed
and the pulp fiction market took off.
BY JOHN HELMER
JOURNAL OF COMMERCE SPECIAL
MOSCOW -- "Fare well, my darlink," Olga snarled in her guttural
Siberian accent, as she eased Ivan -- or what was left of him after
she'd filleted and skinned him -- into the Moscow River. "The militia
captain and I will remember you between passionate embraces at the
dacha. It was thoughtful of you to leave me the key. But then I always
said you were too nice for a Russian."
It's that style of pulp fiction that creates a huge market opportunity,
as a North American publisher recently learned, and an equally huge
logistical problem. The Russia-wide study it commissioned from Gary
Shenk of the Boston Consulting Group proved that distribution is the key
His research across 18 of Russia's regions has been summarized to
illustrate the broader problem of trading for Americans in Russia.
Details that might identify the publisher, or reveal information that is
commercially competitive, have not been disclosed.
Titles are down
Before the Soviet Union became non-fictional history, 1.5 billion books
were printed annually in Russia. According to the Russian Book Chamber,
a publishing trade organization, this colossal number comprised 41,500
titles, and included school texts and children's books. By 1996, the
Chamber says, the national print run was down to 473 million books and
The chamber believes the high literacy rate among Russians, and the
ideological importance which the Communist Party attributed to reading
materials, created one of the largest fiction-consuming markets in the
The Soviet book trade was centrally organized. Most of the printers in
Russia were (and still are) located in Moscow, and 80% of the books
originated there. More than a billion books rolled off the presses and
into warehouses, but most of the readers were hundreds, if not
thousands, of miles away. How did the Soviet publishing trade get them
The question the North American publisher asked the Boston Consulting
Group to answer was similar, Mr. Shenk recalls.
Moscow is a small market
"Only 12% of Russia's pulp fiction readers are in Moscow," he said. "How
do you get the books to where most of the readers are?"
Since the end of the Soviet administration in 1991, print runs have
collapsed along with the book-trade (knigatorg) network that used to
distribute them. Regional knigatorg organizations have incorporated
themselves, and many have gone private. Bookshops that were supplied by
the regional knigatorg have undergone a similar process of
disintegration and privatization.
Supply has been replaced by demand. The system that determined the
assortment of titles on every bookstore shelf in Russia has gone. In its
place, only a few regional organizations have remained strong enough to
continue supplying stores.
According to Mr. Shenk, "Management makes a big difference in this
process. If managers are dynamic, they can keep the regional
organizations alive as a wholesalers. The same is true if the innovative
managers strike out on their own, creating independent wholesale
networks and shops."
The Boston Consulting Group surveyed how Russian book publishers reached
retail outlets. In almost all the regions surveyed, Mr. Shenk discovered
that from 60% to 90% of pulp fiction was being sold on the street, from
temporary stalls and more durable kiosks.
Bookstores of the traditional kind weren't trading volume, and except
for Moscow -- which has several popular bookshops and a thriving
book-mart -- the main publishers don't concentrate on them any longer.
Two dominant Russian publishers of pulp fiction, Eksmo and AST, cover
all the genres, generating the whodunits through local authors, and
importing the romance, usually without paying royalties. Sources in the
industry explain that Eksmo and AST started as book wholesalers, and
moved upstream to produce books.
Good at selling
"They are good at selling," Mr. Shenk said. "They have taken control of
regional wholesalers, who in turn deliver directly to the kiosks."
But how can a large North American publisher of pulp fiction break into
"The volume of book sales in Russia is very high," Mr. Shenk said. "But
nowhere in the world is the price of books so low." The average Russian
thriller or romance is a paperback costing no more than the equivalent
of one dollar.
Date: Fri, 31 Jul 1998
From: Maris Ozols <email@example.com>
Subject: Re: 2291-Manning/Yeltsin's Russia
>Anyway check the Financial Times for stuff we don't get in the US & it
>is as "establishment" and conservative as heck so makes a great source
>to quote in official reports.
I would certainly agree with you about the FT with the exception of the
stuff about being staid. Whilst the other papers write about boring 'been
done' travel destinations in the world, the FT writers continuously
discover interesting places (that I can't afford to go to!) Seriously
though, the FT had enjoyed the largest rise in circulation of any newspaper
here in Britain. I buy it daily (especially Saturday) and I don't have any
shares or any financial axes to grind whtsoever! Think pink!!! PS The
Sunday Business is not bad either - the cheapest Sunday paper here and with
extremely witty restaurant reviews.
Date: Fri, 31 Jul 1998
From: Maris Ozols <firstname.lastname@example.org>
Subject: Re: 2292-Temperley/Women
Whilst I would be wary of describing Ms(?) Green's and Ms(?) Bennet's views
as banal, it seems quite axiomatic in what Mike Snow has described.
Although I have been married to a native Pole for over twenty years
(possibly because none of the local Brits possessed the vibrancy that I was
looking for), I have also found the women of central/eastern Europe (not
just Russian) to be far more aware of themselves as women and more exciting
and stimulating to be with than the excuses in the west who no longer know
what their identity is. This, however, is also true of the men. Men from
central/eastern Europe also seem to be far more decisive, unwavering,
willing to stand up for themselves than the Charles Atlas rejects that
populate the West. Maybe sophistication has washed the baby away with the
Date: Fri, 31 Jul 98
From: "John Nighswander"<email@example.com>
Subject: Temperley's comments, Russian Women
As an American man I would like to express my hearty disagreement with
Temperley (#2292), Snow, etc. Nothing is more pathetic than the expat
who can't get it at home. I am married to an American woman and my
mother is an American woman. Ruki proch', gospoda. As long as we are
throwing around ludicrous generalities (ALL American women are
ball-breaking Catherine McKinnon clones? What USA did these guys come
from?) here are a few more based on many years experience living in
Russia/Kazakstan/Ukraine: Compared with Russian/Ukrainian women,
American women are more honest, more sincere, more faithful, more
sexually knowledgeable, more intellectually curious, more literate,
more worldly, have more self-respect, are more open to new experience,
more optimistic and are far, far better dancers.
For some reason the "Russian women are the most beautiful women in the
world" cliché has been beaten to death in the press lately. Why?
Perhaps lack of other positive news from Russia, perhaps the Asian
crisis has driven sex-starved expats from Thailand. In any case, like
most unfounded assertions it does not stand up to serious scrutiny. I
can only assume most propagators of this myth have never been to
Italy, Sweden, Poland, Croatia, Brazil, Manila, Singapore, Israel, or
The American men who make the most grandiose claims for Russian women
are for some reason often those who speak no Russian, know very little
about Russian culture and traditions, and carry around the most bitter
personal histories. They like Russian women because a lot of Russian
women are "easy", end of story. Let's leave American women out of it.
Date: Fri, 31 Jul 1998
From: David M Rowell <firstname.lastname@example.org>
Subject: In praise of Russian Women
Am I the only one to notice the significant situation that the debate about
women and their characteristics seems to be distributed largely on gender lines?
Men who have been and/or are in Russia, and who have enjoyed contact with
women are singing the praises of Russian women in perfect unison. Women -
whom apparently have yet to even visit Russia - are presuming to correct
and their personal impressions.
For what it is worth, I am very privileged to have been living with a wonderful
Russian woman here in the US for the last fifteen months. We get married next
week. I agree with every (male) statement made over the last few days, and
eyes at the unreality and irrelevance of the contra-statements. It is no wonder
that American men are spurning their female compatriots in greatly increasing
numbers every day and flocking to Russia, and no amount of feminine pseudo-logic
can rebut the reality of this phenomenon. Men are "voting with their feet"
American women try and tell us that we shouldn't, or that we are mistaken, or
As a side-bar comment, and based only on fifteen months of experience to
apocryphal stories from men who have "imported" their brides from the former
Union, it is particularly pleasing to note that Svetlana shows no signs of
"Americanised" and retains the philosophy, the approach to life (and, yes, the
same height/weight ratio!) that endeared her to me in the first place.
This issue is, of course, perhaps tangential to this venerable mailing list, and
probably starting to wear out its welcome. There is another mailing list
to the discussion of these issues that has been cited here before, and
parties (of all genders and nationalities) would almost certainly be welcomed at
this, the "Russian-Women-L" list.
will, I believe, gain one entry to that list.
From: Fahnest542@aol.com (Alan Fahnestock)
Date: Fri, 31 Jul 1998
Subject: Temperly, temperly
One American male reader of JRL is not in the least fed up with American
women. Or Russian women. Or, probably, Martian women --- having spent a
considerable part of my younger and less thoughtful years in what must
inevitably be dubbed an in-depth survey of this world's distaff inhabitants,
I'd like to suggest that anyone who can be fed up by any particular variety
thereof needs to look inside for the cause, not at the objects of said fed-
The discussion is, of course, largely non-productive, as this "gentleman"
suggests, but not because the women involved have raised pointless points:
rather, because its genesis was so bone-headed and unnecessarily insulting.
Leave us lay it to rest as one of those things that doesn't bear dwelling on.
It does seem odd to me that so many expat males should so loudly proclaim,
"Wow, this is cool, in Russia even I can get laid," but I suppose it's their
prerogative. To add, "And they don't make me feel like an idiot," is odder
still, given the prevalence of fire where there is smoke.
>From RIA Novosti
July 31, 1998
LEBED REMAINS THE LEADER
The congress of people's republicans in Krasnoyarsk
is devising the program of the regions' confrontation
to the central establishment
By Sergei DUNAYEV
After Alexander Lebed had won gubernatorial elections in
the Krasnoyarsk territory, the observers thought for a while
that the once active candidate for presidency was really
concerned about the "revival of the territory's economy."
However, the recent developments can shake their conviction.
The events which made us talk once again about Lebed as a
candidate for presidency-2000 are the two forums which opened
in Krasnoyarsk yesterday. One is the third congress of the
Russian People's Republican Party (RNRP), and the other is a
conference of the public movement called "Honour and
Motherland." Both of these structures are headed by the
governor-general Lebed. In his speech at the congress, Lebed
defined the top-priority task of the party and the movement as
"putting their deputies into the Duma." The RNRP is convinced
that in December of next year it will be able to overcome a
5-percent barrier and form its own faction in the lower house
The ideological approaches of the long-awaited-for "third
force" (the thesis which was exploited by Lebed's team from
the time of the past presidential elections) are even more
interesting. This is how they are formulated in the official
statement: "Both the party of power and the opposition
(primarily the KPRF) failed to attract the sympathies of the
electorate. The reason is the inability of traditional
political forces to consistently uphold the interests of the
regions. As distinct from the traditional political forces,
the movement "Honour and Motherland" and the RNRP are the
parties of the regions. The movement's political centre is in
Krasnoyarsk now... The monetary flows are concentrated in
Moscow, while the provinces suffer from non-payments and live
in conditions of a constant deficit of finance and
long-lasting wage arrears. The capital and the provinces are
in outrageously unequal situations."
According to the ideologists of the general's party, the
polar structure "party of power - opposition" is a thing of
the past. The reason is that the KPRF, like any other
political party of contemporary Russia, is based in Moscow.
And the life in Moscow is replete with privileges. Moscow
politicians have something to lose: their dachas on the
Rublyovo highway, satellite telephones, luxury cars,
fashionable clothes... Which means that there is no difference
between the leaders of the party of power and of the KPRF. The
conclusion they make is that "the opposition parties cannot
put forward a candidate of the same stature as Yeltsin."
At present, the main sore spot are the relations between
Moscow and the provinces. This is why Alexander Lebed managed
to win the elections under the motto "Strong Regions - Strong
Russia!". Now in many regions the governors are trying to set
up their own regional parties. But these movements are of an
ad hoc character and reflect only local interests. In this
situation, the movement of Lebed's supporters is in a more
advantageous position, the RNRP ideologists assert. The
movement arose in the regions and can speak on behalf of the
regions. This is why the "Honour and Motherland" movement and
the RNRP have every opportunity to occupy an empty niche in
the political structure.
According to the Nezavisimaya Gazeta sources in
Krasnoyarsk, today Lebed's supporters will elect the party's
new leadership: under the current legislation a governor
cannot hold leading party posts. However, Lebed will remain
the RNRP's actual leader and perhaps this circumstance will be
confirmed juridically at the congress.
August 1, 1998
Who's Afraid of the Big Bad Tax Collector?
By Sujata Rao
Vladimir is a scientist and a landlord.
Within Russia's current fiscal crisis, the first makes him a prime
victim of state wage arrears. The second makes him a prime target of the
state tax police.
Vladimir isn't worried, though. Not even in the face of the biggest
campaign to nab tax deadbeats in Russia's post-Soviet period.
Not even after tax police began raids in search of tax-dodging landlords
in Stalin buildings like the one in which he owns an apartment.
Not even after television reports that police would ask foreign
companies to submit information about apartments rented by their
employees -- like the foreigner living his flat.
"Let them get to me, first," the elderly gentleman said philosophically.
"If they find me, I'll deal with it."
Vladimir's attitude may seem flippant, but according to a straw poll of
landlords and other Russians with undeclared income, it's typical. It's
also a major factor in what has become a crisis situation for the
The hunt for tax evaders has accelerated since international lenders
fingered Russia's poor tax collection as a major reason for the
country's economic ills.
Tax collection accounts for just 11 percent of gross domestic product,
and if Russia wants to continue receiving portions of a $22.6 billion
loan from the International Monetary Fund and others, it will have to
improve its record.
Just 5 million of Russia's 150 million residents filed tax declarations
for 1997. Although the number does not reflect the multitudes for whom
taxes are withheld by their employers, it does indicate that the vast
majority of Russians who make ends meet through second incomes are not
reporting the money.
Russian tax police earlier this month said they had uncovered some
250,000 cases of tax evasion since the start of the year, compared to
200,000 tax cheats nabbed during the whole of 1997. But the 1998 figure
still adds up to just 30 million rubles ($5 million) of extra revenue.
To crack down on the richest elements, the government has passed a
resolution mandating that anyone who spends more than $25,000 in a
single transaction be reported to the authorities.
But the most highly visible targets of the tax police are the country's
-- and in particular, Moscow's -- hard-currency earning landlords.
"The accent now is on individual tax evaders," said Lyubov
Konstantinova, head of the individual income tax department with the
Moscow tax inspectorate. "And some of the biggest evaders are landlords
who are renting out apartments."
Tax service officials recently estimated that $1 billion is earned
through apartment rentals in Moscow alone. Konstantinova said a sample
study by the tax police indicated that less than a third of the
landlords are paying taxes.
These tax dodgers technically could pay a hefty price for flouting the
law, facing up to five years in prison and a fine equalling twice the
amount owed -- potentially tens of thousands of dollars.
And yet Vladimir's apathy persists in other landlords.
"They are checking the elite buildings, not these shabby panel homes,"
said Olga, who is letting out her two-room apartment in a working-class
neighborhood of Moscow.
Tax police officers are themselves humbled by the task of raising
revenue from landowners. So far, almost 10,000 apartments have been
checked in Moscow, tax police said. Of these, 220 were being rented out,
with 170 landlords found to be shirking their taxpayer's duties.
One tax police officer said the numbers just don't add up.
"Quite often, we raid an apartment building and more than half of them
are empty, and many people just don't open the door," he said. "I think
we sometimes spend more on the raids than what they actually yield."
Methods used by police have angered another sector of the business --
realtors. Some companies said they are coming under increasing pressure
to submit lists of landlord clients and addresses of apartments being
"We always advise our clients to pay taxes on the rent they are
receiving," said Grigory Kulikov, president of the Miel real estate
agency. "But some of the methods the police are using clearly violate
people's constitutional rights."
Some see the methods as hearkening back to the days of neighborhood
informants. According to a Russian newspaper report, one tax office is
encouraging people to call a hotline to turn in their neighbors.
"The number of phone calls was already impressive," Natalya Artyomova, a
representative of Moscow's central bureau of tax services, was quoted by
the daily Moskovsky Komsomolets as saying.
The report was enough to scare Vladimir into action. He said he was
planning to talk to his neighbors and persuade them not to squeal on him
if police came around looking for information. But while landlords have
been some of the tax man's most visible prey, officials have started
striking out at other segments of the population, and now conduct
regular raids in search of unlicensed traders in the city's hurly-burly
"It is too early to judge the effectiveness of the raids," the Tax
Service's Konstantinova said. "But one thing is clear: It still hasn't
entered people's heads and consciences that they must pay taxes."
Inna, who runs a pet food store in northern Moscow, said she is aware of
the tax campaign, but "it should bother the owner of the store, not me."
Sellers are also under presser to use special cash registers that keep a
record of every transaction. But Irina, who sells music tapes at a
market in the Stavropol area, said she can't afford this. "I'll have to
give up this business," she said during a visit to Moscow.
Though most people remain content to take a chance that the tax police
will not get them, the campaign and resulting media coverage has
generated some fear.
Dmitry, a freelance jingle writer who works with several advertisement
agencies, said he filed a declaration this year for the first time.
"It was all the ads on television that made me think that I should pay
at least something and not live with fear," he said.
Irina, an English-language instructor who teaches evening courses in
Moscow, said she is scared of being caught, but still is hesitant to
file a declaration. She makes more than twice her salary by giving
private lessons during the day.
"My husband told me there is no way they can find out about people like
me, and I hope he is right," she said. "And I don't see any reason to
pay anyway -- I don't see that the government is doing anything for us."
August 1, 1998
BOOKWORM: Memoir, Collection Tap Into Nostalgia
By Igor Zakharov
Special to The Moscow Times
It may seem that the last thing Russia needs right now is a new edition
of the collected works of Josef Stalin, but that is just what it is
Several weeks ago Richard Kosolapov, a true Leninist-Stalinist Moscow
professor, singlehandedly completed his labor of love, the publication
of the 16-volume "Works of J. Stalin." The final book in the set has 468
pages, and can be purchased for 27 rubles ($4.35) at the book kiosk at
24 Ulitsa Pravdy. One can pick up volumes 14 and 15 there as well, all
published by the Pisatel publishing house.
Publication of Stalin's works began after World War II and was
interrupted in 1953 when the tyrant died. Thirteen volumes had been
printed by that time. For the next several decades the books were out of
circulation, and Stalin himself was almost unmentionable. One could not
get Stalin's works at a library or buy them at a bookstore. Only now in
the 1990s are they freely available, reprinted from time to time to
satisfy the demand of his admirers.
However limited the number of Stalin's readers at present, their
ambitions know no bounds, as witnessed by the following passage in the
communist newspaper Yedinstvo: "The task of returning Stalin to the
people is the most important one for world communism today."
Another interesting item available at that kiosk is "Predosterezheniye,"
or The Warning, the latest book of memoirs by Yegor Ligachyov, the
strongest and most active supporter of the conservative group in the
Politburo in the 1980s. It is published by Pravda International, is 462
pages long and sells for 25 rubles.
Ligachyov is the originator of the immortal phrase "Boris, you are
wrong!" flung at Boris Yeltsin in June 1988 at the Nineteenth Party
Conference, in front of over 100 million television viewers.
Ligachyov's book is a good read: Along with the inevitable communist
rhetoric, it is full of vivid descriptions of the last Soviet rulers and
lively scenes of life inside the Kremlin. In many cases, it is difficult
not to agree with his assessments, including these lines that end his
"I am satisfied with my life ... But fate of many of my contemporaries
is not so enviable.
"Take Gorbachev. He started a great socialist perestroika, then changed
his plans. He said one thing and did the opposite, then found himself
left by the side of the road.
"Or take Yeltsin. His reforms turned into the peoples' tragedy, into the
collapse of a great state, a ruined economy, into the deaths of
thousands of his compatriots, into the unbelievable pauperization of
"But the age-old truth states that not a single politician can get away
from the court of history and of the people."
FEATURE - Emerging Europe shrugs off Russian cold
By Alan Crosby
PRAGUE, July 31 (Reuters) - It used to be the case that when the Russian
economic bear sneezed, the rest of the Soviet Union and its satellites caught
But if the limited effects of Moscow's financial crisis in eastern Europe are
a sign, more than eight years of post-communist restructuring has become a
strong antidote to the most recent strain of Russian flu.
In the initial stages of the crisis, investors quarantined all of post-
communist Europe along with Russia, staggering currencies and capital markets
region-wide in the process.
Analysts say that while there was no doubt that market movements in Russia
exert a heavy short-term influence over eastern Europe, the links were created
by a regional view taken by global investors and are not based on direct
They add that at least some investors were starting to differentiate more
clearly between Russia and its eastern European neighbours, although general
emerging market pessimism still tended to weigh on sentiment.
``Some people look at Central Europe and think it's linked with Russia, but
it's really very detached now,'' said Vlad Sobell, senior economist at Daiwa
Europe in London.
``Only the Czech Republic seems really influenced by Russia, maybe because of
its own political uncertainty,'' he said, adding that markets in Hungary and
Poland were increasingly taking their cue from the United States or Britain
rather than Moscow.
Under the COMECON agreement of the former Soviet Union, economies of eastern
Europe were so intertwined with Russia that many suffered heavily with
crumbling of the grouping.
Economic restructing severed many of the ties as economies re-tooled to
produce exports aimed at richer western European markets and with the stigma
of Russian dominance over the region looming.
``The Czech Republic, for example, is not overly dependent on what is going on
in Russia. Only a very small portion of our exports go there,'' said Vladimir
Kriedl, an economist at Patria Finance in Prague.
``Fortunately, we managed to redirect all of our exports from the former
Soviet Union to Western Europe five years ago.''
And it's a two-way street, economists add, pointing out that Germany exports
nearly 11 per cent of its output to emerging Europe and Italy nearly 10 per
cent -- both of which are higher than their exports to Asia.
GROWTH DRIVEN BY FOREIGN INVESTMENT, EXPORTS
The Vienna Institute for International Economic Studies (WIIW) says growth in
Poland, Hungary, Slovenia and the Czech Republic is being driven by foreign
direct investment and industrial exports, helped by improving productivity and
In a presentation at the beginning of July, Dariusz Rosati, guest researcher
at the WIIW, said growth among the five leading reform states -- the Czech
Republic, Hungary, Slovenia, Slovakia and Poland -- should continue even if
Russia's economic troubles worsened.
``For the time being we think it can be contained,'' he said of the Russian
economic predicament. ``We don't see a direct risk, simply because the central
and east European markets are not directly integrated into the Russian
Still, the influence of Russia cannot be under estimated.
In Poland, for example, Russia accounts for only seven percent of exports but
supplies its eastern neighbour with natural gas as well as other resources,
which if cut could create difficulties.
Most vulnerable in the short-term are currencies, especially the Czech crown,
since it is the most freely- convertible in eastern Europe.
A first quarter strengthening trend for the crown stopped in its tracks when
bearish Russian sentiment tramped across the region in March, but traders said
uncertainty leading up to and after a June general election was just as much
to blame and the currency has since strengthened to record levels.
The crown as of the end of July was up nearly 11 percent from January. Most
other currencies have also shrugged the crisis off.
``The markets are intelligent enough to make a distinction between Hungary and
the Russian developments,'' National Bank of Hungary (NBH) Governor Gyorgy
Suranyi told Reuters Television in an interview.
While the stronger emerging European economies should see the crisis through,
analysts and officials said they were concerned that the gap between stronger
and weaker economies in post-communist Europe would widen and delay key
On Wednesday Romania's Finance Minister Daniel Daianu said he was still
worried about trends in Russia delaying the launch of a planned Eurobond issue
of around $250 million.
``I'm worried that in the fall things might not be much better,'' Daianu told
Reuters in an interview. ``We've still not made a decision...we are keeping
our options open.''
He said Romania could be affected by the Russian crisis unless market reforms
proceeded more quickly.
``For a longer period of time than people think markets will be nervous,''
said Daianu. ``Countries that are liable to suffer more, ironically, are those
which should be more protected.
``But I don't see how they can be protected as they suffer from institutional
fragility...banks plagued by bad portfolios, lack of financial discipline, low
value added in export oriented industries,'' he said. ``Some of these features
are not far away from what we can see in Romania's economy.''
Many equity issues around the region have also been put on hold, though blue
chip shares have fought their way through the crisis in major markets such as
Warsaw and Budapest.
In the past six months as the Russian RTS index fell 64 percent Poland's
WIG-20 has been unscathed, rising more than 15 percent over the period. By
contrast, Kiev, the closest to Russia has shed over 50 percent.
The crisis initially dropped Hungarian shares to their lowest level in a year
and pushed the forint -- normally stuck to the strong side of its its
4.5-percent dollar/mark basket -- to historic lows just above the mid-level in
But Hungarian analysts and officials say investors have since learned that
Hungary's economy and companies have more in common with Frankfurt and Wall
Street than Moscow.
Though the effects of the crisis still linger on the Budapest Stock Exchange
in the form of investor caution, there is little doubt among analysts that the
effects will be minimal.
``In terms of its economy and whole financial system, Hungary's are better and
absolutely different than Russia's,'' said Andrea Dicso, analyst at Erste Bank
``Just look at the prices -- a few weeks ago, they absolutely followed
Russia's. But in the last couple of days there is a difference between the two
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