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Johnson's Russia List


Auguust 5, 1998   
This Date's Issues: 2298  

Johnson's Russia List
5 August 1998

[Note from David Johnson:
1. Robert McIntyre: Fairy Tails, in Context (Solnick-2295).
2. Tate Ulsaker: Response to Karen Segar.
3. Frederick Kaegi: In search of value subtractors.
4. Matthew Rendall: Primakov and the lessons of history.
5. Barry Ickes: Virtual Economy.
6. Moscow Times editorial: Government Cannot Rely On Chubais.
7. Reuters: Russian PM hammers home message -- tax, tax, tax.
8. Reuters: Russia, IMF both under test with new rescue deal. 
9. Rossiiskaya Gazeta: 100 DAYS OF KIRIYENKO'S PREMIERSHIP: 

10. Reuters: Atomic Forces May Be Split Three Ways.
11. Moscow Times: Christian Lowe, Moscow To Outlaw Executions 
By April '99.

12. Reuters: Russian experts ponder Do our men need Viagra?


From: "Robert McIntyre" <>
Date: Wed, 5 Aug 1998
Subject: (Fwd) Fairy Tails, in Context (Re: JRL 2295 , item #5)

In responding to a reference by Jerry Hough to his work on 
"Komsomol Crooks," Steven Solnick agrees to the term "crook" but 
cites in Kirienko's favor an article by David Hoffman in the 
Washington Post.. He states that "Hoffman found that some of the 
profits Kirienko made on arbitrage and banking in Nizhnii in the 
early 1990's were used by Boris Nemtsov to settle the oblast's 
pension bill." 
I have not seen the Hoffman article, so I do not know if he 
asserts that this is true or reports that a source made this claim to 
him. In either case it should be noted that the connection between 
Kirienko and the pension fund did not begin as philanthropy. I think 
this pension fund story is probably a Fairy Tale with a fragment 
of fact imbedded in it . 
I was informed by economists who work in NN that the wealth 
of Kirienko's "Bank Garantee" was itself based on his classic crony 
linkage to the Oblast Governor Nemtsov. It is widely known in 
Nizhnii (and I believe true, see below) that Nemtsov deposited 
(non-competitively) all of the NN Oblast part of the Russian Republic 
Pension Fund in Bank Guarantee. Does Hoffman report significant 
bank "profitability" before the arrival of the pension fund 
gold-mine? Payment of pension arrears from this source would hardly 
represent a good deed. Or, is there evidence to contradict this 
interpretation? I believe that the "arbitrage" in question was oil 
trading, but that is another story. 
The Garantee Bank-Russian Pension Fund link is made manifest in 
stone. The award winning bank building (post-modern with Russian 
art moderne touches) is about three years old. To the west there is 
a beautiful "marriage palace", to the east is the KGB/FSB regional 
headquarters (filling all the space from the Bank up to newly 
restored "Monument to Lenin In Gorky" on the walking street), and 
across the street to the south is FSB Dom Kulturi. If one goes 
around the Security Police Headquarters side of the bank building, 
there is a small side entrance with the name "Russian Republic 
Pension Fund" carved into the stone, not simply as a plaque affixed 
to the wall. 
It seems unlikely that Hoffman reported the contribution to 
"solving" the pension arreas problem as Kirienkos sole financial link 
to Nemtsov. Does anyone have more information on this issue and/or 
and e-mailable copy of the WP article?


Date: Wed, 05 Aug 1998 
From: Tate Ulsaker <>
Subject: Response to Karen Segar's response [Russian Women]

I just returned from a business trip to see only one hostile response to my
support for Russia's resistance to feminism. I assume that others had
opinions to offer but that you chose a hostile response that contained the
least 'accusation per logical conclusion' quotient.

Whether against feminism or for it, we do so out our motivations, which are
eventually revealed. If possible, I would like an opportunity to reveal my
motivation for supporting interdependent roles rather than the feminist
solution of mainstream western political correctness that is presently
declining at exactly the same rate that globalization takes hold.

Here is what Karen had to say about my motivations: "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."

My reasoning, had she asked, is that I prefer society here because I feel
wanted and needed for who I am. I don't have to be 'appalled' by her while
being myself. She called my position 'colored'. Who is colored by which
society? I would argue that she may be the more burdened in this regard.
I don't believe that defending myself is necessary here. I would just like
to point out that logical arguments should also be rational. There is no
more exploitation in my being here than there is in her being there.

Karen, the funny thing about this whole response of yours is that we are in
absolute agreement on all issues. It is only the personal attacks that
separate us. Unfortunately, this is not surprising to me. You go on to
say that men more often have ego problems than women. Except in a few
cases, I agree with you. You then followed perfectly with a common
strength of femininity: "Their self-worth does not depend so heavily on
occupational and economic status." Women have more flexibility when it
comes to ego. What a great strength. Using that strength can work for
both in a relationship. Remember that! 

You go on to say, "A society where 'men can be men and women can be women,'
with perfectly complementary and interdependent roles, is unrealistic."
Why did you do that? Why did you add the word 'perfectly'? It distorts
reality because no one seeks perfection here. I often find myself
questioning the real motivations of American feminists. We read on...

"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."

Why attack me as 'appalling'? I agree with you. All attacks on me are
baseless because I am not drawing lines, you are with the word 'appalling.'
In fact, you support my ideals regarding the strength of roles as well.
Assuming that you are representing a style of thought you support in
feminists, no conclusions on my part are necessary.

Glad to be here,
Tate Ulsaker
Director of Operations C.I.S.


Date: Tue, 04 Aug 1998
From: "Frederick Kaegi" <> 
Subject: In search of value subtractors

It's fun to see to the old Soviet Studies warhorse of value subtractors
trotted out once again--it conjures up all the great planning-era images
of huge blocks of metal being molded and stamped into useless industrial
products that nobody wants.

But, thinking about this article last night, I wonder just where these
value subtractors are today and how they are doing. I mean, how many
specific industries can you name in Russia where this is actually

My bet is that those you could name are in the last throes of death or
are already dead. The classic value-destroyers are precisely those
companies that have been hit hardest. Whereas almost all industrial
sectors were running at 85%+ of capacity in 1990, classic (?)
value-destroying sectors (appliance makers, tractors, miscellaneous
machine-building, etc) are those that are at the bottom of capacity
utilization, around 8-15%. Meanwhile exporting industries like steel and
aluminum are operating above 60%.

In fact, let's take a closer look at the steel industry. First of all,
let's note that Russian crude steel consumption is down from over 70 m
tons in 1991 to less than 20m in 1997. Might it be possible that someone
is facing cost constraints here, and that the price of the steel
matters--and that the steel companies care if they are paid?

And if these steel companies operate in a virtual economy, then the
costs they face are arbitrary and it really makes no difference what
they have to pay for raw materials, energy, or transportation. Just
happily export at a loss for cash and that's it, right? 

Wrong! Russian steel companies that face higher costs for things like
transport and raw materials--the ones based in Western Siberia and ones
in the Urals with old, wasteful facilities--are dying, while those that
more efficiently use raw materials and have lower transport costs (those
in Western Europe) are in good financial health. Yet in Russia, as we
know from the article, all of these things are paid for in barter. So
why is there a difference? 

Because while barter may distort financials and severely complicate
things by mixing barter flows and cash flows in one unit, Russian
companies do still face real cost constraints and will certainly be
punished for destroying value. Irrespective of *how* it pays for what it
uses, a steel company has to balance this with what it takes in (be it
in cash, oil, or whatever). If it builds up debts, it will soon stop
getting deliveries from these suppliers. If you look at the top nine
Russian steel plants, two are in receivership, and three more were taken
over by creditors. The other four (Novolipetsk, Severstal, Oskol,
Magnitogorsk) are reasonably well run or make products that are more
valuable. Furthermore, these companies now only make products that can
be profitably produced.

That barter is widely being used in transactions and tax payments does
not necessarily mean the system is nonmarket. William Cronon's
award-winning book about the American midwest on the eve of the
industrial revolution ("Nature's Metropolis") describes precisely the
same kinds of barter transactions/tax collections prevailing in

industries with long production cycles that had poor access to credit,
yet the actors were clearly acting within a market system.

And to understand why barter prevails in Russia, I don't think you can
so easily dismiss the use of unofficial cash transactions occurring
parallel to barter transactions. Why is this so unpersuasive?


Date: Tue, 04 Aug 1998 
From: Matthew Tobias Rendall <> 
Subject: Primakov and the lessons of history

Paul Goble's summary of Yevgeny Primakov's recent speech (JRL
#2296) suggests that the foreign minister needs a crash course in foreign
policy history--or a different set of history books. He has got things
completely backward. Far from being a period of isolationism, Russian
foreign policy before the Crimean War was one of, in Paul Schroeder's
(1983) phrase, "conservative internationalism." Russia sought to resist
the spread of revolution and uphold the status quo by cooperating with
Europe's other monarchies (and giving the cold shoulder to "illegitimate"
France), and thus came to be know as the "gendarme of Europe." Nicholas I
and his foreign minister, Count K. V. Nesselrode would not have dreamed of
"resigning [Russia's] great power status," and indeed they did not:
Britain and Russia exercised dual hegemony in Europe for much of the 19th
century (Schroeder 1994). Moreover, Nesselrode's successor, Prince A. M.
Gorchakov, may indeed offer a constructive example for Russian policy
makers, but this is because he favored internal reforms instead of foreign
Nesselrode's diplomacy was routinely damned by prerevolutionary
nationalist historians, and then by their Soviet nationalist successors,
as selling out Russian interests for the sake of cooperation with the
West. In the first years after Napoleon's defeat St. Petersburg passed
through a period of foreign policy romanticism similar to the more radical
strain of Gorbachev's new thinking, marked by Tsar Alexander I's
persistent efforts to build a new world order and thus establish perpetual
peace. But when the Greek revolution broke out in 1821 and the tsar
sought a mandate from the European alliance to intervene, the tsar's less
idealistic European counterparts strung him along, causing St. Petersburg
to become disillusioned with collective security by the end of his reign.
This experience helped lay the groundwork for the myth that by cooperating
with the West, Nesselrode sold out the national interest.
In fact, it is hard to see how Russia suffered. In 1828-29 it
fought a costly but victorious war with Turkey, and then sensibly (from
the standpoint of narrow Russian and European interests, if not those of
the Balkan peoples) decided that it was better to keep the Ottoman empire
as a weak neighbor than to overthrow it. From that time on, disabused of
Alexander's romantic notions about international solidarity but enjoying
good relations with the West, Russia enjoyed 24 years of peace, except for
brief interventions in the Near East, the suppression of European rebels,
and the conquest of the Caucasus. These interventions brought it little
good and some harm, but that Russia stagnated politically and economically
is to be blamed on the regime's reactionary domestic policies, not the
West or Russian diplomacy. Indeed, the long peace could have been used,
under better leadership, to pursue internal reforms.
Russia's European policy after the Crimean War under Prince A. M.
Gorchakov marked a turn not toward activism, but toward isolationism:
Russia swore off counterrevolutionary interventions in Europe. As Barbara
Jelavich (1991) writes, "Russian leaders recognized that it would be
impossible to pursue an active European policy during a period of internal
reform, when the resources and the attention of the state had to be turned
inward. Gorchakov thus was to follow the policy of *recueillement*, with
an almost exclusive emphasis on domestic rather than external affairs." 
This was by no means a bad idea, and it is a good example for
Russia today. At the same time, as Goble points out, Russia embarked on
expansion into Asia. While this occurred on Gorchakov's watch, the
foreign minister himself opposed these entanglements (Karel Durman 1988).
And while Russia's policy thus grew more "vigorous," it was bad vigor,
miring St. Petersburg in Asian imbroglios which culminated in the
Russo-Japanese War. Gorchakov was no hero, and he made his share of
mistakes, but there is no denying his insight that Russia then, as now,
would do best to cultivate its garden.


Date: Tue, 04 Aug 1998
From: "Barry W. Ickes" <> 
Subject: Virtual Economy

Robert McIntyre objects to the term virtual economy. I actually wish I had
come up with it myself, but the characterization is due to a report of the
Russian Interdepartmental Balance Commission, headed by Petr Karpov. 
As to value destruction, I cannot speak for John Thornhill, but Gaddy and
I use the term in the narrow meaning of production where the value of
output is less than the value of purchased inputs.


Moscow Times
August 5, 1998 
EDITORIAL: Government Cannot Rely On Chubais 

Moscow has recently been filled with rumors that Anatoly Chubais may 
soon return to the government. These suspicions were fueled only last 
week when President Boris Yeltsin chose to meet Chubais on a brief break 
from his vacation, giving him time while not bothering to meet Prime 
Minister Sergei Kiriyenko. 

At one level, talk of Chubais' return to the government is almost 
irrelevant. He has hardly left it. Since leaving his post as first 
deputy prime minister for economics in March, the veteran liberal 
economist has remained close to the levers of power. 

He was quickly appointed by the government to head Unified Energy 
Systems, the state-controlled energy monopoly, which is one of the key 
institutions in the Russian economy. 

A few weeks after that, Yeltsin, desperate for Western aid to bail 
Russia out of a financial crisis, named Chubais his special envoy for 
negotiations with the international financial institutions. 

But the talk of a return for Chubais is important in that it underlines 
the lack of any one powerful minister to take responsibility for the 
totality of economic policy. 

The government has plenty of eager beaver young ministers with varying 
degrees of competence but none carries much political clout either in 
Russia or in the rest of the world. 

Neither Kiriyenko nor Finance Minister Mikhail Zadornov, apparently, 
knew how to conduct the crucial negotiations with the International 
Monetary Fund. The lines of responsibility on domestic economic policy 
have also been rather confused with deputy prime ministers Viktor 
Khristenko and Boris Nemtsov having no clearly defined spheres. Tax 
chief Boris Fyodorov has emerged as a dynamic but occasionally isolated 

All of them are cut from the same mold, all talk the same technocratic 
and liberal economics, all stress the need to respond to the financial 
crisis with a radical austerity plan. 

But the government does feel the want of Chubais' international stature 
and his ability to identify key objectives and coordinate all arms of 
government to push them through. 

So bring back Chubais? No. First off, he probably does not want to 
return, preferring the private sector where he can earn a higher salary. 
Moreover, for the communist-dominated State Duma, Chubais' return to the 
government would be like a red rag to a bull. The lower house of 
parliament would abandon immediately any consideration of the 
government's legislative program. Chubais' return would also 
unnecessarily antagonize those oligarchs who drove him from office. 

Chubais should remain on the sidelines. It is up to Kiriyenko and his 
team to improve their game. 


Russian PM hammers home message -- tax, tax, tax
By Peter Graff

MOSCOW, Aug 5 (Reuters) - Russian bigwigs and deadbeats beware: Prime Minister
Sergei Kiriyenko wants your taxes. 

That, above all, was the message he gave in a newspaper interview published on
Wednesday to mark 100 days since President Boris Yeltsin plucked the baby-
faced 36-year-old from obscurity to lead Russia out of a crippling financial

Kiriyenko, who has had to dodge criticism of his youth and inexperience in a
country notorious for its high-stakes intrigue, talked tough in an interview
with the popular daily Moskovsky Komsomolets. 

He insisted he has the mettle to take on Russias most powerful companies and
richest men. 

``I got into a fight with Gazprom,'' he said, referring to Russias biggest
firm and the worlds largest producer of natural gas. 

``The result has just come out: Gazprom has fully paid its taxes for July, and
the government has fully paid up for its current use of gas,'' he said. 

``I have a fine relationship with (Gazprom boss Rem) Vyakhirev. But when we
had problems with the company, I spoke out,'' he said 

``A similar situation holds for oil companies. I have no personal conflict
with them. But our position is extremely harsh: everyone must pay taxes. 

``We understand the worldwide crisis has hit the energy sector first and
foremost. But any attempt (by oil companies) to wriggle out of economic laws
in force in this country must inevitably drive them into conflict with the

Russias poor tax collection is at the centre of its debilitating non-payments
crisis. The government cant pay its bills. Firms cant pay the government, or
each other, or their employees, many of whom have not received wages in

``For the past five or six years we have been living off debt. Coal miners
take to the railroad tracks and theres no money to pay them, so lets borrow
some more...Do we have enough political will to refuse this narcotic of
dependence?'' Kiriyenko said. 

But he said his government had already made progress. 

``In June we collected three percent more in taxes than in May. In July we
collected five percent more than in June. For August we have to keep up the
pace,'' he said. 

That means targeting not only companies, but individuals as well. 

Most Russian employees have income tax automatically deducted from their pay
cheques. But the wealthiest -- managers and entrepreneurs -- often dont pay
up. The result is that ``the most disciplined tax payers are those who are
earning the minimum wage,'' Kiriyenko said. 

But to get wealthy people to pay, tax rates will have to be lowered and the
tax code simplified. 

``We have to be sensible. Tax rates that are too high are pointless, because
we force people to find ways to avoid them. And there are plenty of methods to
do so. The tax rates have to be reasonable, so that it isnt worth the risk,''
Kiriyenko said. 

The government has set up new rates, which came into effect on August 1, but
it will take a few months for people to get used to them, he said. 


FEATURE - Russia, IMF both under test with new rescue deal
By Janet Guttsman

WASHINGTON, Aug 5 (Reuters) - A new rescue package to shore up the rouble and
give Russias government a fighting chance of economic success will be a test,
not only for Russia, but also for the International Monetary Fund. 

The IMF, already under fire for using the wrong recipes to help Asias troubled
economies, will lose yet more credibility if Russia fails to respond to a new
$11.2 billion loan, money which makes Moscow the IMFs biggest borrower to

The lenders, aware of Russias wobbly record on economic reform, admit there is
no guarantee new IMF money will pull the heavily indebted country back from
the economic brink. 

But Russias politicial significance is such that they see no realistic
alternative to helping it. 

``Our interest in successful political and economic reform in Russia is
compelling,'' U.S. Treasury Secretary Robert Rubin wrote last week in a letter
to Newt Gingrich, the leader of the Republican controlled House of

``A collapse of the rouble would undoubtedly strengthen Russian opponents of
reform, who include ultra-nationalists and communists as well as oligarchs who
want to protect their special interests.'' 

The stability of the rouble is one of Russias few economic success stories
since it started on the zig-zag path towards a market economy. If the rouble
crashes, inflation takes off again, creating new problems for millions already
struggling to survive. 


Rubin said a non-reformist Russia could become closed and protectionist, more
likely to oppose U.S. foreign policy interests. Crisis in Russia could spread
across central and eastern Europe, and economic or political troubles there
could hurt U.S. firms and workers, he added. 

``This is the wrong time for the IMF to withdraw from this strategically
important country,'' he said. ``We have a significant opportunity to use the
leverage of IMF financing to help the Russian government finally take the
myriad steps needed to put its finances on a sustainable path.'' 

The big IMF loan -- the funds third largest credit ever -- was agreed two
weeks ago after tough and nail-biting talks and after Russias communist-
dominated parliament approved most of a string of tough demands on tax reforms
and spending cuts. 

President Boris Yeltsin signed the package into law last Friday, hours before
a constitutional deadline, and ministers want parliament to meet again later
this month to discuss the additional measures needed to unlock the next

The extra money, part of it topping up an existing loan and part of it to
compensate Russia for lower oil revenues, means Russia has received three of
the IMFs biggest seven loans. 

It brings total IMF promises to Russia to some 22.6 billion Special Drawing
Rights, the quasi currency used by the IMF for accounting and lending. That is
about $30 billion at current exchange rates. 

Mexico, the IMFs second biggest borrower, won IMF promises of 21.3 billion
SDRs over a far longer period dating back to the 1950s. Russia only joined the
IMF in 1992. 


But Russia has already failed to meet the conditions for several instalments
of cash from the previous $9 billion loan, raising concern that the latest
deal could also go off track. 

``Its not a happy situation,'' one U.S. administration official admitted. 

Concern about the loan centres in part on Russias ability to meet its promises
and in part what economists describe as moral hazard -- the idea that
governments or commercial lenders can be reckless because the international
community will always step in to bail them out. 

``There is undoubtedly a perception...that Russia is too large to fail,'' IMF
chief economist Michael Mussa said last month. ``There is a moral hazard
problem for Russia that actually has affected capital flows.'' 

Washington experts admit that if the latest Russia loan does fail to revive
the economy, or if Russia comes back for even more cash, it will provide extra
ammunition to those opposed to IMF rescue deals. 

The U.S. House of Representatives has balked at an administration request to
provide $18 billion to replenish IMF resources drained by last years rescue
deals in Asia, and most of the money for the latest Russia loan came from an
emergency lending facility which has not been used for 20 years. 

Conservatives in Congress say IMF rescue packages encourage moral hazard.
Liberals say the austerity measures included in IMF-sponsored reform
programmes neglect the needs of the poor or ride roughshod over workers'


The IMF says it is trying to take account of such criticism, allowing the
maintenance of subsidies on basic goods in some troubled Asian countries or
encouraging other borrowers to curb military spending. 

It wants Russia to do more to unravel a tangled web of non-payments across the
economy -- a process which starts with wages and taxes and which often
includes the state. 

Many workers have not been paid for months and disgruntled miners are camping
out near the White House parliament building, bitter at the wage delays. 

But IMF First Deputy Managing Director Stanley Fischer said the latest crisis
could force Russia to act on long-standing problems, including its inability
to collect taxes. 

``Crises are also opportunities and this crisis was an opportunity to get
action on Russias critical problems by the Russian the context
of financial support from the IMF,'' he said soon after the deal was

Fischer flew to Moscow for urgent talks last weekend and said he was pleased
with government efforts on belt-tightening and tax collection. ``Good progress
has been made, and if it continues that way the outcome will be good,'' he


>From RIA Novosti
Rossiiskaya Gazeta
August 5, 1998

It is so nice to come to a party when everything is ready:
the table is laid and you do not have to think of anything.
It is much worse to enter one's own kitchen in which the
stove is out of order, the refrigerator is empty and, in
general all is a mess and you do not know where to start. Such
was the situation last May when the government headed by Sergei
Kiriyenko got down to work. Financial markets were falling, it
was increasingly difficult to fulfil old obligations, the
treasury was empty and the money intended for wages had to be
used to pay debts. The ruble was about to collapse and social
problems were not only seen pretty clearly from the windows of
the White House (government building) but heard because the
Gorbaty Bridge pavement rocked with the knocking of safety hats
against the pavement.
Kiriyenko has not worked a miracle and gold rains have not
started pouring on Russia. After the May 21 collapse on the
stock exchange, when the Central Bank's annual refinancing rate
highjacked to 150%, the expectation of bad news haunted many
people. The government held on, taking practically the last
reserves out of the budget in June, spending 20 billion rubles
to pay back wages. Simultaneously, it worked on a stabilisation
program which was to become the "loadstar" and plan of action
for the near perspective.
The government badly needed an urgent IMF loan, and
Anatoly Chubais was immediately put in action. The government
anti-crisis program was approved by the international financial
community and Russia received the credit.
It was necessary to shape a prudent industrial program and
conduct a constructive dialogue with the State Duma. The
government's reaction was the recruiting of the most prominent
communist economist, Yuri Maslyukov.
Kiriyenko is not afraid of putting together the extremes
and adopting unexpected decisions. At the same time, he never
allows the situation to grow extreme. He tolerates miners'
pickets on the railway in Kuzbas, does not demonstrate a
"strong arm" and the problem becomes settled without riot
police and clubs. He spends the scrapings of the budgetary pot
on the GKO pyramid, drafts ruble-denominated debts that are to
be paid in August and September into long-term currency debts,
persuades foreign bankers to return to this market but does not
devaluate the ruble, as he is sure that this market will soon
become to refinance itself and free the budget from the burden
of unplanned expenditures.
But all this does not mean that the government completely
concentrated its attention on home affairs. Kiriyenko`s visits
to France, Japan and China have also produced tangible results.
Suffice it to mention Japan's loan in the amount of $1.5
His three-hour-long conversation with Chechen President
Aslan Maskhadov in Nazran incites confidence that there will be
no extremes in relations with the Republic of Ichkeria either.
August is a season of vacations, including for members of
the government. But it is not so for Kiriyenko. In the end of
the month the State Duma is to approve a thick package of bills
on the anti-crisis program. The decision of US Congress to
replenish the funds of the IMF will largely depend on the
Duma's behaviour. If the funds are not replenished, Russia can
forget all about the second, 5-billion-dollar tranche of the
IMF loan in September. This would mean an empty refrigerator
and the stove out of order again.
There is no doubt that Kiriyenko will spend as much time
in the Duma as it will be necessary, explaining things, laying
down his arguments and trying to persuade deputies but he will
neither frighten nor threaten them. There is a big chance that
he will succeed. Then we will stop fidgeting and worrying
whether the ruble be devaluated or not, whether doctors and
teachers will get their paychecks or not and whether pensions
will be paid on time.


Atomic Forces May Be Split Three Ways 
August 4, 1998

MOSCOW -- (Reuters) Russia, eager to make the most of its meager 
military funds, is planning a major shakeup in its nuclear forces that 
could split its atomic weapons between the army, navy and air force. 

Aleksei Liss, spokesman for the advisory but influential Security 
Council, said on Tuesday a newspaper report that the Strategic Rocket 
Forces would be disbanded altogether as a separate unit by 2001 was too 

"The Strategic Rocket Forces will be transformed in their work, command 
and structure into three major spheres," he said. "That is the command 
for the use of nuclear forces in the air, on the ground and in the sea." 

"All branches will have their own command subordinated to a general 
united command. This transition is planned to be finished by 2001, 
although it is only a concept and subject to changes," Liss said. 

Long on the drawing board but still not fully in the public domain, the 
grand concept also gives increased clout to the Defense Ministry at the 
expense of the other "power" agencies dealing with security, such as the 
Interior Ministry. 

"The Russian state, in its seventh year of existence, has finally 
decided what it wants from its military forces," wrote commentator Ilya 
Bylavinov in the daily newspaper Kommersant. 

Security Council Secretary Andrei Kokoshin gave some details on Monday. 
But televised excerpts did not mention nuclear arms. 

"The military will do away with one of its four existing branches of the 
armed forces," Kommersant reported. "By 2001, the Defense Ministry has 
to liquidate the Strategic Rocket Forces as an independent structure and 
divide its forces between ground troops, the air force and the navy." 

Liss said this report was too strongly put. A Defense Ministry spokesman 
said all would become clear at a news conference soon. 

Air force spokesman Col. Aleksander Drobushevsky said: "If we get, as 
reported today, nuclear missiles for the air force, they will be used 
and handled strictly according to international regulations and laws." 

The Russian nuclear forces, inherited from the Soviet Union, include 
hundreds of strategic atomic weapons on submarines, in silos or on 
special trains and vehicles. There are also bombs carried by aircraft. 
However, until now the command structure has been heavily centralized. 

Kokoshin said on Monday Russia would be focusing its military efforts on 
training a small, crack force ready to intervene in regional or local 
conflicts along the border of the former Soviet Union or inside Russia. 

Since the collapse of communism in 1991 and the end of the Cold War, 
Russia has acknowledged the likelihood of an all-out attack from abroad 
is unlikely. 

"We have carried out sober analysis of the situation and strict analysis 
of conditions, without closing our eyes to the critical financial 
situation and the very tough restrictions which this situation entails," 
Kokoshin said. 

The plan seeks to trim the number of military departments and nondefense 
units to create greater efficiency and save money. The nuclear shakeup 
should be seen in the same light. 

Yeltsin has pressed for military reforms leading to a fully professional 
-- as opposed to conscript -- force. But Defense Minister Igor Sergeyev 
and his predecessors have been hampered by Russia's financial hard 
times, poor morale, low call-up rates, bullying in the ranks and 
creaking equipment. 

The new document, to be supplemented by an updated military doctrine 
later this year, makes clear conscription will have to be used for some 
time to come, Kommersant said. 

In a move welcomed by Moscow but which Soviet-era officers would 
doubtless perceive as the ultimate humiliation, Western defense attaches 
handed over aid on Tuesday for children whose fathers died in service. 


Moscow Times
August 5, 1998 
Moscow To Outlaw Executions By April '99 
By Christian Lowe
Staff Writer

Russia's justice minister, under mounting pressure from the Council of 
Europe, said Tuesday that the death penalty will be completely abolished 
by April 1999. 

Russia currently operates a de facto moratorium on capital punishment, 
but under the terms of its membership in the Council of Europe, it has 
to ratify a ban on the death penalty by February next year or face 
having its delegation excluded from the council's parliamentary 

Justice Minister Pavel Krasheninnikov, on a visit to the Volga River 
region of Saratov, said "the current moratorium on capital punishment 
will be replaced by its complete abolition in April 1999," Interfax 
reported. Krasheninnikov added: "We shall implement international 

Any ban on capital punishment would have to be ratified by both houses 
of parliament. The opposition-led lower house, or State Duma, nixed a 
bill suspending the use of the death penalty in March 1997 and has since 
shown little inclination to approve total abolition. 

However, Amnesty International, which campaigns for an end to the death 
penalty worldwide, welcomed the justice minister's statement, saying 
government backing for abolition could influence the Duma into ratifying 
a ban. 

Mariana Katzarova, a researcher at Amnesty's London headquarters, said 
Krasheninnikov's statement Tuesday was reassuring, because several 
senior government figures have signaled this year that Russia cannot 
afford to abolish the death sentence because it has nowhere to house 
convicts serving life sentences. The justice minister himself said last 
month that Russia was not ready for abolition. 

"We can only welcome a renewed willingness on the part of the government 
after, for a while, it withdrew its commitment to the Council of 
Europe," Katzarova said. 

The Council of Europe deadline by which Russia must finally abolish 
capital punishment is Feb. 28. Under the schedule announced by 
Krasheninnikov, Russia will miss this deadline. 

However, the council, the continent's leading human rights organization, 
has in the past been flexible when Russia has been late fulfilling its 
membership commitments and is not expected to take action against Russia 
in this case, provided the ban is ratified soon after the deadline 

Courts in Russia continue to issue the death sentence: There are 
currently 894 prisoners on death row around the country, according to 
Amnesty's figures. However, the government says no one has been executed 
since Yeltsin introduced the moratorium in August 1996. 

Amnesty and the Council of Europe have insisted that a de facto ban 
enforced by presidential decree is not sufficient because it could be 
repealed when President Boris Yeltsin leaves office. "The guarantee that 
executions will not be carried out is hanging by a thread," said 
Amnesty's Katzarova. "The moratorium will only [function] as long as 
Yeltsin is alive." 

When it was granted membership in the Council of Europe in February 
1996, Russia took upon itself a commitment to phase out the death 
penalty. It pledged to place an immediate moratorium on the use of the 
death penalty, sign protocol No. 6 of the European Convention on Human 
Rights, which outlaws the death penalty, within a year, and ratify the 
protocol within three years. 


Russian experts ponder Do our men need Viagra?
By Adam Tanner

MOSCOW, Aug 4 (Reuters) - Russian men will be among the first outside the
United States able to buy the impotence drug Viagra legally starting in
October -- but its unclear how many will actually want it, officials said on

With 58 the average age of death for Russian males, much of Viagras prime
potential market is eliminated. But experts say middle-aged Russian men suffer
from the same sexual problems as those elsewhere -- although they may be more
reluctant to acknowledge them. 

``The level of sexual disorders is very high in Russia,'' Tatyana Agarkova, a
doctor and member of the Culture and Health Sexology Association, said in an
interview. ``Russia is not different from other countries in needing help.'' 

Smoking, alcoholism, stress, poor eating habits and other banes of Russian
contemporary life can contribute to impotence -- but these lifestyle factors
have also sharply lowered Russian men's life expectancy. 

At a news conference to present the drug, sensitivity over any threat to the
perceived virility of Russian men sometimes overcame scientific analysis. 

``The percentage of impotent men in Russia is far lower than in America,''
said an agitated Nikolai Lopatkin, 74, director of the Russian Institute for
Urology, who wore a Soviet-era ``Hero of Socialist Labour'' gold star on his
lapel. ``Don't think that half of our men are impotent, it's far from the

Robert Marshall, head of the Russia office for U.S. drugs firm Pfizer (PFE.N)
which makes Viagra, said a company study concluded that about four million
Russian men above the age of 35 -- 14 percent of the total -- suffered from
impotency and were potential customers. 

But he said it was unclear whether they would seek medical help and whether
they could afford the average cost of $12 for a single tablet which Pfizer
plans on charging in Russia. 

``The potential for Viagra is very hard to estimate,'' he said. 

Many Russian pensioners, who under the Soviet Union rarely discussed sexual
problems in public, saw their savings wiped out in the hyper-inflation of the
early 1990s after the collapse of Communism. 

So far there are no plans to subsidise Viagra costs for the needy, said Galina
Koslesnikova, head of the Health Ministry's drug registration division. 

Viagra is already available on the Russian black market at prices ranging from
about $14 to $250 a pill, medical experts say. Sometimes blackmarket dealers
even proffer fakes such as a strong laxative. 

``As soon as it appeared in the United States it came to the Russian black
market,'' said Agarkova, who hailed the drugs legal arrival. 

``Selling it through such illegal channels outside the control of doctors is
extraordinarily dangerous.'' 

As in the United States, Switzerland, Canada and Brazil where it is already
sold, Russia will offer Viagra only by prescription after its official
introduction in October. 

Experts said some Russians, including the new rich wanting to see if they can
enhance sexual performance, will continue to seek Viagra through non-official

``Our main concern is that patients will be taking Viagra either who don't
need it or without any information about it,'' said Pfizer's Marshall. 

He added that in the United States about two million men in the United States
had taken Viagra since its April introduction, with Pfizer selling 25 million
tablets there. 


>From RIA Novosti
August 4, 1998
Unless he explains where a third of the taxpayers' money goes

Persistent rumours about the possible resignation of
Defence Minister Igor Sergeyev, 60, overshadowed last week's
main event for the ministry. I mean the session of the Finance
Ministry collegium which produced a rough draft of the 1998
federal budget, which, naturally enough, includes the defence
Under it, a third of the budget (167 billion roubles out
of the 456 billion roubles) will be spent on the repayment of
the internal and external debts, some 150 billion roubles will
be spent on defences and security, and the rest will go on the
national economy. 
It goes without saying that when the draft will be
submitted to the State Duma, the industrial, agricultural and
other lobbies will fight tooth and nail to get more for
themselves. It is possible that military allocations will be
cut considerably, unless the power departments explain why they
need so much money. 
It is indicative that we are bound to get a "police
budget," despite the fierce resistance of "the goodwill
public." To begin with, the planned military expenses do not
exceed the limits set by the constitution. Second, they are
even less than is necessary to keep the power structures more
or less alive. They will barely suffice for the maintenance of
the armed forces and the other power units, and will be
possibly enough for one promising research project in the
interests of future defences. 
But even this is not settled. We all know that the final
version of the budget will allocate on defences and security
less than initially planned, and the sums eventually
transferred to the military accounts will be smaller still. The
draft budget does not provide for allocations on the federal
programme of building housing for servicemen, on the
utilisation and liquidation of weapons and hardware, and on
space research. 
Since nobody has renounced Russia's international
agreements, we will have to cut pieces from the defence pie. It
barely differs from last year's budget, which created such a
large deficit. 
And yet the power structures (first and foremost the
Defence Ministry which is to get 102 billion roubles) will find
it very hard to prove their point. Marshal Igor Sergeyev was
hinted that the army will not be allowed to spent this money on
maintenance, as it is designed to ensure the continued
implementation of the military reform, or in plain English,
Last year the armed forces were cut by 223,000, including
56,000 commissioned and 25,000 warrant officers. This year
another 76,000 commissioned and 57,000 warrant officers are
expected to resign, and the overall cuts add up to 400,000
servicemen. This is 1.5-2 times more than last year. And yet
the army is short of funds for rearmament and modernisation;
allocations to it barely suffice on maintenance. This means
that the armed forces should be reduced still more, and the
planned ceiling of 1.2 million is not the limit. 
It is paradoxical but the Defence Ministry has no ideas on
how the army would live in this situation. The rumours about
the Defence Minister's imminent resignation might come true,
unless the pro-reform marshal shares his plans for the future
with the public soon. This time Igor Sergeyev will not be
allowed to swallow a third of the federal budget without



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