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Johnson's Russia List


August 10, 1998   
This Date's Issues: 2304    

Johnson's Russia List
10 August 1998

[Note from David Johnson:
PLEASE READ! This will be the last JRL message until
Thursday, August 13. A modest break. How will you spend your
1. Interfax: Communist Chief Says Envious of US Impeachment

2. Interfax: Scientist Warns of After Effects of Nuclear Testing.
3. Obshchaya Gazeta: Aleksandr Movsesyan, "No Goals Are in Sight 
That Are Worthy of These Sacrifices: The Shortcomings of the Anti-Crisis 
Program of the Cabinet of Ministers."

5. Itar-Tass: Scientists Warn Yeltsin of Pollution in Major Cities.
6. Claudiu Secara: Re #2299 Herspring/Hough.
7. Obshchaya Gazeta: Dmitry Furman, LUZHKOV, LEBED HAZY FIGURES.
8. Christian Science Monitor: Alexei Izyumov, IMF in Russia: Who Else
Will Crack the Whip?

9. Business Week editorial: WHY RUSSIA NEEDS A CASH ECONOMY.
10. Interfax: Poll: 43 Percent Unaware of Government Program


Communist Chief Says Envious of US Impeachment Regulations 

Moscow, July 29 (Interfax)--The chairman of the Russian State Duma's
special impeachment commission, Vadim Filimonov, of the Communist faction,
has said he is envious of the United States' impeachment regulations.
U.S. President Bill Clinton is facing a threat of impeachment because
of a new development in the Monica Lewinsky scandal, Filimonov told
Interfax Wednesday.
"U.S. legislation envisages far more reasons for impeaching the
President than our Constitution," he said. "They (the United States) have
more democratic rules, and I like them. I think the United States is far
ahead of us in this respect, and we may only be envious."
Clinton is facing the impeachment threat not because of his alleged
liaison with an intern but because of alleged perjury, Filimonov said. 
"This is not the most serious of crimes," he said. Nonetheless, U.S.
legislation sees this "immoral action" as a sufficient reason to raise the
impeachment issue, Filimonov said.
"Unlike the authors of our Constitution," U.S. lawmakers have shown
foresight, by setting high requirements to the country's president, he
Filimonov said he regrets that "our Constitution envisions limited
grounds" for impeaching the president. However, "there is a chance,
although a slim one," that the procedure launched by 217 Duma deputies will
lead to early presidential elections in Russia, he added.


Scientist Warns of After Effects of Nuclear Testing 

Moscow, Aug 5 (Interfax) -- The seriousness of the consequences of
nuclear tests carried out by the former Soviet Union "will possibly surpass
the aftermath of the Hiroshima bomb attack," prominent Russian
environmentalist and member of the Russian Academy of Sciences Aleksey
Yablokov told Interfax Wednesday [5 August].
Speaking on the eve of the 53rd anniversary of the Hiroshima tragedy,
he said that in the 1960s the Soviet Union tested the world's largest 
50-megaton atomic bomb in the air above the Novaya Zemlya island. "In the
estimate of Academician Sakharov, a one- kiloton nuclear charge exploded in
the atmosphere causes the death of 50,000 people in a chain of
generations, which means that ultimately this bomb will take the lives of 3
million people," he said.
He also said that the fundamental concept on which the International
Atomic Energy Agency is based is erroneous. "Until now this organization
has performed two functions, spreading nuclear technology in the world on
the one hand, and controlling the nonproliferation of nuclear weapons, on
the other. These two tasks are mutually contradictory," Yablokov said.
He said, speaking about the "peaceful" uses of atomic energy that any
nuclear power plant, even one operating without flaws, "causes serious
radiation pollution of the bio-sphere, where the content of Krypton-85 and
Plutonium is millions of times greater than it was in the pre-nuclear era,"
Yablokov said.
Regarding the radio-nuclides Tritium, Iodine-131, Cobalt-60, Fe- 59,
and Caesium-137 and -134, he said that they can be found in soils and in
living beings at a distance of tens of kilometers from any nuclear power
Regarding this, he said that in the period from 1925, when
international monitoring was initiated, to 1990 the radiation dose
considered safe was lowered 78 times. Moreover, these "safe doses" are
only applicable to healthy 20 year-old men, he said. 
Speaking about the Chernobyl accident "the latest of the most tragic
signs of the nuclear era," he said that in the first months following the
accident, several dozen thousand children were born dead in Ukraine,
Belarus, and Russia, and also in Germany, Greece, Austria, Sweden, Norway,
and Turkey.
Yablokov said that over 9 million people still live on the
Chernobyl-contaminated areas where half of the children are born with
mental disorders.
Belarus still spends 25% of its budget, Ukraine 10% and Russia 1% on
dealing with the consequences of the Chernobyl accident.


Shortcomings of Anti-Crisis Program Seen 

Obshchaya Gazeta, No. 29
July 23-29, 1998
[translation for personal use only]
Article by Aleksandr Movsesyan, professor of the Academy of Finance at
the RF Government: "No Goals Are in Sight That Are Worthy of These
Sacrifices: The Shortcomings of the Anti-Crisis Program of the Cabinet of

The first reading of the program submitted by Sergey Kiriyenko made
quite an agreeable impression. At last, much of what had been talked
about for years and years, for example, imputed income for small business,
or establishing efficient control over the alcohol products market, was
beginning to be implemented. The document was emphatically and strictly
structured, and economic estimates of the increase in state incomes or
decrease in expenditures were given for many of the proposed measures. 
Seemingly, all the factors of monetary regulation of the economy (this is
precisely the direction of economic theory to which the government
consistently and openly adheres) were enumerated and used in the program. 
It is even surprising that in such a brief period (a month or two), the
government was able to create such a sound document.
A more careful analysis shows, however, that a conglomerative content
is concealed behind the efficient structural form and outward completeness
of the program. The developers simply systematized the varied proposals
accumulated over the long years of the crisis, linking them mainly in a
stylistic fashion. We cannot guess the full-valued and systemic model
standing behind the document, a model with the aid of which the various
measures, groups of measures and variants of the program can be evaluated
on the basis of computer experiments, and not on the basis of real-life
experiments, so painfully endured by the people.
In the technocrat milieu in which it is accepted to include our 
premier, this sort of comic calculation is well-known. Of all the 
inhabitants in the country, out of the 35 percent nonworking women, 25 
percent children, 10 percent disabled and 30 percent pensioners -- there 
is no one to do any work. The method of calculation in some ways 
resembles an anti-crisis program -- the factors are taken into account 
separately and are formally summed up without any consideration of their 
intersecting and their mutual influences. A lot of questions arise from 
For example, does the transition to adding VAT on products shipped 
not lead to a reduction in mutual supplies and to additional curtailment 
of production? How can the proposed installment payments for VAT be in 
the same section with the requirement to abolish all "earlier granted 
deferments on payment of tax"? Does not the increase in tax rates for APK
[Agroindustrial Complex] products, together with the abolishing of 
subsidies, reduce agroindustrial production, and do the last 20 percent of
the profitable farms not become unprofitable and do the total tax receipts
from the APK not decrease along with the rise in prices for food products?
How can you increase the VAT rate for children"s food and at the
same time abolish benefits for children? There are quite a few such
questions, caused by the insufficient consideration of the mutual effect
of the factors and the consequences of the combined use of groups of
measures. It is possible that the government has substantiated answers
for many of them, but they remained outside the framework of the text of
the program.
Here we pass to the second shortcoming of this document -- the almost
complete absence in it of ideological support for the measures proposed. 
The people are again called on to make certain sacrifices, and they have,
throughout history, repeatedly proved their ability to do this, for the
sake of great goals. The program sets them important, but limited tasks. 
Its provisions may prove to be enough to restore the confidence of the IMF
and a few foreign investors, but not of the people, who should be given a
clear explanation of why they are making these sacrifices, and what has
made them necessary. Allusion to the world financial crisis is no longer
very convincing, since it simply does not exist. There is a crisis in a
few countries, mainly in Southeast Asia, which have brought capitalization
of their stock markets to 150-190 percent of the GDP and are now reaping
the fruits an ill-considered financial policy. But these countries are
hardly tied to Russia economically.
It is obvious that we now find ourselves in a new phase of a strictly
Russian crisis and will be able to emerge from it only through the general
efforts of all strata of society, whose end goal should be to establish
Russia"s victory in the economic competitive battle with the
developed countries. This is a worthy goal, and it is, of course, 
necessary to set the industrial policy the task of reducing the tax burden
to 1.5-2 percent of the GDP, but it is not enough for a moral uplift of
the people. In general, the influence of ideology on the efficiency of
the economic system is now being obviously underestimated, apparently, to
counterbalance its overstated role in the Soviet period.
Finally, with all due respect to monetarism and its well-known 
achievements in the 1980"s, we cannot help but see its restrictive 
framework. The United States and Great Britain long ago replaced their 
orthodoxic monetaristic governments with republicans and conservators. In
Germany, apparently, parties will soon come to power which also lean on a
broader set of theoretical-economic structures. In the program of the RF
government, however, there is an almost total lack of a view of the state
as not only a macroeconomic regulator, but also as a component of economic
activity, which owns about 25 percent of the fixed capital and sizable
blocks of shares in the leading Russian enterprises.
Unfortunately, the program has devoted virtually no place to the 
questions of managing state property, and this management could provide a
great deal more funds than other factors which the document covers in 
detail. Suffice to say that the state"s share as a stockholder in the
net profit of the major oil companies during the past year is 
approximately equal to the value of the block of Rosneft shares which was
sold. Let us remember that the advanced European countries, in the 
1950"s-1970"s, which, with respect to the level of technological
and economic development approximately corresponded to our present 
conditions, took the route of expanding the state sector and receiving 
budget income from the management of state property.
Now is not the time to lead the state completely out of economic 
life. Our business is not yet strong enough for this, the formal and 
informal institutions which ensure the successful functioning of the 
economy without the direct intervention of the government are still far 
from being organized. Under these conditions, other organizations, often
criminal, which receive the profit which could go to the budget, will take
the place of the state, which goes off into the background. We are not
referring to only the obvious rackets. According to our calculations,
nonintervention of the state in mutual offsetting schemes will make it
possible for middlemen to obtain over 50 billion denominated rubles a
year. This is money, taken away year after year from the budget
organizations, which, because of this, will become increasingly poor and
will ask for increases in subsidies. Additional receipts to the budget
could be obtained from state control over the information markets. As the
"Goskomstat affair" showed, information has become a valuable commodity in
our country, except that it is not the state that is selling it, but
private and dishonest persons. Having licensed the sources of information
by types, having certified and standardized the market information itself,
and having become the regulator and the major operator on the information
market, the state will not only obtain about 15 billion rubles [R] of
additional income yearly, but will also considerably increase the overall
efficiency of the country"s economic system, reducing the presently
inordinately large transaction costs.


Date: Sun, 9 Aug 1998 
From: (Renfrey Clarke)
Subject: Russian greens combat new nukes

#By Renfrey Clarke
#MOSCOW - After pledging US$22.6 billion to save Russia from
economic meltdown, international lenders are being called upon to
extend a further US$18 billion. Not, this time, to avoid
metaphorical meltdowns, but to help set the scene for real ones.
#At a press conference on August 3, leading Russian nuclear
energy official Yevgeny Ignatenko outlined plans for the building
of 16 new nuclear power reactors by the year 2010. Ignatenko is
the director of the state body Rosenergoatom, which operates
Russia's nuclear power plants.
#With nine power reactors to be decommissioned during the period
to 2010, Ignatenko explained, the number operating in Russia
would rise from 29 to 36. Eight new nuclear power plants would
come into operation, and the proportion of Russia's electricity
derived from nuclear power would rise from 12.8 per cent to about
14.7 per cent.
#The total cost of the expansion program would come to 114
billion rubles (about US$18 billion). Because Russia's near-
bankrupt government is skimping on infrastructure development,
the nuclear authorities are looking to private investors - above
all, foreign ones - to provide this sum.
#But international financiers are not leaping at the chance to
fund new Chernobyls. Russia's nuclear power industry, aside from
posing well-known environmental dangers, suffers from a drawback
guaranteed to put off most potential lenders. As payment for
their product, Russia's nuclear plants have mostly to settle for
bartered goods. The industry sees little in the way of ``living
money'', and is ill-placed to repay loans.
#There is also real doubt that the electricity from new nuclear
power plants would find buyers. The contraction of Russia's
industrial output during the 1990s has created an excess of
generating capacity, and the country's industries show few signs
of reviving.
#With an uneconomic product, Russia's nuclear power authorities
can be expected to turn their attention back to state sources of
financing. The nuclear industry has excellent contacts in the
armed forces and in technocratic circles within the state
bureaucracy, and has long shown an ability to extract favours
from the government.
#During July, the government endorsed its own variant of
Ignatenko's expansion program. The English-language <I>Moscow
Times<D> stated on July 30 that Prime Minister Sergei Kiriyenko
had signed a document calling for the completing of four nuclear
reactors now under construction, and for the building of four
more nuclear plants by 2010. In addition, planning work is to
begin on yet another four plants. The federal authorities will
not pay for the construction work involved in these projects, but
will finance research and development.
#If these schemes fail to prosper, the nuclear bosses have
several fall-back options, which at least on the surface appear
much cheaper. These latter variants, however, are not necessarily
less dangerous than the full swag of 16 new ``nukes''.
#Of Russia's 29 working nuclear power reactors, 13 were built in
the 1970s, with a planned lifespan of 30 years. In the normal
order of things, these reactors would be decommissioned during
the coming decade. Now, nuclear officials are talking of keeping
them in operation.
#On July 30 the English-language <I>Moscow Times<D> quoted
Nikolai Yermakov, head of the nuclear power department in the
Russian government's Nuclear Energy Ministry, as saying that the
lifespan of many of the country's reactors could be increased by
``at least five to ten years''. The safety implications of
keeping leaky, metal-fatigued equipment functioning beyond its
designed period of service need no comment.
#Perhaps even more risk-laden is a scheme to develop the use of
mixed uranium-plutonium reactor fuel. Here, the push by Russia's
nuclear power industry to shore up its influence and ensure its
survival is being disguised as arms reduction.
#Russia reportedly has reserves of weapons-grade plutonium of
some 50 tonnes. According to Reuters on July 27, Russia is
seeking up to US$2 billion in aid from the international
community for developing ways to ``dispose of'' this plutonium by
using it in nuclear power reactors. On July 24, the report
stated, Russian Prime Minister Kiriyenko signed an agreement with
US Vice-President Albert Gore ``under which both nations pledged
to convert plutonium from dismantled nuclear weapons.''
#The report quoted US Undersecretary of Energy Ernest Moniz as
saying that the US, France and Germany had held preliminary talks
on helping Russia to build the first plants for converting the
plutonium. If such plants are constructed, and if Russia finishes
up holding large quantities of uranium-plutonium reactor fuel,
this situation will then be cited as a compelling reason to build
or convert reactors in Russia to use the fuel.
#This method of ``disposing of'' plutonium poses far greater
dangers than alternatives such as vitrification and burial in
stable geological structures. When plutonium - arguably the most
dangerous substance on earth - is transported or processed, the
possibility of leaks or theft can never be ruled out.
#Discussing the proposals urged by the pro-nuclear lobby,
Greenpeace Russia spokesperson Igor Forofontov stresses that
these schemes are economically absurd as well as environmentally
#``Our industries already use far more energy per unit of output
than in the West,'' Forofontov points out. ``The resources that
are projected for nuclear power should go into energy-saving
#``If even half of the oil and gas that leaks into the Russian
environment or is flared off were used for power generation,
there'd be no need for nuclear energy.''
#Meanwhile, Russian anti-nuclear activists have been taking their
protests to the reactors - specifically, to the nuclear power
plant on the Kola Peninsula in Russia's far north-west.
#The Kola plant is one of Russia's oldest nuclear installations,
and according to an International Atomic Energy Agency study some
years ago, is among the most dangerous. The decommissioning of
its reactors is due to begin in about five years. Although the
Kola Peninsula has a rich potential for hydro and wind power
generation, the government plans to replace the existing nuclear
plant with a new one, to use mixed uranium-plutonium fuel.
#Between July 19 and August 3, around 150 anti-nuclear activists
from at least seven countries mounted a protest camp three and a
half kilometres from the Kola plant. The activists were demanding
the shutting down of the plant, the scrapping of the plans to
replace it, and the developing and implementing of a regional
plan for the use of renewable energy resources.
#On July 28 about 50 of the protesters helped stage an ``Anti-
Nuclear Day'' in Apatity, the peninsula's second-largest city.
Teams of activists also distributed leaflets in other population
centres, including the nuclear workers' town of Polyarnye Zory.
#Although many local people voiced support for the protesters,
relations with the authorities were tense. Foreign participants
in the camp were fined for breaching the terms of their visas.
Non-violent direct action by protesters in Polyarnye Zory on July
29 was met by nuclear officials with threats and physical
attacks. A newspaper in Apatity published an article under the
headline ``Terrorists beneath the walls of the Kola Nuclear Power
#Throughout the period of the camp, the nuclear plant was kept
under heavy security force protection. But using a diversion
tactic, environmentalists on July 29 managed to climb onto the
roof of the plant's administration building, and to unfurl a 50-
metre banner that read ``Nuclear Plant is Silent Death.'' Three
of the protesters were arrested.


Scientists Warn Yeltsin of Pollution in Major Cities 

Moscow Aug 6 (Itar-Tass) -- Big Russian cities may soon become
unsuitable for life, because they are already facing a "critical ecological
situation," which affects negatively people's health. This conclusion was
drawn by scientists from the Russian Academy of Sciences.
Five academicians of the Russian Academy of Sciences, including
well-known environmentalists Nikita Moiseyev and Aleksandr Yanshin,
forwarded an open letter to President Boris Yeltsin, asking him to "take
most urgent measures" for protecting the cities against harmful exhaust
gases of the automobile transport.
They suggest "the banning of the import and registration in Russia,
primarily in big cities, of automobiles, not fitted with neutralizers of
exhaust gases, the introduction of higher excise duties on ethylated petrol
and the reduction of excise duties on oxygen-containing additives, the
making it incumbent upon the Interior Ministry agencies, or other special
agencies, to put into effect the ban on the use of automobiles, in which
the amount of toxic exhaust gases exceeds the fixed limits." Aside from
it, the scientists insist on starting after the year 2000 the production of
automobiles, with the amount of exhaust gases corresponding to European
The academicians decided to forward the letter to the President
because of the "automobile epidemic," when the number of automobiles used
by the population showed a perceptible increase, and they became the main
reason for the pollution of the natural environment. According to the
information of the scientists, toxic effluents into the atmosphere of
Moscow alone amount to 220 kilograms a year per each Muscovite.
In their opinion, the "critical ecological situation" resulted in a
dramatic deterioration of the health of Muscovites. The overall sick rate
in Moscow is far higher, than the average level for Russia.


From: "Claudiu A. Secara" <>
Subject: #2299 Herspring/Hough on The current crisis in Russia
Date: Fri, 7 Aug 1998

In response to Dale Herspring’s and Jerry Hough’s (JRL #2299)
authoritative unflattering lines, I would like to make a few suggestions.
Maybe next time we are going to have an intellectually more calibrated
conversation, but for now I should definitely help those who felt obliged to
defend the credentials of Jerry Hough on matters of history. [By comparison,
I should add, we need more contributions to the list of the quality of
Matthew Rendall’s (JRL #2298) and Anthony D’Agostino’s (JRL #2301) scholarly
Although on a historical scale it is not much, I did follow Jerry Hough’s
opinions for the last twelve years and I find him memorable among the voices
that are heard on matters of geo-strategic thinking. Out of respect for
Jerry Hough’s scholarship, I decided that he would understand which way the
wind is blowing. Most often one finds that the word history is a four-letter
word except when it refers to the events one remembers from past twenty
years or so. 
Dale Herspring’s take on my comments is not light, just short of
deploying the marines. Although, no one disputes the desire and the
satisfaction that comes from being associated with the cold war’s winning
team, history is of course a little bit more complicated. And on that score
Herspring brings very scant contribution in his posting that I can to refer
to, this time, unlike his well documented books on Soviet military, from
which, out of great appreciation, I quote not once in my books, The New
Commonwealth and Post-Soviet, Euroslavia.
The nature of the argument with Jerry Hough is mostly related to the
scope of our intellectual exercise. Are we interested only in how the U.S.
can take advantage of the situation on a short-term basis? Or, is the
question more on the fundamentals, quality and scale, in the context of the
global economy, global security issues, power-sharing arrangements, etc.? If
that would be the framework of the discussion, then policy making would be
much closer to history making and to the "vision thing."
Now, when it comes to more subtle observations, I should point out that
using the same old scare cliches, "Hitler," "Stalin," etc. is not very
subtle or intellectually generous. It would not be an exaggeration to remind
ourselves the simple fact that throughout much of the known history
humankind progressed with the help of such as Hammurapi, Solon, Caesar,
Charlemagne, di Medici, Elizabeth I, Peter I, Washington, Lincoln, etc. Once
we get over the emotional hang up on "leadership" and come to terms with
such as Aristotle and Hegel, we can see more distinctly the paradoxical
nature of human reality and the irony in the debate on individualism versus
collective mind.
One remarkable quality of Jerry Hough’s approach is his frankness in
naming names. Certainly, bribing is part of the legitimate policy making
arsenal but that already changes the terms of the intellectual discourse. We
are not concerned any more with the "right" but with the "evil." 
If we rephrase, however, the question in terms of what would be the most
desirable form of Russian society in the interests of the U.S., that is a
different take and gets to be even more controversial. Desirable for whom?
NASA would probably like state sponsored grand projects, Wall Street would
go for free market growth, Commerce Department for free market competition,
the Pentagon for civil war, Labor would prefer strong government regulations
and protectionism, Education, Science and Arts would prefer public works
programs and a socialist economic model.

Herspring says: "I was a bit put-off by Secara's suggestion that because
Jerry is a political scientist somehow history is not relevant." That’s a
fabrication, period. 
The sad thing is that, indeed, in Jerry Hough’s comment history starts
with the Hoover Institution or maybe with the Marxists, but definitely not
with Aristotle or Plato. No, the "line that all that matters is ownership of
the means of production " is not to be found in my note, but as matter of
historical record it actually belongs to Aristotle. "Thus there are some who
hold that the proper regulation of property is more important than any other
object, because, so they say, it is about this issue that factional
conflicts always arise." (Politics, II, 7)
Herspring says; "Saying that a period resembles another period does
little when it comes to
analysis. The first thing a policy-maker would say would be ‘so what,’ "
makes sense only when it refers to Jerry Hough’s comment on Lebed that I
quoted and responded to. You got that wrong, Dale Herspring! You found my
note "a little bit bizzare"? I find that statement bizarre, indeed.


>From RIA Novosti
Obshchaya Gazeta, No. 31
August 1998
By Dmitry FURMAN

Forecasting the situation in Russia immediately before the
2000 presidential election is absolutely impossible - not only
because the 'party of power' has no identifiable successor to
Yeltsin and God knows what will happen to Yeltsin before the
year 2000.
Simply, the main political forces of Russia have been
subjected to colossal transformations in the course of the
short post-Soviet history. 
Describing the 'party of power' as a democratic one is
silly, while the Communists are also not a party of protest and
Which means that the main political delineation of the
late 1980s and early 1990s is no more. Having lost their
ideological and behavioural clarity, the two main political
coalitions are losing their capacity to attract and mobilise
loyal masses. The Krasnoyarsk gubernatorial elections provide a
graphic example.
New ideologies and delineations are non-existent. The
majority of politicians are freely drifting from mood to mood
and from grouping to grouping with no painful hesitations. 
But since the presidential election will be held, there
will be delineations, too. The provinces are apt to disagree
with Moscow's choice, the villages will not vote the way the
cities will, the rich will never agree with the poor, etc. 
The differing interests, moods and ideas are likely to
form combinations and 'constellations', so that in the second
tour the voters will have to choose between representatives
(leaders, symbols) of two major blocs. 
What will these blocs ('constellations') be like?
Thus far, they are hazy. The future is vague. Still, one
can discern images and hear vague sounds in the mist. The best
discernible image is that of Moscow Mayor Yuri Luzhkov. The
sound best heard is the lion's roar of General Lebed, the
Krasnoyarsk Governor. 
The two figures are well known and even habitual. This may
be the reason why we fail to realise that these two figures are
strange, not classifiable by the habitual standards and
belonging to the future. 
Let's take a closer look at the two figures.
Yuri Luzhkov is an energetic and popular Mayor who holds
in his iron fist not only Moscow the Russian Capital, but also
Moscow the main bulwark of anti-communism, of all democratic,
cosmopolitan and pro-market forces. 
It would seem that such a man should have a clear-cut
ideology. Moreover, Luzhkov has done a lot to make it
identifiable. He has been honestly serving Yeltsin, helped him
crush the resistance of the parliament's defenders in the
critical year 1993, gone to a synagogue and even worn a
At the same time, he is drifting closer to the 'communist
patriots', opposes the infiltration of Moscow by the Caucasus
people, stresses his adherence to spiritual values, blames
Chubais for everything, wants to have the Crimea or at least
Sevastopol back in Russia, and is buddies with Byelorussia's
A strange combination, indeed. It just may be purely
The mayor wants to build a grandiose structure and he
builds the Cathedral of Christ the Saviour. This move is hailed
by the Church and the patriots, and even the democrats have no
The Mayor fights the infiltrating Caucasus people, which
is welcomed by the patriots and is not rejected by the
democrats, for whom the treatment of Jews, rather than Azeris,
is a measure of pro-western liberalism. 
The Mayor begins to understand, or rather feel, that he
may be popular in the communist and patriotic circles and still
enjoy democratic support in Moscow. His initial steps are
followed by new moves, and the actions of his main rival,
Alexander Lebed, only impart him a new impetus. 
When Lebed concluded the Khasavyurt accords, Luzhkov
naturally criticised them. While drifting, Luzhkov develops an
increasingly more clear understanding that he is drifting in
the right direction, i.e. in the direction of the supreme
Having enlisted the support of Moscow, which is important,
of course, but is in no way the earnest of success, Luzhkov has
become much bigger than the narrow pro-western electorate. 
The combination of interests and images formed around
Lebed is nearly the opposite of Luzhkov's. The two combinations
seem to have appeared to be opposite.
Lebed facilitates peace in Chechnya; Luzhkov naturally
criticises the way it is done. Luzhkov likes Lukashenko; Lebed
comes to dislike the Belarussian president. 
Luzhkov's main basis is the elite, rich, cosmopolitan
Moscow; Lebed's basis is the periphery and the low social
strata, the protest electorate who has only recently been the
Communists' and Zhirinovsky's turf. 
But Lebed's connection to this electorate is even more
symbolic that Luzhkov's connection to the Moscow electorate. It
is not based on ideology; rather, it is based on the fact that
Lebed is a General, a personally attractive man, whose image is
that of a brave and upright person, who does not 'hang out' in
Lebed's ideology (if the term is applicable to both him
and Luzhkov) contains a strong liberal and pro-western
component. Characteristically, he is applauded in both America
and Europe, where Lebed is more popular than the Moscow Mayor.
The general is the leader of Russia's low social strata
who has a liking for western liberalism: nonsense, but no more
nonsensical than the Mayor of the cosmopolitan Moscow supported
by the Communists. Lebed's movement from the low-class, protest
electorate to the opposite, elite democratic electorate is
easier than Luzhkov's movement in the opposite direction. 
Luzhkov may have his Moscow basis and sweep a part of the
protest electorate; Lebed can sweep a part of the democratic
electorate and still preserve his basis in the protest
electorate. What we are witnessing is probably the rise of two
mighty combinations of symbols, images and interests, both
highly eclectic yet potentially very durable. 
Is this good or bad?
Both figures and blocs in the making contain dangerous
elements. Luzhkov, if and when elected into the Kremlin, will
try to rule Russia as toughly as he rules Moscow, but Russia is
not Moscow, and he would hardly succeed in ruling the nation
Moscow-style. It is not likely that he would start a war - say,
for the Crimea. 
It is more likely that Luzhkov will continue scaring our
neighbours by the prospect and thus push them farther from
Russia and into NATO's embrace. 
If and when elected the president, Lebed may also try to
compensate for the vagueness of his programme by roar and
demonstrations of his tough ways. 
But Luzhkov and Lebed will hardly ever become real
dictators. Not that they are personally incapable of this;
simply, there are no resources in Russia to maintain a
From this viewpoint, neither figure emanates realistic
danger. But the benefit inherent in the formation of the two
blocs is evident. 
Yeltsin's phenomenon - that of no alternative to the
current president - is that of stagnation, of gradual
degradation of society and the state. 
The uncontrollable (for lack of alternative) federal power
is strong enough to torment Russia, but not strong enough to
establish order of any kind. The degradation goes hand in glove
with the erosion of the communists-democrats confrontation, for
this confrontation used to unite the nation in a certain
measure (there are 'local' communists and democrats throughout
the country from Kaliningrad to Sakhalin). 
Replacing ideological ties with those of strength is not
feasible. The strength wanes as the ideologies disappear. 
The formation of two blocs which stand an approximately
equal chance to win a victory, while the defeat will be no
catastrophe for either, can become the starting point for
movement ahead, towards the instruments of a democratic
rotation of power and new integrating forces, and new interest
of all in their country and in their federal authorities. 
We may be witnessing the emergence of a Russian specific 
'two-party system' which would finally pull the country out of
the quagmire.


Christian Science Monitor
AUGUST 10, 1998 
[for personal use only]
IMF in Russia: Who Else Will Crack the Whip?
Alexei Izyumov
•Alexei Izyumov, a Russian economist, is a co-director of the Center for 
Emerging Market Economies at the University of Louisville, Ky.

How times have changed. Just 10 years ago Washington was, for Russians, 
the capital of our global arch-rival - the source of constant political 
tension and a possible military threat.

Today Washington is seen by many Russians - from striking miners to 
government ministers to millionaire bankers - as almost a divine helping 
hand, sometimes generous, sometimes miserly, but ultimately the only 
force capable of saving the Russian economy from self-annihilation.

The shift is due to the fact that Washington is the headquarters of the 
"mother of the Russian reforms" - the International Monetary Fund.

The IMF's decision last month to provide Russia with a $15.1 billion 
stabilization package - $22.6 billion if additional loans from the World 
Bank and Japan are included - is the latest and strongest sign of 
Washington's power in Russia.

I was in Russia last month and witnessed the high suspense in 
anticipation of the IMF decision. In Moscow, government bureaucrats and 
people on the street alike all seemed to be tuned in to the dramatic 
IMF-Russian negotiations. The media treated the visiting IMF 
representatives as messiahs. It seemed that almost everyone - whether 
they liked it or not - agreed that without the IMF rescue package the 
Russian economy would just fall over the cliff.

The IMF bailout has helped calm the stormy financial markets, fortified 
the fragile ruble, and allowed the government a crucial breathing space 
to implement its anti-crisis program - all presumably good things. Yet, 
in the West the bailout has provoked a new wave of IMF-bashing. As 
earlier with Southeast Asia, critics charge that the IMF is itself 
responsible for Russia's dire situation and that its latest move is 
wasteful and unproductive. This critique is largely misguided. Russia's 
troubles aren't the IMF's doing. Taking the IMF out of Russia would make 
the situation there worse.

The fundamental problem of the Russian transition is not the bad advice 
from the IMF, but the inconsistency of reform - a problem rooted in the 
controversial attitude toward capitalism of the Russian people 
themselves. The problem is that while Russians overwhelmingly welcomed 
the freedoms and the consumer abundance of capitalism, they wanted at 
the same time to preserve most of the "perks" of communism, such as free 
health care and education, subsidized housing, and guaranteed jobs.

Thus, when the IMF pushed for "shock therapy" in Russia - an abrupt end 
of government subsidies; market-based prices; and strict monetary policy 
- it was too bitter for the Russian taste. As a result, the Russian 
government most of the time wasn't willing or able to implement these 
measures, settling instead for the worst possible combination of 
stop-and-go policy.

For example, as Russia's need for its huge military industry evaporated, 
output shrank by 80 percent. This humiliating comedown for a former 
superpower was so unpopular and hard to digest economically that the 
government felt obligated to keep millions of workers on the payroll, 
generating wage arrears and deficit spending all at once.

While all Communist countries of the former USSR and Eastern Europe 
suffered deep recessions during their market transition, those that 
closely followed IMF advice - Poland, Hungary, and the Baltics - were 
able to resume economic growth after just three to four years. Those 
that didn't - Ukraine and Belarus - are now in worse shape even than 

This is not to say that IMF policies in Russia have been faultless. Many 
Russian economists - including me - do not agree with some of the IMF 
prescriptions for Russia. The ruble exchange rate, for example, was set 
too high, making Russian goods too expensive for foreign importers, thus 
hurting Russian production and stalling recovery. It's clear now that 
some of the mistakes of the 1992-94 reforms could have been avoided, 
such as the IMF's and West's sluggishness in pushing the anti-inflation 
agenda and overlooking the power and influence of such Soviet-era 
monopolies in electricity and natural gas.

But the years of reform were not lost. During this time a lot of 
deadwood in the Russian economy was eliminated, and new industries were 
born. Even the precipitous fall of industrial output wasn't all that bad 
because it mainly represented products consumers didn't want anyway.

Today in spite of the Russian government's failures to ensure 
consistency in reforms, the IMF continues to be the most important 
source of economic discipline in the otherwise anarchic world of Russian 
policymaking. In a way, and quite ironically, the IMF has become the new 
incarnation of Moscow's own Communist-era Politburo - the supreme source 
of Soviet directives. Indeed, the way the country waited with bated 
breath for the IMF's decision last month was eerily like the days of 
waiting for Brezhnev or Gorbachev to announce from the Kremlin the 
latest and "wisest" shift in the Communist Party line.

Besides money and economic guidance, the IMF presence in Russia serves 
another useful function - education. Many in the West overlook the fact 
that - unlike Mexico or Korea - Russia didn't have Harvard-educated 
economists to manage its reforms. A university friend of mine, now a 
high-level officer of the Russian government, once confided that, if 
nothing else, the IMF provided a great school for our top government 
leaders, most of whom hadn't the slightest idea of the workings of 
market economics.

Critics are good at sniping at the IMF's mistakes, but what's the 
alternative? Would Russia be better off left to its own devices? Just 
look at Yugoslavia or Belarus.

In Russia, the harshest critics of the IMF - the "Great Satan of the 
West" - are none other than Communists and extreme nationalists. Even if 
there were no other arguments in support of IMF policies in Russia, this 
alone should give pause to IMF-bashers on this side of the Atlantic.


Business Week
August 17, 1998
[for personal use only]

Russia's evolution into a true market economy has stalled out. Nothing proves
this point better than the bizarre finances of what appears to be one of its
most successful and profitable companies, Avtovaz, maker of the country's
best-selling auto, the Zhiguli. The company posted record sales of $3.8
billion last year but somehow hasn't been able to come up with $1.9 billion in
taxes due the government. Why?
Profits are drained off by a shadowy world of private networks, some legal,
some criminal, that provide goods and services to Avtovaz. The worst offenders
are its managers, who have set up chains of dealerships to sell the $5,000
Zhigulis (known in the West as Ladas). None other than Boris A. Berezovsky,
one of Russia's top tycoons, got his start by selling Zhigulis through his own
nationwide car dealership. He cut a deal with Avtovas, which supplied him with
cars to sell without any up-front payments.
Then there are the suppliers. Most of the components are supplied by people
who receive new cars at below-market prices as payment. They then resell them
to auto retailers at huge profits. Finally, there are criminal gangs who
``sell'' protection and take their payments in new cars as well.
Of course, some economists might argue that many of the networks and deals
represent nothing more than a simple barter economy. After all, components are
being supplied, cars are being distributed, and 120,000 people are being
employed. The problem is money. Russia needs to embrace a cash economy that
would make transparent all the deals that now take place behind the scenes,
allowing companies to capture profits that go to individuals. Without a shift
to open accounting, foreigners will never invest in Russia in a big way. Nor
will Moscow ever begin to retrieve the taxes it needs.


Poll: 43 Percent Unaware of Government Program Essentials 

Moscow, July 29 (Interfax)--Almost half of Russians, 43%, don't know
the essentials of the Government- proposed stabilization program, according
to a poll conducted July 24-28 by the National Public Opinion Center. Some
1,600 people in different economic and geographical zones were interviewed.
The statistical error is within 4%.
Only 7% of those polled thought the program would help overcome the
economic crisis, while 16% said it would worsen the situation and 20% said
neither was true. 14% were undecided.
Most of the respondents knew that implementation of the program would
result in a certain rise in retail prices. Asked what price rise their
family could bear, 3% said a 30% rise, 2% said up to 30%, 4% said up to
20%, 7% answered up to 10% and 20% said a rise of no more than 3-5% was
Some 55% said their families could not bear any price rises because
prices are too high already. In this case 9% were undecided.



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