August 24, 1998   
This Date's Issues: 2323  • 2324

Johnson's Russia List
#2324
24 August 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Yeltsin Explains Government Shuffle.
2. AFP: Text of Yeltsin's Nationwide Broadcast.
3. Reuters: Duma speaker says Russia PM mulling coalition govt.
4. Ben Aris: life expectancy.
5. Peter Ekman: Financial Suicide.
6. Fred Weir in Moscow on latest developments.
7. RFE/RL: Laura Belin, WHY CHERNOMYRDIN?
8. Albert Weeks: Chernomyrdin-Kiriyenko-Chernomyrdin.
9. Nicola Whittaker: Russia - Internet or "Internot"?
10. RFE/RL: Breffni O'Rourke, Russia: Political Upheavals Reverberate 
Through CIS.
11. Toronto Sun: Matthew Fisher, Russia on brink of economic ruin.
12. Reuters: Chernomyrdin Says Battered Markets Priority.] 

*******

#1
Yeltsin Explains Government Shuffle 
By Judith Ingram
August 24, 1998

MOSCOW (AP) -- Boris Yeltsin said today he recalled Viktor Chernomyrdin to
head the government because an experienced leader was needed to tackle
Russia's burgeoning crisis and restore political and economic stability. 
Chernomyrdin faces an unprecedented economic crisis, a feisty parliament
and a public skeptical that any change at the top can improve its lot. His
reappointment came one week after the Russian government effectively
devalued its national currency, the ruble, and announced it would
restructure the country's short-term debts. 
In a televised address a day after Yeltsin dismissed Prime Minister
Sergei Kiriyenko and his government, the Russian president suggested
Chernomyrdin might be the best candidate to succeed him when his
presidential term expires in 2000. 
``(Chernomyrdin's) main advantages are decency, honesty, and
thoroughness,'' Yeltsin said. ``I think these qualities will be the
decisive argument in the presidential elections.'' 
Yeltsin asked parliament to approve his candidate, but parliamentary
leaders announced they would not convene a plenary session for at least a
week and asked for more time to consider the appointment. 
Yeltsin met with Chernomyrdin in his Kremlin office while Kiriyenko held
a farewell meeting with his colleagues in the government headquarters known
as the White House. 
``Come to work, come to battle,'' Yeltsin said to Chernomyrdin at the
start of their meeting. 
Kiriyenko asked his fellow ministers and deputies ``not to leave their
workplaces and to continue working until replacements are found'' for them,
Interfax reported. 
Chernomyrdin started consultations on the makeup of the new government
early today. 
He spoke with regional leaders, including Gen. Alexander Lebed, the
presidential hopeful who is governor of the Krasnoyarsk region of Siberia.
Chernomyrdin was expected to consult with parliamentary leaders later in
the day. 
``The first thing I will do as acting head of government is to analyze
the situation on Russia's financial and stock markets,'' Chernomyrdin was
quoted as saying by the ITAR-Tass news agency. 
One Chernomyrdin colleague, Alexander Shokhin, said it was unlikely that
prominent economic reformers Anatoly Chubais and Boris Nemtsov would be in
the new government. 
President Clinton was due in Moscow for a summit Sept. 1, a meeting that
Yeltsin's spokesman said today was still very important despite the
dismissal of the Russian government Sunday. 

``Taking into account the circumstances in Russia and in the United
States for the U.S. president, such a visit will be extremely useful for
both presidents and for Russian-U.S. relations as a whole,'' said spokesman
Sergei Yastrzhembsky. 
Kiriyenko, 36, is a former banker who had won respect from Western
economists and some Russians even though he failed to stem the collapse of
the Russian stock market and the steady degradation of the economy. 
Although Chernomyrdin is generally respected in political and business
circles, the sudden change seemed likely to further undermine confidence in
Yeltsin's leadership and do nothing to pick up the spirits of Russians who
have gone months without wages. 
``The changes in the government will not make the slightest difference
in the situation of Russia's miners, because what we are going through now
is the direct result of the work of Chernomyrdin and his team,'' said
Viktor Semyonov, the leader of a months-long picket by miners. 
Chernomyrdin, who headed the Gazprom national gas monopoly during the
Soviet era, was Yeltsin's prime minister and right-hand man from December
1992 until this March, when the president said Russia needed new, more
energetic leadership. 
Chernomyrdin's government failed to pass comprehensive tax laws, or
stamp out rampant tax evasion among Russian companies. 
Communist Party leader Gennady Zyuganov said the communist-led majority
in the parliament is still calling for Yeltsin to step down. 
The ruble dropped 0.135 against the dollar on the interbank currency
exchange today, to close sharply down at 7.14 rubles to the dollar. 
The government was expected to announce the terms of restructuring the
country's short-term debts later today. 

*******

#2
Text of Yeltsin's Nationwide Broadcast 

MOSCOW -- (Agence France Presse) The following is the full text of
President Boris Yeltsin's nationwide broadcast Monday presenting Victor
Chernomyrdin as interim premier and naming him as Yeltsin's heir apparent
for presidential elections due in 2000. 
"Yesterday I took difficult decisions. I asked Victor Stepanovich
Chernomyrdin to lead the government of this country. 
"Five months ago, no one expected the international financial crisis to
hit Russia so hard, or the economic situation in this country to
deteriorate to such an extent. 
"In these conditions, the priority is to avoid a return to the past and
to ensure stability. 
"Today we need what are known as heavyweights. The experience and
gravity of Chernomyrdin are necessary. 
"Behind this nomination stands another important consideration, to
ensure the succession of power in the year 2000. 
"Chernomyrdin has probity, honesty, and is responsible. I think that
those will be the decisive factors in the presidential elections. He has
not been spoiled by the exercise of power nor by his resignation. 
"I am grateful to Sergei Kiriyenko for having tried bravely to rectify
the situation. 
"Today I asked the Duma to consider the candidacy of Chernomyrdin, and I
ask deputies, regional leaders and all citizens of Russia to understand me
and support my decision. In the current situation there is no time for
lengthy debate. 
"The most important thing for us is the destiny of Russia, stability and
normal living standards for Russians." 


*******

#3
Duma speaker says Russia PM mulling coalition govt

MOSCOW, Aug 24 (Reuters) - The Communist speaker of Russia's State Duma,
the lower house of parliament, said on Monday the legislature had agreed
with newly appointed acting Prime Minister Viktor Chernomyrdin on
principles for a coalition government.
Gennady Seleznyov, speaking to reporters after a meeting between
Chernomyrdin and Duma leaders, said the chamber's political factions had
agreed with Chernomyrdin to draw up a document asking President Boris
Yeltsin not to interfere in the functioning of a new government, which he
said would be formed on a ``coalition basis.''
``The sense of this document is that the president should give his
guarantee that a government, which will be formed on a coalition basis,
will not be pushed around with no end,'' Seleznyov said.
``The prime minister will have all authority to lead the cabinet and
himself to define the list of his cabinet staff,'' he said. Seleznyov also
said the Duma would work on a simultaneous document containing concrete
recommendations for a new plan to tackle Russia's economic crisis.
Seleznyov said the Duma Council, a body consisting of faction and
committee heads, would meet on Friday to discuss the new documents and the
full chamber could vote on Chernomyrdin's candidacy early next week.
Yeltsin named Chernomyrdin his new candidate for the post of prime
minister after sacking Sergei Kiriyenko on Sunday. Chernomyrdin has said he
will name his new government only after he is confirmed by the Duma,
although opposition deputies vying for cabinet posts have said they would
like to see his list and his programme before they vote. 

*******

#4
Date: Mon, 24 Aug 1998 
From: ben@glasnet.ru (ben aris)
Subject: life expectancy

just a quick note. I have read several doom and gloom pieces on the list
recently that cite, amongst Russia's other woes, how the life expectancy is
continuing to fall. Leonid Bershidsky, the Editor of Kapital is right in
his belief that life expectancy is already recovering from its 1994 low of
57.6 years for men and 71.2 years for women. The most recent stats from
Goskomstat suggest that this year men's expectancy is already back in the
60's. The main cause for premature death has been alcoholism, although
health care is still inadequate.

Yours
Ben Aris
EIU stringer
Moscow

LIFE EXPECTANCY AT BIRTH (number of years)
males females Total population
1992 62 73.8 67.9
1993 58.9 71.9 65.1
1994 57.6 71.2 64
1995 58.3 71.7 64.6
1996 59.6 72.7 65.9
Goskomstat

*******

#5
From: "Peter D. Ekman" <pdek@co.ru>
Subject: Financial Suicide 
Date: Mon, 24 Aug 1998 

Financial Suicide?

Peter D.Ekman
Professor of Finance
American Institute of Business and Economics
pdek@co.ru

The worst fears of foreign investors in Russia returned Sunday night in the
form of Acting Prime Minister Victor Chernomyrdin. The fears are that the
restructuring program for the defaulted Russian Treasury bills, or GKO's,
which was to be announced Monday morning, would discriminate against
foreigners. The restructuring plan has now been delayed with no firm new
announcement date. The economic future of Russia lies in the balance.

Discrimination would, in effect, take the property of the foreign investors
and give it to Russian GKO investors, primarily Russian banks. The
situation is similar to a dishonest bankrupt, who pays his friends and
relatives before appealing to the bankruptcy court to protect him from his
creditors because he simply has no money. A discriminatory debt
restructuring would likely make Russia a financial pariah state. The
question is not whether foreigners will be hurt by the restructuring - they
certainly will be - but whether the Russian government will take more from
foreign investors in order to save politically connected Russian investors.


Persistent rumors of discrimination last week were interpreted to mean that
there was some support in the government for this suicidal step, which
could very well mean that the empires of three or four of the "financial
oligarchs" would topple without discrimination.

Last week one broker told me, "hopefully there are at least two people in
the government," referring to Anatoly Chubais and Boris Fyoderov, "who
realize that this step would be financial suicide."

Boris Fyoderov reassured financial markets last Wednesday by announcing
that the GKO restructuring plan would be ready by this Monday morning or he
would resign. A plan that discriminates would probably be so complex that
it would take a longer time to draft. Former Prime Minister Sergei
Kiriyenko promised that there would be no discrimination. Anatoly -day
suspension of hard currency payments. Many Russian banks are, or soon will
be, in economic default on their foreign obligations. In many countries,
it's probable that they are also in legal default. Following a
discriminatory restructuring, the foreign assets of these banks would
likely be seized, at least while the legal technicalities are being worked
out.

These consequences could happen without the participation of foreign
governments. Private individuals and corporations could sue in several
different countries, whether or not their governments supported their
actions. Nobody could force foreign investors to put their money into
Russian markets. If foreign governments actively supported financial
action against Russia, the consequences of discrimination would be much
worse, including the seizure of gas and oil exports.

I don't expect the situation to reach this stage, but the concern that the
U.S. government on the restructuring is illustrated by a Monday morning
report on NTV. According to the report, immediately after being sacked by
President Yeltsin, Kiriyenko talked by telephone to U.S. Vice-President
Albert Gore. Gore's question was whether the restructuring would go
through without discrimination.

Why don't I think that the situation will go so far that foreign
governments will take steps to protect their citizens' investments? After
all there are potentially tens of billions of dollars to be lost, in a
situation analogous to Cuba seizing foreign assets after its revolution, or
Libya seizing foreign oil wells.


Financial markets react much faster than governments ever will. The prices
of Russia's Eurobonds are already diving. Within hours of a discriminatory
restructuring, Russia's Eurobonds will again fall by half as investors
wonder whether Russia's promises have any value. It will become clear that
Russia will never borrow again if the discriminatory restructuring is not
reversed quickly. 
The discrimination would almost certainly be reversed within weeks, but
much of the damage would already be done. Investors would think that
Russia not only is unable to keep track of its cash accounts or collect
taxes, but that it is so naïve as to think that it can openly steal from
its lenders without consequences.

It's high noon in Moscow. A decision must be made soon which will affect
Russia's economy for decades.

**********

#6
From: fweir@rex.iasnet.ru
Date: Mon, 24 Aug 1998 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT Aug 24) -- President Boris Yeltsin explained
Monday that he purged his entire government for the second time
in six months and rehired former Prime Minister Viktor
Chernomyrdin with the aim to to stabilize Russia's plunging
economy and provide for an orderly succession of Kremlin power.
"I have made a difficult decision. But five months ago (when
the last mass government change took place) nobody could
expect that the world financial crisis will hit Russia so
painfully, that the economic situation in the country will grow
so complicated," Mr. Yeltsin said in a brief nationwide TV
address.
The 67-year old President looked pale and unwell, stared
without emotion into the camera, spoke softly and stumbled over
his words at one point.
"In this situation we need a strong person, we need the
experience and weight of Chernomyrdin," he said. 
In one of the sweeping, sudden gestures for which he is
famous, Mr. Yeltsin decided at the weekend to discard Prime
Minister Sergei Kiriyenko and his youthful pro-market government
team that he had hired after sacking Mr. Chernomyrdin last March. 
In its 5 months in office, the Kiriyenko government has
watched Russia slide into financial bankruptcy, currency collapse
and social upheaval.
Mr. Kiriyenko was widely expected to be blamed for the
crisis, but few predicted that Mr. Yeltsin would choose to take
back Mr. Chernomyrdin -- a man whose independent power base and
unconcealed presidential ambitions are probably the reasons he
was fired by a notoriously jealous President in the first place.
But Mr. Yeltsin appears to have been backed against a wall
by a spiralling financial crisis, a parliament that has been
calling upon him to resign and an economic elite that is
increasingly nervous over Russia's perilous political drift.
Analysts say it is likely that Mr. Yeltsin was pressured by
Russia's troubled financial oligarchs to appoint a strong man
such as Mr. Chernomyrdin, with a track record of elite
solidarity, to help save the country's top banks from being swept
away in an avalanche of debt default.
"The influence of Yeltsin's own family, and of oligarchs
like Boris Berezovsky is obvious in this turn of events," says
Andrei Kortunov, head of the Moscow Scientific Fund, a private
think tank. "But we should remember that Yeltsin always makes his
own decisions in the end, and this seems to be his own choice."
Boris Nemtsov, the youthful pro-market deputy prime minister
frequently mentioned as possible presidential material, tendered
his own resignation Monday and also cited powerful vested
interests as the underlying obstacle to effective market change
in Russia.
"It is very difficult to make reforms in a country where
there is so much arbitrariness and monopolies are rampaging," Mr.
Nemtsov said. "The present-day ugly oligarchic economy of Russia
needs serious transformations, but just now vision and

understanding of the country's problems are simply lacking."
Mr. Yeltsin has frequently hinted that he could run for a
third Kremlin term at the next presidential elections two years
from now. But in Monday's speech he appeared to abandon that idea
and throw his support fairly unambiguously behind Mr.
Chernomyrdin. 
"There is another important reason for this decision, that
is, to ensure continuity of the government in the year 2000," Mr.
Yeltsin said. "Viktor Chernomyrdin's main advantages are decency,
honesty, and thoroughness. I think these qualities will be the
decisive argument in the presidential elections."
Mr. Chernomyrdin promised to lose no time in coming to grips
with the crisis, although he offered no details on what he might
do differently from the outgoing cabinet of Mr. Kiriyenko.
"The first thing I will do as acting head of government is
to analyze the situation on Russia's financial and stock
markets," Mr. Chernomyrdin said.
But analysts say the situation is grim, and the sudden
change of government teams is likely to make little difference. 
Russia's public finances are in tatters, and millions of
workers who have gone for months without wages are threatening a
general strike this autumn.
"Chernomyrdin has the trust of Russia's financial elite and
Western creditors, but it's very hard to see how he can do
anything to turn around an economic situation as bad as this,"
says Igor Bunin, an analysts with the independent Centre for
Political Technologies.
Mr. Chernomyrdin's appointment must be approved within two
weeks by the opposition-led State Duma. This requirement could
lead to a bruising political confrontation between president and
parliament like the one over Mr. Kiriyenko's confirmation just a
few months ago.
Mr. Yeltsin urged the Duma to quickly approve Mr.
Chernomyrdin's appointment, employing exactly the same arguments
-- ironically -- that he so recently deployed on Mr. Kiriyenko's
behalf.
"In the present situation, there is no time for long
discussions," Mr. Yeltsin said. "The main thing for us is
Russia's destiny, stability and creating normal living conditions
for the Russian people."
The Duma, however, seems in no rush to comply. It has
cancelled emergency sittings planned for this week in order to
study the situation, and has announced it will reconvene next
Monday.
Although the Duma is likely to be more sympathetic to Mr.
Chernomyrdin than his immediate predecessor -- and many of
Russia's regional leaders have already expressed support for the
change -- parliamentary leaders are furious at the way Mr.
Yeltsin's sudden shifts constantly catch them off guard and force
them to accept presidential fait accomplis.
"The question of the prime minister has not been properly
prepared," complained Communist leader Gennady Zyuganov, whose
party controls almost half the Duma's seats.
"Yeltsin did not meet political leaders, we did not review
the issue. It was his 'home politbureau' again that gathered and
made a decision. . . No personnel changes can help drag the
country out of the crisis as long as Yeltsin is in the Kremlin

with all of his powers."
Under Russia's Constitution, if the Duma turns down Mr.
Yeltsin's nomination three times, the President may dissolve
parliament, appoint the Prime Minister by decree and call new
elections.
Mr. Yeltsin's abrupt about-turn has plunged Russia into
chaos, deeply wounded the President's already waning authority
and public credibility, and could signal the beginning of the end
of the Yeltsin era, analysts say.
"For Yeltsin to purge his whole government and bring back
Chernomyrdin, whom he fired just five months ago, was an act of
sheer desperation by a man clinging to the last shreds of power,"
says Mr. Kortunov.
"This means that Yeltsin's circle of people he trusts has
become so narrow that he has no choice but to humiliate himself
in public, to admit that he made a mistake in firing Chernomyrdin
and to bring him back," he says.

*******
#7
Date: Mon, 24 Aug 
From: "Laura Belin" <laurabelin@mailexcite.com>
Subject: WHY CHERNOMYRDIN?

RFE/RL NEWSLINE Vol. 2, No. 162 Part I, 24 August 1998
END NOTE

WHY CHERNOMYRDIN?
by Laura Belin

Boris Yeltsin's decision to put Viktor Chernomyrdin
back in charge of the cabinet, five months to the day after
sacking him, was both a typical and an atypical step for the
Russian president. Political rather than policy
considerations no doubt prompted the move, but the reasoning
behind the appointment remains unclear.
The ouster of Prime Minister Sergei Kirienko is in
part a response to the dire situation on Russian financial
markets, which continued their slide after the government
and Central Bank gave up protecting the ruble from
devaluation. Shifting the blame to cabinet appointees when
times get tough is a classic Yeltsin tactic. The government
closely coordinated its economic policies with the
presidential administration in the four months since Yeltsin
bullied a reluctant State Duma into confirming Kirienko.
Still, the president continued to distance himself from some
economic realities. During a visit to Novgorod on 14 August,
Yeltsin chided the government for being "a little slow in
supporting [domestic] manufacturers." Although Yeltsin
expressed support for Kirienko that day, the president's
spokesman said Yeltsin sharply criticized the Finance and Economics 
Ministries, as well as the State Customs Committee.
As former premier, Kirienko can now become a
convenient scapegoat. In recent months, Chernomyrdin has
criticized several government actions but never turned his
fire on Yeltsin. Speaking to Interfax on 23 August,
Aleksandr Shokhin, who heads the Duma faction of
Chernomyrdin's Our Home Is Russia movement, argued that
Yeltsin has of late not been "fully informed" by Kirienko,
Central Bank Chairman Sergei Dubinin, or Anatolii Chubais,
the president's envoy to international financial
organizations.
Bringing an old hand back into the government is
another routine feature of Yeltsin's cabinet reshuffles.
This is the president who blamed Chubais for wage and
pension arrears when he fired him as first deputy prime
minister in January 1996. Just six months later, Yeltsin put
Chubais in charge of the Kremlin administration. Eight

months after that, he again named Chubais first deputy prime
minister and tasked him with solving the wage and pension
arrears problem. Similarly, Yeltsin appointed Sergei
Stepashin justice minister in July 1997. Two years earlier,
he had sacked Stepashin as director of the country's main
security service after the botched handling of a hostage
crisis in Budennovsk. Searching for a candidate to replace
Anatolii Kulikov as interior minister in March of this year,
Yeltsin again tapped Stepashin.
Nevertheless, the reappointment of Chernomyrdin is at
odds with Yeltsin's past practice in one important respect.
The president normally avoids giving the impression that he
is acting under external pressure. He has left remarkably
unpopular officials in power for long periods, and he
insisted on naming Kirienko as prime minister, despite vocal
opposition from many Duma deputies and media outlets.
Throughout Kirienko's tenure in office, the 51 percent
state-owned network Russian Public Television and the
private network NTV continued to contrast the young premier
unfavorably with his predecessor. The daily "Nezavisimaya
gazeta," which (like Russian Public Television) is linked
financially to CIS Executive Secretary Boris Berezovskii,
has published several calls for bringing Chernomyrdin back
into the government. The most recent of those calls was on
21 August.
Why did Yeltsin offer the top government post to
Chernomyrdin once again, despite having repeatedly expressed
the need for new leadership earlier this year? Several more
weeks of uncertainty and haggling with parliament over
Chernomyrdin's confirmation are unlikely to encourage
potential investors to take a chance on Russia. Nor is
giving Chernomyrdin his old job back likely to boost
Yeltsin's opinion poll ratings.
NTV speculated on 23 August that Yeltsin has decided
once and for all not to seek re-election in 2000. That is,
he appointed Chernomyrdin acting prime minister because he
no longer feels threatened by the latter's presidential
ambitions. Yeltsin lent credence to this explanation in a
nationwide television address on 24 August, when he said his
"main consideration" in appointing Chernomyrdin was
"providing for the continuity of power in 2000." He added
that Russia needs the experience of political "heavyweights"
at present.
While it is possible that Yeltsin has annointed
Chernomyrdin his heir, a more likely explanation is that the
president moved to appease the industrial and business
interests that never warmed to Kirienko. Several banks and
corporations aligned with Chernomyrdin finance influential
Russian media. Berezovskii has often spoken of the need to
ensure "continuity of power." NTV is partly owned by
Gazprom, the gas monopoly Chernomyrdin headed from 1989
until late 1992. Yeltsin may be trying to deter corporate-
owned media from portraying him and the government as weak
and ineffective.
Alternatively, Yeltsin could be offering Chernomyrdin
and his backers a poisoned chalice. The Duma is not
guaranteed to confirm the old/new prime minister, according
to Liberal Democratic Party of Russia leader Vladimir

Zhirinovsky. In fact, the Duma Council on 24 August
instructed the speaker of the lower house, Gennadii
Seleznev, to ask Yeltsin to withdraw Chernomyrdin's
nomination.
But even if Chernomyrdin sails through a confirmation
vote, his government will find no easy answers to the
federal budget shortfall and other economic problems. The
Economics Ministry recently predicted that Russia's gross
domestic product will fall by 2.5 percent in 1998. Failure
to turn the economy around would harm Chernomyrdin's
presidential prospects and the stature of those who lobbied
for his return to the cabinet.

The author is a specialist on Russian politics and media.

********

#8
Date: Mon, 24 Aug 1998 07:32:41 -0400
From: Albert Weeks <AWeeks1@compuserve.com>
Subject: Chernomyrdin-Kiriyenko-Chernomyrdin

In a curious way, President Yeltsin's reappointment of Viktor 
Chernomyrdin as Russian prime minister has its comforting side--at 
least, from a U.S. perspective. The positive side of the firing of the 
young reformer Sergei Kiriyenko is that:
· The old boy, corporate-business network is 
back in operation at a time of chaos, when trust and coordination 
need to be rebuilt in the administration of the faltering economy. 
Chernomyrdin is an experienced administrator, in Russia's huge 
energy industry, and is generally respected by other such 
ex-nomenklaturists from the Soviet period. His will be a steadier 
hand on the tiller.
· Because Chernomyrdin, by the Russian constitution, 
is Yeltsin's successor and because he has a stable personality and calm,
sober demeanor, control over Russia's lethal and deteriorating 
arsenal of nuclear weapons is in more experienced hands. Which 
should be a relief to U.S. authorities. Kiriyenko did not have that kind 
of reassuring authority and familiarity with Russia's military assets 
and liabilities.
· Curiously, the return of Chernomyrdin further shades 
Yeltsin's own standing. Today the president's support stands at 
only about 4%. Those who feel that Yeltsin should step down for 
the good of the country are reassured by Chernomyrdin's Phoenix -like 
reappearance at the top.
In firing/rehiring Chernomyrdin, Yeltsin performed a 
unique version of Lenin's spiral of dialectics. The "triad" of 
Chernomyrdin-Kiriyenko-Chernomyrdin is an updated version 
Hegel's and Lenin's dialectic of Thesis, Antithesis, and Synthesis. 
According to the theory, Chernomyrdin's first term, that ended last 
March, provided the first stage (thesis) of reform managed by most 
of the old Soviet nomenklaturist bureaucracy under Chernomyrdin. 
But this stage was contradicted (antithesis) by the appointment of 
an outsider, a young reformer from, the ranks of provincial governors
who evidently sought an entirely different, non-nomenklaturist,
non-centralist solution to Russia's economic problems. 
Finally, on Aug. 23, Yeltsin reverted to Chernomyrdin thus 
contradicting the contradiction, "negating the negation." He rejected 
but also combined, supposedly, elements of both Chernomyrdin's 
and Kiriyenko's programs while at the same time providing a new, 

putatively "highest" stage of development (synthesis).
But this Hegelian spiral of contradictions contains elements 
of peril for Yeltsin. For one thing, the politically-ambitious Chernomyrdin
has reportedly demanded a free hand as his price for once again 
becoming premier. He will tolerate no interference from Yeltsin, who 
is a notoriously clumsy butt-insky. 
Second, Chernomyrdin's reappointment obviously marks 
the beginning of the end for Yeltsin himself. The latter now faces the 
prospect of voluntary or involuntary resignation, or impeachment.
This also has its comforting side.

********

#9
From: Nicola Whittaker <Nicola@expo-web.net> 
Subject: Russia - Internet or "Internot"?
Date: Mon, 24 Aug 1998

Russia - Internet or "Internot"?
by N. Whittaker

"The Internet market is growing six times faster in Russia than in
Western Europe at this time (source: Sergei Smirnov of Rostelecom at an
Interfax Press Conference)." Surprised? 
Sceptics, particularly those who have not caught the Internet bug
themselves, rightly wonder just how this "information super-highway", which
often seems little more than a haven for pornographers and the lunatic
fringe, can have such a transcendent effect on the real world of tangible
goods and services. Although getting to grips with new connections and
connectivity in Russia today is like trying to grasp and hold a moving
cloud with bare hands, like Russia itself, the Russian Internet perversely
is not a monolith but a rapidly growing crazy quilt of both complementary
and clashing colours. 
Unlike the States, the Russian Internet has, from the very beginning,
been driven by commercial applications. It was the commodities traders,
bankers, and businessmen who, at the beginning of the decade, were the
customers who helped Russia's largest network, Relcom, spread its array of
simple e-mail routers throughout the country.
Nowadays, the different social strata of Internet users in Russia may be
divided along the following categories: 
35% Employees of companies, research institutes, etc..., in the
scientific and information technology sectors. 
25% Managers of different levels, including government employees. 
20% Private consumers. 
10% People working in libraries, theatres, etc... 
10% Students and school children. 

SOURCE: BISNIS
According to an estimation by the Regional Public Centre of Internet
Technologies, (ROCIT), there are currently 900,000 to 1 million Russian
Internet users (see tables 1 and 2 below).

Table 1
% Russian Internet Users Internet Usage experience
33.3 3 months
23.0 6 months
21.7 12 months
9.3 2 years
12.7 2+ years

SOURCE: INFOART

Table 2
% Russian Internet Users Location
64 Moscow
16 Ural, Siberia, Far East
11 Central & West Russia
9 St. Petersburg

SOURCE: INFOART
Compared to the ROCIT statistics in 1996, the number of Internet users
in Russia has doubled. One contributing factor could be the fact that
since 1996 the dial-up online time has gone fallen from a basic of $3 to
$1.50.
An increasing number of Russian firms and individuals are using the
Internet as a means of business communication. Though on-line advertising
in Russia is not quite developed, several major Russian companies
(Aeroflot, Izvestia, Kommersant, Credo Bank and Bank Delovay Rossiya) have
recognised the potential of inexpensive and world-wide accessible online
advertising.

Ample opportunities remain to experiment with net applications in a
business to business setting within the Russian markets. Other modes of
communications such as making a conference call, sending a letter or a fax
overseas - perhaps taken somewhat for granted over here in the West - have
proven to be very inefficient. Thus the Internet for the Russian
businessman or businesswoman is an inevitable time and cost effective tool.
An enterprise which manages to establish a process by using Internet
technologies to link other entrepreneurs through an entire production
chain, from manufacturers to suppliers and customers is going to result in
some pleasant surprises all round.

SOURCES:
BISNIS www.itaiep.doc.gov/bisnis/bisnis.html
INFO ART www.infoart.com
INTERFAX NEWS AGENCY www.interfax-news.com
Regional Public Centre of Internet Technologies, (ROCIT) www.rocit.ru
SAMOVAR INTERNET CONSULTING www.samovar.ru
EXPO-WEB COMMUNICATIONS www.expo-web.net
THE MOSCOW TIMES www.moscowtimes.ru

*********

#10
Russia: Political Upheavals Reverberate Through CIS
By Breffni O'Rourke

Prague, 24 August 1998 (RFE/RL) -- Russia's fellow members of the
Commonwealth of Independent States (CIS) are becoming accustomed to
surprises from Moscow as Russia struggles with its deepening financial crisis.
But President Boris Yeltsin's sacking of the entire cabinet of Prime
Minister Sergei Kiriyenko has sent shock waves through the CIS as well as
further afield. So has the decision to replace Kiriyenko as prime minister
with the veteran Viktor Chernomyrdin. 
People are asking themselves whether this is the start of recuperation
in Russia, or is it another desperate measure from a failing leadership in
Moscow?
Only five months have passed since Yeltsin dismissed Chernomyrdin from
the premiership and nominated Kiriyenko, as the bright young man with the
dynamism and skill to lead Russia securely on the road of reform. Reality
turned out to be different. 
Yeltsin led a long and politically costly battle with parliament to gain
confirmation of Kiriyenko. And instead of getting better, things in Russia
in the following months have deteriorated dramatically into a full-blown
crisis of confidence. 
Not all of that was Kiriyenko's fault, in so far as falling world oil
prices cut deeply into Russia's export earnings, and international
investors were made pessimistic and cautious towards the Russian market by
the ongoing Asian financial crisis. But now the country lies practically
paralyzed, with the possibility of another distracting struggle to get
Chernomyrdin accepted by a reluctant parliament. 
Yeltsin has called for support from all Russians, inside and outside
politics, for the change of the government. But not only Russians will be
effected by the continuing turmoil. 
As the dusty trains clatter daily between Kazakhstan and Russia, many of
the passengers are small business people who make their living from cross
border trade. For them the fall of the ruble has had immediate
significance. Before the de facto devaluation of the ruble last week (Aug.
17), Kazakh traders were getting 75 Kazakh tenge for one dollar. Now it's
78 to the dollar and locals expect it to fall further. That's because the
Kazakh currency is reflecting the weakness of the ruble.
In the Caucasian republic of Armenia, many families are worrying whether
worsening economic conditions in Russia will result in any loss of jobs for
the tens of thousands of Armenians who work unofficially there. Many of the
jobs may be ill paid, but they represent a crucial income for those who can
find no alternative work at home. 

By contrast, in the republic of Georgia, most people shrug off the
Russian developments. They are hoping that now that Turkey has replaced
Russia as Georgia's biggest trading partner, their little country will be
more insulated than it once was. In addition, Russian investment in Georgia
is small, and trade between the two countries is carried out in dollars.
Even in energy matters the little republic is independent of its giant
neighbor.
Georgia's President Eduard Shevardnadze, a former Soviet foreign
minister, was one of the few CIS leaders who reacted promptly to the events
in Moscow, saying he hopes they will enhance stability in Russia. Facing
the Caspian sea, another small republic, namely oil-rich Azerbaijan, is
also buoyant. The head of Social and Political Relations in the President's
office, Rustam Mamedov, says he believes the CIS countries can weather the
storm without worry. He says Chernomyrdin's return in Moscow is timely
considering his past role in stabilizing the ruble. 
Analysts say that the continuing upheavals in Russia could have a
loosening affect on ties within the CIS, as member states reorient trade
contacts away from Russia and more towards each other, to Asia, and to the
West. 
(Azerbaijani/Kazakh/Georgian/Armenian services have contributed to this
story) 

*********

#11
Toronto Sun
August 24, 1998 
[for personal use only]
Russia on brink of economic ruin
By MATTHEW FISHER (74511.357@CompuServe.com)
Sun's Columnist at Large

MOSCOW -- On a side street a couple of hundred metres from Red Square last
Thursday afternoon, two strapping young soldiers shamelessly begged
passersby for a few rubles and kopecks. 
This follows by a few days a defence ministry suggestion that men in
uniform should hunt, fish and forage for mushrooms until the Kremlin gets
enough money to pay them. 
An Irish chum who runs a cigarette factory in Moscow says that unless he
comes up with a hard currency loan which will probably never be repaid, his
secretary will not go to Italy for a long-planned holiday next week because
it is impossible for her to convert her pathetic rubles into any western
currency. 
As for his business, a new plant is now in limbo because his western
investors no longer want to have anything to do with Russia. 
Another friend can't get the $3,400 she has on deposit in a U.S. dollar
account at a Russian bank. This is the same institution which recently
built itself a grand marble and mahogany lobby. 
The Voice of Russia, or Radio Moscow, as the once proud Communist party
propaganda organ used to be known, has sacked its only two English-speaking
commentators from overseas, taken away subsidized Soviet-style apartments
from a team of broadcasters who have not been paid in several months and is
now so short of money that, incredibly, all the telephone lines into its
studios have been cut. 
British Airways business class service normally carries 100 or more
westerners between London and Moscow every day. On one flight last week
there were just eight business class passengers. One was a burly, humorless
Russian fellow who dressed like a gangster sent over from Central Casting.
Five were Russian women dolled up in the tarty style much favored here by
prostitutes and by hoodlums' molls. The other two were tight-lipped
foreigners most probably on their way to Russia to dole out the latest
batch of western handouts. 
As much as the rapid descent of the ruble, which the Yeltsin
administration first lied about and then gave up on last week, the
foregoing string of sad little observations are tangible signs that
Russia's much over-hyped economic miracle is over almost before it began.
Thanks to grotesque miscalculations by supposedly savvy, western-oriented
officials and the theft of virtually everything of value in Russia by this
same grasping, deeply entrenched old ruling elite, the country is grinding
to a halt. 


SMOKE AND MIRRORS 
That Russia's allegedly vibrant economy has been mostly smoke and
mirrors has been obvious for several years to those few brave foreigners
who travelled outside Moscow's charmed Garden Ring to witness human misery
and decay. But Russia's economic paralysis has finally begun to touch Fat
City, too. 
A Muscovite who sells car tires imported from Canada, the U.S. and
France says that after several years of booming trade, which allowed him,
his wife and his daughter to take seven holidays in southern Europe and
Southeast Asia and to buy a Korean car, his customers have suddenly
vanished. However, one thing that has remained the same is that the police,
the fire department, local bureaucrats and petty hoods still harass him for
bribes. 
Another thing which hasn't changed in Moscow is the continuing
propensity of government officials to gorge on emergency loans provided by
western banks and governments. Thirty-five magnificent limousines with
traffic-beating blue lights on their roofs were parked outside the Russia
Central Bank last week as the country's leading minds chewed over how to
get the country out of its latest mess. Most of the cars were deluxe
Mercedes-Benz 600 series sedans that a Canadian or American bureaucrat or
politician might dream of having, but would never dare to be seen in. 
Small wonder that the global focus on Bill Clinton's prodigious sexual
appetite, his skewed relationship with the truth and his
reputation-rescuing foreign adventures is understandable. So is Canada's
present preoccupation with its faltering dollar and with the Supreme
Court's decision that Quebec has no right to unilaterally quit Confederation. 
The latest outrages in Northern Ireland and that old standby -
Dianamania - dominate what little room is left on the news agenda these
days. But chaos in Russia will soon force this country to the top of the
list again. 
About the only accurate thing uttered in Moscow last week was a solemn
promise by Prime Minister Sergei Kiriyenko that Russia's agony has only
just begun. 

********

#12
Chernomyrdin Says Battered Markets Priority 
August 24, 1998

MOSCOW -- (Reuters) New Russian acting Prime Minister Victor Chernomyrdin,
trying to reassure nervous investors, said on Monday he would make an
analysis of battered domestic financial markets a priority, Itar-Tass news
agency reported. 
The debt market is in a state of deep freeze while shares are at
two-year lows as Russia has plunged into a financial crisis involving the
effective devaluation of the ruble. 
Chernomyrdin was recalled to power on Sunday after President Boris
Yeltsin made the shock decision to sack former Prime Minister Sergei
Kiriyenko. 
"The first matter I will deal with in the post of acting prime minister
is an analysis of the financial markets and stock markets of Russia,"
Chernomyrdin, appointed by Yeltsin on Sunday evening, was quoted by
Itar-Tass as saying. 
It was the first public statement since he was appointed and Itar-Tass
quoted the new premier as saying he had issued the relevant instructions on
Sunday evening. 
Chernomyrdin's return to power, made after the sacking of former Prime
Minister Sergei Kiriyenko after four months in office, is another blow to
the confidence of investors after the collapse of all the country's markets. 

The political shakeup came as the government was working out a
restructuring of its short-term debt market, planning to convert around $40
billion of GKO t-bills and OFZ bonds into longer-term paper, cheaper for
the state to service. 
A spokesman for Deputy Prime Minister Boris Fyodorov said on Sunday the
announcement of the terms of the debt swap would still take place on Monday
as planned. 
Chernomyrdin will have to deal with the after-effects of the effective
devaluation of the ruble last week, part of a raft of monetary measures
passed by the outgoing Kiriyenko. 
Kiriyenko also ordered a 90-day moratorium on some foreign debt,
although several of Russia's larger commercial banks have said they did not
need the debt freeze. 
Analysts were doubtful whether Russia's financial markets would be
reassured by Chernomyrdin's decision to give them top priority given
longer-term doubts over the course of economic reforms under his leadership. 
"I think that the market will be in very dire straits over the next few
days before any sign of what might happen in the future takes place," said
Thierry Malleret, chief economist at Moscow's Alfa Capital. 
The perilous situation of Russia's finances, which necessitated the debt
restructure, moratorium and crisis measures, had built up during
Chernomyrdin's six years in office. 

********