September 4, 1998   

This Date's Issues: 2346• 2347•  2348 •

Johnson's Russia List
#2347
4 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Russian PM Outlines Economic Plans.
2. Reuters: Extracts from speech by Russia's Chernomyrdin.
3. Patrick Armstrong: CHERNOMYRDIN AS THE ONLY CREDIBLE ACTING 
PRESIDENT.
4. Val Samonis: Chicken and Egg: The Most Concise Political Economy 
of the Russian Monetary Policy.
5. Jim Vail: Humanitarian Interests.
6. Publications of Harvard's The Strengthening Democratic Institutions 
Project (SDI).
7. The Financial Times (UK): Kuzbass region flexes its muscles again.
8. The Times (UK): Richard Beeston, Drinking problems resurface to
plague Kremlin.
9. The Guardian (UK): James Meek, Moscow question: Would the IMF have 
ended the English civil war? 
10. Rossiyskaya Gazeta: Vladimir Kucherenko, "Zyuganov, Yavlinskiy and
Others Reject Chernomyrdin for One Reason: To Remove from the Political 
Arena a Strong Rival at the Next Russian Presidential Election."
11. APF: Russian defence minister warns against street unrest.
12. Hamburg's Bild: Ruehe 'Cannot Imagine' Relapse Into Soviet 
Dictatorship.
13. RFE/RL: John Varoli, Prison Reform Moves Forward, Slowly.]

******

#1
Russian PM Outlines Economic Plans
September 4, 1998
By BARRY RENFREW

MOSCOW (AP) -- Acting Prime Minister Viktor Chernomyrdin called Friday for
``economic dictatorship'' to end Russia's crisis and preserve market reforms
as the hard-line opposition said it would again block his confirmation.
Outlining plans to stem the country's economic crisis, Chernomyrdin said
the government would allow the ruble to float freely, allowing market forces
to determine its value. He also said the government would press ahead with
market reforms as soon as the situation was stabilized.
``Starting in January the government will introduce an economic
dictatorship -- enterprises will be put in the conditions under which they
will not be able to fail under their obligations,'' he told the Federation
Council, the upper chamber of Parliament.
Russia has been plunged into crisis by the collapse of the ruble and a
power struggle between the Communist-dominated Duma, or lower chamber of
parliament, and President Boris Yeltsin.
The Duma was to vote for a second time Friday on whether to confirm
Chernomyrdin as premier, after rejecting him on Monday. His approval could
ease the political instability reigning over Russia, though it would not end
the nation's economic distress.
The opposition says it will never approve Chernomyrdin, accusing him of
creating many of the current problems during his previous five years in the
job. Yeltsin has said he will accept no one else.
Just last month, the ruble was trading at 6.2 to the dollar, or about 16
cents. On Friday, two days after the government said it was powerless to
control the crashing currency, the U.S. dollar was close to 18 rubles in
street trading.
Russians were worried, but there was no sign of panic or unrest.
Chernomyrdin warned that a quick solution to the political crisis must be
found.
``It may be our last chance to build a normal economy in Russia. Yes, our
actions will be unpopular. Everyone will assail us. But don't tie the
government's hands, give us time to step back from the precipice. That
refers to everyone from the president on down,'' he said.
Chernomyrdin said his economic rescue package would concentrate on
meeting unpaid wages and pensions, closing down bankrupt and inefficient
businesses, getting rid of dishonest managers and officials, and lowering
taxes. He said the government would use hard currency reserves to back the
value of the ruble.
``We will have prices rising. The ruble rate will be falling. But since
every ruble will be insured by our hard currency reserves, the rate will
stabilize,'' he said.
Defense Minister Igor Sergeyev said the military wanted a quick end to
the crisis and that nobody wanted a repeat of the 1993 confrontation between
Yeltsin and parliament that ended with a tank battle in Moscow.
``We expect the relevant branches of government to make decisions as soon
as possible,'' he was quoted as saying Thursday by the Interfax news agency,
in an apparent warning to lawmakers.
``The armed forces are not in a festive mood,'' he added.
The Defense Ministry issued a statement Friday denying that troops were
being moved in to Moscow because of the political situation.
If the Duma again rejects Chernomyrdin, Yeltsin has the option of
proposing him a third time, or choosing a new candidate. If the Duma votes
no for a third time, Yeltsin can call new Duma elections.
Some say Yeltsin will do just that -- forcing the legislators to undergo
elections a year earlier than scheduled. The Communists, led by Gennady
Zyuganov, are not particularly strong in the polls at the moment, but the
turmoil is likely to strengthen their support.
Yeltsin moved Thursday to promote a compromise, reviving a political deal
nearly clinched last weekend, which the Communists abandoned at the last minute.
According to Russian news agencies, Yeltsin made some amendments to the
document -- which proposes a reallocation of powers between the president
and parliament -- and sent it back to the Duma.
Some Duma members rushed to try and block any attempt by Yeltsin to
dissolve parliament by putting a motion to start impeachment proceedings on
the Duma's agenda for next week.
Once impeachment proceedings are under way, the Constitution bars Yeltsin
from disbanding the legislature. However, the proceedings pose little actual
threat to Yeltsin because the procedures are lengthy and complex.
Russia has been operating with an interim government since Yeltsin fired
the previous prime minister on Aug. 23 and named Chernomyrdin acting prime
minister.

*******

#2
Extracts from speech by Russia's Chernomyrdin

MOSCOW, Sept 4 (Reuters) - The following are some of the key extracts from a
speech by Acting Prime Minister Viktor Chernomyrdin to the Russian upper
house of parliament on Friday, when he outlined radical measures to rescue
the economy: 
OPENING REMARKS 
Respected members of the Federation Council, as you know the country is
in a critical state. The dollar rate is rising, prices are rising and not
just on imports. The rouble is effectively becoming wooden again and is
rapidly losing its weight. People, whether they are listening or not to our
clever speeches, are stockpiling cereals, salt, matches, sugar. 
ON THE CHOICE FACING RUSSIA 
If in the coming days we do not stop the panic, sort out payments,
resolve the problem of the supply of food, medicine, fuel for the winter,
there will be a disaster like the one which Russia faced at the end of the
80s. Today we are again faced with a choice -- either the abyss of
hyperinflation or mobilisation to rule the economy. 
Yes, our actions will be unpopular. Yes, they will swear at us from the
bottom up. And they will be right. When life is hard, there's nothing to
praise the government for. 
Our actions will be unpopular and we will be attacked by everyone. 
But allow us to do something which would move the country away from the
borderline between life and death. 
ON "ECONOMIC DICTATORSHIP" 
The country will start to live according to strict, absolutely clear
rules. In practice this means that from January next year, the country moves
to economic dictatorship. 
All these measures will need legislative support and new legislation
should come into force literally from January next year. 
ON THE CURRENCY 
Where can can we find the money? Through an increase in the reserves of
the central bank, then making a backed and controlled (monetary) emission,
after which the market itself can determine the rouble's relationship to
hard currency, that is a move to a floating rate. 
We will strictly tie the monetary mass to the gold and foreign reserves
of the central bank. At that stage, of course, prices will rise, but that
way every rouble will be backed by gold and foreign currency reserves. In
other words, the rate will be unbreakably stable. 
ON TAX RATES AND COLLECTION 
The rates of basic taxes should be lowered. Tax holidays should be given
for new production, to regulate payments to nonbudget and social funds and
at the same time to broaden the tax base, to fix the income tax rate at 20
percent and make exceptions only for the poor. 
I think we have to simplify the tax regime. In agriculture only one land
tax is needed and tax privileges should be given to those who increase
production. 
People will no longer be able to avoid paying debts to other enterprises
or taxes without punishment. The property of bad debtors should be
immediately turned into state property. 
ON BANKRUPTCY AND PROTECTION OF DOMESTIC INDUSTRY 
The period of nonpayments has ended. The period of bankruptcies will begin. 
Bankruptcy procedures will be fully worked out so that worthless or
thieving owners or managers be changed rather than bring the enterprise to a
halt. At the same time the state will show decisive support for domestic
producers and especially, especially now, exporters. 
For purchases from the state budget absolute priority will be given to
domestic goods and services. 
A state monopoly on alcohol prooduction really will be introduced. 
ON HIS CANDIDACY: 
I left in March, to applause. If things had become better without
Chernomyrdin, I would not be standing here on this platform today. 
Time has run out. Each lost day takes months, years to make up. I ask for
your support and backing for immediate action. 
I am ready to take full responsibility only because I know that it would
be harder for somebody else in this difficult position, not because I'm so
great. Another person would need months to get acquainted with the
situation. But we don't have those months now. 
I have felt the entire weight of power and I am fully aware of the
responsibility and I think we cannot continue this political performance
before the whole nation. Now is not the time for games. 
ON TAKING THE BLAME 
We, I have a heavy responsiblity. I have already said, and I think I need
to say again here in this hall of representatives, to repeat, I have not and
will not lift the blame from myself or my government. 

*******

#3
Date: Thu, 03 Sep 1998 
From: Patrick Armstrong <ab966@issc.debbs.ndhq.dnd.ca>
Subject: CHERNOMYRDIN AS THE ONLY CREDIBLE ACTING PRESIDENT

In the speculation about why Yeltsin dismissed
Kiriyenko and renominated Chernomyrdin, 
there is one hypothesis which is worth
considering. Like other hypotheses, there is no
evidence for it, there is only argument.
Observation shows that Yeltsin does do things for
a reason, even though that reason may not be
immediately evident. Here is the hypothesis which
ought, at least, to be kept in mind.
1. It is evident that Yeltsin is on a 
"medical maintenance" regime.
2. It is evident that this regime is not working
as well today as it used to -- Yeltsin's mental
and physical state is more erratic lately.
3. It may be that his doctors have told him that
the end is coming.
4. Chernomyrdin is the only credible and reliable
ACTING PRESIDENT available.

******

#4
Date: Thu, 3 Sep 1998 
From: Val Samonis <vsamonis@chass.utoronto.ca>
Subject: Chicken and Egg: The Most Concise Political Economy 
of the Russian Monetary Policy

Chicken and Egg: The Most Concise Political Economy of the Russian
Monetary Policy
By Val Samonis, Faculty of Management, U of Toronto

The recurring issue of the currency board (CB) for Russia reminds me of
the chicken and egg. If the Central Bank of Russia (CBR) had at least
$50bn in gold and forex reserves, it could begin stabilizing the ruble
within the more or less classical formula of central banking, assuming
that the world's worst central bankers are kept out (no particular need
for a genius!). Now CBR has probably less than $10bn which is by far not
enough to introduce and maintain a credible CB. A relative success of CB
in Hong Kong (and other emerging markets) is based on this
high-forex-to-domestic-money ratio. Besides, CB works best in small open
economies which Russia is not and will never be. For the Russian CB to
succeed, it would also need a strict, tough (even brutal) fiscal policy
which brings us to square one (chicken and egg). Still, all other options
are exhausted, so CB is probably the only way ahead. Anybody willing to
provide big money and thereby underpin the Russian CB? So far I do not see
many takers of my offer. Chicken and egg again! 

I respectfully chicken out,

*******

#5
From: "Jim Vail" <jimvail@hotmail.com>
Subject: Humanitarian Interests
Date: Thu, 03 Sep 1998 

I have worked in Russia the past five years as a journalist, a public 
relations specialist, a USAID contractor and an English teacher. But I 
think the most meaningful work I undertook, and have seen continue after 
my recent departure, is in the realm of humanitarian assitance. Myself 
along with a few friends began an organization called the Brotherhood of 
St. Seraphim, which like the Salvation Army, feeds almost 200 homeless 
and impoverished people everyday at the rail stations in Moscow. Our 
organization was re-registered this past year by the Moscow city 
government under the title of Center for Humanitarian Aid. In addition 
to feeding and clothing Moscow's needy, we began the city's first 
homeless newspaper called Est Vykhod or A Way Out. The newspaper is 
helping many needy people, including impoverished families who come into 
the city from the regions, earn a desperately needed income.

While the latest talk has focused on the mistakes of the IMF and the the 
suggestion that the Russians have to do it on their own, I would like 
people to know that western aid these past 7 years has not been in vain. 
I would definitely agree that the challenges USAID and other western 
lending organizations faced here were enormous and their failures far 
outweighed their successes. That I know from personal experience. 
However, there are a number of people from the west who have come here 
to quietly set up humanitarian and non-profit organizations which 
continue to function and serve as tangible proof that the west can 
provide help in a meaningful way.

Jim Vail
Co-founder Center for Humanitarian Aid
Jimvail@hotmail.com

Julie McDonald
Financial Director Est Vykhod
Bezdna@imedia.ru

*******

#6
From: Cameron_Half/FS/KSG@ksg.harvard.edu
Date: Thu, 3 Sep 1998 20:19:05 -0400
Subject: Publications

The Strengthening Democratic Institutions Project (SDI) of the Belfer
Center for Science and International Affairs (BCSIA) at the John F. Kennedy
School of Government at Harvard University would like to announce the
publication of five new reports on Russia and the NIS.

* "Future Prospects for the Eurasian Corridor" is the transcript of an
April 23, 1998 conference on the political and economic development of the
Eurasian transportation corridor, and includes presentations by
representatives from the region, the US government, academia, and business.

* "The Caucasus and Caspian 1996-1998 Seminar Series: Volume III" is the
third installment of transcripts from SDI's ongoing seminar series on the
Caucasus and Caspian. Seminars in this volume focus on Chechnya and the
North Caucasus.

* Three monographs in the "Whither Russia?" series:
- "From the Russian Idea to the Idea of a New Russia" by Igor
Chubais, Professor of Philosophy at the Russian Academy of Dramatic Arts
(and brother of Anatoly Chubais), confronts the ongoing confusion about
Russia's identity and offers the author's blueprint for unifying and
strengthening Russia.
- "Russia's New Geopolitics" by Alexei Mitrofanov, Chairman of
the Committee on Geopolitics in the State Duma and the leading
international relations expert of the Liberal Democratic Party of Russia,
outlines a geopolitical strategy for Russia to confront the challenges to
Russia's relations with the Near Abroad presented by the United States and
other countries.
- "Russia's New Path" by Aleksei Podberezkin, advisor to KPRF
Chairman Gennady Zyuganov and Deputy Chairman of the Committee for
International Affairs in the State Duma, Chairman of the Central Council of
the All-Russia "Spiritual Heritage" movement, and Co-Chairman of the
National Patriotic Union of Russia, describes the main features of Russia's
"oligarchic state capitalist system" and the role of the Russian state and
military in defending Russian culture.

To order these or other SDI publications, please contact:
Elena Kostritsyna
SDI
79 JFK St.
Cambridge, MA 02138
Tel (617) 495-1356
Fax (617) 496-8779
elena_kostritsyna@harvard.edu
http://www.ksg.harvard.edu/bcsia/sdi

SDI publications are also available electronically to subscribers of
Columbia International Affairs On-Line at http://www.ciaonet.org

*******

#7
The Financial Times (UK)
4 September 1998
[for personal use only]
RUSSIA: Kuzbass region flexes its muscles again
Moscow has been warned that miners will block rail lines if their 
demands are not met. Charles Clover and John Thornhill report

The governor of the Siberian region which produces half of Russia's coal 
is trying to wrest more powers from Moscow to pay local miners, who are 
owed an average of five months' wages.
Aman Tuleev, governor of the Kuzbass region, warned that if his economic 
and political demands are not met, coalminers will blockade railway 
lines through the region's territory, which connects Russia's east and 
west.
"The central government has no choice. If it does not agree, the miners 
will be sitting on the railway tracks again," he said.
Mr Tuleev's stance reflects the increasingly aggressive demands of many 
of Russia's elected governors, who are desperate to assert their 
influence as the federal government's authority crumbles.
Some are toying with a range of measures to protect their local 
economies if Russia's current financial crisis spirals out of control. 
To the Kremlin's alarm, the talk is turning to local price controls, 
federal tax strikes, and even the issue of quasi-currencies.
The Vremya newspaper reported that the Samara region, south-east of 
Moscow, was considering issuing bonds, backed by municipal property, 
which could be used for payments in the event of economic crisis.
"After this there remains only one more action needed to complete their 
exit from the structure of Russia - to declare formal independence," the 
newspaper commented.
"It is a good time for the governors to play these games," said Nikolai 
Petrov, an expert on Russia's regions at the Carnegie Moscow Centre. 
"The central government is practically absent."
Mr Tuleev, a rough-hewn railway engineer who stood as a Communist 
candidate in the 1996 presidential elections, claimed that if his 
regional government were given control of local coal mining enterprises 
it could fix the problem of wage arrears.
The central government still owns controlling stakes in most of the 
coalmines, but does not interfere with the management.
"Why do we want the shares? So that we (the regional administration) can 
have a place on the board of directors, participate in decision making, 
and block the decisions that are not correct," said Mr Tuleev.
He would also like to modify taxation rules so that a greater percentage 
of local tax revenues would stay in Kuzbass and dreams of unifying his 
region with the neighbouring regions of Tomsk and Altai. "Russia has too 
many administrative regions, 89 in all. The country would be easier to 
govern if we lowered this number," he said.
Last May, Kuzbass miners started Russia's so-called "rail war" by 
blacking the Trans-Siberian railroad, which runs through the territory.
They lifted the blockade in late May then imposed it again in July for 
two weeks and have threatened once again to blockade the tracks.
Labour union leaders in Kuzbass charge that mine directors siphon off 
revenues by selling coal at artificially low prices to trading companies 
which they own. But Anatoly Chekhis, head of the Federation of 
Independent Trade Unions in Kuzbass said the problem of wage arrears 
also had a broader dimension.
"This problem is not just with our manager. It is a problem all over 
Russia which means that it is a problem with the system. It is the whole 
system that we must change," he said.
Mr Tuleev enjoys wide popularity throughout Kuzbass, a region which has 
always been on the forefront of political change in Russia. In June 
1989, strikes in Kuzbass were one of the main factors that brought Boris 
Yeltsin to power in 1991.
But now, most of the population of Kuzbass is tired of Mr Yeltsin and 
the central government. The region is one of the most active 
participants in the "red belt" of regions in Russia where communists 
enjoy strong popularity.
"Kuzbass has always been a pioneer in political movements," said Victor 
Zheltov, head of the political science department at Kemerovo State 
University.
"We were the first to go on strike in 1989, and we were the first to 
block the railroads in May."
"Kuzbass has always been the first to sponsor ideas which the regime 
does not like. Who knows where we will go this time?" he said.

******

#8
The Times (UK)
September 4, 1998 
[for personal use only]
Drinking problems resurface to plague Kremlin 
FROM RICHARD BEESTON 
IN MOSCOW 

FRESH doubts were raised yesterday about President Yeltsin's physical 
ability to remain in power, after allegations that he was drinking again 
and could manage only two or three hours of work in a day. 

According to a full-page article in the mass-circulation Moskovsky 
Komsomolets newspaper, the Kremlin leader's nagging health problems have 
returned to haunt him as he faces the toughest political and economic 
crisis of his seven-year rule. 

The paper set out in detail Mr Yeltsin's long history of health 
problems, including repeated heart attacks and seizures as well as bouts 
of alcohol abuse. It claimed that the numerous statements from the 
Kremlin press service, saying that the President was "working with 
documents" at his country residence, really meant that he was 
incapacitated by illness or drink. 

Those problems were supposed to have been resolved after open-heart 
surgery two years ago and a subsequent attack of pneumonia, which left 
the Russian leader weakened but ready to make a fresh start and lead a 
healthy life. Instead of obeying doctors' orders, Mr Yeltsin has 
reportedly returned to drinking alcohol, often as much as half a pint of 
vodka in one sitting, and relying on a number of painkillers to see him 
through the day. 

Renat Akchurin, the doctor who saved Mr Yeltsin's life in the operating 
theatre, was reportedly sacked in spring this year after falling out 
with Tatyana Dyachenko, the President's daughter and influencial aide. 
Dr Akchurin refused to comment yesterday on the allegations. 

Under Article 92 of the Russian Constitution, the head of state can be 
removed if he is physically no longer up to the job. Two years ago, when 
he underwent multiple bypass surgery, he briefly handed over his powers 
to Viktor Chernomyrdin, then Prime Minister. 

******

#9
The Guardian (UK)
4 September 1998
[for personal use only]
Moscow question: Would the IMF have ended the English civil war? 
By James Meek

How familiar does this sound? When a severe economic crisis led to 
deadlock between the head of state and parliament, the head of state 
rejected a political compromise giving more rights to the legislature, 
and dissolved it. He ruled without parliament for 11 years, imposing a 
harsh economic crackdown which balanced the budget, before a military, 
religious and ethnic crisis in his ramshackle realm forced him to summon 
MPs again, provoking a bloody nationwide conflict. 
That was the run-up to the English civil war. It's also uncomfortably 
close to the developing scenario in Moscow. What would an IMF team, 
projected back through time, have prescribed the England of King Charles 
I, with its corruption, its oligarchic distribution of wealth and power 
and its troubled tax collection record? "Market reforms, your Majesty. 
You might care to privatise the royal parks."
Maybe our instincts are wrong. Maybe we should see the English civil war 
as a skirmish in the battle for sound money, rather than as part of a 
struggle over individual liberties, democracy, faith and national 
identity which was to continue in Britain for another three centuries, 
and continues still.
But I don't think so. And it shows no respect to Russia to see the 
confrontation between the State Duma and President Boris Yeltsin as an 
irritating sideshow to the economic crisis, or as a personal feud 
between wild, romantic Tsar Boris and the dull, puritan communist leader 
Gennady Zyuganov (who does, oddly, look a bit like Cromwell).
There are fools and knaves galore in parliament and the Kremlin. But the 
paradox is that although there are few real democrats on either side, it 
is democracy and its institutions they are fighting over, and that is 
what matters.
"The sources of our trouble, including the current financial crisis, are 
not in the economy," wrote Russian thinker Dmitri Furman this week.
"They are in politics, in our political system, which has created 
authorities that are beyond control. If you look more deeply, they are 
in the psychology and culture of the Russian people, which have made 
such authorities possible."
To anyone outside Russia, this might seem absurd. Russia is a democracy. 
Yeltsin was elected by universal suffrage in 1996. The constitution was 
approved in a referendum. Regional governors are elected, as are 
regional parliaments, mayors - the country is swimming in elections.
The reality, of course, is that democracy and elections are not the same 
thing. Even if all elections held in Russia had been free and fair - 
which they weren't - they would not guarantee civil rights. They would 
not guarantee observance of the constitution or the rule of law. They 
would not prevent corruption, nepotism and racism. These have to be 
fought in Russia every day. The price is a high one in ruined lives, 
broken ribs and journalists' corpses, and in an inability to cope with 
unforeseen economic change.
The start made to democracy in Russia has made the country's 
conservative majority wary because it seems to be about immense freedoms 
for a few. The idea that democracy is also about strong government 
enforcing the law has not taken hold because it has not been practised 
during the Yeltsin years. It is popular to say in Moscow that federal 
law extends out as far as the Moscow Ring Road, the boundary of the 
Russian capital. This is an exaggeration. It doesn't get that far. The 
elected mayor of Moscow, Yuri Luzhkov, pays as little attention to the 
constitution as any of the other elected feudal bosses who run the 
country's other 88 regions.
Courts rule that the mayor's enforcement of residence permits in the 
city is illegal: he pays no attention. His police continue their racist, 
rapacious arresting and fining of dark-skinned Russians from other parts 
of the federation. The police are breaking the law on the streets of Mr 
Yeltsin's capital. Mr Yeltsin neither knows nor cares. No one hinders 
them.
In Bashkortostan on the Volga, a local leader gets himself elected by 
rigging the vote and shutting down opposition newspapers. Mr Yeltsin 
congratulates him. In Kalmykia, the local president wins in an illegal 
poll. Later, a journalist who has opposed him is murdered. Mr Yeltsin 
expresses vague concerns. In Tatarstan, the ethnic Tatar authorities 
discriminate against ethnic Russians. Moscow looks the other way.
Embezzlement on a heroic scale among generals, bureaucrats and 
businessmen is revealed daily by the press. No action is taken. 
Industrialists steal from the factories they have privatised on the 
cheap and don't pay their workers or their taxes. Federal ministers who 
try to bankrupt them are obstructed. The country is run on a shrug and a 
backhander.
It is no shame for Russia to admit that the country which put the first 
man into space, which gave the world the periodic table, Fyodor 
Dostoyevsky and Anton Chekhov, remains stranded at the time of Hobbes 
and Milton as far as democracy is concerned. Most Russians know it 
anyway. The West has had trouble understanding the issue.
Russia's scientists, engineers and artists have been able to flourish by 
building on the works of their foreign counterparts, as we have been 
able to build on the work of Russia's great minds. Russia has embraced 
the personal computer, the credit card and the stock exchange. But 
democracy is different. It can't be left to specialists. It can't be 
picked up from a handbook and applied. By its nature, it has to come 
from the people, otherwise it doesn't work. It has to be handed down 
from generation to generation, but Russia's young generation today is 
the one that has to begin the process, and its children are just going 
to school.
This is a hard thing for the West to help with. It is much easier to 
dole out money through the IMF than to support the growth of democratic 
institutions, particularly when that includes organisations like trades 
unions which in Britain, having succeeded too well, are considered 
old-fashioned. And how can the West "support democracy" without 
interfering in the affairs of a sovereign state whose people, as Furman 
points out, have been so sluggish in mass resistance to their 
kleptocratic rulers?
Yet the alternative is unacceptable to the liberal conscience: that only 
by enduring hundreds of years of civil strife can Russia, like the West, 
find its own, unique, painful way to democracy.

******

#10
Chernomyrdin Presidency Fears Drive CPRF 

Rossiyskaya Gazeta
2 September 1998
[translation for personal use only]
Article by Vladimir Kucherenko: "Zyuganov, Yavlinskiy and
Others Reject Chernomyrdin for One Reason: To Remove from the
Political Arena a Strong Rival at the Next Russian Presidential
Election"

So the State Duma has rejected Viktor Chernomyrdin's candidacy. The
Zyuganovites, "Yabloko" members, Zhirinovskiyites, and independent deputies
-- lawyer Makarov and ethnosociologist Starovoytova -- came together in a
fit of anger. Reds and liberals formed a united front. But is it politics?
Gennadiy Zyuganov was on top form and made a really strong speech. 
Readers were able to hear it live. According to him, the current economic
collapse is the result of the executive authorities' entire policy since
1992. This year's turmoil and the futile attempts to save the GKO pyramid
have lost is $10 million to be precise. The opposition leader's argument
were echoed in one way or another by the other factions' leaders.
But words must correspond to actions. Should Gennadiy Zyuganov be
fuming, as if he was not in any way party to the policy of governments of
past years?
The Russian Federation Communist Party [CPRF] faction in parliament is
responsible for a very great deal. It has voted for all the country's
budgets since 1995. And they invariably incorporated the GKO system, which
was strongly criticized even then by many economists, and was hated even
then by industrial circles for drawing potential investors' money away from
production and into speculation. On occasions the then vice premier, Oleg
Soskovets, appeared to be more opposed to government financial policy than
the CPRF leaders.
The parliamentary part of the CPRF never submitted a motion of no
confidence in the government, although it described its course as
anti-people. Moreover, despite describing the executive authorities'
policy as criminal, some people from the faction were quick to take up
government posts at the first opportunity.
When it lambasts Central Bank policy the communist party faction seems
to forget that it was the State Duma that appointed rabid monetarist and
GKO pyramid supporter Sergey Dubinin Central Bank chief. Although it had
the opportunity to appoint someone from the "real sector," Promstroybank
chief Yakov Dubenetskiy, to the post. Or another worthy figure who did not
fit the IMF criteria. The CPRF faction could have blocked the Law on the
Central Bank, which was adopted under pressure from the IMF and removed the
opportunity to issue money as a means of boosting production. And it made
no attempt to amend it.
Despite having a powerful faction in parliament, the CPRF all these
years made no attempt to wrest the legislative initiative from the
government. Remember that it was the government alone that devised all the
laws relating to production, property, finance, and investments. The
parliamentarians preferred in the main to raise pensions and wages and
torpedo budgets they had themselves approved. Why were the
parliamentarians themselves unable to present their own law on leasing, on
taxes, on the alcohol and tobacco monopoly, on industrial policy? Thus
acting systematically, destroying the monetarist course they were so
abusive about, and gaining authority among industrialists.
Incidentally, in 1996 CPRF people actually joined the commission to
check out the results of privatization in 1992-1994. It was a magnificent
opportunity to do battle with the accursed course and the accursed "young
reformers" in the government. And at the same time -- a splendid
opportunity to adopt a law on the nationalization of things that had been
illegally appropriated. But none of this happened.
All these years the biggest opposition faction in the Duma failed to
say clearly and plainly what it has to offer instead of monetarism. 
General statements about "backing home production" don't count.
The CPRF has never been able to explain clearly where it would get the
money for this. Even the initial money, to revive production, as a result
of which it would be possible to ease the social tension in the country and
pull in the capital that has been taken out. The vague idea of issuing
money was a constant theme. But in what way?
Here too the Communists were amazingly short of ideas. We know of
only one way of issuing money that does not result in disastrous inflation
and an orgy of theft: investment of the money that is issued in specific
projects to "drive" production of competitive goods, and not the patching
of holes in the budget. In this case the issue can take place via
intermediary mechanisms rather than by means of printing money. But the
CPRF was obstinately silent about this, as if it all boiled down to
printing money. That is not to mention the fact that issuing money
requires the conversion of the current banking system into a three-tier
one.
In the same way the parliamentary opposition has never formed a shadow
cabinet and has never issued a specific list of plan for production
development. It has always skillfully avoided answering the question what
it intends to do once it has come to power and effected the desired change
of policy. After all, it would be very difficult: The West would
immediately demand the repayment of massive debts, there would be a
scarcity of goods, and supplies of food would be intermittent due to a
declining Russian agrarian sector.
The CPRF once described itself as the "constructive opposition,"
declared that Russia had had its "quota of revolutions," and said that it
championed nonviolent, constitutional means of struggle. (Lenin would have
branded Zyuganov an opportunist -- an appeaser of the bourgeoisie; and a
liquidationist -- a parliamentary windbag). In other words, the CPRF
declared itself a Western-style political party playing by the rules of
public politics.
But politics is the art of the possible, the ability to face up to
reality. The reality is that the country is now a long way from 1985 and
entirely different forces and structures have been operating in it for a
long time. So if you are playing by the rules of democracy, then be so
good as to face up to life. Amid your righteous indignation never forget
that Boris Yeltsin -- whatever you think of him -- "bonds" the country
together. That Viktor Chernomyrdin -- love him or hate him -- is the
embodiment of Russia's biggest exporter. And exporters are the only ones
who through their foreign exchange earnings can now save the ruble system
and prevent the country from falling apart. The worsening political crisis
is accelerating the destructive processes and plunging Russia into a new
election fever. Remember 1991, when a great country was blown apart to
remove the unsympathetic President Gorbachev. Incidentally, Makarov,
Starovoytova, and people of like mind today prospered as a result. It is
naive to say the least to expect B. Yeltsin and those around him to
relinquish authority voluntarily and early as well.
When abusing Chernomyrdin for not being specific, just think: What
have you offered instead? A purely abstract program to get the country out
of the crisis? When calling for the president's resignation, do you have,
as Lenin did in 1917, a parallel center of power prepared to assume at
least theoretical responsibility for preventing the country from
disintegrating? When they brought down the Provisional Government in 1917
Bolsheviks had behind them a system of Soviets and party committees and
ultimately the Red Guards. What does the present opposition have, aside
from total negation and a parliamentary talking-shop? What would happen if
you had a government in the country that blithely started printing money,
handing out rubles left, right, and center, and raising the cost of a loaf
of bread to one billion rubles? It is not enough to criticize these days;
you need to have worked out a way of getting Russia out of the crisis and
be willing to assume power in the end. But this is precisely what you do
not have!
Back in 1993 the analyst, Sergey Kurginyan, highly respected in
opposition circles, said: There is a limit to politics. That limit is the
country's very existence, its unified statehood. It appears that we have
already gone beyond that limit.
A bitter Oleg Morozov, leader of the "Russia's Regions" faction (he is
backed by fuel and energy complex interests), said: For the first time the
opportunity arose to create an alternate economic course to the old
out-and-out monetarism, to place the government under tighter parliamentary
control, albeit with V. Chernomyrdin at its head. The main thing is to make
the cabinet more independent of the president. He said: It is now a
matter of hours and the country is sinking like a sick man on his deathbed.
The cynics suggest that every political movement has its own material
benefits if you can find them. Why is the CPRF now so paradoxically
forming an emotional union with Yavlinskiy and the "Makarov-style"
fanatical anticommunists? The answer probably is that they do not want
Viktor Chernomyrdin to be the current president's potential successor and
acting president in the event of trouble. They are terribly afraid of him
as a strong rival in the upcoming presidential election. Unfortunately,
because of this a parliament has missed a splendid opportunity to influence
the course of reforms. Already the acting premier is saying that he will
form a team without worrying about the Duma. The "dissolution" option will
come into play, after which the country will get a Chernomyrdin government
anyway.
[Description of Source: Rossiyskaya Gazeta -- Government daily
newspaper.]

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#11
Russian defence minister warns against street unrest

MOSCOW, Sept 3 (AFP) - As Russia's political crisis rumbled on Thursday, 
Defence Minister Igor Sergeyev warned against a repeat of the bloody 
clashes of 1993 in an earlier power struggle between president and 
parliament.
On that occasion, President Boris Yeltsin sent in tanks and troops 
against deputies holed up at their rebel parliament.
"Please God make sure there is no repetition of 1993," Sergeyev said as 
he watched military air exercises, according to the Interfax news 
agency.
The official toll for the 1993 clash was 148, although unofficial 
sources put the figure at more than 1,000.
This time, the State Duma lower house of parliament, after rejecting the 
president's nominee Viktor Chernomyrdin as prime minister, has called on 
the acting premier to withdraw altogether.
Yeltsin wants to press Chernomyrdin's candidacy however. If the 
parliament rejects it a second and third time, the president can 
dissolve the assembly.
Sergeyev admitted that the mood in the army "is not at its best," and 
the troops, just like the rest of the country, were "worried" about the 
military and political situation.
Popular former general Alexander Lebed, who is strongly tipped as one of 
the main challengers to replace Yeltsin in the next presidential ballot 
in 2000, warned earlier this week that the army could turn "aggressive" 
if the situation deteriorated.
The spectre of military intervention is raised nearly every time there 
is such a crisis, but the army has usually sided with the legal power in 
office at the time.

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#12
Ruehe 'Cannot Imagine' Relapse Into Soviet Dictatorship 

Hamburg Bild
2 September 1998
[translation for personal use only]
Interview with German Defense Minister Volker Ruehe by Einar
Koch; place and date not given: "How Long Will the Russian Army
Keep Still?"

[Koch] Russia is stumbling at the brink of an abyss. Former General
Lebed fears unrest and even bloodshed. How long will the Army keep still?
[Ruehe] The Russian Army is not a putsch army! The soldiers have long
proved their great capacity for suffering. Many live with their families
in tents, often close to the subsistence level. From many personal talks
with my Russian counterpart Sergeyev and the Army leadership, I know that
Russia's armed forces are loyal to the Constitution, to the government, and
to the progressive democratic forces. The danger is not coming from the
Army but from the streets -- from the radical nationalist forces and the
old communists.
[Koch] Is a relapse into the communist dictatorship imminent?
[Ruehe] I cannot imagine a relapse into the old communist Soviet
system. The opening up of society and the army to democracy has gone too
far for that. However, I am still very worried, because the communists and
the nationalists are indeed trying to stop the process of democratization
and set a course backwards. This must be prevented under any
circumstances, also through international help and the strengthening of the
democratic forces. Otherwise, we will have a hot October.
[Koch] Will the Cold War return?
[Ruehe] Not the Cold War that we used to have. Relations between
Russia and NATO have become much too close by now. We have a strategic
security partnership with the Russians now. But it is quite clear that if
the communists and the nationalists had a say in Moscow, these relations
would cool considerably. Then there would be a danger of Russia leaving
the international family.

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#13
Russia: Prison Reform Moves Forward, Slowly
By John Varoli

St. Petersburg, 3 September 1998 (RFE/RL) -- In deciding two days ago 
(Sept.. 1) to transfer jurisdiction over prisons from the Interior 
Ministry (MVD) to the Justice Ministry, Russia made a major step toward 
reforming its prison system. Such a reform was one of the conditions for 
Russia's acceptance into the Council of Europe in 1996. 

Human rights advocates have welcome this development, but said much work 
remains to be done. 

"The transfer in itself does not mean a big change," said Diederik 
Lohman, director of Human Rights Watch (formerly Helsinki Watch) in 
Moscow. "But giving the Justice Ministry jurisdiction is an improvement 
because it takes the prisons out of the hands of those whose main 
concern is to have good statistics on the number convicted." 

But there are still many obstacles to overcome before Russia's 985 
correctional facilities, holding more than 1 million prisoners, 
effectively move into the jurisdiction of the Justice Ministry. 

The whole process looks set to drag on to early 2000. "We plan to make 
the prison system more humane," said Vladimir Vasyukov, head of the 
Justice Ministry in St. Petersburg and the Leningrad region. "But 
Reforming it will be a long process." 

According to MVD Major General, Vladimir Spetsnadel, the top local 
official for the prison system in St. Petersburg and the Leningrad 
region, the process will last until 2000. 

One substantial problem complicating the transfer is the fact that the 
MVD's prison system is a bureaucracy that dwarfs the whole existing 
Justice Ministry. The latter needs to create the necessary bureaucratic 
infrastructure, and be allocated the necessary financing. 

The roots of the problem go back to 1922 when control of the Russia's 
prison system passed from the then equivalent of the Justice Ministry 
into the hands of police officials. 

In the early 1930s, the NKVD, a predecessor to the MVD and KGB, created 
Russia's sprawling penal system that then became known as the Gulag, or 
Main Inspectorate for Penal Correctional Facilities. 

During the Stalinist era, Russia's inmates played a key role in building 
the Soviet Union, as well as earning hard currency for the country by 
exporting the fruit of their labor such as cut timber and mined natural 
resources. 

While the prison camp system was a lucrative commercial enterprise 
during Soviet times, today it is more a financial burden. Yet, officials 
hope to once again make it profitable--- but this time for the mutual 
benefit of both state and inmate. 

Officials said that the federal government was sending local prisons 
only 65 percent of the promised funds, and only 45 percent of the 
necessary medication. Spetsnadel described the life of inmates as poor, 
and that they go without uniforms and basic consumer items, which must 
be sent by relatives. 

"We must make money ourselves," said Spetsnadel. "A labor program for 
inmates already exists, but currently only 20 to 30 percent of prisoners 
are working. We need to get them jobs so that they will not get lazy and 
lose their qualifications, ending up as homeless upon release." 

Spetsnadel said that convicts earn between 200 and 800 rubles a month, 
in one of 17 professions. The money is placed in their bank account, 
with their families given access to it. 

But one of the most serious tasks to be tackled is prison overcrowding. 
The city's and region's prison population of 28,000 fits into 16 prisons 
which were meant to hold 22,000. The worse offenders are the remand 
prisons, such as the infamous Kresti, a red brick Tsarist-era structure 
near the Finland Station, on the Neva river. Built to hold 3,300 
prisoners, it now holds 9,121, according to the MVD. 

Since bail is a rare occurrence in Russia-- as bond prices go as high as 
40,000 rubles (about $4,000) --most prisoners, even those who have 
stolen a sack of potatoes have to wait up until 18 months for a trial. 

"Our main task is to get the remand prison population down," said 
Vasyukov. "And we think it is a good idea to further the develop the 
bail system." 

Vasyukov also said that overcrowding was also a result of the burden on 
the Justice Ministry's underfunded, overworked court system. 

"The main thing is to change the policy of taking people into 
detention," said Lohman. "If the Prosecutor's Office, which is a 
separate agency, keeps sanctioning detention and arrest for meager 
crimes and the time needed for getting a court hearing continued to drag 
on for over a year, then we will not see any major improvement in the 
prison situation." 

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