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Johnson's Russia List


September 7, 1998   

This Date's Issues: 23532354•   •

Johnson's Russia List
7 September 1998

[Note from David Johnson:
1. The Independent (UK): Phil Reeves, Russia's regions start to rebel 
as Kremlin's grip weakens.

2. AFP: Lebed predicts riots within a week if Russian crisis not tackled.
3. Reuters: INTERVIEW-No recovery until Yeltsin gone-Yavlinsky.
4. Public Television The NewsHour with Jim Lehrer: CRISIS MANAGEMENT.
(With Michael McFaul, Stephen Cohen, Melor Sturua, and Leon Aron).

5. Chicago Tribune: Cathy Young, RUSSIAN STUDIES.
6. Reuters: INTERVIEW-Zhirinovsky predicts Chernomyrdin win.
7. Reuters: Russia's Communists put Primakov on PM list - NTV.
8. AFP: Ex-Soviet bloc fears fallout of Russian crisis.
9. The Electronic Telegraph (UK): Marcus Warren, Cash chaos costs jobs 
of Russian middle classes.

10. AFP: Chernomyrdin promises chake-up at central bank.
11. Reuters: Top Russian wants to allow dollars in shops. (Fyodorov)}


The Independent (UK)
7 September 1998
[for personal use only]
Russia's regions start to rebel as Kremlin's grip weakens
By Phil Reeves in Moscow 

As Russia's political leaders meet today for another attempt to strike a deal
in the dispute over President Boris Yeltsin's chosen prime minister, evidence
is growing that the Kremlin's grip over the country is weakening. 
A car bomb at the weekend in the southern republic of Dagestan, an Islamic
republic that borders Chechnya, killed 16 and injured 80. It has deepened
concern that Moscow is no longer able to impose its will across the land. The
blast, described by Mr Yeltsin as "an attempt to tear apart the unity of the
Russian Federation", was a reminder of the fragility of the relationship
binding Moscow to Russia's regions, which has been placed under acute strain
by the economic collapse. 
Evidence that some of the 89 republics, regions and territories are using the
chaos to seize more power has been mounting since the crisis began last month.
The upper house of parliament, the Federation Council, made up of regional
leaders, last week symbolically voted to support the acting prime minister,
Viktor Chernomyrdin, who faces a second vote over his job in the Duma today. 
But what they say in Moscow and do back home differs. The most stunning
example is the decision of the Yakutia republic, in the Far East, to place its
gold production under the control of local authorities and limit sales to the
federal government and banks. But there are others: the governor of Khakassiya
in Siberia is the brother and neighbour of General Alexander Lebed. Comparing
Mr Yeltsin to "Genghis Khan and Hitler", Gen Lebed has announced his region
will no longer transfer any funds to Moscow. The general himself has imposed a
price freeze in his region of Krasnoyarsk, banning increases of more than 10
per cent. 
The governor of the Kuzbass, the Siberian region that produces half Russia's
coal, is threatening Moscow that miners will block rail lines across his turf
if federal authorities fail to pay five months of back-pay. One governor, in
Saratov, has mentioned introducing his own currency. 
Under the cover of the crisis, Tatarstan, a republic on the Volga River, has
tried to protect local producers by slapping a 10 per cent import tax on flour
from outside its borders, violating a federal constitutional clause defining
Russia as one market. And in Voronezh, in the Red Belt part of southern
Russia, city authorities have been seizing control of semi-privatised
enterprises, such as the pharmacies, and returning them to government control.
Moscow's sway in the regions has always varied from strong to tenuous, but it
was weakened last year when Mr Yeltsin lost the power to appoint governors,
who are now all elected. 
Moscow often seems willing to let them go their own way, no matter how much
corruption and illegality abounds, so long as they pay taxes. Now, however,
they are in danger of becoming even more remote, and even more cavalier about
the constitution and distant hand of federal power. 


Lebed predicts riots within a week if Russian crisis not tackled

MOSCOW, Sept 6 (AFP) - Russian presidential hopeful Alexander Lebed predicted
Sunday that Russians would come out into the streets to express their anger
within a week if the current financial crisis is not tackled.
Lebed told private television TV6 that interior ministry troops were currently
on a state of alert across the country. He denied, however, persistant rumours
in the capital that the army was also on standby.
He said that in the Siberian province of Krasnoyarsk, of which he is governor,
35 percent of shops had closed and that people had stopped banking money and
were trying only to withdraw their savings from banks.
"Another week like that and the financial and banking system will be
paralysed," warned the popular ex-general.
"At that moment, citizens...will quickly come out on the streets and will
sweep away the powers that be at a single blow," he added.
Lebed reiterated his fear that there might be a replay of the events of 1991,
when reactionary communists attempted to carry out a putsch against then
leader Mikhail Gorbachev, which led to the rise of Boris Yeltsin as president.
He said that this time it could be President Yeltsin himself cast in the role
of the putschist if he tries to use force to keep control of the country in
case of a popular protest.
"If anyone is hoping to control this crisis he is fooling himself," said
The head of Russia's Federal Security Services (FSB), successor to the Soviet-
era KGB, ruled out the use of government armed forces last Tuesday to resolve
Russia's economic and political crisis.
"Neither the president, nor the acting prime minister, nor the Duma (lower
house of parliament) ... nobody is expecting or preparing such methods to
resolve the country's problems," said Vladimir Putin.
Lebed said last week he would consider the prime ministerial post "if there is
nobody else more qualified in the economic field to resolve the problems.
To tackle the job, "a deep knowledge of economics is not essential," he said.
"What is essential is to lead through very tough actions while remaining
within the law."
"I've been trained as a paratrooper and I can't be a normal prime minister but
a prime minister for crises, without a doubt," he told public television ORT.


INTERVIEW-No recovery until Yeltsin gone-Yavlinsky
By Adam Tanner

MOSCOW, Sept 6 (Reuters) - Grigory Yavlinsky, head of the pro-reform
opposition party Yabloko, said on Sunday Russia's economy would not
substantially improve until President Boris Yeltsin left office. 
``Things will be better only when there will be a new president,'' Yavlinsky,
a candidate for president in the next elections, told Reuters in an interview.
Yeltsin has vowed to serve out his term until the elections in 2000 despite
calls for his resignation. A poll of 1,500 Russians reported on NTV television
on Sunday said 66 percent favoured his immediate resignation. 
Yavlinsky, 46, leads the fourth-largest faction in the State Duma, the lower
house of parliament, which will vote on Monday on whether to confirm acting
Prime Minister Viktor Chernomyrdin in his post. 
Long a critic of Yeltsin and his government, Yavlinsky said his party would
again reject Chernomyrdin, but said it was unclear how other parties would
``In Russia only an idiot would make predictions,'' he said. ``I've been in
politics for 10 years, which is the entire time that politics have existed in
Russia. It's exactly because I've been in politics for 10 years that I can say
my partners' positions change very often.'' 
The Duma rejected Chernomyrdin overwhelmingly during its first vote last week.
It can reject him up to three times before the constitution requires a
dissolution of the legislature. 
On Monday morning Yavlinsky and other parliamentary leaders will meet Yeltsin
for last-minute discussions before the vote. 
``As a rule, it's quite rare that he says something sensible,'' Yavlinsky said
of Yeltsin. ``Nothing is clear, and considering the partners I have it's not
clear what to expect from them -- from Yeltsin, from the Communists.'' 
Economically depressed Russia suffered a further blow three weeks ago when the
government devalued the rouble, leading to a sharp rise in prices. 
Some experts have warned of civil unrest, but the streets remain calm. 
``I'm worried that things could really worsen, but I don't think it would lead
to a disaster,'' Yavlinsky told Reuters. 
``The main problem in Russia is that there is no civil society, there are no
stable parties, there's no continuity, there's no heritage, there's no
traditions,'' Yavlinsky said. 
``The world must understand that Russia must create a civil society from the
grassroots....Otherwise we'll have a Babel.'' 
Asked about the likely course of the rouble, which has fallen from six to the
dollar to 17 in recent weeks, Yavlinksy said: ``For now it will continue to
get worse, because there is no production, there are no exports.'' 
One of the authors of a 500-day plan to boost the Soviet economy under
President Mikhail Gorbachev, Yavlinsky said he had stayed up all night on
Saturday to prepare a new programme. 
``I am writing a programme of immediate and medium-term measures,'' he said.
``We will publish it mid week.'' 
Gorbachev rejected the original 500-day plan and it was not clear whether
Yavlinksy would win support for his latest ideas. 
In an opinion poll in the latest weekly Obshchaya Gazeta, 16 percent of 936
polled Muscovites said Yavlinksy would be the best candidate for prime
minister. Only six percent in the poll mentioned Chernomyrdin as the best man
for the job. 


Public Television
The NewsHour with Jim Lehrer 
September 2, 1998 

ELIZABETH FARNSWORTH: And here with me to analyze events in Russia is Michael
McFaul of Stanford University, author of a forthcoming book on Russian
democracy. Also joining us are Stephen Cohen of New York University, author of
Rethinking the Soviet Experience, Melor Sturua, of the University of
Minnesota, a longtime columnist for the Russian newspaper Izvestia. He was a
speech writer for Soviet leaders Kruschev; and Leon Aron of the American
Enterprise Institute, who's writing a biography of Boris Yeltsin. Thank you
all for being with us. Michael McFaul, did this summit help Russia in this
time of crisis? 
MICHAEL McFAUL, Stanford University: Well, it didn't do anything positive,
that's for sure. I don't think it did anything negative either. President
Yeltsin and President Clinton had agreed to have the summit well before the
crisis, and Clinton had to go as a result of that. But he didn't provide
anything to help them out. It's going to be a long road down before they do
ELIZABETH FARNSWORTH: Melor Sturua, do you agree with that, that nothing
positive came out of this? 
MELOR STURUA, University of Minnesota: Well, something positive came, of
course, but it's not substantial enough to say that it helps Russia. 
ELIZABETH FARNSWORTH: What positive do you think came of it? 
Giving long-term advice when emergency aid is needed.
MELOR STURUA: Well, the point is that Mr. Clinton came to Moscow, shook hands
with President Yeltsin. They exchange some pleasantries, and this is fine. But
I don't think that this is decisive. Let me abandon some sophisticated
vocabulary and give you an example. Somebody's dying from massive coronary
heart attack. And the doctor tells him, I will treat you, but you have to
abandon smoking, drinking, meeting with Monica Lewinsky; you must jog, you
must run, et cetera. That's fine, but the man is dying. You must treat him
now. You must apply some intensive cardiovascular therapy. Afterwards, yes,
it's okay. But all the conditions are iffy conditions. Health is very iffy.
And if it's late, it doesn't matter for Russia. 
ELIZABETH FARNSWORTH: So, Mr. Sturua, you're saying that the advice that the
President gave is long-term advice— 
MELOR STURUA: Yes, yes. 
ELIZABETH FARNSWORTH: And what Russia really needs is immediate aid? 
MELOR STURUA: Of course. In the long run it's good advice and we have to
follow it. We know ourselves about it. But now, of course, it's too late to
speak about this—conditions. You know, we need your helping hand. And you are
giving just a finger. And finger is good for nose picking, and that's it. 
ELIZABETH FARNSWORTH: Stephen Cohen, what do you think about the advice that
the President gave to Yeltsin? 
STEPHEN COHEN, New York University: I think it was not only bad, but it's
impossible. He essentially said to Russia stay the course. And Russia cannot
stay the course. And it can't stay the course, and by the course, I mean,
these monitored economic policies that we have politically and economically
underwritten in Russia for seven years. It can't stay the course because in
the last seven years an unprecedented peacetime economic devastation has
occurred in Russia. The economy today is barely 20 percent what it was seven
years ago. 75 percent of the population lives below or at the subsistence
level. Children don't have vitamins. They suffer from malnutrition. Men live
less than 60 years. Yeltsinism as a set of policies has no legitimacy. It's
completely discredited. Russia is changing course as we talk. What Mr. Clinton
said simply associated the United States with Russia's pain. I think it feeds
the anti-Americanism in the country. And I think it hurts our friends in
Russia, particularly the way during his press conference—and I've never seen
an American President do this before--he actually lobbied on behalf of
specific Yeltsin appointees and laws. I've never seen another American
president do that in another country. 
ELIZABETH FARNSWORTH: Leon Aron, do you agree that this is—that President
Clinton's advice is actually counterproductive? 

A test for Russian democracy

LEON ARON, American Enterprise Institute: Well, I think that obviously the
summit—summits in general are largely symbolic affairs, and this particular
summit happened to be a sort of a visit on the Titanic, where one person,
unfortunately for him, will be able to lift off. But I'm afraid I'll have to
disagree with my friend, Stephen Cohen. I think what the President stressed—at
least this was my understanding—is trying to find a way out of this economic
collapse, part of which is due to severe structural problems, part of it due
to human blunders and corruption, to find it—a way out of it within the
democratic framework--I think this is extremely important. I think we will see
in a few days, maybe in a week and a half at the Duma, I think, does not
confirm Chernomyrdin. We will see a deadlock with both powers, executive and
legislature, claiming legitimacy, and both of which, you know, obviously, were
elected. Then it will be a real test of Russian democracy, of how to get out
of it. Finally, you know, for all the faults that this regime had and for all
the blunders that were made, this is by far the freest, most open, most
tolerant regime that Russia had in a thousand years. It's a regime under which
opposition could organize, publish newspapers, when nobody was arrested for
their political convictions, when the freedom of press was complete, when
everybody could publish and travel everywhere they wanted. So to that extent,
prodding this same regime to do something in the economy and come to an
understanding with the Duma, within the economic—within the framework of
democracy I think is at least sort of a useful reminder. 
ELIZABETH FARNSWORTH: Mike McFaul, you just heard Leon Aron mention the
Titanic and Alexander Lebed, the general, who's also a political leader, now
said that the current crisis is more dangerous than before the Bolshevik
Resolution in 1917. How serious do you think this crisis is? 
MICHAEL McFAUL: Well, the crisis is very serious. I don't believe it's like
1917 for the simple fact that there is not a Bolshevik Party out there waiting
to take advantage of riots on the streets. Having said that, this is akin to
the greatest crisis that Russia's had since becoming an independent state.
It's a total economic meltdown, and here I agree with Steve Cohen, we rarely
agree, but I agree here that the course that they'd been on is over and done,
and to speak of staying the course, you know, we're beyond that. History has
moved beyond that. And the real threat now is the political crisis, does this
bleed over to cause authoritarian regimes, civil war? So far they've played by
the democratic rules of the game, and I'm encouraged by that. But I'm also
very worried that people would be tempted to say this crisis is too serious,
we need to dissolve the Duma, and not bring back the elections. And if Yeltsin
attempts to do that, and there are rumors that they are thinking about doing
that, rule by decree, martial law, I think that's very serious, because he's
not strong enough to pull it off. I agree—I disagree with it in principle, but
even in practice, it's not going to work, and that could lead to real
bloodshed in Russia. 

A temporary suspension of the markets and democracy?

ELIZABETH FARNSWORTH: Melor Sturua, you've seen a lot of hard times in your
lifetime in Russia. How does this one compare? 
MELOR STURUA: Well, of course, I don't think that there is a real danger of
civil war, because the Communist Party can't come to power at the ballot box.
The situation is very dangerous. Our financial system is falling apart. Banks
are falling apart. Goods are disappearing. The ruble is disappearing. Dollar
is disappearing. What's next? Hope disappears, and then patience. And when the
patience of the people disappears, this is the most dangerous thing in Russia.
But it seem to me that despite everything, despite everything, I agree with my
colleagues that today's Communists are not Bolsheviks in 1917, and Mr.
Zyuganov is not Lenin, fortunately enough. But Lenin said that Russia always
suffered—not from capitalism but from the under-developed capitalism. And
today we have this underdeveloped capitalism in Russia. May I show you two
credit cards? One is an ordinary Mastercard; another is Mostcard issued by the
Most Bank, which is the fifth largest bank in Russia. So when you insert in
money machine Mastercard, you get dollars; when you insert Mostcard, you get
just a flash on the screen, all the transactions temporarily suspended. So now
based in Russia we have temporarily suspended free market, and temporarily
suspended democracy. I hope temporarily but suspended. 
ELIZABETH FARNSWORTH: Stephen Cohen, we saw President Yeltsin in the press
conference just now. How capable is he of dealing with this crisis? 
STEPHEN COHEN: You mean physically, Elizabeth? 
ELIZABETH FARNSWORTH: I mean physically. 
STEPHEN COHEN: It's hard to speculate about a man's health, but visibly—and
that's the beauty of television—we get a close look—and this is the first time
he was subjected live to television, to live television in a while--he did not
look good. But I would draw your attention to a more fundamental matter. I
believe that Yeltsin and Yeltsinism—by that, I mean the general policies he's
pursued in economic and social policy for the last seven years--have lost all
support in the country, both in the political elite and among the ordinary
people. And that means that Yeltsin personally no longer has any legitimacy.
The legitimacy that he was given by becoming an elected president he has
squandered, and therein lies the danger. We've seen what the people are
prepared to do. In May, June, and July we saw in the far North, in the
maritime provinces, the capacity of not only the working class but middle
class people, who have not been paid in months and months, who cannot feed
their children, who in a few weeks won't have electricity to generate heat, to
protect him against the cold. We've seen them close down the railway lines.
They can cut down Moscow, cut Moscow off from the rest of the country. And I
believe that if the political elite and Moscow doesn't get its act together,
in the next say ten days, two weeks, that will happen. There is one thing
driving these politicians in Moscow that might make him compromise and agree
on a coalition government, and that is that all of them, from Yeltsin to the
Communists, are afraid of the Russian people. And I think they have good
reason to be. 

What should the U.S. be doing to help Russia?

ELIZABETH FARNSWORTH: Leon Aron, given all of this, what should the United
States do next? 
LEON ARON: It's very difficult for the United States to do anything at this
point. This is a country in the midst of either post-revolutionary or pre-
revolutionary crisis, depending on whether we'll see movement forward or
retrenchments and perhaps reaction. Outsiders in these situations are
extremely limited in their options. I think the West has done its last bit
when it provided Moscow with over $22 billion in loans and because of the
domestic political situations, because the parliament would not approve the
emergency measures because the government did not do the right things at the
right time. That was at least the first trench of it. That was essentially
evaporated. So I think after that we could only, as Dickens would say, "behold
with throbbing bosoms" is what is happening there. 
MELOR STURUA: May I interject? 
MELOR STURUA: May I interject. Well, you say that the West has already given
$22 billion to Russia and let's see if we can do anything more. We are talking
about sea changes not in Russia but in the whole world, especially we live in
the state of globalization. And you are talking about $22 billion. The United
States in a couple of weeks lost in the market more than $2 trillion, and you
could save this money if you were more generous toward Russia. Do you remember
in '94 how you bailed out of Mexican peso? You gave them 50 or 54 billion
dollars. And Mexico has no nuclear weapons, no missiles. Mexico doesn't
support Saddam Hussein, Mexico doesn't supply Iran with nuclear know-how. I
don't think that $22 billion settles everything. 
ELIZABETH FARNSWORTH: What do you think about that? 
MICHAEL McFAUL: No. There's a big difference between Mexico and Russia, and— 
MELOR STURUA: Yes, there is a big difference. I agree with you.
MICHAEL McFAUL: And the big difference is not just in their economies but that
Mexico had a plan to bail them out, to get them out of a crisis, and it
worked. Russia today has no such plan. Throwing money at Russia today is just
throwing money down the tubes. 
ELIZABETH FARNSWORTH: So what should be done? 
MICHAEL McFAUL: Well, I agree with Leon. At this point there's very little
that can be done in the short-term. I think the one thing we want to make
clear is we do not want to see authoritarian rule of Russia because it's going
to fail, and No. 2, I think over time we need to resurrect the idea of the
market. The failures of the reforms of the last seven years are not because
they tried market reform and it failed but because they tried Soviet-style
muddling through, partial reform, oligarchic capitalism. That's the real enemy
in Russia today, and we can help to undermine that. 
ELIZABETH FARNSWORTH: Okay Steve Cohen. Yes. We have a very short amount of
time, but what do you think? 
STEPHEN COHEN: I think we're in danger of losing our soul in Russia. I think
we have to drop this dogma about the notion that there's only one way to
reform the country. Russia's changing course. They are going to be new
policies. They are not going back to the Soviet system, that the state is
coming back to try to save the nation. I think we ought to open our minds, our
hearts, restructure their debt, and help them change course. If not—if not,
Russia will become the cemetery of America's moral reputation. 
ELIZABETH FARNSWORTH: Well, thank you all very much for being with us.


Chicago Tribune
September 6, 1998
[for personal use only]
By Cathy Young. Cathy Young lives in Middletown, N.J., and is the author of
"Growing Up in Moscow: Memories of a Soviet Girlhood." She is a contributing
editor and writer for Reason magazine. 

This must have been a historical first: a summit involving two leaders who
both are being pressured to resign. But the problems confronting Boris Yeltsin
and Russia are enough to make one appreciate the luxury of being preoccupied
by presidential sex scandals (or even presidential perjury scandals).
News reports from Moscow show scenes reminiscent of this country's 1929
stock market crash, with frenzied men and women crowding outside banks trying
to withdraw their savings as the country's financial system crumbles. Except
that the U.S. during the Great Depression had an immeasurably more solid
economic foundation than Russia does today.
To many on the left, Russia's meltdown is providing a golden opportunity to
bash their favorite twin whipping boys: the free market and America. Russia,
we are told, went too far or too fast in privatizing its economy; capitalism
has inflicted worse misery on ordinary Russians than communism ever did.
Stephen F. Cohen, a professor of Russian studies at New York
University--who, as a Sovietologist back when there was a Soviet Union, argued
that the Soviet system could be reformed from within and changed into
"socialism with a human face"--blames an "American crusade to transform Russia
into a replica of American democratic capitalism." Nation magazine editor
Katrina vanden Heuvel takes umbrage at the U.S. president "preaching" to
Russians, in the grip of a crisis, how to run their economy.
In a stunning comment which shows the leftist mindset of moral equivalency
between Soviet Communism and Western democracy, she added that "It's as if a
Russian president had come to this country in 1933 during our Great
Depression" and told us what to do. Would that be Stalin?
Actually, it's far from clear that most Russians are worse off now than
they were before the collapse of Communism. When vanden Heuvel says on a TV
show, "Russia is now an impoverished nation, the majority of its citizens are
impoverished," she ignores the fact that this was also true under the Soviet
regime. Especially outside big cities, such as Moscow, bare shelves were the
norm and it was not unusual for people to get up at dawn to line up for bread
and milk. Some of the trends cited as evidence of a post-Communist
deterioration in living standards, such as the drop in life expectancy,
actually date back to the Soviet era. And the official statistics do not
capture the vast informal economy, often based on barter rather than money.
Be that as it may, to say that Russia's troubles are the result of too much
free market is a little like saying Clinton's troubles are the result of being
too straightforward with the public. The markets in Russia are "free" only in
the sense that the financial oligarchy has free rein.
Entrepreneurship has been largely stifled by licensing fees, burdensome
regulations, and lack of protection from organized crime. The new Russian
"capitalists" are really the old bosses of Soviet industry who were in a
position to get their hands on economic resources when the Communist system
fell apart, and whose skills lie not in creating goods or services but in
exploiting their ties to the government to stifle competitors.
As for younger "New Russians," there are genuine business pioneers among
them--but all too many engage in financial machinations that often resemble
pyramid schemes more than stock market transactions. Juliet Johnston, a
visiting professor at Dartmouth who is fortuitously writing a book on the
Russian banking system, argues that Russian banks do not act like banks: They
don't grow their wealth by investing in industry. This differentiates Russian
financiers from America's 19th Century "robber barons."
What's more, the Russian state won't cut off life support for mammoth
enterprises which consume 50 percent more in resources than they produce in
(unneeded) goods, and don't pay taxes or repay loans. A report in The New York
Times points out that Poland, which allowed such dinosaurs to die and their
workers to set up small businesses unhindered by government, has one of
Europe's fastest-growing economies.
There is another important way in which Russia, whatever Cohen may say,
suffers from not being more of a replica of American democratic capitalism: It
is missing the rule of law and the moral principles that have always been the
underpinnings of free markets.
Corruption is routine, at every level from the lowliest police precinct to
the upper echelons of government. Most Russian businessmen not only lack any
notion of giving back to the community but also believe, just as they were
taught by Communists, that business is no different from a scam. When I was on
a trip to Russia in 1992, a young man who had quit graduate school to go into
business told me, "One of the hurdles I had to overcome was getting used to
the idea that if it's in my interest to deceive someone, I have to do that."
Nor is there any notion of deferred gratification: The idea is to get rich
quick, take the money and run.
Giving more money to Russia at this point may be throwing good money after
bad--money that will end up in the coffers of the same pseudo-capitalist
tycoons. Perhaps, a few years ago, the United States could have given aid to
Russia in a way that would have done more to promote genuine reform. Perhaps
we have "lost" Russia. But it certainly wasn't because we tried to make it too
much like us.


INTERVIEW-Zhirinovsky predicts Chernomyrdin win
By Adam Tanner 

MOSCOW, Sept 6 (Reuters) - Vladimir Zhirinovsky, the leader of Russia's ultra
nationalists, predicted on Sunday that Viktor Chernomyrdin would be confirmed
as prime minister and the battered economy would stabilise in the coming
``I am sure he will be the prime minister, either on the 7th or on the 14th,''
an uncharacteristically calm Zhirinovsky said in an interview with Reuters.
``Chernomyrdin will be prime minister, which will lead to better things.'' 
Chernomyrdin, President Boris Yeltsin's choice for the job, was overwhelmingly
defeated in the first of up to three confirmation votes in the State Duma
lower house of parliament last Monday. 
After three ``no'' votes over a three-week period, the constitutition requires
the president to disband the Duma. 
Zhirinovsky's Liberal Democratic Party, the Duma's third largest, abstained in
the first ballot but he said the party would vote for Chernomyrdin, prime
minister from 1992 to March this year, in the second round on Monday
``We are in favour (of Chernomyrdin), but the left and Yabloko may refuse to
take part in the vote,'' he said. 
Yabloko, led by economist Grigory Yavlinsky, favours economic reform but has
fiercely criticised the government and voted against Chernomyrdin in last
week's vote. 
``If there is a secret vote, he'll already go through tomorrow. If it's an
open vote, it's possible that Chernomyrdin will get up to 200 votes and on the
third time he'll get the necessary 300 for,'' Zhirinovsky said. 
Chernomyrdin needs a simple majority of 226 votes in the 450-seat Duma to be
re-instated as premier. 
Most parliamentary parties came out against him in the first ballot, which was
94 votes for and 253 against. 
A secret ballot increases his chances because it allows Communist dissidents
anxious about their prospects of reelection in new elections to break with
party discipline. 
``When push comes to shove, some of the Communists will vote for
Chernomyrdin,'' Zhirinovsky said. ``They don't want to be left without a job,
especially when they're at retirement age.'' 
``If it's an open vote for the third time, Chernomyrdin will get 230. If it's
closed he'll get up to 300,'' said Zhirinovsky, who has often backed Yeltsin
despite his noisy antics. 
Yeltsin is expected on Monday to carry out ``round table'' talks with
parliamentary leaders before the vote. The Communists are expected to propose
alternative candidates, but most observers believe the president will stand by
his man. 
``At the round table the president will reveal that he has one candidate,
Chernomyrdin, but in the spirit of political compromise he'll agree to changes
in the constitution to expand the powers of the State Duma,'' Zhirinovsky told
``And he'll say that he's ready now to expand the government's powers in its
formation and functions.'' 
Yeltsin's aides last week reached an agreement with parliament giving them
more say in the government in exchange for backing Chernomyrdin, but the deal
fell apart. 
Zhirinovsky said he favoured Chernomyrdin's plan to print more money to pay
back debts, and said the economy should show signs of stability in the coming
``It's all propaganda to scare one another,'' he said of warnings of imminent
doom in Russia. ``Everything will be calm.'' 
``In the coming months will be the first steps forward. The rouble's fall will
stop, production will come to life and tax collection will improve,'' he said.


Russia's Communists put Primakov on PM list - NTV

MOSCOW, Sept 6 (Reuters) - Russia's Communists intend to present President
Boris Yeltsin with a series of alternative candidates for prime minister on
Monday, including the surprise choice of acting Foreign Minister Yevgeny
The NTV station on Sunday broadcast a video of Communist leader Gennady
Zyuganov talking to party members in parliament on Friday and mentioning five
possible alternative candidates to acting Prime Minister Viktor Chernomyrdin,
including Primakov. 
The television station used a powerful long-range microphone to record
Zyuganov, who apparently was unaware he could be overheard. 
Primakov, 68, the former head of Russia's external spy service and a long-time
diplomat, is acceptable to the Communist-dominated State Duma lower house of
parliament because of his efforts to promote Russia as a great power and
lessen its reliance on the West. 
Primakov is expected to keep his position as foreign minister if Chernomyrdin
is confirmed by the Duma on Monday or in a possible third and final vote a
week later. 
Yeltsin is scheduled to meet parliamentary leaders before the vote to seek
support and listen to their suggestions. 
So far, the president has said that Chernomyrdin, whom he abruptly fired in
March after five years on the job, is the only possible candidate. 
Other candidates mentioned by Zyuganov, who has repeatedly declined to name
alternatives publicly, were: 
Gennady Gerashchenko, former central bank chairman; 
Yuri Luzhkov, mayor of Moscow; 
Yuri Maslyukov, the industry minister under former Prime Minister Sergei
Kiriyenko who last week resigned from Chenomyrdin's acting cabinet; 
Yegor Stroyev, speaker of the Federation Council upper house, who said on
Sunday he is not interested in the prime minister's job. 


Ex-Soviet bloc fears fallout of Russian crisis

MOSCOW, Sept 6 (AFP) - Russia's abrupt financial meltdown has sparked fears of
an economic "nuclear winter" in the economies of the former Soviet bloc, whose
leaders have scrambled to protect their countries from the fallout.
>From the Baltics to Ukraine, passing by Belarus on its western approaches, the
Russian crisis has triggered panic spending sprees, job lay-offs and fears
that their economies could soon be laid waste by the Russian maelstrom.
Worst hit are countries with closest economic links to Russia. In an uncanny
echo of the Russian collapse, Kiev was forced Friday into a de facto currency
devaluation, and suspension of the interbank foreign currency market.
Like Moscow, Kiev has been forced to swallow tough monetarist medicine to
secure International Monetary Fund assistance to shore up its feeble currency,
but analysts say the hryvnya risks a 30-40 percent drop against the dollar,
which if realised could see a repeat of the Russian collapse in Ukraine.
In Belarus, whose authoritarian leader Alexander Lukashenko has long
criticised Russia's dash to a market economy, the sickly Belarussian ruble
crumpled from 120,000 to the dollar to 300,000 on the interbank market in the
space of five days.
Panicked savers have pulled 71.4 billion Belarussian rubles from the banking
system since late August, and embarked on a desperate spending spree to
convert their wasting savings into western fridges, washing machines and
And as prices have soared, shops have started rationing staple goods in short
supply, notably sugar.
Even the Baltic states, which have turned sharply westwards since regaining
independence in 1991, have been forced to baton down the hatches as the icy
blast from Moscow swept in. Around 20 percent of the region's exports still
head east.
Although Prime Minister Gediminas Vagnorius has insisted that "the Lithuanian
economy is stable and will not be affected by the Russian crisis," his
optimism is not shared by the country's industrialists.
"The Russian crisis spread beyond Russia's borders long ago, and we must speak
today of a shock wave which has hit the entire eastern European market,"
warned Bronsislovas Lubys, head of Lithuania's Confederation of Industry.
If the crisis lasts until New Year, Lithuania would lose 250 million dollars
in exports, he warned, adding "if it lasts six months, unemployment in
Lithuania will rise by 20 percent."
Neighbouring Estonia's United Dairies on Wednesday shut down a processing
plant geared to the Russian market and laid off 40 percent of staff because
customers could no longer pay for deliveries.
Moldovan President Petru Lucinschi last week enlisted the help of visiting
French President Jacques Chirac in protecting Chisinau from the ill-effects of
the Russian crisis.
"It will be very difficult for us to deal with the crisis without support from
the World Bank and the International Monetary Fund," Lucinschi said, admitting
"that is why we asked President Chirac to help us" secure aid from
international lending institutions.
However, the future appears less bleak -- for now -- for a host of other
members of the Commonwealth of Independent States (CIS), set up after the
collapse of the Soviet Union to maintain some form of regional cooperation.
Kazakhstan, buffeted by falling world prices for its energy and commodity
exports, fears a prolonged crisis could hurt trade, but officials continue to
downplay the impact of the Russian crisis.
Baku, whose state budget has, like Kazakhstan, been badly hurt by tumbling
global oil prices, says its low foreign debt and underdeveloped financial
market means its economy has not yet been chilled by the chill winds blowing
in from Moscow, a commentary echoed in Yerevan, Tbilisi, and Dushanbe.
Further afield, economists in Germany warned that up to 50,000 jobs in the
former East Germany were threatened by the crisis, the weekly Bild am Sonntag


The Electronic Telegraph (UK)
7 September 1998
[for personal use only]
Cash chaos costs jobs of Russian middle classes
By Marcus Warren in Moscow 

MEMBERS of Moscow's middle class are being thrown out of work in their tens of
thousands by the financial chaos that has already destroyed the value of their
Bankers, businessmen, stock market traders, salesmen and anyone connected
with imports - those who thought they were building a new and better Russia -
face the loss of well-paid jobs they may have held for years. The rich
transferred their assets abroad long ago. The poor majority have no savings
and many have not received wages for months. The in-betweens are the ones who
are suffering most pain. 
Until recently, they were the last people afraid of unemployment. Blue-collar
workers from smokestack factories producing little except pollution were
vulnerable, but not the new elite, they reasoned. Now, with banks on the verge
of collapse and the trading system close to ruin, whole departments of well-
trained, motivated young professionals are being laid off. Estimates vary but
at least 100,000 in the financial sector are at risk in Moscow, where the
middle class is concentrated. Each supports five or six dependents.
President Yeltsin holds round-table talks today with the opposition to try to
break the political deadlock. Afterwards, the parliament will vote on whether
to approve his candidate, Viktor Chernomyrdin, as prime minister. Mr
Chernomyrdin told European finance ministers that Russia would stabilise its
economy with international help. But, in a spectacular vote of no confidence,
Muscovites rushed to stock up on provisions for the winter in scenes
reminiscent of the Soviet era, with panic buying of staples such as rice,
cooking oil and pasta.
Many professionals have been working all hours in an attempt to save their
companies from the worst effects of the economic crisis. The queues were so
long to withdraw money from customers' accounts at the Rossiisky Kredit bank
that the branch where Irina Nikonova worked stayed open till 8pm every day as
she tried to calm panic-stricken depositors.
When the blow came, her employers gave her a choice: to resign straight away
without any redundancy payment or to work out two months' notice. If she chose
the second option, she was left in no doubt that the bank would use any excuse
to get rid of her at any time, including arriving a minute late for work. Ms
Nikonova, 22, who always came top of her class at school and graduated with
distinction from Moscow's elite economics institute, said: "Of course, I feel
terrible. I am convinced that I shall never find a job in the banking sector
Vladimir Solvoyev, director of the recruitment agency Universal Personnel,
said: "We are getting up to 100 inquiries a day. We would get more but the
phones can't cope." Sergei Solomentsev was filling out forms at the agency's
office. He said: "On top of being made redundant, I have lost the equivalent
of £12,000 in the rouble and bank crash. The difference from 1917 is that the
aristocracy had inherited its wealth and could flee abroad. Today's middle
class is self-made. It has a lot to lose and nowhere to go."
But becoming unemployed may be the catalyst that turns the politically inert
bourgeoisie into a force for change. Mr Solvoyev said: "Right now, the middle
classes are paying for their political stupidity. They took the view that
politics here was dirty and that mud was for pigs only. But who is going to
change this country if it is not us?"


Chernomyrdin promises chake-up at central bank

MOSCOW, Sept 7 (AFP) - Russian Prime Minister-designate Viktor Chernomyrdin
promised a shake-up in the country's central bank, saying it was partly to
blame for the current financial crisis.
Speaking in an interview late Sunday on the NTV television channel, he also
said it was useless to expect a new leader to come to power on the current
public wave of discontent at the chaos in Russia.
Replying to a viewer's question on the central bank's responsibility,
Chernomyrdin said its actions had not "unfortunately" always been consistent,
and its words had not been followed by actions.
"Of course the central bank is to blame for this and there are some people in
it who must take the responsibility. I think one must make changes in the way
of running the central bank but not destroy it."
It is up to the Duma, the lower house of parliament -- which has so far
refused to approve Chernomyrdin's nomination as prime minister by President
Boris Yeltsin -- to appoint or dismiss the head of the central bank on the
recommendation of the president.
Chernomyrdin also called for a new government to be appointed without delay.
He told the main communist opposition, which is blocking his appointment, that
"it is vain to hope for someone to come to power on the wave" of discontent.
"We must not play with the people's misfortune," he said. "We need a
government without delay."
Chernomyrdin compared Russia to an ocean liner caught in a storm and in danger
of running on the rocks, "and meanwhile the crew discusses who to name as


Top Russian wants to allow dollars in shops

MOSCOW, Sept 6 (Reuters) - Russia's Deputy Prime Minister Boris Fyodorov said
on Sunday that he favoured allowing Russian stores and enterprises to do
business in dollars as well as roubles. 
``We have to acknowledge that there is a second money supply in the country in
the form of dollars, marks, pounds and francs,'' Fyodorov told state
``Under the system we are proposing today, if anyone wants to pay in dollars,
let him do so. But if someone does not want to accept roubles, this cannot be
By allowing payments in foreign currency, he said, ``all the money currently
stored under mattresses will come into circulation and be freely exchanged.'' 
He also repeated that Russia would introduce a ``very tough'' system under
which the number of roubles in circulation would be linked to foreign currency
reserves, similar to the creation of a currency board in some countries. 
Russia devalued the rouble three weeks ago and since then it has fallen from
about six to the dollar to 17. Many stores have struggled to adjust their
prices on a nearly daily basis as the fall continues. 
Russian law forbids transactions in dollars, although some stores have started
posting prices in dollars which must be paid in roubles at an inflated
exchange rate. 
The country saw a similar pricing system during the hyper inflation of
Fyodorov, appointed deputy prime minister just a few days before President
Boris Yeltsin sacked the government of Sergei Kiriyenko on August 23, has been
offered a top job in the cabinet being formed by acting Prime Minister Viktor


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