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Johnson's Russia List


September 12, 1998   

This Date's Issues: 2366 2367 2368

Johnson's Russia Llist
12 September 1998

[Note from David Johnson:
1. AP: Mitchell Landsberg, Is Yeltsin Losing His Grip?
2. Argumenty i Fakty, 73% of Russians Say Yeltsin Resignation Good 
for Country.

3. Reuters: Brian Killen, New Russian PM vows to pay debts.
4. Paul Backer: Re 2361-Luryi/Anti-Semitism.
5. AFP: Russian stallholders suffer from depression.
6. Forbes: Vladimir Kvint, Fixing Russia. After Yeltsin falls, Russia 
should be a good place to invest. Here's why. 

7. Rossiyskaya Gazeta: Local Government Heads Adopt 'Save Russia' Appeal.
8. Moscow Times: Valeria Korchagina, Friends Tell of Stern New Premier's 
Lighter Side.

9. The Economist: Russia shipwrecked.
10. Summary of Dmitri Simes briefing September 10 on US-Russian 

11. Moscow Times editorial: World Went For Chubais' Selfish Plan.
12. Interfax: Sakhalin Governor Forecasts 'Russia's Dissolution.'
13. AFP: Primakov as premier sounds knell for Yeltsin: press.]


Is Yeltsin Losing His Grip?
September 12, 1998

MOSCOW (AP) -- The hair is no whiter, the girth, perhaps, no wider. But the
Boris Yeltsin who is trying to lead Russia out of its latest crisis is not the
same man who led his country triumphantly out of the communist past.
By nearly all accounts, Russia's president moves more slowly and appears to
think less clearly than he did just a few years ago -- changes that might not
be unusual in a 67-year-old man, but that could have profound implications for
his country.
To be sure, Yeltsin is still very much in charge of a government that
concentrates enormous power in the hands of the president. Under a
constitution he rammed into law in 1993, parliament is more of an advisory
body than a true partner in government.
He has even seemed energized at times in recent weeks as he battled with
parliament over his choice for prime minister. The president settled on a
compromise candidate, Yevgeny Primakov, who is a year older than Yeltsin and
also has suffered serious health problems in recent years.
With two years left in his term, Yeltsin remains a masterful political
tactician. But he is a man whose health and mental acuity are almost certainly
The change seems so marked that Russians and Westerners alike are starting to
make a comparison that would have been unthinkable not long ago. They say
Yeltsin reminds them of the late Soviet leader Leonid Brezhnev, whose last
years in office were a painful parody of leadership.
Alexander Bovin, former Russian ambassador to Israel, was recently quoted by a
newspaper as saying Yeltsin is a lot like Brezhnev in his ``middle period,''
when the Soviet leader was marked by a ``slow gait, stateliness, somewhat
royal appearance, sometimes not fully articulated speech.''
One difference, Bovin said, is that Yeltsin seems to be ``more cloistered and
cut off from objective information and the people than Brezhnev was.''
Those are harsh words, given Brezhnev's reputation, which can be summed up in
the name given his tenure, from 1964-82: the Era of Stagnation.
``The late Brezhnev, the late Yeltsin -- they're much the same,'' said
Marshall Goldman, a Russian scholar at Harvard. ``Look at a video of (Yeltsin)
in August 1991 and look at the difference in behavior today.''
That August, Yeltsin, then the president of the Russian republic of the Soviet
Union, became an international hero when he clambered atop a T-72 tank and
defied a coup attempt against Soviet leader Mikhail Gorbachev.
He was a strapping, vigorous man, quick on his feet both physically and
mentally, whose seemingly spontaneous action and words stirred a nation to
resist a return to totalitarianism.
Today, Yeltsin often seems sluggish. His face frequently appears puffy. Even
after a month of vacation this summer, he had bags under his eyes and appeared
When he finally appeared in public after weeks of lying low, one Russian
newspaper featured a sarcastic headline: ``He lives!''
His physical health has been a concern for some time. Yeltsin was suffering
from heart disease during the 1996 presidential election and had a heart
attack, followed by multiple bypass surgery, in the months after his victory.
Of equal concern these days is his mental agility.
At a recent news conference, Yeltsin appeared to have difficulty understanding
reporters' questions and had his press secretary repeat them several times.
He also has displayed increasingly erratic behavior. He has fired his entire
government twice this year. The man considered Yeltsin's top economic adviser,
Anatoly Chubais, has been fired three times. On a recent trip to Novgorod,
Yeltsin made three proclamations that he later contradicted, one within an
Such behavior once was chalked up to Yeltsin's well-documented fondness for
liquor. But few people believe that explains his lapses now.
Ariel Cohen, a Russia analyst for the Heritage Foundation in Washington, said
Yeltsin has to marshal all of his strength these days merely ``to cling to
For all the concern, Yeltsin remains a formidable politician with remarkable
survival skills.
Grigory Yavlinsky, a former Yeltsin aide who now leads the social democratic
party Yabloko, says he has a stock answer for anyone who doubts Yeltsin's
staying power: ``He will catch a cold at your funeral.''


73% of Russians Say Yeltsin Resignation Good for Country 

Argumenty i Fakty, No. 37
September 1998 (signed to press 8 Sep 98)
[translation for personal use only]

A total of 73 percent of Russians think it would be better for the
country if Yeltsin resigned and only 12 percent reckon it would be better
for him to stay until the year 2000, while 15 percent are undecided,
according to the findings of an opinion poll published on the second page
of the Russian newspaper Argumenty I Fakty on 8 September. The poll was
carried out by the Institute of the Sociology of Parliamentarianism at the
beginning of the month with a sample of 6,000.
It found that the level of public confidence in Yeltsin was down to
four percent from 11 percent in June 1997, with 81 percent of the sample
saying they did not trust Yeltsin and 15 percent undecided. Meanwhile, the
lower house of parliament, the State Duma, enjoys the trust of 12 percent
and the upper house, the Federation Council, 11 percent.
A total of 65 percent of Russians find the current economic situation
in the country intolerable with a further 27 percent deeming it bearable,
but only just.According to the poll, 55 percent of Russians oppose Viktor
Chernomyrdin's return as Prime Minister with only nine percent in favor, 20
percent who do not care, and 16 percent undecided.
Only five percent of those polled approve of the work of Yeltsin's
daughter, Tatyana Dyachenko, as the president's image adviser, while 36
percent disapprove, 32 percent do not know what she does, 21 percent do not
care and 6 percent are undecided.
Valentin Yumashev, the head of the president's administration, came
off even worse. Only two percent approve of his work, 16 percent do not
care, 11 percent disapprove, 55 pe cent do not know what he does, and 16
percent are undecided.
Sergey Yastrzhembskiy, the president's press secretary, fared a little
better with 12 percent of those polled approving of his record


New Russian PM vows to pay debts
By Brian Killen

MOSCOW, Sept 12 (Reuters) - Russia's new prime minister, Yevgeny Primakov,
whose appointment was greeted by local media as marking the dawn of a new
political era, vowed on Saturday that the country would never be declared
Primakov has said reforms will continue and German Chancellor Helmut Kohl was
quoted as saying he was confident the new premier could drag Russia out of
economic turmoil. 
``Primakov stands high in my estimation. He is certainly not the prototypical
reformer but he takes small steps in the right direction,'' Kohl said,
according to the text of an interview to be published in Sunday's Bild am
Sonntag newspaper. 
``I'm confident he can do it. I'm convinced Russia won't fall back into the
past,'' Kohl added. 
Some Western economists have voiced concern about a possible return to Soviet-
style economic management, a relaxation in monetary policy and the consequent
danger of runaway inflation. 
The new government has still to be formed and the shakeup continued on
Saturday with Yeltsin's dismissal of his chief spokesman and foreign policy
adviser Sergei Yastrzhembsky. 
A new team will have to try to lead Russia out of crisis, restore market
confidence and ease social tensions ahead of the winter. Many people have not
been paid for months, banks are crippled, shop shelves are half-empty and
prices are rising. 
Ukrainian President Leonid Kuchma said on Saturday planned talks with Yeltsin
next week had been moved to Moscow. 
The talks, which had been due to take place in Ukraine, are expected to
concern the economic problems in the two states. 
``We are interested in Russia's democratic transformation and the earliest
resolution of the political crisis,'' Interfax Ukraine quoted Kuchma as
On Saturday the Kremlin said Yeltsin had fired Yastrzhembsky but declined to
confirm a report by Interfax news agency that foreign policy aide Sergei
Prikhodko had replaced him. 
Kremlin sources said Yastrzhembsky and Security Council secretary Andrei
Kokoshin, who was sacked on Thursday, were viewed as disloyal by Yeltsin for
lobbying him to name Moscow Mayor Yuri Luzhkov -- a potential rival -- as
prime minister. 
Yastrzhembsky told Interfax his dismissal had not come as a suprise. ``If one,
two or more officials have to pay with their jobs for civil peace and harmony
within Russian society then it's not such a big price,'' it quoted him as
Western creditors remain worried about the course of reforms and there is
still a risk of further debt defaults. 
However, Primakov said on Saturday the new government was already working to
rescue Russia from bankruptcy. 
``We shall pay all our debts,'' Itar-Tass news agency quoted him as saying at
a meeting with leading Russian media representatives. ``Russia is not the kind
of country that will declare itself bankrupt and it will never become this.'' 
``The new government will see to this and it is already working in this
direction,'' he added. 
Primakov, 68, was formerly foreign minister. He has already made clear through
his first key economic appointments that there will be a change of emphasis in
his economic policies. 
The government's economic supremo will be First Deputy Prime Minister Yuri
Maslyukov, a communist who once headed the Soviet state planning organisation
Gosplan. The central bank looks set to loosen the monetary reins under new
chairman Viktor Gerashchenko, a former Soviet-era central bank chief. 
Gerashchenko has urged the lower house of parliament, or State Duma, to lift a
ban on central bank credits to finance the budget, but he has also promised
caution on printing money. 
The Kremlin said on Saturday Yeltsin had appointed Alexander Voloshin as
deputy head of the presidential administration in charge of economic issues.
Itar-Tass news agency said Voloshin was an aide to administration chief
Valentin Yumashev. 
In other appointments, Igor Sergeyev, Sergei Stepashin and Sergei Shoigu were
confirmed as ministers of defence, the interior and emergency situations
respectively. First deputy foreign minister will replace Primakov as ministry
Under the headline ``The End of an Era,'' Russian business daily Kommersant
declared Russia was no longer a presidential republic and power had shifted to
the leftist-dominated Duma. 
``A constitutional coup has effectively taken place in the country,'' it said,
adding that Yeltsin had been forced by the Duma to make major concessions. 
Praised as the ideal compromise candidate by nearly all Duma factions,
Primakov won overwhelming support in a confirmation vote on Friday. Yeltsin
nominated him only after the Duma twice rejected his previous candidate,
Viktor Chernomyrdin. 
Primakov has ruled out quick fixes, while discounting criticism that he had
little experience in economics. 
Investors and some foreign governments were uneasy about the appointment of
Maslyukov and Gerashchenko. 
But German Finance Minister Theo Waigel was quoted on Saturday as saying the
appointment of Communists would not necessarily spell the end of the reform
process in Russia. 
``Much depends on the people involved,'' he told the Sueddeutsche Zeitung.
``The decisive question is what a future government does and whether Russia
keeps its promises.'' 


Date: Sat, 12 Sep 1998 
From: "Paul Backer, Esq." <>
Subject: Re: 2361-Luryi/Anti-Semitism

In response to the denial of anti-semitism in Russia.
It is simply inaccurate and grossly misrepresents the facts. My experience
is that of a Jew born in Russia, whose family lived there for generations
prior. My great grand-father indeed served in the czar's army.
1. Use of the 1827 edict as indication of lack of anti-semitism is
laughable, anti-semitism was always reality not written policy. Reference
to "many Jews ... draft dodgers" is profoundly offensive. I assume that
ethnic Russians went to serve their 25 years willingly? Strange, b/c that
does not seem to reflect historic sources.
The example of a Jewish doctor who refused to abandon centuries of his
family's faith for the (i am sure) vast pleasure of delivering a royal baby
proves what? Is is it not striking that as a condition of being able to do
one's professional services, he was asked to sacrifice his ethnic and
religious identity? It is amazing that anyone can refer to baptism for a
jew in such cavalier manner.
The flat statement that a baptized jew did not experience discrimination,
seems to be based on nothing. Further, strictly speaking after baptism
that individual is no longer a jew.
2. In re discrimination against Jews during Soviet times, it is widely
proven and accepted fact that many of the leading institutions such as
Moscow and St.Pete State Universities had quotas on the number of jews that
would be accepted in the 70s. 
Finally, the justification that many jews were after all, in the No.2
position and "ran day to day operations" smacks of scholarship somewhere on
the level of the "Elders of Zion".
This may be an unpopular viewpoint, but the reason why so many Jews were
educated in Russia is b/c the culture very strongly emphasizes scholarship,
one could spend a lot of time on explaining that the fact that Jews were
not allowed in many of the crafts, guilds, military, etc. professions,
pushed them into professions that were literacy intensive, but that would
be beside the point.


Russian stallholders suffer from depression

SARATOV, Russia, Sept 12 (AFP) - The bored look on the face of the stall-
holders in the Russian town of Saratov says as much about the country's
economic crisis as any stock exchange statistics.
With their heads in their hands, the dairymaids in the town's market continue
to wait for the next customer.
After a frenzied period when Russian consumers bought everything on the
shelves as prices rocketed, now noone is willing to risk their savings.
"Each customer was buying three, five and 10 kilogrammes of sugar, but no
more", said stall-holder Zoya Rogatena, surrounded by pyramids of unsold milk,
cheese, sugar and butter.
"They are waiting for prices to come back down to the levels of August before
the ruble was devalued".
When the financial crisis broke in August, anybody with money stocked up on
supplies to see them through the uncertain times ahead, she said.
Now customers who visit her stall in the town centre market come to check the
prices and with depressing regularity leave empty-handed.
On Thursday, she had about 60 customers compared to 200 on a normal day.
Like all the other dairywomen, she makes a living off a commission on sales
Out of Friday's takings of 1,000 rubles (83 dollars) -- down from 5,000 rubles
one month ago -- she will make a paltry 10 ruble.
"All I can think about night and day is how much I am selling", said her
neighbouring stallholder Tatiana Ilena, whose voice is hoarse from shouting to
attract customers.
"To begin with, the customers insulted us because they were furious that the
price of a kilo of butter had gone from 15 to 20 rubles. Now it is we who are
cursing, against the dollar and God", she said.
Imported products such as cheese have soared way beyond the buying power of
the vast majority of Russians.
Sergei, who owns the stalls run by Tatiana and another dozen dairywomen, said
the profits he made during the recent panic-buying had been offset by the
current losses.
The rising ruble means he has to pay more for products than he can sell them
for. All of which leaves the dairywomen caught between customers who do not
want to buy and a boss who wants to limit their sales to avoid losing money.
"Morale is low. It wasn't exactly a prestigious profession before", said
Tatiana, made up like all her colleagues with lipstick and eye-liner.
Her 10 rubles just about stretches to a five ruble bus ticket and bread to
feed her daughter and mother.
Only the announcement that Yevgeny Primakov is set to become the new prime
minister gives them hope. 
"The government will pay pensions and wages and people will start to buy
butter again", she said. 


September 21, 1998
[for personal use only]
After Yeltsin falls, Russia should be a good place to invest. Here's why. 
Fixing Russia 
By Vladimir Kvint 
Dr. Vladimir Kvint is a consultant, and a professor at the Fordham University
Graduate School of Business. Writing in FORBES in 1990, he was one of the
first people to predict the imminent breakup of the Soviet Union. 

IN HIS SPEECH announcing his nomination of Viktor Chernomyrdin as prime
minister, President Boris Yeltsin stated that no one could have expected the
Russian financial crisis. Soldiers and workers aren't getting paid, export
earnings end up in Swiss bank accounts and no one could have foreseen a
crisis? The man is clueless. 
The crisis cannot be ended by IMF loans or half-hearted reforms. It can end
only when the crooked privatizations of the early 1990s are reversed, some
controls reestablished and the crooks who stole the proceeds from Russia's
exports forced to disgorge their foreign bank accounts. This Yeltsin cannot
do: He is the creature of the kleptocrats. 
When Yeltsin falls—whether via resignation or by a coup d'état—his successor
will have to do things that may be seen abroad as a backsliding to communism,
but that will be a misconception. I do believe that money honestly invested in
shares and physical assets from abroad and by ordinary investors at home will
not be confiscated. To attract foreign investors back into the economy and to
persuade ordinary Russians to invest their savings, both groups will have to
be made whole—although foreigners who bought those now-frozen government bonds
(GKOs), are going to be stuck holding the paper for a long time. Voiding the
crooked privatizations and doing it again honestly and openly could bring in
more foreign exchange than all the money that the IMF could ever lay its hands
on. Some of that foreign exchange would come right out from under Russian
I think, therefore, that sound investments made now in Russia will pay off: in
telecoms—but not in mass media—in oil exploration, public utilities in some
regions, transportation, high-tech and software companies, the construction
industry and a few reliable banks. 
But know what you are buying. There is a big difference between companies run
by Western-style management and publicly traded in the U.S. and those that are
run by the old-style bureaucrats and their kleptocratic masters. Which means
that companies controlled by Russia's new magnates should be avoided (see "The
last days of Yeltsin"). These companies are likely to be renationalized and
ultimately resold, perhaps in part to foreign interests, in open tenders
organized by foreign and domestic accounting, law and investment banking
On the other hand, several of the mutual funds managed by foreign firms, such
as the Templeton Russia fund, could be promising investments once Yeltsin is
out of the way and Russia starts afresh. With their prices down 87% and more,
there are certain to be bargains among Russian stocks. 
We had all better hope that the change comes quickly. For many years, when
Westerners asked me about the control of nuclear weapons in Russia I laughed,
because these weapons were always in strong hands: Brezhnev, Gorbachev,
Yeltsin. These guys would never use nuclear weapons. They loved life and the
privileges their rank brought them. They had no death wish. 
It is different, though, with military men who have not been paid and whose
families have no money for decent food. Discipline in the Russian army hasn't
been at such a low level since the last days of the czar. Soldiers have been
selling guns and tanks and aircraft. What's to stop them from selling nuclear
and biological weapons? Terrorists do not need to buy a nuclear bomb as a
whole; they can buy them in pieces from different places. Chechen guerrillas
have already threatened Russian leaders with word that they possess biological
Americans worry about the possible coming to power in Russia of a
nationalistic dictatorship that might turn aggressive to make the Russian
people forget their troubles. Not to worry. Even a military dictatorship would
have an enemy close at hand: the pseudocapitalists who hijacked the Russian
economy and stole the bread from Russian mouths. As recently as 1992 these
pseudocapitalists were as poor as most other Russians. They had no capital and
no access to it but bribed and muscled their way to wealth by methods
described in previous issues of FORBES (Dec. 30, 1996 and Sept. 7). They then
proceeded to send abroad the money earned from Russian exports, leaving
Russian companies unable to pay their workers. These people—not foreign
investors—will feel the wrath of Yeltsin's successors. Indeed, selling
foreigners a stake in the economy will be seen as the only real hope of
putting Russia on a more prosperous path. 


Local Government Heads Adopt 'Save Russia' Appeal 

Rossiyskaya Gazeta
Septemnber 9, 1998
[translation for personal use only]
Undated "Statement by Participants in Conference of
Representatives of Unions and Associations of Local
Self-Government Bodies Which Are Members of the Russian Federation
Congress of Municipal Formations:" "Cities and Towns Urge
Gentlemen Boyars To End Troubles. Is Only Thing Left To Do To
Summon Minin and Pozharskiy and March on Moscow?" [In 1611 Kuzma
Minin was instrumental in setting up a voluntary militia commanded
by Dmitriy Pozharskiy which later marched on Moscow to free it and
enthrone a new czar] -- passages within slantlines published inboldface

Having discussed the situation that has developed in the country, the
conference participants note:
In terms of its significance and impact on the situation of the
bulk of the Russian population the current political and economic crisis
can be considered the most acute and the gravest throughout the reform
implementation period.
Any further deterioration in the already grave socioeconomic situation
of municipal formations and most Russians could push socially unprotected
strata of the population over the limit of their patience.
The lack of clear, coordinated programs and actions to get out of the
crisis between the president, Russian Federation Government, and Federal
Assembly (State Duma) is helping it to develop and deepen, leaving no
prospect of a painless solution.
Bearing in mind that the possible consequences of the further negative
development of events could be social upheavals bringing calamities for the
majority of the population (acts of civil disobedience, strikes, and so on)
which could practically destroy the state, and that the alternative to
agreement among top politicians is a return to dictatorship and the
destruction of the state's democratic foundation, we, the conference
participants, consider the only solution to be the consolidation of all
political parties and movements, of federal, regional, and local organs of
power, of people of all professions and nationalities, and of the entire
Russian population to one end -- to save our Russian state. The
consolidation of diverse political forces and the corporate method of
development historically typical of our state could become Russia's means
of escaping from the crisis.
In this context, on behalf of the leaders of Russian cities, towns,
villages, and other municipal formations we appeal:
/to the Russian Federation president, Federation Council, and StateDuma,/
as the Russian Federation's supreme official and supreme organ of
state power, regardless of all existing conflicts and personal ambitions,
to take urgent measures to strengthen the federal executive branch and to
jointly take urgent measures to prevent the further development of thecrisis;
/to leaders of political parties and movements/
to stop further whipping up political tension and to suspend any
active activity not aimed at consolidating and uniting society in order to
save the country;
/to leaders of Russian Federation components and our colleagues who
are leaders of municipal formations/
to unite and to pool efforts to maintain stability and order on the
territory of Federation components and municipal formations, making maximum
effort to ensure the vital activity of cities, towns, and other population
centers and to provide social protection for and assistance to thepopulation;
/to bankers, businessmen, entrepreneurs, merchants, and other
components of market relations/
to turn toward people and help them to survive the crisis. Without the
people and the state there will be neither business nor prosperity for you;
/to mass media leaders/
not to inflame passions. Many things are in your power. Give people
the strength to survive the peak of the crisis;/To the citizens of Russia/
We have only one Russia. We cannot let it be either lost or destroyed
-- it is our Motherland. Let us help each other to hold out and survive.
[Description of Source: Rossiyskaya Gazeta -- Government dailynewspaper.]


Moscow Times
September 12, 1998 
Friends Tell of Stern New Premier's Lighter Side 
By Valeria Korchagina
Staff Writer

Yevgeny Primakov, who was confirmed as Russia's new prime minister Friday,
brings to the job a fearsome reputation as a stern professional and tough
But friends and acquaintances of the former spy chief painted a picture of a
vivacious man who, away from the public eye, adores red wine and whisky and
whose favorite pastime is telling jokes. And above all, he is fiercely loyal
to the people he considers his friends, even if that loyalty carries a
political cost. 
"The head of the foreign intelligence service or a foreign minister ... by
definition has to be reserved," said Yury Kobaladze, spokesman for the foreign
intelligence service, which Primakov headed from 1991 until 1996. 
"In reality [Primakov] is an incredibly open person. He has lots of friends
and acquaintances. He loves jokes and informal gatherings. He can drink quite
a lot and not loose control over himself. He is a normal human being." 
Primakov followed the classic career path of a Soviet apparatchik. Born in
Kiev but raised in the Georgian capital, Tbilisi, he initially worked in radio
and television. In the 1960s and 1970s he was a top Pravda correspondent in
the Middle East and, after a stint as a foreign policy adviser to Soviet
leader Mikhail Gorbachev, he was made head of foreign intelligence. 
Progressing through the Soviet bureaucracy meant conforming. He reportedly
worked to get rid of his strong Georgian accent. According to some reports, he
is of Jewish extraction and like many of his contemporaries, was forced to
change his surname to the more Russian-sounding Primakov. 
Perhaps because of the prejudices he faced, Primakov came up against obstacles
early on. At the beginning of his career, he was forbidden from going abroad
-- a considerable problem for a man whose main specialty was Arabic studies,
and an indication that the authorities for some reason did not think him
sufficiently trustworthy. 
The 1980s brought personal tragedies. Primakov's son died of a heart attack in
1981 and in 1987 he lost his first wife, Laura, to heart disease. 
"However, Primakov is not a complainer," said Anatoly Chernyayev, an aide to
Gorbachev and friend of the new prime minister. "It must have been a huge blow
for [Primakov]," he said. But "he is not someone who knows how to complain or
would even want to," Chernyayev said. 
Chernyayev said Primakov's warmth towards his friends marks him out. "About a
year ago I was walking in central Moscow," he said. "Suddenly I heard the
screeching sound of several cars braking simultaneously. I turned around and
there was the Foreign Minister's cortege stopping. Guess why? Primakov spotted
me and decided that he must say hello," Chernyayev said. 
Alexei Arbatov, a State Duma deputy and a political scientist who worked under
Primakov in the 1970s, also said that friendship has always played a big role
in Primakov's life. 
"He is known to surround himself with people, but while many are very bright
and positive some are seriously questionable. And if [Primakov] forms his
opinion on somebody and likes the person it is almost impossible to change his
mind even if the person absolutely does not deserve anything," Arbatov said. 
Generous though he is to his friends, Primakov has never allowed himself to be
pushed around, and is not likely to start to now that he is prime minister.
"If somebody tries to bend him, he will just get up and leave. And if he
doesn't I will be really disappointed," Chernyayev said. 


The Economist
September 12, 1998
[for personal use only]
Russia shipwrecked 
M O S C O W 
Although Russia is now likely to get a new government, this one led by Yevgeny
Primakov, the country’s tribulations are far from over 

WHEN the ship is on the rocks, it is seldom the moment for an argument. On
the SS Russia, however, Captain Boris Yeltsin and his rebellious crew have
wasted valuable salvage time haggling about who should be the next chief
engineer. The passengers, meanwhile, are glumly watching the water rise,
noting the lack of lifeboats. 
The financial weather still looks fearful. But at least the political mutiny
seemed set to calm down when, on September 10th, Mr Yeltsin conceded that he
would not be able to persuade the Duma, Russia’s recalcitrant lower house of
parliament, to ratify the appointment of his former prime minister, Viktor
Chernomyrdin. Instead, Mr Chernomyrdin withdrew, declaring grandly that
“Russia has had enough upheavals this century”, thereby opening the way for Mr
Yeltsin to nominate his acting foreign minister, Yevgeny Primakov. The
Communists said they would accept his nomination. This should bring some
political peace—at least for now. 
Mr Primakov is a wily old apparatchik, who has served loyally under every
Russian leader since Leonid Brezhnev. Formerly the head of the country’s spy
service, he took over as foreign minister in 1996. Under what is known as the
“Primakov doctrine”, Russian diplomacy has become more prickly and
uncooperative, even reckless. 
Some of the sharpest clashes have taken place in the Middle East. Under Mr
Primakov, Russia has consistently lobbied for the end of sanctions against
Iraq. An Arabic speaker, Mr Primakov has long-standing personal ties to Iraq’s
President Saddam Hussein. He has also loyally stood by another unpleasant
Russian ally, Slobodan Milosevic, the Yugoslav president—and strongly opposes
NATO action against the Serbs in Kosovo. 
All the same, Mr Primakov, is at least a presentable face for Russia: neither
drunk, nor ill, nor a political amateur, and with a modicum of administrative
ability. He is much-liked by hardliners of left and right for his anti-western
stance, and his defence of what he likes to call Russia’s “great power
status”. He will also be backed, on more pragmatic grounds, by reformers such
as Boris Nemtsov, the acting deputy prime minister, and has been pushed
forward by Grigory Yavlinsky, leader of Yabloko, the social-democratic party. 
All of which probably makes him the least bad choice. Russia will now get a
government, which will at least start on better terms with the cantankerous
Duma than the previous one—and have a chance of putting together an economic
policy. Whether this will be a sensible one is unclear. Mr Primakov’s own
economic views are opaque. He has virtually no economic or financial
experience. His government may well contain some reformers, such as Boris
Fedorov, an economist much liked in the West—but also a clutch of Communists
to placate the Duma. Even if he wants to tackle vested interests in business
or the bureaucracy, which so often block reform, he will have no power base
from which to do so. He offers stability, and a degree of obstructive
coherence in dealings with the outside world, but not the decisive leadership
and real changes Russia sorely needs. 
The alternative would have been simmering constitutional uncertainty, to add
to Russia’s financial and economic woes. The Duma had already rejected Mr
Chernomyrdin twice, and would probably have done so again (not
surprisingly—for five years, until he was sacked in March, he governed with
scant success). Mr Yeltsin would then have had to dissolve the Duma and call a
general election. 
This conundrum, with luck, will not now require an answer. But many still
believe that if Russia is to get back on an even keel it needs a new president
as much as a new prime minister. Mr Yeltsin’s authority is thoroughly
diminished. So far, he has seemed determined to hang on, though Moscow was
filled with rumour this week that he would resign—leaving his new prime
minister as head of state. 
All the same, Russia remains, on the whole, remarkably calm. Most banks are
still paying out small amounts of money. The queues outside their branches are
orderly, if morose. Most shops still stock most goods, although not staples
such as flour and sugar, which have been snapped up by nervous shoppers. The
rouble’s exchange rate yo-yos, falling by a third one day, rising by a quarter
the next. 
The signs, however, are ominous. Inflation is rocketing. Prices rose by 36% in
the first week of September alone, throwing millions more households into
poverty. Imports fell by a third in August. The effect of the collapsed
banking system and tottering insurance industry has yet to be felt. Even
reformers in the government think printing roubles is inevitable, whoever
replaces the central bank’s chairman, Sergei Dubinin, who resigned this week.
The country’s hard-currency reserves are barely $12 billion, making a default
on its foreign debt all too likely. 
The best anyone can hope for is that the current mess may prove a salutary
shock to those who caused it, especially the tycoons (see article) who, along
with regional bosses, now hold most of the real power in Russia. It is
possible, though unlikely, that the shipwreck will make Russia’s elite behave
more responsibly, perhaps even by backing, one day, a genuinely reforming
government. But a lot of people, by then, will have drowned. As for Mr
Primakov, he will be steering a very leaky ship. 


Date: Fri, 11 Sep 1998 
From: Cleve Gray <> 
Subject: Dmitri Simes Briefing 


Dmitri K. Simes, President of The Nixon
Center in Washington, D.C., delivered a briefing this week at the Center
for Strategic and International Studies entitled, “The U.S.-Russian
Relationship: Cooperation, Confusion, and Delusion.” Mr. Simes’ former
boss was Yevgeny M. Primakov.
Simes views the changes in the Russian government with “encouragement,”
because he believes that the world has been misled for too long about what
has been happening in Russia in recent years. The news of market reforms
and processes of democratization in Russia were stark exaggerations by
Western media outlets. “There were no serious market reforms in Russia,”
he said. The disinformation was furthered by the Clinton Administration,
which has been hiding the truth of the situation in Russia from the
American public, according to Simes. Since 1995, the U.S. Embassy in
Moscow has been conveying information to the Clinton Administration
concerning the economic situation in Russia. This information was ignored.
Simes believes that the situation in Russia was “perfectly predictable,”
yet “not inevitable.”
In order to resolve the financial troubles of Russia, Simes said, “Good
money should not be thrown after bad money.” Simes also believes that
legislation should be passed to protect investors’ rights. Some Russian
banks, he said, are “outright pyramid schemes,” schemes which have caused
investors to be wary of the Russian financial system. Simes also made
reference to the “patronizing affection” which he claims the U.S. has shown
to Russia. He said that this should be stopped, that the American
government should not be defining what Russians should do in their own
Speaking of the nomination of Yevgeny M. Primakov for the post of Prime
Minister, Simes allayed concerns over Primakov’s lack of experience with
economic policy by saying that Primakov “knows the best Russian economists”
and is familiar with economic policy circles. Primakov is acceptable to
both Yeltsin and the Duma as Prime Minister because he is not connected to
“any group of oligarchs” within Russia. He is not in “somebody else’s
pocket.” Primakov faces a daunting task in the coming months, because his
policies must be acceptable to the Russian people, the International
Monetary Fund, the World Bank, Yeltsin, and the Duma. Primakov must accept
that there is “no alternative” but to deal with the Duma. 
Primakov has proven himself to be very capable in the arena of foreign
policy. At a time when Russia’s international and political standing in
the world has declined, Primakov is seen by many as the person to help
Russia out of its current crisis and to bolster its political clout. The
“less than perfect” Yeltsin government, Simes said, does not understand
that it needs to be on good terms with international financial institutions
and the Clinton Administration. The current government needs to understand
that the present crisis is not “a temporary crisis.” What Russia needs is
“someone who can work with Washington.” While working with Washington,
Primakov will likely convey his belief that the U.S. role of sole
superpower and U.S. attempts to shape events in Russia are “unacceptable.”
Regarding the state of the Russian military, Simes referred to it as
“poorly fed and totally demoralized.” The regional governors within the
Russian Federation do not know what to expect from Moscow, he said. They
are “playing with fire” with the military district commanders and their
units, whose reactions cannot be easily predicted. As a result, it is in
the interests of the regional governors to develop relations with these
commanders to prevent any type of unrest.
“It is difficult today to think of Russia again as a great power,” Simes
said. The U.S. should act with “patience and care” towards Russia in its
present crisis. At the moment, Russia is too weak to be dangerous, but if
the United States is too hard on Russia now, it may have to confront
another superpower in the future. 

By Cleve Gray
Research Intern
Center for Defense Information
1779 Massachusetts Ave, NW


Moscow Times
September 12, 1998 
EDITORIAL: World Went For Chubais' Selfish Plan 

When, a few years ago, Anatoly Chubais was again brought back to run Russian
economic policy, Western leaders were ecstatic. A World Bank official
described Chubais as "a demigod." A U.S. Treasury official spoke of Russia's
new "economic dream team." For nearly a decade now, practically every American
media outlet has described Chubais as "liberal" or a "reformer." The sentiment
seemed to be that he was an ally who wanted to keep good relations with the
West, while building a democratic and broadly prosperous Russia. 
This has always been a delusion. To continue to call Chubais a positive force
in Russia, the West has had to engage in the same sort of torturous
rationalization and denial that used to be displayed by apologists for Lenin
or Stalin. Chubais has never shown the slightest respect for either democracy
or rule of law. Much like the Bolsheviks, Chubais has treated ordinary people
-- both in the West and Russia -- as expendables. American and European
taxpayers provide the funding; Russian people, the raw material. 
Chubais set up rigged auctions for practically all of Russia's wealth --
morally, if not necessarily legally, stealing billions of dollars from Russia,
and in the process enshrining a system often described as oligarchic-bandit
capitalism. When a fund Chubais created received a $3 million interest-free
loan from Stolichny Bank for the purpose of "building civil society," Russian
media called it a bribe; the West accepted Chubais' absurd assertion that
interest-free loans for such vague purposes were "absolutely normal ... in
both Russia and any other democratic country." 
Chubais did not publicly oppose the war in Chechnya. He did nothing to keep
the oligarchs from muzzling the nation's press. There has been virtually zero
discussion of, for example, an authoritative account of a 1996 meeting at the
Kremlin between Chubais and nearly every major Russian editor: According to
Nezavisimaya Gazeta editor Vitaly Tretyakov, when editors complained of being
pressured by Gazprom and other political heavyweights, Chubais responded: "You
will do what the owners [of your paper] tell you. If not, bones will crack." 
Now this week, he has said that he lied to the International Monetary Fund to
trick it into a doomed $22.6 billion bailout this summer, saying it was
necessary and proper to do so: "The financial institutions understand, despite
the fact that we conned them out of $20 billion, that we had no other way
Maybe the IMF does understand. But Western taxpayers who foot the bill will
not. Nor will Russians: Chubais' comments have further damaged the nation's
credit reputation. Once again, Chubais is pursuing a reckless personal agenda
at the expense of the nation he claims to love and serve. 


Sakhalin Governor Forecasts 'Russia's Dissolution'

YUZNO-SAKHALINSK, 9 Sep (Interfax- Eurasia) -- Sakhalin Governor Igor
Farkhutdinov assessed the move of the Kaliningrad regional authorities to
suspend payments to the federal budget as "a beginning of
Russia's dissolution."
Farkhutdinov told journalists in Yuzno-Sakhalinsk Wednesday [9
September] that the events in the Far Eastern island of Sakhalin which has
no road links with the mainland may follow the same scenario.
The crisis will not remain limited to the stand-off between the
federal power branches in Moscow, he said. "If things get rough in Moscow,
regional leaders would remain in place a bit longer than the State Duma due
to the distance from the center," he said.
"When the current authorities are toppled" new leaders could declare
"joining one neighbor or another," he said.


Primakov as premier sounds knell for Yeltsin: press

MOSCOW, Sept 12 (AFP) - The Russian lower house of parliament's overwhelming
approval of Yevgeny Primakov as prime minister sounded the knell for Boris
Yeltsin's presidency, commented the Russian press Saturday.
Under a hardly flattering photograph of the Russian president, the Kommersant
daily ran the headline: "The end of an era."
"Yeltsin has been pushed to the sidelines of political life. The new main
players are now the Duma (lower house of parliament) and the government which
it has formed," said the paper.
"Of course, he's still president in name, but no one takes him seriously,"
Kommersant said dismissively.
The newspaper went on to explain an alliance forming between the communists,
who dominate the Duma, and the economic elite, often referred to as the
"The oligarchs no longer hide the fact that they find the communists more
acceptable than Yeltsin and in order to get rid of him, they're prepared to
join forces with them," it continued.
But Kommersant warned that such a liaison could prove dangerous: "it is not
certain that once Yeltsin is out, we will be able to push back the
Sevodniya, a newspaper which belongs to one of the major financial groups,
argued that by securing Primakov as premier "the communists have annulled the
'Yeltsin regime', which quietly and without a fight, had ceased to exist."
Nezavisimaya Gazeta, run by billionaire businessman Boris Berezovsky,
described Yeltsin's televised address Friday as that of "a weak man, who
barely understands what is going on in his country." 
Berezovsky is close to Viktor Chernomyrdin, selected by Yeltsin to steer the
country out of its economic crisis, but who withdrew his candidature for the
premiership after being twice rejected by the Duma.


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