September 14, 1998   

This Date's Issues: 2370•2372 ••

Johnson's Russia List
#2372
14 September 1998
davidjohnson@erols.com

[Note from David Johnson:
I mistakenly used #2370 twice. And mislabled the Moscow Times.
What else?
1. AFP: Yavlinsky turns down cabinet post offer.
2. Reuters: Primakov Urges Unity to Fight Crisis.
3. AFP: Gorbachev Gives Thumbs Up to Yeltsin Nominee.
4. Washington Post: Adrian Karatnycky, Gorbachevism Without Gorbachev?
5. RFE/RL: Ben Partridge, Russia: Economic Crisis Threatens Millions With 
Impoverishment.
6. AFP: Russian panic-buying dries up as public sees stability at last.
7. PRIO: Pavel Baev, ZUGANOV SHOULD HAVE BEEN ALLOWED TO WIN IN 1996.
8. CBS Moscow: Response to the Village Voice (JRL#2356, Sept. 8).
9. Peter D. Ekman: Economics education.
10. Yasushi Toda: Chubais Interview in Kommersant Daily (JRL #2365).
11. Masha Gessen: Re 2366-Backer/Luryi and Anti-Semitism.
12. Jamestown Foundation Monitor: PRIMAKOV DEFENDS START II; DECRIES 
CONFRONTATION and RUSSIA GETS NEW FOREIGN MINISTER. 
13. AFP: Russia will stick with "constructive" foreign policy: new FM] 

*******

#1
Yavlinsky turns down cabinet post offer

MOSCOW, Sept 14 (AFP) - Russian liberal opposition leader Grigory Yavlinsky
on Monday turned down an offer from Prime Minister Yevgeny Primakov to
become a deputy premier in the new cabinet, Interfax reported.
Yavlinsky, head of the reformist Yabloko faction in the State Duma lower
house, met with Russia's new premier in the government White House as
Primakov's sought to piece together a government for Russia.
Primakov offered Yavlinsky the post of "second first deputy prime
minister" next to Communist Yury Maslyukov, who will coordinate the work of
the finance and economics ministries in the new government, the news agency
said.
Yavlinsky said Maslyukov "has a different opinion about the course of
economic and political reforms. The government should not be a discussion
club," Interfax cited him as saying.
After voting in favor of Primakov in last Friday's crucial confirmation
hearing, Yavlinsky said publicly that Yabloko would not join the former
foreign minister's government because it was taking a wrong economic
direction.
Besides Maslyukov, Primakov has also employed the former Soviet banker
Viktor Gerashchenko as the nation's new central banker. The premier said he
will complete drafting a new government by the weekend.

*******

#2
Primakov Urges Unity to Fight Crisis 
September 14, 1998

MOSCOW -- (Reuters) Russia's new prime minister, Yevgeny Primakov , chaired
his first Cabinet session on Monday and told ministers that national
stability and unity must be their top priority at a time of swirling
economic turmoil. 
But in comments likely to worry Western lenders meeting in London to
discuss Russia's plight, Primakov also confirmed a shift of policy away
from strict monetarism towards social welfare and industrial growth. 
President Boris Yeltsin, severely weakened by the economic and financial
crisis, remained at his country residence outside Moscow and was not
expected to hold any meetings on Monday. 
"This is a national government, a patriotic government, which must
concern itself with the interests of Russia and her people," Primakov told
the Cabinet, still largely composed of acting ministers from the outgoing
administration. 
He rebuffed suggestions made in some Russian and foreign media that his
new government would adopt Communist policies but reiterated that reforms
must have a "big social dimension." 

Primakov, a former foreign minister approved by parliament last Friday,
faces a tough task trying to restore order to Russia's chaotic finances and
regain the trust of international investors dismayed by its default on some
foreign debt. 
The conservative but pragmatic Primakov, 68, has signaled a bigger
Cabinet role for the Communist opposition. He must present a completed list
of ministers to Yeltsin by the end of this week. 
The leftist-dominated Duma, or lower house of parliament, has already
confirmed the Communist Yury Maslyukov as Primakov's first deputy and
Soviet-era banker Victor Gerashchenko as head of the central bank. 
Maslyukov said on Monday he would oversee the Economy and Finance
ministries in the new Cabinet and that his top priority would be paying off
huge wage and pension arrears, Russian news agencies reported. 
"The very first anti-crisis measures of the government will include
solving the problem of wage arrears and also solving, at least partially,
the pension problem," Itar-Tass news agency quoted Maslyukov as saying. 
Millions of Russians including teachers, doctors and army officers
regularly go many months without being paid. 
Maslyukov, who once headed the Soviet state planning organization
Gosplan, was expected shortly to present proposals to Primakov on
stabilizing the ruble. He has said he will have an economic program ready
by the end of the week. 
His proposals are sure to be carefully scrutinized by Western countries
and global lenders like the International Monetary Fund (IMF), which have
told Moscow it can only expect further financial help if it sticks to tough
market reforms. 
The appointment of Gerashchenko as central bank governor has stirred
concern among Western economists and liberal Russian politicians who recall
his lax monetary policy during his last stint in the job from 1992 to 1994. 
Gerashchenko has urged the Duma to lift a ban on central bank credits to
finance the budget, a move that risks stoking inflation, although he has
also vowed caution on printing money. 
Acting Finance Minister Mikhail Zadornov, a key member of the previous
reformist cabinet, said on Monday he hoped Russia would be able to avoid
printing its way out of the crisis. 
"We would prefer not to rush towards central bank credits," Interfax
quoted Zadornov as saying. "Hopefully it will be possible to get by without
an emission." 
In some sorely needed good news for the beleaguered government, Russian
markets appeared calmer on Monday. 
The ruble, which briefly hit around 20 rubles to the dollar on the
streets last week, stood at 8.825/8.97 to the dollar in morning trade,
against an official central bank daily rate, based on last Friday's trade,
of 11.4281. Share prices also edged higher on very thin volume. 
"The feeling on the market is that generally we have avoided the
precipice but the question is whether there is another one ahead of us,"
said one trader, Denis Sarantsev. 
After Monday's Cabinet meeting, Primakov consulted former Prime Minister
Victor Chernomyrdin over future policy. Chernomyrdin, Yeltsin's favored
candidate for prime minister, stepped aside last week to clear the way for
Primakov after being rejected twice by the Duma. 
Chernomyrdin, who served Yeltsin loyally as premier from 1992 until his
sacking in March this year, also reiterated his intention to run for the
presidency in the next election due in the summer of 2000

*******

#3
Gorbachev Gives Thumbs Up to Yeltsin Nominee 
September 14, 1998

MOSCOW -- (Agence France Presse) Yevgeny Primakov, whose appointment as
Russia's prime minister last week was welcomed internationally, received
Sunday yet another strong vote of approval from the man who jump-started
his political career: Mikhail Gorbachev. 
In an appearance late Sunday night on the television program Itogi, the
last Soviet leader gave an enthusiastic thumbs up to President Boris
Yeltsin's choice for the premiership. 
"Concerning Primakov, I feel that this was the best decision," he said. 
Gorbachev, who stepped down in 1991 after a bitter power struggle with
Yeltsin, expressed no qualms about taking partial credit for Primakov's
success. 
"The responsibility for starting Yevgeny Primakov's political career
lies with me," he said. 
Primakov was drafted into the presidential advisory board in 1990 and
remains the only member of an exclusive circle of Gorbachev favorites to
have retained power in the new Russian state. 
The former leader, appearing aged but shrewd, attributed the decision he
made eight years ago to Primakov's "position as an adherent of reform and
democracy." 
"He defends national interests. ... He is a man that can be counted on,"
Gorbachev said. "He is an experienced man. ... I know him. He is a good man
and a loyal friend." 
Gorbachev indirectly dismissed accusations that his protégé, who once
headed the Russian World Economy and External Relations Institute, does not
have the financial know-how to right Russia's rapidly disintegrating economy. 
"He has studied economics his whole life," he said. "He will know how to
handle things." 
However, the biggest challenges facing Primakov, who starts his first
full week as prime minister on Monday, are not economic, but political,
according to Gorbachev. 
"The biggest problem we have today is a political one," he said. "The
root problem is the rift between the government and society." 
Gorbachev pointed to the people's total lack of faith in government as
underlying the bulk of Russia's problems. 
"The situation is such that the president can no longer do anything, no
one believes him anymore," he said in a routine jab at his arch-rival,
Yeltsin. 
Gorbachev said he expects the former diplomat to address the heart of
nation's problems by restoring people's faith in their leaders. 
"He represents the wide center," said Gorbachev. 
Primakov, who shortly after confirmation in his new position appointed a
trio of Communists to his governing team, is in no danger of turning away
from free-market reform, according to Gorbachev. 
"Primakov won't go back," he said. "I think ... he will look for people
who are in favor of continuing reform." 
The former Soviet leader said he feels the Russian people, changed by
seven years of capitalism, will make any return to communism a virtual
impossibility. 
"The country has suffered huge losses ... and now we have a different
Russia," he said. 
"We have learned to no longer count on the government. Look at how many
people now stand on their own in the toughest of conditions. They are not
going to go back." 
The people's distrust of their leaders was a sign of problems deeply
rooted in the structure of the government, he said. 

"Changes need to be made in the powers of the federal government. Today
we are prisoners of one man, the president, who has all the power," he
said, calling for a more equal distribution of power between president,
parliament and government. 
In the short term, however, more immediate issues -- such as ruble
devaluation and inflation -- top the new prime minister's agenda, said
Gorbachev. 
In a direct appeal to leaders of the G7 countries, who will meet with
the prime minister at an upcoming summit in London, Gorbachev stressed the
importance of reassuring foreign investors who have been fleeing the market
in droves since the beginning of the crisis. 
"If people leave the banks now, then they will never come back. If that
happens, then even Primakov won't be able to save the situation," he said. 
Gorbachev said economic reform could not be effected without the active
involvement of the government. 
"If they manage to get the situation in hand and begin to make changes
for the better ... with state support, then I think everything will be fine." 
Should Primakov prove incapable of doing so, however, Gorbachev invoked
an ominous emergency scenario where his favorite for the presidency,
Aleksander Lebed, would have to be called in to right the situation. 
With mixed optimism, the former leader sent warning bells to his protégé
that there was no time to waste. 
"I attach great importance to the first steps," he said.

********

#4
Washington Post
14 September 1998
[for personal use only]
Gorbachevism Without Gorbachev?
By Adrian Karatnycky

The writer is president of Freedom House. 

The dramatic standoff between anti-reform communist hard-liners and the
moderately reformist administration of President Boris Yeltsin has yielded
a stunning result in Russia: the ascendancy of a third force, the
Gorbachevites, to the apex of Russian politics, and the return of
Gorbachevism as the fundamental direction in Russian political life.
The three men who stand at the top of the new government -- Prime
Minister Yevgeny Primakov; the likely new first deputy prime minister and
economic czar, Yuri Maslyukov; and the new Central Bank chairman, Viktor
Gerashchenko -- were an integral part of the Gorbachev-led team that guided
the Soviet Union in its waning days. Primakov was a key foreign policy
adviser. Maslyukov ran the state planning ministry and served as deputy
prime minister, and Gerashchenko served as head of the central bank. While
none of these leaders today would acknowledge these links to the
now-discredited former Soviet president, they are likely to pursue some of
the policies that marked his last years in power.
Some might argue that the coming to power of these ex-communists
reflects the new-found power of the communist and leftist legislators in
the Russian Duma. In truth, Russia's newly appointed leaders have little in
common with the populism and ultranationalism of the extremist Gennady
Zyuganov and his ragtag band of communist deputies. 
Indeed, the second coming of the Gorbachevites reflects the weakness of
both the communist and reformist political camps and the abiding power of
Russia's industrial, raw materials and financial oligarchs (who fear the
loss of their fortunes) and Russia's security and military elites (who
worry about chaos). These power blocs have little trust in the policies of
the hard-line communists in parliament and the radical reformers whom
Yeltsin has booted from office. Russia's powerful economic oligarchs fear
the rule of free-market reformers, who recently tried to force them to pay
overdue taxes and to scrap the system of favoritism and patronage that has
characterized Russian-style capitalism.
Meanwhile, Russia's security elite fears that reformers will pare down
their already meager military budgets. Nor do the oligarchs trust the
motley crew of populists and ultranationalists who could challenge their
immense wealth and power through a wave of nationalizations. And the
security elite worries that the communists could plunge Russia into chaos
by pursuing the politics of revenge against those guilty of "treason" for
the loss of the Soviet Union.

The reins of government, therefore, have passed into the hands of a
third elite, one that has been in mothballs for nearly a decade but is
trusted by the military and economic elites. What, then, does the return of
Gorbachevism mean for today's Russia?
While they are likely to increase the role of the state in the economic
process dramatically, these new leaders are not entirely hostile to the
private sector. Under Gorbachev, they had supported limited efforts to
liberalize the economy and establish property rights.
Chief central banker Gerashchenko, who headed the Soviet and the Russian
central bank, became a favorite of the "red directors" and the new
oligarchs in the early 1990s when he resisted efforts to restrict the money
supply. His policies fueled hyperinflation and accelerated industrial
decline but enabled Russian enterprises to survive through massive state
subsidies and made it possible for Russia's new financial oligarchs to
profit from the resale of state-subsidized loans.
Can neo-Gorbachevism survive for long? Probably not. The
Primakov-Maslyukov-Gerashchenko troika is likely to represent Russia's last
determined attempt to run a state-dominated economy. But the new Russian
economic elite, which today has decisive influence in the shaping of
government policy and control over most of the country's information media,
is comfortable with such a state-dominated approach provided it can
stage-manage Russia's acute economic crisis while allowing the oligarchs to
secure needed subsidies, consolidate their monopolies and oligopolies and
live to fight another day.
Glasnost and perestroika are words that wore out their welcome under
Gorbachev's inept rule and are unlikely to reenter the Russian political
lexicon. But the return of a Gorbachev-era team makes it likely we will see
a Russia that implements perestroika's half-baked statism, coupled with
glasnost's limited tolerance for personal freedom and political expression.
In short, the rule of the sixty-somethings who have returned to power will
mean the consolidation of a patrimonial statist-capitalist system that is
far from the ideas of economic and political liberty but is not so far
removed from some of the ill-formed ideas that animated one of contemporary
Russia's most-scorned political figures -- Mikhail Gorbachev.

**********

#5
Russia: Economic Crisis Threatens Millions With Impoverishment
By Ben Partridge

London, 14 September 1998 (RFE/RL) -- The International Federation of the
Red Cross and Red Crescent says the Russian economic collapse, the onset of
winter, and poor harvests threaten "devastating" consequences for millions
of Russians. 
It also says that the Russian crisis is likely to have an "enormous"
knock-on effect across its borders on Ukraine, Belarus, and Moldova. 
A statement issued Friday says 73 million people in Russia, Ukraine,
Belarus and Moldova "are already living below the poverty line and many
millions are expected to face the harshest winter in decades."
The Geneva-based federation is about to launch a major international
appeal for humanitarian assistance to "meet the most essential needs of
hundreds of thousands of people suffering the effects of the current social
and financial crisis in Russia."
It says: "Little has been said about just how devastating the
repercussions will be for an already beleaguered Russian population of
close to 150 million, out of whom 31 million are estimated to be living
below the poverty line. The knock-on effect across Russia's borders -- to
Belarus, Ukraine, Moldova -- is likely to be enormous."

The statement says the Russian crisis has enveloped not only the most
vulnerable groups, such as the elderly and disabled, but also social groups
not normally associated with being underprivileged.
They include public employees such as teachers, miners, doctors, and
workers in institutes, as well as those living in far-off regions that were
subsidized under the Soviet system.
The federation last winter issued a multi-million dollar appeal to
provide food and clothing for more than one million of the most vulnerable
people in Russia, Belarus, Ukraine, and Moldova.
The statement says: "Conditions this winter are expected to be far worse
as a result of the economic crisis which will push up the cost of food,
create shortages (through reduced food imports), and increase fuel prices.
The situation is further aggravated by the persistent non-payment of wages,
pensions, and other benefits."
The statement says warnings of poor grain and potato harvests in Russia
this year are already causing serious concern.
Only 28.6 million tons of grain had been harvested by the end of August
compared with 55.2 million tons by August 1997 (i.e. some 48 percent of
last year's harvest). A summer drought, followed by August rains, has
ruined the potato crop, according to the Agriculture Ministry. Potatoes are
said to account for 10 percent of the nation's caloric intake. The
statement says there has been a striking increase in reliance on "dacha
produce" grown on individual plots. Before the collapse of communism, 60
percent of Russia's potatoes were grown on private plots: this figure is
now 90 percent.
Viktor Klestun, director of Russia's Agrarian Institute, has predicted
"severe food shortages" particularly of vegetable oil and meat products. In
1997, Russia imported 650,00 tons of beef. Its meat factories are said to
be operating at 37 percent capacity.
The statement says: "As the crisis in Russia has deepened, the flow of
international aid has dwindled. Millions of Russians as well as neighboring
peoples in Belarus, Ukraine, and Moldova are now facing a rapid downward
slide into poverty and misery."
"The 'coping mechanisms' of former times, such as the barter economy and
dacha produce, must be supplemented by emergency assistance on a large
scale if a human catastrophe is to be averted 
Borje Sjokvist, head of the federation's Moscow delegation, says: "The
situation is unpredictable but we are sure many more people will be
affected this winter than last. We can't exclude the possibility of mass
starvation if the situation continues to deteriorate."
The International Federation of the Red Cross and Red Crescent, together
with the national societies of Russia, Ukraine, Belarus, and Moldova, is
identifying the most vulnerable sections of society and regions in advance
of an appeal for humanitarian aid.
It is calling on national Red Cross/Red Crescent societies
internationally to launch special fundraising campaigns such as street
collections and postal appeals for donations. 

********

#6
Russian panic-buying dries up as public sees stability at last


MOSCOW, Sept 14 (AFP) - Prices inching down, the ruble more robust, and
shelves fuller than before: Russia's financial panic appeared to be drying
up Monday in the welcome sun of an Indian summer.
Several Muscovites expressed cautious optimism Monday morning that the
brutal economic storm which has waterlogged the economy could have
subsided, though some were still wary that the Russian shipwreck could
still go down.
"I feel the crisis is starting to ease," said cashier Galina
Alexandrovna, 24. "In our shop, prices have come down 20 percent in recent
days. There are no more queues in the markets, prices have come down.
"At Pavlovo-Possad where I live, I even managed to buy oil at 25 rubles,
instead of 50, like yesterday," she added.
"I sense a certain stabilisation," said accountant Natalya Fedoseyenko,
26. "This weekend I went to the dacha near Moscow. There was no poverty
there. Buckwheat, flour, it had everything. And the prices had even come
down a bit. They will never get back to their July levels. Stockings are
still 100 rubles instead of 20. It's a shame."
The sense of cautious optimism came after four desperate weeks in which
the ruble lost 70 percent of its value, prices exploded, and anxious
citizens started hoarding goods and besieging banks to withdraw rapidly
depreciating savings.
But in the past few days, the ruble has bounced back from a low of more
than 20 to the dollar to around 8.5 by Monday afternoon, with a modicum of
normality returning to retail life. The country even has a new prime
minister after weeks of political deadlock, Yevgeny Primakov being
confirmed Friday afternoon.
"In honour of the confirmation of the prime minister, 30 percent off all
prices," declared one shoe shop in downtown Moscow.
"I am sure that everything will be better, now that Primakov is in
power," said pensioner Inna Kuznetsova, 61. "He is very sound and
cultivated. I have already noticed a certain easing of the crisis. People
aren't queueing up like idiots any more."
Not everyone was convinced though.
"This stabilisation is artificial in my opinion," said student Sergei
Sergeyevich, 20. "It was done on purpose because the Communists were coming
to power. They are showing us that prices are lower because of them.
"Wait til they get their jobs in the new government - then there will be
real poverty, with empty shelves, just like in Soviet times.
"Look at that lorry. I advise you to fill one with food items, otherwise
you'll never be able to invite your friends over and have a party.
Whether the crisis really has blown over, or merely died down for some
brief respite, Russians will not forget the three weeks which shook their
country and forced them either to think on their feet, or panic, depending
on your point of view.
"Many people behaved very sensibly," wrote sociologist Alexei Levinson
in the daily Vremya. "Is it really panic when someone learning of the fall
of the ruble realises that before prices go up he has the chance to buy
goods very profitably?
"People dashed to buy primarily apartments, HiFi equipment, foreign
clothing and furniture," he added. "This is far from being the classic
example of Russian panic."


*******

#7
From: Pavel Baev <Pavel@PRIO.NO>
Subject: ZUGANOV SHOULD HAVE BEEN ALLOWED TO WIN IN 1996
Date: Mon, 14 Sep 1998 15

Perhaps the readers of the list might find an interesting twist in the
enclosed short presentation at a seminar in the International Peace
Research Institute, Oslo (PRIO) on 14 September 1998.

ZUGANOV SHOULD HAVE BEEN ALLOWED TO WIN IN 1996
By Pavel Baev

As Russia has at last received a broadly-supported prime minister, the
key question for the coming weeks has arisen: Is Primakov the solution
to the current crisis? The answer depends upon the interpretation of
this crisis.
One interpretation is that the crunch is essentially political, rooted
in the permanent confrontation between the executive and the legislative
powers and in the struggle for power in Yeltsin's entourage. A frail and
manic-depressed president with enormous formal powers and eroding
support in the political class is by definition an unstable political
constellation. One part of the political 'stabilization package' is
Yeltsin's gradual marginalization, much accelerated with his double
humiliation (inviting Chernomyrdin back and agreeing to embrace Duma's
choice). Primakov may well be another pert of this solution, working
closely with the Duma and building a broad consensus for his moderate
course. What is more, Primakov is perhaps the best caretaker for the now
very probable transitional period and new presidential elections.
Yeltsin can be sure in his and his family safe retirement, the Duma is
secure against dissolution, and the potential candidates do not see
Primakov as a competitor.
Another interpretation is that the heart of the crisis is the paralysis
of state finances. Accordingly, the two major components of this crisis
are the predictable collapse of the GKO pyramid and the much-debated
inefficiency of the tax collection system. Primakov - with his immediate
appointments of inflation-friendly Gerashchenko and GOSPLAN-minded
Maslyukov to the key positions - is perhaps as much a part of the
problem here as he can be a part of the solution. In fact, it was
Kiriyenko's team that knew how to handle these sorts of trouble. They
had plenty of bad luck, but at least they had expertise, determination
and backing from the IMF. Primakov - with a few hollow promises to
continue 'reforms' - can perhaps secure the arrival of the next tranche
of the already promised credit. One thing he can do professional is to
play on the tune 'Russia-Is-Too-Bid-To-Be-Left-To-Collapse', and the IMF
is in fact quite vulnerable vis-à-vis Russia, a major recipient of its
aid and a holder of some $ 150 billion external debt. But there are few
hopes that the new government will be able to make the economy work with
the simple trick of printing money.
But there is a yet another interpretation: the crisis is fundamental and
is a product of the 'bastard' capitalism that has emerged in Russia as a
result of poorly thought through and half-heartedly implemented market
reforms. Russian 'oligarchs' have been busy robbing the country of
everything of value until there is nothing left. Their
financial-industrial groups are similar to Korean chaebols in their

direct access to political power but quite different in their neglect
and even destruction of real economy. All these berezovskys, gusinskys,
smolenskys are gross-masters of financial speculation, media
manipulation and political intrigue, but they are simply not interested
in producing goods. The whole model of economic transformation with the
capital market as the lever and rouble as the fulcrum has failed, so the
real issue is the new paradigm.
It is fairly obvious that the alternative model that the Communists
intend to put to work - its key elements being state regulation,
inflation and re-nationalization - is programmed to failure. One can
take a look at Bulgaria in winter 1997 and say: 'I have seen Russia's
future and it does not work'. What is unfortunate, albeit
understandable, is that there is broad support not only in the Duma but
also in the society for this sort of 'back-to-basics' experiment. It
somewhat reminds the rise of 'anti-globalizm' in Malaysia, perhaps with
a flavour of North Korean juche (self-reliance) philosophy. Such an
experiment cannot last long simply because there is no economic reserves
to mobilize inside the country, but the not-too-distant failure still
can do some good. The robber-barons would be swept away, the very
fundamentals of the corrupt power structures would be shaken, a new
political power basis for market reforms might be established. 
From such a perspective, the outcome of the presidential elections in
1996 was rather unfortunate. Yeltsin's victory paved the way for the
'oligarchs' to seize political power, launched the GKO pyramid scheme,
compromised the democratic institutions, What seemed to be the lesser of
the two evils has turned out to be a recipe for a huge disaster.
Zuganov's victory most probably would have launched the same Communist
model, but by now the failure would have given a new leader a much
better starting point. It still leaves open the question about the
personality of this leader and his methods of 'clean-sweeping'. Primakov
perhaps has a decent chance to last longer than Kiriyenko, but perhaps
already by the middle of the coming winter political analysts would
agonize over another question: Is there any alternative to Alexander
Lebed?

Dr. Pavel K. Baev
Senior Researcher,
International Peace Research Institute, Oslo (PRIO) 

*******

#8
From: "David Hawkins" <dshawkins@glasnet.ru>
Subject: CBS response to the Village Voice [JRL#2356, Sept. 8]
Date: Mon, 14 Sep 1998 

RESPONSE TO VILLAGE VOICE “PRESS CLIPS”

James Ledbetter’s criticism of the CBS News report that President Boris
Yeltsin signed an undated resignation letter is correct in exactly one
respect. In our first live bulletin we did not include a response from
Yeltsin’s press office. At a press conference shown on Russian television
an hour before our report, the Kremlin spokesman denied rumours of
Yeltsin’s resignation and said that Yeltsin had no intention of stepping
down. We should have said so in our report. Later the same day, on the CBS
Evening News, we did prominently include Yeltsin’s press spokesman’s
characterisation of our story as “lies and nonsense.”
In every other respect Ledbetter is mistaken and his arguments attacking
the substance of our report are totally illogical. 

We did not report that Yeltsin had resigned, so the fact that he
remains in office in no way proves our story wrong. What we did say was:
“CBS News has learned, from sources inside the Kremlin and close to the
Yeltsin family, that Boris Yeltsin today signed an order resigning from
office. The resignation is not dated and will await the confirmation of his
prime minister designate, Victor Chernomyrdin...” The precondition for the
submission of Yeltsin’s resignation did not occur. Now that Chernomyrdin’s
nomination has been withdrawn all bets are off.
We also said that Yeltsin could change his mind, not as some sort of
“strange loophole” or to bullet-proof our story, but because that is what
our sources told us.
As anyone who actually covers events in Russia knows, the political
river here runs swift and deep. Deals are sometimes broken as quickly as
they are made. We remain convinced that Yeltsin did sign a resignation
letter in return for a guarantee of his and his family’s personal safety
and perhaps other considerations. That the letter has not yet surfaced and
may never come to light should not be a surprise. 
Why broadcast a report about an unsubmitted resignation letter that
might be withdrawn and risk the opprobrium of second-guessers like
Ledbetter? Rumours were whipping around Wall Street that Yeltsin had
suffered a stroke or had actually resigned and the stock market had dropped
some 350 points before our report aired. Our story immediately followed a
“Special Report” from New York on the market drop that mentioned the
resignation rumours. The Yeltsin administration was denying those rumours
and we had credible information that indicated they were lying. Should we
have kept it to ourselves?
Ledbetter is naïve if he thinks Yeltsin’s declaration on Russian
television the next day that he had no intention of leaving office somehow
repudiates our reporting. This is the same Boris Yeltsin who said, on
Russian television the previous week, that he would not fire the young
reform Prime Minister Sergei Kiriyenko and would never devalue the rouble.
Less than 72 hours later the rouble was in free-fall and Kiriyenko was
history. This is also the same Boris Yeltsin who declared cease-fires in
Chechnya while bombing to rubble the Chechen capital of Grozny and whose
press office vehemently denied reports that Yeltsin suffered a heart attack
days before the 1996 presidential elections. Now we know he had not one,
but at least two heart attacks. 
“There have been no reliable reports that Russian presidential elections
are forthcoming in three months,” Ledbetter writes. So what? We never said
elections were forthcoming. We simply explained Russian law on succession.
That we stand by our story is in no way “surreal.” We had four reliable
sources, including two inside the Kremlin and one member of Yeltsin’s
family, before airing our bulletin. A fourth source confirmed the story
prior to our Evening News broadcast. We did not name them for reasons that
should be obvious in a country where political grudges are sometimes
resolved with bullets and car bombs.
What is surreal, or at least ironic, is that while criticising us for
not including a Yeltsin response in our first bulletin, Ledbetter falls
back on the lame reporter’s excuse, "Efforts to reach [CBS News Moscow
Correspondent Richard] Threlkeld were unsuccessful.” Unsuccessful? You
can’t succeed if you don’t even try. Several other reporters had no
difficulty reaching us. The telephone operators at CBS News in New York
have the Moscow Bureau telephone number and will give it to anyone who
asks. What’s more, due to the magic of telecommunications, it’s a local
call. Ledbetter never called, never left a message. 

David Hawkins, Bureau Chief
Richard Threlkeld, Correspondent
CBS News Moscow

*********

#9
From: "Peter D. Ekman" <pdek@co.ru>
Subject: economics education
Date: Mon, 14 Sep 1998 

Ariel Cohen of the Heritage Foundation commented (#2370) that the
previous American strategy toward Russia had been flawed, and that now,
``The United States should put a lot of emphasis on education, the areas of
economics, finance, management and accounting,'' he added. ``We should've
done it earlier and at a massive scale.''
I can only agree that education - in particular economic and business
education - is one of the most important areas that the US can support in
Russia. Nevertheless, the words "massive scale" bother me. I don't think
that throwing money at the problem will help and may hurt, just as the
IMF's support of the Yeltsin government may have hurt the cause of reform.
The Russian management education system is not ready to absorb a
"massive" amount of money. Where are the professors who will do the
teaching? Who will be the students and the other beneficiaries of the
programs? Who will be the administrators, and how will we know the money
is not being wasted?
One partial solution to these problems is to send Russian students
abroad as in the Muskie Program and the "Yeltsin Initiative." This is
only a partial solution since it is incredibly expensive, and it does not
help much in building the management education infrastructure in Russia.
Don't misunderstand me - the Muskie Program is great - but I think that 10
students could be educated in Russia for the cost of every one student
educated abroad. One solution to the cost problem is to send students for
short courses abroad, say for a few weeks to a few months. These programs,
unfortunately, can become mere junkets for the well-connected, if they are
not closely monitored.
The "Yeltsin Initiative," which plans to send thousands of Russian
abroad, is the largest of the "short course" programs. Though it has only
just completed its first year, it's clear this program needs some
reworking. The student selection process apparently favored political and
business connections over objective selection tests. An "MBA type" with
AIBEc's president, Ed Dolan).
Problems in some western or joint programs include the following: a
short time commitment to Russia, student selection problems caused by
charging high tuition, and the usual problems of joint Russian-western
administration.
As much as I agree with Mr. Cohen about the importance of funding
business and economics education in Russia, careful management of this
funding will be more effective than any "massive" program.

*******

#10
Date: Mon, 14 Sep 1998 01:09:18 -0400
From: Yasushi Toda <yasushi@ufl.edu>
Subject: Chubais Interview in Kommersant Daily (JRL #2365)

Regarding Evgenii Al'bats' interview with Anatolii Chubais (Kommersant-Daily
September 8), I agree with Michele Berdy (JRL #2365-3) in that Chubais never
told the interviewer that he "lied" to the International Community to borrow
more money.n accomplice of the "lie."
As Chubais stressed in the interview, in the high-voltage financial market

"perception is reality." He said it in English, and then translated it into
Russian. If the financial market perceives that a country's economy is bad, it
will become bad. Second, if Russia had devalued ruble or stopped repaying the
GKO in May, it would have created "a very negative perception" in the
world. So
he defends President Yeltsin who denied devaluation only a few days prior to
August 17. As the interviewer asked, "Does the government have the right to
lie?"
Chubais answered, "Yes, it has to lie." Not only did Yeltsin deny it, I
recall that
Dubinin also said in public (in Moscow Times) early August that the rumor for
devaluation was a lie. In the regime of fixed exchange rate, the authorities
must keep telling the "lie" until the last moment. Remember a few decades ago
that a Chancellor of the Exchequer, having told an impending devaluation of
pound sterling to his journalist friend, had to resign immediately.
Defending the ruble in public is one thing, but not assessing the wisdom of
maintaining the going exchange rate is quite another. The interviewer and
Chubais both mentioned Andrei Illarionov of the Center for Economic
Analysis as
a critic for the government's insistence on the going rate. He was not a
lonely critic. Nikolai Petrakov of the Institute of Market also pointed out
a widening
disparity between the purchasing power of ruble and its exchange rate in the
Obshchaya gazeta in July. In fact, as Sujata Rao reported in Moscow Times in
July 22, "Russia's latest bail out package from the IMF may have diverted a
ruble devaluation for now, but some economists say eventually letting the
currency fall against the dollar is likely - and maybe even necessary." Then
nobody predicted a catastrophic downfall. Only a modest, say 10 percent,
downward adjustment of the "green corridor" was considered necessary. Had it
been done then, however, the impact of the August sellout would have been
milder. The Central Bank would not have had to lose so much foreign reserve.
I don't want to do too much Monday morning quarterback. I wish to think
that
the Russian government and the Central Bank were preparing for the
eventuality,
but they just missed the timing. But the ensuing confusion in the government
and the Central Bank late August gives the impression that they had no
preparation. The perception they tried to create for the public may have
indeed been made into their fixed idea, while the reality finally revealed
to the
market the falsehood of that perception.

Yasushi Toda
E-mail: <yasushi@ufl.edu>
Office telephone: (1-352) 392-0151, -0112. Fax (1-352)392-7860
Office address: Department of Economics, University of Florida, P.O.Box
117140, Gainesville, FL 32611-7140, USA
Private address: P.O.Box 13676, Gainesville, Florida 32604-1676, USA

*******

#11
From: "Masha Gessen" <mgessen@glasnet.ru>
Subject: Re: 2366-Backer/Luryi and Anti-Semitism
Date: Mon, 14 Sep 1998 

Yuri,

I apologize for misspelling your last name. As for "branding" you, I
didn't. I said that stating that Jews with university education enjoyed
rights etc. was misleading--in the sense that it may lead people like Helen

Womack, who can write the sort of thing she wrote after living in this
country for ten years, to make more idiotic generalizations. I can see it
now: "anti-Semitism wasn't all that severe; all you had to do was obtain a
university degree." I'm not suggesting *you* would say something like that.
As for the 1st Medical issue, perhaps your wife and I belong to different
generations (I am 31): when my peers were preparing for college, it was one
of those "obsheizvestniye fakty" that Jews can't get in.

Masha Gessen
(incidentally, there is no need to make fun of my job title, which I
include for identification purposes--I actually wish more people who post
to the list indicated their affiliation or at least where they are writing
from)

*******

#12
Jamestown Foundation Monitor
September 14, 1998

PRIMAKOV DEFENDS START II; DECRIES CONFRONTATION. In a series of
statements--heard most likely with some relief in Washington and
elsewhere--newly named Russian Prime Minister Yevgeny Primakov told
lawmakers on September 11 that he would not take Russia back on the path
toward "confrontation" with the West. The former Russian foreign minister,
whose remarks came prior to the Duma vote that approved him, was responding
to several provocative questions from the leader of Russia's
ultra-nationalist Liberal Democratic Party, Vladimir Zhirinovsky. Primakov
said that international confrontation was "not in Russia's interests and...
not in the interests of the Russian people."

The one-time Russian spy-master also spoke forcefully in favor START II
ratification, saying that the treaty does not undermine Russia's security
and that he would urge lawmakers to back it. In addition, Primakov refused
to be goaded into a denunciation of NATO enlargement. Although he has often
harshly criticized the Western alliance for its expansion plans, Primakov on
this occasion chose instead simply to defend the Kremlin's decision to sign
the Russia-NATO Founding Act (Russia TV, September 11). That cooperative
agreement with NATO, signed in May of last year, has been one of the few
policies on which nationalists in Russia's parliament have taken issue with
Primakov's performance as foreign minister.

In answer to a separate question about Russia's ongoing negotiations with
Japan over control of the Kuril Islands, Primakov again chose his words
carefully. The Russian prime minister said that foreign policy is not "all
about just two colors--black and white" while assuring deputies that the
Russian government would seek a decision "which does not harm our
sovereignty" (Russia TV, September 11).

Russia is currently involved in delicate negotiations with Japan that center
on the Kuril Islands territorial dispute. A number of political leaders in
Moscow and in the regions have spoken out strongly against any territorial
concessions to Tokyo. But Primakov's relatively moderate remarks on the
territorial issue--like those on NATO enlargement and START II--appeared to
reflect, at least in part, an awareness that Western support remains crucial
to Moscow during its current troubles. If so, that would reflect once again
the "pragmatism" so often attributed to Primakov's conduct of foreign

policy--and seen as the reason for his long survival as a leading political
figure as well. It is that pragmatism that has heretofore allowed him to
maintain relatively cooperative relations with the West while engineering a
foreign policy that reasserted Russian interests around the globe.

RUSSIA GETS NEW FOREIGN MINISTER. With the departure of Yevgeny Primakov
from the Foreign Ministry post, the shake-up in Russia's diplomatic and
security establishments continued over the weekend. On September 11 Primakov
named Igor Ivanov to replace himself as foreign minister. Ivanov, Russian
first deputy foreign minister since January of 1994, is a hold-over from the
era of Andrei Kozyrev--democratic Russia's first foreign minister and a man
generally described as far more pro-Western than Primakov. Ivanov was born
in 1945 and has spent much of his career involved in European affairs. He
served from 1991 to 1994 as first Soviet--and then Russian--Ambassador to
Spain. He is fluent in Spanish and England. (Itar-Tass, September 12)

*******

#13
Russia will stick with "constructive" foreign policy: new FM

MOSCOW, Sept 14 (AFP) - Russia's new foreign minister, Yegor Ivanov, said
Monday that the new administration in Moscow would continue with the
current "constructive" foreign policy, the Interfax agency reported.
"This anticipated and constructive policy will without doubt be
continued," Ivanov told Interfax in his first statement since succeeding
Yevgeny Primakov, who was appointed as prime minister Friday.
When Primakov was in charge at the foreign ministry he took a strident
approach to promoting Russian interests abroad, a stance which involved
refusing to recognise US world leadership.
Ivanov is considered the closest of Primakov's political associates. He
was number two at the foreign ministry under the new premier.

*******