September 19, 1998   

This Date's Issues: 2382• 2383•2384•

Johnson's Russia List
#2383
19 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. BBC: Two steps forward, one step back. World Affairs Editor John 
Simpson challenges the conventional wisdom that "Russia is a disaster 
waiting to happen."
2. Los Angeles Times: Tyler Marshall, U.S. Policy on Russia Seen as 
Failure by Some Experts. Economics: Other observers say the conditions 
are too fluid and the situation is too fresh to judge.
3. Barry Ickes: Jonathan Weiler's query about inflation.
4. David Filipov: confederation of Russian states.
5. The Moscow Tribune: John Helmer, THE KREMLIN'S BIG FANTASY.
6. Jerry Hough: Re 2382-Ickes/Hough.
7. AFP: Russia in urgent need of foreign finance: Primakov.
8. Reuters: Russian PM under pressure to produce results.
9. Intefax: Russia Heading for 'Worst Harvest in Four Decades.'
10. Interfax: Russians Polled on Impact of Current Crisis.
11. The Globe and Mail Canada): Geoffrey York, pensioners. 
12. Secretary of State Madeleine Albright on Primakov and Russia,
September 17, 1998 at Carnegie Endowment.
13. Albert Weeks: Mr. Danzer's query.
14. AP: Foreign Firms in Russia Scale Back.]

******

#1
BBC
September 16, 1998 
Two steps forward, one step back 
Hardship is real ... so is political freedom 
World Affairs Editor John Simpson challenges the conventional wisdom that
"Russia is a disaster waiting to happen."

Every day for the last three weeks, my reports here have all been about the
same thing: political chaos, the agony of ordinary people who are trying to
get their money out of the banks or buy food to keep them going through a
difficult winter. 
Time and again, the women I interview break down in tears at the thought of
their troubles. Out in the countryside, people have already learnt how to live
without money; now they are facing the possibility of living without any real
infrastructure at all. 
It's entirely, literally true -- and yet there is another side to things,
certainly in Moscow, an aspect of life which is completely different and which
tends in the opposite direction altogether, towards moderate optimism instead
of intense despair. 
The fact is that after coming here and reporting on this country's affairs for
twenty years now, I've got thoroughly used to the "Russia is a disaster
waiting to happen" line which Russians get a pathological pleasure from
repeating and Western journalists and diplomats find themselves passing on to
the outside world. 
It is obviously disastrous that Boris Yeltsin should have sacked his reformist
government nearly three weeks ago just as it was starting to get somewhere. 
It's true that there are some seriously unpleasant characters, especially on
the far-right nationalist side, just waiting for the chance to take over if
everything were to collapse. 
There's no question that such a collapse is one of the real possibilities
here. But we shouldn't let ourselves dwell on that possibility to the
exclusion of everything else. 

Down memory lane 

The other day, when things were quiet, I wandered round central Moscow
watching the extraordinary changes that have taken place here since the day in
April 1978 when I first set foot in Russia. 
I started off in Red Square and walked out through the little double-arched
gateway at the end which looks as though it was built in the sixteenth century
and was in fact put up in 1995 -- the exact replica of the one Stalin tore
down in order to get his tanks into Red Square for the annual celebration of
the October Revolution. 
Through the archway, Manezh Square opened up in front of me. Once this was a
vast open space below the Kremlin walls which cars -- not many of them in
those days -- used to roar through. 
In the middle, the big old gas-guzzling Communist Party official vehicles used
to be parked. It was a huge vacuum at the very heart of Soviet Moscow -- a
vacuum which ruled out imagination and beauty and the human touch and personal
liberty. 
And now? Well I'm not much of a fan of the shopping mall, but the Manezh
Centre, which has been built four storeys down underneath Manezh Square and
topped off at ground level with gardens and glass domes to let in the light,
is sensational. 
It's only been open for a few months, but already it has the Russian knack of
looking as though it's always been there. As I went down an escalator with the
classy and, it has to be said, horribly expensive shops opening up along the
avenues on each floor around me, the place was thronged with people -- young,
happy-looking, nicely-dressed people. 

Change is in the air 

It was true they didn't seem to be buying anything. Times are worrying and no
one can be entirely sure that their wages will be paid next month. But they
were enjoying themselves openly in a way people never used to here. 
And the thing I liked most was that at the big and rather dreadful ceremonial
fountain at the heart of the shopping centre, under the main glass dome, young
men and women were hopping through the gentle streams of water onto the little
island in the middle and posing there while their friends photographed them.
And there wasn't anyone to move in and stop them or take their names or punish
them. 
Slowly, starting from the heart and moving out wider and wider, this is
becoming a different country -- a country which will eventually become so used
to the habits of personal freedom that no one will readily be able to change
it back to its old ways. 
Even the Communist Party, which has been flexing its muscles and using the
crisis with great tactical intelligence, is a different party from its old
Marxist-Leninist self. 
It's still Marxist, still believes the State has to step in and redress the
inequalities between the classes, but it's given up the Leninism -- the
snooping, the thought-control, the demand that everyone should do and say the
same thing, the regulating of every aspect of life. 
I don't mean to say the future is necessarily rosy. All sorts of worrying
things could happen here. 
But what I'm absolutely certain of is that if Russia and its often second-
rate, quarrelsome politicians can manage to avoid outright disaster, then the
basis is here for this country to be peaceful, democratic and reasonably
prosperous. 
Russia is doing what it always does: taking two steps forward and one step
back. Situation normal, they say here. Disastrous but not fatal.

*******

#2
Los Angeles Times
September 19, 1998 
[for personal use only]
U.S. Policy on Russia Seen as Failure by Some Experts 
Economics: Other observers say the conditions are too fluid and the situation
is too fresh to judge. 
By TYLER MARSHALL, Times Staff Writer (tyler.marshall@latimes.com )

WASHINGTON--As Moscow's new government of old faces searches for ways out of
the country's economic crisis, a heated debate has broken out among Russia
specialists in the United States about how the Clinton administration should
respond. 
Some experts argue that recent events have unmasked as a catastrophic
failure the seven years of U.S.-backed efforts to build free-market capitalism
in Russia. What is needed, they argue, is emergency action to contain the
immediate havoc and a wholesale overhaul of American policy. 
"The collapse of Yeltsinism is the collapse of American policy toward
Russia," said Stephen P. Cohen, a professor of Russian studies and history at
New York University. "Everything we've recommended there has been an abject
failure." 
He called for the administration to lend its support to: 
* an international humanitarian aid effort to ease the impact of what he
believes will be a grueling winter; 
* a scheduled $5-billion installment of a loan from the International
Monetary Fund so that the Russian government can pay back wages; 
* a reworking of Russia's foreign debt. 
"This is a destabilized, nuclear-laden country coming apart at the
seams," Cohen said. "Our priorities should be clear." 
Another group of experts--including many within the
administration--believes that conditions in Russia are too fluid and the
crisis too fresh to declare either the reform efforts pushed by Russian
President Boris N. Yeltsin, or U.S. support of those efforts, a failure. 
"I don't think it is either accurate or smart to say that Russia has
fundamentally changed course," Deputy Secretary of State Strobe Talbott said.
"I don't believe . . . that reform in Russia has come to an end, and therefore
U.S. policy has failed." 
Talbott added: "There's no question that Russia has hit a major slippery
spot on the road to its future. It's slipping back and forth, and it's not
clear what direction it will be pointed when it comes through this slick spot.
A crisis, yes, but what I'm cautioning [against] is proclaiming a crisis as a
disaster." 
Deputy Treasury Secretary Lawrence Summers took a similar tack in
testimony earlier this week before the House International Relations
Committee. 
"It would be difficult to exaggerate the uncertainties of a moment such
as this one," he said. 
Critics regard such comments as waffling by those who refuse to admit the
failure of policies they backed so strongly. 
So far, the Clinton administration has limited its response to the
drastic downturn in Russia's economy and corresponding political turmoil to
low-keyed jawboning. 
For instance, U.S. officials warned new Prime Minister Yevgeny M.
Primakov that Western help can only come if Russia follows responsible
economic policies and does not try to pay the nation's debts by printing
money. 
In his House testimony, Summers said the U.S. will recommend against the
release of further financial aid from the IMF to Russia until the Primakov
government imposes basic controls over the banking system, the budget process
and the currency. 
Since 1992, Russia has received more than $20 billion in financial
assistance from the IMF. 
In public statements and interviews this week, senior officials who deal
with Russia policy gave no indication that any new U.S. initiative was in the
works. Instead, they stressed that the tumult in Russia--which includes a
strong backlash against further advice from the West--required a deliberately
low profile. 
So far, U.S. officials have resisted calls from some in Congress for
emergency humanitarian assistance to help Russia through its winter--calls
made against the backdrop of reduced harvests, a potato blight, diminishing
food imports and the prospects of further economic problems. 
"We don't now see food shortages, although there is some hoarding," State
Department Russia expert Stephen Sestanovich told a Senate Foreign Relations
subcommittee hearing earlier this week. "One can't react too quickly." 
Another senior administration official said offering unsolicited food aid
was a "politically difficult" matter, given that Moscow already has rejected a
Polish offer of such assistance. Humanitarian aid is under study, this
official said, but so far "they haven't asked, and we haven't offered." 
Coit Blacker, who helped formulate Russia policy in the George Bush White
House and is deputy director of Stanford University's Institute for
International Studies, endorsed the administration's minimalist short-term
response to the crisis. 
"We can't do much until the Russians present what they regard as a viable
set of economic policy prescriptions," he said. "We can continue to talk, to
jawbone, to remind them how important it is to do what needs to be done, and
that's what's happening now." 
Others, however--including those worried about Russia's huge, tenuously
guarded nuclear arsenal in such an unstable environment--vehemently disagreed.
"Our Russia policy is at a dead stop and sinking," said Joseph
Cirincione, an arms control specialist at the Carnegie Endowment for
International Peace in Washington. "What concerns me most is that
administration officials, to a person, seem complacent, blase" in their
response. 
"Control over Russia's nuclear materials and expertise were already
shaky, but in this crisis, this control is threatened with collapse," he said.
Cirincione said he is especially concerned about the security of 715 tons
of fissionable material--enough for 40,000 nuclear weapons--now guarded by
individuals who have not been paid for months. 
"As this crisis continues, some of these scientists, technicians and
guards are going to conclude they'll never get paid and will take action to
feed their families using the resources they have," he said, thus creating the
prospect of the material being peddled on the black market. 
As debate focuses on the immediate U.S. response to the Russian
situation, questions are surfacing on the larger question of how a major
reform effort, supported by Washington's stamp of approval and more than $70
billion in combined Western loans and credits, could have gone so badly awry. 
Efforts to create a free-market economy in Russia have generated a small
group of powerful, super-rich individuals, known collectively as "the
oligarchs," but have also left millions of Russians unpaid. 
Citing examples of massive corruption and misspent Western loan money,
House International Relations Committee Chairman Benjamin A. Gilman (R-N.Y.)
asked Talbott and Summers this week: "Was the administration ignoring all
this, or just wishing it would all go away?" 
Gilman continued: "How can Russia change from the 'success story' of our
foreign policy, as it was portrayed by this administration just two years ago,
into the dismal failure for our foreign policy that it appears to be today?" 
The two administration officials disputed Gilman's assessment. 
Times staff writer Elizabeth Shogren contributed to this story. 

******

#3
Date: Sat, 19 Sep 1998 
From: Barry Ickes <i04@psu.edu>
Subject: Jonathan Weiler's query about inflation

Jonathan Weiler asks about the relationship between money and prices
in high inflation episodes. Of course it is true that the fastest increase
in prices occurred with the lifting of price controls in January 1992. But
this is natural. Money growth in 1991 was excessive, and price controls
resulted in repressed inflation and shortages of goods in official markets.
Lifting price controls converted repressed inflation into open inflation. It
did not create the inflation. And it is important to recall that inflation
was declining each month from February to July of 1992. Inflation rebounded
in the second half of the year in response to the change in monetary policy
at the CBR.
It is also true that the price level rose faster than the money
supply in the second half of 1992, and I recall Gerashchenko using this fact
to deflect blame. But this is precisely what happens in all high inflation
episodes. During such period people try to reduce the amount of their wealth
held in money because of its eroding value. This only leads to an increase
in the velocity of money and a decline in the real money supply. The decline
in the real money supply occurs in all high and hyperinflations. Phillip
Cagan's classic analysis of hyperinflation demonstrates this, and it has
been observed since in all cases studies. Now the only way that the real
money supply can decline is for the price level to rise faster than the
money supply. But it is precisely the reaction of households to the policies
of the central bank that causes this.
I remember in Gerashchenko's last tenure at the CBR of the answer
given by a Bank official to the question of "didn't the CBR have a problem
with printing money?" The reply: "No, the printing presses are working
efficiently and we are printing money as fast as we can." No better
explanation than that!

******

#4
Date: Sat, 19 Sep 1998 
From: David Filipov <dfilipov@glasnet.ru>
Subject: confederation of Russian states

Re: Danzer's request for info on possible new alignment of Russia.
Kommersant recently published an interesting story, with a map, on how the
breakup would look. 
The paper asserted that the ten current "donor" regions (Sakha, Krasnoyarsk,
Moscow, Sverdlovsk, Tatarstan, St. Pete, etc. etc) would form the bases for
the new federation units, presumably to be called "republics" (that is,
Rossel would finally have his "Urals Republic). 

******

#5
Date: Sat, 19 Sep 1998 
From: helmer@glas.apc.org (John Helmer)
Subject: THE KREMLIN'S BIG FANTASY

The Moscow Tribune, September 18, 1998
THE KREMLIN'S BIG FANTASY
John Helmer

There's a legend that Catherine the Great ordered a cast taken of her lover, 
Prince Gregory Potemkin's penis. This is supposed to be kept still in a 
secret place of the Hermitage Museum. The legend says that Catherine wanted 
the keepsake to remember her pleasure.
If President Boris Yeltsin is thinking he'd like a keepsake of Anatoly 
Chubais to take into retirement, what do you suppose he would ask for?
Two of Chubais's physical attributes have been made fun of by his
political opponents -- his red hair and his bullneck. Some locks of the former
encased in a porcelain cast of the latter might make an attractive cachepot, 
even if, as General Alexander Lebed once said, red hair isn't the sort of 
thing Russians like Peter the Great admire. The latter, incidentally, was 
another of Russia's monarchs mesmerized by the phallus. One of St.
Petersburg's museum keepers recently revealed that he spends every working 
day near the colossal formaldehyde-preserved penis which Peter brought back 
as a souvenir of Holland.
No, the only thing big enough to remember Chubais by should be his
reform. And that's what's impossible to do now. Colossal though Chubais's
reform may have seemed, on close inspection today it has shrivelled.
Among the recriminations for Russia's current political and economic crisis,
Chubais and his supporters blame the Russian parliament for this. They claim
that Russian democracy got in the way of tax reform. Some have even 
recommended eliminating parliament's power to tax, giving it to Yeltsin 
instead.
That was before last month's rebellion by the oligarchs, triggered by their 
fear that if taxed to the limit proposed by the Kirienko government, they 
would be bankrupted. It was the most powerful constituents of reform who 
overthrew Kirienko, and are now forcing Yeltsin into retirement. They also 
stood to benefit most from the terms of the power-sharing agreement with
the Duma that Prime Minister Yevgeny Primakov succeeded in extracting a few 
days ago. Boris Berezovsky's warning that renationalization of
the oligarchs' property will lead to civil war is a reminder to Primakov
of how little power he can expect to exercise.
Because it was the Communists who led the opposition to the deal with 
candidate Prime Minister Victor Chernomyrdin, it is once again the 
"Communist-dominated parliament" that is 
blamed in the western press for the political standoff. It is that bogeyman 
again, which is the target of President Clinton's warning that international 
support for Russia depends on the continuation of reform. Who better to 
tickle the Kremlin's fantasy than the world's most exposed male fantasiast?
Who remembers today that the "Communist-dominated parliament" repeatedly gave 
Yeltsin all the emergency powers to pursue reform that he asked for. They 
were never enough in the period between independence in 1991 to the dismissal 
of the Supreme Soviet in September 1993. Then, after the physical 
destruction of parliament, Yeltsin had all the freedom he wanted to compose 
his own constitution, and by turning out prison and asylum inmates, get it 
ratified without demur from either parliament or Russia's Constitutional 
Court.
But that, the men from the Clinton Administration, the International 
Monetary Fund, and the World Bank have been complaining, hasn't been good 
enough either. 
For a reform as colossal and as memorable as Chubais's to be remembered
obviously requires the success that still eludes it -- and will forever elude 
it. That's because Chubais's redistribution of Russian property has destroyed,
not just the communist system that once administered it, but the state
which cannot defend, protect, enlarge, or tax it; along with the social 
consensus on which all governance, even tyranny, depends.
Taxation without representation has been tried repeatedly in Russian
history. Ivan the Terrible and Josef Stalin were the most ruthless of
implementers, and compared with them, Chubais simply isn't frightening enough
to be memorable. But the principle of no taxation without representation is 
something Chubais's reform has taught all Russians to cherish, whether they 
are poor pensioners or swaggering gangsters. Primitive though the principle
is, it's now making it impossible for Russia to be governed. This is why
the Gross Domestic Product contracts, capital flees, credits disappear, 
banks are shuttered, and the real economy hides like a thief. 
Tax reform in Russia -- that's the demand of Chubais, Clinton and the rest. 
But without representation it requires more than just big words
or big sticks. It's an impossibility. That's why Catherine's 
and Peter's keepsakes are different. They were bigger and better than 
possible. They were real fantasies.

*******

#6
Date: Sat, 19 Sep 1998 
From: "Jerry F. Hough" <jhough@acpub.duke.edu>
To: David Johnson <davidjohnson@erols.com>
Subject: Re: 2382-Ickes/Hough

Barry Ickes is right in that I show my age. I was talking about 
TsEMI of the past and it never was monolithic. But it was anti-Kosygin 
because he was too limited, and it was extremely macroeconomic and 
non-institutional in its assumptions about reform. Most of all we must 
not judge people by their present position. Petrakov is surely the most 
unattractive figure in the Soviet reform effort. In the mid-1980s he, 
like everyone, was for the rise in meat prices, etc., that were a 
pre-condition to agricultural reform. When Gorbachev indicated he would 
not accept price increases, Petrakov became his ideologist. He was the 
foremost opponent of any gradual approach to price increases--and not 
abstractly. He fought the gradual reformers tooth and nail, and they 
hated him. The 500 Day Plan really was Petrakov's, and Ed Hewett was 
right that he was a Milton Friedman, to the right of Gaidar. Then when 
he didn't get power with Yeltsin, he turned against the program he had 
been espousing from 1988 to 1991. By contrast, men like Bogomolov and 
Abalkin were men of real honor. They had their position. When the 
king wouldn't buy it, they moved to the side rather than sell out their 
beliefs. I hope they are coming back, and I pray that this time Abalkin 
will join Bogomolov on agricultural reform.

******

#7
Russia in urgent need of foreign finance: Primakov

BONN, Sept 19 (AFP) - Russia's new Prime Minister Yevgeny Primakov called for
urgent foreign financial backing to help the country pursue its reforms, in an
interview to appear in Sunday's daily newspaper Bild.
"We have enough reserves to prevent us going off the rails financially," he
stressed, but added "international organisations would do well to realise that
we need credits in order to win time and pursue reform."
Primakov insisted that the country was striving to ensure that foreign
investment "not only returns, but increases."
"As head of the government, I can promise that the investment climate will
achieve stability and that we are preparing no surprises for our overseas
partners," he assured.
He vowed that Russia would pursue its path of reform and that there would be
no return to a system of administrative dictatorship.
"The biggest problem to tackle is that of (unpaid) salaries and pensions," he
said, noting that the financial crisis had provoked social tensions which were
reaching "a dangerous point".
The government must "convince people that strikes and acts of insubordination
will resolve nothing, but only worsen the situation," said Primakov.
He also expressed concern at a general apathy among the population "which does
not have faith in the authorities to resolve the crisis."
Strategies to be adopted to do just that, Primakov told Bild, include widening
the tax base and toughening up on non-payment, while boosting industrial and
agricultural production.
In spite of his reassurances, Primakov admitted that the situation was "even
worse" than he had expected when President Boris Yeltsin asked him to run for
the premiership in order to break a three-week deadlock between the president
and the parliament.
Yeltsin's first-choice candidate Viktor Chernomyrdin withdrew ahead of a
decisive third parliamentary vote after the lower house of parliament twice
vetoed his candidacy.

******

#8
Russian PM under pressure to produce results
By Timothy Heritage

MOSCOW, Sept 19 (Reuters) - Prime Minister Yevgeny Primakov faced pressure on
Saturday to accelerate efforts to tackle Russia's deep economic crisis and
help ordinary people through their toughest times in years. 
Primakov outlined his economic plans to reporters on Friday and Russia
Television channel broadcast his remarks in full for the first time on
Saturday, showing him reassuring Russians that the government would start
paying more attention to their needs. 
He and President Boris Yeltsin discussed the economic turmoil with Ukrainian
President Leonid Kuchma and they agreed to create an anti-crisis group to
tackle the problems together. 
But Russian media turned the heat on Primakov for failing to complete the
formation of his government more than a week after he took office and the
opposition Communist Party gave his economic plans only a cautious welcome. 
``They were only the blueprints of his as yet unpublished programme. They
require careful analysis,'' Communist Party leader Gennady Zyuganov told
reporters. 
``There were some reassuring noises aimed at support of domestic industry, at
paying off debts, at compensation for people, a more socially-oriented course.
We will see how it works in reality.'' 
The Communists later met to consider their strategy before a day of nationwide
protests planned for October 7 over huge wage arrears which piled up under
previous governments. 
The Communists played an important role in Primakov's appointment by putting
up stern resistance to Yeltsin's first choice of prime minister, loyal ally
Viktor Chernomyrdin, and persuading the weakened president to make a
compromise. 
But they have refused to enter Primakov's government en masse, as have several
other parties, making it hard to put together a cabinet. Many posts remain
vacant, including the finance ministry. 
Primakov, 68, gave a glimpse of his economic strategy in the statement which
he read to reporters on Friday but continued to send conflicting signals. 
He said he was committed to reforms, although ``corrections'' were needed to
the previous government's programme and the central bank has alarmed foreign
investors by saying it is ready to print money to pay off state debts and re-
float banks. 
Primakov pledged to regulate Russia's foreign exchange market to try to halt
the rouble's slide, announced plans to impose state monopolies on the alcohol
and tobacco trade and vowed to fulfil Russia's debt obligations. 
He added: ``We must create a financial basis for guaranteeing the payment of
wages to workers in the budget (state) sector and pensioners. We cannot solve
this problem immediately but I think we will feel the results soon.'' 
Kuchma is also hoping for quick results to ensure Russia's problems do not
drag down Ukraine's economy. He met Primakov after two days of talks with
Yeltsin at which the presidents agreed to set up a crisis group to tackle
their problems. 
They gave no details, but said their countries were still committed to a
strong partnership and economic reforms, despite their economic problems. 
Russian newspapers are growing increasingly impatient. 
Komsomolskaya Pravda said each new delay in forming the government was a blow
to Russians hoping for quick measures to protect their savings, held in
struggling banks. The Kommersant Daily business newspaper agreed. 
``A week has passed and catastrophically little has been done. The cabinet has
not been formed. The only achievement is a five-minute address by the prime
minister (on Friday) which broke the information blockade,'' Kommersant said. 
Other newspapers have expressed alarm at the limited access to Primakov, a
former spymaster, and the government since he took office. He promised on
Friday to make regular television appearances but he has his work cut out to
impress the media. 

******

#9
Russia Heading for 'Worst Harvest in Four Decades' 

MOSCOW, Sept 17 (Interfax) -- By September 14 Russian farmers had
harvested only 41.8 million tonnes of grain at bunkerweight, just over half
as much as by the same period of last year.
The harvest confirmed fears that the country is heading for its worst
harvest in four decades.
The Russian State Statistics Committee said that various collective
farms had produced 37.4 million tonnes of grain by September 14, compared
with 68.2 million hectares for the year before. Farmers have cut 27.6
million hectares, of which 26.8 million hectares have been threshed, the
committee said.
Production of potatoes and other vegetables as of September 14 had
amounted to 18.5 million tonnes and 3 million tonnes respectively, down 15%
and 3% from the same period of last year.
About a quarter of Russia's total crop area was destroyed by drought
and other bad weather conditions this summer, compared with an average of
6%-11% in 1995-97. There is now just 7 million hectares of grain left to
harvest, including 5.5 million hectares in Central Russia, the Urals and
Siberia. These figures take into account the crops that have been
destroyed or left for livestock to forage.
By September 16, farmers had harvested 60% of their wheat; 26.8% of
their buckwheat and 33.7% of their millet.

******

#10
Russians Polled on Impact of Current Crisis 

MOSCOW, Sept 17 (Interfax) -- Only 8% of Russian citizens say that the
current crisis has not yet affected them.
People with higher educations accounted for 10% of those who say the
crisis has not affected them. Those with ages under 30 account for 12% of
the group who says the crisis has not affected them. These figures were
obtained by the Public Opinion fund which held an opinion poll among 1,500
urban and rural residents on September 12.
Fifty percent of Russian citizens said that their financial status and
living standards fell so drastically that they did not know what to do
next. This answer was particularly common among respondents over 50 (61%),
among the citizens with an incomplete secondary education (66%) and among
supporters of Communist Party leader Gennadiy Zyuganov (68%).
Forty percent of those polled said that their living standards had
decreased. Ten percent said their living standards only slightly
decreased, and 30% said their living standards sharply decreased. The
latter added, however, that they were still able to carry on.
Seventy-four percent of the respondents are not taking any measures to
protect themselves from the crisis, because they do not know what to do
under such circumstances. This is particularly common in the rural regions
(82%).The most common way of protecting oneself from the crisis is buying
extra supplies of commodities and food stuffs. Fifteen percent of those
polled said they were stocking up on food. The population of Moscow and
St. Petersburg were the most active buyers (22%). Rural residents were the
least active (9%) since stocking up for the winter has always been part of
their life style.
Other options (buying durable goods or hard currency) were chosen by
1% to 3% of the respondents.

******

#11
Date: Sat, 19 Sep 1998 
From: Geoffrey York <york@glas.apc.org>
Subject: pensioners

By Geoffrey York
The Globe and Mail (Canada)
Sept. 19, 1998

MOSCOW -- One day this week, Antonina Nikishova made herself a soup of
potatoes, bread, and some leftover mushroom broth. It was her only meal
of the day.
Before the Russian crisis began, the 65-year-old white-haired
grandmother could sometimes afford a few meat dumplings, or even some
frozen chicken. Those days are gone.
Before the crisis, her monthly pension of 423 rubles was worth about
$100. Today, as the ruble continues to collapse, her pension is worth
only $36. Food prices are skyrocketing, and Russia's vast army of
pensioners -- the tenacious survivors of Nazi invasions and Stalinist
repressions -- are facing one of the most painful battles of their
lives.
~I remember the Germans," Mrs. Nikishova says. ~But I don't remember a
life as terrible as now. I don't remember such fear. People are
starving."
Every morning, Mrs. Nikishova buys seven or eight bottles of cheap
Russian vodka near her home in Dmitrov, about 100 kilometres from
Moscow. She boards a crowded bus to her local train station, then takes
a train to Moscow, carrying her vodka bottles in a heavy bag. The
journey takes almost three hours.
In Moscow, she spends the day standing on the sidewalk at the exit of
Kievskaya subway station, holding a single vodka bottle as an enticement
to commuters. She sells the bottles for less than 12 rubles each --
about $1 a bottle.
If she sells all her vodka, she makes a profit of 85 cents a day. It's
meagre compensation for a day of standing in the cold or rain and
dodging the Moscow police. If she manages to collect a few empty beer
bottles to sell, she might make another 30 cents.
Before the crisis began in mid-August, she didn't have to travel to
Moscow every day. But now she is desperate. If she doesn't hawk vodka,
she might not eat. So she stands on the sidewalk every day.
~You can't call this a life," she says. ~But I'm hungry. If I don't
come here, it means I can't eat."
Mrs. Nikishova is a tiny wizened woman, widowed for six years. Her
white hair is tucked beneath a colourful kerchief. She wears a lumpy
blue overcoat, a sweater, thick grey socks and worn-out red shoes.
Several of her front teeth are missing, but she can't afford the
450-ruble dental fee for a pair of new teeth.
She is proud of her strength, proud that she can stand for seven hours
on the sidewalk. But she dreads the day when her health fails, or her
feet won't work any more. Already she suffers from asthma and high blood
pressure, and she wears a colostomy bag because of an operation some
years ago. Much of her limited cash is spent on medicine, bandages, and
asthma inhalers.
Some of Russia's pensioners had enough money to hoard food at cheaper
prices when the crisis began. Some had their savings in U.S. dollars,
tucked beneath their mattresses for occasions such as this. Many can
survive by growing their own food in little garden plots.
But others, like Mrs. Nikishova, never had enough money to save or
hoard. When the crisis struck with shocking swiftness in mid-August,
they were unprepared. ~I don't know about dollars," Mrs. Nikishova says.
~I was raised in a village."
For decades, she had worked as a nursing assistant and cleaning lady in
Soviet hospitals and schools. She was poor, but she could afford to buy
a television. Today she lives alone in a one-room apartment in a
high-rise building. Her television and refrigerator are broken, and the
building has no hot water.
She began to understand Russia's new poverty when some of her relatives
died last year. ~Nobody could afford their coffins. They had to be
cremated. Before, even beggars could get a pauper's coffin for five
rubles."
Then last month the financial and economic crisis hit Russia like an
avalanche. The soaring inflation rate has bitten deeply into her daily
life. She bought two bottles of vegetable oil this week, for the first
time in a month, but the price had jumped from 12 rubles to 23. She
can't afford to buy sugar, which is three times as expensive as before.
And she can't remember the last time she had sausage or beef.
Her pension is usually a month late. Her daughter and son-in-law give
her some financial help, but her daughter's salary as a school teacher
has been delayed for months. ~Sometimes they buy me a bag of potatoes
and I'm very happy."
Some days are better than others. Good days are like Wednesday, when
she sold her vodka quickly and found a discarded coffee jar, which might
be useful at home.
Bad days are when her local bus is cancelled for lack of funds (a much
more common event since the crisis began) and she has to buy a costly
ticket on a private mini-bus.
Bad days are when she becomes too hungry to stand on the sidewalk for
se ven hours without food. Then she must spend 18 rubles on a bowl of
borsch, losing her day's profits.
Worst of all are the days when the Moscow police are in a nasty mood.
Like the other grandmothers selling cigarettes and vodka on the
sidewalk, she has no official permit to be there. When they catch a
glimpse of a police patrol, the pensioners scatter down the street like
frightened mice.
One day this week, Mrs. Nikishova didn't move fast enough. A policeman
grabbed her and punched her on the arm. A second policeman took her
bottle of vodka, opened it and poured the vodka onto the sidewalk. ~He
shouldn't have done that," she sobbed a few minutes later. ~He should
have given it to someone."
As soon as the police disappear, the pensioners drift back to the
subway exit to sell their wares. ~If we didn't come here, we would have
died by now," Mrs. Nikishova says. ~But the Ukrainians bring cheaper
vodka and we can't compete. They dilute their vodka with water."
She is asked whether she blames anyone for the economic crisis. ~I
don't understand much, but I know our government is guilty," she says.
~Our leaders live well, and they want us to die. We're living like a
herd of cattle."
Then she remembers how her doctor praises her for her stamina. ~I'm
strong -- that's what saves me. If I don't have anything else, I will
survive on water and salted bread. I'm proud that I can survive despite
all this. But if nothing is done, many people will die."

******

#12
Excerpt
U.S. DEPARTMENT OF STAT
September 17, 1998
SECRETARY OF STATE MADELEINE K. ALBRIGHT
AT THE CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE
Washington, D.C.

Q: I want to ask you about Russia. (Inaudible) -- the case.
(Inaudible) -- Kiriyenko Government and the Chernomyrdin government,
and that message -- (inaudible) -- was ignored. My question to you is
given the appointments that have been made recently and given the much
more -- (inaudible) -- what is the message -- (inaudible) --

ALBRIGHT: Well, first of all, I do claim fairly good knowledge of
Yevgeniy [Primakov}, having talked to him at great length, sung with him
and spent many, many hours on the phone.
My message, and America's message as well as the G-7/8 message, is
that we can help but they have to make their own decisions; and that
ultimately the economic situation is such that they need to understand
-- and the President made that very clear while he was there -- that
there is no way for them to insulate themselves from the worldmarkets.
I think as we look at what's going on in Russia, we have to see the
positive as well as the problems. Despite the fact that this is going
on, in terms of democracy what is happening is happening
constitutionally. I think that is something that cannot be underrated.
It is something that people now kind of take for granted. But those of
us who spent a lot of time studying the previous system, I think
understand the importance of that development.
Primakov and I have really, I think, what characterizes our
relationship -- and it started out in our first meeting -- is he
actually was very funny. He said, since you know what I did before,
you know that I know everything about you.
So that was kind of a good way to begin. I said, actually, I spent a
lot of time studying about you -- not quite in the same detail or with
the same capability. But we both decided then and there that our best
approach was that we recognized each other as tough fighters on behalf
of our own national interests. We didn't agree often, but we did agree
on many things; because I think that he knew -- and he still knows --
that Russia needs an effective non-proliferation regime, that Russia
needs strategic arms reduction, that Russia needs an adapted CFE
treaty, that Russia needs good relations with its neighbors and that
Russia needs a Europe without dividing lines. Those are just some
initial things that we agree on.
I think that on foreign policy, we have talked about the fact that
things will continue as they are. We will agree where we can and
maintain our solid defense of our own national interests; and where we
can agree, that will be positive.
We are very, very concerned about the economic situation. The
international community is prepared to help; but not if the Russians
don't make the tough decisions themselves. We have indicated to them
that some of the policies that might be forthcoming from -- we have
not gotten involved in names, that's not our business -- but that
basically it would be a mistake if that long-running debate that goes
back decades about whether Russia should turn inward or outward, at
the end of the century if the vote is to turn inward, they have put
themselves in an impossible position; because even a country as
powerful and as self-sufficient as the United States cannot operate
outside of the world economy. And our message to them is -- they don't
have a government and therefore, they don't have an economic plan yet.
So it's hard for us to react to it.
But the message to them is, you can't go backward; and we will help
you if you can figure out how to get yourself into place.

*******

#13
Date: Sat, 19 Sep 1998 
From: Albert Weeks <AWeeks1@compuserve.com>
Subject: Mr. Danzer's query

John Danzer asks whether a confederation arrangement perhaps 
would sort out the unwieldy 89 Russian regions into manageable, 
less numerous regions, and if so, how this might be projected. 
Danzer might wish to review the experience of the "Ekonomicheskiye Raiony" 
(Economic Regions) of the Soviet period. These were constructed not only 
by geographic criteria but also in terms
of resources, industries, and population. Of course, some of those 
FSU regions extended into now-independent republics. Yet there was 
some rational division-of-labor by the Regions with respect to the huge 
RSFSR itself. 
A problem with this, however, is that even there, since 1991, further 
redivisions of political-administrative authority have occurred, 
more or less in accordance with the old "Provinces" (Oblasti).
Thus, superimposing the former Economic Regions over the 
political-administrative map of the contemporary RF produces a crazy-quilt.
Still, the old regions might provide Danzer with a point d'appui. And he 
should know that there is book and journal literature (in Russian)
about the rationale and operative parameters of the former Regions.
Maps illustrating the above are available through Eastview Publications, 
which has a website.

******

#14
Foreign Firms in Russia Scale Back
By NICK WADHAMS
September 18, 1998

MOSCOW (AP) -- Many foreign companies in Russia are cutting staff and holding
off on further investment while they wait for the country to stabilize --
though they insist they are not running away for good. 
The hardest hit have been in the consumer goods and financial sectors,
struggling with the collapse of nationwide distribution systems and the stock
market, Scott Blacklin, president of the American Chamber of Commerce in
Russia, said Thursday. 
``In some ways, the business community feels like it was hit by a neutron bomb
and we've all been irradiated,'' he said. ``Which means we're all alive today,
but in 30 days, 60 days, 90 days, some of them are going to die.'' 
The biggest problem for many foreign companies dealing in consumer goods is
that their clients, being driven toward bankruptcy by an unstable ruble rate,
can't afford to pay for goods priced in dollars. 
``It's a serious hit to our market share,'' said Robert Bellman, country
director for the Compaq computer manufacturer. ``We don't want to bring in a
shipment if payment isn't 100 percent guaranteed.'' 
Unloading goods is not the only problem. With collapsing Russian banks
freezing accounts, withdrawing assets or making bank transfers has become
almost impossible. 
In a survey by the American Chamber of Commerce in Moscow, 72 of 101 large and
small foreign businesses said they could not access some funds because of bank
restructuring and government decrees. 
The bank failures, coupled with a government moratorium on repaying foreign
debt, have eroded foreigners' faith in the government's desire to carry out
economic reforms. Many are delaying new investment decisions until the dust
settles. 
``It is clear that the Russian government, whoever is comprising it, does not
have the credibility necessary to maintain an attraction for foreign
capital,'' Blacklin said. ``There seems to have been a profound break in the
former belief in the reform process in this country.'' 
Russia's stock market, a good reflection of investor attitude toward the
government, is down more than 80 percent since the start of the year. 
Facing losses in the billions of dollars, many companies are laying off local
and foreign staff. 
Compaq is not replacing people who leave and plans to cut about 10 of its 100
employees in the next few months, Bellman said. 
Blacklin said other financial and retail companies have been laying off as
many as half of their employees. 
Still, the big foreign companies that have invested $21 billion in Russia
since economic reforms began in 1992 have no plans to leave, despite Prime
Minister Yevgeny Primakov's suggestion that the government may try to protect
domestic business and print rubles. 
``We're in this for the long haul,'' said Richard Weden, director of American
Express's Russia division. ``Though policies of the new government may change,
open market practices will continue.'' 

*******