September 20, 1998   

This Date's Issues: 2385• 2386•2387•

Johnson's Russia List
#2386
20 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Washington Post: Fred Hiatt, Who Lost Russia? (DJ: Comments, on
this and the following piece?)
2. New York Post: John Dizard, WITCH-HUNT TIME: GET THE RUSSIA-WRECKERS.
3. Reuters: Russian PM vows to support domestic industry.
4. Yuri Luryi: 2383- Helmer/Kremlin's Big Fantasy.
5. AFP: Russia's woes worsen as government posts go begging.
6. Keith Hudson: A Strategy for the IMF.
7. Sydney Morning Herald: Neela Banrejee, THE YELTSIN LEGACY. Shadows of 
misery in Russia 
8. Ray Finch: Ben Franklinski.
9. Richard Bos: Re 2383-BBC/Two Steps Forward.
10. The Independent (UK): Phil Reeves, Shrieks as Moscow gets the Full
Monty.
11. BBC: Billions in Russian aid 'stolen or wasted.'
12. BBC: Ex-bank chief denies IMF money missing.
13. Interfax: Ilyukhin: Russia's National Security Threatened.]

******

#1
Washington Post
September 20, 1998
[for personal use only]
Who Lost Russia?
By Fred Hiatt
The writer is a member of the editorial page staff. 

A Who Lost Russia debate is gathering force in Washington. Unlike the Who Lost
China debate that long ago blamed supposed Communist sympathizers, this one is
taking aim at capitalism, or its allegedly too-zealous adherents. The guilty
parties this time are said to be Russia's would-be reformers and those in the
West who backed them -- particularly the Clinton administration and the
International Monetary Fund.
A popular version goes something like this: Russia's self-proclaimed reformers
stripped a modern nation of its industrial might, impoverished the masses and
enriched a corrupt elite. Things could have turned out differently had the
reformers privatized more slowly and fairly, put in place a social safety net,
tolerated some central planning and supported the nation's industrial
heartland. But in their heartless Chicago-school fanaticism, the young
reformers spurned a softer, Sweden-style capitalism that Russians might have
tolerated in favor of a rigorous Chile-style market.
This argument always reminds me of something Yegor Gaidar, Russia's first and
still most admirable reformer, told me soon after the Soviet Union collapsed,
as he pondered the economic and social wreckage -- not to mention empty
coffers -- that Mikhail Gorbachev and predecessors had bequeathed him. If we
do everything right, maybe in 20 or 30 years we will have the luxury of
choosing between the Chile model and the Sweden model, Gaidar said then,
adding that he could be happy with either. Right now, he said, he was just
looking for a way to survive.
Now, there's no question that Russia today -- nearly seven years after Gaidar
became deputy prime minister -- is again in collapse. Much of what the critics
point to -- the corruption, the impoverishment, the disillusion -- is beyond
dispute. President Boris Yeltsin and his various teams have failed; so has
U.S. policy. Anyone who supported the gist of that policy, who backed the IMF
bailouts -- as I did -- must acknowledge that.
But to acknowledge the failure is not quite the same as saying the policy was
wrong. If you listen carefully to the critics -- here or in Russia, where
Communists and centrists make a similar case -- you still will be hard pressed
to hear a credible alternative to what the reformers tried to do. What you
will hear is many contentions, dispensed now with a certain vindicated
pleasure, that can't always be supported by the evidence.
Take, for instance, the allegation that Yeltsin and his team "de-
industrialized" a great industrial power. Russia in 1991 was not in truth a
developed nation as much as a mis-developed one: It had an advanced space and
nuclear sector, and almost everything else was Third World. Many or most of
its factories produced goods worth less than the raw materials that went into
them. Entire cities -- many, many cities -- were built in remote and frozen
areas where they were guaranteed to be forever wards of the state.
The challenge was -- and remains -- to administer euthanasia to this misshapen
industrial complex that Russia -- now without slave labor and with dwindling
oil revenues -- can no longer support. Easy, you might say: Let people move
from the hopeless tundra cities to places of commerce, where new jobs could be
created.
Except it wasn't easy. People in Siberia were given the apartments where
they'd always lived; so were people in Moscow. The tundra apartments were
worthless, the Moscow apartments were worth plenty, and so people in the
tundra couldn't afford to move. New firms and jobs appeared, but far too
slowly -- in large part because opponents of reform managed to block the laws
and institutions needed to foster them, just as they discouraged the foreign
investment that might have helped pay for a better safety net.
The American left and right oddly enough finger the same culprits now, but for
different reasons. The right by and large argues that reform in Russia didn't
go far enough -- and that President Clinton and the IMF should have realized
that and pulled the plug long ago.
The first point is correct, but there's a certain dishonesty in the second. No
one in the administration or anywhere else was unaware of the corruption, the
reformers' broken promises, the risks of failure. To accuse them now of
unwarranted optimism is easy; but to pinpoint the moment when they should have
stopped their aid -- when they should have given up on Russia -- is, even
today, more difficult.
Leftist critics on the other hand argue that reform went too far and too fast.
They now have, in Prime Minister Yevgeny Primakov and the Gorbachevites on his
team, a government that agrees. The talk is of bulking up the military-
industrial complex, weaving safety nets and reestablishing state controls over
trade and finance. But as before, it's not clear how these initiatives will be
paid for, other than by printing more rubles, a path to likely hyperinflation.
Already in the first two weeks of September, consumer prices rose 43 percent.
A debate about Russia policy is right and fitting. No one should escape
scrutiny: not the IMF, which accepted unrealistic forecasts in dispensing a
final, quickly squandered $4.8 billion in July; not the World Bank, which
shoveled hundred of millions in the direction of the coal industry to little
effect; not the reformers, with their many mistakes and not their defenders in
the West.
But the debate should proceed with an honest acknowledgment of the obstacles
that Russia faced from the start, the paucity of its options and the long-term
nature of any solutions. Russia's experiment in economic reform may or may not
be lost for now, but at some point the country surely will try again. It will
be important then for everyone to have drawn lessons that the evidence of
history can support.

*******

#2
New York Post
September 20, 1998
[for personal use only]
WITCH-HUNT TIME: GET THE RUSSIA-WRECKERS
By John Dizard (dizard@nypost.com)

WHO lost Russia? 
The worst performance by a major peacetime economy in the 20th century has
been that of Russia over the past six years. 
And we - Americans, and the American business and financial model - are being
blamed for it. 
Seventy years of Soviet propaganda was unable to effectively smear our country
and our system in the eyes of the Russian people. Six years of an American-
backed, American-advised and American-financed government did the job. 
A lot of people will say that we shouldn't have a witch hunt to find which
Americans were responsible. 
I don't agree. There were witches here, after all. So why not hunt them?
Otherwise, they'll continue to run our Russian policy. 
Rep. Benjamin Gilman, (R-N.Y.), the chair of the International Relations
Committee, said on Thursday that, Anti-Americanism has been on the rise in
Russia ... not only have we been lied to by high-level Russian officials, but
our government has ignored important signals that all was not well. 
The failures were covered up by officials and the policy hustlers who were
profiting from grants and God knows what else. Thanks to this deception, and
possibly corruption, the world's investors thought the United States would
indefinitely back a crooked system. When even our aid, loans, and supportive
babble were no longer enough, we got the worldwide August crash and the re-
entry of Communists into the Russian government. 
Let's start off the list of who's responsible with Al Gore. He was happy to
take credit for Russian policy when he thought it would work. He formed what
was originally the Gore-Chernomyrdin Commission. 
Prime Minister Chernomyrdin became one of the richest men in Russia
principally by using his position to secretly appropriate shares in Gazprom,
the biggest company in Russia, and to direct much of its cash into his pocket.
How he did this, and what else he did, is not yet clear to the U.S.
intelligence community, because Gore and his staff killed off an inquiry into
his partner's links to organized crime. 
The White House is silent on whether there will be a Gore-Primakov Commission
for the new prime minister and former foreign intelligence chief. 
Maybe that would be just too embarrassing, but with Gore you can't be sure. 
Then of course there's Strobe Talbott, the Russian policy supremo at the State
Department. 
Strobe, who got a big career assist from Victor Louis, a KGB disinformation
expert, expertly inserted daggers in the dorsal region of any official who
questioned whether we should bet everything on Boris Yeltsin. 
This even after the crime of the war in Chechnya, which you helped pay for,
and the military assault on the Russian parliament. 
Strobe was helped in his coverup of the U.S. policy disaster by Robert Kagan,
whose wife, Victoria Newland, works for Talbott. 
Kagan works out of the Carnegie Endowment in Washington, and also holds down a
contributing editorship of the Weekly Standard, the Washington conservative
magazine, which, like The Post, is owned by News Corp. He avoided any
criticism of the administration's favorite thieves - sorry - Russian
reformers. 
First among these has been Anatoly Chubais, who bounced in and out of top
economic posts in Russia, and who is now cashing in as head of the country's
biggest electric utility. 
He recently boasted in a Russian newspaper interview that he had lied and
conned the International Monetary Fund into giving his government money when
it had failed to comply with the conditions for doing so. 
Kagan's response: I still think Chubais was doing the right thing. I haven't
changed my views at all. I think we should have continued to fund the
reformers. 
OK, Bob. At least you're consistent. 
A colleague of Kagan's, Anders Aslund, who also has a home at Carnegie and in
the pages of the Weekly Standard, was reportedly described to the Russian
Ambassador to the U.S. by Chubais as Chubais' personal agent in this country. 
I believe there is a law requiring such ... people to register as foreign
agents. 
Aslund's conflicts of interest, ranging from PR work paid for by George Soros
for Ukraine, to connections with dubious Russian brokers, are truly awe-
inspiring. 
Are there any good people here? 
They've been excluded from the inner councils of government, but yes, there
are. Anne Williamson, a New York journalist who has written an invaluable book
on the making of the Russian disaster, Contagion - How America Betrayed
Russia, is on the list. 
Janine Wedel, of George Washington University, who documented Chubais' circle
in the American Foreign Policy Council's Democratization Magazine, is another.
And there are those who have begun to realize that a housecleaning is in
order, such as Ben Gilman. 
So let's get our torches and get going. 

******

#3
Russian PM vows to support domestic industry
By Oleg Shchedrov

MOSCOW, Sept 20 (Reuters) - Prime Minister Yevgeny Primakov told industrial
leaders on Sunday that Russian market reforms will focus on encouraging growth
but ruled out resorting to isolationism to protect domestic industry. 
Primakov, installed earlier this month as a compromise figure acceptable to
both President Boris Yeltsin and the Communist-led parliament, asked the
businessmen to contribute to his efforts to head off Russia's economic
meltdown. 
``The formation of the government is not complete, but we have already started
serious work on an anti-crisis programme which would not have been complete
without the views of business leaders,'' he told the Russian Union of
Industrialists and Entrepreneurs in televised remarks. 
The union comprises managers and owners of major Russian enterprises,
including military ones, who have suffered from the tough monetary policies of
previous Russian governments. 
Former foreign minister Primakov, who is critical of his predecessors' course,
reiterated his commitment to improve the economic situation in Russia through
promoting national industry. 
But he made clear his new course did not mean sealing Russia off from the rest
of the world. 
``There can be no isolated economy in the contemporary world,'' Itar-Tass news
agency quoted him as saying. 
Primakov, 68, is under pressure to boost efforts to tackle the crisis after a
week in office in which the rouble has plunged even lower against the U.S.
dollar. 
He outlined his economic plans to reporters on Friday and Russia Television
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. 
``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,'' he said on
Friday. 
Primakov hoped banking reforms would also start to have an effect this week. 
In comments to Germany's Bild newspaper, Primakov said Russia had enough
currency reserves to stay afloat, but needed urgent foreign help to pursue
reforms. The newspaper did not say how much Russia would need. 
On Sunday, he said he did not favour the idea of forcing all Russian exporters
sell all hard currency revenues to the Central Bank. 
``Some (hard currency revenues) should be left for expanding production,'' he
was quoted by Interfax news agency as saying. 
A major challenge to Primakov and his government will come on October 7, when
trade unions supported by influential Communists plan nationwide protest
action to demand a radical change of economic course and Yeltsin's
resignation. 
The Communists played an important role in Primakov's appointment. They led
resistance to Yeltsin's first choice of prime minister, loyal ally Viktor
Chernomyrdin, and the weakened president turned to Primakov last week as a
compromise. 
But the Communists, and several other parties, have refused to enter
Primakov's government, making it hard for him to put together a broad-based
cabinet. 
The Communists were also instrumental in the departure of Sergei Dubinin as
central bank chairman. Dubinin was replaced by Viktor Gerashchenko, who has
said he is ready to print money to pay off state debts and re-float banks. 
Dubinin defended the bank's actions under his tenure, including its use of the
first tranche of a loan orchestrated by the International Monetary Fund in
July. The money was quickly spent in a futile attempt to prop up the rouble. 
In a radio interview on Saturday, Dubinin denied suggestions by Russia's chief
prosecutor that ``not everything was clean'' at the bank, saying remarks were
``groundless and simply irresponsible.'' 
The head of the Auditing Chamber of the Communist-dominated State Duma lower
house of parliament, Veniamin (eds:correct) Sokolov, later joined the attack
on Dubinin alleging that several billion dollars of the IMF loan had been
misused. 
Sokolov, a long-time vociferous opponent of Yeltsin, was indirectly quoted by
the British Broadcasting Corporation as urging the West not to approve further
loans unless strict finanical control is imposed. 

******

#4
Date: Sat, 19 Sep 1998 
From: Yuri Luryi <yluryi@julian.uwo.ca>
Subject: 2383- Helmer/Kremlin's Big Fantasy, 

I admire John Helmer's heroic attempt to analyze problems of
renationalization in the present Russia with the help of Historical
Penisology (see below). Especially, nowadays [If John is not an American,
it looks even more challenging:-)]. Yet, I would like to draw your
attention to another John's reference. That is to the Berezovsky's warning
that "renationalization of the oligarch's property will lead to civil war".
Believe it or not: it has a direct semantic relation to John's historic
discoveries, as one may see below.
The fact, however, is that not only oligarch's property can serve as the
Apple of Discord (with bloodshed).
This is what the influential member of the Duma V. Pochmelkin wrote in 1994:
"The Communist faction sharply opposed the adoption of the new Civil Code.
One leading member of the Communist faction told me that this Code 'would
bring a lot of bloodshed'. I wondered: why? He explained: 'When we come to
power, we shall nationalize everything, and nobody gives up property
without a fight'".
Private properties, big and small private business, private industry are
widely spread now in Russia. Those, attempting to renationalize it, will
face organized
resistance of the too many. Not only oligarchs will fight in defence of
their properties. And the Commusists hardly would take a risk. In the
common Russian language, if person A unreasonably demands person B to give
him something, the deservedly rude reply in simple Russian would relate to
the penis. People would reply using Russian equivalent of that word (which
is a three letters word): "X.. tebe!". Which might be translated literally
as "Get a penis instead!" (the English equivalent might be "Like Hell I
will!") So, I am sure, would be said in Russaian to the Communists, if
they demand private property back. That is why John Helmer's historic
penile anekdotes are so closely relevant to the prospects of
renationalization in Russia.
P.s. I remember Pochmelkins words, because I quoted these in 1994 from
November issue of the "Express Chronicle" (in my work on Russian Succession
Law and Inheritance Abroad). By the way, " Expres Chronicle", this, in my
opinion, most independent and informative Human Rights Weekly, is re-born
again after 5 months of interruption! Thanks to the help of a few American
and one Swiss Foundations (this Weekly rejects financial help both, from
the Russian Government and from the "oligarchs" as well). I strongly
recommend you and the members of the List to read it. The issue of
September 14 can be found at
<http://www.online.ru/mlists/expchronicle/chronicle-weekly/>

********

#5
Russia's woes worsen as government posts go begging

Sept 20 (AFP) - When Yevgeny Primakov took on the job of prime
minister, he knew he was in for a rough ride to save Russia's imploding
economy -- but just over a week on, things are getting worse, and he is at the
helm of a still-largely rudderless government.
The ruble has lost 61.5 percent of its value in the last month, trading at 20
to one dollar in the street. Inflation is climbing, rising to 9.9 percent in
August. The International Monetary Fund (IMF) has frozen desperately-needed
billions of dollars in loans. The opposition Communist Party is planning
national strikes on October 7 over unpaid back wages and pensions. Stung
foreign investors are demanding their money back.
And, against all this, Primakov is finding it impossible to fill the key
cabinet posts of finance, economy, exterior economic relations, privatisation
and social affairs.
The main problem would seem to be that no-one wants to take the poisoned
chalice of being a minister in a government which will inevitably fail to
satisfy the opposing demands of the Russian public and the West.
"Finding the right candidates (to join the cabinet) is not an easy job. We
often face big problems," Primakov admitted Friday. "Some of these problems
involve parties that support me as prime minister but then refuse to
participate in the government."
As a consequence, this means the premier -- a career diplomat and former
foreign minister with no economic or financial credentials himself --
currently relies for economic and financial management on central bank
president Viktor Gerashchenko, who is known for running the institution in its
Soviet Union days and who favours printing rubles to get Russia out of its
debt crisis.
Primakov is also bound to the Communist Party, which backed his nomination on
September 11 as premier after President Boris Yeltsin's preferred man --
former premier Viktor Chernomyrdin -- was twice rejected.
As a result, the top two government posts under Primakov have gone to
Communist deputies. One of the new deputy prime ministers, Yury Maslyukov, is
to oversee the work of the yet-to-be-found economy minister.
The Communists are against ministerial candidates they see as too removed from
their protectionist policies.
Party leader Gennady Zyuganov has reiterated his calls for Yeltsin to resign,
saying the "sick" president was incapable of running the country.
He also said Primakov's first list of names put forward for the ministries
"does not reflect at the moment the interests of the majority in the Duma and
the Federation Council," the lower and upper houses of parliament.
The Communists, Zyuganov said, wanted "a government conforming to the
interests of the whole population and not those of the IMF."
Primakov Sunday was to meet several heads of industry and the banking sector.
One of the leaders, the president of the Russian federation of industry,
Arkady Volsky, is rumoured to be in the running for ministerial post.
The social affairs portfolio has proved particularly tricky to fill. On
Friday, a rising star in parliament, Vladimir Ryzhkov, turned down the post of
deputy premier in charge of social affairs three days after being offered the
job.
Ryzhkov said he agonized for three days over his assignment before conceding
that only a better politician than he could help resolve a crisis surrounding
the prompt payments of wages and pensions.
That is a problem that will plague any new member of Primakov's
administration.
While foreign investors, banks and governments and international institutions
like the IMF are pressuring Primakov to see through market reforms and tighten
the country's belt, ordinary Russians are calling for price stability and
enough purchasing power to see through winter.
The signs are that domestic imperatives are winning out, at least in the short
term.
The central bank has started running rubles off the printing presses to pay
back wage arrears and recharge the nation's sinking banking sector. It has
also promised to buy back treasury bonds in the hands of Russian investors.
But that last measure has prompted angry foreign investors holding the bonds
to plan a trip to Moscow this week, ready to lodge legal complaints that the
one-sided buyback unfairly discriminates against them.

******

#6
Date: Sun, 20 Sep 1998 
From: Keith Hudson <ac972@dial.pipex.com>
Subject: A Strategy for the IMF

It seems certain that, even if only for humanitarian reasons, the IMF will
have to give a further tranche of money to Russia -- and pretty soon, too.
However, no coherent policy has emerged from Primakov so far. If such a
policy does emerge in the next week or two, which is unlikely, it is highly
questionable whether it would be practicable and, indeed, whether the IMF
could realistically appraise it.
The two immediate dangers facing Russia are that:
(a) Primakov is unable to form a government of ministers with the economic
insight and courage to force through necessary changes; 
(b) the next tranche would be as completely wasted as before.
It seems to me that the next tranche from the IMF should be based on one
simple principle: 
It should be applied to the lowest possible level, in order to
short-circuit the multiple layers of corruption, administrative and private.
The only practical method of doing this is to lend it to the Regional
Governors in proportion to their populations. In the first instance this
would only be a percentage game, of course and a great deal of the money
would undoubtedly be wasted. Some would be lost completely, some would be
partially wasted, but some regional loans might find their way more
directly to the population, improve local services and, with simultaneous
regional de-regulation for small and medium business, stimulate enterprise.
I suggest that there should be only one condition for the loans. This is
that a small team of IMF observers should be based in every region in order
to record the effect of the loan on price levels and public services. This
would necessarily be a rough-and-ready estimate in the first instance, but
the benefits (or non-benefits) of a loan in any particular region would be
pretty quickly apparent. Further regional loans would then be given
according to the effectiveness of the first one -- some regions, one would
guess, not receiving any further help at all.
Of course, this strategy would be interpreted as political interference in
the internal affairs of Russia leading, as it would, to further
administrative independence of the regions. This I see as inevitable
anyway, but perhaps, as a sweetener, a proportion of the overall loan could
be applied to the central government. However, once the conditions of the
proposed loan were known to the regions, it would be politically impossible
for the central government to resist. 
Such a strategy would also meet with objections from Western statesmen
because it would appear to undermine the integrity of Russian
nation-statehood -- and thus, by implication, their own amour propre -- and
also weaken the central control of Russian nuclear weapons. Both of these
are deeply serious considerations, of course, and I wouldn't wish to
downplay them. But I cannot see any possible IMF policy that would do any
good other than the one I suggest above. 
The IMF has only one more opportunity to help Russia. Subsequent strategies
will not be those of statesmen, world bankers, and small cliques of
economists, as they have been hitherto, but of the electorates of the
Western world. The power of this opinion is already being expressed by
Republican Senators in Washington and it is already obvious, too, that
European countries will be disinclined to contribute much more, if at all,
to the IMF. If the next centralised loan to Russia is seen to be totally
wasted, as the last one was, public opinion will simply -- but very
powerfully -- say: "No more", and the IMF will become a political and
financial invalid. In reality, being pretty close to bankruptcy already,
the IMF will have nothing more to disperse in the coming months and years,
whether to Russia, South-East Asia or to Latin America. 

******

#7
Sydney Morning Herald
September 18, 1998 
[for personal use only]
THE YELTSIN LEGACY 
Shadows of misery in Russia 
With doom and gloom back in Moscow, winter can only make it worse. NEELA
BANERJEE reports. 
Neela Banerjee is the Herald correspondent in Moscow. 

It is the weekend in Moscow, and an old man as small as I am, propped up on
crutches, is in front of me in line to buy milk. He dresses as properly as he
must have 30 years ago, in a fedora and trench coat, but they are now crumpled
and dirty.
"Please, the cheapest milk and yogurt," he asks the shopgirl. His hands quake
gently as he counts out the last change he has. I know he lives on milk and
bread. Many retirees in Russia do. I stand there and think that next week, he
may not be able to afford even the cheapest milk and yogurt.
One sunny afternoon, a friend comes by and tells me there's a line to buy
bread 100-people-long by the underground. I remember an empty bread store in
my old neighbourhood here in 1991, where a kerchiefed girl told me: "I came in
from outside Moscow. We have no bread there. I buy loaves of bread here, take
them home, and when a loaf gets hard, I put it in a warm oven with a damp
towel over it, and it gets soft."
We both smiled at her ingenuity. It was only three or so in the afternoon, the
store was already dark, and they told us to leave so they could lock up.
I've lived in the former Soviet Union for the better part of the past decade,
and now, so much of what I've heard comes back to me every day, persistent as
a guilty conscience.
In 1996, when he ran for re-election, the Russian President, Boris Yeltsin,
posited the race as a clear choice: forward to free markets and stability with
him, or back to shortages and turmoil with the Communist challenger, Gennady
Zyuganov.
Few Russians liked the President, but most feared the past even more. As it
turns out, we have gone back to the past with Yeltsin.
The Yeltsin legacy may be that there will be no legacy. What he created, he
has undone with his own hands. His near-authoritarian presidential republic is
now being run by a parliament he has alternately shelled into submission or
plain ignored.
The Communists, whom most had discounted as a political force in Russia, are
stronger than they have been in a decade. Yeltsin went to war in Chechnya,
allegedly to hold the Russian Federation together, and now the country is
slowly atomising as regional governors grab more power, while the President
"handles documents" in his suburban home, an official euphemism for his long
absences from public life.
Many of us had doubted the so-called "irreversibility of reform". But we never
imagined the future could be so like the past, in all its wrenching details.
Stores, once full, are empty. Shopkeepers use the same methods they did in the
1980s to maintain a bit of dignity: they space individual bottles of water or
boxes of crackers a foot apart on a bare shelf to give the illusion that there
is still something to buy. Police check trucks on highways out of Moscow to
make sure they aren't taking food out.
In the winter, in the provinces, people may get ration cards again, the same
flimsy shelter they had in 1989 and 1990, when there were no soap, no sugar,
no matches. Except now, people also have no money.
One of the few achievements of the reforms built on sand is that they changed
our expectations. We went to stores and bought what we needed for the day or
the week, not for the season. Even those who relied on their vegetable plots
to see them through still expected vegetable oil and detergent to be available
at tables by the underground and in pre-fabricated metal kiosks.
After years of hyperinflation in the early 1990s, when prices were marked in
the only stable currency, the US dollar, Russians had recently started to
think in roubles, see prices only in roubles, even hold some of their savings
in roubles. "We believed," many people have said, in line at banks, waiting at
the store, bitter or simply shaking their heads at that very belief.
Most of all, we could say what tomorrow would be like, which wasn't true five
years ago.
In Moscow, everything looks normal on the surface. People go to work, kids to
school, men fix cars in the yards, couples hold hands coming home in the
twilight.
But it's still fairly warm and light most of the time. With the darkness of
fall and winter, another kind of pall will settle on us, too, I think. I look
sometimes at women in the trains after a day at work and shopping for what can
still be found and see that familiar shadow pass over their faces.

******

#8
Date: Sun, 20 Sep 1998
From: "Ray Finch-Kroll Associates, Moscow" <krollrf@aha.ru>
Subject: Ben Franklinski

Some two weeks ago, in the midst of their latest economic crisis, a Russian
weekly suggested that one possible solution to correct Russia's economic
ills would be for the Central Bank to start printing dollars. Though this
suggestion was made in jest, it does raise a potentially devastating
question: What would happen to the US (and possibly, the world economy) if
it was flooded with hundreds of billions of counterfeit US dollars? Just
for a moment assume that the current cabal calling the shots in the Kremlin
have completely lost their moral compass and are sorely aggrieved over
Russia's economic collapse (which they largely attribute to the poor advice
and stingy support they received from the West). Could not the same country
which obtained the secrets to build the A-bomb, come up with the ingenuity
to create a near-perfect copy of the $100 bill? (There is no shortage of
hungry experts in this country.) For those who believe that the Russian
government would never dare take such a step, do not understand the extent
of dissolution, corruption and moral confusion in this country. Here's a
free piece of advice for the West: forget about trying to sell the idea of
a Currency Board to the Russians. They will never buy it. Instead, start
to train your customs officials and their dogs on how to sniff out suitcases
packed with Ben Franklin's. 

*******

#9
Date: Sun, 20 Sep 1998
From: Richard Bos <hagcott@clara.net>
Subject: Re: 2383-BBC/Two Steps Forward

> Re:
> John Simpson challenges the conventional wisdom that "Russia is a disaster
waiting
> to happen."
<SNIP>
> 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 realise that most subscribers to JRL are not Communists and never will be,
but if
we are really to understand what the options for Russia are, it is
neccessary to get
away from Cold War rhetoric and listen to what people are actually saying.
John's
definition of Leninism is far removed from anything that Marxist-Leninists stand
for. Modern-day Communists recognise the many positive acheivements of the
old CPSU,
but also know that the principles of Marxism-Leninism and
democratic-centralism had
been betrayed in the USSR for a long time. Many of the people who run the
gangster-capitalism in Russia and the surrounding republics now are the same
people
who claimed to be Marxist-Leninists before. Not so long ago the Geogian leader
Shevadnaze said that he had wanted to rid his country of the "black cancer of
Communism" since childhood and had worked his way to the top of the Party in
order
to do that along with other like-minded people.

When Socialism is restored in Russia it will not be the socialism of
Khruschev/Brezniev/Gorbachev; it will be the Socialism of Marx and Lenin. If
you ask
any Communist in Russia today - that is what they will say. They have
learned the
hard way, and they are not about to make the same mistakes next time.

*******

#10
The Independent (UK)
20 September 1998
[for personal use only]
Shrieks as Moscow gets the Full Monty 
>From Phil Reeves in Moscow 

ANY visitor to a back street near the Lubyanka, once the KGB citadel of an
empire's nosy-parker moral arbiters, could draw only one conclusion on Friday
night: amid an economic hurricane, Moscow has finally gone mad. 
Rising above the capital's bustle came a chorus of hundreds of gleeful voices,
all female. "Sex!", they bellowed, in unison. "Sex!" And then again, louder:
"SEX!" 
Undeterred by their nation's gloom, or perhaps because of it, some Russians
are still having fun. That it should be young women, whose source of
entertainment is a troupe of greasy-torsoed male strippers - Russia's answer
to "The Full Monty" - is further proof that the gender best suited to survive
history's trials is not the hairy eyebrowed variety that usually sits in the
Kremlin. She is found ebullient and defiant, in micro-skirt and stilettos, at
a night club called The Hungry Duck. 
A thousand women turned out on Friday night to watch "Dillon's Show", a group
of Russian males, who stride about in g-strings on a long bar-top, flexing
oiled muscles, tossing mousse-laden locks, and showing off their bottoms. 
Queues are customary at Russia's shops and banks, but the line waiting to get
in the club - a utilitarian-looking dump once the Soviet Home of Working
Artists - was longer than any I have seen in two months. Nor have I seen so
many people crammed into one bar. Within the hot gloom and din, there were
hundreds and hundreds of girls, bopping on tables, cheering, and knocking back
beer in plastic cups as if there was no tomorrow (which, for some here, there
isn't). 
They paid 10 roubles (30p) to get in. Drinks were free, men were banned until
the performance end. But the males were there, swigging beer in feral,
prickly-skulled, clumps outside the door. Later, many would clamber through
the upstairs windows, to avoid paying their higher (50 rouble) fee. "It's just
a good night out," said Olga, an 18-year-old student, before the DJ, a New
Yorker, interrupted with another demand that we should shout the word "SEX",
louder still. She started again. "Its just a ... hang on a minute. WHOOPIE! OH
YEAH!" A sequin-spangled man in a baseball cap, wearing jeans that looked as
if they had mauled by a combine harvester and - inexplicably - leather
fingerless driving gloves, had appeared on the bar top. Peeling off his
clothes, he was preparing to execute a thigh-chafing twirl around a metal bar.
The cheering crowd rushed forward into two roving spotlights, eager to touch.
Olga was gone. I had more success with Vika, a 17-year-old computer science
student. No, her parents didn't know she was there. And, yes, she thought it
was all great. She found it funny. (Not everyone did; amid the gyrating throng
of spectators, some stripped to their bras, several girls were crying.)
"People should be allowed to do what they like," she said Including, we
agreed, Bill Clinton. Like most Russians, she regarded the public dissection
of the American president's private life with incomprehension. 
"We are going to talk about sex, sex, SEX!" yelled the DJ, to another gust of
cheers and frantic arm waving. Another man arrived, another inverted triangle
of bouncing near-naked sinew, who began simulating copulation, close to the
beer pumps. 
The show is, it must be said, a good deal raunchier than mere stripping off.
In fact, Montys do not come much fuller than this. They have been at it, these
young men, since January, performing to women in a society where sexual
liberation has evolved about as far as the lung fish, and which - for all its
reputation for Slavic glumness - knows how to throw a party. 
Their leader is a 24-year-old Nigerian law student called Dillon Oloyede, who
got involved because he needed money to pay for his lessons. He has since
realised there are sizeable sums out there. He is coy about exactly how much
he and his nine Russian fellow performers make a night, but agrees it is more
than $100 each - the average monthly salary in parts of Russia. 
But it is a tough beat, as a long scar on his ribcage testifies. Three months
ago, he was stabbed after a show. Although racism runs deep here, he prefers
to think his assailant was high on drugs. He has seen "The Full Monty", and
approved, although the other two strippers in the dressing room - a male model
and a factory worker - have not. 
Like the "Monty" stars, they are survivors, people who know how to adapt to an
ailing economy, and make money. They are helped by a certain (though not
total) lack of prudery in Russia, which recently showed Lolita on state-run
TV. 
Mr Oloyede is unashamed of his work. "The important thing to remember is that
I am an actor," he said, adjusting his silk, sequinned jock strap. " It is not
sex, it is a performance. Being an actor, I feel I have to behave as a
president, appearing before my people". 
He says this, standing almost naked before me, without the slightest trace of
irony. 

******

#11
BBC
September 20, 1998
Billions in Russian aid 'stolen or wasted' 
Jonathan Charles in Moscow reports on evidence that millions of dollars
provided as aid to Russia is being squandered: 

Venyamin Sokolov is an unlikely crusader - but Russia's chief auditor has
spent the past few months travelling across the country to track down billions
of dollars of missing aid from the West. 
Mr Sokolov does not look like a trouble maker but this short, greying man in
his late fifties has been stirring up problems for the new Russian government.
When we met in Moscow this week, Mr Sokolov came armed with a briefcase full
of evidence detailing corruption and incompetence. 
He told me that he has uncovered proof that billions sent by the west to help
his country's economy have been wasted. 
Mr Sokolov, who is director of Russia's chamber of accounts, says that some of
the money was lost to corruption and much of the rest was used improperly. 
His comments come as the International Monetary Fund is considering whether to
loan Russia another £3bn in the wake of the latest economic turmoil there. 

Vanishing money 

As we drove around Moscow in his car, Mr Sokolov pointed out building after
building where officials had colluded with corruption. 
Passing the finance ministry he said it had been given £100m to fund an export
contract for MIG jet aircraft - but during his investigations he had
discovered that the deal was bogus and the money had vanished. 

... while others grow rich 

Mr Sokolov claims it is just a tiny fraction of the total amount which has
gone missing because of corrupt officials and business executives. 
He says: "Because we are talking about huge sums of money, naturally we can't
check everything." 
"We have checked a fair proportion of the loans and I am ashamed to say that
several billion dollars has not been used for its intended purpose - and some
of it was simply stolen." 

Warning to IMF 

Mr Sokolov says that he gave a warning to the IMF months ago that the loans
were being abused. He is urging the West not to send any more money until
proper supervisory measures are put into place to prevent it being wasted. 
"First and foremost we have to establish strict financial controls - the kind
that exist in any country in Western Europe ... it's a basic prerequisite for
the development of market economics, in order to create a highly effective
economy and to overcome corruption." 

Russia's tax collectors get tough 

The Russian government is trying to negotiate fresh loans to help it stabilise
the economy. The money is needed to prop up the rouble and to help pay for
imports. 
Forty percent of Russia's food is imported, and without hard currency it may
face shortages this winter. 
As I wandered around supermarkets in Moscow this week, the crisis was clearly
beginning to bite. 
Because food is no longer being imported, the prices of everything produced
domestically is rocketing. 
Meat and sugar have tripled in cost since the economic collapse started in the
middle of August. 
As I watched, pensioners with just a few roubles shook their heads sorrowfully
at the food which is now just too expensive for them to buy. 
The government says the West's help is urgently required. But the evidence
presented by Mr Sokolov is unlikely to convince the IMF that any new loans
should be agreed. 

*******

#12
BBC
September 20, 1998
Ex-bank chief denies IMF money missing 

The former governor of the Russian Central Bank has denied allegations that
billions of dollars worth of International Monetary Fund loans to Russia have
been stolen, misused or gone missing. 
In an interview for Russia's Ekho Moskvy Radio, Sergei Dubinin said that the
Central Bank could account for "every cent" of the IMF loan to bail out the
crisis-ridden economy. 
On Sunday, Russia's chief auditor Venyamin Sokolov told the BBC that billions
of dollars in aid sent by the west to help his country's economy have been
wasted. 
He said some of the money was lost to corruption and much of the rest was used
improperly.
But reacting to earlier similar allegations made by the Russian prosecutor-
general, Mr Dubinin said: "We received $4.8bn from the IMF, and the Central
Bank was put in charge of the money in accordance with the usual procedure
regarding the reserves. 
"It was the first time that the Central Bank had received money to replenish
the reserve, and the money did not go to the budget - we can account for what
is happening to every cent, every dollar, every single German mark." 
Mr Dubinin, who resigned earlier this month, said he was "surprised or even
alarmed" after Russia's Prosecutor-General Yuri Skuratov's said there had been
irregularities in the use of IMF loans. 
"I did not expect that such a high-ranking official would allow himself to
make such assumptions while an investigation is still in progress," Mr Dubinin
said. 
"I cannot accept them, I believe that these allegations are groundless and
simply irresponsible." 

****** 

#13
Ilyukhin: Russia's National Security Threatened 

ST. PETERSBURG, Sept 17 (Interfax- Northwest) -- Russia's national
security is in a dire situation, State Duma Security Committee Chairman
Viktor Ilyukhin told a news conference in St. Petersburg Thursday.
In China, Germany, Japan and the United States "the question of
dividing up Russia is being raised," he said.
Because Russia depends on the outside world for food supplies, it may
be forced to pay with land, Ilyukhin said.
Foodstuffs may soon become the main factor putting pressure on Russia,he said.
The armed forces can no longer serve as guarantor of security,
Ilyukhin said. He is the leader of the opposition Movement in Support of
the Army.Following the disintegration of the USSR, Russia lost 13 mechanized
armies and corps, four tank armies and five air defense armies, Ilyukhinsaid.
Military reform has cost the country its strategic nuclear air force,
while new equipment accounts for as little as 20% to 30% of defense
spending compared to 80% in NATO, he said. The state owes over 60 billion
rubles to the defense industry, Ilyukhin said.
"The virus of separatism" is another threat to Russia's national
security, he said. "Nearly all the constitutions of Russia's internal
republics are inconsistent with federal legislation, and the refusal by
numerous regions to remit taxes to the national budget" is reminiscent of
the start of the Soviet Union's disintegration, Ilyukhin said.

********