September 29, 1998    
This Date's Issues: 2399•2400

Johnson's Russia List
#2399
29 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: ``I'm middle class,'' Russian Communist leader says.
2. Reuters: Russian PM struggles to keep Duma's favour.
3. Peter Rutland: Discussion of WESTERN PRESS COVERAGE OF RUSSIA.
(DJ: I regret I missed this meeting. I should have been there.)
4. Ray Thomas: No easy remedies for demonetisation of the Russian economy.
5. Karl Ryavec: Weimar Russia.
6. Jerry Hough: who is losing Russia now and how to minimize the consequences.
7. Michael Hammerschlag: BACK TO THE FUTURE. (re Victor Gerashchenko).
8. Sunday Times (UK): Mark Franchetti, Communists prepare for law-abiding 
revolution.
9. Peter Ekman: Anti-US Backlash.
10. Reuters: Russian officials mull nuclear security - Interfax.
11. Moscow News: Simon Saradzhyan, Muscovites Have Mixed Views on Crisis.
12. Rossiyskaya Gazeta: Primakov Outlines Economic Rescue Package.
13. Interfax: Luzhkov Sees Development of 'Regional Separatism.' 
14. Interfax: Russian Economics Ministry: 1998 Consumer Prices may Double.]

******

#1
``I'm middle class,'' Russian Communist leader says

MOSCOW, Sept 27 (Reuters) - He may not be ready to take his party into the
centre ground conquered by Gerhard Schroeder or Tony Blair but Russian
Communist leader Gennady Zyuganov took a memorable step on Sunday by admitting
he too was ``middle class.'' 
A leading member of Zyuganov's movement, the successor to the Soviet ruling
party, accused new Prime Minister Yevgeny Primakov last week of forming a
``bourgeois'' government, despite his appointment of a Communist as his first
deputy. 
That prompted an interviewer for TV6 television to ask whether ``bourgeois''
was still necessarily bad for the self-professed party of the proletariat. He
probed Zyuganov on which social class he himself felt he belonged to. 
``I'm a manager, a professional manager,'' the former mathematics teacher and
long-time party activist replied. 
``By education, I consider myself one of the intelligentsia -- the middle
class.'' 
The Russian Communist party, the biggest in parliament, still preaches
extensive state control over the economy. 
As such it is a world away from the mainstream left parties of western Europe,
such as Schroeder's newly victorious German Social Democrats and Blair's
ruling British Labour Party, which have won over the prosperous middle-class
centre. 
Yet Zyuganov, who must broaden his appeal if he is to have a chance of
succeeding President Boris Yeltsin, has seized on the decimation of Russia's
embryonic middle-class by the financial crisis to portray himself as the
defender of their interests. 
He predicted a strong turnout among the estimated hundreds of thousands of
Moscow white-collar workers laid off by banks and other service companies at
mass protest rallies planned for October 7 and stressed his party favoured
private enterprise. 
``We are not against private property,'' he told TV6, citing the example of
China, whose Communist rulers have overseen an explosion of entrepreneurial
ventures and rapid economic growth. 

******

#2
ANALYSIS-Russian PM struggles to keep Duma's favour
By Timothy Heritage

MOSCOW, Sept 28 (Reuters) - Russian Prime Minister Yevgeny Primakov is getting
closer to completing his government lineup but his chances of maintaining the
support of parliament are receding, political analysts said on Monday. 
Opposition parties in the State Duma, the lower house of parliament,
overwhelmingly approved Primakov as prime minister on September 11 in a
compromise with President Boris Yeltsin, but have since proved unwilling to
enter his team en masse. 
Primakov, who is still gradually adding names to his lineup, now faces the
prospect of tackling Russia's worst economic crisis in years without any major
party fully behind him in the Duma, whose support is vital for the passage of
laws. 
That increases the likelihood of reforms being delayed by the opposition-
dominated Duma in a tug of war with the government and president, just as they
were under Primakov's predecessors, Sergei Kiriyenko and Viktor Chernomyrdin. 
"Everybody has realised that the government is doomed to failure so they do
not want to be associated with it," Andrei Piontkovsky, head of the Centre for
Strategic Studies think-tank, told Reuters. 
"They realise Russia is headed for hyperinflation in the next five months and
don't want to take responsibility for it." 
Yeltsin opted for Primakov, a pragmatist without close links to any political
party, as a compromise after Chernomyrdin was rejected by the Duma in two of
the three possible votes on the next prime minister. 
Another defeat would have forced Yeltsin to dissolve the Duma and call an
early parliamentary election, a prospect neither Yeltsin nor the opposition
favoured. 
The president sacked Kiriyenko's government on August 23 to try to pull Russia
out of economic depression but its problems have only deepened in the month
the country has been without a proper government. 
Yeltsin also wanted to end the stalemate in which Kiriyenko had no political
backing in the Duma. But his hopes of doing so have been frustrated by the
action of the major parties in the chamber. 
Some parties have been upset by details of the economic programme that have
gradually emerged, although it is still incomplete. Others regret Primakov's
choice of ministers -- limited by the refusal of many of his first choices to
join him. 
"The cabinet's administrative plans ... and its economic and personnel
policies have forced deputies who ensured Primakov's triumphant passage
through the Duma to distance themselves from his cabinet," the Nezavisimaya
Gazeta newspaper said. 
The Communist Party, the dominant force in the Duma, is represented by First
Deputy Prime Minister Yuri Maslyukov, who is in overall charge of the economy.
But it has expressed no interest in other cabinet jobs and its support is only
lukewarm. 
Liberal Yabloko party leader Grogory Yavlinsky has turned down the chance to
enter the cabinet and said his party will remain outside the govermnent as a
whole. 
No members of nationalist parties have been offered jobs and Alexander
Shokhin, the senior figure in the government from the centrist Our Home is
Russia bloc, quit on Friday little more than a week after he was appointed a
deputy premier for finance. 
Most of the remaining figures in the government are neutral and Primakov has
always said he wanted professionals, not people at the whim of the masters of
their political parties. 
Primakov's overwhelming victory in the Duma confirmation vote at least gives
him some breathing space which make a no-confidence vote unlikely in the near
future. 
"The premier has some room for manoeuvre. He was approved by the Duma in
triumph and it would now be very inconvenient for the deputies to hold a no-
confidence vbote in him in his first few months of work," the Vremya newspaper
said. 
"All deputies can do is to block the government's legal initiatives." 
Vremya said although the Duma has this power, it would be hard for it to
reject the government's economic programme after supporting Primakov as prime
minister. The Communists could hardly reject it while Maslyukov remained in
office, it said. 
Yeltsin can also pass some measures by decree, but his authority has been
weakened by the economic and poltical crises of the past few months and he may
not be willing or able for force through such moves. 
The economic programme remains incomplete, with some ministers favouring
printing money to help solve problems and others advocating a tight monetarist
policy. 
Shokhin's resignation highlighted the problems in reaching a consensus. It
also reduced the likelihood of Our Home is Russia backing the government,
especially if he returns to the Duma in his former role as head of the party's
parliamentary group. 
Some political analysts lament the political positioning at a time when Russia
needs unity to tackle its crisis, including settling months of unpaid wages to
millions of Russians. 
"You would have thought someone would jump at the chance to take on the social
policy portfoloi. Success in this area would guarantee a bright political
future," said Sergei Markov, head of the Institute for Political Studies
think-tank. 
That responsibility was finally filled by Russia's ambassador to Greece after
prominent politicans refused it. 
Most parties and politicians do not want to risk failure ahead of a
parliamentary election at the end of 1999 and a presidential election due
about six months later. 
"Everybody is unfortunately thinking about themselves and not about the
country," Piontkovsky said. 

*******

#3
Date: Mon, 28 Sep 1998 
From: Peter Rutland <prutland@wesleyan.edu>
Subject: boca raton 

WESTERN PRESS COVERAGE OF RUSSIA. From 24-27 September the annual
convention of the American Association for the Advancement of Slavic
Studies took place at Boca Raton, Florida. One of the panels was devoted to
Western media coverage of Russia. The original lineup of the panel featured
many of the leading characters from Johnson's Russian List. However, the
imminent arrival of Hurricane Georges caused most participants to cancel.
An audience of about 60 people heard a discussion of media coverage of
Russia by Laurie Belin (who formerly covered Russia for RFE/RL's Newsline),
Thomas Goltz (freelance journalist and author of the new book AZERBAIJAN
DIARY) and Peter Rutland (Wesleyan University).
All the panelists recognized that American journalists face considerable
obstacles in reporting on Russia. Above all, the struggle for space in
their newspapers means that stories are less frequent and shorter in length
than they were during the drama of the Gorbachev years. Laurie Belin noted
that fewer, shorter stories means that reports tend to become simplified
and focus on a few key themes and well-known characters. Reporters tend to
be tied to Moscow, and rarely spend much time in the provinces. They also
tend to be overly influenced in their analysis by Moscow-based
intellectuals and the cocktail-circuit of diplomats and bankers. Belin
noted that due to staffing and resource constraints U.S. journalists rely
heavily on the Russian wire services (Itar-Tass, Interfax). The Russian
wires play an important role in defining what is the news of the day, and
often have a distinct spin on the way those events are interpreted. Neither
the state nor privately owned wire services are politically neutral and
objective. Hence the news that American readers see has been filtered twice
- once by the Russian wire service and again by the U.S. correspondent. A
striking example would be the reporting of the "money in a box" scandal
from the 1996 presidential election campaign. Many Western sources reported
that the money was probably planted on the Chubais aides by Aleksandr
Korzhakov, and although it soon became clear that this was not true, most
media never bothered to correct their earlier reports. 
Goltz illustrated many of these points with some harrowing tales of his
own experiences filing stories on ethnic cleansing and other atrocities
from the wars in Chechnya and Azerbaijan. He suggested that the major media
operate on what he called the "big foot" principle. They are reluctant to
run stories from stringers, preferring to wait until they can get their own
correspondent into the field - even if this means reporting on a massacre
one month after it happened. He also suggested that they subscribe to the
"idiot" principle, in that they assume that average readers in the
Heartland cannot or do not want to comprehend complicated stories, such as
the Section 907 sanctions on Azerbaijan. 
Rutland expressed his concern that journalists are moving away from hard
news reporting and slipping into simplified imagery. It is increasingly
common for foreign news stories to be structured around the human interest
angle, in an effort to capture the reader's attention with an eye-catching
first sentence. Belin noted that this approach, already widespread in
domestic U.S. reporting, portrays a lone individual battling a hostile
world, and cultivates in the reader a sense of resignation and
powerlessness. Equally disturbing to Rutland was the way that
interpretation and analysis have invaded straight news reporting. Issues
and events are typically framed in a bipolar way. Under Gorbachev it was
"reformers versus reactionaries," then under Yeltsin it was "democrats
versus communists," now it is "ordinary people versus the Mafia/oligarchs."
The audience generally agreed with the rather critical observations of the
panelists, although several persons stressed that the journalists are doing
the best they can in difficult circumstances, given the perceived shrinkage
of interest in foreign news back home. Murray Feshbach noted that the
Washington Post has carried some excellent in-depth reports on
environmental issues. Rutland concurred that Post coverage of Russia (and
other countries too, for that matter) seems to be more thorough than that
of the New York Times. There was some discussion of whether the Internet
can reverse the tide of progressive ignorance, by making direct news
sources from foreign countries readily available. True, more information
can be accessed, more speedily, than ever before, but these sources are
often superficial or biased, and most readers do not have the time to sift
carefully through all the Internet sources. Belin argued that the
aggressive reporting on Western journalists by the eXile, while at times
exaggerated, may have performed a service in encouraging many journalists
to be more careful in how they write stories, to avert an eXile broadside. 
The big question, of course, is to what extent these sundry deficiencies
in Western reporting help explain why American observers from Washington to
Wall Street are repeatedly caught by surprise by developments in Russia.
Blaming journalists is a little like shooting the messenger for bringing
the bad news, but they do share some responsibility for under-estimating
the complexity and hence unpredictability of the Russian situation. 

Peter Rutland
Government Department
Wesleyan University
Middletown CT 06459
tel 860 685 2483
fax 860 685 2781

*******

#4
From: Ray Thomas <r.thomas@open.ac.uk>
Subject: No easy remedies for demonetisation of the Russian economy
Date: Fri, 25 Sep 1998

>#2395
>24 September 1998
>From: "Lawrence Freedman" <lfreed@glasnet.ru>
>Subject: Re: 2393-Thomas/Inflation

I'd agree with most of Lawrence Freedman's comments, but note that, like me
and like others on the list, he does not have positive policy recommendation
for Primakov. No simple solutions are available. Freedman points out that
if people won't pay then sellers will bring down the price of, for example,
vodka. But the problem with the Russian economy is not retail trade, but
in inter-firm transactions. There is no money to finance inter-firm buying
and selling. The lack of money does not drive down prices, or prevent
inflation. It just makes any kind of business difficult to conduct, and,
observers in Russia say,leads firms to depend upon criminal elements. Lack
of money also seems to be the reason as to why firms don't honour the
contracts they have with their workers and pay them the wages that are due.
It is not helpful to say that the Russian government by printing money will
be "stealing value from" (the people). Primakov's stated aim is for people
to get the money which is owed to them in terms of unpaid wages and
pensions. It would be fairer to say that enabling these debts to be paid
would involve redistribution. Redistribution of income is an accepted
function of government.
Whether printing money will be effective in getting these debts paid is
another matter. The Russian economy is so de-monetised that it seems
likely that whatever the governmental intention, the money may flow into the
shadow economy where it avoids tax and supports criminal activity.
But a point has to be made about exchange rates. Whose knowledge is it
that "16 roubles are not worth a dollar"? That may be the valuation of
the speculator. But is that anywhere near parity in purchasing power?
Would you be able to have as good a life in, say, New York on $10,000 a
month as you can have right now in Moscow for 160,000 rubles a month?
That is a genuine question - for those who are in touch with such cities!

******

#5
From: ryavec@polsci.umass.edu (Karl Ryavec)
Date: Mon, 28 Sep 1998
Subject: Weimar Russia message from Jim Vail

I think the piece by Walter Mead quoted by Jim Vail is clever but forces
the possible parallels between today's Russia and Weimar Germany. First,
there's no obvious Hitler in Russia, at least not yet. Second, the Russian
military is not the impressive "cadre" and "expandable" military Germany
had in 1933. Third, Russians as people are not as "activist" as many
Germans were. So far, most have been rather apathetic politically. Yes,
life is often difficult for some Russians living outside of Russia but for
many others it is better than being in Russia. As for NATO, Russia is not
shut out. Only Russian action could keep it fully out. True, Russians are
generally not democrats but they are not communists or fascists either.
This does not mean Russia will not surprise us, but it will do so, if it
does, in its own way.

*****

#6
Date: Mon, 28 Sep 1998
From: "Jerry F. Hough" <jhough@acpub.duke.edu>
Subject: who is losing Russia now and how to minimize the consequences

We are spending too much attention arguing about who lost Russia. 
We need to focus more on who is losing Russia now and how to minimize 
the consequences. Once again the IMF goes to Moscow in a political 
crisis and has an absolutely disastrous impact. Clearly what is going 
on is that someone (probably Yeltsin playing his old games or maybe 
Primakov) is wasting time trying to get money out of the IMF and is 
playing games with policy appointments and promises. In the past, it 
just conned the IMF, and the IMF then conned Western investors and nothing 
bad happened in the short term. But now the Russians don't have time to 
lose playing these stupid games and they are losing--or have lost--the 
time they could have tried to gain control of the domestic situation. 
It is like 1917 with the West focussed only on whether the Kerensky 
government would stay in World War and dangled Constantiople.
Those who argue for the analogy with Weimar are absolutely right 
about the parallel in the idiocy of Western policy, but it should be 
remembered that the natural result in such situations as Germany in 1932 
and Russia in 1917 is a military coup. The German military didn't 
intervene because it thought it could control Hitler and wanted an end to 
the Versailles restrictions. Kornilov tried in 1917 and failed. This 
time by far the more likely outcome is that Kornilov will succeed.
The policy question that George Marquart raises is the crucial 
one. The real answer, I think, comes from putting together the report 
on the Agriculture Department preparation for aid with Mike McFaul's 
advocacy of protecting democracy. 
We need to think seriously about how to protect democracy or 
semi-democracy, not the self-styled democrats. (We should organize 
lectures for them on what coalitional democracy is and how parties win in 
the West, and we should change the lecturers.) The tragedy of 1917 was 
that Kornilov attacked Kerensky instead of allying with him against 
Lenin. A more or less democratic outcome today probably depends on 
Lebed allying with the Communists, tacitly in a government of national 
unity or implicitly. There is no reason that should be hard. Both 
have a combination of nationalism and the Asian model that is very 
close in character. They both have used Glazev as a chief economist, as 
has Stroev. Lebed is the one leader who would not be threatened 
by the Communists, but the question is whether Zyuganov would accept the 
subordinate position the alliance would require (that is, how he accesses 
the relative odds of his winning an election as against being 
repressed). The Russians need to learn to use World War II analogies 
they probably don't know in talking with the West--the coalition 
Conservative-Labour government in Britain that even postponed the election
until after the war or the US use of rationing, price controls, and an
industrial policy to win the war. The grand alliance in Germany to get
detente is another example. 
If Lebed is going to rule for 20 years and go down as the great tsar
that Gorbachev should have been, he needs to cultivate a role as a figure of
national unity who understood the transition would take 20 years and who
worked toward constitutional democracy with an imperfect market economy. Let
us hope and pray he does that. He is the one figure who can tell the West to
stuff it on who he allies with and what he does. The West needs to play the
humble bit and to say that if Russia wants to try the Nicholas II model
(agricultural reform, protectionism, foreign investment, an industrial policy,
and a weak Duma), we are willing to see how it works. We will try to help 
reestablish investor confidence. 
The Wall Street Journal on Thursday raised on the first page the 
question of whether Rubin, Summers, and Fischer will go down in history 
like the best and brightest of the Kennedy era and whether the Asian and 
Russian disasters will be seen as great as the Vietnam war disaster. 
The Journal correspondents were implying a yes answer. Anyone who has 
been reading about the hedge fund disaster has to worry that the Vietnam 
War will look like peanuts in its consequences. The Baby Boomers need 
to think about what will happen to their pensions if the world repeats 
the 1930s and the stock market drops 90 percent. The young can wait for 
it to come back, the middle-aged cannot, and maybe that will focus their 
attention on what is important in the world.
The West needs to get the world's economies growing, and that 
includes the Russian. We allied with Stalin when we faced a greater 
danger in 1941. We are no longer in a position when we can allow 
economic bureaucrats keep pushing all the money on the table in the hope 
that they will be justified and their reputations saved. We need to be 
talking to the Russians about our World War II economic policy, not wait 
for them to discover it.
The place to start is on the agricultural front. The analogy, 
which we in the Russian field should be talking about, is the ARA food 
program of 1921-1922. It was headed by Secretary of Commerce Herbert 
Hoover in the Harding Administration. It was conducted while Lenin was 
in power and suppressing democracy and the Church. The US did not 
recognize the Communist regime. Yet, the only conditionality was some 
control over distribution. Harding, a shrewd Ohio politician, no doubt 
was primarily interested in helping the Midwest farmers. Today the 
American farmers are in a terrible situation. The politics on the 
Republican side are easy because of the Harding-Hoover analogy, and both 
parties should be eager to court the farmers in an election year. If it 
were headed by a bipartisan team of people like Dole and Mitchell, it 
might allow both parties to claim credit. But the sooner we get it 
going, the easier it is to convince Russians that Havel did not speak for 
the Secretary of State when he talked about the desirability of keeping 
Russia weak and the easier it will be to maintain the program through any 
change of regime.
The analogies with Weimar are right in one thing. No doubt, 
there were Czechs in 1931 and 1932 who thought how wonderful it was that 
Germany was weak. Russia can become militarily strong in a shorter 
period than Germany did in the 1930s, and Lebed has always impressed 
me as closer to a Napoleon than to a Pinochet. Summer vacation is 
over, the Baby Boomers are moving to September, and it is time to 
think about preparation for the winter here as well as in Russia. 
P.S. Incidentally, I would like to congratulate Richard Pipes on his 
cogent analysis of the cultural reasons Russia should have adopted a 
Nicholas II economic reform model in 1990-1992 instead of the IMF 
program. Unfortunately, my memory fails with old age, and I can't remember
the articles in which he was supporting that position when it mattered. I
hope some of your readers can do the research so we can give him credit for
his far-sighted analysis.

******

#7
From: "michael hammerschlag" <hammerschlag@hotmail.com>
Subject: BACK TO FUTURE
Date: Sun, 27 Sep 1998

BACK TO THE FUTURE

by Michael Hammerschlag 

Nothing at this point could be worse for Russia than the 
appointment of Victor Gerashchenko to head the Central Bank. As head of 
the Central Bank from 89-94 (with a half year break after SU collapsed), 
Gerashchenko violated the most elemental responsibility to protect the 
value of the ruble. According to economist Jeffrey Sachs, "He's the 
"worst central bank governor in history" and "economically illiterate". 
Over '92-94, he issued trillions and trillions of rubles to pay the 
reckless debts of industry- inflating the money supply and crushing the 
ruble from 32R/$1 to 1200/$ in a little over 2 years. Ignorant of simple 
economic principles, he took his most important task as sustaining the 
clunky massive industries; and impeded, resisted, and sabotaged 
reformers at every step. In July '93, with the President and Finance 
Minister out of town, Gerashchenko "invalidated" old money: people had 3 
days to convert old rubles to new ones; creating an absolute panic. 
Allegedly to "reduce the money supply" and so control inflation, prevent 
an influx of rubles from independent CIS, and break the bank of the 
Mafia; it still was an outrageous and criminal act. He had done it 
before in '91. Again and again we marveled at his durability: though 
everyone AGREED he was destroying the economy, he seemed unfirable, 
perhaps because he knew where the secret Swiss bank accounts lay. 
Understandably, to Communist managers that controlled everything, just 
letting companies BE was harder than breaking a heroin habit; massive 
industries were almost the only industries and allowing them to collapse 
was anathema. 
But Gerashchenko's incompetence was still dazzling. He seemed to 
have no understanding of the connection between printing trillions of 
unsupported rubles and their continued devaluation. And the devaluation 
was breathtaking: 26-fold at the end of '92, 400-fold by the end of '93, 
and about 2000-fold by 94 (though wages also increased). Sachs then 
criticized his "profoundly Soviet view of money: he sees it not as a 
store of value, but merely as a unit of account". For 4 years, protected 
by entrenched friendships between neo-communist bureaucrats and support 
from the DUMA, he resisted all efforts to remove him. Finally when he 
provoked a 30% drop in the ruble on Black Tuesday in Oct '94, 
Gerashchenko was sacked for his deputy- respected Tatiana Paramonova, 
who lasted a year. She was just REAPPOINTED as his deputy, the only good 
news in the mess. 
As Russia essentially nationalizes collapsing banks (who 
recklessly speculated in the artificial stock market), Communists take 
their place in government (Dep Prime Minister for ECONOMIC STRATEGY 
Maslyukov), and spy chiefs reign supreme; it's like the clock is rolling 
back 7 years. Dep. Prime Minister Shokhin and Gerashchenko are oil and 
water- it's hard to see how they'd agree on anything. After protesting 
against the wild printing of money, Shokhin just resigned, allegedly 
because liberal Zadornov (who had supposedly provoked the Aug 17 ruble 
collapse) was confirmed as finance minister, but there's a long 
tradition in Russia of resigning before imminent disasters. Shokhin was 
the only reformer left who has the confidence of the IMF and Western 
investors, which increases their reluctance to render any massive 
assistance. 
Gerashchenko probably did as much to damage Russia and reforms as 
anyone else in the last 8 years, much intentionally for political 
advantage. Although inconceivable to a Westerner, it's possible the 
Communists WANT a complete economic collapse; that's how they came to 
power before: it's even in their playbook. Although the chronic 
nonpayment of wages is a terrible thing, destroying the ruble is worse. 
Unless quickly purged, Victor WILL print hundreds of billions of rubles, 
again making them worthless and setting loose the rabid beast inflation. 
He's planning to issue 40-50 billion R, and claims pressure to issue 120 
billion, which even the central bank admits will cause 300-450% 
inflation. In '91-3, Russia was still mostly self-sufficient, sealed and 
insulated from the world, so inflationary changes happened slowly 
(although in lurches). Now that Russia is plugged into the world economy 
and dependent on imports for virtually EVERYTHING, reckless issuance of 
currency will have an immediate and devastating result. And if it is 
cast adrift by a gun-shy and economically shaky world, in the short term 
it can't sustain itself. 
Michael Hammerschlag wrote commentary essays for Moscow News, Moscow 
Guardian, Moscow Tribune, Providence Journal, Seattle Times, and CJR; 
and lived in SU/Russia 1991-94.

******

#8
The Sunday Times of London
September 27, 1998
[for personal use only]
Inside Moscow by Mark Franchetti
Communists prepare for law-abiding revolution

Russia's communists may have won seats in the
government of Yevgeni Primakov, the new prime
minister, but they have not lost their appetite for
revolution. 
In room 1542 on the 15th floor of the duma, the
lower house of parliament, preparations are under
way for a series of mass protests over the
economic crisis that has preoccupied the country
and much of the world in recent weeks. The
communists of Gennady Zyuganov claim that up
to 20m people will support their bid to topple
President Boris Yeltsin, their arch-enemy. 
Not until next month, however. Party workers at
the nerve centre of the "red October" protests are
angry but fastidiously law-abiding souls, and
Yeltsin has decreed that 42 to 50 days' notice
must be given of any intention to strike. Lenin,
father of the 1917 Russian revolution, would be
aghast at the volume of paperwork that must be
completed before workers can take to the streets
in 1998. While Zyuganov makes passionate
speeches demanding Yeltsin's immediate
resignation, his aides are obediently following the
rules of state bureaucracy. 
They have sent hundreds of letters to factory
managers to warn about stoppages and strikes, due
to culminate in a day of mass demonstrations on
October 7. "Those who miss the 42 to 50-day
deadline may still take part in so-called 'special
preliminary strikes' which can be staged after a
shorter waiting period," explained Vladimir
Tikhonov, the communist deputy co-ordinating the
action. 
Earlier this month, a few hours after the
communists said thousands of sacked bankers and
businessmen would join the first rally outside the
Kremlin, only 500 people turned up - mostly
pensioners nostalgic for Soviet times. Besides,
since several leading communists joined the
government there is confusion about what the
protesters should be demanding. The slogans on
their banners are reportedly being altered to omit
all criticism of the government. Instead, they will
be limited to the familiar refrain of "Yeltsin out".

*******

#9
From: "Peter D. Ekman" <pdek@co.ru>
Subject: Anti-US Backlash
Date: Sun, 27 Sep 1998

In David Jones' piece from the Washington Times "Anti-U.S. backlash rises
as Russians seek villain" (JRL #2398), I seemed to get the answer to my
question (JRL #2387) on whether anybody has seen any anti-Americanism is
Russia. The answer is NO.
Jones gives several examples of analysts who think that Russians will
start questioning US policy, even though they say that most Russians blame
their own government for the current crisis. Questioning and examining US
policy toward Russia is not "Anti-US" - unless you would consider Johnson's
List to be "Anti-US." Jones does provide a counter-example for each one his
supposedly "Anti-US" examples, but the counter-examples are buried in the
middle of the story, whereas the "Anti-US" trivia is in the lead.
The most serious "Anti-US" example shown by Jones is that a CNN reporter
was "surrounded and browbeaten," at a demonstration in front of the Duma.
The demonstrators even went as far as shouting at the journalist. I suppose
that the Washington Times could find many demonstrations in its hometown
where a journalist would be browbeaten if he walked into the middle of a
demonstration. Shouting and browbeating ... this is obviously serious stuff!
Jones' piece is better than the material I previously complained about -
the "rising tide of anti-Americanism" pieces (see, e.g. Dizzard in JRL
#2386), Jones does at least go through the motions of objectively
considering the question. "Backlash" however is just as much a content-free
emotional word as "rising tide."
I repeat my challenge. If anybody sees an example of anti-Americanism in
Russia (rather than questioning American policy), please send it to
Johnson's List.

******

#10
Russian officials mull nuclear security - Interfax

MOSCOW, Sept 28 (Reuters) - Russian officials on Monday discussed how to
prevent the illegal export of nuclear arms and technology, Interfax news
agency said. 
It said Grigory Rapot, deputy secretary of the country's advisory Security
Council, had convened a meeting of respresentatives of several ministries and
other state bodies. 
Interfax gave no further details of the meeting and officials declined to
comment on the report. 
The United States and Israel have often expressed concern that Russian nuclear
technology may be falling into the hands of Iran and other alleged ``rogue''
states. 
Washington last month imposed sanctions on seven Russian enterprises it
believes are helping Iran to develop its missile programme. 
Russia has vowed more effective policing of the arms trade, saying nuclear
proliferation in neighbouring countries also poses a threat to its own
security. 
Earlier this month President Boris Yeltsin and U.S. President Bill Clinton,
who was visiting Moscow, signed an agreement cutting their plutonium
stockpiles. 
The two countries have also agreed a joint project to convert 10 sites once
used to produce the Soviet nuclear arsenal into commercial enterprises as part
of efforts to provide employment to Russian scientists who might otherwise be
tempted to sell their skills abroad. 

*****

#11
Moscow News
September 29, 1998 
Muscovites Have Mixed Views on Crisis 
By Simon Saradzhyan
Staff Writer

More than a third of Muscovites expect Russia's economic crisis will
eventually culminate with angry people taking to the streets f but almost the
same number believe the situation will stabilize and life return to normal
within a year's time. 
More than 500 Muscovites aged between 18 and 65 were questioned over the phone
in a poll conducted by the Russian Market Research Company on Sept. 12 and 13.
Vyacheslav Kozlov of RMRC said that optimism was the prevailing sentiment
among Moscow residents, who he said retain attitudes from their recent
relative prosperity. 
"Pessimism has not had time to spread and people still continue to
irrationally reject the crisis, running on their psychological reserves,"
Kozlov said in a phone interview Monday. 
Forty-one percent of Muscovites questioned said they expected the crisis would
end and life stabilize within a year. Another 22 percent of the RMRC poll's
respondents expected the economic crisis would last for two years or more.
Eight percent said they thought that Russia would not recover from its
economic and social woes in the foreseeable future. RMRC put the margin for
error in the poll at plus or minus 5 percent. 
But if two-thirds of the respondents were thus optimistic and predicting a
relatively quick recovery from the collapse of the banking system and the
national currency and the government's insolvency, Muscovites were also pulled
by a strong pessimistic current. 
Two of out three respondents said the crisis had either a strong or very
strong negative impact on them. More than 35 percent said they had seen their
savings devalued, while another 23 percent reported either partial or complete
loss of their deposits in Russian commercial banks. 
More than 20 percent of the poll's respondents said at least one member of
their family was either fired or forced to take an unpaid leave. 
Two out of each three families whose members were questioned in the poll said
they were unable to afford certain basic food products because of the soaring
prices. 
More than 35 percent of the poll's respondents said they expected public
disorder at some point, while another 21 percent expected to see interruptions
in supplies of electricity, heat and water within the next two or three
months. 
Yet Kozlov, the director of RMRC's business-to-business research department,
said the overall mood of respondents differed markedly from what RMRC
researchers had expected, as well as from what has been reported by the local
media. 
"We expected panic, but got perplexity" in most of the answers, he said. 

******

#12
Primakov Outlines Economic Rescue Package 

Rossiyskaya Gazeta
September 25, 1998
[translation for personal use only]
Report by Vladimir Kucherenko: "Government Takes First
--Decisive -- Steps. Real, Vital Measures Discussed at
Yesterday's Russian Government Session" -- passages within
slantlines published in boldface

The most important question was the repayment of government debts in
respect of budget-funded workers' wages, servicemen's pay, and pension
payments. Immediate steps to normalize money circulation and banking
sector operations in Russia were then discussed, as well as immediate plans
to establish a state monopoly on the production and wholesale of alcoholic
products.
Opening the government session, Premier Yevgeniy Primakov delivered a
forceful speech. But the premier warned that it was not exactly a program
but rather the outlines of how to pull the country out of the economic
"tailspin."
The premier began his speech by strongly criticizing the previous
economic policy, which created a declining economy in Russia. Its essence
was to exchange raw materials and energy sources for imported goods and
food. Consequently, the influx of foreign currency into the country
sharply decreased because of the fall in prices of raw materials on the
world market, whereas import prices remained almost the same. All this was
complicated by the world financial crisis, which was augmented by domestic
problems -- unchecked financial speculation, a crime wave, and the illegal
export of capital abroad.
The previous development of the economy was linked to the booming
securities market, whose percentage yield was many times greater than
international levels. This was an obstacle to the real development of
industry and agriculture and attracted short-term, speculative capital.
Primakov said that the joint statement by the Russian Federation
Government and Central Bank of 17 August was inadequately prepared, did not
take account of the real situation, and was published "without the
president's advice or authorization." Therefore a series of measures to
rescue the situation is now needed. What exactly are they?
First of all, Primakov intends to restore the functioning of the
banking system. He urged the country's citizens not to be in a hurry to
sever their relations with banks and noted with satisfaction the decrease
in the outflow of citizens' savings from the Sberbank. "I am prepared to
state on behalf of the government that we will ensure the safeguarding and
return of all deposits."
Second, the government intends to severely curtail the export of
capital from the country by increasing the norm relating to the compulsory
sale of enterprises' foreign currency earnings and by reducing the
normative times allowed to transfer them into the country. Yevgeniy
Maksimovich asserts that the government is well aware of all the loopholes
used to smuggle capital out of Russia and that they will be resolutely
closed.
The government chairman then broached budget questions. According to
Primakov, its revenue side does not meet the country's needs and the
expenditure side could be better organized and made more transparent so the
public can monitor it. In this context the tightening up of tax discipline
will continue for both enterprises and private citizens. But most of all
in respect of territories which are contravening tax legislation "and at
the same time trying to lay down the law." Administrative measures are
insufficient here, so economic levers will be used. The government wants
to reduce the tax burden on the producer by creating firm guarantees for
investment in the real sector of the economy.
In order to replenish treasury resources, in October the government
intends to take resolute steps to implement its monopoly on the production
and sale of alcohol and liquor and vodka products over 28 degrees proof. 
"It is a question not of nationalization but of effective control of both
production and wholesale trade," Primakov stated.
Thus, the government must create a firm financial base in order to
meet its own commitments. It is by no means an entire program, Primakov
believes, but it is the necessary starting point.
/What exactly does the government intend to do to meet its
commitments?
/As early as September/ servicemen will receive two months' pay.
/In October/ the uninterrupted payment of wages to budget-sector
workers will be organized. While the accumulated arrears will be regularly
repaid by the state starting 1 October.
/Starting in 1999/ the government intends to pay its debts to citizens
monthly, taking account of some of the losses incurred by them because of
soaring prices and the ruble devaluation.
According to the head of the cabinet, here the government will be
forced to rely on the mobilization and regrouping of available resources.
Primakov stressed that this outline of immediate measures was
unanimously supported by all his deputies.
A package of necessary draft laws will be submitted to the State Duma
in the future. The premier is counting on complete mutual understanding
from the parliamentarians. Yevgeniy Maksimovich believes that all the
proposed measures must "encompass the entire territory of the state, in
which federal principles must be strengthened instead of turning the
country into a conglomerate of appanage principalities."

*******

#13
Luzhkov Sees Development of 'Regional Separatism' 

Moscow, Sep 25 (Interfax-Moscow) -- While the West is creating a kind
of United States of Europe, the Russian Federation is heading for regional
separatism, Moscow Mayor Yuriy Luzhkov said Friday [25 September].
He addressed a roundtable meeting of the heads of Russian regions who
were discussing the development of federal relations in Russia.
The meeting was attended by First Deputy Prime Minister Vadim Gustov,
first deputy chief of the presidential headquarters Oleg Sysuyev, head of
the Central Russia Association and Yaroslavl region Governor Anatoly
Lisitsyn and numerous other regional leaders.
Rather than reviving the Soviet system in which unity was maintained
by force and coercion, federal relations must be strengthened by economic,
cultural and linguistic tools, Luzhkov said.
Regions must delegate some of their powers to the center, but both
sides must benefit from this arrangement, he said.
The federal authorities must create a unified fiscal system, Luzhkov
said. The government is unduly soft by allowing regions to act erratically
and declare their autonomy. In particular, several regions have said that
they will not pay federal taxes. "Tax evasion cannot be tolerated as it
leads to the destruction of Russia's economic space and disintegration of
the country," Luzhkov said.
If the center fails to meet its commitments in the payment of
subsidies to regions, the matter can be resolved in courts, he said.
Donor regions, or those which pay more to the budget than receive from
it, must have economic advantages so as to encourage economic activities in
other regions, Luzhkov argued. In the absence of an intelligent regional
policy, the number of donor regions fell from 20 in 1994 to eight at the
present time.Social standards for state workers, pensioners and the poor must
be the same throughout the country, and the center must subsidize the regions
so as to meet the standards, Luzhkov said.

*****

#14
Russian Economics Ministry: 1998 Consumer Prices may Double 

Moscow, Sept 24 (Interfax) -- Russia's 1998 consumer price index may
reach nearly 200%, says a report by the Russian Economics Ministry
presented to the first meeting of the country's new government Thursday [24
September].The abrupt plunge of the ruble in the second half of August
triggered
a high inflation rate, it says. In the first week of September alone
consumer prices grew by 35.7% and in the second week by 5.6%, the State
Statistics Committee reports.
Manufacturers' prices are expected to rise by a factor of 1.4 before
the end of the year.
The unstable exchange rate in the first half of September suggests
that a new dollar equivalent in rubles has not been found, ministry experts
believe. The range in which the quotations changed, from 8.7 rubles to
20.8 rubles per dollar, gives insight into what it should be. If there is
no excessive money printing, the exchange rate will be about 20 rubles to
the dollar at the end of the year, ministry experts predict.
Real incomes fell by 11.1% in January-August on the same period last
year, and will decline until the end of the year.
The official unemployment level is expected to be nearly 3% of the
able-bodied population, the report says.
Russia's GDP in 1998 will fall by 5% on 1997 and the industrial
output, by 4.5%.
Exports to countries outside the CIS this year will be 87% of the 1997
amount and imports, 96%.
Exports to other CIS member nations are expected to shrink by 3.5%
while imports from them, by 10.1%.

*******