September 30, 1998    
This Date's Issues: 2401•2402•2403

Johnson's Russia List
#2402
30 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Timothy Heritage, ANALYSIS-Russian economic crisis
affects diplomacy.
2. Mitchell Polman: Hammerschlag's piece.
3. Financial Times (UK): John Thornhill, RUSSIA: Fyodorov warns of 
money-printing plan.
4. Rossiyskiye Vesti: Economist Sergey Glazyev on Anti-Crisis Program.
5. Moscow Times: Irina Glushchenko, ESSAY: AIDS Epidemic Was Russia's 
Sexual Revolution.
6. Ira Straus: Who lost Russia (II): Is it fair to blame the IMF? 
7. The Times (UK): Alice Lagnado, Russian parents claim army press 
gangs stalk teenagers.
8. Hamburg's Der Spiegel: Interview with Yuriy Boldyrev, deputy chairman
of the Russian Audit Office. (Audit Office Official Discusses Misappropriation 
of Loans).]

*******

#1
ANALYSIS-Russian economic crisis affects diplomacy
By Timothy Heritage

MOSCOW, Sept 30 (Reuters) - President Boris Yeltsin looked to foreign affairs
on Wednesday to provide some relief from the gloom of Russia's deep political
and economic crisis. 
But although he made defiant noises about strengthening Russia's role on the
world stage at talks with Foreign Minister Igor Ivanov, his brief diversion
into foreign policy is unlikely to have given him much cause for optimism. 
The financial crisis has forced Moscow to seek foreign aid, a blow to its
hopes of being considered on equal terms with the major world powers, and is
another setback to its efforts to regain the status it enjoyed in world
diplomacy in Soviet days. 
The economic problems could force Prime Minister Yevgeny Primakov to push
foreign policy into the background and new policy initiatives seem unlikely
until there is more political stability in Russia. 
``In general it will be a case of deja vu in foreign affairs. The economic
crisis means the government will have to be more inward-looking and gives it
less room for manoeuvre in foreign policy,'' foreign policy expert Sergei
Karaganov told Reuters. 
``It will be harder to concentrate on foreign affairs becasue of the economic
crisis and Ivanov clearly does not have the same status Primakov had as
foreign minister,'' said Karaganov, head of the advisory Foreign and Defence
Policy Council. 
Ivanov, who stepped into Primakov's shoes as foreign minister when the veteran
minister became premier, has pledged to make no major changes in policy. 
In a newspaper interview published on Wednesday, Ivanov sketched out familiar
policies. He opposed the use of force to end conflicts in the Balkans,
resisted NATO membership for ex-Soviet republics and vowed stronger ties with
Belarus. 
The main aim of policy under Primakov was to rebuild Russia's importance and
to create a ``multi-polar'' world where no single country is dominant --
namely the United States. 
Yeltsin rammed that message home on Wednesday at talks with Ivanov in the
Kremlin. ``Everyone must understand that in the modern world, global problems
cannot be resolved unilaterally,'' a Kremlin official quoted Yeltsin as
saying. 
Ivanov reflected the idea of a multi-polar world in his first trip abroad as
foreign minister last week when he met leaders from all parts of the world at
the United Nations. 
Primakov also sent a message on Wednesday by making Belarus his first port of
call as prime minister rather than visiting any of Russia's Western partners. 
But the defiance can only go so far. Russia is now dependent on the West for
financial help and its room for manoeuvre is clearly limited by this. 
Political analysts say Moscow is in no position to impose its will in world
diplomacy and even if it tries to do so, it is likely to find few listeners. 
Yeltsin has not been helped by Sunday's election in Germany ending the
16-year-rule of Helmut Kohl, the Kremlin leader's closest ally in the West. 
Yeltsin has invited the next chancellor, Gerhard Schroeder, to Moscow but is
unlikely to forget the German leader has cast doubts on his ability to
maintain stability in Russia. 
``The honeymoon in Russian-German relations seems over,'' the Izvestia
newspaper said, raising questions about what this means for ties with Russia's
biggest single creditor and investor. 
Yeltsin has also lost a valuable ally in Ryutaro Hashimoto, who resigned as
Japan's prime minister in July. They had worked hard to improve relations
between Russia and Japan, soured by a dispute over four islands seized by
Moscow in World War Two. 
Russian policy is not based on personalities and its partners are unlikely to
change policy radically. 
But Yeltsin's good relationships with Hashimoto and Kohl were vital
ingredients in Russia's recipe for success, just as his personal ties with
President Bill Clinton have helped prevent Russian-U.S. relations becoming
even worse than they are. 
Yeltsin has dominated Russian diplomacy in the 1990s but his personal role in
foreign policy could now be in question. 
His authority has been dented by Russia's political and economic crises,
forcing him to give Primakov an unusual degree of independence as prime
minister. 
At 67, Yeltsin's grip on the everyday affairs of government is weaker than
ever and his performances during foreign trips have been unpredictable and
sometimes embarrassing. 
Ivanov has dismissed speculation that Yeltsin might give up his ultimate
responsibility for foreign policy as head of state. But others say the
mechanisms of decision-taking in foreign affairs might shift somewhat towards
the goverment. 
``We now have a foreign policy triangle with the president, the prime minister
and the foreign minister all wanting a role in policy,'' a foreign ministry
source told Reuters. 
``The prime minister is likely to keep a big interest in foreign policy and it
will be hard for the new foreign minister to assert his independence.'' 
That does not rule Yeltsin out of decision-making but suggests Primakov could
well be highly influential in foreign policy, unlike his predecessors as prime
minister. 

*******

#2
Subject: Hammerschlag's piece
From: mlpolman@juno.com (Mitchell L Polman)
Date: Tue, 29 Sep 1998 

I'm loathe to jump into the "Who Lost Russia?" debate because , like
Jerry Hough, I consider it a complete waste of time. Nevertheless,
Michael Hammerschlag in "Back to the Future" makes an extremely important
point in his piece. For some strange reason Western commentators and
analysts persistently overlook the fact that the Communists and their
nationalist allies in the Duma WANT to bring about a collapse because it
works to their political advantage. They have steadfastly refused to
FULLY implement important parts of the IMF's reform packages -- land
reform, tax reform, etc. If Yeltsin attempted to do these things by
decree they would scream that he was a dictator and should be
"impeached", thereby cloaking their attitudes in the language of
democracy. Who lost Russia? Isn't it obvious?

******

#3
Financial Times (UK)
30 September 1998
[for personal use only]
RUSSIA: Fyodorov warns of money-printing plan
By John Thornhill in Moscow

Boris Fyodorov, the outgoing deputy prime minister, yesterday warned that the
Russian government intended to print money to cover its fourth-quarter budget
deficit - a move that would be certain to fuel inflation and jeopardise
funding from the International Monetary Fund.
Mr Fyodorov, who was sacked this week as a cabinet minister and head of the
tax service, said the finance ministry was already "planning a budget for the
fourth quarter where there will be a deficit which can be covered by an
emission".
There was no one in the government against using an emission in this way, he
said in an interview with the Financial Times.
The finance ministry, which has so far collected only half its planned tax
revenue for September, will present its revised budget proposals to the
cabinet tomorrow. Yuri Maslyukov, the former Communist parliamentarian who is
now first deputy prime minister in charge of the economy, will also outline
the government's long-awaited economic programme.
Mr Fyodorov said the government would have to issue at least Rbs50bn to
Rbs60bn ($3.1bn-$3.7bn) - equivalent to about one-third of the monetary base -
just to cover its immediate needs and pay off wage and pension arrears. But he
expected the government to try to limit the scale of emission.
"I think they will be scared to go on a spending spree, as some people say.
These disaster scenarios of hyper-inflation by the end of the year - I do not
believe in them," he said.
However, the IMF, which has lent Russia almost $19bn over the past four years,
has already told the government it does not believe in the concept of a
"controlled emission" and has warned of the social pain caused by high
inflation.
Mr Fyodorov said the government's economic programme had still not been worked
out in full but two trends were clear. "First, the idea that the central bank
should directly finance the budget is not abhorrent to anyone in the
government. Second, they like the idea of controls," he said.
Mikhail Zadornov, finance minister, said foreign investors had yesterday
welcomed an outline plan to restructure the frozen $40bn government debt
market. But few details of the scheme emerged.

*******

#4
Economist Sergey Glazyev on Anti-Crisis Program 

Rossiyskiye Vesti
September 16-23, 1998
[translation for personal use only]
Interview with Sergey Glazyev, director of the Information-Analytic
Administration of the Federation Council system, doctor of Economic
Sciences, by Larisa Ivanova: "What Will the Anti-Crisis Program Be?"
place and date not given; Editorial notes

Sergey Glazyev, doctor of Economic Sciences, talks about the 
Federation Council program for overcoming the crisis and making the 
transition to economic growth
[Ivanova] How can you describe the state of Russia's economy today,
or rather, what is left of it?
[Glazyev] The country is going through a profound financial and 
economic crisis: the collapsed GKO-OFZ pyramid brought about the collapse
of the state financial system and the devaluation of the ruble, which in
turn led to a rush demand for dollars and commodities, and to an abrupt
increase in prices, queues and the deficit. This turn of events was
anticipated. Well-known economist-experts not only predicted the coming
of a financial-economic crisis, they also, in the year leading up to 17
August 1998, warned the authorities of this, and proposed urgent measures
to prevent the collapse of the state securities market. In particular,
the analytical centers of the Federation Council, the institutes of the
Russian Academy of Sciences, and the Russian Trade-Financial Union, as far
back as the spring, sent the government and the Central Bank special
reports on the self-destruction of the state's financial system, which
provided precise estimates of the scale and nature of the approaching
crisis, and substantiated recommendations for its neutralization. The
leaders of the executive power did not react to them in any way and
continued to make statements about financial stabilization and the
strength of the ruble position, right up to its collapse.
[Ivanova] How do you evaluate the actions of the President, the State
Duma, the Federation Council and responsible organizations and persons in
the crisis period?
[Glazyev] As you know, a trilateral commission, made up of 
representatives of the State Duma, the Federation Council and the 
Government was formed, and it attempted to work out coordinated 
anti-crisis measures with all the organs of authority.
At the very start of work on the document, the decision was made to
base it on the proposals of the Federation Council for a program to 
stabilize the economy and finances, and also to take into consideration 
the draft of the State Duma decree on the socioeconomic and financial 
situation in the country. They also bore in mind the government program 
"On Stabilizing the Economy and Finances," which actually collapsed on 17
August, when decisions were made on the forced restructuring of the state
domestic debt, devaluation of the ruble and the introduction of a 
moratorium on currency operations of a capital nature.
The Statement of the trilateral commission succeeded in giving an 
objective evaluation of the situation and the reasons for the crisis 
conditions in the country's economy and financial system, as the result of
an erroneous and irresponsible economic policy, and also succeeded in 
formulating many general provisions and principles, which received the 
approval of all parties. In accordance with the above-mentioned decree of
the Federation Council, the statement formulated a general definition of
the changes in the economic course.
At the same time, the Government did not support many of the 
proposals of the Federation Council and the State Duma. For unknown 
reasons, some of the essential provisions approved by the conciliation 
board were not taken into consideration either.
The main shortcoming of the Statement is the too general nature of 
many of the important provisions and the lack of strictly anti-crisis 
measures. As the basis for a joint program of anti-crisis actions, the 
Statement should have contained clear answers to the questions: how will
the splash of inflation be stopped, and the incomes and savings of the
population be protected? How will the collapse of the banking system be
prevented? How will the currency market be stabilized? How will the
population's provision with essential goods be guaranteed? Unfortunately,
these questions remained unanswered.
It should be noted that the Federation council systematically 
examined the questions related to the crisis condition of the Russian 
economy long before the August events. The Chamber came out with specific
recommendations to the Government and the Central Bank on putting right
the situation in both the money and credit sphere, in particular on
increasing the responsibility of the Bank of Russia for the money-credit
policy being followed, just as, in the sphere of production, for example,
on forming an industrial policy aimed at a rise in domestic production. 
But the Government paid virtually no attention to most of the Federation
Council proposals.
Moreover, as far back as July, the Chamber, at its latest meeting, 
adopted a program to emerge from the crisis and make the transition to 
stable economic growth. Since this program was based on reliable 
predictions, it proposed a set of preventive measures, as well as measures
in case the situation should get out of control. Which did happen in the
end.
[Ivanova] What are the versions of the anti-crisis programs today, 
and also, in your opinion, their effectiveness and periods for 
fulfillment?
[Glazyev] They can be arbitrarily divided into two groups: those 
oriented toward the use of internal reserves and the revival of domestic 
production and those standing up for attracting foreign sources and for 
monetary mechanisms for a way out of the crisis. Among the latter were 
proposals which Chernomyrdin presented in the Federation Council on 4 
September (in other words, the proposals of Soros and Kavallo). Their 
essence is the following. Depreciating debts and savings at the first 
stage, through hyperinflation, accompanied by a landslide fall in the 
ruble exchange rate and a dramatic reduction in the real incomes and 
savings of the population. After this, at the second stage, the 
depreciated money supply and ruble exchange rate would be fixed, and the 
transition made to a "currency board" system: tying the monetary base to
the amount of Central Bank currency reserves; full liberalization of 
foreign trade; renunciation of state regulation of the economy; counting 
on attracting foreign investments and loans; a dramatic reduction in state
expenditures. In order to finance domestic production in this version, we
must first export raw material to obtain currency, for an increase in
which it is permitted to emit rubles, or to get a loan abroad to form
currency reserves. Another permissible path is to sell enterprises to
foreigners, so that they themselves will import currency to refinance
production.
If these proposals are realized, Russia will lose its sovereignty in
implementing a monetary policy, and will place its entire financial 
system, including the formation of the budget, under the control of the 
foreign experts of the "currency board." There will be a dramatic 
depreciation of the savings and incomes of citizens and enterprises in the
course of the first stage of the "planned" hyperinflation; the final 
destruction of the science-intensive and comprehensive processing 
industry, crowded from the sales markets abroad; further compression of 
the real money supply by a factor of two or three, with a dramatic 
deterioration in the financial situation of enterprises, and with their 
mass bankruptcy and resale to foreigners; degradation of the economy's 
technological structure, securing its raw material orientation and 
eliminating Russia's scientific-technical potential; a dramatic rise in 
unemployment, to 30-35 percent.
The Federation Council program, approved by the Chamber on 10 July 
1998, gives a real basis for overcoming the crisis and creating the 
conditions for economic growth since it is oriented toward the revival of
domestic production, an upswing in the economy and the increased 
well-being of the people. It contains an anti-crisis, short-term system 
of measures which specifies the mobilization of all the reserves available
in the country, and a long-term strategic program. The basic elements of
the economic mobilization policy are -- the mobilization of all sources of
budgetary incomes of a nontax nature (decommercialization of the Central
Bank, its transition to estimated financing and transfer of all its profit
to the budget; introduction of a state monopoly on the export of natural
gas and the import of alcohol and cigarettes; an increase in the
efficiency of state property administration), centralization of the
country's currency reserves, stiffening the monitoring of price-setting
and supplies in natural monopoly sectors, the development of a
money-credit policy to support production, decisive suppression of
organized crime, cleansing the state machinery of public-fund embezzlement
and extortioners, and other measures.
The main problem for the present government is the problem of 
political choice. So far, a few steps have been taken in the direction of
the mobilization version, but not with a view to surmounting the crisis,
rather with a view to protecting the interests of the financial oligarchy.
Hence the half-heartedness and poor efficiency of the decisions made.
For a transition to economic growth, we must attract investments in
the development of production, overcome the gap between the financial and
production spheres and raise the competitiveness and efficiency of 
domestic production. We must activate the intellectual and 
scientific-technical potential, the spare savings of the population (at 
present, only half of them are invested). For example, while we have one
of the highest norms of population savings in the world -- about 29 
percent of the GDP -- we are not creating the necessary conditions for 
their productive use -- over half of them are exported abroad, involved in
speculative operations or are simply lying around futilely, not working
for economic growth.
Under the present conditions, I would not rule out such forced 
measures as regulating and even freezing prices, and organizing 
export-import operations for state needs. I have no doubt that, in order
to prevent famine in many regions, the authorities are attempting to
restore a system of centralized provision of the products essential to the
population. Unfortunately, the gross errors and bribery on the part of
the so-called liberal reformers are forcing a temporary change in
priorities: the main thing today is at least to ensure the survival of
the people this winter and resuscitate at least part of the country's 
production potential.
[Ivanova] A number of observers express fears that the arrival in the
government of Yuriy Maslyukov, the former chairman of Gosplan, and the
appointment of Viktor Gerashchenko to the position of chairman of the
Central Bank will mean the end of market reforms in Russia. Is this true?
[Glazyev] The fact that the State Duma immediately agreed to the 
candidacy of Primakov for the position of premier, and the President there
and then signed the edict on his appointment, as well as edicts on the
appointment of Maslyukov as first vice-premier, supervising industry and
trade, and Gerashchenko as chairman of the Central Bank, is reassuring. 
To begin with, they are top-class professionals and will obviously not
make ill-considered decisions and trust blindly in the foreign experts of
the IMF.
Revival of the administrative-command economy or Gosplan, which some
of the mass information media are reckoning on, is physically impossible
today. It is also clear that the state should bring pressure to bear on
the economy to achieve the national functions and tasks which are not
within the capacity of private capital or which private capital is not in
a hurry to solve, because of its pragmatic interests.
No one but the state can implement such an important function as 
strategic planning of socioeconomic development -- in the form of working
out and adopting medium-term and long-term programs. This is also
confirmed by the experience of the most highly developed states -- the
United States, Germany, Great Britain, France and Japan. Moreover, the
state plays an active role when the country's economy is in a crisis. 
Incidentally, we recently published, in conjunction with the foundation
"For Economic Literacy" and the Rossiyskiy Ekonomicheskiy Zhurnal, a book,
"Effektivnost gosudarstvennogo upravleniya" [The Efficiency of State
Administration], which reveals the experience of the state administration
in the United States. It would be useful for Russian readers to
familiarize themselves with this book. In all countries, the state was
and is a regulator (or tuner) of the market element. The crisis showed
that our country has not yet formed mechanisms of market self-regulation: 
the collapse of the ruble, the inconceivable rise in prices, the actual
ruin of many banks, firms and citizens -- these are to a considerable
extent the result of a lack of stable mechanisms to support the market
equilibrium, which was destroyed in a flash by the collective strategy of
speculators on the capital market, as well as that of the wholesale and
retail traders, with the purpose of extracting a super-profit at the
expense of the basic mass of the population. If the state had continued
to try to dodge this further, total chaos would have ensued. This sort of
market cannot suit anyone.
Our country now has a chance -- by learning the lessons of the past,
mainly feeling its way along -- to create the basis for a civilized market
economy, in which the market and the state are not antagonists, but
partners, in which the financial sphere does not parasitize by suffocating
the production sphere, but serves both it and the economy as a whole, in
which the entrepreneurial initiative and creative freedom of the citizens
is inseparable from their responsibility, and is protected by the
judicious policy of the state. But this is a laborious, daily job, and we
should all be prepared for it.
Editorial Notes follow below:&[Boxed item];The editors invite
scientists, politicians, psychologists, sociologists and everyone who is
interested in seeking ways for Russia to emerge from the crisis to a
conversation on the pages of our newspaper&[End box];
&[Boxed item];Sergey Glazyev has held the positions of RF minister of
Foreign Economic Relations (1992-1993), chairman of the RF State Duma 
Committee on Economic Policy (1994-1996), chief of the Economic Security 
Administration of the RF Security Council. Since 1996 he has been 
director of the Information-Analytical Administration of the staff of the
Federation Council.&[End box];

********

#5
Moscow Times
September 30, 1998 
ESSAY: AIDS Epidemic Was Russia's Sexual Revolution 
By Irina Glushchenko
Irina Glushchenko is a theater critic who writes for Nezavisimaya Gazeta and
Dom Aktyora. She contributed this essay to The Moscow Times. 

The early years of perestroika were set against the backdrop of the West's
spiralling AIDS epidemic. This was also when the first telemost, or live
U.S.-Soviet television link-up, took place. 
I watched all but one of these broadcasts. Later, my grandmother excitedly
told me what I had missed on that occasion: "An American woman asked something
about sex, but one of our women got up and said there was no sex here!" 
The phrase "There is no sex in the U.S.S.R." subsequently went down in the
annals of history and provided millions with a laugh at that unfortunate
woman's expense. So how exactly do people have children in the Soviet Union,
people would ask with a snigger? 
But if we stop to consider just what sex meant for us, then she was right in a
way f there really was no sex in the Soviet Union. 
Back in the 1970s, reports from the United States often appeared on the pages
of the newspaper Literaturnaya Gazeta, the staple diet of every educated
family. I still remember one article about New York's 42nd Street. Although it
didn't give any particular details, the fleeting mention of the words
striptease, sadism, masochism, sexual deviance, prostitution and pornography
caused a sweet sensation of horror, nonetheless. Near the end, it said that
naked girls dance in cafes on the street. "It would really be something to go
there," wishful teenagers would comment as they read the piece. (I did go
there in 1992, and I was extremely disappointed.) 
Reading these reports we naturally pictured countries in the West, and the
United States in particular, as the center of all earthly depravity and sin.
When a family acquaintance returned from a business trip in the United States,
my grandmother even asked him how much sex he saw while he was there. It's a
shame I don't remember how he replied. 
In the Soviet Union the word sex was only used in social and political
articles about the flaws of capitalist society and occasionally in translated
works of literature. It certainly did not figure in speech as a rule. Distinct
from the word pol, or gender, and polovaya zhizn denoting sexual relations in
a functional sense, the word sex was laden with mystery and impropriety. 
And it certainly had no place in family life. 
Although the actual concept of a conventional family was in itself utterly
bourgeois in its origin, the Soviet state carefully guarded the foundations of
the family, primarily because things were easier that way. The authorities had
to know who lived where, and this was done by means of registration and
residence permits. The family was the lowest level of society that the state
was able to regulate and everything that happened outside the boundaries of
the family was regarded as suspicious and undesirable. Since it was impossible
to eradicate life on an individual basis altogether, family life was
paradoxically regarded as belonging to the sphere of public and not private
life. And amidst all of this, the role of sexual relations in society was
limited to childbearing exclusively within the family. 
Since promiscuous sexual freedom was seen as undermining the foundations of
the family, the state created various administrative obstacles to extramarital
sex. Unmarried couples could not share hotel rooms; nonresidents were not
allowed to stay the night in student dormitories. Soviet people basically had
nowhere to be alone. These norms survived right up to the end of the Soviet
period, although in less draconian form. 
There was no sexual education in schools, since this could lead youngsters
into evil ways. There was certainly no instruction in taking precautions,
going on the assumption that if a person is unsure about this aspect, he or
she just won't go through with it. The greater the risk, the less the desire.
"How do you best avoid pregnancy?" went the old joke. "By drinking tomato
juice." þ "Before or after?" þ "Instead of." 
Once, when I was in the fourth grade, our teacher took all the girls to one
side and told us about menstruation and a few other things. As much as they
were innocent in themselves, these explanations were delivered in a suitably
menacing way, designed to ward us off certain contacts with boys. The way she
portrayed it, once we reached sexual maturity we were pretty much likely to
get pregnant from kissing. 
After this talk one girl went to her parents complaining that "they're telling
us about adult love." That was the end of the talks. 
The magazine "Health" was a limited source of knowledge, and a few spartan
facts could be gleaned from medical encyclopedias. 
Another unique form of sexual education was provided by lecturers travelling
around resorts, droning on about venereal diseases, which inevitably put you
off any sort of sex life whatsoever. 
So is this all to say there was no depravity in the Soviet Union? Of course
there was. But it wasn't sex. Sex presumes the presence of a certain culture.
Children were born here not as a result of sex but of polovaya zhizn. You have
to admit there is a difference. 
I remember how our press came down on the West's "sexual revolution" and how
the rebellion of young people against bourgeois society in the late '60s was
perceived in the Soviet Union as a sign of the final breakdown of the
bourgeoisie. Nor did the hippies escape the vitriol, because although they
rejected bourgeois society, they also rejected order and authority. The most
feared thing in the Soviet Union was any spontaneous, uncontrollable and
chaotic process that did not yield to planning. The authorities didn't like
drifters who frequently changed their place of work, and they frowned
absolutely upon "casual encounters" and a "disorderly polovaya zhizn." 
At the end of the 1970s there were some changes, mainly in youth culture. This
was immediately reflected in the Russian language, with the introduction of
the term seksualno ozabochenny, or "sexually preoccupied," and the appearance
of the concept of the "Swedish family," believed to have been inspired by the
example of the pop group Abba, where everyone sleeps in one bed and no one is
sure who fathered whom. 
By the time perestroika came around, the AIDS menace was gathering momentum in
the West. With the gradual opening-up of our society we could no longer afford
to ignore such a terrible danger. 
And so it happened that the AIDS scourge acted like a magic wand on our
country, since any struggle against the disease was inconceivable without
sexual enlightenment. 
And off came the lid. Under the flag of this struggle, strange as it seems,
prostitution was virtually legalized, pornography appeared and sexual
liberation flourished. If in the West the appearance of AIDS was the end of
the sexual revolution, here it was only the beginning. 

*******

#6
From: IRASTRAUS@aol.com (Ira Straus)
Date: Tue, 29 Sep 1998 
Subject: Who lost Russia (II)

Who lost Russia (II): 
Is it fair to blame the IMF?

As Russians face their dismal situation, many of them are tempted to blame the
West. Many Westerners are tempted in turn to respond by denying any blame at
all. Legalistic distinctions are made in the West, in order to achieve a 100%
dissociation from responsibility for what happens in Russia. 

It is a way of washing our hands.

It would be best if it were happening the other way around -- if, in their
internal discussions, Russians weren't trying to blame the West, and if
Westerners in their own discussions were taking up their share of the blame.
Perhaps that is too much to hope for. But it helps nothing for the West to
become overly defensive and wash its hands of all the blame. Because in that
way, it blinds itself to its continuing responsibilities, with the result of
accumulating more actual blame in practice.

One argument that is making the rounds for escaping blame is to point out that
no one is forced to accept IMF loans; it is Russia that has chosen to take
them and to meet the conditions for them. We at the IMF tried to give the
Russians our best advice, so the argument goes, but it was up to them to
choose whether to accept or reject the advice. And often they didn't do what
we wanted.

All this is technically true, but a bit disingenuous. 

If a troubled country cannot get a loan from the IMF, then its credit
reputation is ruined; no one else will give it a loan either, except at
extortionist interest rates. For practical purposes, financial vulnerability
often compels acceptance of IMF loans and conditions. The alternatives could
be too harsh for a moderate regime to endure. The choice is not so much "to
accept or not to accept", as: either play along with the IMF, or else to turn
away and reinforce the state with a heavy dose of anti-Western nationalism. To
be sure, if the IMF did not exist, the same alternatives would exist, but in
an even more stark form: then some national bank would end up playing the same
role, as the Bank of England did in the 19th century, and usually in a more
rigid, ungenerous way. To be conscious of the vast responsibility of the IMF
is not to blame the IMF for its sometimes overbearing responsibilities; it is
only to be conscious of the responsibility.

In the case of Russia, the financial vulnerability before the IMF has been
componded by a psychological vulnerability before the West. The country has
not felt confident that it knows what to do or how to get out of its mess. It
has come to be led by Westernizing elites. These elites were fairly isolated
socially, as Russian intellectuals have often been. They lacked depths of
administrative support as well as administrative capability on their own.
Until the last of the Soviet period, they were not free to carry out open and
independent policy planning for fundamental change; they could only develop
their thinking as philosophical dissidents. As a consequence, they were good
in elaborating a general perspective, but lacked much depth or detail in their
programmes. A gradualistic adaptation of the Soviet system might have allowed
time to develop plans more adequate to fit the scope of the process of the
transformation, learning as one went along -- this was the best argument for
gradualism -- but the elites chose to Westernize wholesale, in order to end
the cold war and the division from the West in one fell swoop. 

The Westernizing elites put their faith in the West. They accepted the West as
a reserve fund of wisdom and know-how, and as a psychological reserve for
reassurance when their own plans and confidence ran dry. This attitude might
have made sense if the West had taken an attitude of responsibility for
Russia's fate, as it had taken an attitude of responsibility for Germany after
1945 and for European recovery in the Marshall Plan. But it left the Russians
dangerously vulnerable to Western advice, no matter how carelessly given.

The most authoritative-sounding Western advice, the advice that was dignified
by promises of loans and of credit-worthiness, camefrom the IMF. Indeed, most
of such help as the West has given (apart from Germany) has been channeled
through IMF loans; the idea of doing a Marshall Plan through the OECD was
quashed from the start by the Bush Administration. 

This was not the choice of the IMF, and as such, it is unfair to give it the
blame. It was the choice of politicians, who did not have the desire or
courage (not the desire in the case of Bush, not the courage in the case of
Clinton) to mount a responsible program of assistance. When they prepared some
assistance anyway, did not even have the courage to give it directly but only
to ask for general funding for the IMF, which then in turn could give loans to
Russia among other countries on a seemingly technical basis. The IMF was never
set up for social development programs; that was a task which the World Bank
took on in the 1960s, and which has been unloaded more recently on an IMF
which is not fit for them. It is even more unfit for the task of transforming
a state economy into a market system; all it really knows about is currency
stabilization within a pre-existing market system. The blame goes to those who
gave the IMF these tasks outside of its competence; it is simply thes reason
why the consequences have been bad that pass through the IMF. 

The IMF has approached a vulnerable Russia in a spirit of supreme confidence:
'Here is what you need to do, here is a loan to help do it and to salvage your
international credit rating, but we'll give it to you only if you sign on the
line and meet all of our conditions.' The conditions have often been detailed
as well as draconian. This is no secret to the Russian people. It is none the
better when the detailed IMF conditions are hidden in confidential documents;
there are leaks of these documents regularly in the Russian press, making it
amply clear to the Russian people that the economic policies of their
govenment are being determined and supervised in great detail by the IMF. 

Is it any wonder, then, that the West gets the blame for the results of the
Russian/IMF policies? And who is being more irrational -- Russians who give
the IMF/West the blame, or an IMF/West that looks up with a surprised face and
denies any culpability?

*******

#7
The Times (UK)
September 30 1998
[for personal use only]
Russian parents claim army press gangs stalk teenagers 
Starved of recruits, the military is seizing youths in the streets, writes
Alice Lagnado in St Petersburg 

PRESIDENT YELTSIN has ordered the twice-yearly military call-up to begin,
sending a particularly cold chill down the spines of young men. 
With the army desperate to fill its ranks, young men are being snatched from
the streets and press-ganged into service involving a horrifying two years of
humiliation and beatings, even death. 
"A hunt is going on," said Ella Poliakova, joint chairman of the Soldiers'
Mothers Organisation. "Press-ganging is absolutely illegal. It is a flagrant
denial of the rights of young people." 
Konstantin Ivanov, 19, who has heart disease and suffers regular fainting
fits, was forced into service while on his way to work one December morning.
Two men - a policeman and a plainclothes army official - stopped him in a
Metro station and took him to an army base at Gatchina, 25 miles south of
here. 
His parents, who have a file of doctors' notes proving that he is seriously
ill, first discovered his whereabouts that afternoon, when they received a
telephone call from an army official. They failed to convince the authorities
that their son was too weak for service. 
After a struggle that lasted weeks, and after he was admitted to a military
hospital, the authorities caved in and Konstantin is now back home, away from
the brutal and systematic bullying, or dedovshchina, that rules the lives of
young conscripts. 
"If the older soldiers were in a good mood, things were OK, but at night all
hell broke loose," said Konstantin, who added that he was beaten by the older
officers and made to work through the night. 
He was relatively lucky. Some young men do not return home alive. Official
figures say 500 soldiers committed suicide in 1997, and 50 were killed by
fellow servicemen. Human rights organisations put the figures much higher,
estimating that about 5,000 army recruits die or commit suicide every year. 
Mrs Poliakova has more than 100 incidents of press-ganging on her files and
claims it has been common practice since the mid-1990s. One particular case
that sticks in her mind is that of a teenager who was celebrating his 18th
birthday at home this spring. With the party in full swing, officers arrived
and simply took him away. 
The Russian Army denies that press-ganging goes on. Stepan Zholovan, St
Petersburg's deputy military chief, was dismissive, saying that the real
problem was draft-dodging - by about 30,000 eligible men last year, according
to Defence Ministry statistics. 
He said that young men who claimed they were press-ganged were lying. He also
denied that sick youths were knowingly recruited because they were subject to
rigorous medical checks. 
These checks are, however, dismissed by campaigners and recruits, who say
doctors spend just minutes on the process and ignore complaints. 
Autumn conscription begins in October, but already hundreds of worried parents
and young men are visiting the Soldiers' Mothers for advice. Mrs Poliakova is
sure press-ganging will continue, and sees no respite in the army's attempts
to fill its barracks. 
"There will be some new form of repression," she said. "I don't know what
exactly, but they'll think of one." 

******

#8
Audit Office Official Discusses Misappropriation of Loans 

Hamburg's Der Spiegel in German 
September 28, 1998
[translation for personal use only]
Interview with Yuriy Boldyrev, deputy chairman of the Russian
Audit Office, by unidentified Der Spiegel correspondent; place and
date not given: "The Government Refuses"

[Der Spiegel] Yuriy Yuryevich, the Audit Office has checked the use
of loans involving billions of dollars that Russia received from the West. 
What is the result?
[Boldyrev] So far, our investigations have only referred to committed
loans from the International Bank for Reconstruction and Development. For
instance, there was one loan for the establishment of labor exchange
offices. In a number of cases, these funds were neither used for the
intended purpose nor was their misappropriation criticized by
anybodyafterwards.
[Der Spiegel] What happened to the money?
[Boldyrev] With the government's approval, many centers, funds, and
foundations were founded, whose functionaries earn up to $15,000 per month.
These are gigantic salaries in our country. We have discovered contracts
for consultations, according to which individuals -- not Nobel Prize
laureates or renowned experts -- received up to $200,000.
[Der Spiegel] What are the consequences of your investigations?
[Boldyrev] We are a constitutional body. Criminal prosecution or
dismissal from service are among the powers of other authorities.
[Der Spiegel] Do the improprieties you discovered automatically
become cases for the public prosecutor?
[Boldyrev] In our country, the President chooses his prosecutor
general. He must then be confirmed by the Federation Council.
[Der Spiegel] Do you want to say that the Prosecutor General's Office
covers the abuse of power and money in the administration?
[Boldyrev] I believe that the original source of all corruption in
our country is the highest level of power -- the President, the government.
That is why we are unable to get appropriate reactions to our reports.
[Der Spiegel] What can be done?
[Boldyrev] We must do what others have done long before us: introduce
independent public prosecutors.
[Der Spiegel] Are the authorities that you want to check cooperative?
[Boldyrev] Only verbally. In reality, the government refuses to give
us a complete list of confirmations of payment. We get such confirmations
only if the government wants to show them to us. Since the executive power
need not fear control nor punishment, a complete check is undermined as
much as possible.
[Der Spiegel] Is there not a single loan that has been used right to
the last pfennig for its intended purpose?
[Boldyrev] I would like to avoid this conclusion. So far, however,
the Audit Office does not know of a single case in which government
activities were investigated and no gross violations were discovered.
[Der Spiegel] Which federal authorities are the ones that engage in
the worst abuse?
[Boldyrev] Our employees discovered the most severe violations of the
laws in the Central Bank.[Der Spiegel] Which ones, for instance?
[Boldyrev] In 1997, the Russian Central Bank spent about 2.2 percent
of all budget revenues for its own needs, a total of 7 trillion rubles.
[Der Spiegel] According to the exchange rate at that time, that was
almost 2.3 billion German marks; and all that for salaries, buildings,
official cars, and dachas?
[Boldyrev] The most terrible thing is that the leadership and the
employees are absolutely guided by their own interests.
[Der Spiegel] What are the prospects of finding misappropriated money
again and bringing it back?
[Boldyrev] According to the law, our government is collectively
responsible. In reality, this means a law favoring collective
irresponsibility. Individual officials cannot be prosecuted.
[Der Spiegel] Not even in serious cases?
[Boldyrev] We are discussing about 10 investigation reports per week.
In one-third of the cases, we apply for investigations of state
functionaries. However, as soon as the trace leads right to the top,
nothing happens.
[Der Spiegel] Could you recommend foreign creditors to give Russia
additional loans at the moment?
[Boldyrev] I can only speak for myself. I have told my voters in St.
Petersburg for years that I would not trust a single kopeck to a Russian
investment company or a bank. Recommendations to foreign banks are not my
business. Our economy needs investments. However, if I do not want to
risk my own money, then I cannot recommend such a risk to anybody else.
[Der Spiegel] How great do you think is the damage to the Russianstate?
[Boldyrev] In 1995 alone, $9 billion passed by the state budget just
because of illegal customs reductions. In the three years of its
existence, the Audit Office has uncovered violations of law that have cost
the state a total of 100 billion rubles, that is, about 33 billion
Germanmarks.

*******