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

Johnson's Russia List
#2403
30 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: IMF waits for Russian economic programme.
2. Reuters: Russian unions say crisis to fuel planned protests.
3. Albert Weeks: Primakov on the USA.
4. Skelly Martin: Reply to Balzer on Middle Class.
5. Itar-Tass: Ilyukhin: Russian Army Facing Food Supply Problems.
6. Moscow Times: Chloe Arnold, Big Rubles for Country's Biggest Banker.
7. Bloomberg: Russia's Lebed Calls for Redistribution of Power, Property.
8. Reuters: Russian Communists may form pact with Moscow mayor.
9. Fred Weir on new book by former KGB spies. ("Under Cover Lives")
10. AFP: Nemtsov Blames Yeltsin, Tycoons for Crisis.
11. Russia Today: Jennifer DeLay, Russia's Federal System -- Is Bigger
Really Better?
12. Komsomolskaya Pravda: Yavlinskiy on Refusal To Join Cabinet.
13. Jamestown Foundation Monitor: PRIMAKOV THREATENS REBELLIOUS GOVERNORS
WITH DISMISSAL.]

*******

#1
INTERVIEW-IMF waits for Russian economic programme
By Brian Killen

MOSCOW, Sept 30 (Reuters) - Russia's economic policies, due to be presented to
the cabinet on Thursday, remain a mystery to the International Monetary Fund,
which is unlikely to give credits soon just to provide some breathing space. 
Senior IMF Moscow representative Martin Gilman told Reuters on Wednesday that
Prime Minister Yevgeny Primakov's government still had a lot of hard work to
do before the international community came to the rescue. 
"We're still in a wait-and-see mode. We need to see what the authorities are
going to be proposing in terms of the thrust and in particular the details of
their economic policies," he said. 
Gilman, speaking before this week's IMF and World Bank meetings in Washington,
said hyperinflation and a chain of defaults by Russia on its debt obligations
could be avoided. 
"But it is becoming increasingly clear that the only way some of these more
dire scenarios that are being discussed can be avoided is by what are going to
be some difficult decisions ...basically increasing revenues and reducing
expenditure to try to bring the fiscal situation under better control." 
Gilman said tackling these fundamental issues was the key to solving other
problems. "If there is a will to do that then some of these more dire
predictions can be avoided and we're happy to work with them to try to achieve
that." 
Russian government officials have said they need further IMF credits, agreed
in July as part of a $22.6-billion international aid package, to avoid
printing money or defaulting on foreign debt. It's not going to be easy to
secure this financing. 
"What would it take to persuade the average Russian to invest his money in
rouble assets?" Gilman asked. 
"If you can answer that question, maybe that would come relatively close to
what it would take to convince the international community." Russians hold
most of their savings in cash dollars, with home savings estimated at $30-$50
billion. 
Gilman said the forthcoming IMF/World Bank meetings were not expected to come
to any decisions on Russia, although its predicament was sure to be widely
discussed at talks between the Russian delegation, the IMF staff and others. 
The Russians are expected to be represented in Washington by Finance Minister
Mikhail Zadornov, Economy Minister Andrei Shapovalyants and Central Bank
Chairman Viktor Gerashchenko. 
Gilman said he did not have a full list of the Russian delegation, but he
expected Gerashchenko to play a major role. 
Gerashchenko, known as Hercules in the Russian banking community, was head of
the central bank in the early 1990s. Last week, he outlined the most
comprehensive proposals published so far for rescuing the Russian financial
system. 
These called for printing at least 40-50 billion roubles ($2.5-$3.1 billion)
by the end of the year to help meet urgent budget requirements in the absence
of external financing. 
Gerashchenko also wants to control use of central bank credits to limit impact
on inflation and the exchange rate. 
Gilman said the Russian delegation to the IMF/World Bank meetings might
disclose some details of the government's stance. 
"At the level of the IMF staff, we do not anticipate any substantive
discussion with the Russian delegation in terms of specific programming," he
said. "It would be nice to get an indication from the authorities as to their
policy intentions." 
An IMF mission visited Moscow earlier this month to assess the situation after
the August 17 decision to effectively devalue the rouble, freeze the domestic
debt market and declare a moratorium on some foreign debt repayments. 
Gilman said the mission would return some time in October, but future loans
had to be backed by a comprehensive programme. 
"There's too much of a tendency to see the problems in financing terms, that
Russia simply has a cash flow problem, and that if they just had some
temporary financial relief, some breathing room as it's sometimes called, then
they can get through this very difficult period. 
"Our view, which I believe is shared broadly by the foreign economic observers
of Russia, is that this is not just a cash flow financing problem," he said. 
"Russia is really confronting, even more than before, a very substantial
fiscal imbalance and it's not sufficient to simply finance that imbalance." 

*******

#2
Russian unions say crisis to fuel planned protests
By Gareth Jones

MOSCOW, Sept 30 (Reuters) - Labour leaders said on Wednesday a day of
nationwide protests set for October 7 would bring millions of Russians on the
streets to demand President Boris Yeltsin's resignation and prompt payment of
wage arrears. 
Similar days of action in the past have brought out far fewer protesters than
predicted by the trade unions but this time they said Russia's deepening
economic chaos guaranteed a much higher turnout. 
``According to our preliminary information...more than 37,000 companies and
organisations will take part in the strikes, or approximately nine million
people in around 9,500 towns, cities and villages across the country,'' said
Mikhail Shmakov, head of the millions-strong Federation of Independent Trade
Unions. 
He told a news conference the total number of people directly or indirectly
involved in the day's protest marches, pickets and strikes would probably be
much higher. 
``This day of action will be massive in character and tough in its demands,''
Shmakov said. ``Clearing wage arrears and finding a mechanism to prevent them
building up again are the biggest social problem facing us today.'' 
As he spoke thousands of scientific workers were picketing major highways into
Moscow to draw attention to their plight. 
Many held Soviet red flags emblazoned with the hammer and sickle and placards
demanding Yeltsin's resignation, though plans to close the highways to traffic
appeared to have failed. 
At a demonstration on Pushkin Square in central Moscow other scientists
listened gloomily in heavy rain as speakers blasted Yeltsin over the desperate
plight of their sector, the lavish subsidies and benefits of Soviet times now
a very dim memory. 
On Thursday university students will stage protests and next Monday teachers
plan similar demonstrations, Shmakov said. 
Millions of Russian workers in both the private and public sectors are owed
wages stretching back many months. 
The government blames the delays on a complex web of debt that has built up
between companies and between firms and cash-strapped state bodies including
the armed forces. 
Prime Minister Yevgeny Primakov has said clearing the backlog of wages will be
the top priority of his new government. Trade union leaders have welcomed his
pledge but say they will judge Primakov by his deeds, not his words. 
``The government is moving too slowly...though we generally welcome their
change of tack towards a social market economy,'' said Andrei Isayev, head of
the Union of Labour, the political arm of Shmakov's federation. 
Primakov is still putting together his government nearly three weeks after
being approved by parliament. Dominated by centrists and moderate Communists,
the cabinet has signalled a more interventionist economic policy with more
help for industry and the poor in a break from previous liberal
administrations. 
``Philosophically, we are with Primakov. Monetarism and liberalism have ruined
Russia,'' Isayev told Reuters. 
But many economists fear Primakov will have to print money to fund his
promises on wage arrears and say this will boost inflation, sharply eroding
the value of any wages paid out. 
Shmakov said total wage arrears had reached 86 billion roubles by September 1
and were likely to be much higher by now because of the rouble's sharp
decline, which has badly hit even the most successful Russian firms. 
At the time of the last nationwide day of protests on April 9, held just
before the advent of Sergei Kiriyenko's short-lived government, wage arrears
totalled 57.7 billion roubles. Hundreds of thousands rather than millions took
part in those protests. 
Union leaders and Communist Party officials, who are also helping to organise
the protests, say they are working closely with the authorities to ensure the
day of action passes calmly. 

******

#3
Date: Wed, 30 Sep 1998
From: Albert Weeks <AWeeks1@compuserve.com>
Subject: Primakov on the USA

Yegor Yakovlev, writing in Obshchaya Gazeta (JRL #2401), recalls some 
incidents in the life of Russian PM Yevgeny Primakov. I, too, have a 
recollection, but it is not as sanguine as Yakovlev's.
Primakov helped, with three other editors, write the 
'Entsiklopedicheskiy Spravochnik' ('Encyclopedic Reference') titled,
'The Contemporary United States of America.' It was 
published (in Russian) by Politizdat, Moscow, 1988 (note the late date). 
On p. 93 of this 541-page volume, we find this tidbit, under the 
heading, "Bourgeois Political Parties":
"The principal characteristic of [the two-party] system is 
that it serves as an instrument for preserving political
domination by the monopolistic bourgeoisie. Such political 
domination via the two-party system is supported by the ruling class
in the way elections are held and financed."

Much else about America in this "Spravochnik" would make Madeleine 
Albright blush. And give Mr. Primakov a fit of amnesia.

*******

#4
From: Skelly Martin <MSkelly@ufg.ru>
Subject: Reply to Balzer on Middle Class
Date: Wed, 30 Sep 1998 

I am not an expert on home/apartment ownership in Russia but Mr. Balzer's
comments on the "middle class" inspired the following.
There are millions of Muscovites (and St. Pete residents and Nizhni
residents and...) who have achieved what is usually the most important
symbol of achieving "middle class" status, ownership of their own residence.
(Not always an ideal residence but usually at least adequate "shelter".)
This ownership is not the "US" brand of ownership where the buyer puts 5%
down and pays on it for a few years and then takes out a second mortgage to
finance education/cars/etc. Rather Russian apartment ownership is typically
with absolutely no mortgage. Couple with this real estate taxes that are
very, very low and utilities that are artificially low and you get a typical
Russian whose "fixed" costs are very affordable. 
As for growing the middle class, iIt would be interesting to know what kind
of a stimulus the economy would get if some portion of these residents were
able to take out a 50% Loan to Value mortgage (at a reasonable rate) and
start a business.

******

#5
Ilyukhin: Russian Army Facing Food Supply Problems 

MOSCOW, September 26 (Itar-Tass) - A very difficult situation has
evolved in Russia's Armed Forces concerning food supplies, Viktor Ilyukhin,
the chairman of the State Duma security committee, said on Friday.
Ilyukhin took part in a round-table meeting dedicated to the problems
of the Russian Armed Forces, the defence industry and state security. The
meeting was attended by representatives from the General Staff,
defence-related enterprises and military scientists.
According to Ilyukhin, in 1997 budgetary allocations covered the
provision of three-meal diet for only 290 days a year, with the calorie
content being decreased by 30 percent.
Allowances to army officers and generals have not been re- calculated
to compensate for inflation since 1995, acting Chief- of- Staff Colonel
General Valery Manilov said adding that even this money is delayed for
three-four months.
"We have just repaid arrears for June, and before the end of September
all army and fleet officers will have received money for another two
months," he said. "It will render the moral situation in army units
healthier and ease social tensions in garrisons."

******

#6
Moscow Times
September 30, 1998 
Big Rubles for Country's Biggest Banker 
By Chloe Arnold
Staff Writer

Critics of President Boris Yeltsin's economic policy-makers have already
suggested that Western loan money was embezzled and that the ruble devaluation
was the culmination of a dark plot. But as those allegations seem to be
fading, a new scandal is focusing public anger: former Central Bank chairman
Sergei Dubinin's 1997 salary f which was 1,258,113,518.45 rubles. 
"What? What? How much? How much?" wrote journalist and State Duma Deputy Yury
Shchekochikhin in Novaya Gazeta about Dubinin's official salary, as reported
in a 1997 personal income tax declaration leaked to the newspaper. "I'm trying
to understand the order of the numbers. The '45' at the end, that's I assume
the kopeks. Next comes '518' f that's rubles; '113' f thousands; '258' f
that's millions. And that '1' at the beginning f what's that? How's that?
That's þ a billion." 
Dubinin's salary would come to $240,000 at last year's exchange rate. By
international standards, that is in the ballpark for a central banker. Edward
George, the governor of the Bank of England, received a 1997 salary of pounds
277,000 ($415,000), a Bank of England spokeswoman said Tuesday. U.S. Federal
Reserve Chairman Alan Greenspan, meanwhile, earns a comparatively paltry
$136,700. 
Six-figure salaries are also not unusual f at least in the pre-crisis go-go
years of Russia's soaring equity and debt markets f for a Russian commercial
banker. 
But official salaries as meaty as Dubinin's are unusual in the Russian public
sector f even in the national government. Prime Minister Viktor Chernomyrdin,
for example, last year infamously declared an annual income of just $7,800. 
Dubinin's official salary is also more than 40 times that of Yeltsin's
official 1996 salary of $480 a month. Not that Yeltsin is suffering in
poverty: According to the same 1996 declarations he filed with the Central
Election Committee during his re-election drive, Yeltsin raked in $280,000
from Western publishing houses for his autobiographies published in English. 
Even Dubinin's lieutenants were pulling down exponentially more than the
Russian president and prime minister. Novaya Gazeta reported that gross
incomes for 1997 for deputy central bankers Alexander Khandruyev and Sergei
Alexashenko came to 702,585,937.81 rubles and 685,429,952.72 rubles ($134,000
and $131,000) respectively. 
That is quite a lot in a country where the average monthly salary for a
public-sector worker f a police officer, a teacher or a doctor f runs under
$100. 
"[Dubinin's] personal annual income is equivalent to the budget for two
departments of the State Tax Service, five prominent Moscow high schools f or
12 villages," Novaya Gazeta reported. "It is the same as the combined wages of
210 ministers and [Duma] deputies f or the budget for an entire district
hospital in Dagestan." 
According to Novaya Gazeta, top officials at the Central Bank also used
positions on the boards of other banks to boost their incomes. Former Deputy
Chairman Denis Kiselyov took a seat on the board of directors for East-West
United Bank in Luxembourg, earning approximately $6,700 a month, the newspaper
reported. 
"The number of hours [Kiselyov] claimed to work in this bank was 40 a week,"
the article stated. "The number of hours a person is supposed to work
according to the labor law is 41. Which means he spent a single hour at work
at the Central Bank." 
Margot Jacobs, a banking analyst with United Financial Group, said she was
less concerned by the high official salaries than by the practice of accepting
second salaries from commercial banks, which are organizations that the
Central Bank f in theory anyway f is supposed to be regulating. 
"It sounds as though these bankers are abusing the privilege of working in two
places in order to get more money," Jacobs said. "But they deserve a small
round of applause for actually declaring their salaries." 
The howls over the salaries are the latest in a series of offensives against
the Central Bank. Last week, both the Audit Chamber, a government budgetary
watchdog, and the Prosecutor General's office accused the Central Bank of
embezzling billions of dollars loaned by the International Monetary Fund. 
"Not everything is clean," Prosecutor General Yury Skuratov said last week in
announcing that a probe into the bank's dealings was under way. 
The Audit Chamber was even more scathing. Last week a top auditor declared
that Central Bank officials had made off with money loaned to Russia by the
World Bank. He promised a full-scale investigation. 
The World Bank responded that it had no reason to believe its money had been
stolen, and a World Bank official said the auditor making the allegations had
never once contacted the World Bank's Moscow offices on the matter. 
The Central Bank was also quick to react, calling the allegations outrageous,
and demanding that officials hold their tongues until investigations are
completed. But now, with their six-figure salaries made public, the already
unpopular bank has sparked further fury. 
"It isn't a question of how much these people are earning, but how much they
choose to receive," said Veniamin Sokolov, an auditor for the Audit Chamber.
"They regulate their own wages according to whim." 
A loophole in the Constitution has allowed the Central Bank to act like a
commercial bank when determining its staff's salaries, Sokolov said. 
The Central Bank refused to comment on the article in Novaya Gazeta. But in an
interview in the daily newspaper Komsomolskaya Pravda, Irina Yasina, former
press officer at the Central Bank, vigorously defended the institution, saying
investigators would not dig up irregularities because it had been acting
within the law. 

*****

#7
Russia's Lebed Calls for Redistribution of Power, Property

Moscow, Sept. 29 (Bloomberg) -- Alexander Lebed, governor of Russia's
Krasnoyarsk region, called on the federal government to redistribute power,
property and taxes to quell unrest in the countryside and ensure Russia
restores financial stability. 
The new government being formed by Prime Minister Yevgeny Primakov is helping
improve relations with regions, Lebed said, though there are few specific
plans on how to help financially. 
``The situation reminds me of the dinosaur syndrome -- the head is tiny, the
body huge and the head sometimes without a brain,'' he said. ``Life itself
dictates the necessity of redistributing power, property and taxes in favor of
the regions.'' 
He added that a strong Russia will depend on ``strong and powerful regions.'' 
Lebed warned that Russians will support a nationwide trade unions' strike
planned for Oct. 7. 
``People will take to the streets,'' he said. ``They're fed up without an
escape. In 1992, people had savings, enthusiasm and hope. Today they have none
of those things.'' 
Lebed, among regional governors who met today with Primakov, also said the
nation's external debt totals about $210 billion. That includes $155 in state
foreign debt, $30 billion in banks' debts and $25 billion of companies' debts.

******

#8
Russian Communists may form pact with Moscow mayor

MOSCOW, Sept 30 (Reuters) - Russian Communist Party leader Gennady Zyuganov
said on Wednesday he might push for an electoral pact with Moscow mayor Yuri
Luzhkov, forming a broad centre-left alliance, Interfax news agency said. 
``Zyuganov does not rule out the possibility of forming a centre-left
coalition with...Luzhkov,'' the agency said in its account of an interview
with the Communist leader after Luzhkov said on Tuesday he might run for
president. 
It quoted Zyuganov as saying ``the creation of a broad centre-left coalition''
would ``benefit everyone.'' 
``The more that practical, educated and intelligent people can manage to unite
their efforts, the sooner we will get rid of radicals from any flank and not
give a chance to corporals that call themselves commanders to seize power,''
Zyuganov said. 
``(Luzhkov)...has solid support not only in Moscow, he's working actively now
with the...regions,'' he added. 
Interfax said Zyuganov declined to answer when asked if he might stand aside
in favour of Luzhkov in the presidential election, due when President Boris
Yeltsin's term ends in mid-2000 at the latest. 
Luzhkov, re-elected mayor in 1996 with more than 90 percent of the vote, is
viewed as an authoritarian but effective manager who has provided genuine
benefits to ordinary Muscovites. 
He has powerful business backers and is regarded as a rival to former Prime
Minister Viktor Chernomyrdin for the support of the Kremlin and business
establishment. 
He has regularly criticised Communist policies but keeps a tight official rein
on Moscow's local economy and takes a nationalistic tone on many issues
further from home that is in tune with Zyuganov's Communists. 
``I've never said I wanted to be a candidate in the 2000 elections and I'm not
intending to say so now,'' Luzhkov told Reuters Television on Tuesday during a
visit to Britain. 
``But if I see that the only ones with a chance of getting elected are those
who are not capable of leading the country sensibly and correctly, I will
enter the race as well.'' 
Luzhkov has always denied presidential ambitions in spite of indications to
the contrary. He repeated his cautious new line at a news conference in London
on Wednesday. 
``I have not said I will run...But if I see that the contenders for president
don't have the necessary policies and state positions to ensure the stability
of Russia, then I will enter the battle,'' he said. 
Luzhkov met British Prime Minister Tony Blair during the annual conference of
his ruling Labour Party and said he was interested in learning from Blair's
centre-left approach. 
Echoing Blair, who has championed the ``Third Way'' in politics, Luzhkov told
Reuters he wanted a ``middle way'' between capitalism and socialism. 
He has given no sign he would consider joining forces with the Communists.
Under Russia's two-round presidential voting system, first-round losers can
endorse one or other of the second-round pair and persuade supporters to
follow suit. 

*******

#9
From: fweir@rex.iasnet.ru
Date: Wed, 30 Sep 1998 17:53:33 (MSK)
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT) -- A book by several former KGB spies, due to be
released soon, will provide an intriguing glimpse into their
activities, contacts and methods in several capital cities
around the world during the Cold War. It includes a detailed
chapter by a Russian secret agent who worked in Delhi through the
turbulent 1980's.
"Western literature and propaganda developed the image of
the KGB as hard and murderous people," long-time Soviet KGB agent
Mikhail Lyubimov told a Moscow launching of the new book on
Wednesday.
"In this book we've tried to show ourselves as we really
were: normal professional people who loved our country and often
loved the countries we worked in as well."
The book also sheds some light on the USSR's global strategy
during the long years of confrontation with the United States.
Agents posted to Western capitals engaged in aggressive espionage
tactics, while those working in Third World countries --
particularly India -- were far more cautious in their activities.
Entitled "Under Cover Lives", the book will be published
later this month in Britain. It covers the reminiscences of 12
KGB agents about their triumphs, frustrations, grinding routines
and little pleasures during service in 16 global capitals, and was 
edited by Helen Womack, Moscow correspondent of the London 
Independent. 
Ms. Womack says it is an authentic account of KGB work in
various locales, but warns that many specific details might have
been changed to protect their contacts.
"You have to remember what profession these men are in," she
says. "I experienced no censorship in preparing the book, but
it's very likely the agents censored themselves in telling their
stories to me, so as not to expose people who worked for them."
The chapter about India was penned under the pseudonym
"Vasily Timofeyev" because the author remained a serving member
of Russia's foreign intelligence service until his death at the
age of 54 in Moscow last month.
Further chapters, covering Washington, Rome, Cairo, Tokyo,
London, New York and other cities, were written by retired spies
using their own names.
Mr. Timofeyev, who was a KGB agent in Thailand before being
posted to Delhi under journalistic cover in the early 1980's,
wrote that his work among Indians was very restrained, to avoid
offending the USSR's best friend in South Asia.
"Moscow did not want to undermine this trust," he wrote.
"Friends do not have secrets from each other and yet. . . the
Soviet Union felt its partner needed a little guidance. My task
was to find Indians who would act as lobbyists for socialism at
home and lean on the government to support Soviet positions in
world bodies such as the United Nations and the Non-Aligned
Movement. There were few thrills and spills in this work and I
admit honestly that I was no James Bond. But there was
satisfaction to be had when my 'agents of influence', as the KGB
called them, helped events to go Moscow's way."
Mr. Timofeyev claims the "agents of influence" he directed
and paid on behalf of the KGB included top Indian journalists,
parliamentarians and academics. He offers the code words by which
some of these people were known to the KGB -- names such as
"Dik", "Ram" and "Sabur" -- as well as details of their careers,
lifestyles and services to Soviet intelligence.
At no point does Mr. Timofeyev say that he induced Indian
citizens to commit treason, but rather he fed his agents money
and information and encouraged them to promote pro-Soviet
positions that were already popular among Indians during those
years of strong friendship between the two countries.
He writes that his top agent was a Congress MP named "Shiva"
who was paid a regular salary "for bringing up in parliament
issues of interest to Moscow, for example the question of U.S.
meddling in the Punjab, and for organizing seminars, often on
anti-American and anti-Chinese themes. . .
"His positions were well known. When he stood up in
parliament fellow MPs may have groaned and said: 'There goes that
Soviet apologist again.' But as long as I was never caught
actually handing over money to him, it could not be proved that a
hidden hand controlled him or that he represented anybody but his
poor constituents."
The book's revelations may prove uncomfortable for those few
Indians who were actually on the KGB's payroll -- if anyone can
decipher who they were from Mr. Timofeyev's cautious and crafty
report -- but it is unlikely to cause much wider upset.
By this account, KGB activities in India were so tame that
Indian counter-intelligence rarely bothered to follow or observe
their Soviet colleagues, and Mr. Timofeyev's Indian "agents" felt
no fear about dining and drinking with him in their own homes.

******

#10
Nemtsov Blames Yeltsin, Tycoons for Crisis 
September 29, 1998

WASHINGTON -- (Agence France Presse) Reformers in Russia succumbed to the
current crisis because of a weak President Boris Yeltsin, an oligarchy opposed
to change and an internecine warfare among tycoons, ex-Deputy Prime Minister
Boris Nemtsov told The Washington Post. 
"We had an oligarchic system in a market economy, with a very strong position
of a few clans inside the country. ... They were against our reforms," he said
in an interview published Tuesday. 
A few months after his appointment in March 1997, Nemtsov said he and other
reformers were caught up in a struggle among the country's tycoons for a
privatized share of Russia's telephone companies, which reformers insisted go
to the highest bidder. 
"They didn't want real competition," he said. The privatization sale, "was not
according to the oligarchs' rules. ... That's why they struggled against each
other and the government." 
Plans by reformers to move quickly to another privatization scheme to show
their resolve were frustrated by then Prime Minister Victor Chernomyrdin who,
Nemtsov said, was sensitive to the demands of the tycoons. Yeltsin later in
the year fell ill and Nemtsov felt his support slipping away. 
"Yeltsin supported me from the beginning, in March, up to the end of the year.
And after that, not much. He was very weak, he was not ready to struggle." 
He said Yeltsin failed to understand that he had to take a stand alongside the
reformers. 
"Yeltsin is a politician, he thinks about his own power only. He has no
message how to build 'people's capitalism.' He has no idea how to overcome the
crisis. The only idea is how to be the Russian czar, no more." 
"That is why in 1997 he saw that support of the young reformers meant the
strength of his power. After that, he didn't think so," Nemtsov said. 
When, earlier this year, he sought out Yeltsin's support from Chernomyrdin's
attempts to dilute his duties, Nemtsov said the ailing president only gave him
hollow words of encouragement. 
"He didn't understand it. He wasn't ready. He thought it was just intrigue. He
always understands power as just personnel decisions," Nemtsov said. 
In the spring, Yeltsin replaced Chernomyrdin with a politically weakened
Sergei Kiriyenko because he "was afraid of (losing) his power." 
Nemtsov, who was fired last month along with Kiriyenko after the ruble was
devaluated, said he planned to run for parliament. 
He was critical of the return of Soviet-era apparatchiks under new Prime
Minister Yevgeny Primakov. 
"This government knows how to print money, and no more," Nemtsov told the
daily. "Who will get it? The oligarchy. This is crazy." 

******

#11
Russia Today
http://www.russiatoday.com
Russia's Federal System -- Is Bigger Really Better? 
By Jennifer DeLay
Sept. 29, 1998

Russia's provincial governors, by taking matters into their own hands after
the ruble went into a tailspin in mid-August, seem to have ignited a debate
about the future of Russia's federalist system. But it is too early to tell
whether plans to consolidate the federation's 89 administrative units are a
step in the right direction or a distraction from more urgent matters. 
Governors from Kaliningrad to Krasnoyarsk have annoyed the Kremlin in recent
weeks by announcing their own plans to take control of economic policy. Local
leaders say they owed it to their constituents to act rather than wait for
directions from the embattled center. Irked politicians in Moscow and
elsewhere seem to think events in the provinces prove the need for reform of
the federal government rather than the need for new approaches to economic
problems. 
Moscow Mayor Yury Luzhkov, for example, said during a meeting with Prime
Minister Yevgeny Primakov that Russia should be divided into 10 to 12
"economic conglomerates," each of which would comprise eight to 10
administrative units. Russia's new prime minister replied that Luzhkov's
proposal to restructure the federal system was "reasonable" because "89
territories is too much." 
Igor Farkhutdinov, the governor of Sakhalin Island, said much the same thing
on Sept. 23. Farkhutdinov told the press that mergers by larger regions would
be disruptive but said smaller regions should expand to ensure a balance of
power within the federation. He declared that restructuring of the federal
system had to go forward despite the dangers. "If we do not want to see
something similar to the collapse of the USSR, the members of the federation
need to be enlarged," Interfax news agency quoted him as saying. 
Even President Boris Yeltsin chimed in, giving his approval to a proposed
merger between the city of St. Petersburg and the surrounding Leningrad
region. First Deputy Prime Minister Vadim Gustov, who previously served as
governor of the Leningrad region, told the press on Sept. 24 that Yeltsin had
charged him with overseeing the merger. "Boris Nikolayevich said: 'I am making
you personally responsible for the measure. Go ahead and merge them. If
somebody stands in the way, the president will interfere and dismiss him,'"
Interfax quoted him as saying. 
There is a strong case to be made for reform of the Russian federal system.
The Russian government has struggled for years to cope with the unwieldy and
confusing administrative structure it inherited from the Soviet Union. It has
had to give provinces equal status with ethnic republics in order to head off
political protests and budding tax revolts in Sverdlovsk and elsewhere. The
rights and responsibilities of other territorial units -- autonomous districts
and the like -- remain unclear. This confusion has made it hard for the
Kremlin to collect taxes from regional governments, even in the rare cases
when the locals are willing to turn over their money. 
Clearing up the muddle by consolidating the regions could make tax collection
easier. But Primakov, Luzhkov, Gustov and Farkhutdinov are probably not
motivated just by concern for the state budget or the desire to eliminate the
worst of the federal system's complications. The discussions of federalism are
in essence a debate on power. 
Russian federal policies do more than spell out the privileges and tax
liabilities of every province, republic and district; they define how power is
to be shared between the center and the regions. Those who lobby for reform,
therefore, are calling for a shift in the balance of power. 
Compacting Russia's 89 territories into a dozen or so giant administrative
units may make it easier for the government to assert itself outside of the
capital. It would certainly serve to neutralize many restive local leaders and
allow the central government to insert its allies in key positions of power.
But it would not solve the deep-rooted economic problems that led the
provinces to assert their own right to implement emergency policies in the
first place. 
This is probably not the time to embark upon a debate over federalism in
Russia. Plans for consolidation of the regions are in essence a political
response to Russia's economic woes, and the Kremlin will not have enough time
or political capital to address the issue of federalism properly unless it
first rides out the financial crisis. In short, Primakov, Luzhkov, Gustov and
Farkhutdinov should prove their ability to collect taxes from the regions
before they start an argument about how big those regions should be. 

*******

#12
Excerpt
Yavlinskiy on Refusal To Join Cabinet 

Komsomolskaya Pravda
September 18, 1998
[translation for personal use only]
Interview with Grigoriy Yavlinskiy by Mikhail Rybyanov;
place and date not given: "Grigoriy Yavlinskiy: 'In Russia, of Two
Evils, We Chose Both': Yabloko Leader Explains Why He Refused To
Join the Cabinet, Why the Country Needs Primakov, and Whether We
Will Survive This Winter"

[Rybyanov] Grigoriy Alekseyevich, in the end you refused to
join the cabinet--and not for the first time. Who then will pull the
country out of the crisis? There are not too many people with good
brains in the country.
[Yavlinskiy] I will tell you honestly--when the question of
forming the new cabinet arose, we in Yabloko made the decision that
if we were offered the economic block, we would accept. But
developments took a different turn. Until this Monday, no offer had
been made to us, but Maslyukov had already been placed in the
cabinet and Gerashchenko confirmed as head of the Central Bank. Then
on Monday I was told: We are offering you the post of deputy [prime
minister] for social issues. Alone. Without my team. What would I do
there? Serve as a cover for the Communists?
Different people have different reasons for joining the
cabinet. Some want to gain a new degree of authority, or, as they
sometimes call it, a promotion. Some are solving their own
commercial problems. My task is: If I do decide to join the cabinet,
I bring with me my team that truly can successfully start taking the
country out of the crisis by implementing real changes for the
better, creating jobs, pay, and raising wages. With respect to the
economy, it means that like-minded people should be in key
positions--for instance, the Central Bank, the Ministry of Finance,
the Customs Committee, Sberbank, and so on. Otherwise, I would find
myself in the same position as Lebed, Nemtsov, or Zadornov, whom we
all know well, found themselves in. You cannot say that these people
are completely helpless. But the structure of power did not permit
them to single-handedly influence the situation in the
country....
[Rybyanov] What do you expect of Primakov?
[Yavlinskiy] I pin great hopes on Primakov, because his role
is very unusual--he is now almost a vice president, Yeltsin's
"political double." That is why it was necessary to have Primakov
there, because having Kiriyenko in this spot was simply laughable.
Primakov's task is to ensure the succession of power, compliance
with the Constitution, and preventing violent scenarios in the
development of events. You never know what could happen to the
President. It was preferable to have a man whom Yeltsin trusts, to
whom both the military and enforcement agencies would listen, under
whom the parliament would not riot, and at the same time, should it
come to elections, somebody who hold them, and hold them honestly.
And in addition to all this, this man should not be a candidate for
president. How do you put it all together? Such a solution was
found.
[Rybyanov] Could another compromise figure be found for prime
minister?
[Yavlinskiy] This compromise is the result of the 1996
elections. Do you know what failure means? Someone who, of two
evils, chooses both. This is what we did in 1996. One evils sits in
the Kremlin, the other--in the Duma. Who knows now which one is
greater, and which, smaller?
[Rybyanov] So, you are saying that the Communists' coming into
the cabinet was inevitable?
[Yavlinskiy] Do not forget that Maslyukov was brought in as
first deputy by the "young reformer" Kiriyenko. Which means that it
was Yeltsin's position on principle. Friday morning, before the
vote, we met with Yevgeniy Maksimovich. He said right away: Here are
my candidates--Maslyukov and Gerashchenko. I expressed my doubts. He
said: I have already made a decision. Everything became clear: They
started forming an economic team on the basis of the old
rules.
There is just one important difference: I believe that, being
a political prime minister, Primakov must be ready, if necessary, to
replace the economic team while remaining on his post. Otherwise we
will keep endlessly electing prime ministers.
Actually, think about the substance of what is currently
happening. Yeltsin's era is coming to an end. Our common task is to
have it end as peacefully as possible, because Boris Nikolayevich is
a man for whom it is very difficult to finish anything peacefully.
And this is not just Yeltsin's era ending--this is the Soviet era
ending. Our President is a former member of the Politburo, and
former Prime Minister Chernomyrdin used to be a member of the CPSU
Central Committee. We need to bring the country to the end of this
era with minimal losses. To avoid another Chechnya.
[Rybyanov] Well, you could fight for this in the
cabinet.
[Yavlinskiy] This task would be more effectively dealt with
not in the cabinet but through public politics. Building a civil
party in Russia is no less important than being deputy prime
minister for social issues. Why has the Yeltsin regime fallen apart?
Because it has not created anything for self-reproduction. In his
entire time as a politician he has not even created his own party.
He has no personnel reserves. The situation with Primakov's
appointment was necessary to keep the country from exploding. Of
course, they tried, but they did everything in such a way that it
was immediately obvious that they were completely inept. One day
they create this stupid Rybkin party, then the NDR [Our Home Is
Russia] that barely makes it to the Duma--with their resources! By
the summer of this year it had become clear that the Yeltsin regime
has exhausted itself. It has no future. In addition, a deep
spiritual crisis began. In this century, revolutions in Russia have
taken place not when the people were hungry but when the people
rejected the authority. There was no famine in 1991. By this summer,
we have approached the same line as, for instance, in 1917. People
simply cannot stand the sight of this authority. As in a family on a
brink of divorce--quarrels, arguments, and then everything just
dies, and one does not want anything anymore, good or bad.
Both in 1917 and in 1991, society got out of this spiritual
emptiness by dealing the country a terrible, colossal blow. The most
important thing right now is to not repeat the same way of getting
out of the spiritual crisis. This is a very dangerous and important
time for us, and God willing, we will pass through it safely. This
era will finally end. And the problem is not the Communists--the end
of Soviet mentality is near....

*****

#13
Jamestown Foundation Monitor
September 30, 1998

PRIMAKOV THREATENS REBELLIOUS GOVERNORS WITH DISMISSAL. Russian Prime
Minister Yevgeny Primakov warned a meeting of regional leaders yesterday not
to go down the path of "dangerous separatism." He said the center would not
tolerate "illegal and unconstitutional" moves by regional leaders who
"display the mentality of feudal princelings." September tax receipts,
Primakov complained, amounted to only half of the planned sum (NTV, BBC,
September 29). Primakov said on his appointment that one of his main aims
would be preventing the disintegration of the Russian Federation. During
Russia's latest economic crisis, regional governors scrambled to protect
their populations from hardship. Many announced unauthorized measures such
as withholding tax payments to the center, freezing consumer prices and
preventing the export of food from their regions. Many of the governors were
not so much grabbing power as desperately trying to cope with the problems
in their regions provoked, as they see it, by the incompetence of the
central government.

Primakov told the governors that his government is preparing legislation
which will make it possible for governors who break the law to be removed
from office. Originally, regional governors were appointed directly by
President Boris Yeltsin, who also removed them at will. In the course of the
last two years, however, all the governors have stood for direct election in
their regions. The Kremlin has repeatedly claimed that the president still
has the right to fire renegade executives, but the claim is on weak legal
ground and Yeltsin has not dared to put it to the test. Primakov now intends
to fill the vacuum. The obvious solution--a mechanism allowing governors who
flout the law to be impeached--is problematic because the upper house of the
Russian parliament is made up of governors and regional legislators who
would be unwilling to set a precedent by condemning one of their number.
Instead it is likely that Primakov's government will resurrect a draft law
of 1993 calling for the Constitutional Court to rule in such cases. That
bill was not enacted at the time, but it now seems likely that Primakov will
try to get it onto the statute books.

Eduard Rossel, governor of Sverdlovsk Oblast, said he was opposed to the
center's asserting the right to remove governors. In his view, the main
problem is not the waywardness of the governors but the vacuum of power in
Moscow (NTV, September 29). Rossel knows what he is talking about. He was
himself removed from power by Yeltsin in 1993 after he threatened to turn
Sverdlovsk Oblast into a Urals republic. He won his post back, however, in a
direct election in 1995 and has been in power ever since. The conflict was a
landmark in the evolution of the Kremlin's relations with the regions.
Rossel continued to promote the interests of his region, but through
cooperation rather than confrontation. In 1996, Sverdlovsk became the first
Russian region other than a republic to sign a power-sharing treaty with the
federal center.

*******