October 4, 1998    
This Date's Issues: 2410•2411

Johnson's Russia List
#2411
4 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russians protest as government plan still unclear.
2. Ray Kroll: Dostoyevsky and Russian tourism.
3. Ira Straus: Re not losing Russia.
4. Michael Kagalenko: Re 2407-Brody on shock therapy.
5. Declaration of Marxist-Leninist-Stalinist Platform in the Communist 
Movement to the workers of Russia.
6. Jim Vail: New Deal comparison/
7. Dmitri Gusev: IMF-Russia Bailout Loan Agreement Legally Non-Binding.
8. Peter Necarsulmer: Remarks to US-Russia Business Council meeting in
Chicago. ("Managing Operations in the Current Crisis")
9. The Independent (UK):Best of enemies rewrite history of hate.
Armenians, Russians, Azeris agreeing on the past? Phil Reeves in Georgia
observes ancient hostilities set aside for a schoolbook.
10. Elisa Munoz: INFO-RUSS: Nikitin's trial.]

******

#1
Russians protest as government plan still unclear
By Dimitry Antonov

MOSCOW, Oct 4 (Reuters) - Around six thousand Russians marched through the
streets of the capital on Sunday to mark the 1993 crushing of a coup attempt
by the Soviet-era parliament and prepare for a day of nation-wide strikes next
week. 
The protests, mostly by people from Russia's left-wing, were held as the
government of new Prime Minister Yevgeny Primakov faced the tough task of
coming up with a clear plan to end the ex-Soviet giant's deep economic crisis.
Russian officials in Washington acknowledged after talks with the
International Monetary Fund (IMF) that negotiations on further credits would
have to start from scratch given the serious turn for the worse the economy
had taken. 
Communist leader Gennady Zyuganov, leading the march to the White House
government building, urged the protestors to take part in a nationwide day of
action next Wednesday. 
The October 7 protests are against the slide in living standards and the
economic and political crisis. They are also aimed at pressuring President
Boris Yeltsin to quit. 
``I call for you and your relatives to go on October 7 and support these
demands (the resignation of Yeltsin and the creation of a coalition
government),'' Zyuganov said. 
A Moscow police spokesman said that around six thousand people had joined the
Sunday march. 
``I have spoken with the governors of 45 regions and they told me their
regions will take part,'' Zyuganov added. 
``We don't trust the Yeltsin regime and we hate it,'' said one middle-aged
woman who held a big banner with the words ``Long live the Soviet
Constitution'' emblazoned across it. 
The Sunday demonstration was the second of the weekend to mark the 1993 putsch
attempt and its violent quelling by Yeltsin. Several hundred people joined a
protest on Saturday. 
Dozens of people were killed when Yeltsin sent in tanks on October 3, 1993,
against hardline opponents who had defied his decision to dissolve the Soviet-
era parliament by occupying the White House parliament building. 
Every year since then anti-Yeltsin forces have staged marches and rallies on
this date but now their protests carry added resonance as Russia grapples with
soaring prices, job losses and a sliding rouble. 
Primakov is the latest to take on the task of ending Russia's crisis but has
still to come up with a clear plan some three weeks after taking office. 
He must find a definite set of measures to stabilise the rouble, which has
plunged 60 percent since mid-August, pay back billions of dollars of debt and
salaries and find ways to ensure the proper funding of the budget. 
Finance Minister Mikhail Zadornov, one of the few remaining liberals in
Primakov's cabinet, said in Washington after talks with the IMF that any
further credits will depend on the economic plans that the new government
comes up with. 
``It is us who will make the decisions. The position of the international
(institutions) will depend on what budget and tax laws are adopted by the
parliament,'' Zadornov told reporters after meeting ministers and central bank
chiefs of the wealthy Group of Seven industrialised countries. 
Zadornov also scaled down the estimate for external financing for the fourth
quarter, saying a budget would be presented with a figure of just $2.5
billion. 
This compares with $4.3 billion that Russia had been hoping to receive in a
second tranche of expected IMF credits. 
``We have a totally different situation now so we basically have to start
talks with the IMF from scratch,'' said one Russian senior official in
Washington who declined to be named. 
Primakov has tried to allay fears that he was planning to reintroduce Soviet-
style economic management. 
He reassured a group of top foreign investors on Saturday that the dollar
would be allowed freely to circulate and that privatisation would not be
reversed. 

*******

#2
Date: Sun, 04 Oct 1998
From: "Ray Kroll-Kroll Associates, Moscow" <krollrf@aha.ru>
Subject: Dostoyevsky and Russian tourism 

David, 

This letter came into my possession while I was walking near Red Square last
night. Ray Finch 

FYODOR D.'S LETTER TO THE MINISTER OF TOURISM.

Sir, I trust that the events of the last month have finally laid to rest
your plans to expand the crystal K-Mart palace near the Kremlin. Didn't I
warn you that, underground or not, such a construction is not compatible
with the Russian soul, nor will it help in attracting foreigners. Tourists
come to this country not for blue-light specials, but for a stiff snort of
irrationality. They're bored with comfort and security and want
unpredictability, arbitrariness and yes, maybe suffering (even if its only
vicarious). What will they write home about if you improve Russian driving
practices, clean public toilets or level the sidewalks? What would be the
point of visiting Russia if you were to root out the corruption,
bureaucracy, superstition and drunkenness? Remove the suffering and you
diminish the joy. 

As I've reminded you more than once, a psychiatric ward is infinitely more
interesting than a shopping mall. The little children might have been happy
that you transformed the Russian jungle into a Disney World ride, but most
adults would have been dissatisfied. Material happiness is shallow next to
the stormy depths of Russian experience. Future transformations ought to
remain along the tried and true paths of a roller coaster going nowhere or a
madhouse with an elegant facade. 

Don't be distressed by the insincere bleatings of those in the west over
"who lost Russia?" In the eternal scheme of things, the last shall be
first, the lost, found and the poor, rich. Besides, it is infinitely more
satisfying to live in a mud hut of our own design than in one of their
sanitary plastic suburbs. Who is happier: the isolated resident of some
opulent nursing home or the old woman selling cigarettes by the bus stop?
Russia's contribution to the modern world remains unchanged: the kingdoms of
this earth are passing away, and those that put their faith in this world
are certain to be disappointed. In this regard, we are way ahead of our
western brothers. 

Moreover, as the world's basket case, we provide for unlimited charity among
the wealthier nations. Beggar, prodigal son and sinner, we serve as a stern
reminder for the rest of the world that "there but for the grace of God go
I." What other country could provide such comic relief, such pathos, such
rich material for the evening news? And you were hoping to change this
country into one of those 8-to-5, law-based, Sunday-brunch type nation.
That's a true recipe for desperation.

Finally, in putting together your new tourist brochure, consider the
following slogan (it's guaranteed to draw a crowd): "Russia will continue go
its own way-even if the road leads off a cliff." 

Yours, Fyodor

*******

#3
From: IRASTRAUS@aol.com (Ira Straus)
Date: Sun, 4 Oct 1998 
Subject: Re: not losing Russia

It seems -- judging from Yale Richmond's and another response to my "How not
to go on losing Russia" piece -- that I didn't make 100% clear the purpose of
my paragraph 8.a. This led to some replies that don't really catch the point.
A couple readers seem to have gotten the mistaken impression from it that I
think that we're heading inevitably into a new cold war, and that we should
start fighting the new cold war straightaway, e.g. by expanding NATO to
Russia's borders. That's not what I actually wrote, and not what I meant.
Sorry about any confusion anyway; I suppose I should make a clarification
here.
8.a. is to be read conditionally. The logical condition for it is stated one
sentence earlier, in 8.: "If Russia does come to be decisively lost and we
have to fight a second cold war, then ..." Then of course, let's gear up to
do it right. But I'm not saying any such thing will or must happen. 
Paragraph 7 provided a context that, together with the first sentence of 8.,
was meant to make clear the logical turns in the argument: 
"Russia isn't decisively lost yet. We're losing it fast, but there's probably
several years to go before a decisive turn to an anti-Western regime. We need
a full-service program to salvage the chances that it won't be lost -- all the
measures described above, and then some." The last phrase referred to all the
measures described in paragraphs 1-6 (i.e. all the paragraphs above 7), not
paragraph 8 (which is not above 7) which starts from a hypothetical opposite
premise, "If Russia does come to be decisively lost...".
Evidently these logical turns could get missed more easily than I counted on,
at least in a quick read. I hope they're all clear now.

******

#4
From: mkagalen@coe.neu.edu (Michael Kagalenko)
Subject: Re: 2407-Brody on shock therapy
Date: Sat, 3 Oct 1998 18:20:34 -0400 (EDT)

Eric Brody speaks in defence of the economic "shock sherapy," as well as 
its psychiatric analogy, electroconvulsive therapy (ECT). I would
like to comment on both;

> But it is my (lay) understanding that, frightening though the
> procedure is to contemplate, ECS has a very strong record of safety and
> effectiveness in treating severe depression.

This what ECT fact sheet from National Mental Health Association
states:

"After 60 years of use, ECT is still the most controversial psychiatric
treatment. Much of the controversy surrounding ECT revolves around its
effectiveness vs. the side effects, the objectivity of ECT experts, and
the recent increase in ECT as a quick and easy solution, instead of
long-term psychotherapy or hospitalization. 
Because of the concern about permanent memory loss and confusion related
to ECT treatment, some researchers recommend that the treatment only be
used as a last resort. It is also unclear whether or not ECT is effective." 
(this is quote from complete fact sheet, which can be found at
http://www.nmha.org/infoctr/factsheets/62.php )

The resemblance of this fact sheet to the criticisms of IMF programs is
uncanny. 
I would like to see the proponents' answer to the question posed by
Alexander Solzhenitsin: "Would you treat your mother with shock therapy ?"

Lastly, Eric Brody asserts that Polish economic success has been due to
the IMF-prescribed "shock therapy". But former Polish finance minister
Grzegorz W. Kolodko wrote the following in July 7, 1998 issue of the "New
York Times": "As a former Polish Finance Minister, I believe that if
Poland had continued the policies pursued up until 1992 (the infamous
"shock therapy") we would now be where Russia is today -- that is, in a
seemingly permanent financial crisis." 

******

#5
Date: Tue, 29 Sep 1998 
From: Mark Jones <Jones_M@netcomuk.co.uk>
Subject: Declaration of Marxist-Leninist-Stalinist Platform in the Communist 
Movement to the workers of Russia

Workers of all lands, unite!
Moscow, 23 September 1998
Comrades, Class-Brothers!

On 7 October 1998 the leaders of the FNPR [Federation of Independent
Russian Unions], the KPRF, and the NPSR [independent trade unions of
Russia] will (as in 9 January 1905 [Bloody Sunday]) take you to the
authorities to beg for mercy; but, unlike 1905 events have developed in an
outrageously convoluted manner. It's unlikely that soldiers will fire on the
demonstrators -- because at the head of the demonstration will be the
authorities themselves: governors, ministers, heads of administrations.
The most stirring speeches will be pronounced by these leaders: for the
governors, ministers and heads of administrations are the Father Gapons
of the end of the 20th century. It is they who will call the regime a
disgrace, who will complain about the downfall of Russia and call for
reason, common sense and calm.

The Gapons will call for elections for the presidency and Duma, and the
creation of a government of 'National Interest'. Then after you have
accurately folded away your banners and slogans already faded during the
past seven years, you are condemned to go home and wait another half
year for unpaid salaries and for jobs.

All this is an old story. Steam was periodically vented this way during the 
past seven years and as a result it was possible to rob the people and to
plunder Russia without let or hindrance during this seven years.
Scum with no real roots or origins, who seized power through trickery
and who promised mountains of gold to credulous and trusting workers,
robbed the people of Russia, stole factories, mines, enterprises and
extractive industries -- the whole national property (which formerly
contributed enough to the national budget to easily fund the world's
strongest army and the most advanced sciences, and in consequence,
defence industry, education, the most universal welfare provision and
system of sports, the most advanced system of healthcare and of
multinational culture).

Though not ideal, our own cherished Soviet power gave each employee
the right by law to address and be answered. The Soviet power provided a
minimum wage (70 rubles) on which one could exist. The Soviet power
guaranteed salary payments twice a month. Under the Soviet power
veterans received a monthly pension on which it was possible to live
well.

Under the Soviet power there was no unemployment. Under the Soviet
power 80 per cent of families received flats with all facilities and rental
including all communal services was only 20 percent of a single wage.
Under the Soviet power anyone who wanted a higher education and
commensurate salary, had the opportunity to do so. The Soviet power
provided all-round development of all the nationalities of the USSR and
for all territories of the USSR.

That is why on 7 October it is necessary to require, not a new president,
not a new state Duma, not a mythical government of national interests, but
the restoration of Soviet power. It is necessary to raise the demand among
all nations of the former USSR for the reconstruction of the Soviet Union.

These messieurs (not comrades) who are trying to take over the leadership 
of your day of protest on 7 October think first and foremost of
themselves, not about Russia and not about the Russian people. They will
once again speak of creating new jobs while 60 percent of old jobs are
vacant. They will assure you that under the Soviet power, those old
working places produced goods which no-one required. But how did that
production which 'nobody wants' disappear beneath the earth? It appears
that we've eaten everything we could, it appears that it is possible to wear
the same old clothing from then until now; that it why it is better not to
shout about creating new working places but better to restore old ones, to
restore Soviet industry which worked and which produced necessary,
valued, solid, good quality products.

On 7 October, these messieur-comrades will blab about 'capitalism with
a human face', such as in Germany or Sweden - about the 'mixed
economy', about the 'monstrosity of extremism'. Again they will try to
seduce you with mirages and frighten you with phantoms; they will do it
to people who no longer believe anything or fear anything. In fact for
Russia the possibility of achieving either German or Swedish capitalism
does not exist: what IS possible is Congolese capitalism, Somalian
capitalism, Botswanan capitalism. Because as there, so in Russia, foreign
loans were supplied for rights to extract natural resources -- and the loans
themselves were stolen by governmental thieves. Because there, as in
Russia, the governments are completely dependent on foreign support.
The government does not inform even the deputies of the State Duma
what happens here. Foreign interests imposed a domestic debt of rubles
420bn and an external debt of $140bn. For domestic debt, the government
offered 120 per cent interest, and for external debt, 9.5 percent. The entire
Russian budget is swallowed by this debt!!! Thus the former prime
minister stated that 75 percent of the budget would go on debt repayments
in 2002. And these funds were simply stolen. Where, exactly, are the
power stations, mines, oil wells, chemical and metallurgical plants,
machine building plants, railroads, light industry, that these foreign loans
were to pay for? Show us! Under the Soviet power, for substantially
smaller loans, gigantic industries were constructed and 90 percent of the
housing, hospitals, museums, theatres, sports facilities, schools, institutes,
universities, and may other things we have today. Russia cannot live
under capitalism!

The Russian people will become extinct under capitalism!

On 7 October, communists must join the protests not under feeble
slogans such as 'Russia - Labour - People's Power - Socialism!'. 'For a
Government of National Interests!' 'Give us our salaries!'

Communists must advance communist slogans: 
'Proletarians of all Lands, Unite!'
'Glory to Proletarian Internationalism!'
'Down with the Exploiter-Traitor Regime!'
'Restore the Soviet Power!'
'Down with Private Property and Wage Slavery!'
'Expropriate Industry and Banks!'
'All Power to the Soviets!'

Communists - like the Bolsheviks in 1905 - must take part in the 7
October protests, must be in the midst of the masses. But the slogans of
the KPRF, FNPR, NPSR, are not enough for the communists because they 
give nothing to the masses. What did the first State Duma do for the
people? Nothing! What did the second State Duma do for the people?
Nothing! What did the third State Duma do for the people? Nothing!
What did president Yeltsin do for the people? Nothing! What will
president Luzhkov, Lebed or Zyuganov do for the people? Nothing! Nor
will a coalition government or government of national interest do
anything for the masses, if Russian capitalism continues to exist in any
form.

The 7 October protest was designed to help preserve temporarily this
regime by the KPRF, FNPR, NPSR.

Communists must give this demonstration real revolutionary
significance.

Co-ordinating Committee, Marxist-Leninist-Stalinist Platform in the
Communist Movement.
email: intcentr@aha.ru
postal address: a/ya 12, Moscow, 115612 Russian Federation
[trans N Jones]

******

#6
From: "Jim Vail" <jimvail@hotmail.com>
Date: Fri, 02 Oct 1998 
Subj: New Deal comparison

I find it strange that nobody has questioned the need for Russia to 
implement Franklin Roosevelt's New Deal program. As I understand it, the 
New Deal was a great program that provided a wonderful psychological 
boost to an economically depressed nation. However, my studies dictated 
that it was really the Second World War which ended the Depression and 
put America back on the road to full recovery. Don't forget also that 
the U.S. Supreme Court ruled many of Roosevelt's New Deal programs 
unconstitutional. To make any comparisons today with what Russia needs 
invites a more thorough discussion and analysis.

*******

#7
Date: Sat, 03 Oct 1998 
From: Dmitri Gusev <dmiguse@cs.indiana.edu>
Subject: IMF-Russia Bailout Loan Agreement Legally Non-Binding 

It seems that the recent $22 billion plus loan agreement 
that Anatoly Chubais "conned" the IMF into signing is 
not legally in effect yet, according to the Russian laws.
I located the text of a July 1, 1998, resolution
of the State Duma "On Approval of the Program of
the State External Borrowings of the Russian
Federation, and the Credits Provided by the 
Russian Federation in 1998."
Appendix 1 of the document allows the government
to receive up to $2.7 billion dollars in non-binding
credits from the IMF in 1998.
Article 6 of the main text states that the
loans obtained by the federal government
without proper "processing" ("oformleniye")
required by the 1994 Federal Law "On State External
Borrowings of the Russian Federation, and the
State Credits provided by the Russian Federation..."
and Article 31 of the Federal Law on the 1998
Federal Budget WILL NOT BE CONSIDERED PART OF
THE STATE EXTERNAL DEBT [of Russia].
The 1994 law says that any international loan 
agreement concluded on behalf of Russia and not
listed in the corresponding yearly program of
the state external borrowings requires ratification
by the State Duma if the sum of the loan is above
$100 million.
Article 31 of the March 4, 1998, Federal Law on the 
1998 Federal Budget specifies that the only 
international loan agreements that "must be fulfilled"
("ispolneniyu podlezhat") in 1998 are those listed in 
the 1998 program of the state external borrowings. 
That had me puzzled until I found out that Part I of
the 1998 program contains data on the international 
loan agreements concluded by Russia in 1992-98
that are partly utilized in 1998 (some money would be received), 
or cause "obligations on guarantees" ("obyazatel'stva po
garantiyam") to arise this year (some money would have to be
paid back).
Finally, Article 3 of the Law on the 1998 Budget
lets the government change the volumes of
external and internal borrowings provided that
the volume of the aforementioned borrowings remains the
same, the servicing costs of debt are lowered, 
and the overall volume of the state debt of
the Russian Federation is reduced (not increased),
and also in order to meet earlier obligations of
the Russian Federation, with subsequent proposal
of changes to the program of the state external
borrowings. The changes would have to be approved
by a Duma resolution.
Clearly, even the first $4.8 billion trenche
of the IMF bailout loan was "too large", a
significant part of it used to support the
rouble (and not, say, to pay off an earlier
debt).
I recall a former employee of the EBRD respond 
to one of my previous JRL articles on this topic 
by stating that, for all he knew, the Duma determined 
the upper limit on the foreign borrowing each year, 
and as long as the government stayed within the limit, 
borrowing remained legal. And yet the legal situation is
more complicated, it turns out. 
The IMF was so easily duped, it's scary. Reading
all this Russian legalese is difficult, indeed,
but how could they just trust Chubais, whom I
would never trust with a cent of my own money?

******

#8
Date: Fri, 02 Oct 1998 
From: PBNPres@aol.com (Peter B. Necarsulmer)
Subject: Remarks to US-Russia Business Council 10/1/98

Dear Mr. Johnson:

You may find my remarks to the 6th Annual US-Russia Business Council Meeting
in Chicago on Thursday, October 1, 1998 to be of passing interest. The
subject was "Managing Operations in the Current Crisis." I was joined on the
panel presentation by the Russia country managers for Boeing (Douglas
Davidson), Caterpillar (Stuart Levenick), Baker & Botts (Kevin Dent) and
A.T. Kearney (Martin A. Cannon).

US-Russia Business Council Annual Meeting
October 1, 1998
Chicago

Remarks by Peter B. Necarsulmer
Chairman & CEO, The PBN Company
Chairman, C.I.S. Strategies, Ltd.

What could be the relevance of this lemon (I am holding) to a discussion of
the operational impacts of the current financial crisis in Russia? 
If you like a twist in your martini or a squeeze in your vodka and tonic,
it can be meaningful indeed. Especially when you consider the price of lemons
in Moscow today.
I won't keep you in suspense. Two days ago, one lemon cost THREE-DOLLARS
AND FIFTY-CENTS at Seven Continents, one of the more popular full-service
supermarkets in central Moscow.
Like many in Moscow today, a key element of my daily anti-crisis operations
program is the consumption of a cocktail or two when the work day ends at 10
or 11 at night.
So, confronted last Monday with this outrageous and astronomical price for
a single lemon, I had to make a crisis decision which, in approach, is really
no different than dozens of other operational decisions about banking, employee
relations or currency exchange which confront my business and the businesses
of my American and European clients each and every day.
I could take the easy way and acquiesce in this supermarket blackmail. I
could simply pay the ridiculous price and get on with the cocktails.
Alternatively, I could take the other easy road--throw the lemon back, use
my ever-growing vocabulary of Russian slang and promise myself to return to
Safeway and America as soon as possible, never to return to Russia.
Or, I could take a third way. Calm myself, walk two blocks to a 
neighborhood Russian produce store, and buy an entire kilo of the exact same
lemons for the
dollar equivalent of A DOLLAR TWENTY-FIVE. That's what I did. And the
cocktails that night were even more satisfying for this little bit of extra
effort.
In fact my lemon experience of several days ago is a good analogy for our
discussion of Russia in crisis.
In terms of daily operational impacts for long-term players in Russia,
there exists, or shortly will exist, a practical solution for the vast majority 
of day-to-day operational questions.
Doug Davidson's description today of Boeing's steady and studied
step-by-step approach to dealing with its banking, employment and salary 
payments issues is an excellent example. In fact, there are several dozen
mid-sized banks operating today that are safe and efficient providers of all 
essential banking services. There are numerous legal methods from personal to 
passport accounts which allow transfers into Russia of hard currency. And, it
goes without saying, that there is a larger pool of highly motivated and highly 
skilled labor on the market today than at any time in recent years.
Yes, the larger banking system has been decimated and yes inflation is
beginning to rage. But is Russia now just a lemon? I don't think so.
Are foreign investors and commercial agents really so bad off after all?
A little bit of memory goes a long way.
The level of panic and anxiety among players in Russia is inversely
proportional to their national origin and length of residency. There is a
stark gap between the panic factor among Russians and foreigners--Russians
know Russia has been around for 1,000 years and will be here for a 1,000 more
to come. They have staying power and they have witnessed a 1,000 times
worse than today's realities.
So too, foreign businessmen. In the late eighties and early nineties, the
major concerns were receiving and placing phone calls, sending a fax, making a
photocopy, finding medical care, securing a hotel room with an acceptable
resident population of cock-roaches. We take all of this for granted today.
My point is that a dollop of nostalgia puts today's operational troubles=
in
context. The hassles associated with cash rather than credit card
transactions, shortages of imported Oscar Meyer wieners and Charmin toilet
paper can be taken in stride. These are technical problems which will and
are being solved.
More compelling are the memories of the August 1991 coup and the 1993
storming of the White House. Likely traffic jams and work stoppages
anticipated for next week's October 7 manifestations can hardly be compared
with the trepidation and white knuckle fear occasioned by tank missiles
flying overhead, snipers shooting randomly from roof tops and friends literally
bleeding to death in your arms.
The fact is, today it is still business as usual for us and most of our
clients. 
Of course, some have closed their doors either literally or
figuratively--especially our friends in the capital markets. But the serious
players whom we know and work with personally like Boeing, Coca-Cola, Philip
Morris, Mary Kay, Chevron, Polaroid and Diageo are in the market to stay.
And they want you to know that.
The reasons are simple. The fundamentals which drew them and you to the
Russian market remain largely unchanged. In so many respects, realities are
far superior today than only five years ago.
150 million consumers are still in place, the vast majority with a
heightened level of demand, sophistication and knowledge.
Russia's highly educated and cost-effective work force is still in place.
The Federation's untold and largely untapped natural resources are=
still in and on the ground.
While the Ruble may be a shadow of its former self, Russia's technical and
scientific greatness is not diminished in the least.
And to these fundamentals, we may add a number of factors mentioned so
correctly by Dan Yergin in his remarks earlier in the day....
A constitution--however flawed--and constitutional framework which are
intact and respected.
A committed constituency of unreconstructed capitalists and free-
marketeers.
Tens of millions of anti-communists.
Government structures that, no matter how corrupt, are more technically and
professionally capable today than at any previous time.
A functioning telecommunications infrastructure.
A functioning construction industry.
Warehousing and distribution facilities.
Air transportation and mobility.
Roads and highways.
And the list goes on.
I am not going to stand here and be an apologist for Russia. Nor am I going
to minimize the current difficulties. 
No one should minimize the near total destruction of the banking and monetary
systems.
More important, perhaps, is the bankruptcy of Russia's credibility in the
world, especially in the financial markets. Russia's lack of credibility not
only reflects but sustains the current economic crisis=97for Russia itself, and
for all of us who do business there. And, among outsiders, this credibility
gap is greatest for America and American businessmen who, rightly or wrongly,
are tarred to a measurable degree by the Russian public and political
leadership with major responsibility for the meltdown.
Nevertheless, the central point is that there is an opportunity for turning
the lemon which is Russia today into lemonade. And nowhere is this more true
than in governmental policy-making.
The message to each and every operating company represented here today is,
DO NOT BECOME SO PRE-OCCUPIED WITH DAY-TO-DAY OPERATIONAL MATTERS THAT YOU MISS
THIS UNIQUE OPPORTUNITY. Responding effectively in government relations terms
to the operational crisis means, in significant part....
ONE....Redefining your company in the eyes and ears of government at the
federal and regional level. Most important, let the policy-makers know you
are staying, not running from the market.
TWO....Clarifying your strategic business objectives and aligning them with
the priorities of the new government--about which I will speak more in a
moment.
AND, THREE, Becoming actively engaged in the decision-making process and
influencing outcomes, not sitting back and waiting for governmental decrees,
Duma votes and IMF negotiations.
All of the critical laws defining social and economic relations in Russia
are now back on the table. The next three-to-six months will be a period of
opportunity for you to help define outcomes on the issues that matter
most---precisely the issues which have been defined year in and year out by
this Council and its members as key impediments to business development in=
the Russian Federation.
The tax system.
Customs, tariff and duty regimes.
The banking system.
The monetary system.
Labor laws.
Foreign investment.
Production sharing agreements.
Intellectual property.
Alcohol and tobacco production and distribution.
The bankruptcy laws.
Possibly even laws on private property.
Of course, formal RF governmental policy is yet to be defined.7And it
was not defined in the "policy emission" which emerged this afternoon from Mr.
Maslyukov only to be clarified as not the Government"s policy only one
hour later by Mr. Primakov in a television interview.
However, the priorities of this Government are rather clear. Defining your
companies' governmental affairs strategies both for this period of crisis and
over the longer term must take these priorities into account.
It's Russia First from this point forward....not Washington and not the
West.
There is a realignment of true north on Russia's geopolitical and economic
policy compass away from the US and the IMF toward internal considerations
such as payment of pension and wage arrears, and toward Europe, particularly
in light of the ascendancy of Tony Blair in Britain, and the continuing and
overarching importance of Germany to Russia.
Primakov, Yeltsin and the entire Government are extremely sensitive to the
needs and priorities of the governors and the regions--which is both a
political and an economic imperative for the new Government.
Domestic producers are first in line, especially the military/industrial
complex, agriculture sector and natural resources.
Revenue generation of any kind is the order of the day--taxes, export
currency sales, import duties, license and patent registration fees.
Direct foreign and domestic investment will be favored. Portfolio and
speculative investors past and future will be shunned.
Fighting government corruption will be a priority.
Stopping the brain drain is also high on the list.
So what prescriptions and advice may be offered to foreign operating
companies in Russia?
1) Be clear on your company's objectives. If you are staying, be clear on
why you are staying and how you intend to do it--be prepared to communicate
this to all key audiences, starting with your employees, suppliers and
business partners; with your home offices; and, with the news media and
government officials.
2) Don't stand in line outside of Mr. Primakov's office. In the federal
government, seek out the senior level apparatchiks who always have and
always will make 90% of the decisions...either by their commission or omission.
3) Go to the regions. Seek out members of the Council of the Federation.
Work with individual Duma deputies representing specific regions. Work with
regional compacts. Bear in mind that the most important economic and
political dialectic in Russia over the past 8 years has come to pass--namely,
the devolution of power away from the center to regional sources of political
and economic authority. On this point, I could not agree more with Dan
Yergin.
Again, go to the regions and study carefully those companies that have
achieved the greatest success and replicate what they have done. Philip
Morris, Caterpillar, Wrigley, and MARS. Coca-Cola. McDonald's. Pepsi.
4) Work with and support AmCham, the US-Russia Business Council, GCC. All
of these organizations are active, effective and get results.
5) But also understand the limitations of American organizations in today's
realities and a palpable decline in American influence. Work with the EU High
Commission, European Business Club, German Business Club, commercial
counselors of other G-7 countries and multinational forums such as WTO Working
Groups, the Embassy Working Group. Work with domestic producers associations
and the Russian Chamber of Commerce and Industry. If ever there was a time
for coalition building and power in numbers, that time is now.
6) Learn the lesson once and for all. Handshakes mean nothing. Trips to
the mountain top have extremely limited value. The government relations
function needs to be institutionalized. Run your operation in Russia just as 
you do it in Washington, DC or in Brussels. Have the people in place. Retain 
the right specialists. Use industry associations. Be prepared to give in
order 
to get. Remember that, as George Bush was fond of saying, half of life is
showing
up.
7) Match your corporate interests with Russian national and regional
interests. Again, I point to those companies which have followed this most
fundamental axiom. Boeing is an excellent example in its efforts to work with
the Russian Space Agency, Tupalov, Ilyushin and numerous research and design
institutes throughout Russia. Philip Morris' successes in the Leningradsky
Raion is another case in point. Keep in mind the priorities of this new
government and of regional governments--not simply the priorities of the IMF.
8) Find the ways to provide technical and other support to achieve priority
federal objectives. This is not simply about relationship building--it's
about realizing strategic business objectives. If you are in the alcohol
business, roll up your sleeves and work with government on designing a
monopoly system that keeps you in business. No matter what your economic
sector, assist this new Government in developing its anti-corruption=
program.
Fine and good you say--but how can this be accomplished when the Government
has yet to be confirmed? How can we do business with a Government that looks
and acts more like Noah's Ark and the Tower of Babel than a functioning
executive authority?
Our view is that Primakov's is a transitional government with an historic
mission....responsible first and foremost for delivering on a promise of
political stability. To date, Mr. Primakov's track record is good.
What else can be said? A Primakov government appears to be one that is not
and will not be beholden to the Oligarchs and which is, in fact, committed to
real anti-corruption measures. If anyone can follow through on this promise,
it is the former head of the special services--he knows who is who, and he
knows where all the bodies lie. Mr. Primakov is a statesman and it is a fair
guess that he will insist on statesmanship from this evolving government...no
matter how long it lasts.
And, we think, it is much more important to keep our eyes focused not on 
the ministerial dance cards, but on the inner circles of trusted advisors that
will be most accountable for implementing the Primakov agenda.
I hope you find some value in these modest recommendations on how to make
good use of Russian citrus. In conclusion, I would like to leave you with=
one more thought.
One of the Wall Street banking houses likes to say..."we make our money
the old fashioned way, we earn it."
In fact, an awful lot of people were making money in Russia the quick and
easy way--and some were literally stealing it. Those days are over.
From this point forward, money and business will be made by those in Russia
who are prepared to earn it. It is a pleasure knowing that the members of the
US-Russia Business Council have and will continue to practice business in
just this way.

# # #
Peter B. Necarsulmer can be reached in Moscow at (7-095) 745-8700; in
Washington, DC at (1-202) 466-6210; or, by e-mail: pbnpres@aol.com.

*******

#9
The Independent (UK)
4 October 1998
[for personal use only]
Best of enemies rewrite history of hate
Armenians, Russians, Azeris agreeing on the past? Phil Reeves in Georgia
observes ancient hostilities set aside for a schoolbook 

THE DAMAGE caused by history's meddling hand is barely visible in Qazbegi,
high in the Caucasus mountains. The 17,000ft snow-crested volcano which rears
above the town has been dormant since before the fall of Troy. 
Wolves, bears, and wild goats patrol the surrounding forests, moving among the
glaciers and jagged brown peaks of north-east Georgia, as they have done for
centuries. Yet, in this timeless place, history is the topic at hand. Halfway
up a hillside, in a stark government chalet, a highly unusual meeting is
taking place. 
Gathered around a table are representatives of Armenia, Georgia, Azerbaijan
and Russia - fractious neighbours who have weathered centuries of war,
conquest, counter-conquest and local feuds as empires swept in and out in an
effort to control the strategic territory between the Caspian and the Black
Seas. 
The meeting has the look of a mini-summit. National flags in miniature and
green plastic bottles of mineral water adorn the table-top. But today, the
talk is not of border disputes, or landmines and battles or even of newly
independent nations wriggling free from Moscow's weakening grasp. 
These officials have made a four-hour journey up a winding, deeply pot-holed
road which connects Georgia with nearby Russia to discuss a small, yet
intensely sensitive issue: the creation of a history textbook for the children
of the Caucasus. They have broadly accepted, these academics and education
officials, that a book should be written that will help their teenage
schoolchildren understand not only their own national history, but that of the
next-door neighbours. 
Sound simple? Not here. Geopolitics, religion, rivalry and myth are as
thoroughly rooted in the soil as the Caucasus mountains themselves. What would
seem ancient history, a half-remembered trifle, to a westerner is unsettled
business in these parts. In particular, Moscow is still regarded warily after
70 years of imperial rule that produced Stalin (a Georgian), the KGB and
widescale suppression of national aspirations and human rights. 
Thus, rules are required. The project is overseen by the Council of Europe,
which is leading a drive to reform history teaching across the former Soviet
Union as part of its general efforts to encourage democracy and free thinking.
The participants have received "guidelines" stipulating that the book will
"not be written in a triumphalist, polemical or even vindictive" style. It
should be "neutral and realistic", and "free of ideological and political
stereotypes." Military issues - the region's countless wars - should be "dealt
with", but not with undue emphasis. 
A cursory glance at the first two decades of this century reveals the delicate
path ahead. How should the book deal with the Bolshevik Revolution, and the
subsequent acquisition and control of the Caucasus by the USSR? Or the war
between Georgia and Armenia in 1919, or - always the defining issue for the
Armenians - the 1915 massacre of their people by the Turks, friends of the
Azeris? 
And yet - though much wrangling seems inevitable - the signs are far from
hopeless. The driving force behind the project, known as the Tbilisi
Initiative, is Alison Cardwell, a dogged and defiantly optimistic British
official. She hopes to see the book in print by 2001. If all goes to plan, it
will include sections on the history of each of the four countries written -
crucially - by a small group of their own resident historians. Each country
will be responsible for telling its story as it would like its neighbours'
children to see it. This is far from an ideal recipe for thrilling history.
But Ms Cardwell dismisses suggestions that it will produce propaganda. "I
don't believe that will happen. I really think they will try their hardest to
do what they have been asked to do." 
Even a whitewash will be better than nothing. The Soviet Union created a
vacuum, leaving millions ignorant of any but the Communist version of history.
Its mendacious textbook, A History of the USSR, contained almost nothing about
the Caucasian peoples or other non-Slavs on the fringe of the Soviet empire. 
The hurdles are high and plentiful. At this week's meeting, the Armenians were
clearly wary. And the Russians were struggling to grasp the concept of "multi-
perspectivity" - the idea that there is more than one legitimate view of
history, and that these may validly contradict one another. But the first day
of the three-day meeting in Qazbegi, one of several stages towards
publication, ended peaceably. 
But in this divided region, merely getting people round a table is a
considerable accomplishment. Two of the participants, Christian Armenia and
Muslim Azerbaijan, are locked in an unresolved conflict over the enclave of
Nagorno-Karabakh, after a war in which 20,000 died. Relations between the two
new nations could scarcely be worse and remain one of several reasons for the
region's instability (along with Chechnya, two assassination attempts against
Georgian leader Eduard Shevardnadze and the unsettled conflict in Abkhazia). 
At bottom, last week's gathering high in the Georgian mountains, was about
conflict resolution. "We have got to have a textbook at the end of the day,"
said Ms Cardwell. "But getting countries to work together is what matters
most." 

*******

#10
Date: Fri, 02 Oct 1998
From: Elisa Munoz <emunoz@aaas.org>
Subject: INFO-RUSS: Nikitin's trial
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Dear Friends,

As you may know, Alexandr Nikitin is scheduled to face trial on 20 October
in St. Petersburg. I recently spoke with Thomas Jandl from Bellona, USA,
who addressed the AAAS Committee on Scientific Freedom and Responsibility
last month. Mr. Jandl has informed me that the judge in the case has
stated that at least parts of the trial will be open to the public. He
believes that it will be beneficial to have international observers attend
the trial. Do any of you know scientists who either live near St.
Petersburg or will be traveling to Russia around that time? Or, do you
know any scientists who speak Russian who may be willing to go? If so,
would your organizations be willing to contribute to the cost of sending an
observer?

As time is running short, please let me know at your earliest convenience.

Thank you.

Elisa Munoz emunoz@aaas.org

===========================================================
The details of Nikitin's case can be found at
the Bellona's home page
http://www.bellona.no/e/index.htm

or go directly to 
http://www.bellona.no/e/russia/nikitin/index.htm

Alex Kaplan, info-russ owner/coordinator sasha@smarty.ece.jhu.edu

*******