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Johnson's Russia List
 

 

October 7, 1998    
This Date's Issues: 24162417


Johnson's Russia List
#2417
7 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Komsomolskaya Pravda: Will the President Hear the Voice of the People? 
2. Novoye Izvestiya: "In the Years of Reforms, $100B in Western Aid Was
Taken out of Russia." (Jeffrey Sachs interview).

3. AP: Greg Myre, Marchers Rally Against Russia Government.
4. Jeffrey Barrie: Potemkin Protest.
5. John Helmer: Re Russian steel: reply to Barry Ickes & Clifford Gaddy.
6. Jim Vail: Mayor Luzhkov.
7. Baltimore Sun: Will Englund, Marsalis cheers blue Russia. Blues: Jazz
trumpeter Wynton Marsalis plays the history of jazz for Russians who know all about
the blues but aren't sure they'll ever swing as a nation. 

8. Boston Globe: Jean MacKenzie, Economists say Russia's bid to lift
economy may backfire. Personal income falls; inflation expected to soar.

9. The Moscow Tribune: John Helmer, EX-MINISTER ATTACKS GOVT OVER WAGES.
10. Anne Williamson: IMF & Russia.
11. AFP: Yeltsin in Good Health, Wife Says.
12. Washington Post: William Greider, Breakdown of Free-Market Orthodoxy.]

********

#1
Russia Today press summaries


http://www.russiatoday.com
Komsomolskaya Pravda
7 October 1998
Lead Story
Will the President Hear the Voice of the People? 
Summary
The daily wrote that from his office, President Boris Yeltsin can see
the lawns and spruces of the Kremlin, but not today's Russia. Kremlin
analysts and press reviewers create summaries for him in which reforms
appear successful and life happier. 
Aleksander Gamov wrote that, once, Yeltsin went to see a crowd of
demonstrators on Red Square. He arrived at the Spasskaya tower and watched
the crowd cry "Yeltsin's gang -- to court!" for 15 minutes. Not one of
protesters noticed the president standing 15 meters away from them. 
Gamov recalled that Yeltsin really is a stronghold of one of the main
achievements of the democracy -- freedom of speech, which the country was
deprived of for centuries. It is true that no one in Yeltsin's time has
ever been persecuted for anti-presidential statements. 
RUSSIA TODAY Notes: Thousands of Russians took to the streets on
Wednesday, as part of planned protests to demand an end to wage arrears and
the resignation of Yeltsin. Although union and Communist leaders predicted
that the ongoing economic crisis would prompt millions to join in the
demonstrations, according to initial estimates turnout seems much lower. 

*******

#2
Russia Today press summaries

http://www.russiatoday.com
Novoye Izvestiya
7 October 1998
Lead Story
"In the Years of Reforms, $100B in Western Aid Was Taken out of Russia" 
INTERVIEW WITH GEOFFRY SAKS, DIRECTOR OF THE INSTITUTE OF INTERNATIONAL
DEVELOPMENT AT HARVARD UNIVERSITY 
Summary
Novye Izvestiya interviewed Geoffry Saks, an American economist who was
an advisor to Yegor Gaidar's government in 1993. 
Saks said that the current situation in the Russian economy, general
corruption and the misappropriation of Western credits have created a
situation in which neither politicians nor ordinary citizens see a way out. 
Saks also said that in all the years of reforms, there has never been a
team in the government that acted for a single objective and coordinated
activities in the interest of a common cause. Top officials have ignored
the interests of the country and worked only for their own capital.
According to his own research, Saks said that $50 billion to $100 billion
in funding sent to Russia as Western aid or allocated for Gore-Chernomyrdin
commission programs has been taken out of the country. The money was
deposited in Western banks or used to buy property abroad. 

Saks said that, after returning to America, he spoke to everyone -- the
White House, the U.S. State Department and financial officials -- about the
Western money that had been stolen in Russia. He said he only met with
silence. In their private talks, however, officials admitted that the West
did not provide funds to Russia for economic reforms, but for purely
political reasons. 
RUSSIA TODAY Notes: Russian auditors, part of a commission from the
Duma, also announced recently that according to their research, the
government misspent millions of dollars in Western aid intended for
reforms. Russian officials, including the former central bank chief Sergei
Dubinin, have rejected the allegations. 

*********

#3
Marchers Rally Against Russia Gov't 
By Greg Myre
October 7, 1998

MOSCOW (AP) -- Hundreds of thousands of Russians frustrated by the
country's deep economic recession took to the streets in nationwide
protests today, but the turnout was far smaller than organizers predicted. 
Until now, ordinary citizens have endured their economic crisis
stoically, with few public outbursts against a government that has been
unable to halt an economic decline that has ravaged Russia for most of this
decade. 
Tens of thousands of people carrying red and blue flags marched through
Moscow to a rally on the edge of Red Square, where opposition leaders
called for back wages to be paid and for President Boris Yeltsin's removal.
Riot police watched the peaceful protest. 
``We will not allow Yeltsin to destroy us, '' said trade union leader
Mikhail Shmakov. ``We want a president who solves the concrete problems of
the country and doesn't make empty promises.'' 
The demonstrations were the first major protest since Russia was plunged
into its latest economic crisis in August, when the country's financial
markets collapsed. But most of those marching were protesting months -- or
even years -- of not receiving salaries and pensions because of the
economic malaise. 
Turnout at dozens of demonstrations fell far below predictions by the
Communist Party and other opposition groups, which had forecast 40 million
would join the protests. Police had no overall figures on turnout, but
estimated several hundred thousand people took part, a small fraction of
Russia's 148 million people. 
Organizers said about 400,000 people marched in Moscow, but the motley
crowd appeared closer to 30,000. The Moscow marchers ranged from hard-line
Stalinist and fascist groups to trade unions and bands of young people
making fun of old Communist protesters. 
Some demonstrators berated journalists, accusing them of playing down
the events. Others denounced the United States, claiming Yeltsin was an
American puppet determined to destroy Russia. 
``How many people? At least 2 million?'' one old man asked a companion
in the Moscow protest. ``What! No, it's 3 million, at least,'' answered the
other. 
Thousands of police and internal security troops were mobilized in case
of trouble, but the demonstrations passed peacefully. Police escorting the
march in Moscow did not carry truncheons, a sign authorities did not want
confrontation. 
In cities across Russia, the marchers comprised union workers,
pensioners, students and members of widely divergent political factions.
Some carried photos of Soviet founder Vladimir Lenin, while others hoisted
flags from Russia's czarist era. 

Many of the marchers were elderly, with few young people taking part. 
In the Siberian city of Krasnoyarsk, Alexander Lebed, the regional
governor and a likely presidential candidate, took part in a march and
backed calls for Yeltsin to step down. 
``Today Yeltsin is alone,'' said Lebed. ``People are pushed to the
extreme. Western investors have become fierce and are angry with him.'' 
``Look at the hole the Russian people have fallen into. Look at the
people on their knees,'' Marina Rubintsina, a 19-year-old student, told
demonstrators in the eastern port city of Vladivostok. ``We don't have a
future.'' 
Inflation is forecast at 200 percent, millions of workers get paid late,
and the economy is expected to shrink more than 5 percent this year. Still,
the protest organizers may have hurt their efforts by sending out mixed
messages. 
The unions wanted to focus on the economy, while the Communists saw the
protest as a way to further weaken Yeltsin, who still has two years left in
his term. 
Some trade unions did not want to be linked to the Communists. Aides to
Communist leader Gennady Zyuganov, who was at the Moscow protest, said the
unions blocked him from addressing the protest. 
Protest organizers said they were pleased with the response. They said
the protest was not limited to public rallies, but also included union
meetings, work stoppages and strike actions throughout the country. 
But there were no reports of significant work stoppages or any
disruption to public services. 
Meanwhile, Prime Minister Yevgeny Primakov today gave his Communist
deputy broad powers over the new Cabinet's economic course. 
However, Primakov also intends to personally oversee the Finance
Ministry, indicating he wants to have final say on major economic
decisions. First Deputy Prime Minister Yuri Maslyukov had pushed for full
control over the economic-related ministries. 

Maslyukov, who served as the last head of the Soviet central planning
agency, will be in charge of economics and trade ministries and various
other bodies. He also will oversee talks with the International Monetary
Fund, the World Bank and other international lenders, the ITAR-Tass and
Interfax news agencies said. 

********

#4
From: "Jeffrey Barrie" <jbarrie@bigfoot.com> 
Subject: Potemkin Protest 
Date: Wed, 7 Oct 1998 

When David Filipov (Boston Globe) sent me an email today making our
meeting contingent on the absence of a coup today, I decided to make a
comprehensive tour of Moscow in the best traditions of the bad old days
(early 80's) when I was a military attaché here with the US Embassy.
I set out on my journey armed with cynicism developed over my eighteen
years of life in Moscow, and participation in most of the "theater" of
Potemkin protest. A few heads were bloodied in the late 1980's in Moscow
protests, and three young men were killed during the confusion of the
August, 1991 coup attempt. A greater number of mostly young people lost
their lives in the October, 1993 attack on the Duma.
Loss of life is tragic, but there are two vantage points from which
these events can be observed. One is the media's which seeks to dramatize
events and make them larger than life. The other is from the cat bird seat
where, in Russia most of the time, events are smaller than life. Take the
October, 1993 attack on the Duma for example. As I approached the White
House from the banks of the Moscow River that fateful morning I kept my
head down. I hadn't heard that much automatic weapon fire since my Vietnam
days. But when I reached the bridge level looking down at the White House
the first sight that struck my eyes was two girls walking a cocker spaniel
along the bridge road. And then I noticed the thousand or so other
spectators that were actually leaning into the field of fire across the
Moscow River between the White House and Hotel Ukraine.
While I tried to digest what I was seeing, CNN cameras had long shots
from rooftops on Katuzovsky Prospekt that ignored the parade and focused on
the drama. Meanwhile, I found myself wandering closer and closer to the
White House itself, where I found hundreds of souvenir hunters hacking at
strands of barbed wire, and dozens of kids actually trying to "catch coup"
by touching the building itself or even crawling into a window. Many of
the casualties came from this Russian version of running the bulls at
Pamplona. Not a cop or soldier in sight until around 1:00 p.m., when I
suppose they decided the Government would win the day, and it was safe to
take sides.

And so today, devoid of any apprehension at all, I went in search of
Moscow's National Day of Protest. Leaving the Kremlin as my last stop, I
circled the entire Garden Ring and Boulevard Ring Roads at noon and didn't
see the first red flag. Traffic was light and it seemed more like a Sunday
than Wednesday. Some businesses were closed, and about half of the kiosks
(although that has been pretty much the rule since the banks have refused
to release funds to depositors here). There was an occasional clutch of
busses parked on side streets suggesting that human cargoes had been
delivered, but there were no signs of them. There were more than the
average number of cops on the street, and about the same number of flashing
blue lights on speeding vehicles as always.
Finally dispairing of finding anything at all, I headed for Red Square.
There, behind St Basil's, was the National Protest. At first I thought
there might be as many as 10,000 people assembled, which would be twice
what I've seen gathered in Moscow for a protest in many years. But when I
waded into the crowds I realized that they were thinner than they looked
from afar, and with the exception of the fairly unkempt babblers, pretty
much in a holiday mood. The press photographer-to-protester ratio seemed
to be about 10:1, and each was busy posing his or her selected group for
the most dramatic shot possible against the plentiful, picturesque
backgrounds. The babblers were more tower of babblers than otherwise, in
groups with bull-horn bearing leaders competing for listeners and trying to
attract photographers. There seemed to be no common language.
In two hours I will watch Vremya tell me how things went in Moscow from
their point of view, and elsewhere in Russia. Westerners watching Vremya
feeds and their national coverage will shake their heads over the Russian
tragedy. But the word I hear most in the city is "normalno." 

*******

#5
Date: Wed, 7 Oct 1998 
From: helmer@glas.apc.org (John Helmer)
Subject: Reply to Barry Ickes

RE: Russian steel: reply to Barry Ickes & Clifford Gaddy

It's a pity that it doesn't suit Barry Ickes to acknowledge that what he
doesn't know, or hasn't come to Russia to find out, may be different from
what he guesses. If he were more modest, and also more methodical, he
wouldn't be turning hypotheses about costs, non-costs, subsidies,
barter, and cash in Russian steel manufacturing into attacks on Russian 
enterprises which are, not coincidentally, facing a worldwide campaign of 
trade exclusion, including exclusion right now from the North American market.
A similar collection of self-interested guesses about Russian heavy
industry
was promoted in early 1993 by George Soros, Jeffrey Sachs, and David Lipton
in secret memoranda they sent to the International Monetary Fund. The
documents, which I saw and reported at the time, argued that Russian heavy
industries like steelmaking should be put into bankruptcy as a precondition
for the
"structural reforms" the IMF had in mind to fnance through its loan program.
Incidentally, this was't long before Soros's nominees secretly started buying 

shares of Novolipetsk Metal Combine, Russia's second largest steel producer; 
and well before he and his Uneximbank allies captured control of the 
steelmaker, and started increasing exports of steel to the U.S.
The "de-structuring" ideas were opposed on the IMF board in 1993 by the 
Belgian director, Jakues De Groote, who circulated a lucid paper on the topic.
That got De Groote into hot water with other directors on the IMF board. 
Re-reading the documents today demonstrates how percipient De Groote was.
Years later, after the Soros-Sachs group failed to destroy Russia's
steel industry, up step Ickes and Gaddy to the plate, with the same club
aimed at the same ball. The language and concepts are different; the
target is the same; and the evidence is still lacking.
By the way, Ickes claims he and Gaddy haven't together made the claim
against Magnitogorsk Metal Combine which I reported. Maybe that's correct. 
But Gaddy, speaking without Ickes, did made his claim about Magnitogorsk in 
an ABC News interview aired on October 3. The text appeared the next day in 
JRL #2412, item 6. Is television a virtual medium, not to be taken as 
seriously as the real medium of the written word? I guess there's probably a
continuum of thought between the two, and between Barry and Cliff too. 
All they need now is to connect with the real world of steelmaking, and
decide whether they know enough about Magnitogorsk, Severstal, and
Novolipetsk to substantiate their claims. 

*********

#6
From: "Jim Vail" <jimvail@hotmail.com>
Date: Wed, 07 Oct 1998 
Subj: Mayor Luzhkov

I was wondering if any Russian journalists are planning to write a book 
about Moscow Mayor Yuri Luzhkov. I have been reading the fantastic book 
on former Chicago Mayor Richard Daley called Boss by Mike Royko a second 
time since I've returned home and would love to read a similar book 
about the man who many have compared to Daley. When reading Royko's book 
you can appreciate that what the Russians do does not stray far from the 
inner workings of American democracy. The reporting behind such a book 
should go beyond the image, into the inner workings of City Hall, ie. 
who is paying who and what is getting done or not done. (Obviously such 
reporting is dangerous in an emerging democracy such as Russia, but I 
remember a great story in Pravda 5 about how Luzhkov's last landslide 
election win bordered on total illegality. After that story ran, Leonid 
Bershidsky wrote a piece in The Moscow Times making fun of this story, 
and then his newspaper ran a similar opinion piece about the sham a few 
weeks later.) Considering that Luzhkov could very well be the next 
Russian President, this book could be a winner with the international 
public as well.

********

#7
Baltimore Sun
7 October 1998
[for personal use only]
Marsalis cheers blue Russia
Blues: Jazz trumpeter Wynton Marsalis plays the history of jazz for
Russians who know all about the blues but aren't sure they'll ever swing as
a nation. 
By Will Englund 
Sun Foreign Staff 
MOSCOW -- Wynton Marsalis was here to play his trumpet and talk about jazz
yesterday, but let's just take that as a starting point because there's
always a wider sense of things -- particularly in a country like Russia
that lives by suggestion and improvisation.
"Jazz music has two basic things," he said, to an absolutely jam-packed
Rachmaninoff Hall at the Tchaikovsky Conservatory. "One is the playing of
the blues, and the blues is the soul of the music, and jazz must always be
played with soul, with feeling."

So far, so good. The blues is not a difficult concept in a country
wracked by murderous ideologies, by economic collapse, by corruption -- in
a country where life is a challenge, where the joke's on you, where poetry
still matters.
"And the other," said Marsalis, "is swing. Swing is the sound of a group
of people working together, talking to each other, trying to coordinate."
The audience burst into applause, because they were hanging on every
word Marsalis had to say, but this was the crux of it.
Russia -- the home of the collective, the country that prides itself on
its rejection of individualism -- is a place where it sometimes seems you
never hear the sound of a group of people working together. The communal
fable aside, it's every man for himself here.
But Marsalis and the six othermembers of the Lincoln Center Jazz
Orchestra showed, for one afternoon at least, that it doesn't have to be
that way. Even in the midst of a solo, the band had swing.
The Lincoln Center group launched a world tour by flying all the way to
Moscow for one engagement, which is tonight, and the first thing they did
on getting here yesterday was go stand on the bridge from which tanks fired
on the recalcitrant parliament back in 1993. That's tourism with an edge.

Jazz once was banned

Then they came over to the conservatory to talk about jazz to students
and faculty and anyone else who could elbow in. And they played a little, too.
Long ago jazz was forbidden and delicious here. When it was allowed to
surface -- still in Soviet times -- it developed a limited but ardent
following. Russian jazz, to indulge in an unfairly sweeping generalization,
tends to be a little intellectual and a little inward. Marsalis stood up on
stage yesterday and through his trumpet he spoke right to the audience.
They began with a little history tour, beginning at turn-of-the-century
New Orleans, where musicians first began embellishing the material and
playing with notions of rhythm. Along with Wycliffe Gordon on trombone and
Victor Goines on clarinet, Marsalis showed what a New Orleans trio would do.
"We're making up all of our music," he said matter-of-factly, "and we're
trying to make it make sense. We're trying to organize it as we go along."
The crowd was cheering and whistling. The band came down through the
decades. Gordon got sounds out of his tarnished trombone, with the help of
a mute and a toilet plunger, that no trombone was ever thought to produce.
Herlin Riley, compressing 80 years into three minutes, showed how drummers
went from the rat-tat snare of march music to the keshushhhhh of a brush on
high-hat cymbal, all the while pushing the beat to the back of the measure.
They played "Happy Birthday to You" in New Orleans style, moved through
the years and fashions until the melody and even the beat had become
recognizable only in memory and imagination, and then suddenly came
crashing back to Bourbon Street and familiarity. More whistles and cheers.

Improvisation school?

Then they played "Rubber Bottom" and "Play the Blues and Go" by Duke
Ellington, and "Embraceable You," with Marsalis by turns husky, brassy and
forlorn.
Marsalis took questions, and a student wanted to know if there were
schools where he could learn to improvise.

"I don't think there's any school of improvisation," he replied. "It's
like a school of talking. Is somebody going to teach you how to talk? Jazz
has to be learned on the bandstand."
An older man wanted to know in which direction he thought jazz was
developing in America today.
"Nobody can know that," Marsalis said. "If I could tell you that, I'd be
in horse-racing or something. But there are many musicians all over the
country, and they want to swing.
"They don't want to wear gold chains or curse. They want to play music.
They're not going to have videos. They're not going to be exported as
representations of the United States. They are not going to be part of this
rampant and blatant commercialism. There are many, many people all over the
United States of America who are not a part of any of that. Believe me."
To a student who was barely more than a boy, Marsalis delivered a
thought that might be the essence of jazz and the country where it was born.
"Anything can be developed if you want it bad enough," he said.
"Anything can be created, if you're willing to devote the energy to
creating it.

`Loved to swing'
"My father's a musician, so I always grew up around musicians. They were
always struggling. They never had enough money. But they loved to swing."
He had the audience, which knows a thing or two about struggling, with
him all the way. They were cheering, though eventually they subsided into
the traditional rhythmic clap, and, yes, someone came forward to hand
Marsalis a rose. This was Russia, after all.
"Americans were born with jazz," said jazz fan Oleg Minaev afterward.
"It's what they're made of."
"Russians," he sighed, and presumably he was talking about musicians but
maybe he meant to include the whole country. "They're great. But they're
like students. They're not listening. There just isn't that swing."

*******
#8
Boston Globe
7 October 1998
[for personal use only]
Economists say Russia's bid to lift economy may backfire 
Personal income falls; inflation expected to soar
By Jean MacKenzie, Globe Correspondent

MOSCOW - The outlook for Russia's economy is going from bad to worse, and
the government's best efforts to improve the situation are likely to
backfire. 
That was the grim assessment offered by top economicanalysts yesterday,
as the government instituted a series of measures designed to boost
revenues and stem capital flight. 
Jan Lundin, European managing director of the RussianEuropean Center for
Economic Policy, or RECEP, delivered the bad news along with the group's
monthly report. 
''Real personal income is at its lowest level since 1992,'' he told
reporters yesterday. ''There has been an increase of 65 percent in the
consumer price index from mid-August to mid-September. As for financial
markets, they are basically dead.''
All indicators point to a very hard winter for Russians. RECEP's
forecast is for inflation to soar to 400 percent by year's end, as the
Central Bank tries to plug its budget gaps with soft rubles. 
According to official statistics, the budget deficit isalready at 98
billion rubles ($6.2 billion) for the last quarter of 1998. But the
government is forging ahead with its pledge to pay wage and pension arrears. 
It has been generous with populist promises on the eve of a nationwide
protest that some estimate will bring 40 million people throughout Russia
onto the streets today. Prime Minister Yevgeny Primakov appealed for calm
in a televised address yesterday evening, but aside from vague assurances,
he had little to offer. 

A desperate search is on for ways of increasing revenues. The
government is now going into the vodka business, reinstating a state
monopoly on alcohol that was abandoned when the Soviet Union fell in 1991.
According to a presidential decree signed yesterday, all spirits over 56
proof will come under government regulation, and it is hoped that the
resulting taxes will swell the central coffers by up to 35 billion rubles
($2.2 billion) a year. 
Russia is resorting to currency manipulation to save what few dollars it
has. Yesterday, new regulations on currency sales went into effect,
requiring exporters to sell 25 percent of their hard currency earnings
directly to the Central Bank, and an additional 50 percent on the currency
market at special trading sessions. For one hour a day, 10:30 to 11:30 a.m.
Moscow time, exporters will be forced to sell their dollars, but only to
those with valid import contracts. Analysts say this will keepthe value of
the dollar artificially low. 
Tne timber exporter, who asked not to be named, was irate at the new
laws. ''Of course, it is not in exporters' interests to sell their foreign
currency earnings at this lower rate,'' he said. When asked if this would
lead exporters to hide their currency earnings, he just laughed and said
''I can't really answer that one.''
In afternoon trading sessions, the dollar will be sold freely, and it is
expected to fetch a much higher price. The result: a two-tiered system of
ruble rates that will wreak havoc with the ruble's convertibility, create a
growing black market for currency, and lead exporters to stash their
earnings abroad. 
''In my opinion, this is an extremely dangerous measure,'' said Dmitry
Vasilyev, former head of the Russian Federal Securities Commission. ''It
undermines the foundations of the real economy, it undermines the incentive
of exporters to bring back to the country their currency earnings.''
Another idea for bringing money into the federal budget is to increase
taxes on energy exporters, who are raking in profits now that ruble
devaluation has lowered their production costs. But Vladimir Kosmarsky,
RECEP's Russian managing director, says this is another instance of
counterproductive thinking. 
''Any increase in taxes in such an unstable system can destroy the
backbone of our economy, that is, the oil and gas sector,'' he said. ''We
are trying to kill the goose that lays the golden eggs.''
Borrowing seems to be out for the present. Talks with the International
Monetary Fund in Washington are proceeding slowly, according to both
Russian and Western sources, and there is little possibility that foreign
cash will be found to bail Russia out of its present hole. 
The only way of meeting obligations to pay wages and pensions, let alone
save the banking sector and jump-start the economy, will be to crank up the
ruble printing presses. But this is a quick road to hyperinflation. 
''Considering that our entire national industry, with the very small
exception of some sectors, is flat on its back, considering the situation
with the population's incomes, hyperinflation is a very serious thing,''
said RECEP's Kosmarsky. ''I cannot even predict the possible social
consequences of this process.''


******

#9
Date: Wed, 7 Oct 1998 
From: helmer@glas.apc.org (John Helmer)

The Moscow Tribune, October 9, 1998
EX-MINISTER ATTACKS GOVT OVER WAGES
By John Helmer

The former Minister of Labor, Oksana Dmitrieva, said in interview
this week that the government will be able to pay the government's share
of the overdue wages, because at Rbs8 billion (equivalent 
to $500 million), the wage debt is small enough not to raise the budget 
deficit significantly.
Dmitrieva, a democratic reformer when she served as a parliamentary
deputy for St.Petersburg, was dropped by the new government after
she had served just four months in the cabinet. 
"I think it's impossible to solve the crisis at the expense of the
people,"
she said. "At the same time, it is only possible to resolve the crisis if 
the system of payments is restored. So money generated through emission 
should also go into re-payment of bonds, which will revitalize the banking 
system."
Dmitrieva, who was an economics professor before her political career,
said she and the Labor Ministry blamed the former government of Prime
Minister Sergei Kirienko for allowing the wage debt to balloon during
the few months it was in office. "In May and June of this year," she said, 
"the debts for salaries from the federal budget were not bigger than one
month. At the beginning of the year, there were practically no debts. 
But the gross mistakes in monetary and credit policy led to the situation 
when the debts on salaries started to grow rapidly and amounted to this 
figure. "
She also said the Kirienko government's decision to add a 2% surcharge
to pension contributions was illegal. 
The former minister criticized the taxation drive which the Kirienko 
government had pursued. According to Dmitrieva, "my experience shows 
that increase of the taxation pressure can only lead to the decrease of 
budget revenues." 
"There should also be the most thorough audit and improved 
management of the non-budget funds, which currently have more 
money than the budget and which are not burdened with debts as 
the federal budget."
Most of the Rbs84 billion in unpaid wages claimed by protesters this
week is owed by Russia's private enterprises. After the first six months 
of the year, in which industrial output contracted by 5% and government
tax collections rose, Russian enterprises have not been meeting payrolls, as 
an alternative to mass retrenchments. 
Edwin Dolan, President of the American Institute of Business and
Economics 
in Moscow, argues that if the government starts printing roubles to pay 
workers, the immediate spending stimulus to the economy may be better than 
none at all. "Those advisors who advocate controlled emission of roubles," 
Dolan says, "have a better case than those who oppose printing any new 
roubles at all."
"In the Russian case, the money supply could roughly double over the next
six months or so, after which the printing presses would stop, and prices 
would stabilize again."
Dolan is not confident this will happen, however. While he backs
paying the government's debts to workers and pensioners now, he forecasts

100% inflation or worse next year, depending on whether the government is 
able to reschedule its foreign debt, and revive foreign lending by the first
quarter of 1999.
Robert McIntyre, an American economics professor who has taught in Russia
for two years and is now with the United Nations University in Helsinki,
said he believes Russia's output has fallen so far behind capacity that a 
money stimulus, combined with limits on imports, now would raise production 
and demand, and avoid an inflationary spike.
He supports a combination of measures to return the full foreign currency 
equivalent of Russia's energy exports to the economy, either through 
renationalization of the oil and gas companies; or through taxation of their
exports and compulsory sale of their foreign currency earnings to the Central
Bank. 
On Monday, representatives of Russia's leading oil companies said they 
would prefer rapid inflation to loss of control over their cashflow.
The immediate target of their attack was a proposal by the Finance Ministry
to add 10-Ecu per ton tax on oil sales abroad to help fill the
government's emergency four-quarter budget. 
The new tax reverses the approach of former Prime Minister Kirienko,
who tried to raise additional budget funds by imposing consumption taxes,
and by pressuring individual oil companies to pay income, profit, and payroll 
taxes. His downfall was in large part arranged by the oil producers, which 
are owned by a handful of Russia's insolvent commercial banks. They are now
hoping to persuade the new government to let them accumulate more revenue, 
reducing their bank owners' liabilities.
"I think that additional taxation of exporters is unreasonable," former
Labor Minister Dmitrieva said. Her party in parliament, known as Yabloko, 
has been financed in part by oil company contributions.

********

#10
From: "Anne Williamson" <annewilliamson@email.msn.com>
Subject: IMF & Russia
Date: Wed, 7 Oct 1998

An Imperial President's Moneybags
This is the second of a four-part series on the International Monetary Fund,
World Bank and the international financial system.

By Anne Williamson
Copyright 1998, WorldNetDaily.com

Now that the Clinton administration's foreign policy of taxpayer-subsidized
globalism has unleashed currency contagion worldwide, pressure on Congress
to fund the $18 billion bailout of the International Monetary Fund has
become intense. But before Congress votes in the funds, an examination of
the IMF's new, haphazardly created mission as the "lender of last resort" to
the world's deadbeats and incompetents is in order.
During the Cold War, the International Monetary Fund got itself repeatedly
into all sorts of financial and ethical mishaps in the West's effort to
contain the Soviet empire. But the IMF's excesses were of little concern so
long as its financial firepower could be directed at whatever nation
appeared on the verge of toppling into the Soviet camp.
No longer serving in an arguably wasteful manner what was nonetheless an
agreed national purpose, the IMF has come to function increasingly as the
personal gift of the office of the U.S. Treasury courtesy of that office's

service to the U.S. presidency. The U.S.-dependent IMF has been well
pleased; far easier to serve a single master than answer to a committee of
congressmen.
The ascendancy of Treasury in foreign policy at the State Department's
expense is pure Clinton, the result of a neo-mercantilist foreign policy in
which enterprise is to be subject to direction from the presidential
administration it is to serve. By expanding the mandates and accelerating
the use of a host of international agencies in which the U.S. is dominant --
the IMF, the World Bank, the EBRD, the regional development banks, the
IFC -- and combining their efforts with those of the Commerce Department,
the Export-Import Bank, OPIC and USAID-financed Enterprise Funds, the
Clintons constructed an international patronage machine in which the
American executive stands supreme, the assistance-favored financial industry
at their side eyeing the world's debt markets.
In service to this new homegrown, internationalized "crony capitalism," the
president's men are seeking to institutionalize the socialization of private
investors' and global bankers' risks in international markets via a
freshly-capitalized IMF. The price of the U.S.'s $3.5 billion contribution
to the proposed IMF bailout fund on top of another requested $14.5 billion
is said to be insignificant when weighed against the financial calamity of a
worldwide recession that IMF ministrations and policing could avert. But how
true is this? What might taxpayers expect for putting their money where Bill
Clinton's mouth is?
Taking the IMF's behavior in Russia as a guide, the answer is that we can
expect a rapid escalation of taxpayers' liabilities in the service of failed
policies. After the chaos unleashed by the fund's initial advocacy of a
single ruble zone for the Commonwealth of Independent States, which handed
management of the ruble to 12 central banks, the fund's monetary sages
settled down to their usual business of lending large sums in return for
secret, IMF-designed recovery programs always said to be strictly enforced.
In Russia's case, only the rhetoric of strict conditions was enforced.
For example, when the IMF touted a 1996 $10.2 billion loan on the basis of
what an extraordinary job Russia had done in meeting the conditions of a
1995 $6.7 billion loan, one crucial detail went unmentioned. The $6.7
billion loan was extended without any conditions via the IMF's Systematic
Transformation Facility, a program designed to funnel money to Russia in
return for "the promise to reform." Also left unsaid was that through the
magic of money's fungibility, the $6.7 billion loan financed -- almost to
the kopeck -- Yeltsin's bloody and disastrous assault on Chechnya.
Following the Russian Communists' success in the December 1995 parliamentary
elections, the Fund proceeded into even dodgier territory with the 1996
$10.2 billion loan, which came front-loaded with a billion dollars meant for
Yeltsin's re-election. Certainly the Fund understood the potential
embarrassment to Clinton's own re-election bid were the card-carrying
Gennady Zyuganov to be elected to the Kremlin. Alas, the rather delicate

operation of purchasing a foreign land's election for a flawed incumbent on
behalf of another land's flawed incumbent was soon gummed up with the two
incumbents' conflicting political needs.
When candidate Yeltsin wanted to please farmers by yielding to their demand
for higher import tariffs with a 20 percent increase and a promise to use
the new funds for social programs, the IMF barked that an increase in import
tariffs would derail the loan. The cagey Yeltsin quick slapped a 20 percent
hike on frozen American chicken, a $700 million dollar market, $258 million
of which had been earned by Tyson Chicken. Let us recall that it was Tyson's
agents who engineered Hillary Clinton's short, but steeply ascendant career
trading cattle futures. And it was Tyson that had come through with a
particularly well-timed loan to the 1992 campaign that proved critical in
facilitating the Clintons' last minute get-away from Arkansas and federal
banking investigators via the ballot box. Clinton, steeped in the political
folkways of his home state, soon flew to Moscow and advised Yeltsin they
ought "to help each other." After that, all talk of a chicken tariff
increase ceased.
Once the first tranche's payout of a billion plus dollars arrived the
following May, Yeltsin pulled out all the stops: back wages for state
employees and pensions were paid, and after the IMF's billion was consumed,
the capricious Siberian ordered his initially mulish Central Bank to hand
over a billion more. The West's IMF watchdog kept its mouth shut.
But weren't we told that Russia's financial oligarchy paid for Yeltsin's
re-election? To the contrary, Russia's bankers made serious money on
Yeltsin's electoral weakness by buying government bonds at distressed prices
using cheap money handed over from government deposits. The lion's share of
the domestic bonds' high yields have always been paid with IMF loans.
Russia's then representative to the World Bank, Leonid Grigoriev, explained,
"Of course, the government was to return this money and that is why the
yields on 3-month paper reached as much as 290 percent. The government's
paying such huge, impossible rates on treasury bills, well, it's completely
unbelievable. It had nothing to do with the market and therefore such yields
can only be understood as a payback, just a different method."
Clearly, building an empire of finance capitalism is an expensive business.
But who pays? U.S. taxpayers and Russian workers, who paid indirectly by
having their wages go unpaid and their national estate continually degraded.
Secondly, the Russian people paid by being denied a means of exchange since
the banking and trade sectors of the economy were quick to socialize amongst
themselves what few rubles the IMF's tight money policies allowed the
Russian Central Bank to print.
Today Russia is collapsing into a fireball of default, devaluation and
despair that will have unhappy political consequences. No regime in history
that has reduced its own population's standard of living has survived
without violence; and even that appears beyond Moscow's reach since the
debilitated and hungry army, like the mass of Russians workers, hasn't seen

a paycheck for what seems a month of Sundays. As Americans look on, the U.S.
Treasury's receipt for the purchase of Boris Yeltsin and his government of
"brave, young reformers" -- who dutifully took the IMF's money to subsidize
themselves and their own greedy constituency of criminal oligarchs -- is
being torn to shreds. Moscow's new kingmakers are Gennady Zyuganov, head of
the Communist Party, the KGB and Russia's regional governers.
Empire too, then, is an uncertain venture. How uncertain? Much depends on
the emperor. Before Congress agrees to confiscate more resources from US
taxpayers for the Clinton administration's royal gift, members ought to take
a careful look not only at the Yeltsin government and the Fund, but at the
bloviating class's fair-haired boy. Is he more like Caesar Augustus or Gais
Caligula? Or is he just naked?

*********

#11
Yeltsin in Good Health, Wife Says 
October 6, 1998

MOSCOW -- (Agence France Presse) The wife of President Boris Yeltsin
attempted to dispel mounting rumors of her husband's dismal physical
condition, maintaining doctors had rated the president's health as "fine,"
Interfax reported late Tuesday. 
"The doctors now say that everything is more or less normal," Naina
Yeltsin stated in an interview with the Moscow weekly Argumenty i Fakty,
adding that the president "undergoes regular check-ups." 
The traditionally publicity-shy first lady steered away from more
specific details concerning the president's condition, which has been in
question for years and the subject of much recent scrutiny. 
"When there are so many conjectures surrounding this issue, I am even
afraid to address it. Anything I say will be distorted," she told the press. 
Mrs. Yeltsin's rare public appearance came at a time when those of her
husband occur less and less frequently. 
While the country explodes in economic turmoil, Yeltsin has looked
increasingly haggard in his few lackluster appearances on Russian television. 
"Of course, what's happening to him right now doesn't improve his mood,"
Mrs. Yeltsin qualified her statement, a reference to rising public
discontent with the president that is expected to culminate Wednesday as
millions of dissatisfied Russians take to the streets to demand Yeltsin's
resignation. 

*********

#12
Excerpt
Washington Post
October 7, 1998
[for personal use only]
Breakdown of Free-Market Orthodoxy
By William Greider
William Greider is the author of "One World, Ready or Not: The Manic Logic
of Global Capitalism." 

Official Washington is slowly awakening to the storm upon us, but its
faint-hearted response ensures that this global unraveling will become far
more severe before the United States and other governments find the will to
confront it decisively. 
We are not yet at a worldwide depression like the one that unfolded
between 1929 and 1933 -- not yet. But leaders in government, business and
finance are committing the same basic error of judgment that led, once
before, to epic tragedy. Hubris, plus their weak grasp of economic history,
blinds many smart and powerful people to the gathering dangers. 
Authorities are clinging wishfully to the reigning free-market
orthodoxy, as it breaks down before their eyes. The laissez-faire theory of
efficient markets did not predict this crisis and can't explain it, but
theory laid the predicate. The proposition that utterly unregulated markets
rule society more wisely than sovereign governments is being smashed by
reality....

A quick list of what governments ought to be doing now: 
Stimulate real economic activity on many fronts. Cut interest rates
significantly, of course, but also prepare the political ground for a
quick, emergency tax cut, not the usual regressive version but one that
puts more money in paychecks of working folks who will spend it promptly. 
Monetary policy, in extreme circumstances, can "flood the streets with
money" (as legendary central banker Benjamin Strong put it in 1928) and
induce an artificial inflation that halts the downward spiral of prices.
That's an ugly solution, but there is also danger in waiting too long to
act aggressively. If central banks are too slow to cut rates, they may find
themselves in the same liquidity trap as Japan. 
Halt the widening squeeze on available credit. Nervous bankers around
the world are, understandably, pulling back from trouble, cutting off
business lines of credit, rejecting new loans for developing nations. But
this makes everything worse. Regulators and central banks must lean hard on
banks and brokerages to keep credit flowing. Lending can be encouraged by
temporarily relaxing capital standards and reserve requirements. 
Switch the lending objectives of the IMF from financial disorders to
economic stimulus. This requires new IMF leaders -- pro-growth business
executives from around the world who understand the necessity of
re-liquifying failing companies and economies. A new IMF could create a
global version of FDR's Reconstruction Finance Corporation that imposes
reasonable workouts between firms and creditors. 
Restrain the destabilizing adventures of global finance. Banks and hedge
funds can be whacked by higher margin requirements on lending for financial
speculation. Poorer nations (and ultimately major economies) need the right
to impose prudential controls on capital flows to disarm the "hot money." 
In all these areas, governments possess enormous power over the
marketplace, if they will decide to use it. The long-term instabilities and
inequities that produced this breakdown will not be solved by emergency
rescue measures, but the crisis makes them more visible. A new Bretton
Woods agreement would devise a moderating version of capital controls and a
more stable system for currency relationships. It would investigate such
suspect matters as the wholesale tax avoidance practiced by global
corporations and financiers. 
But a new Bretton Woods must ask larger questions. Why do the terms of
trade protect property rights but not human rights or the rights of workers
to organize in their own self-interest? Why does the global system ignore
the random inhumanities in its own factories? Or the deepening inequalities
of wealth and incomes that helped to generate this crisis? 
A new Bretton Woods understanding, in other words, cannot be left to the
bankers and economists.

********


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