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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

October 8, 1998    
This Date's Issues: 24182419


Johnson's Russia List
#2419
8 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Timothy Heritage, ANALYSIS-Yeltsin stays but opponents
get their say.

2. David Filipov: I'm no coup-monger.
3. Moscow Times: Andrei Piontkovsky, SEASON OF DISCONTENT: Oligarchs 
Gun For Zadornov Kamikaze Style.

4. Interfax: Russian Defense Ministry Approves Plan to Reduce Spending.
5. Rossiyskaya Gazeta: Aleksandr Gavrilyuk, "Threshing Is the Work That 
a Peasant Finds Most Pleasant." (Farms Cannot Do Without State Intervention).
6. Moscow Times editorial: Inertia Not Democracy Drives Rally.
7. AP: Russia Lowers Import Taxes.
8. Grzegorz Kolodko: From shock failure to gradual therapy.
9. Moscow Tribune: Lyuba Pronina, Moscow Gets Ready for Big Freeze.
10. Interfax: Russian Democratic Groups Rally in Moscow 3 Oct.
11. Interfax: Chubays Urges Democrats To Close Ranks Before 1999 Election.
12. Komsomolskaya Pravda: Former Tax Chief Fedorov Speaks on Dismissal.
13. Irish Times editorial: Russia and China.]

********

#1
ANALYSIS-Yeltsin stays but opponents get their say
By Timothy Heritage

MOSCOW, Oct 8 (Reuters) - Rival Russian leaders argued on Thursday over who
emerged on top from a day of inconclusive protests which embarrassed
President Boris Yeltsin but did little to boost the cause of his opponents. 
Hundreds of thousands of protesters vented their anger over unpaid wages
and Yeltsin's rule at rallies across Russia on Wednesday, but turned out in
far smaller numbers than trade unions and leftist leaders had hoped. 
The organisers said the protests showed the masses had no confidence in
Yeltsin and he should resign. The Kremlin said most Russians had shown their
support for Yeltsin by simply staying at home or at work. 
In the end, public apathy won the day. Worn down by years of hardship and
ineffectual government, Russians have little faith in politicians, fear the
disruption that political change would bring and are mainly preoccupied with
trying to make ends meet. 
``The situation can be explained. In times of crisis, people go into
personal survival mode,'' Igor Bunin, head of the Centre of Political
Technologies think-tank, told NTV television. 
``They feel less inclined to take part in organised events. Everyone
takes care of himself.'' 
Police said the meetings and rallies across Russia gathered some 1.3
million people. Trade unions said 25 million people marched or took part in
strikes or small rallies and that they had managed to get their message across. 
Oleg Sysuyev, deputy head of the Kremlin administration, was quoted by
Russian media as saying about 700,000 people had protested, and that this
meant the rest of the 150 million population did not want Yeltsin to step down. 
``The president will keep working,'' Itar-Tass news agency quoted Sysuyev
as saying. Yeltsin himself said on Thursday he planned to stay in office
until his term ends in 2000. 
Few can have expected Yeltsin to heed the resignation calls from
protesters beneath the walls of his Kremlin headquarters. 
The most realistic aim of the demonstrators had been to increase pressure
on the president, whose hopes of building a prosperous new Russia are in
tatters because of the worst economic crisis in years. 
Independent analysts say Wednesday's lower than expected turnout does not
mean Russians are happy with Yeltsin -- opinion polls show they are deeply
dissatisfied. 
But many people who oppose Yeltsin are equally critical of the main
opposition Communist Party and trade union leaders who organised the
protests, and would not want to be associated with them by joining their
rallies. 
Others are disillusioned with politics in general, and have lost hope
that any of the likely presidential contenders would do a better job than
Yeltsin or improve their lives. 
They mistrust the opposition-dominated parliament as much as they
mistrust Yeltsin, and prefer the status quo, however unsatisfactory, to the
prospect of unpredictable upheaval. 
Others remember with trepidation a revolt against Yeltsin led by hardline
parliamentarians in October 1993, in which more than 100 people were killed.
They therefore avoid protests which could lead to similar bloody scenes. 
Add to this a traditional Russian fear of authority. 
Some would-be protesters may also have stayed away because they do not
want to upset the efforts of the new government to end the economic crisis
after less than a month in office. 
Prime Minister Yevgeny Primakov appealed for calm on the eve of the
rallies, although Yeltsin was the protesters' target. 
``A real classical uprising is now impossible in Russia,'' sociologist
Boris Grushin wrote last month in Izvestia newspaper. 
One man who may have gained something from the protests is Moscow mayor
Yuri Luzhkov, a likely candidate in the presidential election which is due
in mid-2000 but could take place sooner if Yeltsin steps down or is forced
out despite his apparent determination for now to stay. 
Many protesters chanted Luzhkov's name at a rally on Moscow's Red Square
on Wednesday, although others opposed him. 
``The all-Russian protest action attracted three times fewer people than
its leaders predicted, but a new opposition leader appeared -- Yuri
Luzhkov,'' said the liberal Nezavisimaya Gazeta newspaper. 
Regional governor Alexander Lebed may also have felt he gained by leading
a march in his powerbase, the Siberian region of Krasnoyark. Yet he too was
criticised by other protesters. 
The liberal newspaper Sevodnya said Russia faced a dilemma even if
Yeltsin stepped down because neither of these leaders or any of their
probable rivals seemed ready to take over yet. 
``Where does all this debating lead?'' it mused. ``To the conclusion that
ruling a Russia that is falling apart is not an attractive prospect for
anyone.'' 

******

#2
Date: Wed, 07 Oct 1998 
From: David Filipov <dfilipov@glasnet.ru>
Subject: I'm no coup-monger

Jeff Barrie writes:
When David Filipov (Boston Globe) sent me an email today making our
meeting contingent on the absence of a coup today"

For the record, I have never predicted, or advocated, a coup, either in
print or in private conversation. 

******

#3
Moscow Times
October 8, 1998 
SEASON OF DISCONTENT: Oligarchs Gun For Zadornov Kamikaze Style 
By Andrei Piontkovsky
Special to The Moscow Times

After the collapse of the leading banks and the crashing failure of Boris
Berezovsky's bid to reinstall Viktor Chernomyrdin as prime minister, the
favorite figures in my column, our remarkable oligarchs, appear to have gone
to ground. 

Only Berezovsky has remained visibly at large with his humanitarian
intervention to free two British hostages held by Chechen bandits, and the
British ambassador, Sir Andrew Wood, later expressed his gratitude to him
before a number of television cameras that happened to be set up by the
wayside. The artful dodger Berezovsky may well be congratulated on a wise
investment: For a couple of million dollars he has probably assured himself
political asylum in Britain. Just in case. 

The rest of the oligarch pack has showed no sign of political life for a month
or more, but this is no silence of the lambs. Last week, the oil barons,
driven by Mikhail Khodarkovsky, declared open season on the "last monetarist"
in the government, Finance Minister Mikhail Zadornov. In the emergency budget
for the fourth quarter of the year, Zadornov invoked the wrath of the
oligarchs with a proposed taxation of the oil and gas industry that takes into
account its additional export revenues earned as a result of the devaluation
of the ruble. 

True to his belief that "the only real business in Russia is and will always
be politics," Khodarkovsky sounded the political attack on Zadornov when he
sent a letter to the gerontocrats that head the government saying "It is time
to stop following the instructions of the IMF, Russian producers must be
supported, and controlled inflation can prop up the budget." 

This carefully calculated rhetoric of the oligarchs is music to the ears of
First Deputy Prime Minister Yury Maslyukov and Central Bank Chairman Viktor
Gerashchenko. It also leads us to expect a political alliance between the
oligarchs and the quasi-communists that can ensure the dismissal of the
offending Zadornov, a move agreeable to both sides. 

Here the oligarchs are displaying a staggering lack of foresight. By removing
Zadornov from the government they remove the last obstacle to the
implementation of the repressive, dirigiste economic ideas of the former
members of the Politburo of the Communist Party of the Soviet Union. As we
know, it was only Zadornov's firm position at the government session last
Thursday that prevented the adoption of the economic program prepared by
Maslyukov's team. 

After Zadornov's exit from the government, this program will be implemented in
full. Then the gas and oil oligarchs will quickly find out that the compulsory
sale of hard currency at the special foreign trading exchange rate
expropriates their earnings far more effectively than any taxes or duties. 

It seems the oligarchs have not yet grasped what has happened. For a year and
a half they waged a merciless campaign of destruction against the last
liberals in the government who prevented them from stealing without hindrance.
Having won a Pyrrhic victory, the oil and gas barons must now face their
traditional adversary of the Soviet era, the military-industrial complex.
Maslyukov joined the government to take revenge upon the raw material
producers who grew fat during the years of pseudo-reforms, and in this new
conflict where the oil and gas oligarchs no longer enjoy the political krysha,
or protection, of Chernomyrdin, they don't stand a chance. 

******

#4
Russian Defense Ministry Approves Plan to Reduce Spending 

Moscow, Oct 5 (Interfax)--The Russian Defense Ministry has approved a
plan to reduce spending on military command structures.
Civilians will replace 20% of positions in command structures in 1999,
ministry officials have told Interfax. The personnel of secretariats and
the number of aide-de-camps and special duty officers will be reduced.
Numerous deputy commanders, from those in central commands to
individual units, will be dismissed.
The number of positions for generals and colonels will be reduced by
20% before May 1, 1999.
The ministry is considering reducing the strength of the armed forces
to one million, the officials said.

******

#5
Farms Cannot Do Without State Intervention 

Rossiyskaya Gazeta
6 October 1998
[translation for personal use only]
Article by Aleksandr Gavrilyuk: "Threshing Is the Work That a
Peasant Finds Most Pleasant"

Russian food producers now have a real chance to prove that our
sausages, bread, chicken legs, and dairy products are no worse and even
better than foreign products, and cheaper too. It is a sin not to take
advantage of them. But is there enough capacity and resources to feed all
Russia? Not only with our bread, either.
This year's officially forecast gross grain harvest should total
around 60 million tonnes. Is this a lot or not much?
For example, last year 88.5 million tonnes were harvested. But the
current level is that of 1921 and 1943. And then a ration card system was
in operation in the country. Some experts, Sov-Ekon for example, assert
that the harvest will not exceed 50 million tonnes.
Then it still has to be gathered in. As of 28 September only 42.898
million tonnes of grain crops and pulse crops had been threshed. Tardiness
in harvesting is being observed in relation to practically all agricultural
crops, with the exception of sugar beet and sunflower. Harvesting has
moved beyond the Urals and into Siberia, while snow has fallen in
Krasnoyarsk. There they are praying to God that it does not lie for long,
while in Kemerovo 1 million tonnes of grain have nonetheless been collected
-- a record harvest for recent years.
Almost 9 million tonnes less animal feed has been procured in the
country. It is not hard to figure out what that means. There will be
nothing to feed to livestock, and a reduction in livestock numbers is in
store. They will simply be slaughtered. Therefore it is entirely possible
that both a dairy and a meat shortage could occur.
But there are some glad tidings. This year 2 million tonnes more
valuable wheat than last year will be threshed. That is, wheat suitable
for producing bread-baking flour. Grain reception centers have already
received 5 million tonnes of this wheat. There will be twice this amount in
all. This quantity should meet the country's need for this type of grain.
But this will happen only if the grain is kept, if it does not "leave"
the fatherland's borders for export. This trend is already emerging very
clearly. For instance, right now around 30 percent of sunflower has been
contracted for export abroad. This is not surprising, given the current
ruble rate.
With the increase in the dollar rate the demand for our food
simultaneously increased. And for almost all food. Especially as
necessity forces us to sell it because peasants' debts in respect of
credits and various funds are now equal to 120 billion rubles [R].
I repeat that this is not surprising. Something else is surprising: 
Why, given the sudden shortage of food in the country, is the government
not talking about urgently introducing licensing food exporters, setting
quotas for newly concluded contracts, and so on. After all, if food
"leaves" it will have to be bought in later. This time with "other" money.
But nobody any longer doubts that grain procurements are inevitable. 
The government is already bluntly saying so. It is just a question of
where to get the money from and how much. It is no accident that Gennadiy
Kulik, new deputy government chairman in charge of the economy's agrarian
sector, admitted that "our own agricultural production cannot now meet the
population's needs."
All right, that is as far as grain is concerned. What other kinds of
food are we lacking? Nobody knows the answer to this question. Just as
nobody, including the Agriculture and Foodstuffs Ministry, knows which food
products the country has and which are scarce. Do you recall there was
talk of 20 million tonnes of grain allegedly having been left over from
last year's harvest? Where is it? Who counted it or simply saw it? There
is no answer; not one department has been able to obtain information about
this grain.
Now we come to prospects. In other words, the fate of the next
harvest. I will not overload the reader with figures. I will say only
this: Compared with last year the country is behind in terms of both the
sowing of winter crops and the plowing of fall plowland. The federal stock
lacks exactly half of the seed required. It would cost R1.88 billion to
purchase the shortfall in prices as of 1 June 1998.
The same goes for mineral fertilizers and plant protection resources. 
So far the peasants have bought much less than they did even last year. 
This has happened above all because they have not been paid the promised
30-percent compensation for expenditure incurred in acquiring them.
In short, there is no way out. It is quite clear that we can no
longer do without state -- for which read government -- intervention.

******

#6
Moscow Times
October 8, 1998 
EDITORIAL: Inertia Not Democracy Drives Rally 

Some events, like some governments, seem to move forward more out of inertia
than logic. 

Surely this could be said about Boris Yeltsin's presidency. It is hard to name
a single accomplishment of his second term; moreover, it is hard to see what
single accomplishment one might reasonably hope to see before Yeltsin's
presidency ends in 2000 f with the exception of a peaceful transfer of power
to a democratically elected successor. 

But if Yeltsin's rule is a bit aimless, so have been the protests against it.
Wednesday saw hundreds of thousands of Russians take to their streets to
demand that the government pay their wages and adopt a new economic course f
preferably one that Yeltsin will be watching from retirement. 

Trade unions began preparations for this one-day national strike back in the
spring. At the time, Sergei Kiriyenko was the prime minister, and his
government was pursuing IMF-approved strategies such as harsh monetarism and
full-speed-ahead privatization f strategies that were opposed across the
political spectrum, from Moscow Mayor Yury Luzhkov to Krasnoyarsk Governor
Alexander Lebed to Yabloko leader Grigory Yavlinsky to Communist chief Gennady
Zyuganov. 

Opponents of those policies argued that they fed wage arrears, which have been
hovering for years in the billions of dollars. So trade unions planned another
strike, and opposition politicians cheered. 

Then Yeltsin sacked Kiriyenko, and the government that has emerged to replace
him is more and more looking like a Zyuganov regime. Today, the Communist
Party is the strongest political force in the government. The No. 1 economic
policy-maker is Yury Maslyukov, who is still a member of Zyuganov's party and
who is talking about the same sort of approach to economic matters Zyuganov
has advocated: printing money to pay wages, nationalizing the banking sector,
supporting industry and so on. 

So what are the Communists protesting about, when nearly all of their main
demands have been met? 

The answer is: nothing. They are simply again pushing the fiction that they do
not share responsibility for the sorry state of the economy. 

It is sad that the trade unions have allowed the Communists to co-opt
Wednesday's strike for their own careerist ends. 

But it is even sadder that millions of Russian citizens have proven so
ineffective at influencing their governments. A national strike once every six
months and the ritual of casting a vote once every two or three years does not
make for a democracy; a democracy demands a far more active participation in
community life. 

*******

#7
Russia Lowers Import Taxes
October 7, 1998
By LESLIE SHEPHERD

MOSCOW (AP) -- Import duties on several key foods will be dropped and possibly
lowered on other foods and medicines in an effort to restock Russian store
shelves emptied by the latest financial crisis, the government said Wednesday.

As the ruble plunged and prices soared in recent weeks, Russians rushed to
spend their money before it lost more value and stocked up on non-perishable
food and other consumer goods.

Almost half of all consumer goods sold in Russia are imported and their
supplies have not yet returned to normal.

Still, Prime Minister Yevgeny Primakov went on national television Tuesday to
assure Russians there would be no food shortages this winter.

To accomplish this, First Deputy Prime Minister Yuri Maslyukov said the
government would soon lift import duties on five basic foods, which he did not
identify.

The government was discussing ``considerably reducing'' import duties on other
foods and medicines, his spokesman Anton Surikov told the Interfax news
agency. Extra food will also be bought from Ukraine, Belarus and Moldova, he
said.

Maslyukov said the new Russian government, in office for almost a month, would
present its proposals to revive the economy by the end of October. Russian
media have widely reported the proposals will include Soviet-era economic
controls such as nationalization and currency controls, which the government
denies.

Maslyukov said Russia plans broad cuts in taxes on businesses by the year's
end in an effort to lure back foreign investors. He told foreign business
people the government would also review the personal income tax scheme. The
government's chronic inability to collect taxes is one of the main reasons it
lacks money.

Maslyukov said the government may have to resort to printing more money,
however, if the International Monetary Fund does not release the second $4.3
billion installment of a loan that was approved in July, a month before the
economy crashed.

Finance Minister Mikhail Zadornov and Central Bank chief Viktor Gerashchenko
are in Washington this week meeting with IMF officials.

``So far, prospects for our cooperation with the international financial
organizations remain unclear, and that's why the government hasn't made a
decision yet on which financial and economic plan it would implement to
stabilize the situation,'' Maslyukov said at a meeting with Western bankers,
according to Russian news agencies.

The next installment of the loan would ``create conditions to stop any talk
about printing money,'' he said.

The IMF has said it disapproves of printing rubles to boost the money supply,
a move that would lead to even worse inflation.

Also Wednesday, Maslyukov was given broad control over the economy when he was
put in charge of the economic and trade ministries and various other bodies,
including the committee for state property management that oversees
privatization.

Maslyukov, a Communist who was the last chairman of the Soviet central
planning agency, will also be acting prime minister whenever Primakov is
absent. He will also oversee talks with the IMF, the World Bank and other
international lenders, Russian media reported.

Primakov said he will retain control over the finance, foreign, defense and
interior ministries, as well as the tax service and customs committee and
several other agencies, the ITAR-Tass and Interfax news agencies reported.

Cabinet ministers will still be appointed to those ministries, but their
policies will be subject to approval by Primakov, and ultimately by President
Boris Yeltsin.

*******

#8
From: "Kolodko, Grzegorz" <grzegorz.kolodko@yale.edu>
Subject: Brody-Kagalenko on "shock therapy"
Date: Wed, 7 Oct 1998 

From shock failure to gradual therapy

Professor Grzegorz W. Kolodko, currently Senior Research Fellow at Yale
University, School of Management, was First Deputy Premier and Minister of
Finance in Poland in 1994-97. His last book on "From Shock to Therapy. The
Political Economy of Postsocialist Transformation" is coming next spring
from Oxford University Press.

As long as it is not understood that there is nothing like so-called
"shock therapy", there is no chance to come to proper conclusions about the
causes of the failures (many) and successes (a few so far) of transition to
a market economy. All debate about the feasibility of "shock therapy"
towards the postcommunist changes is based upon wrong assumptions. The
advocates of such a way of reasoning put the equal mark between
"liberalization and stabilization" and "transition to market system". Yet
these are different notions. Transition to a market economy means three
parallel processes: 
- first, liberalization and stabilization; 
- second, new institutional arrangements,
- third, microeconomic restructuring.
Only vis-a-vis the first process it may be possible to execute less
or more radical policy. In the latter case, if one wants one may call it
"shock". But shock as a such does not imply that there is a "therapy", i.e.
positive outcome of the applied set of policies. So there is a possibility
of "shock failure" too. Then why so seldom we hear about "shock failure"
and so often - and so wrongly - about "shock therapy"? 
As for the institutional arrangements, the former GDR aside, it is
always long lasting process. The new institutions must be often build from
the onset, they need new organizations and new sort of links between them.
Thus the introduction of new institutional environment can go slower or
faster, better or worse, at higher or lower social costs, but never in a
radical manner. The negligence of this institutional dimension of transition
has been the crucial factor behind the Russian crisis. Market does not mean
only private property and deregulation. Wrong! Market means the institutions
performing on the basis of private property, the rules of the game which are
observed and the civic society able to understand these rules and support
these institutions. Thus the cultural and behavioral context of the market
is indispensable for the successful postcommunist transition. 
As far as microeconomic restructuring is concerned, this time even
without the exception of the former GDR, it is long-term and costly process,
which whatsoever cannot be executed in a rapid way. For sure, some
industries, regions of factories can be closed done in a manner which indeed
is a shock, especially for the affected people. But why to call it therapy?
In the Poland's sample at the beginning of 1990s there was a bizarre concept
of "creative destruction". Not surprisingly, there was a lot of destruction
in the real economy, but not enough creation of the new assets. That needs
capital and systemic building, what means it needs time. A lot of time in
the case of postcommunist societies. 
Why then the notion of "shock therapy" is returning as an old song?
It is so now one more time, in the case of Russian malaise, for the same
reasons as it was 9 years ago in Poland. If there is a need for therapy in
extremely difficult times and the proposals to work hard for a generation
are not making the news, then there is a time for voodoo economics as well
as for voodoo economists. And the best example here is, of course, "the
shock therapy". 
Eric Brody, with good intentions, engages "In Defense of 'Shock
Therapy'" (JRL # 2404). But he is wrong not only due to the fact, that
transition by its nature must be gradual. He is - as still many Western
scholars are too- wrong about the Polish experience at the onset of
transition in 1989-92. Now, when Poland seems to be a success story, there
are some policymakers and their advisors that are keen to take the credit
for somebody's else accomplishments. So they keep misleading the public
opinion, that their policies worked, despite they clearly did not. It must
be understood that in Poland at the early stage of transition there was
rather "shock failure". And here Micheal Kagalenko (JRL # 2305) is right,
why challenging the proposals to apply towards Russia now that ill-advised
policy. Actually, the problem is that there were such attempts and their
failure is the main cause of the current Russian crisis. 
In Poland, due to the early policy mistakes, there was great slump
following unnecessary shocks, introduced according to neoliberal monetarist
orthodoxy in 1990. Industrial output fell by 40% and GDP by almost 20% in
1990-91. Unemployment skyrocketed from nil to almost 17% in spring of 1994
and only then started to decline. Inflation in 1990 was at the end of the
year at 250% and by the end of 1991 still at very high level of over 70%.
Fiscal deficit in 1992 - in the aftermath of wrong stabilization policy's
approach - was exceeding 6% of GDP. In the meantime, income inequality was
growing and poverty was spreading. There were similar symptoms like
recently in Russia, though at much smaller scale. The arrears among the
enterprises were mounting, part of due pensions' compensation was not paid,
the bad debt within the banks portfolio was on the rise, the shadow economy
and tax avoidance was vast and growing. There were many cases of
inappropriate privatizations and lack of taking care of the improvement of
corporate governance. Poland did not serve its debt to commercial creditors
form the London Club, thus there was not even a chance to place any bonds at
the international markets. The IMF performance criteria often were not met,
yet its advise was eagerly followed. 
If there were some shocks - mainly vis-a-vis excessive currency
devaluation and raising too high (indeed, overshooting) the real exchange
rates, on the one hand, and extremely (again, too much) harsh restrictions
against the wages, on the other - there were not necessary. Yet it must be
remembered, that there was nothing like radical price and trade
liberalization, since a great deal of liberalization had taken place already
in the 1980s, owing to market reforms of that time. In summer of 1989 over
half of consumer prices (in terms of aggregate supply) was already free! 
The conclusions is simple: there was not that much of shocks as it
is commonly believed, but still there was much less of therapy. Only later,
since after 1993 at the time of successful implementation of "Strategy for
Poland", there were significant achievements. The time of "therapy"
arrived, however not because of the earlier shocks, but despite of them.
The course of reforms has been shifted from "shocks without therapy" towards
"therapy without shocks". And this explain the Polish early failure and
later success. 
Due to gradual, but determined stabilization measures and sound
improvement of corporate governance of both private and state sectors, GDP
has risen in 1994-97 by over 28%, unemployment fell by a third (from 17%
below 11%), inflation declined from 37% at the end of 1993 to 13% at the end
of 1997. Against this background the propensity to save started to grow
since 1994 and thus there was increasing domestic capital formation. Fiscal
position has improved and the deficit was contained below 2% of GDP in 1997.
Without any shock! But with great deal of therapy owing to sound
macroeconomic policy and gradual liberalization and privatization. The FDIs
have been flowing at still growing speed, supporting the domestic savings.
The income distribution was more fair, what - together with gradual
improvement of standard of leaving - contributed to growing social
consensus. Unlike before, the people were not forced by the threat that
"there is no alternative" (in policymaking always are the alternatives), but
convinced that they can and should support market transition, since it
started to work on their behalf, not on their costs, as earlier in Poland
and all the time in Russia. 
In September 1994 I signed the debt reduction deal with the London
Club. Then currency convertibility (according to Article VIII of the IMF
Agreement) was introduced in June 1995, the country has got first investment
grading from S&P, Moody's and IBCA, and a series of successful euro- and
global bonds was issued. In 1996, after tough negotiations, I signed
accession act and Poland has become the member of OECD. A lot of efforts
and attempts, during this difficult years of struggle for integration into
the world economy and for launching sustainable growth, were conducted
against the suggestions and insistence coming from lobbies, which have had
another theoretical and political options, and of course another interests.
My interest was just to put the country on the path of sustainable
development and to use the market transition as a means to do so, not as the
end itself, disregarding the social costs of ongoing changes. Fortunately,
at that time, unlike before in Poland and for much longer in Russia, the
wrong options failed and the pragmatism, common sense and vision, not
dogmatism and delusion, has taken over. It is fine that the new Polish
government, political rhetoric aside, actually tries to continue my line of
transition and development policies and must be support with this endeavor.
The decision-makers and their advisers from the early 1990s should
be happy, though they will never admit it, that their misconduct of economic
matters was reversed on time, unlike in Russia, when similar approach was
continued too long. Thus, due to the fundamental change of the course of
transition policy and introduction of parallel development policy (which was
entirely neglected at the early 1990s) the things stared to change for
better after bad experience following the compromise of "shock therapy".
Hence, nothing strange that even now the ones, which are responsible for the
initial failures, are enjoying the comfort of the later success,
accomplished contrary to what they had advised and what they have done. 
Therefore, the lesson for contemporary Russia's challenge form the
Polish experiences is twofold. Don't do nothing what was done wrong there
and try to learn how to manage transition and development from what we did
correctly later. If "shock therapy" failed in Poland, nothing strange that
the attempts to follow such mismanagement failed in Russia. But, on the
other hand, if "Strategy for Poland" works, why not try to launch "Strategy
for Russia"? It can be both written and implemented, if only is based upon
solid theoretical foundations and ability to learn from own and the others'
experiences. 
P.S. If anybody is keen to read more arguments and study in details the
evidence on the Polish course of transition and development over last 9
years, policies to move from stabilization to growth, income equity in
postcommunist countries and implications of transition for sustainable
growth and the Post-Washington consensus, I'll be happy to send my
UNU/WIDER, IMF and World Bank papers by the e-mail. Just, please, let me
know. 

*******

#9
Moscow Tribune
Oct. 7, 1998
Moscow Gets Ready for Big Freeze
By Lyuba Pronina 

As other regions across Russia may suffer a tough winter, with little or no
fuel to support round-the-clock heating, Moscow government officials say
there are enough stocks of coal, gas and oil to provide Muscovites with
light and heat. 

The heating supply will not be switched off in hospitals, kindergartens,
schools or the residential sector, Moscow vice-mayor Valery Shantsev
pledged at an earlier city government meeting. 

However, according to Nestor Serebryanikov, general director of Mosenergo
(Moscow Energy Supply), some students may have to study in the cold at
universities which have repeatedly failed to pay their energy bills. 

So far, Mosenergo has piled up 450,100 tons of coal (88,3 per cent of the
required supply), 453,800 tons of oil (over 100 per cent) and 5.5 billion
cubic meters of gas, enough to provide for the peak season. 
All major preparations for the winter were completed by the end of
September, but energy workers, however, did not exclude the possibility of
accidents as some city enterprises have failed to prepare properly. 

"If a factory or a plant is not ready for the coming season, adjoining
residential areas may suffer," Mikhail Lapir, head of the Fuel and Energy
Department, said. 

Many concerns about the winter stem from the mutual non-payment crisis.
Mosenergo is owed 16.1 billion rubles ($1 billion), which includes 3.5
billion rubles ($218 million) owed by city organizations, 1.4 billion
rubles ($875 million) by enterprises, 1.1 billion ($68 million) by the
military industry and about 600 million ($37 million) by the Defense
Ministry. The latter three have been put on the list of those who will not
get heating unless they pay. 

"It has happened before: when they get switched off, they suddenly find the
money," Serebryanikov said. 

"Of course we do not want to freeze students, so the dormitories will get
heating, but universities have to consider how to pay for the energy
supplied." Theaters may also face performances in the cold if the Culture
Ministry fails to find sufficient money. 

To battle the snow, 4941 snowplows and other clearing vehicles have also
been prepared, with 205,500 tonnes of technical salt, the major defrosting
agent, already stockpiled. 

******

#10
Russian Democratic Groups Rally in Moscow 3 Oct 

Moscow, 3 Oct (Interfax) -- Over 250 people rallied under the slogan
"From Slavery-like Socialism, from Wild Capitalism - to Open Society" in
the center of Moscow on Saturday.
The protesters held Russian flags and posters saying No to
"restoration of Communism by Primakov's Government; retreat to a Communist
stable; impudent oligarches; red sabotage of basic laws; a free hand to
mafia and neo-fascists." They said Yes to "democratic and liberal reforms;
the sacred right to savings and pensions; control over monopolies; free
democratic press; cooperation of democratic forces.
The participants of the rally gave a silent tribute holding flags at
half-mast to the victims of the tragic events of September- October, 1993.
Russia is facing "the threat of red national-Communist revanche"
again, Democratic Russia leader Galina Starovoitova said at the rally.
"Today, as many times in the Russian history of the 20th century, the
National-Bolsheviks call for civil war and violence," Starovoitova said
referring to the headlines of the Zavtra [Tomorrow] and Sovetskaya Rossiya
newspapers."Five years ago, supporters of reforms gathered in this square and
prevented a civil war. Dozens of our compatriots died on both sides of the
barricades then. Some of them were led by irresponsible politicians to
storm the Ostankino television tower, headed by General Makashov. They are
resting in damp earth, while he [Makashov] is content to be in the State
Duma," she said.Starovoitova strongly denounced the calls and actions aimed at
toppling President Boris Yeltsin. "His dismissal would lead to chaos and a
civil war, the same as hasty amendments to the Constitution," she said.
Leader of the Anti-Fascist Youth Movement Pyotr Kaznacheyev described
Primakov's Cabinet as "left-polygraphic," since it is "a government of
all-out emission."
The Democratic Russia movement, the Life Ring Union and Russia group
uniting the defenders of the House of Russian Government in 1991, the
Moscow Helsinki Group, the Anti-Fascist Youth Movement, the Moscow People's
House, the Russia's Democratic Choice, Social Democratic, Russian
Democratic Union, and Economic Freedom parties participated in the rally.

******

#11
Chubays Urges Democrats To Close Ranks Before 1999 Election

Moscow, Oct 5 (Interfax)--Anatoliy Chubays, Chairman of the United
Energy System, UES, Russia's electricity monopoly, urged democrats to unite
before the State Duma elections that are to be held in 1999.
He told journalists Monday evening in response to an Interfax question
that "there is hardly anything more difficult than to unite the democratic
forces," but, "they are simply obliged to do so, regardless of whether they
like this or not."
"More than that, I would regard every one who refuse to do so as a
traitor with all the ensuing consequences," Chubays said, assessing his
attitude to this question as "utterly tough."
"We see an obviously tough consolidation at the other end of the
political spectrum, and the only possible response is to consolidate the
sound part of the spectrum, Chubays said.
Though in the past he was a member of the Political Council of
Russia's Democratic Choice party, led by Yegor Gaydar, Chubays is now a
rank-and-file party official.

********

#12
Former Tax Chief Fedorov Speaks on Dismissal 

Komsomolskaya Pravda
3 October 1998
[translation for personal use only]
Account of Boris Fedorov remarks by Aleksey Makurin under the
"Verbatim" rubric: "Boris Fedorov Seeks Job Via Komsomolskaya
Pravda! Former State Tax Service Chief on Finding Himself a Job,
and More Besides...."

Boris Fedorov has been invited to work in the government three times. 
And twice he knocked on the White House door himself. But the last time,
when he was head of the State Tax Service, he stated in Komsomolskaya
Pravda: "No one can now expect me now to go of my own accord." And that
is what happened: The acting vice premier, who also doubled as taxation
minister, was dismissed.

Fedorov on His Dismissal 

Primakov told me literally the day after he came in: I am under a
great deal of pressure; although I have known you a long time, I cannot
keep you in the government. I would suggest that Maslyukov and
Gerashchenko put the question thus: Either Fedorov goes or one of us must.
It simply could not be otherwise: I came into fierce conflict with
Gerashchenko back in 1993, when I was vice premier for the first time.

On the New Government 

Primakov may not make it to the next presidential election. And it is
obvious that the actual makeup of the government will change. Boris
Nikolayevich will wake up one fine morning to find a dollar is worth 50
rubles. Knowing our president, you can have no doubt what will follow.
As for the vacant post of vice premier in charge of finance....
Maslyukov does not need the post. He has, after all, essentially gotten
his hands on the management of the whole economy.

On Maslyukov's Anti-Crisis Program 

This is a reversion to the economic views of the late eighties.
Dictatorship is necessary to put Maslyukov's plans into effect, but the
current government has no real power or political will. And I cannot
imagine at all how it is possible, for example, to say to the 7 million
people working in the retail trade: "That's enough, folks! You will toe
the line as in 1975."

On the Free Movement of Currency

Our people have opted for the "greenback." That is a fact. And let
the dollar be the official means of payment. I am in favor of fixing a
definite relationship between the ruble and a basket of currencies and not
printing a lot of money.
Scarcely anyone will take dollars to the bank voluntarily today. The
government's plan can be only be to depress the dollar and then so isolate
the country that people are forced to go the bank and sell foreign currency
at any rate of exchange -- if only not to starve to death. But around the
corner, on the "black market," the terms will, all the same, be more
favorable.

On His Personal Plans 

It is clear that I will not be elected to the Duma. I will try to
take a break and will see what offers come in. Perhaps I will put a "job
wanted" ad in your newspaper?
I am not going to renounce anything. Come four months' time and we
will again perhaps be presenting together the State Tax Service award to
the most active participant in your editorial office's "Demand a check!"
campaign.

*******

#13
Irish Times
October 8, 1998 
Editorial 
Russia and China 

The stark contrast between what once were the world's great communist powers
has again been clearly illustrated. As the British Prime Minister, Mr Tony
Blair, set out to woo China's trade and industry leaders in Beijing, the
centre of Russia's far-eastern metropolis, Vladivostok, was filled with
demonstrators, including sailors of the pacific fleet, demanding the
resignation of President Yeltsin.
China remains nominally communist, is governed by a single party organisation,
is manifestly lacking in human rights but its economy is booming despite the
huge Asian downturn. Russia is nominally democratic and is governed by a
president who Western countries have supported through thick and thin, but its
parliament, in which the Communist Party is the largest minority grouping, has
very little power.
It is paradoxical that the almost powerless Russian communists have been
blamed for economic collapse while the extremely powerful Chinese communists
have been given the credit for a burgeoning economy. Such judgments are
superficial and specious. China's governing party has indeed fostered economic
growth and the establishment of a market economy. But the Chinese market has
been far less subject to controls than have the human rights of its citizens.
The Chinese experiment has given the lie to the theory that democracy and a
successful market must go hand in hand.
Russia's plight proves the same point in a different way. Democracy in Russia
has advanced much further than in China but its market reforms have clearly
failed. Privatisation - a word Mr Blair was advised by British diplomats to
eschew in his Beijing speech yesterday - was undertaken on a massive scale in
Russia.
That this was done in an extremely corrupt manner, seemed not to worry western
economic experts in the slightest. The argument put forward was that corrupt
accumulation of wealth would inevitably - after a generation or so - lead to a
clean and healthy economy. This, the experts argued, was what had happened in
the United States. This suggestion was as insulting to America as it was to
Russia. 
The United States owes its ethos and its strength not to the efforts of Al
Capone and Billy the Kid but to those of Thomas Jefferson and George
Washington. Its founding fathers were men of intense probity, a quality
distinctly lacking in many of those who have laid the foundations for the new
Russia.
President Yeltsin and his supporters will take some comfort in the fact that
yesterday's nationwide demonstrations attracted much fewer people than their
communist organisers had forecast. 
However, it is likely that this was due more to the common sense of ordinary
Russians than any support that is left for Mr Yeltsin. Russians have been
extremely badly done by but the current economic disaster is far from the
worst they have suffered in their recent history. Clearly the vast majority do
not now support their president. That they did not turn out in huge numbers
yesterday simply indicates their unwillingness to be used as political pawns
by Mr Gennady Zyuganov and the Communist Party of the Russian Federation.

*******





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