October 9, 1998    
This Date's Issues: 2420•2421

Johnson's Russia List
#2421
9 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Transitions: Job Opportunity at Prague-based Magazine.
2. Robert McIntyre: Helsinki Sanomat article.
3. Fred Weir on Seleznyov's proposal for referendum on Yeltsin.
4. The Electronic Telegraph: Marcus Warren, Fascists 'pose great 
threat to life in Russia.' (Gusinsky).
5. Boston Globe: John Ellis, Let's buy Siberia; don't laugh, it's
a great idea.
6. Reuters: Nemtsov calls on Russia's young to take power.
7. Moscow Times editorial: Russia Takes Sensible Line On Kosovo.
8. Interfax: Gorbachev Supports National Protest Action.
9. Business Week: Carol Matlack, WHAT DISASTERS LIE AHEAD IN MOSCOW?
10. The Economist: Passive Primakov.
11. Text of Primakov's October 6 television speech.
12. Reuters: Primakov marks month as PM but still no plan.]

*******

#1
Date: Thu, 08 Oct 1998 
From: Dasa Obereigner <obereignerd@ijt.cz> 
Subject: Job Opportunity at Prague-based Magazine

Job Opportunity at Prague-based Magazine

Transitions, a monthly magazine covering changes in post-communist
countries, seeks to fill the position of Associate Editor for Russia and
the former Soviet Union. Applicants from the region are preferred. The
Associate Editor, who will be based in the Transitions offices in Prague,
should have extensive regional expertise and contacts-generating news and
feature stories and working closely with writers in the region-and be
committed to the development of independent and professional media.
Excellent English-language editing and writing skills essential; a minimum
of five years' journalism experience required. The job will entail
extensive editing in English, primarily of work by non-native speakers.
Knowledge of Russian essential; management experience and another CEE
language desirable. Please send cover letter and curriculum vitae to
Transitions, Seifertova 47, 130 00 Prague 3, Czech Republic. E-mail:
transitions@ijt.cz, fax: (4202) 6279 444. Deadline for applications is
November 15. For more information, contact Executive Editor Kees Schaepman.

Dasa Obereigner
Senior Editor
Transitions
Seifertova 47
130 00 Prague 3
Czech Republic
Tel: (420 2) 627 9445
Fax: (420 2) 627 9444
http://www.ijt.cz

*******

#2
Date: Thu, 08 Oct 1998
From: "Robert McIntyre" <mcintyre@wider.unu.edu> 
Subject: (Fwd) Helsinki Sanomat article

Dear David :

Enclosed in the informal translation of an article published 
in the main Finnish newspaper "Helsingin Sanomat" on 7 October 1998 
p. C4. It should make clear that the Cold War is still with us here 
in Helsinki. By the way the reference to "conditions of 1975 or 
1985" refers to the South Korean conditions during those years 
limiting capital movements and foreign investment, which I suggested 
Russia consider. 

"RUSSIA FOLLOWED A DREADFUL PATH IN THE 1990s: The 
prescription of the American researcher is almost from the programme 
of the communists"

KAIJA VIRTA , Helsinki Sanomat 

Russia should give itself a breathing space and deal with its crisis 
by isolating itself from the world market for a while, suggested the
American researcher Robert McIntyre on Tuesday in Helsinki. 
"Russia could pursue the conditions of 1975 or 1985" declared 
McIntyre, who pushed aside the Western clichés at the lecture of 
WIDER Institute. "Raw materials should be exported with strict 
control, and in return food products needed for relief purposes 
should be imported, as well as carefully selected investment goods. 
Only foreign firms who produce in Russia should be granted 
favourable conditions. Domestic products should be protected 
categorically." 

RED PROVINCES FUNCTION BETTER: The seven-point programme of the 
professor also included harsh currency controls, complete abandonment 
of dependence on foreign investment, and the intentional neglect of 
the instructions of the World Bank and IMF. According to McIntyre, 
defiance of the latter helped the South Korean economic miracle for 
decades. 
The professor says that in Russia today the market economy and the 
institutions of private enterprise function better in "red" provinces 
where leftwing governments are elected rather than the regions ruled 
by "young reformers". Behind these sharp prescriptions is the angry 
evaluation of McIntyre who has spent long time in Moscow and Nizhni 
Novgorod: Russia has proceeded since 1991 with a neoliberal reforms 
"along the road to ruin", and the West has been a major help in this. 
As the prescriptions of McIntyre are so radical, where do they differ 
from the programme of the Russian communists? "There is not much 
difference", was the good tempered response of the professor to 
Helsingin Sanomat, "although I am not well acquainted with the 
programme of the communists." 
According to McIntyre Russia selected with the reforms of Yegor 
Gaidar and Anatoli Chubais "a dreadful, catastrophic and a hopeless 
path - this is what the communists say and I say also". The 
difference is evident: "I have come to my conclusion through what I 
know about economic history and the Asian development models. The 
foundations of the communists are something different." 

THE WEST HAS THE WRONG FRIENDS The professor 
rejected the suggestion that his fierce sounding programme for Russia 
was only meant to be a provocation. "I did this paper quickly, 
without deeper thinking, but I have thought about this considerably. 
It is meant to be a serious proposal, of which road to follow." 
According to McIntyre, the West in its relation with Russia has been 
focusing blindly on the "corrupt elite" which profited from the 
transition of the 90s. "We have treated them as the only hope for 
democracy and reforms", he complains. "The answer was always: these 
are the only democrats and if we do not support them, the red 
revolution will erupt!" 
According to McIntyre the Russian communist party has been in reality 
terribly weak until the most recent months of the crisis. Russia 
should decide on its own path. "They surely know that they can rule 
their country only with a coalition government", McIntyre adds. 
According to him the United States and Europe should also have 
accepted the fact that Russia should decide on its own path - and it 
seems to be a coalition government of different parties based on 
compromises and negotiations.

Dr. Robert J. McIntyre
Project Director, Transition from Below
UNU/WIDER (World Institute for Development Economics Research) 
Katajanokanlaituri 6B
00160 Helsinki
FINLAND

******

#3
Date: Thu, 08 Oct 1998
From: fweir@rex.iasnet.ru 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT) -- Russia's parliamentary Speaker, a Communist,
has infuriated the Kremlin by proposing a nationwide referendum on
whether President Boris Yeltsin should resign.
Mr. Yeltsin, however, immediately issued a statement saying
he will remain in office until his term ends in 2000.
Gennady Seleznyov, generally regarded as a leader of the
powerful Communist Party's moderate wing, told journalists
Thursday that massive labour protests this week prove that
Russians want a change at the top.
He said a referendum on Mr. Yeltsin's leadership would be a
peaceful and legal method of letting the population have its say
on the issue.
"After the huge protests which took place yesterday, it
would be legitimate to call a referendum in Russia on whether
society trusts or does not trust the president, on whether he
should or should not resign," Mr. Seleznyov said Thursday.
The proposal is a new twist on a tactic Mr. Yeltsin himself
used in 1993, when he was searching for a means to get rid of
the opposition-led parliament. 
At the time, the Kremlin sponsored a referendum on public trust 
in the President, which Mr. Yeltsin won with about 58 per cent of 
the vote. He later used that result to justify abolishing and then 
destroying the legislature.
Mr. Seleznyov dropped a second bombshell by adding his own
name to the growing list of candidates lined up to contend for
the top Kremlin job once the aging and weakened Mr. Yeltsin steps
down.
Russian workers staged strikes and demonstrations across the
country Wednesday demanding Mr. Yeltsin resign and that new
elections be held for both President and Parliament.
The Kremlin estimated the total number of protesters at just
700,000 while trade union leaders claimed at least 10-million
took part.
Mr. Yeltsin's spokesman, Dmitry Yakushkin, argued Thursday
that the mass protests held no political significance and they
only show that "people are mostly concerned with concrete
problems such as wages, pensions and other social payments, and
the government is working to solve them."
Mr. Yakushkin added the idea of calling a referendum on Mr.
Yeltsin's leadership is illegal and destabilizing.
"Calls for referendums ... will only excessively politicize
society and distract us from dealing with concrete tasks," he
said. He added that Russia's Yeltsin-authored Constitution 
specifically forbids any referendum on curtailing a President's
term of office.
The 67-year old Mr. Yeltsin, told a meeting of top army
officers Thursday that he maintains personal control over the
security forces. "And it will be like that, at least, until the
year 2000, while I'm here," he said.
But Communist Party leader Gennady Zyuganov, another
potential presidential candidate, endorsed the idea of a
referendum as the best means of forcing Mr. Yeltsin to leave
office short of waiting for some fresh disaster such as economic
breakdown, social upheaval or political collapse to do the job.
"Yeltsin and his Constitution are like a plastic bag wrapped
around the head of the nation to suffocate it, and they must be
removed immediately," Mr. Zyuganov told Russian radio. 

******

#4
The Electronic Telegraph
8 October 1998
[for personal use only]
Fascists 'pose great threat to life in Russia'
By Marcus Warren in Moscow 

THE real threat to Russia is a rise of fascism, not a return to communism,
according to one of Moscow's most powerful businessmen.
Vladimir Gusinsky, Russia's biggest media owner and founder of one of its
largest banks, MOST, is one of the tycoons with most to lose in the current
economic crisis. But what alarms him most is not the prospect of a return
to the Soviet era, nor the damage the upheavals have inflicted on his
business empire, but the opportunities they create for Right-wing extremists.
He said: "There is no middle way. If it starts, we will end up with a huge
fence around our country and a nationalist dictatorship." Mr Gusinsky is
reserving judgment on Yevgeny Primakov, the new prime minister, but fears
that if Mr Primakov cannot solve Russia's problems, fascists will exploit
the chaos to take over. He said: "Under Primakov, there is no such danger,
but if he fails, there is such a danger, very much so."
Mr Gusinsky is not the only person to see extreme nationalists as well
placed to "save" the country from economic misery, humiliation and "enemies
within". Nor is he alone in expressing frustration at the way black-shirted
thugs with swastika-like emblems operate with impunity in many Russian
regions. He said: "The authorities have laws against fascism at their
disposal but do not use them. A country where fascists parade in the
streets cannot consider itself to be part of any European community, Group
of Seven, Eight or anything."
Like many other Russian tycoons and politicians, Mr Gusinsky is Jewish. But
while many downplay their origins in a country where anti-semitism is
rampant, he promotes them and is president of Russia's Jewish Congress.

******

#5
Boston Globe
October 8, 1998
[for personal use only]
Let's buy Siberia; don't laugh, it's a great idea 
By John Ellis, Globe Columnist

It's a thin line between hope and fear. Six months ago, financial markets
were bustling and there was learned talk in elite circles that perhaps the
business cycle no longer applied. Today fear is spreading to the boundary
lines of panic. President Clinton was not exaggerating Sunday when he said
the world stood on the edge of a ''financial precipice.''
As detailed in yesterday's Wall Street Journal, a global credit crisis
looms at exactly the moment credit extension is crucial to restoring
confidence. To make matters worse, finance ministers at the meeting of the
International Monetary Fund and the World Bank were unable to agree on a
coherent response to the crisis. Markets from Hong Kong to New York to
London continue to roil with doubt. 
Deflation threatens virtually every national economy, including our own.
There is no world government to deal with what has become a global crisis.
Most of what is proposed reeks of throwing good money after bad. Doomsday
scenarios are no longer dismissed out of hand. The world financial crisis
offers President Clinton the opportunity to fix the problem, completely
change the map of geopolitics, forestall his impeachment by the House of
Representatives, and earn him a place in history worthy of his ambition.
All he has to do is call Walter Mead at the Council on Foreign Relations. 
Six years ago, Mead proposed that the United States buy southwestern
Siberia for $1 trillion to $2 trillion. At the time, the Russian president,
Boris Yeltsin, had offered to sell oil fields, production plants, and land
to the United States to help pay down some of Russia's then $70 billion in
foreign debt. President Bush dismissed the idea as crazy and far-fetched,
as well it might have been at that time. 
But things are different today. On Wednesday, roughly 40 million Russians
joined a nationwide strike to protest years of unpaid wages and pensions.
In the last six years the average Russian has seen his or her income drop
from $20 per month to virtually nothing. 
The near-term outlook could hardly be bleaker. According to the Journal,
Russia's economy is expected to contract by 5 percent this year. Inflation
is expected to reach 200 percent. Federal tax revenues are collapsing, and
the ruble's decline in value continues apace. Russia is a country on the
verge of economic collapse. 
Mead's proposal fixes all that with the stroke of a pen. A $1 trillion
purchase of southwestern Siberia pays off Russia's debt, stabilizes its
currency, upgrades its infrastructure, and leaves more than enough left
over to pay all back wages to every last pensioner. There might even be
enough left over for an Alaska-style rebate to every Russian citizen,
assuming the kleptocracy doesn't skim more than 20 percent off the top.
Support for the sale of Siberia in Russia would be unanimous. In return,
the United States would acquire a land mass larger than its own with a
population of 15 million people. ''The combination of new territories in
Asia,'' Mead wrote, ''and a vast, suddenly solvent market in European
Russia would amount, literally, to a new frontier with new opportunities
and challenges for generations to come. This deal would double our size and
put us on the Pacific Rim at the intersection of China, Korea, and Japan.''
''There's more.'' Mead continued. ''Part of the deal would be for cash and
part for credits; with, say, half the money, the Russians could place
orders in the United States. Fiber-optics, consultants, computers, machine
tools, whatever they wanted from whoever made the best deal as long as the
stuff was American-made. Over a 20-year payment period, we would see
something like $75 billion in exports each year to Russia. Minimum. That
means 1 million jobs in today's 50 states. Even with all the incidental
expenses - environment cleanup, infrastructure - the deal would more than
pay for itself.''
Siberia is a land rich in natural resources. Acquiring its southwestern
shank, America would gain the warm-water port of Vladivostok, the great
timberlands to the northwest, and all the mining rights therein. Overnight
we would become the world's largest oil producer. 
Running up the American flag over Siberia would create an opportunity for
global investors greater than anything since Asia in the post-World War II
era. No one would invest in Siberia today. But if it was an American
territory on its way to becoming an American state (or states), a gold rush
would follow. 
In 1803, President Thomas Jefferson did just such a deal. Napoleon was in a
financial and political jam. Jefferson made him an offer. The result was
the Louisiana Purchase. The Siberian Purchase makes every bit as much sense. 
It probably won't be considered by the Clinton team. They are preoccupied
with more urgent matters, like the head count on impeachment. Unless
Clinton does something that changes everything, however, that head count
will never add up. The Siberian Solution, far-fetched as it seems, is
Clinton's and the world's way out of a very bad jam. 
John Ellis is a Globe columnist. 

******

#6
Nemtsov calls on Russia's young to take power

MOSCOW, Oct 8 (Reuters) - Boris Nemtsov, one of Russia's leading young liberal
reformers, urged young people on Thursday to get involved in politics to fix
the mistakes of leaders trained in the Soviet era. 
``There is only one path: to rise to power and remove those men of the past,''
Nemtsov wrote on his Internet page. 
Nemtsov, 38, a former deputy prime minister, left the government after Prime
Minister Sergei Kiriyenko, 36, was sacked in August. Kiriyenko has been
replaced by Yevgeny Primakov, 68, a veteran Soviet diplomat and former
spymaster. 
Primakov has brought a series of ex-Soviet officials into the government. Yuri
Maslyukov, who headed the communist state planning agency Gosplan, was
promoted to first deputy prime minister, and Soviet veteran Viktor
Gerashchenko was put back in charge of the central bank. 
``You and I understand that people who do not know what needs to be done have
come to power,'' Nemtsov told his Internet readers, most of whom are likely to
be young. 
``In general they are not bad people, but they have their own understanding of
norms rooted in Soviet times, an era about which many of you know only in
passing,'' he wrote. 
``They will not listen to advice from anybody, especially not from the new
generation to which you belong.'' 
Nemtsov, who could one day be a presidential candidate, acknowledged many
Russians found politics distasteful. 
But he said they must get involved in order to avoid becoming ``lumpen
proletariats'' and have a chance of ``returning to a worthy and free life.'' 

********

#7
Moscow Times
October 9, 1998 
EDITORIAL: Russia Takes Sensible Line On Kosovo 

Once again, as it prepares to bomb Serbia, NATO is trying to cast Russia in
the role of the party pooper in the New World Order. 
The West believes that airstrikes are the only way to stop the Serbs
conducting their violent campaign to suppress separatist Albanians in the
region of Kosovo. Yet Russia has refused to come to the party, threatening to
use its veto in the UN 
Security Council to block NATO's campaign. 
To read the Western press, Russia's policy is just recalcitrant Cold War
diplomacy. Russia, it is said, is only trying to score points against the
United States and curry favor with pan-Slav nationalists at home. There is
some truth in this. Russia should make its disgust with Serbian policies more
clear. 
But there is another motive for Russia's opposition to NATO: It just makes
sense. 
NATO will bomb but what then? The West has no political plan for Kosovo.
Indeed, NATO is terrified of the emergence of an independent that could
destabilize the whole region. NATO has neither the right nor the stomach to
deploy in Kosovo the tens of thousands of troops and billions of dollars it
would take to bring real peace to the region. 
Instead, after the bombing, the Kosovo Albanians and the Serbs are supposed to
sit down and agree on some form of autonomy in which the Serbs promise to be
nice to their sworn enemies. 
In reality, Yugoslav President Slobodan Milosevic will promise a fig leaf of
autonomy and at the next convenient opportunity, he will start again. 
All the West's antics will have done is to embolden the Kosovo Albanians to
take on the Serbs, offering them the false hope that the West will underwrite
their independence. 
It may seem tough to just tell them that they are on their own but it is more
humane than lying to them. A useful parallel is with U.S. promises to use air
power to protect the Kurds from Saddam Hussein's Iraq after the Gulf War. The
minority Kurds promptly rose up against Baghdad f only to be slaughtered. 
The West invokes the memory of Bosnia to justify its actions but the lessons
are highly ambivalent. The West remembers it years of inaction during the war
but it should also remember what happened in Srebrenica in 1994 when it
established a UN safe haven for Bosnian Moslems but failed to provide adequate
land-based protection. 
The Serbs bided their time and eventually murdered thousands of innocent
people. 

*******

#8
Gorbachev Supports National Protest Action 

MOSCOW, Oct 7 (Interfax) -- Ex-president of the Soviet Union Mikhail
Gorbachev supports the demands advanced by the participants in the national
protest action, above all the demand for Yeltsin's resignation.
He told Interfax that he fully approves of this demand and that
Yeltsin's resignation would not mean an end to Russia. "We can no longer
tolerate his conduct and inability to understand the situation which can
ultimately cut all live contacts between authority and the people,"
Gorbachev said.
In his estimate, up to 90% of the population support the resignation
of Boris Yeltsin.
"A lot must change, above all our constitution which must ensure a
more reasonable distribution of authority at the federal level," he said. 
Then "we shall no longer have a monarch in the guise of a democratic
president and constitution," he added.
"We have been driven into a corner because the president cannot do
anything and does not understand what should be done, while others cannot
make a move without him," he added. "This must be changed because this
situation cannot be tolerated any longer, although I myself come out for
strong authority and for the preservation of the presidential post."
He said that changes in the constitution must "do away with all this
fuss over this post" and "shift the emphasis over to parliament
and government."

*****

#9
Business Week
October 19, 1998
[for personal use only]
International Business: RUSSIA
WHAT DISASTERS LIE AHEAD IN MOSCOW?
Rash policies could mean a hard winter--and social unrest
By Carol Matlack in Moscow 

A new joke is making the rounds in Moscow: ``For too long we have been
standing at the edge of the precipice,'' it goes. ``Now we are taking a great
leap forward.''
That's surely how things look to holders of Russian debt. Barely a month
after defaulting on $40 billion in domestic Treasury bills, the Kremlin may be
only weeks away from defaulting on payments on $150 billion in hard-currency
sovereign debts. By the end of December, Russia must pay interest and
principal totaling more than $3 billion on Eurobonds, restructured Soviet-era
debt, and loans from international financial organizations. An additional $19
billion falls due next year--about three-fourths of it owed to foreign
creditors.
Where is Russia going to get the money? Finance Minister Mikhail Zadornov
says the government will tap its $12.5 billion in hard-currency reserves to
make this year's payments. But reserves won't cover next year's due bills and
the International Monetary Fund has sworn off any further assistance for now.
The prospect of bigger losses for investors grows more likely by the day.
Here's a look at how deep Russia's crisis could go.

How real is the threat of default?
Very real. The Russians would have trouble paying their debts even if the
economy were growing, and it's shrinking fast. Tax receipts have dropped by
nearly 50% since July, to about $450 million in September. Already, the
Kremlin has had to beg for an extension on $600 million in interest payments
on Soviet-era debt due to Western governments. Russia's hard currency debt is
now rated the riskiest in the world.

What does Russia have to lose from more defaults?
Defaulting on foreign-denominated sovereign debt would have grave
consequences. Apart from destroying Russia's chances to return to
international markets, a default could prompt creditors to make use of foreign
courts to seize Russian property, including assets of energy companies such as
Gazprom. Lehman Brothers Inc. recently won court orders freezing $128 million
in the British units of three Russian banks that failed to honor foreign
exchange contracts. But Russia is eager to stay current on its outstanding $16
billion in Eurobonds. Most analysts predict that the government will dig into
its reserves to make its Eurobond payments, which total nearly $1.9 billion
through the end of next year.

What about other debt holders?
The best they can expect is restructuring. The Kremlin is likely to seek a
restructuring deal on Finance Ministry bonds covering the debts of the old
Soviet state bank. These bonds have been popular with institutional investors.
The government has never missed a payment, but there's little hope it can come
up with the $1.3 billion principal on a bond that matures next May. Other
creditors include the French and German governments and the IMF, which is owed
more than $5.4 billion over the next 15 months.

If Russia can restructure its debts, couldn't it muddle along for some time?
No. Russia is in the eye of a financial hurricane. Central Bank Chairman
Viktor Geraschenko is printing money. He plans to nearly double the money
supply by Dec. 31. The government itself acknowledges that the inflation rate
could reach 200% by yearend.

What is the government planning to do, besides print money?
One of its first moves was to reestablish the state liquor monopoly. The
government will also force exporters of oil, gas, and other commodities to
convert more of their hard currency earnings into rubles. But after four weeks
in office, Prime Minister Yevgeny M. Primakov still hasn't offered a
comprehensive plan to pull Russia out of its economic morass.

So what happens next?
Many analysts think Russia is heading for a winter of economic hardship so
severe that Primakov's Cabinet--and possibly the Prime Minister himself--could
be discredited and forced from office in a few months. Optimists say Russia
might then agree to tough monetary measures. Surprisingly, ordinary Russians
might not mind. A recent poll shows that only 25% of Russians support printing
money to pay back wages, while 57% oppose it as inflationary. But pessimists
worry that political instability could lead to social unrest, or worse.

*******

#10
The Economist
October 10, 1998
[for personal use only]
Russia 
Passive Primakov 
M O S C O W 

WHAT is the most worrying feature of Russia’s economic mess? The collapse in
business confidence? The impending default on over $120 billion of foreign
debt? Fears about food and fuel for winter? Protests on the streets on October
7th—or the grim acceptance of misrule that the low turnout revealed? All are
worrying enough, but perhaps the biggest cause for concern is that, after a
month in office, Yevgeny Primakov’s government has yet to announce any
coherent plan for dealing with them. 
There is no shortage of ideas, ranging from the incendiary (banning Russians
from holding dollars) to the sensible (reforming the tax system). But almost
every proposal, good or bad, faces a political or practical hurdle. Last week,
for example, Yuri Maslyukov, the independent-minded Communist who is the top
economics minister, came out with a wrong-headed, but fairly detailed, plan
that would have given the state much greater control of the economy. It met
furious opposition, both from ordinary Russians—for whom the right to save in
dollars is one of the few benefits still remaining after seven years of half-
hearted reform—and from President Boris Yeltsin, who, unusually, intervened to
declare that he would not let the government return to the economics of the
past. Mr Maslyukov obediently backtracked. 
The government has made some piecemeal decisions. At least 12 billion roubles
($760m) have been printed in order to pay, among other things, soldiers’
wages. But, contrary to worst fears, the government has not switched the
printing presses on to full power; ordinary Russians, displaying more economic
literacy than their leaders, seem firmly against such a move. The exchange
rate has been stabilised, albeit artificially, by forcing exporters to convert
their dollars to roubles. These stop-gap measures have created the temporary
illusion of calm. 
Mostly, however, the government’s economic policy seems to consist of
complaining loudly and hoping for western help. Some of the points made have
been peculiar. Viktor Gerashchenko, the governor of the Central Bank, has
denounced western investors who want their money back as “greedy and stupid”.
Mr Maslyukov has claimed that the West is to blame for the mess, and should
therefore dig Russia out of it. He has also declared darkly that Russia will
press ahead with modernising its nuclear arsenal. Russians lobbying the IMF
this week in Washington have been disconcerted to find, for the first time
since the collapse of communism, that their own difficulties are quite
overshadowed by much bigger ones elsewhere. 
Admittedly, Russia’s problems almost defy solution. By some calculations, even
if Russia paid not a penny of interest on its foreign debt, the government’s
budget would still not balance. While spending plans become ever more
ambitious, tax collection has virtually dried up. Tax revenues in September
came to only 9 billion roubles, 4 billion short of the monthly target drawn up
before the collapse—and then the rouble was worth twice as much as it is now.
Latest figures suggest that GDP will shrivel by up to 8% this year, a
startling decline, given that it was growing slightly until August. Annual
inflation, by the government’s own reckoning, will spiral to 230% by December.
The beneficiary of all this drift and muddle ought to be the opposition. Yet
the protest by Communists and trade unionists on October 7th flopped,
attracting no more than 1m Russians across the country, nothing like the 40m
the organisers had promised. Having backed Mr Primakov’s nomination, the
Communists are awkwardly placed to criticise his government. Although their
leader, Gennady Zyuganov, remains the most popular alternative to Mr Yeltsin,
there is no enthusiasm for a wholesale return to communism. 
One opposition character cashing in on the mess is a man who has pretensions
to be the Tony Blair of Russia: Yuri Luzhkov, the mayor of Moscow. His role
model might be surprised to learn what the “centre-left” means when it is
pursued in Moscow’s city hall: opaque and rickety municipal capitalism,
combined with attempts to snuggle up to both the Communists and assorted ex-
military nationalists. Some Communists favour Mr Luzhkov. Mr Maslyukov, who is
something of a free thinker, even wants him to be president. But the Communist
leadership would prefer to have Mr Luzhkov’s support to put their man in the
top job, rather than the other way round. 

******

#11
ITAR-TASS Carries 'Text' of Primakov Speech 

Moscow October, 6 (ITAR-TASS)--Russian Prime Minister Yevgeniy
Primakov made a televised speech on Tuesday. Follows the full text of the
speech, received by Itar-Tass from the Governmental Information Department:
"Dear Russians!
"I would like to give a brief account of the activity of the
government over the first weeks of its existence. I do not plan to dwell
in detail on the difficulties we face. I do not want to reproach the
predecessors. This is not the best way of gaining foothold.
"We can say that we have finalized the formation of the government,
which has started to take emergency measures to stabilize the situation. 
The most important is to solve problems related to the well-being and, if
you like, the creation of normal living conditions for compatriots.
"The government took an obligation to pay monetary allowances to
servicemen for two months. As of October 2, 3,782 million rubles were
transferred to the Defense Ministry. This is the whole sum due for these
purposes.
"We took an obligation, and we will abide by it, to pay current
salaries of all persons on the state payroll. We are starting to pay that
debt as well. But that will take certain time. Current pensions will be
paid in October, and payments will be further done every month. I want to
tell pensioners that the state will pay everything, up to the kopeck, to
our veterans.
"A possibility to render an additional financial assistance to regions
for paying salaries to teachers, physicians and cultural workers is being
considered. A decision to transfer 1.5 billion rubles to 28 depressive
regions was taken on September 19.
"Certainly, we understand that does not solve the problem. We
understand one more thing: much depends on the regional and local
authorities in that respect.
"One of the most important priorities of the government activity is
the preparations for the Russian cold winter. Measures to supply food and
fuel for the winter season were specially outlined together with leaders of
the northern regions and implemented.
"I will not deny that the government had to focus on the food market. 
The August downfall of the ruble resulted in a major drop of the food
imports, which used to amount to almost half of products on the market over
the recent years.
"We in the government are sure that Russian farmers are capable of
carrying the load and providing the population with food. Certainly, that
will take not only time, which has been missed in many aspects, but also
measures on the part of the government. I can assure you that the
population will be fully provided with vegetables, potato and fruit.
"In order to enable shipments between regions, we lowered by 50
percent the railroad tariff for the transportation of potato and vegetables
and agreed with leaders of the constituent members of the Federation to
lift any limits on the transportation of food on Russian territory.
"We are holding negotiations with Ukraine and Byelorussia for payment
of a part of their debts with food supplies. Such an agreement has been
achieved.
"However, we do not plan to abandon the purchases of foodstuffs
abroad. In these complicated conditions, the government made a list of
agricultural products and medicines, which should be supplied to Russia in
the first turn. That will be done, including with smaller customs dues.
"These are the current deeds of the government in brief. Forced
deeds, if you want. Our occupation with these deeds does not mean that we
limited ourselves to current affairs and do not think about a concept of
the future development. The most important for Russia now is to create
conditions for setting the real economy in motion. For that we are ready to
receive assistance and foreign investments, primarily, in industry,
agriculture and the infrastructure. However, we understand that the accent
should be put on the development of the domestic production."
"Naturally, when speaking of the domestic production we do not mean an
isolated producer alienated from the world market, unrelated to the world
economy. In order to create the best conditions for the production growth,
and not simply proceeding from political reasons, I want to assure you once
more that we will fulfill all our obligations to foreign and domestic
investors.
"Everyone understands that the real economy will not start functioning
and gaining momentum as long as at least three problems are not solved:
firstly, it is necessary to revive the banking system that
collapsed after August 17
secondly, it is necessary to give a push to clots in all spheres: these
are the mutual non-payments between the budget and enterprises and between
enterprises themselves
thirdly, it is necessary to create a tax system which will encourage
the production of any form of property for an active and efficient
functioning.

What is being done in these directions?
"The Central Bank made operations to unclog payments between banks on
September 18, September 25 and October 2. A total of 30 billion rubles out
of the 40 billions stuck in the banking system were set in motion. The
overwhelming majority of money came to budgets of all levels and off-budget
funds. As a result, the non- payments were prevented in many regions.
"But we understand that is not enough. It is necessary to restructure
the whole banking system as soon as possible.
"The government and the Central Bank are working to divide all the
commercial banks into those capable of further functioning and those liable
for closure. We will, certainly, help the viable banks. We will help to
reform even some large banks which appeared to be insolvent but whose
closure would entail considerable social- economic costs. But let none of
the bankers to advocate the banks' nationalization. This is not our way.
"While doing that, I want to stress, we will provide for guarantees of
deposits of the population placed in those banks. We will not abandon this
task.
"More. The mutual debts, which have been a heavy weight on the feet
of the state and enterprises, are an eternal problem. The debts clog the
production, and employees are not given salaries. We aim to break the
vicious circle of non-payments in the near future. We will also solve the
problem of fines and penalties on enterprises. A complex action of
interrelated mutual settlements of the state and enterprises is being
prepared. I can assure you that the action is planned in such a way it
will be done without the emission pumping of economy with unbacked money.
"All the operations will go through the state channels in evasion of
accounts in commercial banks to avoid mismanagement, and that will be the
guarantee against a money flow to the foreign exchange market and protect
the ruble from more shocks.
"The government is planning to submit proposals on the upgrading of
the tax system. The proposals include a cut of the tax burden of
producers, a tougher system of the tax administering and measures against
the shadow economy. But it is not just measures that we need. The tax
system should be made in such a way to take a considerable part of the
economy away from the shadow segment and create conditions for its
functioning in accordance with the rules, the law."
"Today an instruction was given to the Customs Committee to unfreeze
the equipment worth of a fantastic sum of over 1 billion dollars, which was
amassed at its storages. For several years, the equipment was under arrest
for the non-payment of customs dues and the VAT by a number of enterprises,
which were unable to do so due to objective reasons.
"Certainly, taxes must be paid, but we cannot shut our eyes to the lot
of enterprises, which employ live people and which will bring considerable
revenues to the state budget in the near future thanks to the installation
of that equipment. The government instructed to make the customs clearance
of the equipment with a delay of payments or payments by installment under
special schedules on a basis of guarantees of banks. The enterprises
gladly agree to that. Today I reported on the government activity to the
president. And he supported. Boris Nikolayevich signed a decree, and I
signed on a basis of that decree a government resolution "On the
Introduction of the State Regulation in the Sphere of the Production and
the Distribution of Ethyl Alcohol and Alcoholic Products." On personal
responsibility of heads of different departments, there will be rules under
which the production of alcohol in Russia will be done on governmental
quotas. We do not plan the nationalization of the vodka production, but we
will introduce a strict control over its supply only to the wholesale
storages controlled by the state.
"The Interior Ministry and the State Tax Service are instructed to
take all the necessary measures to liquidate the so-called 'unauthorized
production.'
"All that is done not only for fiscal reasons. Tens of thousands of
people poison themselves with inferior, illegally made wine and vodka
products.
"I will say a few words about the government course in the
privatization. We will carry on the course of privatization. But not for
the sake of making rich some individuals or groups of people. Not only for
the sake of replenishing the budget, often with crumbs comparing to the
actual cost of a privatized object. In the whole world, the state gives to
the private hands or parts with businessmen its share only in case it
brings additional investments, serves for the technical progress and makes
it competitive. Our government has started to make heads of the State
Committee on Property responsible for the privatization issues. They were
also informed of the need to crucially improve the work of state
enterprises and enterprises, a package of whose shares belongs to the
state. For instance, it is absolutely inadmissible when the overwhelming
majority of such enterprises do not transfer to the budget a part of the
net profit adequate to the state share.
"Dear citizens! Dear Russians!
"My colleagues and I are reproached of the fact that the government
has not announced a comprehensive program of the economic activity within
several weeks of its existence. There will be such a program. The program
is appearing in outline. The financial side of the program, without which
it cannot exist, much depends on the negotiations, which we are holding
both inside the country and abroad, and which, to my mind, will give a
possibility to form the emergency budget for the 4th quarter of this year
in the next few weeks. We count on a close cooperation with the Duma and
the Federation Council in all these issues.
"And, finally, a way out of the crisis in Russia is tranquility and
accord, stability and discipline, the observation of the constitution and
laws, the priority of interests of society as against personal interests. 
Let us all together solve the vitally important tasks of our motherland.
"Basically, I understand that many people, planning to take part in
rallies tomorrow, have grounds for the dissatisfaction, but I want to call
on everyone not to rock our common boat in today's turbulent seas."

*******

#12
Primakov marks month as PM but still no plan
By Martin Nesirky

MOSCOW, Oct 9 (Reuters) - Prime Minister Yevgeny Primakov completed his
first month in office on Friday still struggling to compile a strategy to
beat Russia's economic crisis and facing a foreign policy flare-up over
Serbia's Kosovo province. 
Illustrating these twin pressures, a Russian newspaper said an
anti-crisis economic plan was still more than a week away and President
Boris Yeltsin said he remained resolutely opposed to NATO plans for military
action against Serbia. 
Primakov, who was foreign minister until approved by parliament as a
compromise premier on September 11, met visiting European Commission
President Jacques Santer to brief him on economic woes that include huge
wage arrears, falling output and debts to foreign banks. 
``We view the visit to Moscow by the delegation of the European
Commission as a sign of strong support for Russia,'' Interfax news agency
quoted Primakov as saying. 
``The European Union is following events in Russia with strong interest,
the more so that with our enlargement to include Finland we now share a
common border with Russia,'' Santer said after earlier talks with deputies.
``Russian stability partly determines our own security.'' 
It was not immediately clear whether Primakov and Santer would discuss
food aid to ease social tensions by helping Russians make it through the
coming harsh winter. The United States, mindful of Russia's strategic
significance as a nuclear power, is already considering supplying food. 
U.S. Agriculture Secretary Dan Glickman met Russia's ambassador to the
United States on Thursday but neither side would discuss specifics of the
meeting. Food accounted for a quarter of the $52 billion in goods Russia
imported last year. 
Primakov, who at 68 is a year older than Yeltsin, has said he wants to
keep reforms on track but with greater emphasis on social welfare. 
Yet he has still not come up with an anti-crisis programme, although he
and his ministers have drip-fed Russians and foreign investors with a wide
range of at times contradictory ideas. 
Patriarch Alexiy II, head of the Russian Orthodox Church, convened a
meeting on Friday of political and church leaders, possibly including
Primakov, to stimulate dialogue between different strands of opinion on the
crisis. 
The newspaper Vremya said Primakov had given First Deputy Prime Minister
Yuri Maslyukov, a Communist, until October 20 to come up with a hit list of
measures from a working group. 
Another deputy premier, Vadim Gustov, told the newspaper Izvestia: ``We
need three programmes. The first one includes urgent measures, the second
one a programme for the next year, and the third a strategic programme of
economic development.'' 
He said the contents of each would depend on how much foreign credit
could be raised or released. The International Monetary Fund says it wants
to see the plans before it hands over money and capital markets are all but
closed to Russia. 
``By the end of 1999 the Russian economy will start recovering,'' Gustov
said, bucking the trend of doomsayers. 
The newspaper Kommersant Daily published what it said was Russia's draft
budget for the fourth quarter of 1998 showing a deficit of nearly 100
billion roubles -- about $6.3 billion -- to be funded largely through
foreign credits, although it was not clear where they would come from. 
Notes from the Finance Ministry that accompanied the draft showed the
government envisaged prices would rise by up to 130 percent and the economy
shrink by five or six percent. 
``The basic background for the planning of the fourth quarter budget bill
is the appearance of a wave of inflation,'' Kommersant quoted the ministry
as saying. 
The daily also quoted the ministry as saying a key aim was to keep money
printing to a minimum to avoid stoking inflation. 
The same paper said Russia had one new trick up its sleeve to boost its
budget and guarantee bank reserves -- a proposal to mint gold coins from
central bank reserves. 
On Kosovo, the Kremlin quoted Yeltsin as saying: ``Russia firmly insists
on political settlement of the Kosovo problem.'' 
Speaking after talks with Yeltsin, Defence Minister Igor Sergeyev struck
an equally tough note, saying NATO action would be open warfare and that
Yugoslavia would fight to the end. 

*******