October 11, 1998    
This Date's Issues: 2423•2424

Johnson's Russia List
#2423
11 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russian PM opposes early presidential election.
2. David Filipov: Balzer's challenge. (Re middle class).
3. Andrew Cockburn: "60 Minutes" on Luzhkov.
4. Gary Kern: Keep America Out of Siberia!
5. Alan Fahnestock: Re 2421---Buying Siberia.
6. Albert Weeks: Can you top this?
7. Moscow Times: Leonid Bershidsky, Firms Think Crisis Will Kill 
Their Rivals: Study 
8. Richard Helbig: Open Letter to the General Directors of All Russian 
Enterprises.
9. Interfax: Moscow Mayor Says Oligarchic Banks Have Lost Clout.
10. Moskovskiy Komsomolets: Underground Command Post at Taganka.
11. The Independent (UK): Rupert Cornwell, Heroes take their leave of 
the Arctic. (Murmansk).
12. Moscow Times: Margaret Henry, FACES: Preferring the Silver Lining 
To a Migraine.
13. Boston Globe: David Filipov, Russia's frustration grows. Moscow sees 
influence undermined by NATO.
14. Yale Richmond: Russian Compromises?
15. Branko Milanovic: RE 2422-Goldgeier&McFaul/Russia and Kosovo.]

*******

#1
Russian PM opposes early presidential election

MOSCOW, Oct 10 (Reuters) - Russian Prime Minister Yevgeny Primakov said on
Saturday he opposed growing calls for an early presidential election. 
Ordinary people protested across Russia last Wednesday to demand President
Boris Yeltsin's resignation but the Kremlin leader said the following day he
intended to complete his term, which is due to end in mid-2000. 
``I am categorically against early presidential elections,'' Itar-Tass news
agency quoted Primakov as telling a briefing for Russian reporters. 
``Early presidential elections could result in a situation which would not
help stabilise society. On the contrary, it would lead to divisions and whip
up political passions.'' 
Referring to Russia's deep economic crisis, he added: ``It would create a
situation in which it would be hard to work to overcome the difficult
situation we are in.'' 
The economic crisis has badly dented Yeltsin's authority seven years after he
became president. His health is also in question at the age of 67 and after
heart surgery two years ago. 
Primakov is having difficulty putting together a plan to tackle the economic
crisis. Yeltsin has said little of substance on the economic problems and has
allowed Primakov to play a leading role in trying to resolve the crisis. 
Primakov, who is 68, has said he is not interested in running for the
presidency. 

******

#2
Date: Sat, 10 Oct 1998 
From: David Filipov <dfilipov@glasnet.ru>
Subject: Balzer's challenge

Harley Balzer writes: 
" Also, I don't know if David Filipov reads JRL, but I would love to know
how his Oct. 5 article about the middle class squares with his statement
on "The News Hour" back in the spring that "the reforms have not touched
99% of the Russian people."

Actually, I'm glad Balzer brings up this Oct. 5 article, even though his
comment indicates that he may have missed the point of my story. I'm happy
because this is a topic that needs a lot of attention, especially from
specialists like Balzer (he is writing a book about the Russian middle class).
In any event, I did not write about "the middle class." I believe that
phrase appeared without a qualifier in my Oct. 5 story only once, in the
headline, which I unfortunately do not get to write.
I wrote about people who perhaps would like to become a middle class of a
prosperous Russia, and who suscribe to many of the values of the middle
class in Western countries, and who often refer to themselves as "middle
class" because of this similiarity to Western middle class people. 
But I went out of my way to presume that prior to Aug. 17, these Russians
did not constitute "a middle class in the American sense of a stable,
prosperous majority." Instead, they form a small, albeit growing, minority
whose lifestyles and attitudes probably contrasted with that of the majority
of Russians. I say "probably" because I did not research this
scientifically, but I feel it is backed by the empirical evidence I have
picked up by travelling around Russia.
Judging from what I've seen outside Moscow and St. Pete, I think that before
Aug. 17, we were very far away from the day when every Russian city will
have a thriving "middle class," or even the current class of (until
recently) prosperous professionals, like we have in Moscow. 
I agree with Christian Caryl and others who say that the term "middle class"
the way we use it for prosperous Western countries is inapplicable to the
situation in Russia. If you were going to describe "Russian middle class" in
the sense of the "average middle-income" Russian," you'd get something like
a shuttle trader who is still officially on the books at some
bankrupt-in-all-but-name factory. I do not think Moscovite intellectuals who
have been to the US can constitute a "middle class" in Moscow, to say
nothing of Russia. If we are talking "middle class" in the sense of income
only, I think shuttle traders and low-level bandits and kiosk owners are
going to work their way into the mix, while a number of well-travelled, but
impoverished, intellectuals I know would be forced out. I'm not saying
kiosk-owners can't be intellectuals, or travel to the US, but I don't think
they are what Harley Balzer has in mind when he says "middle class." 
It is interesting that the magazine Itogi has run two special issues on the
Russian "middle class," one this spring, and one after the crisis. I believe
the magazine interviewed members of the group I discussed in my story.
Perhaps what Itogi and Balzer mean when they say "middle class" is "people
who live like middle class people in prosperous Western societies." That's
not a bad way to describe this group, and it certainly seems to back my
claim that they exist, but it also seems to disqualify them from being a
"Russian middle class."
If we must use Western terminology, I focussed on people I would call
"yuppies" a group that has been the source of so much optimism, especially
for Western policymakers and analysts who would who drop into Russia every
once in awhile and see how much things appeared to be changing for the better.
Talking to these "yuppies," and to others who worked with them, I realized
they were different from other Russians I've known. For them, success and
failure has always been determined by the criteria of a booming
capitalist-style economy, rather than the things that decided whether you
advanced or not in Soviet Russia. The point of my story was simply to say
that because of the crisis, for the first time, this new generation of
yuppies is not upwardly mobile.
Harley Balzer seems to be asking how I can say reforms have not helped most
Russians in February, then talk about a "middle class" and all the things it
has lost in October. The way I defined my subject in the October story, I
don't think there is a conflict here. The Moscow yuppies may have been
important for what they symbolized, but they never made up a large segment
of the population.
Unlike Harley Balzer, I don't have a transcript of the News Hour Q&A I did
in February, but it appears he caught me blabbering with that remark about
how "the reforms have not touched 99% of the Russian people." I should have
made it clear I had not conducted a study and was merely guessing. And I
should have said "have not markedly improved the lives of" and then used a
more reasonable number, like maybe 98%. 

David Filipov
The Boston Globe
Moscow

*****

#3
From: AMCOCKBURN@aol.com (Andrew Cockburn)
Date: Sat, 10 Oct 1998 
Subject: "60 Minutes" on Luzhkov

Anyone interested in the shape of things (possibly) to come might want to
watch CBS "60 Minutes" this Sunday, October 11, 7 p.m. EDT for an instructive
and entertaining piece on Yuri Luzhkov. Watch Josef Kobzon profess his
loyalty and affection for the Mayor, hear his message for the State
Department.

*******

#4
Date: Sat, 10 Oct 1998 
From: Gary Kern <gkern@alumni.Princeton.EDU>
Subject: Keep America Out of Siberia!

The proposal for the USA to purchase Siberia is a great idea for all the
reasons stated by John Ellis of the Boston Globe, "Let's Buy
Siberia--Don't Laugh, It's a Great Idea" (JRL #2421). But it is a
terrible idea for one other reason: If the USA bought Siberia, all the
other residents of the former Soviet Union, with the possible exception
of those in the southern climes, would get up and "move to America!" 
We'd have all the Russian problems right in our back yard: an
uncountable rabble of sick, indigent, crooked, talented, lovable,
detestable, hopeless, incompetent, incurable, brilliant, inspiring,
cruel, tragic, troubled souls. All the oil in the world isn't worth
that. We've got our own problems. Amerika von iz Siberii!

********

#5
From: Fahnest542@aol.com (Alan Fahnestock)
Date: Fri, 9 Oct 1998
Subject: 2421---Buying Siberia

Mr. Ellis of the Globe raises some interesting points, but his geography is a
little peculiar. I checked, and Vladivostok is still in the Russian Far East,
not in southwestern Siberia; this was reassuring --- when locales where one
has spent significant time begin to exhibit tendencies toward peregrination,
it's time to start saving toward a strait-jacket.

******

#6
Date: Sat, 10 Oct 1998
From: Albert Weeks <AWeeks1@compuserve.com>
Subject: Can you top this?

Here's a topical topographic datum for all students of 
of Russian geography. 
According to Moskovskiye Novosti, 4-11 Oct 98, 
Mt. Communism, in Tadzhikistan, has just
had its name changed to the Ismail Samani Peak, named
after, I believe, a Tadzhik hero. Until 1959, this peak was known as
Mt. Stalin. It rises to a height of 24,595 ft. It was the highest
peak in the Union. Mt. Lenin in the nearby Trans-Alay mountain region
rises to 23,377 ft. Stalin, of course, had to top Lenin. 
Which may remind old-movie buffs of Chaplin's "The Great Dictator."
In the 1940 film--FYI: with Stalin noticeably absent from the film!--Hitler
insists on standing taller than Mussolini (Jack Oakie) whenever 
he's in the latter's company.

*******

#7
Moscow Times
October 10, 1998 
Firms Think Crisis Will Kill Their Rivals: Study 
By Leonid Bershidsky
Staff Writer

Business managers expect about 40 percent of their competitors to shut down as
a result of the financial crisis, according to a survey of 120 Russian and
foreign companies released Friday. 
The survey, conducted Oct. 1-5 by the market research company Greenwich
Research Group, asked top executives from both Russian and foreign companies
in 13 sectors to assess the effect of the crisis on business. The views of
Russians and foreigners on what the current situation meant and how long it
would last differed sharply. 
"For Russian companies, the recent events were predictable to a degree," said
Peter Classen, a senior consultant at Greenwich Research Group. "Foreign firms
did not expect this. They thought that there had been enough crises in 1991
and 1993." 
Generally, 49 percent of companies responding to the survey said they had been
poorly prepared for it, if at all. It may be too late for many firms to try to
wiggle out of the financial vise. Executives in the consumer products sector
expect 59 percent of their competitors will survive. The figure is as low as
40 percent for the health care sector. Oil and gas executives, by contrast,
see 98 percent of firms in their field weathering the storm, and CEOs in
construction and transportation firms see, respectively, 67 percent and 69
percent of firms surviving. 
Interestingly, the Greenwich report said a separate recent survey by the
American Chamber of Commerce found that 97 percent of its members would remain
in the market. 
"Many people seem to think it's just the other guy," said Richard Helbig, a
consultant at Greenwich Research. 
According to Classen, an overwhelming majority of companies believe they
understand what they need to do now. 
"They see that dealing with the crisis requires investment and changes in
practices," he said. 
The survey found that 68 percent of firms, Russian and foreign, are "committed
to the Russian market," though 59 percent reported changing their short-term
plan, 46 percent saying the changes were "significant." 
Russian firms are more optimistic than foreign ones about the crisis ending
soon. Only 4 percent of foreign business leaders believe 1999 will be "a year
of significant, measurable improvement," whereas for Russians the figure is 33
percent. 
More Russians than foreigners f 14 percent versus 6 percent f see the crisis
as being tied to politics. Russians are more inclined to think timely,
reasonable measures by the government can quickly improve the situation. 
The consensus among many business leaders seems to be that the crisis has to
end sometime and that life will go on. As Greenwich Research points out, 46
percent of respondents to its survey "used positive statements" when asked how
the crisis will be viewed in five years. 
Twenty-eight percent of the foreign respondents and 10 percent of the Russian
ones believe the events of 1998 will eventually be seen as "a good lesson and
a start of changes for the better. 

******

#8
From: "Richard Helbig" <helbig@east.ru>
Subject: Open Letter to the General Directors of All Russian Enterprises
Date: Sat, 10 Oct 1998

Dear David,
Thanks for the stellar effort of all your team [DJ: It's just me]---even
more useful in these difficult times here in Moscow.
Attached are two items which I and my group authored. The most
recent---the Market Survey---was picked-up by the Moscow Times Saturday
October 12th under the heading: FIRMS THINK CRISIS WILL KILL THEIR RIVALS:
SURVEY. I am sending along the original summary. [DJ: Moscow Times article
above.}
Also making re-newed 'rounds' is an item I wrote several years ago called
the 'OPEN LETTER...' Since Yevgeni Primakov talks so much about making
direct investment into the industrial sector such a priority, I thought I'd
remind him about my experiences there.

"AN OPEN LETTER TO THE MANAGERS OF ALL RUSSIAN PRODUCTION ENTERPRISES from A
FOREIGN INVESTMENT BANKER IN MOSCOW"
It was, and will always be, the work of investment bankers to find those
with money to invest and to put it to work where it is most needed. It is a
sort-of law of finance that money seeks those who need it most—principally
because those users are willing (and usually able) to pay the most for it.
In financial language this is called seeking the highest “rate of return”.
People or institutions with money to lend or invest constantly search the
world for the best possible opportunities and they employ investment bankers
to do the looking for them. During the last twenty years we bankers have
found ourselves in the Middle East, in South America, the Pacific Rim,
China, and the Eastern European countries. Today we are here and Russia
stands dead-center on our financial maps because a lot of money is, or at
least was, poised and ready to come to work here!
In fact during the last five years I’ve probably met about a thousand of
you and walked through not a few of your offices, warehouses and production
facilities. But, because of the years and because much less has happened
than you or I might have wished for, I’m now going to tell you some of the
reasons that I think are causing this—reasons which I believe rest squarely
on our shoulders, and reasons we have the ability to change for our mutual
benefit. Here’s what I think:
1. MANY OF YOU REALLY DON’T TRUST FOREIGNERS AND DON’T WANT US INVOLVED.
To those of you: fine, don’t waste my time, I won’t waste yours.
2. YOU WANT FOREIGN INVESTORS TO ‘GIVE’ YOU MONEY. That’s not how it has
ever worked and it never will. Sometimes governments have money to give to
industry, but they don’t ever have as much as you need, and they’ll never
have as much as the world’s “capital markets”, whose primary job it is to
get involved with you. Let’s leave government to the defence of the nation,
infrastructure and the care of pensioners. You can have my capital markets’
money to use for building better products (replacing all the things being
imported today seems like a good place to start) or to sell overseas. If you
want professionals with experience to help you—good—take my investors’ money
and/or potentially their management skills—but pay it back to them on time
and with interest! Bankers don’t give money away, period. 
3. YOU BELIEVE MULTI-MILLION DOLLAR PROJECT INVESTMENTS CAN BE ARRANGED
IN A WEEK OR TWO. Wrong. Business plans take considerable amounts of time to
prepare. If you’re unfamiliar with the complete process, let professionals
help you.
4. YOU’VE DONE A BUSINESS PLAN, FIND IT DIDN’T GET YOU INVESTMENT AND NOW
YOU DON’T WANT TO DO ANOTHER. A business plan intended for a financing must
be written specifically for that purpose and it is often quite different
from a standard business plan. Few enterprise managers can write such plans,
even with the Western-designed guides in circulation and so popular in
Russia today. Let finance professionals do this job for you and make sure
they intend to continue with you to seek investment once the plan is
finished. You can and should spell this out contractually with your
investment banker or business consultant at the very beginning of his work.
5. YOU DON’T REALLY LET US PREPARE A PLAN FOR YOU. You absolutely cannot
give us what you think we need to know. In this you don’t different from
enterprise managers around the world—few of them have the special skills
that a financier can bring! Like all managers everywhere, you are busy
enough running your company. Listen to what a good financial specialist asks
of you. You will never get your project financed if you give your financier
even 99% of his needs. In this game it’s 100% or nothing!
6. YOU FEAR THAT ALL NEW CAPITALIST FINANCIAL PLANNING MEANS HURTING YOUR
POSITION, YOUR EMPLOYEES, YOUR TOWNS OR YOUR WAY OF DOING THINGS. Wrong! A
good financial plan is like water flowing down-hill—it seeks its own very
logical path and it does not mean getting rid of everything you’re used to
doing today. Of course, the times call for change and this naturally creates
anxiety. It always has, new capitalism or not, and it always will. If you
are the head of your enterprise, you’re the head of the family...it’s up to
you to embrace change on behalf of all of your employees; we foreigners
won’t usually try to do this for you. I will not pretend, however, that new
plans can include all and everyone, but 9 times out of 10, the good
financier will leave you to your job. Layoffs and down-sizing is sometimes
necessary, but I for one, maintain that your first job is to take care of as
many people as you can—always. You certainly have the right to be suspicious
of plans that create improvements only through massive layoffs (a peculiar
penchant and too often used technique in Western factories). Try to find
other ways first—take care of your people—they are your family and your
greatest asset and they cannot easily be replaced by machinery, even new
machinery! We can all think of examples (notably in South America and the
Far East) where excess manpower is an advantage, one that need not be
replaced by technology. The case of German management’s care and use of
manpower is also worth understanding and emulating.
7. SOME OF YOU ARE PLAYING TOO MUCH WITH SHARE STRUCTURES AT THE EXPENSE
OF YOUR EMPLOYEES AND OTHER LONG-TERM GOALS. If you’re spending money on
things other than new equipment market planning, product development or
salaries for employees, count me out. You’re the father of your corporate
entity—act like a good one because it makes a difference to me.
8. YOU’RE ANGRY THAT THE SHARE MARKET HAS BROUGHT YOU NEW ‘OWNERS’
WITHOUT BRINGING NEW INVESTMENT TO YOU. I don’t blame you. Get good advise
before letting go of your shares. The new capitalism has its rough edges and
this is one of them.
9. YOU THINK THAT ONCE ALL-RUSSIAN BANKS OR ALL-RUSSIAN INVESTMENT
BANKERS ARE IN PLACE THAT YOU CAN DO AWAY WITH FOREIGNERS AND FOREIGN
INVESTMENT. Wrong again! The amounts Russian industry needs will always
require foreign money; besides it’s cheaper! New Russian bankers will use
money the same as we all do and there will be no easier path with them—they
now belong to the international financial system and they abide by its
natural money laws. They’ll ask of you the same painstakingly detailed
business plans as any banker anywhere. 
10. YOU DON’T WANT TO PAY INVESTMENT BANKERS FOR OUR UP-FRONT WORK, BUT
ONLY AFTER WE BRING YOU YOUR INVESTMENT MONEY. In ideal circumstances being
paid after investment is delivered is possible, but most of you are not
exactly in ideal circumstances. Make sure your investment banker has access
to the capital that he promises, but then find the money to allow him to do
his job. You’ll get what you pay for—pay nothing, most probably that’s what
you’ll get. 
11. YOU THINK YOU ARE DOING ME A FAVOR BY ALLOWING ME TO FIND YOU NEW
INVESTMENT MONEY. Believe it or not that is unfortunately the feeling many
of us have in our dealings with you, and I’m sure I speak for Russian as
well as Western investment professionals. This comes about here in Russia
just as it does in the rest of the world. You, the enterprise manager, must
wonder how a few months of work on our part can result in the sometimes
large fees you may pay us. Let’s leave that for another day, but simply
stated those of us who know where money is and can convincingly bring some
of it to your enterprise have always been well paid. Given your intense need
for capital it is quite unproductive to cancel meetings without notice or to
delay them indefinitely. My time is valuable, and the owners of capital from
whom I seek money for you are not used to being kept waiting—not here in
Russia, not anywhere. Today money is impatient, it pays attention only to
those who have respect for it and for the professionals that manage it. It
will forever stand between you and I if you think my schedule is not worth
considering. For better or worse, it is customary for seekers of capital to
make way for the banker.
So then, I hope by having spoken openly and frankly here that you have
come to know me a little bit better. I know I still have much to learn about
Russia and about your enterprises, but I consider myself relatively well
informed today about international money, how it moves and the role it plays
in Russia. I would like my words to contribute towards an improvement in our
relations. Please accept them in the spirit in which they are given—to be
constructive, and to make our next meetings friendlier, smoother and more
productive.
Until we meet, I’ll close by saying that I understand and sympathize with
your everyday difficulties. I strongly believe, however, that the Russian
economy will begin to flourish in the near future and that its re-birth will
take place in your manufacturing enterprises—I am as committed to this as
are you. By getting to know me better and by helping me and my colleagues of
the financial world you will be helping to bring that future closer and you
will be the recipient of more of the investment capital you want, need and
so richly deserve. Thank you.
Richard Helbig
COPYRIGHT.Price, Helbig & Company
tele: (7095) 202-2178, fax: (7095) 202-4304
email: helbig@east.ru
www.rus-finance.com


******

#9
Moscow Mayor Says Oligarchic Banks Have Lost Clout 

Moscow, Oct 7 (Interfax-Moscow) -- Oligarchic banks "will not get a
second wind" following the August collapse, nor will they be able to
restore their clout with the Russian authorities, Moscow Mayor Yuriy
Luzhkov told a news conference in Moscow Wednesday [7 October].
They "will not hang over society and decide who will be appointed to
what position," he said. "They acquired their property in a dubious way
and created their capital chiefly by reinvesting budget money," Luzhkovsaid.
The August 17 government decision "hit chiefly large banks rather than
medium ones, which had been financing the real economy rather than playing
the GKO game," he said.
On the other hand, a bank such as SBS-Agro cannot be liquidated,
Luzhkov said. It has to be helped and allowed to rejoin the banking
system, he said.

*******

#10
Underground Command Post at Taganka 

Moskovskiy Komsomolets
6 October 1998
[translation for personal use only]
Yuliya Kalinina report: "Taganka May Collapse Under the Ground:
The End of the World in One Square"

We live in continual fear. 
Once, we feared the American atom bomb. Now we fear that the American
dollar will be banned.
Fear forces one to prepare for the worst. How we could live without
dollars is for now unknown. This is a completely new idea, and we have not
worked out a strategy and tactics of how to act. But we knew how to prepare
for the atom bomb, and we prepared on a big scale -- widely and deeply.
In connection with the disappearance of old threats and the appearance
of new ones, this entire underground economy is now of no use to anyone. It
has been forgotten and left to the mercy of fate.
Fate has not been kind. The empty spaces underground, which have not
even been inspected much less maintained, have begun to fall into disrepair
and to threaten citizens from below. This summer, because of such a case,
Bolshaya Dmitrovka Street collapsed. We are on the verge of anotherdisaster.
At the end of the 1950's an emergency command post (ECP) was
built under Taganka Square. According to our data, it was under the
jurisdiction of the Ministry of Defense (It was built by the Defense
Ministry special construction organization). In the event of a nuclear
strike, the military command was supposed to gather at the ECP and direct
defensive, offensive and counterattack operations.
The emergency command post under Taganka is enormous. It has an area
of ten thousand square meters. It is at the same level as the Metro. Of
course, the fact of its existence is a military secret, and therefore Metro
employees know little about it.
In the last thirty years, the walls, floor and ceiling have begun to
deteriorate and to let groundwater seep in. The ECP is being quietly
overwhelmed. Now 200 tonnes of water per hour are entering it. That is
enough water to fill up a ten-story building in an hour.
There is one pump working in the ECP under Taganka. It is a big one,
and it pumps out about as much water as seeps in. But it is the only one.
If, God forbid, the pump broke down or if the electricity was suddenly shut
off, that would be the end. The ECP would be flooded in a matter of hours.
The water would either break through the partitions separating it from the
Metro and flood our beloved subway system, or it would rise upward to the
surface. In that case, the entire Taganka Square would be facing what
happened to Bolshaya Dmitrovka Street. Buildings would collapse, cars would
fall into the pit, and citizens would run around screaming in terror.
To prevent this from happening, it is necessary to promptly seal off
the ECP. New concrete must be poured on the walls and floors, or it must be
enclosed in a steel container. Such projects would cost on the order of 8-9
million rubles.
Who has such money now? The ECP's owner, who ideally should take
care of repairing it, of course does not have the money. Tearful letters,
pleading for action to prevent the disaster, are as usual going from the
ministry to the Moscow city government, from the city government to the
federal authorities, and from there back to the cabinet.
A voice crying in the wilderness. The circle is closed. No one has any
money, and everyone has his own concerns.
... That is why one should be afraid. At least, people who live in
Taganka or who travel through it should be afraid. A flood, a cave-in,
destruction and casualties. It will be worse that the banning of thedollar.
Is there long to wait? That is unknown. For now, the pump is hanging
on. Muscovites can only pray for its good health, and the people who live
in Taganka should prepare to be evacuated.

*******

#11
The Independent (UK)
10 October 1998
[for personal use only]
Heroes take their leave of the Arctic
By Rupert Cornwell in Murmansk 

"Murmansk - Hero City" proclaims the faded concrete hoarding, fully six feet
square, as you enter Russia's great northern port. Like many mementoes from
Soviet times, it is a mixture of the absurd and the oddly stirring. Times were
truly hard, Hitler was at the gate and ice-free Murmansk was Russia's
lifeline. Now times are truly bad again. Only there are no heroes; only
incompetents and villains, the omnipresent crisis - and icebreakers that break
no ice. 
Outwardly, life in Murmansk belies the economic debacle that has overtaken
the country. Built in bleak Soviet style along a rocky fjord 200 miles inside
the Arctic Circle, this city never yields an easy living. But, at a price,
goods of all kinds are available. Panic and queues are not in evidence. 
You are tempted to conform to conventional wisdom: Russia once more will
sacrifice and suffer, but, you predict, will somehow muddle through, as
always. Maybe so. But out in the villages, in the orphanages and the
hospitals, among the sick and the old and the disadvantaged, the foreboding is
as palpable as the first wet snow of late September. And desperate times beget
desperate measures. 
No help is to be expected from the country's capital in name, Moscow. Like
everywhere else in Russia, Murmansk must sidestep the centre and barter to
secure what it needs - in its own case swapping fish and minerals for fruit,
vegetables and consumer goods from other regions. 
But Murmansk has gone a historic step further. For the first time a Russian
regional leader, in the person of its governor, Yuri Yevdokimov, has appealed
not to his own federal government, but to Norway and Finland for help. The
step is unarguably wise and, from one perspective, merely another step towards
a more open and "normal" Russia. 
Nevertheless, for a region at the very heart of the strategic defence of a
proud, secretive and autarchic country, it signifies surrender. Faced with
economic collapse, the eternal ties that bind Russia are starting to come
asunder. 
For proof, consider the icebreakers. If nuclear-missile submarines are the
emblem of Severomorsk, the closed city 10 miles up the fjord that is home to
the Northern Fleet, Murmansk's pride is its giant nuclear and diesel
icebreakers. There is nothing like them anywhere - monstrous machines of up to
75,000 horsepower, which can carve a 30-yard-wide channel through 10ft-deep
pack ice. As tall as good-sized office blocks, equipped with saunas and
swimming pools, they can stay at sea for five months at a time. 
With them Russia can allow itself to dream of turning the 3,500 miles of the
"Northern Eastern passage" linking Western Europe and Asia across the top of
the world into a new artery of global commerce. 
Without them, the communities strung out along Siberia's bleak northern shores
- settlements as remote as any on earth, with strange, un-Russian names such
as Dikson, Buolkalach and Ur'ung Chaya - would perish. Without them the
estuaries of Siberia's great rivers, the Ob, the Yenisei and the Lena, would
be permanently frozen. The vital mining city of Norilsk, 200 miles inside the
Circle and producer of 15 per cent of the world's nickel, would be cut off,
and Russian research and defence stations on the islands of the polar ocean
would have to close down. 
Early autumn should see the icebreakers at their busiest, escorting cargo
ships before the ice becomes too thick. But now there is no money, and
precious little trade, just the crisis. 
Business on the northern route is down 80 per cent, and half the ships in the
icebreaker fleet lie idle. The Murmansk Shipping Company has received from
Moscow less than a third of the funds it needs to maintain them. 
Some of the difference is recouped with three-week cruises to the North Pole
for foreigners prepared to pay $18,000 (£11,000) to $30,000 a head for the
ultimate chic in summer holidays. Even so, crew salaries have gone unpaid for
two months. The settlements risk going without fuel and other essential
supplies during the bitter cold and darkness of the Arctic winter. Some may
have to be evacuated, perhaps for ever. The "crisis" has succeeded where even
Hitler failed, destroying even hope. 
My last appointment was with Father Nikodim, assistant to the Bishop Simon of
Murmansk, as he was about to celebrate a marriage - if celebrate is the
correct word for a ceremony with virtually no guests, in a church swathed in
scaffolding, where fresco painters go uncaring about their business. 
Never, he says, have prospects been as miserable: the winter of 1991 after
Communism collapsed was as bad in logistical terms, but at least there was the
promise of better things. "This is a catastrophe. For the church, suicide is
the greatest sin, but people are just killing themselves in despair." 
Within half an hour the union is blessed and the couple leave - stepping off
into a future as dark as the lowering sky, carrying the first squally snow
showers of a winter which for the far Russian north could be the hardest in
half a century. 

******

#12
Moscow Times 
October 10, 1998 
FACES: Preferring the Silver Lining To a Migraine 
By Margaret Henry
Special to The Moscow Times

It's hard to find an optimist in Russia these days, but Mikhail Alexandrovich
is one and likely to remain so. 
The current crisis is not a permanent disaster, as the purveyors of gloom and
doom would have us believe, but simply the latest turn in this thing called
life, he says. 
"Everything will be all right. You'll see. Russia has survived a lot worse
things than this." 
I asked him the secret of his resilience. 
"There will always be problems, and you have to do what you can," he said.
"But you also have to know what is and isn't essential and try to overlook the
bad things as much as possible, for they, too, shall pass. And no matter what
the problems are, you can always create your own private world and fill it
with beauty." 
To the naysayers out there, this no doubt sounds like Pollyanna talking. 
But Mikhail is no fool. He has simply made a decision to look on the bright
side, no matter what. And this, along with a robust sense of humor, has
sustained him through personal trials that might have brought others to
despair. Indeed, optimism is the sister of courage. 
Mikhail drank for years, but even after the doctors had given up on him, he
did not give up on himself. He was finally able to quit, he says, by replacing
his obsession with alcohol with a passion for collecting art. His last drink
was 25 years ago. 
The art collection vanished in the mayhem of Russia's capitalist revolution.
At the urging of a friend he had known and trusted for years, Mikhail, along
with scores of other intelligentsia, invested in Charo Bank. Mikhail thought
he was on his way to building a nest egg for a future antiques business. 
Instead, he had to sell his collection to repay friends who had loaned him
money to invest in what turned out to be a pyramid scheme. 
A classical musician and merited artist of Russia, Mikhail makes less in a
year than a driver for this newspaper. At 65, it is too late to start over in
a new profession that pays a decent wage. But he isn't singing the blues. When
melancholy does hit, Mikhail dives into his beloved "ocean of music," which is
in some sense a fountain of youth for this artist. Because he has the will and
a way to keep his spirit rejuvenated, Mikhail is more youthful in late middle
age than a lot of 20-somethings I know. 
Of course, it could be argued that had Mikhail been a pessimist, he would
never have invested in Charo Bank in the first place. True enough. 
But pessimists and cynics pay a high price for their attitude f the loss of
joy. Just ask Mikhail's wife. 
Olga Vasilyevna sees the dark cloud instead of the silver lining, the rain
advancing on any parade. As far as Russia goes, "Nothing good will ever come
of this place." When it comes to human nature in general, she takes an even
dimmer view. 
"I'm a realist," she is fond of saying. "And I'm almost always right. It's
just the way my head works." 
Maybe that mind-set is one reason she has so many migraines. 

******

#13
Boston Globe
October 9, 1998
[for personal use only]
Russia's frustration grows 
Moscow sees influence undermined by NATO
By David Filipov

ZMOSCOW - As the United States and its allies gear up for military
strikes that could come within days against Serbian targets, the West's old
Cold War foe, Russia, is doing everything in its power to prevent any such
thing. 
The trouble for Moscow, and for Serbia, is that there is little an
economically and militarily weakened Russia can do, despite a blast of Cold
War-era bluster and a flurry of last-minute diplomacy, to prevent the North
Atlantic Treaty Organization from carrying out air strikes. 
While Western leaders say they have legitimate grounds to punish the
Yugoslav leader, Slobodan Milosevic, for the Serb crackdown in Kosovo,
Russia is increasingly concerned over what politicians and analysts here
see as NATO's contempt for the United Nations and the international
community. 
A consensus is forming among Moscow's usually scattered political forces
that the NATO attacks, if they take place, will cause a backlash against
the West. This, it is argued, could further set back relations that are
already chilled after Russia's financial system collapsed in August. 
''Such an attack will be seen as ample proof of NATO's overall aggressive
intentions,'' commented Pavel Felgenhauer, defense and security editor for
the newspaper Segodnya. ''Communists and nationalists will cry out that
Mother Russia is next in line for attack and many Russians, stunned by the
collapse of their Western-oriented quasi-market economy, will believe them.''
In recent days, Russian leaders have threatened to sever ties with NATO,
send peacekeeping troops to the Yugoslav Federation to prevent a NATO
attack, unilaterally end an arms embargo against the Yugoslav Federation,
and further stall nuclear arms reduction agreements with the United States.
The State Duma, the lower house of parliament, has threatened to break off
ties with NATO. Ultranationalist groups like the Union of Officers are
signing up volunteers to fight for Serbia. 
This is all disturbing, but nothing the West has not heard before. And
Russia, currently trying to persuade skeptical Western creditors to release
billions in loans put on hold after the previous government defaulted on
its debt payments in August, has been forced to temper its tough talk. The
saber-rattling has been accompanied by a round of telephone calls to
Western leaders by President Boris N. Yeltsin and Prime Minister Yevgeny
Primakov, plus some urgent shuttle diplomacy by Foreign Minister Igor Ivanov. 
Russia says it objects to the violent methods Milosevic has used to crack
down on separatist Kosovo, but says the conflict should be settled through
talks, and has vowed to use its power of veto to halt any UN Security
Council resolution on the use of force against Serbia. 
Yesterday, Ivanov met with Milosevic in Belgrade, then flew to London to
present his counterparts from the United States, Britain, France, Germany,
and Italy - which, together with Russia, make up the Contact Group on
Yugoslavia - a proposal from the Yugoslav leader to unconditionally allow
European officials into Kosovo to monitor Serb troop withdrawals. He said
the Contact Group was moving closer to a settlement. 
But none of this appears to be enough to stop NATO from acting. Yesterday,
US Secretary of State Madeleine K. Albright told reporters in Brussels the
16 nations that make up NATO would ''in the next few days'' authorize the
air strikes. 
''If force is necessary, we will not be deterred by the fact that Russians
do not agree with that,'' said Albright, who also sent special envoy
Richard Holbrooke back to talk to Milosevic today for a fourth try to
resolve the impasse. 
The danger of the military approach, Russian officials and analysts say, is
the precedent it sets for future conflict-solving in Europe. 
''Carried out with or without a United Nations mandate, proposed NATO air
strikes against Serbia would inevitably create a controversial precedent
for the post-Cold War world,'' Yekaterina Stepanova, a research associate
with the Carnegie Moscow Center, wrote in a recent commentary. Stepanova
and others argue that unlike the 1994 NATO bombardment of Bosnian Serb
positions, strikes against Serbia would constitute a declaration of war
against a sovereign state that happens to be Russia's ally. 
Not only would that underline Moscow's weakness, they say, but also set a
precedent that could be used against Russia itself. 
Vladimir Lukin, head of the foreign relations committee in the lower house
of parliament, the State Duma, said, ''If a regional organization like NATO
... without a decision by the UN ... decides to launch a military strike
against country that is solving its ethnic problems in a way we don't like
... that means for Russia that next time, the same thing can happen when
someone does not like the way we are conducing affairs.'' 
Russia already has a province, Chechnya, that won de facto independence
after Moscow's 20-month campaign failed to crush a separatist rebellion.
Ethnic tensions are strong in Chechnya's neighbor, Dagestan, and separatist
moods run high in the Volga region of Tatarstan. 
US specialists say Russia is less worried about the precedent NATO
intervention would set for Chechnya or Tatarstan than it is by the idea
that the West can do whatever it chooses in Moscow's backyard. 
''The main reason the Russians oppose [NATO strikes] is psychological,''
said Kurt Bassuener, director of the Balkan Action Council in Washington.
''They don't want to be seen as being an adjunct to the West. It's a
cost-free way for Russia to differentiate itself.'' 

*******

#14
Date: Fri, 09 Oct 1998 
From: yale richmond <yalerich@erols.com> 
Subject: Russian Compromises?

Development expert Robert McIntyre (in JRL 2421) calls for Russians to form
"a coalition government of different parties based on compromises and
negotiations." Would that such were possible.
Compromise is the American approach to difficult issues. Meet them half
way and made a deal, resulting in a "win-win" situation in which each sides
gets something it wants. But compromise is alien to traditional Russian
culture, and especially to Russian political parties which are more
inclined to squabble rather than to seek solutions which satisfy everyone. 
One hope is ex-diplomat Yevgeny Primakov, an expert in the art of
diplomacy, at which Russians are skilled, but also in compromise, at which
they are not.

******

#15
Date: Sat, 10 Oct 1998 
From: Branko Milanovic <bmilanovic@worldbank.org>
Subject: RE: 2422-Goldgeier&McFaul/Russia and Kosovo

A note on Goldgeier and McFaul's view that "Russian support for 
Milosevic is just plain stupid and has nothing to do with 
furthering Russian national interests from a
realist point of view or reasserting Russia as a global power." 
One can indeed make a strong case that Russia has nothing to gain 
from supporting Serbia (or more generally, from getting involved 
in the Balkans). This is a view much more eloquently and 
elegantly expressed (than by the two of our writers), by 
Solzhenytsin in "The Russian Question at the end of the 20th 
century" ("...the endless wars for the Balkan Christians were a 
crime against the Russian people. Defending the Balkan Slavs from 
pan-Germanism ought not to have been our task; while every forced 
incorporation of newer and newer Slavs into Austria only weakened 
this patchwork Empire and its position vis-a-vis Russia", p. 60).
However, I am intrigued by the fact that the two professors of 
political science (sic!) fail to see why Russia truly is against 
the bombing of Serbia. For the bombing would introduce two 
important precedents with potentially grave consequences for 
Russia. First, a country would be bombed for its repressive 
policies toward a minority. Clearly, the same argument can be 
used, when convenient, to bomb Russia because of Chechnya, or 
China because of Tibet, or Israel because of Palestinians, or 
Turkey because of Kurdistan, or Sri Lanka because of Tamils and 
so forth. Second, the secession of Kosovo that would ensue, would 
be the first intra-republican change of borders in the 
post-Communist world, and could be invoked, when convenient, to 
justify international recognition for a secession of Chechnya or 
Tatarstan, or any other part of Russia (or, for that matter for 
the dismemberment of Ukraine, Moldova, Georgia, or Azerbaijan all 
of which have their own restive minorities). 

*******