October 12, 1998   
This Date's Issues: 2425 • 2426 • 

Johnson's Russia List
#2426
12 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Weak rouble delays Viagra introduction to Russia.
2. Reuters: Yeltsin's health back under microscope.
3. The Times (UK): Anna Blundy, Russia writes off sick Yeltsin.
4. Toronto Sun: Matthew Fisher, Lack of respect galls Russians.
(Re Kosovo).
5. RFE/RL: Paul Goble, The Challenge Of A Hungry Russia.
6. Anne Williamson: Russian Fundamentals.
7. Newsweek: Bill Powell and Owen Matthews, The Gray Men Are Creeping
Back. Nearly everyone with reformist credentials has left the new 
government.
8. Jim Vail: Why Not Try Saving Russia?
9. Jamestown Foundation Monitor: CHUBAIS COULD REJOIN THE GOVERNMENT, 
THEN AGAIN... 
10. Fred Weir on life in the far north.]

*****

#1
Weak rouble delays Viagra introduction to Russia

MOSCOW, Oct 12 (Reuters) - Impotent Russian men will have to endure another
month before the introduction of the drug Viagra because of the country's
flaccid currency, a top Pfizer official said on Monday. 
Pfizer had announced it would bring in the much-publicised impotence drug to
Russia by October. But the collapse of the rouble in August made foreign
medicine much more expensive and imports of all drugs have fallen sharply
since then. 
``We decided that because of all the changes and particularly because of the
difficulties being experienced in a lot of the distributors here in Russia to
put the launch back to the beginning of November,'' said Robert Marshall, head
of the Russia office for the U.S. drugs firm Pfizer which makes Viagra. 
Experts say Russian men suffer from the same sexual problems as males in other
nations and so the country of 150 million has a large potential market. But
many may be frustrated by the high cost after the rouble's devaluation. 
``For sure, we suspect we will sell a little bit less than we would have done
before,'' Marshall told Reuters. 
The drug will initially be available in major Russian cities, but may be hard
to find east of Novosibirsk in Siberia, Marshall said. 

******

#2
Yeltsin's health back under microscope
By Martin Nesirky

MOSCOW, Oct 12 (Reuters) - President Boris Yeltsin's health and ability to run
Russia were under scrutiny again on Monday after doctors ordered him to cut
short his first foreign trip in half a year because of bronchitis and return
to Moscow. 
Seizing the moment, Russia's opposition Communist Party urged workers to stage
new nationwide protests on November 7 to mirror demonstrations last week
calling for Yeltsin to resign and for wage arrears to be paid. 
``If all the people's demands are not fulfilled, Communists and patriots will
summon workers to an even more determined action which will develop into an
all-Russian political strike,'' Communist leader Gennady Zyuganov said in a
statement. 
Yeltsin, who is 67, was scheduled to fly back to Moscow on Monday evening from
Kazakhstan, a day earlier than planned. 
``He fell ill at the end of the week in Moscow. He insisted that the visit
take place,'' Kremlin spokesman Dmitry Yakushkin told reporters in the Kazakh
commercial capital Almaty. 
``Boris Nikolayevich was against cutting it short but the doctors said it
would be better to return to Moscow.'' 
Interfax news agency quoted the chief Kremlin doctor as saying he had tracheo-
bronchitis -- an infectious disease caused by inflammation of the bronchial
tubes and involving coughing and chest pains. His temperature was slightly
above normal. 
Yakushkin said there was no question of Yeltsin being taken to hospital.
Doctors prescribed antibiotics and rest. 
The president has a history of health problems, and underwent heart surgery
two years ago. On Sunday, he nearly took a tumble during a welcoming ceremony
in Uzbekistan. 
Markets and Western nations anxiously monitor Yeltsin's health because of the
power concentrated in his hands as president of the world's largest country
and the second largest nuclear power. That concern is heightened now because
of Russia's economic crisis and NATO-Russia tensions over Kosovo. 
Russia said on Monday it had recalled its diplomatic and military
representatives from NATO headquarters in Brussels for consultations over the
Serbian province. 
On the home front, a Russian deputy finance minister said the International
Monetary Fund might not arrive in Moscow until later this month to resume work
assessing the country's plans. 
Prime Minister Yevgeny Primakov, confirmed in office a month ago, has yet to
come up with an economic programme and has been reduced by the severity of
Russia's crisis to asking the European Union for humanitarian aid -- mainly
food. 
A government spokesman said the cabinet would consider the budget for the
fourth quarter of 1998 early next week. The budget is seen as a benchmark for
further financial aid. 
The opposition was predictably scathing about Yeltsin. 
``He's been having trouble putting in two or three hours a day for a long time
already,'' Zyuganov told reporters. 
Yeltsin says he intends to see out his term to 2000. 
The short visit to Central Asia was Yeltsin's first foreign trip since he took
part in a summit of the Group of Seven wealthy nations in the English city of
Birmingham in mid-May. 
Yeltsin has appeared increasingly marginalised this year, interspersing days
at the office with spells at his residence. 
Opposition leaders say he has failed to show leadership in crisis in which the
rouble plummeted and inflation took off. 
Despite concerns about Yeltsin's health, Russia's shares market continued an
upward trend on Monday and the rouble held steady against the dollar to be
fixed again at 15.84. 

*******

#3
The Times (UK)
12 October 1998
[for personal use only]
Russia writes off sick Yeltsin 
Anna Blundy reports on the fast-waning influence of an ailing President
propped up only by his aides 

BORIS YELTSIN, Russia's President in name at least, speeds into the Kremlin
down a ten-lane road cleared especially for him. His black Mercedes flies the
Russian flag on the front and has a flashing blue light on top. He is flanked
by other vehicles full of bodyguards and followed by an ambulance. 
Lately, though, he has been doing this less and less, preferring to stay at
his dacha, Gorky 9, outside Moscow "reviewing documents", according to Dmitri
Yakushkin, his press spokesman and a former television anchor. Russia is in
the middle of an economic crisis and its new Government is not even suggesting
a way out, but Mr Yeltsin, 67, is no longer able to step forward, big, burly
and reassuring, to tell his people that they will weather the storm. There are
no more rabbits in his hat and his health is visibly failing.His alcohol
problem is well known; after a history of heart complaints he underwent a
quintuple heart bypass in November 1996, a procedure that can dramatically
reduce the IQ; he has an underactive thyroid; and now there are rumours that
he may be suffering from the early stages of Alzheimer's. 
A man renowned for terrible faux pas - his performance with the conductor's
baton in Berlin in 1994, and his failure to emerge from the plane to meet
Ireland's Prime Minister in the same year - Mr Yeltsin's outbursts are not
funny any more. 
Everyone knows that it is no longer boisterousness or drunkenness that causes
them. He seems barely able to understand what is going on from day to day, and
when the Russian people are told that "the President will be monitoring events
closely", as they were during the mass demonstrations last week, they can only
laugh. Mr Yakushkin's job has become an excercise in damage management. 
Last week when President Yeltsin met Eduard Rossel, Governor of Sverdlovsk, Mr
Rossel came out of the meeting saying that Mr Yeltsin had accepted his
suggestion that the use of the US dollar be banned in Russia and had
telephoned the chairman of the Central Bank there and then to inform him of
the decision. Minutes later Mr Yakushkin rushed out a statement saying that
nothing of the kind had taken place, Mr Rossel had been mistaken. Nobody
doubted on whose part the misunderstanding had been. 
When the nation needed addressing the night before last Wednesday's anti-
Government rallies it was Yevgeni Primakov, the benign but ineffectual Prime
Minister, who addressed them. At the conductor Yevgeni Svetlanov's 70th
birthday concert at the Bolshoi theatre on Saturday, the greeting to Mr
Svetlanov from the President, read out by Valentina Matvienko, the Social
Affairs Minister, raised some sniggers from the audience. Everybody knew it
had been penned by Mr Yakushkin. 
Although immensely powerful on paper, Mr Yeltsin has finally become a
peripheral figure in Russian politics. 
In Tashkent last night, President Yeltsin, on his first trip out of Russia
since this spring, cancelled a welcoming ceremony because he was not feeling
well, his press service said. The President appeared stiff and stumbled during
another ceremony. 

******

#4
Toronto Sun
October 12, 1998 
[for personal use only]
Lack of respect galls Russians
By MATTHEW FISHER (74511.357@CompuServe.com)
Sun's Columnist at Large

MOSCOW -- Russia says it intends to use its UN Security Council veto to stop
the West from bombing Yugoslavia. U.S. Secretary of State Madeleine Albright
pointedly explained late last week that Russia's position is "irrelevant." 
With or without UN permission, the U.S. believes it already has the moral and
political authority to lead NATO air strikes against the Serbs in a belated
attempt to get them to behave less ruthlessly toward Albanians living in the
southern province of Kosovo. 
The crisis in Kosovo provides yet another example of Russia's greatly
diminished status in the world. There is little unity in Russia about many
political issues, but this diminution of status is something which galls
almost every Russian from the poorest babushkas to the ruling elite. 
Russians have always had a soft spot in their hearts for the Serbs, their
Orthodox Slav cousins - a small group in a sea of non-Slavs and Muslims,
Catholics and Protestants. 
Any Russian leader has little choice but to assume this historical burden.
The parliament unanimously passed a non-binding resolution last week
recommending that Russia cut all contacts with NATO if it attacks Serbia. 
In the same vein, Russia's new foreign minister, Igor Ivanov, earnestly told
the BBC that Serbia understood the threat it was under. Although there did not
appear to be any proof to support his words, Ivanov gamely said Serbia sought
peace and would therefore accede to all American and NATO demands concerning
Kosovo. 
Russia has always seen itself as Serbia's protector. It declared war on the
Austro-Hungarian empire to defend Serbia in World War I. It sent spies,
military advisers and then troops to try to break the Nazis' stranglehold on
Serbia in World War II. 
Russian thinking then and now is that the Serbs are "our kind of people."
There is a feeling that, like Russians, they have been hard done by by the
West. A Russian military commentator summed up this sentiment in a column last
week in which he wrote, "All of Russia's mass media, from right to left, will
report the same story of blatant NATO aggression without any credible legal
mandate, against a sovereign nation in Europe in support of a terrorist
separatist movement." 

FEEBLE MILITARY 

The biggest reason why the U.S. position hurts so much is, of course, that
what Albright says is true. What can Russia really do, anyway? Send troops or
warplanes to Yugoslavia? Obviously not. The Russian military is too feeble to
sustain any military adventure far from home. 
Nor does Russia have any other leverage these days. It has become far too
dependent on the West for money and goodwill to demand or expect much
political respect or consideration in return. 
Nuclear diplomacy is always an option, of course. But short of threatening
nuclear war, there is little Russia can do but make a lot of noise. 
To draw attention to Russia's position, President Boris Yeltsin can always
warn that an American-led NATO attack over Kosovo could spin so badly out of
control that it triggers World War III. 
Speaking up for Serbs is good domestic politics, if only because it enhances
Russian prestige at home, but such inflammatory rhetoric already seems tired.
After all, it is what Russia said before U.S. forces intervened in Iraq and
Bosnia. 
For all that, there is something audacious and ultimately dangerous about the
U.S. stance that it has the right to invade any country which does not follow
its rules. The U.S. is becoming increasingly cheeky about being the only
superpower around. But as was demonstrated in Somalia, it can still get into
trouble. 
As a result of the Somalia debacle, the U.S. is no longer willing to commit
ground forces to minor shooting wars. The military plan for Serbia is
apparently predicated upon the hope Serbia will be so frightened by the
prospect of the destruction of its air force and a few of its airfields and
command and control facilities that it will do Uncle Sam's bidding. 
But it is unlikely that antiseptic cruise missiles or smart weapons fired
from a safe distance can by themselves change the world. 
Perhaps the saddest part of all of this is that Russia would not be
"irrelevant," to use Secretary Albright's word, if it actually enjoyed some
influence over Serbia. But Serbia has given its Orthodox northern cousins
nothing in return for their staunch verbal defence of Serbian interests. 

******

#5
Russia: Analysis From Washington -- The Challenge Of A Hungry Russia
By Paul Goble

Washington, 12 October 1998 (RFE/RL) -- Moscow's requests to the West for
emergency food aid call attention to a problem that few have been willing to
face but that all are likely to be affected by: the specter of hunger in
Russia this winter or next spring. 
On Friday, Russian Prime Minister Yevgeny Primakov asked visiting European
Union President Jacques Santer for humanitarian food aid. And U.S. officials
said last week that Moscow had approached Washington with a similar request. 
The Russian government has been forced to turn to the West not only because
this year's harvest there has been so bad but also because it does not have
the financial resources to buy or even get credit for the purchase of the
grain needed to feed its population. 
According to the latest estimate of the U.S. Department of Agriculture, Russia
will harvest only 52 million tons of wheat and other grains this year. Not
only does that figure reflect a decline from 88 million tons in 1997, but it
is the worst harvest in Russia since 1953, the year Soviet dictator Joseph
Stalin died. 
Even more ominous, the 1998 estimate is far below the 70 million tons of grain
Russians consume either directly or through animal protein every year. Indeed,
even with the 20 million tons the Russian authorities have stockpiled, both a
degradation in the diet of most Russians and real hunger on the part of some
are now real possibilities by spring when stocks are usually lowest. 
And compounding these problems, Russia's financial crisis now means that
Moscow lacks the means to pay for any additional food imports. Indeed, that
crisis has already had a serious impact on the Russian diet which is already
more heavily dependent on imported foods than almost any other country. 
And that pattern, unprecedented in many respects, seems certain to have
serious consequences for Russia itself, for its immediate neighbors and for
the West as well. 
The impact on Russia is both the most obvious and the most problematic. The
bad harvest will certainly mean that Russians will eat less meat because there
will be less fodder for livestock. And it will likely mean that Russians in
areas that have traditionally had to import food from other parts of the
country will suffer even more. 
But if the human consequences are clear, the political ones are less certain.
The further decay in the diet of many Russians will certainly make them even
more cynical about the current Russian leaders and thus more willing to listen
to those who insist that Boris Yeltsin and his team must be replaced. 
At the same time, real hunger -- especially if it occurs outside the major
cities -- is likely to have two diametrically opposite effects on the
political system. On the one hand, it will certainly exacerbate regional
tensions between regions with enough food and those without. 
And on the other, it is likely to make the population more rather than less
passive. And because Russian officials know their own history -- the February
1917 revolution began with bread riots -- they are likely to do everything
they can to ensure that the cities are fed even if the countryside suffers. 
Hunger in Russia will also have an impact on Russia's neighbors. Not only are
some Russian officials now demanding that Ukraine and Belarus pay for Russian-
supplied oil and gas with food rather than cash, but many governments in
countries neighboring Russia are beginning to be concerned about the
consequences in Russia, including demands for food and potential refugee
flows. 
But the greatest impact may turn out to be on the West largely because of the
timing of the Russian requests for food. 
Many Western analysts and political figures in the West are now inclined to
blame Moscow for the current problems, asserting that Russia failed to reform
far enough or fast enough or in the right way. And they suggest that any
additional aid would just make the problem worse, throwing "good money after
bad" in the words of some. 
But while such arguments may be justified in the case of the kind that the
International Monetary Fund has provided, they appear to miss the point when
the issue involved is human suffering in the form of hunger and when the
failure to respond to calls for humanitarian aid could have serious negative
consequences in the future. 
Twice in this century, the West has provided massive food aid to Russia: in
the 1920s with the American Relief Administration and during World War II via
Lend-Lease. Not only did these efforts save millions of Russian lives, they
also helped to convince ordinary Russians that the West in general and
Americans in particular cared about them, whatever Stalin said. 
Now, with hunger once again threatening their country, Russians are more
cynical about the West with many of them convinced that the West for some
reason wants them to suffer in the aftermath of communism. 
And if the West does not now provide assistance to them in this most
humanitarian of areas, many more Russians are likely to become convinced of
something that the Soviet leaders tried but failed to instill. 
Should that happen, not only Russians but the prospects for all future
cooperation between Russia and the West will suffer, yet another victim of the
specter of hunger again visible on the Russian horizon. 

******

#6
From: "Anne Williamson" <annewilliamson@email.msn.com>
Subject: Russian Fundamentals
Date: Sun, 11 Oct 1998

Russian Fundamentals
By Anne Williamson

The failure to understand where Communism ended and Russia began insured
that the Clinton Administration's policy towards Russia would be riddled
with error and ultimately ineffective. Two mistakes are key to
understanding what went wrong and why. 
The first mistake was the West's perception of the elected Russian
president, Boris Yeltsin; where American triumphalists saw a great democrat
determined to destroy the Communist system for freedom's sake, Soviet
history will record a usurper. A usurper's first task is to transform a
thin layer of the self-interested rabble into a constituency. Western
assistance, IMF lending and the targeted division of national assets are
what provided Boris Yeltsin the initial wherewithal to purchase his
constituency of ex-Komsomol [Communist Youth League] bank chiefs, who were
given the freedom and the mechanisms to plunder their own country in tandem
with a resurgent and more economically competent criminal class. The new
elite learned everything about the confiscation of wealth, but nothing about
its creation. Consequently, Yeltsin's "reform" government was doomed to
sustain this parasitic political base and this reality explains the recently
unsuccessful effort to return Viktor Chernomyrdin, the bankers' standard
bearer, to high office. 
The second mistake lay in a profound misunderstanding of Russian culture
and, in accordance with the many ironies of the Clinton regime, in the
Western advisers' disregard for the very basis for their own country's
success; property rights. It was a very grave error. Private property is
not only the most effective instrument of economic organization, it is also
the organizational mechanism of an independent civil society. The
protection of property, both of individuals' and that of a nation, has
justified the existence of and a population's acceptance of the modern state
and its public levies. But those realities didn't influence an
Administration bent on commercializing foreign policy; what interested the
Clinton crowd were Russian assets, not Russian needs. 
Russian property rights are tricky; property has never been distributed,
but only confiscated and awarded on a cyclical basis. For the big players
property exists, as it always has, only where there is power. For the
common man, the property right hasn't advanced much beyond custom which
prevents the taking of any man's shelter, clothes or tools so long as
continuous usage is demonstrable. An additional, purely Slavic feature of
the Russians' concept of property is the shared belief that each has a claim
upon some part of the whole. 
In ancient 'Rus, property existed for the individual as a claim to a
shared asset, a votchina or "estate", held by all the members of a
particular clan. This understanding of property still informs the culture;
though Westerners bemoan Moscow mayor Yury Lyuzhkov's retention of the
system of the residential permit ("propiska") as an impediment to a flexible
labor force, the policy is one of Lyuzhkov's most popular. Muscovites are
well-satisfied with a mayor who polices outsiders as they believe any
proprietor of such a great estate as Moscow should. 
The Russians' failure to accept the Roman concept of private property has
compelled them to suffer the coercive powers of the state so that at the
very least a civil order, if not a civil society, might be established and
sustained. The hackneyed idea that Russians have some special longing for
tyranny is a pernicious myth. Rather, they share the common human need for
predictable event undergirded by civil and state institutions and their
difficult history is the result of their struggle to achieve both in the
absence of private property.
Since only the Tsar or the Party had property, no individual could be
sure of long-term usage of anything upon which to create wealth. In the
absence of property, it was access - the opportunity to seek opportunity -
and favor in which the Russians began to traffic. The connections one
achieved, in turn, became the most essential tools a human being could
grasp, employ and, over time, in which he might trade. Where relationships,
not laws, are used to define society's boundaries, tribute must be paid.
Bribery, extortion and subterfuge have been the inevitable result. What
marks the Russian condition in particular is the scale of these activities,
which is colossal. Russia, then, is a negotiated culture, the opposite of
the openly competitive culture productive markets require. 
Ironically, the nontransferability of the votchina system's entitlement
was the very flaw shareholding culture and an equities market could have
addressed successfully had Lenin's revolutionary dictum of "Property to the
people! Factories to the workers!" been realized. Instead, the "brave,
young reformers'" ginned-up a development theory of "Big Capitalism" based
on Karl Marx's mistaken edict that capitalism requires the "primitive
accumulation of capital". Big capitalists would appear instantly, they
said, and a broadly-based market economy shortly thereafter if only the
pockets of pre-selected members of their own ex-Komsomol circle were
properly stuffed. Those who hankered for a public reputation were to secure
the government perches from which they would pass state assets to their
brethren in the nascent business community, happy in the knowledge that they
too would be kicked back a significant cut of the swag. The US-led West
accommodated the reformers' cockeyed theory by designing a rapid and easily
manipulated voucher privatization program that was really only a transfer of
title and which was funded with $325 million US taxpayers' dollars. 
Voucher privatization's conceits were compounded by a grievous insult;
unregulated voucher investment funds, which the privatizers encouraged the
uncertain Russian citizenry to patronize. Hundreds and hundreds of
investment funds simply walked with their clients' vouchers, reselling them
to domestic criminals, Red Directors, western investment banks and
international money launderers. When the 18 month-long thieves' banquet
concluded in July 1994, the program, whose very design left the controlling
shareholding of any single enterprise in the hands of the state, had
actually institutionalized the state as the determinant owner of all that
had formerly belonged to "the people".
Thereafter ensued a years-long highly-criminal and oftentimes murderous
scramble for hands-on control of the enterprises. Directors stashed profits
abroad, withheld employees' wages and after cash famine set in, used those
wages, confiscated profits and state subsidies to "buy" the workers' shares
from them. The really good stuff - oil companies, metals plants, telecoms -
was distributed to essentially seven individuals, "the oligarchs", on
insider auctions whose results were agreed beforehand. Once effective
control was established, directors - uncertain themselves of the durability
of their claim to the newly-acquired property - chose to asset strip with
impunity instead of developing their new holdings. 
Unsurprisingly, the entire jerry-rigged effort has collapsed in flames.
The West's best course under the new Primakov government is to take its own
advice, stop meddling, cease all subsidies and allow what few market
mechanisms that do exist in Russia to work. The sooner the banking
industry's pylesos ("vacuum cleaners") are allowed to fail, then the sooner
the national property can return to market where more able and productive
hands might yet grasp it.
Until Russians have resolved for themselves how property is to be held
and secured their decision de jure, all the destructive economic
arrangements and cultural behaviors crowding Russian history will continue.
Wealth will not be created without private property; without transferable
property secured legally to protect no Russian will pay taxes; without
revenues no Russian government can endure without falling back upon what is
every state's final reserve; coercion. 
The years-long sugarcoating of what the Clinton administration's policies
have wrought in Russia is just one more lie bequeathed Americans. More
Western money will only work to insure the continued degradation of Russia,
bequeathing her people a future that can be discerned in that most familiar
object of Russian folk culture - the Matryoshka nesting doll - a perfect,
visual metaphor of Russia's Brechtian universe: Each figure is captive, one
inside the other, and in the end the biggest doll consumes the lot. 

********

#7
Newsweek
October 19, 1998
[for personal use only]
RUSSIA 
The Gray Men Are Creeping Back
Nearly everyone with reformist credentials has left the new government 
By Bill Powell and Owen Matthews 

They were the sounds of an age that seems more distant than it really is, and
they could be heard all over Moscow last week. They came from the Kremlin and
from the streets. Revolutionary anthems blaring as thousands gathered in Red
Square; a Russian foreign minister defiantly threatening the West with a U.N.
Security Council veto; the Defense minister simultaneously warning of "a new
cold war" if NATO bombs Moscow's Serbian allies in Kosovo. And the
government's new economic planner saying that the International Monetary Fund
was partly responsible for Russia's collapse, and that it was "obligated" to
provide Moscow more money. 
All in one week. Since Yevgeny Primakov, former KGB spymaster, became Boris
Yeltsin's latest prime minister one month ago, the West has held its
breath--and said it was hoping for the best. In the wake of Russia's economic
implosion, the conventional wisdom held that Primakov was a reasonable,
compromise choice. He was acceptable to the communists in Russia's
Parliament--as he needed to be--but wouldn't do anything crazy. He might not
make the best out of a bad situation, but nor would he make the worst of it. 
It may be time to think again. One by one, since Boris Yeltsin dismissed the
young Sergei Kiriyenko as prime minister, almost everyone with pro-Western,
reformist credentials has departed the new government. In their stead have
come the gray men of the late Soviet era. Their growing power amounts to
nothing less than a creeping coup. 
The left is emboldened for good reason. Communist leader Gennady Zyuganov's
effective triumph over Yeltsin in the Duma in August--forcing the president to
withdraw Viktor Chernomyrdin as his candidate for prime minister--devastated
the president's authority. Yeltsin has never seemed so irrelevant. How
irrelevant? With Primakov and his team of central planners still desperately
trying to put together an economic rescue plan as inflation gathers steam,
Yeltsin this week will travel abroad for crucial meetings in ... Uzbekistan. 
Populist politicians like Zyuganov and Moscow Mayor Yury Luzhkov have made it
clear that there is more that binds them now than separates them. Zyuganov in
August signaled that Luzhkov would have been an acceptable prime minister
after Chernomyrdin went down. And late last week, having said in London on
Oct. 1 that he almost certainly would run for president, the Moscow mayor said
"there is nothing unusual in [my] seeing eye to eye" with communists on a wide
variety of economic issues. 
This populist-communist nexus--with Luzhkov its effective leader--may well be
the dominant force in Russian politics over the two years that remain of
Yeltsin's term. It is not a comforting prospect. Though not everyone on the
left approves of the Moscow mayor, Luzhkov was correct when he said there was
barely a kopek's worth of difference between many of their policies. Luzhkov
has the soul of a central planner, wants to increase subsidies to Russia's
industry--including its weapons makers--and constantly rants about the "wild,
foolish monetarism" practiced by Yeltsin's reform governments. 
The Clinton administration and all its Western allies have by now accepted the
idea that Russia will return to a period of warmed-over communist economics.
Their only consolation is in the idea--probably correct, given what Primakov
has said so far--that the new government will stop short of massive
renationalization of property now in private hands. That would be one of the
few steps the government could take that actually might trigger a civil war:
many of the biggest plutocrats in Russia now also have big private armies, and
they'd probably be willing to use them. 
And the communists are still not trusted by key segments of the population.
Students were notably absent from last week's lackluster demonstrations. On
Wednesday, as thousands of mostly older trade unionists and pensioners
gathered in Red Square, 26-year-old Georgi Dolmadyan stayed on the campus of
Moscow State University. He did so, he says, for a very good reason: "With all
due respect, these babushkas that shout for the return to communism have only
a few years left to live. We have to live until their ripe old age. And I
don't want to spend those years under communism, thank you." In the capital,
where Russian revolutions are born, people have gotten used to basic freedoms
in the last seven years. Trying to stuff freedom of expression back in the
bottle would be just the thing to get students like Georgi Dolmadyan out into
the streets. 
Yet if iron-fisted, repressive communism really is dead in Russia, it is by no
means assured that democracy is the future. The risk, if economic chaos
increases this winter and beyond, is authoritarian rule centered on one man: a
Luzhkov or a Lebed, or perhaps someone not yet a national figure. Outside
Moscow, poverty is the central fact of life. "And poverty," says Tatyana
Matsuk, a researcher at the Russian Academy of Sciences, "eventually leads to
extremism." An exhausted, impoverished nation had an opportunity to look for
trouble on Oct. 7--and, to the relief of everyone, passed. There is always
next year. With Yana Dlugy in Moscow and Russell Working in Vladivostok 

*******

#8
From: "Jim Vail" <jimvail@hotmail.com>
Date: Sun, 11 Oct 1998
Subj: Why Not Try Saving Russia?

A couple of articles have appeared in the newspapers about what kind of 
aid should go to Russia, namely more micro oriented stuff, ie. 
grassroots and support for small business, rather than the 
macro-oriented stuff, ie. IMF and World Bank projects. This no doubt was 
the idea when organziations like USAID and the TACIS programs were 
implemented several years ago. When we say billions of dollars of aid 
has been squandered in Russia, that includes these very mico programs 
that support grass roots democracy, good infrastructure projects, small 
business programs, etc. 
Have they really worked? The debate over this is not an easy one, and 
I'm sure there are many opinions on both sides of the coin to say that 
there were good intentions, good things did happen, but much money was 
wasted to implement these free market/ democratic reforms closest to the 
people.
I would first like to argue some points raised in Sarah Carey and 
Charles William Maynes story entitled 'Who Lost Russia? Why Not Try 
Saving?' What they argue for is noble and indeed worthy. But as anyone 
knows who's worked in Russia, it ain't that simple. Let's take small 
business support. There is probably no better success story than the 
overnight development of small business in Russia against the incredible 
odds - the backbone to a healthy economy. Of course we must support this 
worthy endeavor and do what we can. But it takes foreign, or at least 
domestic, investment and a healthy banking system to truely support 
this. It takes lower interest rates, a more sensible tax climate, better 
laws. The EBRD's small business project was one of its most successful 
programs. The sad thing is now some of those very banks the EBRD worked 
with to support and invest in small Russian businesses are probably in 
danger of being liquidated. 
It is too easy to criticize USAID and TACIS and complain about the 
highly paid foreign consultants who came into Russia for a few days to 
prescribe a few measures and then get out, having accomplished very 
little. What did they know about Russia? Well, I imagine some eyes did 
open to the opportunities in Russia and possible future investments in 
the future. When it comes to actually giving the Russians hands on 
support in this endeavor, I would say the work of the Peace Corps goes 
to the heart of how the west can support Russian reform. The Peace Corps 
are business missionaries, they believe in Russia in the sense that they 
bring to the table the necessary knowledge and skills and live on the 
ground with the Russians in the regions to make reforms real. They work 
with Russians on a face-to-face level for a ridiculously small stipend 
in which no one is really profiting at the other's expense in the 
financial sense of the term. 
Unfortunately, giving money to 'worthy' projects such as small business 
and grass roots democracy programs is a long-term, not a short-term 
project. It is frustrating and can't possibly achieve results quickly. 
But Eurasia and other aid programs can point to their successes in this 
endeavor and build on them. USAID, I remember when working for a 
USAID-financed training and consulting project back in 1995, was 
obsessed with its funded projects achieving financial sustainability. 
Well, I'm sorry to say, but if you could find even a few projects that 
truely achieved this, that would have been great. But I don't think this 
was the case (Mine certainly didn't, in fact it was a joke). However, 
the real story is that they tried, sure they failed, but they planted 
some seeds, some ideas which can grow in the future. What that means is 
that we can't give up on the Russians who are still working in these 
areas and have little financing. But that takes the face-to-face work, 
western people who go to Russia and truely want to help the Russians, to 
get down and dirty and not just throw money around or look for those 
quick profits. That takes some sacrificing, which the Russians know 
plenty about.
I think it is rather foolish to compare western aid today to the 
Marshall Plan. The Marshall Plan was of course much more grandiose in 
terms of numbers because there was an enemy to fight - it was during the 
height of the Cold War. Today, in a sick sense, the west is half-helping 
the 'enemy' (if that) because that is how the west still perceives 
Russia by embracing Eastern Europe so quickly into NATO and forcing the 
Russians to open the floodgates to western products at the expense of 
its domestic industry. Turn the Russians into one of us. Since this 
hasn't happened, you can't trust the Russians, so why would you really 
want to help them?
Unfortunately, it seems the fear is returning to Russia with the age-old 
perceptions that Russia cannot work in a free market, another Russian 
reform-minded leader failed and the worse has yet to come. Some of this 
stuff is undoutedly true, but I don't want to buy this so easily because 
I believe in fighting the good fight. I left Russia not so much 
disillusioned with what I saw, but more burned out with the way of life 
which is so alien to me. But I won't stop fighting for what we can help 
them achieve there. As most of you probably know, it takes the 
heart/soul, hard work and courage to make things happen in Russia. If we 
don't stop believing in Russia and just pull up our bootstraps a bit 
tighter, helping the Russians continue to make more and more little 
changes now, I feel, will make all the difference years down the road 
whenever those fruits will one day be reaped. 

Jim Vail
Center for Humanitarian Aid

*******

#9
Jamestown Foundation Monitor
October 12, 1998

CHUBAIS COULD REJOIN THE GOVERNMENT, THEN AGAIN... Kommersant daily led its
October 10 edition with an article headlined: "Chubais returns." According
to the newspaper, Prime Minister Yevgeny Primakov's meeting on October 8
with Chubais--the architect of Russian privatization who currently heads
United Energy Systems, the country's electricity monopoly--set the
groundwork for Chubais' return to the cabinet. Primakov asked to meet
Chubais for "consultations" after Finance Minister Mikhail Zadornov and
Central Bank Chairman Viktor Gerashchenko returned empty-handed from
negotiations with the International Monetary Fund, the World Bank and U.S.
government officials in Washington. While the meeting between Primakov and
Chubais was officially devoted to preparations for supplying power during
the winter, Chubais himself confirmed that he and the prime minister
discussed a plan of action for getting the IMF to release the next tranche
of its multibillion dollar loan. The IMF has refused to release the
installment, worth more than US$4 billion, because the Russian government
has not yet produced a coherent, market-oriented anticrisis program.

Kommersant daily noted that Russia must pay US$3.2 billion on its foreign
debt by the end of the year and an additional US$17 billion next year. This
will not be possible without debt restructuring and Western credits, and
nobody in Russia today, the newspaper wrote, has Chubais' "rich experience"
and "close personal ties" with Western creditors. Kommersant added that
Chubais would be unlikely to agree to this role unless he was given a post
equal in power to that of First Deputy Prime Minister Maslyukov, who is in
charge of economic policy.

Chubais' return, however, would provoke a huge scandal with the
opposition-dominated State Duma. According to Kommersant daily, Primakov is
thus likely to wait until the economic situation reaches a breaking point
before bringing Chubais back. If Russia is unable to convince the IMF to
release the money within a month, Chubais will be brought in as the only
person capable of getting the money, thereby preventing a default on
Russia's foreign debt. According to the newspaper's scenario, the Duma
deputies will then have no choice but to swallow the return of their bete
noire (Kommersant daily, October 10).

Chubais has fallen in and out of favor with President Boris Yeltsin numerous
times over the last six years. In late 1997, Chubais lost the post of
finance minister because of a scandal involving a book honorarium he and
several allies received from a large financial-industrial group which had
won big during privatization. A short time later, Yeltsin tapped Chubais to
be his emissary to the Western lending institutions. Last summer,
Chubais--reportedly with a major assist from the U.S. Treasury
Department--helped convince the IMF to put together a US$22 billion bailout
package for Russia. His achievement, however, lost some of its luster in
August when Russia de facto defaulted on its domestic debt and devalued the
ruble. Chubais subsequently lost his post as Russia's representative to the
Western financial institutions. Later, in an interview with Kommersant
daily, he said that Russia had "conned" the West out of billions of dollars.
Chubais claimed his comments to the newspaper were misconstrued.

*******

#10
From: fweir@rex.iasnet.ru
Date: Mon, 12
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT) -- Millions of people in dying Soviet-era
Arctic communities face a grim winter of hunger and power
blackouts because underfunded supply networks have broken down, a
Russian parliamentary commission says.
``We are banging our heads trying to make people realize
that the situation is extremely dangerous. Many cities with big
populations are on the brink of mass tragedy,'' says Vladimir
Budkayev, a parliamentary deputy from the Arctic region of
Magadan and a member of the Russian Duma's northern affairs
commission.
Nearly 12-million people live in Russia's far north, a
legacy of Soviet economic planners' dream of developing the vast
Arctic spaces.
Unlike other northern countries like Canada, where
workers are usually flown in from southern cities to operate
remote mines and oil wells in shifts, the USSR built large
population centres on the tundra and permafrost near sources of
raw materials.
Russia has almost a dozen Arctic cities of over 100,000
people, and scores of smaller industrial towns. Many can only be
supplied by ship or river barge during the short summer season,
or by tractor train along frozen waterways in winter.
``It was a huge mistake to concentrate all those people
in big apartment blocks, exposed to the Arctic climate,'' says
Mr. Budkayev. ``The Soviet system provided for them, but it's
gone now.'' 
Many Soviet-era Arctic industries are not viable in a
market economy, and even those that are cannot support large
local populations.
``What can we do with all the pensioners, families,
unskilled workers who live there?'' says Mr. Budkayev. ``Everyone
must be kept warm and fed, but there are no means anymore to do
that.'' 
The state subsidies that used to ensure adequate supplies
of food and fuel to northern communities have been dwindling
since the demise of the USSR. 
But with this year's financial crash a near bankrupt
Russian government has paid out barely half the amount budgeted
for northern relief. Meanwhile, prices for many basic goods have
doubled or tripled in the past few months.
The Red Cross has launched an emergency $15-million
appeal this winter to help vulnerable groups of Russians --
including poor, elderly, disabled people and refugees -- whom it
warns are facing an ``urban disaster'' brought on by the economic
crisis.
``We can't exclude the possibility of mass starvation if
the situation continues to deteriorate,'' says Borje Sjokvist,
head of the Moscow delegation of the International Federation of
Red Cross and Red Crescent Societies.
Mr. Sjokvist says Russia's financial woes have caused a
drastic fall in food imports which, combined with the country's
worst grain harvest in 40 years, points to widespread shortages
of basic products in coming months.
``We fear it may be the hardest winter in a generation,''
he says. ``Old people are making comparisons to the tough winters
of the 1940's, during the Second World War.''
Some Russian analysts dispute the threat of general
hunger in Russia's main population zones this winter, but agree
that the situation in the north is dire.
``Foreigners sometimes exaggerate our troubles, because
they don't understand how things work in Russia,'' says Vladimir
Petukhov, an expert with the Institute of Social and National
Problems in Moscow.
``Food will be very expensive, but there will be enough
for most of the country. But in the north it's already too late
in the season to conduct a full supply effort. Nothing has been
done this year, and we have the makings of a human catastrophe in
some places.''
The Duma commission estimates that over a million people
must be evacuated immediately from remote communities that are in
imminent danger of social breakdown.
``The whole system of northern habitation is
collapsing,'' says Mr. Budkayev. ``The majority of areas are just
not ready for winter, and few places have more than two months
supply of food and fuel. Some are beyond hope. 
``But there are no plans to withdraw people, no means to
do it, and no places to take them. We are in real trouble.''

*******