October 15, 1998   
This Date's Issues: 2431 • 2432 • 

Johnson's Russia List
#2432
15 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Ailing Yeltsin back at work again.
2. Reuters: Russian crisis seen weakening "oligarchs."
3. Frank Durgin: Berger says Yelstin in control.
4. Financial Times (UK): Head off famine or pay creditors? John 
Thornhill on why fears are hardening over the fate of $183bn of 
external debt.
5. David Woodruff: Rubles, "Bartles," and the Virtual Economy 
debate.
6. Moscow Times EDITORIAL: Too Costly To Bail Out Oligarchs.
7. Interfax: Gerashchenko: Commercial Banks Of No Value to Economy.
8. Itar-Tass: Zyuganov Bemoans 'Split of Society' in Russia.
9. Christian Science Monitor: Judith Matloff, Facing Burning Forests, 
Russia Can't Afford a Bucket.
10. Interfax: Economist Says Russians' Savings Amount to $30 Billion.
11. Reuters: Russia court puts off trial of environmentalist. (Pasko).
12. Komsomolskaya Pravda: Will Junta Replace Yeltsin in the Kremlin? 
13. Novye Izvestiya: The Great Vodka Redistribution Will Start in 
Russia.
14. Reuters: Moscow mayor plans to launch new party next month.
15. Itar-Tass: Lukin Comments on Affect of Kosovo on START II 
Ratification.]

******

#1
Ailing Yeltsin back at work again
By Martin Nesirky

MOSCOW, Oct 15 (Reuters) - Russian President Boris Yeltsin pitched up at
work for the second day in a row on Thursday, ignoring medical advice to
recover from bronchitis at home. 
``The doctors say President Boris Yeltsin is fine, although there are
still signs of a cold,'' a presidential spokesman said. 
The 67-year-old leader, who is under mounting pressure from opposition
politicians to resign, met the Constitutional Court's newly-appointed judge
Anatoly Sliva and two aides, Alexander Voloshin and Evgeny Lisov, Interfax
quoted Yeltsin's spokesman as saying. 
Television pictures of the meetings showed Yeltsin looking tired and
pale. He struggled to smile at his visitors and for most of the broadcast
there was no sound. 
At the meetings he was expected to discuss Russia's economic crisis -- a
weakened rouble, inflation and debts. 
The rouble fell to an average 13.5560 to the dollar in a session crucial
to settling billions of dollars in rouble-dollar contracts written by local
banks to foreigners. 
Russian inflation is estimated to have slowed in the week ended October
12 to 0.4 percent from 0.6 percent in the previous week, the State
Statistics Committee said. Prices rose nearly 40 percent between August and
September. 
Central bank gold and foreign exchange reserves rose to $13.3 billion on
October 9 from $12.8 billion on October 2. 
It was not clear whether Yeltsin would meet Prime Minister Yevgeny
Primakov for a further briefing on the economy, as he did on Wednesday after
defying doctors' advice and putting in a brief appearance at the Kremlin. 
The prime minister cancelled a cabinet meeting on Thursday which had been
expected to discuss settling corporate debts. Primakov said it had not been
worth calling in ministers to discuss one item, and instead issued orders
for these debts to be sorted out quickly. 
``Enough discussion -- we need action,'' Russian news agencies quoted him
as saying. 
On Wednesday, Primakov and the defence and foreign ministers were
summoned to the Kremlin to brief Yeltsin on the economy and on the crisis
over Yugoslavia's rebel province of Kosovo. 
Yeltsin cut short a visit to Central Asia on Monday because of what his
doctors said was bronchitis, sparking fresh speculation about the state of
his health and prompting political opponents to step up calls for him to
resign. 
Yeltsin's decision to go to the Kremlin again appeared designed as much
to show he is in charge as to get work done. 
Russian newspapers have speculated the Kremlin is not telling the whole
truth about Yeltsin's health. 
Nezavisimaya Gazeta quoted administration sources as saying Yeltsin
remained determined to see out his term to 2000. 
The Constitutional Court was discussing on Thursday whether Yeltsin would
be entitled to stand again if he wanted to. 
The Federation Council upper chamber, which is less hostile to Yeltsin
than the State Duma lower house, rejected a non-binding motion on Thursday
seeking his resignation. 
But the fact that the regional governors, who sit in the council,
considered the motion at all will have given Yeltsin pause for thought. 
At the Duma, an impeachment effort against Yeltsin took a step forward
when a commission ruled that the Chechen war, one of five accusations being
considered, could constitute grounds to remove him. 
But the Duma failed to muster a two-thirds majority to push through
constitutional changes curbing presidential powers. 
The president has a history of health problems and has increasingly
interspersed spells at work with periods working on documents or resting at
his Gorky-9 home outside the capital. 

*****

#2
ANALYSIS-Russian crisis seen weakening "oligarchs"
By Julie Tolkacheva

MOSCOW, Oct 14 (Reuters) - Russia's most influential tycoons, known as
oligarchs, may be forced to loosen their grip over the economy as their
banking power bases have been destroyed by the financial crisis gripping the
country. 
The oligarchs, whose close ties to the Kremlin allowed them to take over
privatised enterprises at bargain prices, are under pressure to surrender
shares in banks crippled with debts. 
"There is no doubt that new owners will come to some of the groups," Yakov
Pappe, a senior expert at the Institute for Transitional Forecasting, said. 
"Banks will think about saving themselves, not about financial-industrial
groups or maintaining their positions in a group." 
The government is considering a bank restructuring programme that could give
foreigners greater control over Russian banks. 
Central Bank Chairman Viktor Gerashchenko said foreign creditors could be
offered shares in banks as payment for debts. 
Kommersant, Russia's leading business newspaper, said new foreign owners would
probably "send oligarchs into retirement." 
The daily also said the International Monetary Fund and World Bank were
insisting on changes in ownership of troubled Russian banks as a condition for
support for the sector. 
"The main thing is that those people who led their banks to bankruptcy should
leave," it added. 
Banking analysts said the oligarchs might have to sell at least parts of their
financial-industrial groups (FIGs) to pay debts to businessmen who still have
money. 
"The focus (of power) will be changed," one analyst, who declined to named,
said. "Those financial institutions which used to have real money are now
having difficulties. The only thing they can think of is survival." 
While banks are now in dire straits, some companies, mostly exporters which
profited from the devaluation of the rouble, have new opportunities for
expansion. Domestic manufacturers also have a chance to take advantage of
declining imports, but they have still to prove they are capable of satisfying
demand. 
Analysts said industrialists might enjoy greater influence than the bankers
now and benefit from government pledges to support the real sector of the
economy. 
"These are different people, with no financial capital," the analyst said. "It
is closeness to the government that counts." 
He said current negligible share prices would help companies to widen their
spheres of influence and new owners might seek to boost profitability by
investing in exportable goods. 
But the significance of companies changing hands for the economy as a whole
would be limited, analysts said. 
"Changes in FIG ownership will become a serious event for big business, but
not for the economy," Pappe said. 
Kim Iskyan, a banking analyst at MFK Renaissance, said banks were unlikely to
break away from FIGs because of complicated links that bound them together. 
He also said new owners would have to invest hundreds of millions of dollars,
lay off thousands of people and do a lot of restructuring before the companies
became real assets. 
"The assets, basically, are extraordinary, but the way they are now you cannot
really have the wealth now," he said. 

******

#3
Date: Wed, 14 Oct 1998 
From: "Frank Durgin" <durgin@maine.edu> 
Subject: Berger says Yelstin in control

It should be clear to anyone, just viewing the 
matter from afar via the press and TV ,that for sometime 
now Yeltsin has not been in charge of anything. including himself. 
A few days ago you posted the report by a Russian doctor that 
Yeltsin was suffering from dementia. Then we all saw the pictures
of him stumbling around with confused glassy eyes and hollow look
on his latest trip.
Today an Agence France Press article reports that
top U.S. national security adviser Sandy Berger 
told reporters at the White House that Yeltsin " as far as we can 
determine, he is in control ...in 
Russia and continues to be in charge." 
I wonder if someone with some expertise on this subject could 
provide some insight into this matter. For example when 
we see in the news from Russia virtually every day such 
headlines as "Yetsin orders... Yeltsin approves.... Yeltsin said, etc 
just who is ordering, approving, deciding and speaking. Since Sandy 
Berger is utterly clueless on that question, perhaps someone of your
list subscribers can can throw some light on it. 

******

#4
Financial Times (UK)
15 October 1998
[for personal use only]
RUSSIA: Head off famine or pay creditors?
John Thornhill on why fears are hardening over the fate of $183bn of external
debt

Financial crises can force countries to confront agonising choices as the
Russian government has discovered to its cost.
Such was the mismanagement of its public finances earlier this year that the
government had in effect to choose between servicing its domestic debt or
paying wages and pensions. On August 17, Moscow stunned the world by
defaulting on its $40bn treasury-bill market, paralysing its own banking
sector and sending investors fleeing from other emerging markets.
Soon the Russian government may face a similar but even bigger dilemma: should
it use precious hard currency reserves to honour its $183bn of external debts
or continue to pay for imports, helping to stop the country from starving this
winter.
While ministers swear they will continue to service all their external debt
obligations, independent economists and market traders have already reached a
different conclusion, as reflected in the desultory prices of Russia's
publicly-traded debt.
"It seems to me inconceivable that Russia can meet all its external debt
obligations in 1999," says Philip Poole, east European economist at ING
Barings, the international investment bank.
"If there is a choice this winter between importing food and paying creditors
then I think it is fairly clear they will import food."
For the Russian government, the arithmetic is daunting. Deutsche Bank
calculates Russian public and private borrowers must pay foreign creditors
$49bn of principal and interest by the end of 1999. The government's share of
that bill is $17bn at a time when total fourth quarter federal budget revenues
are projected at just Rbs60bn, less than $4bn at the current exchange rate.
Russia, like any other country, has four potential sources for generating the
hard currency needed to service that external debt; but all have been poisoned
by the latest financial crisis.
First, the country's financial turmoil has scared away most private capital
inflows, which could have been used to roll over debt repayments. Foreign
investors are sitting on massive losses on their Russian assets and will not
return soon. Domestic businesses are unlikely to repatriate hard currency
funds given Russia's heightened political uncertainties. And the government's
attempts to control exporters' hard currency earnings could spark more capital
flight.
Second, the International Monetary Fund and World Bank have made clear they
will not provide additional funding in the absence of a coherent economic
programme from the government. Yet the latest word from Mikhail Zadornov,
finance minister, is that the government might not agree such a programme
until early next year.
That raises the prospect that Russia might even default on the $5.8bn of IMF
loans that are due for repayment next year, consigning the world's biggest
country to financial oblivion alongside Sudan and Sierra Leone.
Third, the central bank has run down gold and hard currency reserves in its
vain attempts to defend the rouble and can barely cover this year's debt
servicing commitments. At just $12.8bn - including an estimated $5bn of gold -
the central bank's current reserves will not last long.
Fourth, Russia's attempts to import less and export more to generate a foreign
exchange surplus will prove challenging in the current global economic
environment. While the savage contraction of domestic output has already
reduced imports, capacity limitations on oil pipelines and the sharp drop in
world commodity prices will prevent Russia from substantially increasing the
value of its exports.
Laura Papi, Russian debt analyst at Deutsche Bank, says the low level of tax
revenues in September and the government's continuing drift are increasing the
likelihood of default by the day. "It is now more a question of how they
default and how they restructure," she says.
The Russian government has already missed interest payments on some of the
restructured sovereign debt it inherited from the Soviet Union and has been
hinting it will press for a second rescheduling of these obligations. Western
governments, which proclaim continuing support for Russia, will have little
option but to swallow their pride and agree. Soviet-era commercial debts,
repackaged into securities known as PRNs and IANs, are also trading at levels
which anticipate default.
Yet analysts suggest the Russian government may attempt to draw a sharp
distinction between the debt obligations it inherited from the Soviet Union
and the new debt it has issued since 1992. The government is likely to attach
a higher priority to servicing its $20bn of outstanding eurobonds, which have
been issued by post-Soviet Russia.
But one leading US financial strategist has been warning clients there is a 70
per cent likelihood that Russia will even default on these eurobonds. "The
Russian government still has no idea what it is doing, Yeltsin is tottering,
and there will be no IMF disbursement this year," he says

*******

#5
Date: Wed, 14 Oct 1998 
From: David Woodruff <woodruff@MIT.EDU> (
Subject: Rubles, "Bartles," and the Virtual Economy debate

David--
If you can stand it, one more contribution to the Virtual Economy debate.
Anyone who can still muster an interest in the origins and prospects of
barter might want to read my book "Money Unmade: Barter and the Fate of
Russian Capitalism," which Cornell University Press will publish next
spring.

It is certainly the case, as Ickes and other parties to the JRL debate on
"value subtraction" have noted, that the prices on Russian barter
transactions are "inflated." As anyone in Russian business will tell you,
100 rubles of "live money" are worth more than 100 rubles of in-kind
receipts (or receipts in wechsels or other money surrogates). As Fredrick
Kaegi pointed out in his contribution, some Russian firms even quote
different prices depending on whether payment is in kind or in money, and
the former is always higher.

In other words, when there is non-monetary payment, the nominal price is
higher than the "real" one (though giving "real" a numerical sense here is
so difficult that this language is misleading). This is why the Karpov
report Ickes cites referred to "virtual prices," and is also the basis on
which Gaddy and Ickes concluded that non-monetary exchange masked "value
subtraction." In particular, Gaddy and Ickes argue that non-monetary
exchange is a way that Gazprom and other value-adding natural resource
exporters give de facto price cuts to uncompetitive industries in return
for being allowed to export the balance of their production.

Essentially, JRL critics of the virtual economy thesis have been attacking
Gaddy and Ickes' leap from Karpov's observation that barter alters de facto
prices while preserving formal ones to the conclusion that barter masks
value subtraction. What this leap overlooks is some straightforward
commercial common sense, brought out especially well in the contributions
of Stanislav Menshikov: sellers will want to give price cuts when customers
cannot afford their goods, and in particular will want to charge different
customers different amounts, depending on what they can afford to pay.

Take for instance the case of Gazprom. Gaddy and Ickes assume that GP
cannot export all of its production because politicians strong-arm it to
prevent it from doing so. Yet in fact, GP's potential for expansion abroad
is very limited. For this reason, from late 1996, at least until the
recent devaluation, GP very deliberately focused its efforts on domestic
expansion--and to this end it was willing to charge (poorer) domestic
consumers far lower prices than it charged (richer) foreigners. In fact,
Gazprom complained of efforts to force it to charge "world prices" on the
domestic market. What the company was defending was a policy of price
discrimination based on ability to pay, designed to keep costs down by
keeping production levels high. In other words, it was a policy of reverse
dumping. Yet it would be silly to suggest that the customers buying
lower-priced gas were by that token "value destroying." (This is just the
point that Menshikov's cheese example makes.)

Given Ickes' invocation of Karpov, it's worth noting that Karpov did *not*
draw the conclusion that Russian industry was value destroying and ought to
be bankrupted. Instead, he suggested sharp mandated price reductions for
key suppliers (gas and electricity, in particular). In other words, he
took the attitude that barter was a reaction to sellers charging more than
their customers could afford (Finansovaya Rossia, 3/26/98). His idea was
thus to replace the de facto price cuts offered through barter with
explicit price cuts.

And this gets to the crux of the issue: if barter is a way of lowering
prices, why don't these price declines just take place explicitly? As
economists will tell you, prices everywhere are "sticky downwards," but in
Russia's case this is especially so. Power company prices are set by
regulatory agencies; other businesses are prohibited from selling below
their cost of production, and production costs as defined in Russian
accounting are often needlessly high. So the pretense of high barter
prices can help sellers to give price breaks needed to win customers, while
formally charging a mark-up above their "cost of production."

The legal stickiness of prices is illustrated, for instance, by the fact
that Gazprom has had to LOBBY for permission to charge lower formal prices
as a way of reducing the share of barter in its receipts. Gazprom's
activity in this regard, by the way, demonstrates that there is not
near-universal support for the "pretense" of barter prices. (Gazprom's
post-crisis position has been somewhat different, for reasons I won't go
into here.)

Here's a metaphor that helps explain the role of non-monetary exchange in
Russia: imagine that Russia has two currencies, the ruble and the "bartle."
A bartle is worth less than a ruble, just as a franc is worth less than a
pound, because the bartle is a devalued version of the ruble. After the
"devaluation" effected by switching to bartles, nominal prices don't change
but they correspond to less value. (Compare an ordinary devaluation: if
all prices instantly re-adjusted to world market levels, devaluations would
be meaningless.) Participants in non-monetary exchange have organized a
private devaluation.

The bartle metaphor makes sense of a number of aspects of non-monetary
exchange:

1. Mangaers' motivation: Gaddy and Ickes conclude that the managers of
value-subtracting enterprises must enjoy the illusion that they are
accomplishing something, and this pretense is the foundation of the whole
phenomenon. Whereas on my version, they are engaged in business that is
profitable in the bartle economy--that is, that would be profitable after a
devaluation of the ruble. Some firms (like Kaegi's steel firms) will quote
higher prices in bartles than in rubles, reflecting the exchange rate
between them. Other firms (like Gazprom and power companies, at least
before 1997) will quote the same formal price in rubles and bartles, but
will seek to limit payment in bartles to those customers that cannot afford
the ruble price (price discrimination).

2. Tax problems: Firms and tax authorities are very well aware of the
difference between bartles and rubles; they try not to accept bartles
unless they can spend bartles. That's the point of the metaphor of a
"devaluation"--customers are paying in units that are worth less, but
suppliers are accepting payment in the same units, just as happens in an
ordinary devaluation. The local devaluations bartles enable are a
political achievement. The most important example: The IMF deal signed
this summer enjoined Russia to ensure that Gazprom collected at least 20%
of its domestic revenue in rubles by the end of the year. The same deal,
however, forbid the government to accept any taxes in bartles. So even
though GP would be collecting 80% or more of its revenue in bartle, it
would have to pay all of its taxes in rubles, amounting to a sharp tax
increase. This issue has been one of the major sources of conflict between
Gazprom and the government for the last two years.

3. Wage problems: Workers resist conversion of their wages into bartles,
although this does happen. Many workers get part of their wages in kind
(at their cost in bartles--so the price is higher than the ruble price) or
draw some or all of their wages in chits that can only be spent at a
company store--where the prices are again higher than the ruble prices at
non-company stores. When wages are not converted into bartles in firms
where almost all receipts are in bartles, wage debts accumulate.
(Note that Gaddy and Ickes also highlight points 2 & 3, which is one of
their important contributions, but tend to assume that firms and tax
authorities accept bartles rather passively, whereas workers resist.)

4. The dumping debate: According to an article in Rossiiskaia Aziia
(5/21/97), which apparently relied on information from the Magnitogorsk
factory's press office, in 1997 the company was planning to sell 48.16% of
its production on the internal market, at a profitability of 27.31%, and
export the remaining 51.84% at a loss of 12.89%. These figures would seem
to supply a prima facie case for those arguing that the factory was
dumping. However, they are misleading. The reason cited for exporting at
a loss was that only in this way would it be possible to get "live" money,
since internal sales would be in kind. The foreign "loss" is a loss only
when it is calculated using the ruble-dollar exchange rate. Given that
domestic sales are in bartles, however, the right exchange rate is the
bartle-dollar exchange rate, which makes this behavior seem much less
strange. This also explains why, when the ruble began to sink in late
August, Sverdlovsk oblast governor Eduard Rossel welcomed it, suggesting
that if the ruble got to 13, the oblast would have "live money" receipts
once again.

5. Interest rates: given the extraordinary interest being paid on
government debt and even on overnight bank credits to one another, one
would have expected Russian industry to disappear long ago. But interest
rates on loans in bartles were substantially less.

There are more ramifications, but I'll stop here, noting only that there is
not just one "bartle," but a multiplicity of them, and maintaining each of
these local devaluations in constant tension with tax and accounting
regulations that regard the bartle as equal in value to the ruble requires
ongoing political struggles, and also makes precise economic calculation
extremely difficult. It remains an open question whether or not the
present devaluation of the ruble will put its value below that of most of
the various bartles, leading to a widespread remonetization. So far, it
seems not. There is also some evidence that bartles are evolving from a
way of organizing a private devaluation of the ruble to a way of organizing
a private revaluation.

*******

#6
Moscow Times
October 15, 1998 
EDITORIAL: Too Costly To Bail Out Oligarchs 

The Central Bank plan for restructuring Russia's banking system, leaked and
published in the Kommersant Daily newspaper, contains
some good ideas. But it shows a lack of political will when it comes to the
biggest banks run by Russia's financial oligarchy. 
The plan makes special allowances for these very large banks, which it says
are too socially and economically important to be allowed to fail. 
The details are not clear but it sounds like the big financiers will once
again be bailed out at taxpayers' expense. The Central Bank has not named the
lucky banks but its chairman, Viktor Gerashchenko, has already indicated that
SBS-Agro is one of them. 
The whole idea that some banks are too big to fail is nonsense. The state does
have a responsibility to protect small depositors, but this is best achieved
by simply guaranteeing their accounts. Indeed, the Central Bank has already
offered to transfer all individual deposits to Sberbank, the state-owned
savings bank. 
Other creditors of the banks will just have to see what comes from a
liquidation. If funds are injected into large insolvent banks, the main
beneficiaries will be the current shareholders f who are largely to blame for
the whole mess. 
For instance, the problems of SBS-Agro, run by the oligarch Alexander
Smolensky, predated the collapse of the state treasury bill market. The bank
was already delaying payments to depositors and defaulting on debts before
Aug. 17, when the state debt default was announced. 
Former Central Bank chairman Sergei Dubinin alleged that the management of
SBS-Agro had transferred assets to related companies, effectively stripping
money that belonged to depositors and creditors. Why should Smolensky be
offered one kopek of state aid? 
Of course, bankrupting the financial oligarchs is a tough political decision.
Look at the supposedly developed economy of Japan, where trillions of yen are
now being spent to save insolvent banks. 
But Russia cannot afford the largess that Japan is offering. Any funds to
refloat banks will have to come from depleted state coffers or inflationary
printing of rubles. If the oligarchs are allowed at the feeding trough, the
bill for a bailout will be huge. 
The Central Bank's plan does try to penalize oligarchs who have siphoned off
funds by splitting their banks into sick "old" banks and healthy "new" banks
in which they will only have a diluted share. 
The scheme sounds tough but its complexity will leave open loopholes which
will surely work to the oligarchs' benefit. Better to just bankrupt them. 

*******

#7
Gerashchenko: Commercial Banks Of No Value to Economy 

MOSCOW, Oct 9 (Interfax-FIA) - Central Bank of Russia chief Viktor
Gerashchenko has said that Russia has no commercial banks that are of
national importance to the economy.
Gerashchenko told Interfax Friday on his return from Washington, where
he attended IMF and World Bank meetings, that it is necessary to select one
or two banks that could become part of the national payments system.
"I think this should be Sberbank, as it is primarily a system of
savings banks. Settlements could be made through them, but different
payments and settlements systems are needed," he said.
Gerashchenko said that the CBR will have to determine which commercial
banks "must be supported." "These will be banks that can work on their own
because they have not lost liquidity," he said.
He stressed that one of the CBR's priorities will be to support and
preserve medium-sized regional banks. The CBR will shortly hold a meeting
with the directors of all regional Central Bank divisions to discuss these
problems in detail, he said.
Commenting on Sverdlovsk region Governor Eduard Rossel's statement
that his regional government is considering introducing an "Urals franc" as
the local currency, Gerashchenko said this initiative was absurd.

******

#8
Zyuganov Bemoans 'Split of Society' in Russia 

MOSCOW, October 9 (Itar-Tass) -- A split of society and the lack of
the power acceptability are the main diseases of modern Russia, leader of
the Russian Communist Party Gennadiy Zyuganov said at a meeting with
Patriarch of Moscow and all Russia Aleksiy II on Friday.
The patience of the people is almost out, which is proved by the
recent large-scale protests, he said. However, problems of the country
require a wise head, a strong will and high morals instead of a strong
hand, Zyuganov noted.
He proposed several measures to overcome the grave situation. Firstly,
the parliament and the government should analyze the results of the
nation-wide protest and proposals made by labor collectives, he said. It
is also necessary to immediately consider constitutional amendments
suggested by regions and approved by committees of both parliament
chambers, Zyuganov added. According to the amendments, the country shall
have a capable and strong government and the legislative authority. The
communist leader calls for an immediate decision on the subsistence
minimum, because millions of Russians are now unable to survive without the
state aid. He said the income of 15 million Russians is twice lower than
the poverty level.
Zyuganov demands immediate measures against corruption and gangsterism
and a meeting of administration heads from throughout the country, who face
those problems.
He calls for forming a Constitutional Assembly of parliament members,
representatives of the president, the government, courts, trade unions and
traditional religions of Russia. The Assembly can keep the country within
the constitutional framework and even introduce changes in the
Constitution, he said.
"I think the insight has come to Russia, and we can find a way out
through conciliarism and peace," Zyuganov said.
A possibility and capability to make a decision critically depends on
the state adherence to the unity of Russia, Minister of Nationalities,
Chairman of the Assembly of Russian Peoples Ramazan Abdulatipov said.

*******

#9
Christian Science Monitor
OCTOBER 15, 1998 
Facing Burning Forests, Russia Can't Afford a Bucket
More than 2.9 million acres have burned in what UN terms an 'ecological
disaster.'
By Judith Matloff 
Staff writer of The Christian Science Monitor

KHABOROVSK, RUSSIA 

The smoke here was so thick that it resembled a heavy fog. Its acrid smell
spread to villages more than 1,000 miles away.
To escape the forest inferno, many animals headed into the city. Startled
residents in one apartment building found a brown bear in their lobby.
The Siberian taiga is a pristine woodland of conifers, stretching 1.3 million
square miles to Russia's Far East Pacific coast. Comprising nearly a quarter
of the planet's timber reserves, the taiga is twice the size of the Amazon
rain forest. It is one of the earth's great lungs, generating oxygen and
extracting pollutants, while providing a refuge for endangered tigers, bears,
and birds.
But huge fires have been raging unchecked in the Siberian Far East for three
months, devastating vast tracts of primeval forest. United Nations experts who
visited Sakhalin island and Khabarovsk, near the Chinese border, this week
called it a global catastrophe.
"Forest fires of such a scale fall in the category of worldwide ecological
disasters," the UN experts said.
"They bear consequences not only for the ecosystem of frontier countries with
Russia but also for a large part of the Northern Hemisphere," the UN statement
added.
These 2.2 billion acres of woodland serve as "sinks" that soak up carbon gases
that add to global warming. The forests host diverse plant and animal life and
make up the traditional homelands of nearly 200,000 indigenous people.
Now the fires, as well as illegal logging, are devastating these woods.
Environmentalists say this poses a bigger threat to the world's environment
than the destruction of forests in Brazil, Madagascar, or Thailand.

Dry year fuels huge blazes

Forest fires in the Far East are an annual summer event, touched off by both
nature and careless humans. But this year was particularly dry, and the autumn
rains are late. In Khabarovsk, about 990,000 acres are still blazing and 2.9
million acres have been destroyed. As much as two-thirds of the forest on
Sakhalin, an island just miles off Japan, have burned.
"If there is no serious rain, Sakhalin's forest will disappear soon," says
Yevgeny Usov, a spokesman for Greenpeace Russia. "The consequences are
serious."
Forest fires are difficult to control in this part of the world because there
are few roads or towns, little equipment, and scarce funds. The fires began
just as Russia's economy collapsed and the central government is too
distracted - and bankrupt - to worry about trees.
Foreigners are filling the void. Japan pledged $40,000 in humanitarian aid to
the town of Gorky, which was ruined by fire, while foreign oil firms working
on Sakhalin have promised $50,000. But Greenpeace estimates that total
material losses in the region could top $31.5 billion.
That doesn't even take into account the ecological havoc: As much as 50
million tons of toxic carbon gasses may be emitted this year from the forest
fires. And ashes falling into Sakhalin rivers will make it difficult for
salmon to spawn. This could affect the red caviar industry on which the
impoverished region depends.
Environmentalists fighting to save endangered Siberian tigers are glum.
Protection efforts had made progress in stabilizing the wild population at
more than 400, but the fires are destroying traditional habitats. "This means
they will move closer to towns where they inevitably will be killed by
poachers," Greenpeace's Mr. Usov says.
The attention on the forest fires is obscuring another serious problem - the
smuggling of valuable cedar, elm, and ash trees to China, Korea, and Japan.
Illegal logging has soared over the past decade, especially since borders
opened after the Soviet Union's collapse in 1991. Russia's pervasive
corruption means that truckloads of rare wood regularly cross the border
unchecked. It can be catastrophic when the trees are cut down in areas of
permafrost, where soil remains frozen year round. Swamps are created on which
new trees cannot be planted.

Illegal logging adds to losses

Illegal logging is practically equal to forest fires in terms of its threat to
the taiga, says Vladimir Shetinin, deputy chairman of the Primorsky region's
State Committee on Environmental Protection, based in Vladivostok.
"The real smuggling is only beginning now. Over the past three to four years
smugglers got a taste of the money they could make," he says.
Ash is one of the most valuable woods in the world, fetching up to $800 for a
small piece, says Vladimir Stegni, director of the Primorsky regional
government's Department of International Economic Relations in Vladivostok.
Cedar is banned from export because it is so endangered. But it gets to China
anyway.
Mr. Shetinin blames the economic crisis, which he says is driving desperate
men to smuggle. "Middlemen meet laid-off factory workers and take advantage of
their professional skills. This is first-class work."

******

#10
Economist Says Russians' Savings Amount to $30 Billion 

MOSCOW, Oct 10 (Interfax) -- The savings of Russians total at least
$25-30 billion, Boris Kheyfets, of the Russian Academy of Sciences
Institute for International Economic and Political Studies, has told the
Interfax-AiF weekly.
He said the government can count on individual savings being invested
only if it regains popular trust. To revive people's interest in
investments, Kheyfets suggested issuing new state foreign currency
certificates. These new securities, denominated in foreign currency, would
be issued for 10-15 years with a yield of 10-12%, to be paid once or twice
a year in rubles at the currency exchange rate on the payment date.
Foreign currency certificates should be offered primarily to
depositors with foreign currency accounts, he said. In addition to saving
deposits, the measure would enable the state to save on rubles payment in
line with the scheme earlier offered scheme, which proved to be unsuitable
for depositors. This would resolve the problem of savings indexation in
the wake of the ruble devaluation. The issue of long-term licenses allowing
people to buy property on certificates would help to actively develop
secondary market, Kheyfets said.
His full article was published in the Friday, October 9, issue ofInterfax-AiF.

******

#11
Russia court puts off trial of environmentalist

VLADIVOSTOK, Russia, Oct 14 (Reuters) - A military court in Russia's Pacific
port of Vladivostok on Wednesday postponed the controversial trial of an
environmentalist and journalist who has been accused of spying for Japan. 
Oleg Kotlyarov, one of the lawyers for accused military journalist Grigory
Pasko, told Reuters the defence team was hoping to get the case thrown out by
a higher court because of irregularities in his arrest and investigation. 
A U.S. human rights group has voiced concern over the trial. 
Pasko, a naval officer who filed controversial reports to Japanese television
and newspapers accusing the Russian navy of spilling nuclear waste into the
Sea of Japan, was arrested last year on return from a trip to Japan and
charged with selling state secrets abroad. 
The U.S.-based Committee to Protect Journalists, in a letter this week to
President Boris Yeltsin which was made available to Reuters, said it was
``greatly troubled'' by the case. 
``The case launched against Pasko, who gathered unclassified documents for use
in his journalistic investigations for Russian and foreign news media, clearly
violates his right 'to seek and impart information and ideas through any media
regardless of frontiers', as expressed in the Universal Declaration of Human
Rights,'' the letter said. 
``We believe a guilty verdict against Pasko would have a chilling effect on
investigative journalism in Russia and set a dangerous precedent for future
use of the country's law on state secrets by officials against journalists,''
it said. 

******

#12
Russia Today press summaries
http://www.russiatoday.com
Komsomolskaya Pravda
October 14, 1998
Lead Story
Will Junta Replace Yeltsin in the Kremlin? 
THE OPPOSITION IS CALLING LOUDER AND LOUDER FOR YELTSIN'S RESIGNATION. WHAT
WILL HAPPEN TO THE COUNTRY? 
Summary

Rumors about President Boris Yeltsin's incapability and possible
resignation have greatly increased, but at the same time the ruble is
gaining value, the daily wrote. This can only mean that market players are
ready for any possibility. 
Politicians obviously prefer to have Yeltsin remain in office as long as
possible, because pre-election blocs have not yet been formed. In the
meantime, they will try to form a junta of Russia's most influential
people, which will include party leaders, "power" ministers, some governors
and members of the presidential administration. The interests of oligarchs
will be voiced by some politicians, the daily wrote. 
This group of people will hardly have any points of common agreement,
except one, which is that presidential elections should be delayed for as
long as possible. Otherwise, the country will be torn to pieces and
Russians will have to await U.N. peacemaking forces. The junta will be
responsible for relatively calm life of the country, at least, until the
elections. 

*******

#13
Russia Today press summaries
http://www.russiatoday.com
Novye Izvestiya
October 14, 1998
Lead Story
The Great Vodka Redistribution Will Start in Russia 
A STATE MONOPOLY ON ALCOHOL WILL MAKE THE POPULATION LOVE MOONSHINE AGAIN 
Summary

Whenever the state treasury becomes empty, the government suddenly
remembers alcohol production, the daily wrote on Wednesday. 
In the history of the new Russia, three prime ministers have attempted to
impose a state monopoly on the production and sale of alcohol -- Victor
Chernomyrdin, Sergei Kiriyenko and Yevgeny Primakov. 
Although they may have believed what they were saying, such a measure
cannot be, the daily argued. After several years of war for markets among
vodka kings, they will hardly surrender to an enemy as weak as the state. 
The previous 70 government resolutions and decrees on alcohol were openly
sabotaged, so one can hardly expect that orders of First Deputy Prime
Minister Yury Maslyukov will be observed. For instance, a new order would
check production volume at every plant and block production between shifts.
This would require an army of inspectors to be present at every plant. But
the director of one alcohol plant told the daily it is easy to bribe a tax
inspector. It only cost himself $2,000, while a single production line
gives him $60,000 of profit per night. 
Chernomyrdin tried, in vain, to impose similar measures in North Ossetia in
1996, where they earn millions of dollars on illegal vodka production.
Experiments on controlling wholesale trade of liquor will also fail, the
daily predicted. Attempts to control retail trade in vodka will be
detrimental for the sector, because it will increase the price of vodka and
lead to outbreak of fake liquor in the country. 

*****

#14
Moscow mayor plans to launch new party next month

MOSCOW, Oct 15 (Reuters) - Moscow Mayor Yuri Luzhkov, who has said he might
take part in Russia's next presidential election, said in an interview
published on Thursday he would launch a new centre-left party next month. 
Luzhkov, who has been busily forging links behind the scenes with
different political forces, also said he considered reserve general
Alexander Lebed to be his main rival if he entered the race for the presidency. 
``We plan our founding conference in November,'' Luzhkov told the
Obshchaya Gazeta daily when asked about his new party, tentatively named the
Russian Party of Political Centrism. 
The balding, diminutive Luzhkov, 62, has built a reputation in Moscow as
a man who gets things done and opinion surveys show he would win strong
support if he contested the presidency. 
But critics have attacked his autocratic style of government and Luzhkov
also sorely needs to broaden his appeal beyond Moscow, whose relative
prosperity is resented by many Russians. 
Luzhkov said his party would fight for a social market economy, using
language reminiscent of Prime Minister Yevgeny Primakov, whom the mayor said
he also saw as a potential presidential candidate. 
However Luzhkov saved his warmest praise for economist Grigory Yavlinsky,
head of the liberal Yabloko party and another likely candidate for the
presidency. 
``I like his analytical approach, his industriousness, his position. His
convictions put him to the right of centre but he is still drawn towards
centrism,'' Luzhkov said in the interview. He added he did not think
Yavlinsky could win the presidency. 
The Communists, worried that they might not win an election on their own,
have recently floated the idea of an alliance with Luzhkov, but the mayor
made clear he did not share their views. 
He said his new party would have clear-cut aims and would not be a vague,
amorphous movement composed of disparate groups. 
Luzhkov played down speculation that the next presidential election, set
for mid-2000, might take place ahead of schedule due to Russia's grave
economic problems and President Boris Yeltsin's uncertain health. 
He said his relations with Yeltsin remained cordial but that members of
the president's entourage were biased against him, noting that two senior
aides who supported Luzhkov's candidacy for prime minister during last
month's political crisis lost their jobs after Primakov was appointed to
head the cabinet. 
``I consider myself an independent political figure and do not need to be
loved by the president's circle,'' Luzhkov added. 
The charismatic Lebed, who is now governor of the Siberian region of
Krasnoyarsk, is widely expected to join the race and Communist Party leader
Genandy Zyuganov could also run. 
Other leading challengers are likely to include Yavlinsky, former Prime
Minister Viktor Chernomyrdin and ultra-nationalist Vladimir Zhirinovsky. 

****** 

#15
Lukin Comments on Affect of Kosovo on START II Ratification 

St. Petersburg, October 9 (Itar-Tass) -- Head of the Russian Duma
committee for international affairs Vladimir Lukin said here on Friday [9
October] "the START II treaty may be ratified before the expiry of the
present Duma deputies' mandates." Lukin is here taking part in the second
conference of mayors of the major Baltic cities.
According to Lukin, the current situation around Yugoslavia will not
affect the parliamentarians' stands on the issue of the START II
ratification, as far as "Kosovo is much more a European issue than
American." At the same time, the deputy believed that "in case a bomb
strike was carried out at Yugoslavia, the whole system of relations between
Russia and NATO would be impaired, including the START II relatedprocesses."
Commenting on the prospects for Duma ratification of the treaty Lukin
pointed out that START II "is no less beneficial to Russia than to its
opponents, and with years passing it will become more and more beneficial
as the Russian nuclear weapons grow old." The head of the Duma committee
believed that the figure of the new Russian prime minister who enjoyed
prestige with the deputies would bias them for the better on the issue.

*******