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Johnson's Russia List


October 19, 1998   
This Date's Issues: 2437 2438 

Johnson's Russia List
19 October 1998

[Note from David Johnson:
1. Bloomberg: Goldman, Others Had Role in Russian Fall, NYT Says.
2. The Electronic Telegraph (UK): Marcus Warren, Yeltsin's family will 
not let him quit whatever the cost.

3. Reuters: Yeltsin rests as succession debate rages.
4. The Guardian: James Meek, Russia sinks deeper as crime wave rolls on.
5. Reuters: Russia may back rouble with gold and silver coins.
6. Jerry Hough: Re 2431-Dent/Russian Fundamentals.
7. St. Petersburg Times: John Varoli, House of Hope Puts a Cap on Russia's

8. The Jamestown Foundation Prism: Aleksadr Buzgalin, THE PEOPLE ARE SILENT? 
(Aleksandr Pushkin's famous tragedy Boris Godunov ends with these few words
[but without the question mark]).

9. Reuters: Russia beer sales to boom, challenge vodka - report.
10. Reuters: Russia's Duma may vote on impeachment in November.]


Goldman, Others Had Role in Russian Fall, NYT Says

New York, Oct. 18 (Bloomberg) -- Goldman, Sachs & Co. and other investment
banks helped Russia develop its bond market and borrow billions of dollars
from foreign investors before the country could reliably collect taxes to
repay its debts, the New York Times reported. Even as Russia's financial
troubles grew, Goldman managed to protect hundreds of millions of dollars it
had at stake in Russia and earned tens of millions of dollars in fees,
including one commission of about $56 million for arranging a $6.4 billion
bond swap in July, rival bankers said. The firm also drummed up demand for
that swap by buying ruble-denominated securities in the days before the
transaction took place -- a standard underwriting activity that is akin to
publishers buying books off store shelves to try to get the titles on best-
seller lists, the newspaper said. 
Russian benchmark Eurobonds declined 68 percent since the end of June,
according to J.P. Morgan & Co. 


The Electronic Telegraph (UK)
18 October 1998
[for personal use only] 
Yeltsin's family will not let him quit whatever the cost 
By Marcus Warren in Moscow 

PRESIDENT Yeltsin's family is determined to keep the Russian leader in
office until 2000 whatever his state of health and no matter how loud the
chorus calling for his resignation.
Isolated, mentally confused and physically enfeebled, Mr Yeltsin is dependent
on his daughter, Tatyana Dyachenko, and his wife, Naina, as never before. But
the two most important women in his life show no sign of wanting him to step
down - even if it costs him his life.
Instead, they argue that he, and he alone, can save Russia from disaster,
despite the almost universal belief outside the Kremlin that it is Mr
Yeltsin's style of rule that has helped to bring the country to the brink of
bankruptcy and unrest.
Helped by Valentin Yumashev, his 40-year-old chief of staff who is often
described as the son Mr Yeltsin never had, his family is now planning to
tackle the seemingly impossible task of persuading Russia and the rest of the
world that the president should stay in power.
This is the message Mr Yeltsin, 67, wants to hear himself. When lucid, he
insists on serving out his term until the next presidential elections, due in
the summer of 2000.
A year ago the notion that Mr Yeltsin, outwardly at least the epitome of
Russian machismo, relied on his 66-year-old wife or his daughter for advice on
how to run the country would have seemed absurd. Last week, however, the world
witnessed how Mrs Yeltsin literally led her husband by the arm during his ill-
fated trip to central Asia, later abandoned on doctors' orders supposedly
because of a bout of "bronchitis".
The influence wielded by Mrs Dyachenko, 38, over her father has long been a
fact of Kremlin politics. Now it is stronger than ever, if only because most
of the other advisers he trusted, such as Alexander Korzhakov, his bodyguard,
and Sergei Yastrezhembsky, his spokesman, have been sacked.
The only aides left with any leverage over Mr Yeltsin are his daughter and Mr
Yumashev. Only they, and possibly his wife, could ever persuade him to step
down before time of his own free will.
According to observers of the Yeltsin family, the atmosphere in the corridors
of the Kremlin and their Gorky-9 residence outside Moscow is highly
reminiscent of that at the beginning of 1996.
Then, as now, the family was convinced that only Mr Yeltsin could defend
democracy and give Russia the strong leadership it needed. A few months and
tens of millions of pounds in campaign expenses later, he won his second term
in office.
Then Mr Yeltsin still enjoyed the support of Russia's wealthiest businessmen
and some of its most talented and ruthless politicians. This time he stands -
or rather staggers - almost alone, at times a source of national
embarrassment, at others a figure of fun.
The family, of course, has personal reasons for not wanting him to resign:
fear of retribution from a hardline communist government or a new president
such as Yuri Luzhkov, currently Moscow's mayor, or the loss of privileges that
go with being Russia's leader.
Certainly, his would-be successors - with Mr Luzhkov the favourite, followed
by Gen Alexander Lebed and Yevgeny Primakov, the Prime Minister, as a possible
compromise candidate - are not an inspiring bunch.
For Mr Yeltsin himself, however, serving his full term of office is a matter
of principle - and pig-headed stubbornness. He is reported to have seen all
the press coverage of his disastrous tour of central Asia himself and to have
been horrified by its armchair diagnoses of Parkinson's, senile dementia and
new heart problems.
His two appearances in the Kremlin last week in defiance of doctors' orders to
rest were conscious attempts to prove his detractors wrong. But few expect to
see him in public again, let alone abroad, in a hurry.
Appeals addressed to Mr Yeltsin to stand down have no effect at all. So some
direct their calls for his resignation to his wife and daughter. Elena Dikun
in the respected weekly, Obshchaya Gazeta, wrote: "Let us assume that you have
no pity for this poor country which suffers so much from not having a
president in these complex times. But couldn't you find some compassion for a
husband or a father? Who else can he rely on if not on you?"


Yeltsin rests as succession debate rages
By Brian Killen

MOSCOW, Oct 18 (Reuters) - Russian President Boris Yeltsin spent the weekend
resting at a country lodge amid continuing calls for him to step down, and
speculation over early elections and potential successors. 
Yeltsin, who has been suffering from what Kremlin doctors diagnosed as a bout
of bronchitis, was due to return to Moscow on Monday for a meeting with Prime
Minister Yevgeny Primakov, the presidential press service said. 
Yeltsin's ill health, which forced him to cut short a trip to Central Asia
last week, has prompted much debate over whether he will see out his second
term, due to end in 2000. 
Krasnoyarsk regional governor Alexander Lebed, a potential candidate for
president, said early elections were inevitable. 
But the gruff reserve general declined to be drawn on whether he would join
the race, saying he was more preoccupied with the problems of his vast
Siberian region than with ``taking the skin from a bear that hasn't been
``I have a region in which the situation is very difficult today and there is
very much work to be done,'' Lebed told NTV commercial television's Itogi
current affairs programme. 
``Ahead of us is a severe, and apparently a hungry winter,'' he added,
dismissing as irrelevant the apparent jockeying for position among rival
politicians in Moscow at a time when people are mostly worried about how to
Russia's financial crisis has left the country on the verge of bankruptcy,
with the government and millions of households struggling to make ends meet. 
The central bank is trying to resist pressure to print money that will fuel
inflation. The deputy head of the state precious metals reserve, Gokhran, said
the bank was due to consider a plan on Monday to back the rouble with gold and
silver coins. 
``We are considering backing for the national currency, or more precisely for
(rouble) emission, with resources from the reserves of Gokhran,'' Dmitry
Ignatyev told NTV. 
Primakov's government has pledged to make timely payment of wages and pensions
in coming months to ease deepening poverty, which the latest statistics show
has been accompanied by a rise in crime. 
Interfax news agency reported that serious crimes such as murder and rape had
surged by nearly 18 percent in the first nine months of 1998 over the same
period last year. 
As Yeltsin convalesced at his country lodge in Zavidovo, outside Moscow,
former Soviet leader Mikhail Gorbachev added his voice to the chorus calling
on the Kremlin chief to step aside. 
``On October 7 millions of people demonstrated in the streets of Russian
cities,'' he wrote in The New York Times. 
``Their main demand was for the resignation of President Yeltsin...It was a
clear verdict on the regime and the sort of 'shock' reforms that the country
has had to endure for seven years.'' 
But Yeltsin, 67, has made clear that he intends to stay in office until his
term expires, despite the doubts over his health which even former allies say
are a cause for concern. 
Moscow Mayor Yuri Luzhkov, a staunch supporter of Yeltsin in the past, was
quoted by Interfax as saying: ``A short ailment is one thing, but if the man
cannot work and fulfill his duties, then it is necessary to find will and
courage to say so.'' 
Luzhkov, 62, has already said he may run for the presidency himself if he sees
no other worthy candidate. In contrast to Yeltsin's recent frail appearances,
the stocky mayor was shown on television at weekend playing soccer and roller-
A poll conducted by the Public Opinion Foundation and published by NTV showed
Luzhkov's popularity rising. If a presidential election were held today, 16
percent of those polled said they would vote for him. 
Communist Party leader Gennady Zyuganov led the field with 17 percent, while
Lebed was in third place with 13 percent. 
But the poll showed Luzhkov would beat both Zyuganov and Lebed in a second
round of voting if the first round proved indecisive. 


The Guardian
October 19, 1998
[for personal use only]
Russia sinks deeper as crime wave rolls on 
James Meek reports on a leap in the number of serious offences in a country
that sometimes treats shoplifting more harshly than murder 

A huge bomb blast killed a St Petersburg businessman, masked assassins
murdered a businessman from Bratsk in front of his family, an aide to the
Speaker of the Russian parliament was shot in the back of the head, and a gang
in the Yaroslavl region were reported to have murdered at least 15 people and
buried them in concrete so that they could steal their homes. 
It was the toll of a single, relatively quiet week in Russia - and these were
only the killings which made the news.
Yesterday the Russian general prosecutor's office was quoted as reporting a
leap in serious crimes, such as murder and rape, of almost 18 per cent in the
first nine months of this year.
It is too early to link the increase conclusively to the financial disaster
which struck the country in mid-August. But the report highlights Russia's
intractable crime problem, one of the greatest sources of popular anger at the
changes which have come about since the collapse of the Soviet Union and the
source of much of the desire for a "strong-handed" leader to replace the
ineffectual Boris Yeltsin.
It is not only Russians who suffer. A Mormon missionary from the United States
was killed and his colleague wounded in a stabbing attack at the weekend in
the Volga city of Ufa.
Although Mormons have been the target of religious hostility in Russia, and
Ufa is a predominantly Muslim city, the police believe that the attack was
simply an act of random violence by a drunk - all too representative of the
thousands of senseless, squalid killings and beatings every month on the
streets and in the flats of countless bleak former Soviet estates.
The prosecutor's report, quoted by Interfax news agency, said that while total
crime was up by 4.6 per cent, crimes carrying a sentence of 10 years or more
had increased by just under 18 per cent.
The prosecutor's department has often accused the interior ministry, the
source of official crime figures, of grossly underestimating the scale of
crime in Russia by not registering cases it doubts it can solve - including
many murders.
But even the police, who are controlled by the interior ministry, admit that
crime is on the rise, although they say it is marginally lower than its post-
Soviet peak in the mid-1990s.
The latest police figures for the first eight months of the year suggest a 1
per cent increase in the number of murders, to 19,500, and a similar rise in
robberies. There were 10,900 cases of extortion, an increase of almost 11 per
Russian crime is distinguished by a staggering number of mafia murders of
businessmen - hundreds are killed each year, by assassins hiding in tenement
stairwells, by snipers or by radio-controlled bombs of extreme ingenuity - and
the low value which gangs of petty thieves and fraudsters put on human life.
The Yaroslavl gang, six members of which have been arrested, are said to have
enticed flat-owners from the city with promises of work and then killed them
by shooting, strangling or poisoning them.
Among the 15 victims was a priest. The bodies were hidden in basements while
the gang tried to sell the homes.
The claim that the gang was concreting over the bodies when it was caught
echoes a similar horrific tale from Moscow earlier this year, when a garage
owner and his helper, posing as car buyers, murdered 11 car owners and buried
10 of them under their workshop.
There has never been a serious attempt at root-and-branch reform of the
criminal justice system, which is still corrupt, underpaid, poorly equipped
and virtually untrained to operate in a vast free market country where
criminals can move easily across thousands of miles.
The system still keeps one million Russians in jail - about a third of all
Russians who go before a judge are given prison sentences, far more than are
fined - and it is not unusual for shoplifters with previous convictions to be
treated more harshly than first-time murderers.
Meanwhile, despite the interior ministry's boast that it is tackling
corruption and striking at organised crime, there have been few successes in
tracking down and convicting mafia kingpins, hitmen, crooked big businessmen
and corrupt officials.
Since these people tend to sup together at the same table and swap stories in
the same saunas, it is difficult, and dangerous, for honest police,
investigators or journalists to try to break the chain.
Even when they make the attempt, it can have the opposite effect. A Russian
journalist who accused a businessman, a sponsor of one of the country's most
powerful politicians, of having ties to organised crime was taken aside by one
of the politician's aides.
"You don't understand, do you," said the aide. "Since your article appeared,
that businessman has become much stronger. Everyone thinks he's got the mafia
behind him. No one dares touch him now."


Russia may back rouble with gold and silver coins

MOSCOW, Oct 18 (Reuters) - Russia is considering minting gold and silver coins
from state reserves to back the rouble and help the government honour its
crushing financial obligations, a senior official told NTV commercial
television on Sunday. 
Dmitry Ignatyev, deputy head of the state precious metals reserve Gokhran,
said the final stage of consultations between Gokhran and the central bank
would take place on Monday and the plan could take effect next month. 
Central bank chairman Viktor Gerashchenko would determine whether or not the
project goes ahead, but possible designs for the coins were already being
discussed, he said. 
If the plan gets the green light, the coins could be used as a means of
payment and be traded on exchanges, he added. 
``We are considering backing for the national currency, or more precisely for
(rouble) emission, with resources from the reserves of Gokhran,'' Ignatyev
Between 100 billion and 200 billion roubles ($6.25 billion and $12.5 billion)
worth of the coins could be issued, he said. 
``I stress that we are talking about possibilities. What will actually happen
today from the point of view of regulating the financial situation of Russia
we can only entrust to our chief banker Gerashchenko,'' he said. 
``In order to back 30-40 billion roubles, we need to mint something like 100
tonnes of gold. But now, in the first stage perhaps as an experiment, we may
be talking of minting 10-30 tonnes of gold and silver coins.'' 
The Russian government is scrambling for funds to cover a budget deficit
estimated at almost 100 billion roubles for the fourth quarter of this year.
The central bank says it will not print unbacked roubles. 
The prospects for borrowing on domestic and international markets are
virtually nil following a decision in August to effectively devalue the
rouble, default on domestic debt and declare a moratorium on some foreign debt
A subsequent collapse in the banking system has worsened already dismal tax
collection rates, but federal tax service chief Georgy Boos told NTV that he
hoped to bring in more than 35 billion roubles in the fourth quarter. 
NTV said the plan to issue gold and silver coins had been amended from an
initial version, details of which were published earlier this month in the
leading business daily Kommersant. 
NTV said the nominal value of the coins, in contrast to the initial plan,
would correspond to the real value of their precious metal content. 
``If the coin has 500 roubles written on it, that is the amount of gold it
contains,'' it said. 


Date: Sat, 17 Oct 1998
From: "Jerry F. Hough" <>
Subject: Re: 2431-Dent/Russian Fundamentals

It seems to me that Marian Dent's thoughtful letter deserves a 
thoughtful reply.
The first thing to remember is that the Clinton Administration 
came to power in January 1993. A fair amount of water had passed under 
the dam by them as she recognizes. Chernomyrdin had just been appointed 
premier appointed promising an industrial policy. Boris Fedorov had 
been appointed minister of finances and the question was not whether the 
Administration would support Yeltsin. The question was whether they 
would tell him to cohabit with the Congress as Mitterrand did and adopt 
a more gradual policy with concern for law, the state, public opinion, etc.,
or whether they would tell him to support Fedorov who was for much more shock 
therapy, unemployment, reduction of health and education expenditures than 
Gaidar had conducted in 1992. Whether one agrees with the decision or not,
they strongly supported Fedorov and made IMF aid conditional on Yeltsin at 
least nominally supporting his policy. And Yeltsin did buy on to the 
extent of assuming that reduction of inflation and privatization would be 
sufficient for reform. Yeltsin demanded that the Administration support 
his dissolution of the Congress and the Constitution as the price, and 
the Administration agreed. 
My impression is that once the Administration identified with 
Fedorov and sent Larry Summers to Moscow in September to sign off on the 
dissolution of the Congress and okay the IMF payment at the time, it 
felt it had a tar baby that it couldn't let go. Treasury and IMF have been 
desperately trying to justify their policy to save their reputations, and 
the politicos seem interested in little more than not having a 
"Communist" victory on their watch. (Read, for example, Stanley Fischer's 
remarkable piece in the Economist that combines a spirited defense of policy
with the reproach to banks that the interest rates on GKOs were so high the 
banks must have known how risky the investments were.) 
The interesting question is why the Clinton Administration got on 
a path that was so contrary to its domestic policy. I think that Bob 
Woodward's book on the opening months of the Administration is must 
reading. It documents beautifully how Clinton came to power with 
liberal promises that required an unbalanced budget and with promises of 
a balanced budget and how all attention was focussed on the political 
battles on that issue. Surely no one that mattered gave any thought at all
to Russia. The Bush Administration had supported Gaidar, that was 
defined as "reform," and Fedorov had been working in the World Bank in 
Washington and had friends there. To go another direction would have 
required a policy decision, and no one was prepared in the literal sense 
to take a policy decision on Russia. Indeed,Woodward's book is the 
source of the ironic information that Larry Summers was supposed to be 
chairman of Council of Economic Affairs, but was vetoed by Gore because of his
political insensitivity. (He had said American waste materials could 
be dumped in the unpopulated areas of Africa.) So because of political 
insensitivity, he was appointed the administration's real Secretary of 
State for Asia, Latin America, European unity, and Russia where he showed 
Gore was right about his political sophistication. 
Thus I think those who see some American plot to seize assets in
Russia as the core of policy are not only wrong, but wrong in a way that 
leads to misunderstanding about the future and what is in the interest of 
American business. I have very recently been over the sources on 1993 to 
1997, and they make absolutely clear that the oil companies trying to invest
in Russia were fleeced as much as those who bought Lukoil shares directly or 
indirectly (or Tatneft, if one wants to look a stock on the New York 
Stock Exchange). Oil companies were happy in Communist Angola, in Nigeria, 
or in Libya. They want predictability, be it democratic or dictatorial, 
and the last thing they want is the kind of lack of solid institutions 
base that the IMF and Treasury promoted in Russia. Manufacturers (e.g., 
drug companies) want protection from Third World imports as a condition for
investing. Alice Amsden should be read more on this. As she reports, the 
big American firms investing in Eastern Europe demanded protectionist tariffs
as a condition. It was the banks and stock brokers who thought they 
benefitted from a free flow of capital, but they see things differently 
The businesses that benefitted from free trade were the consumer 
good exporters--the Tyson's Chickens of this world. And when Clinton 
did intervene with Yeltsin, it was precisely for Tysons.
What needs to be understood, however, is that the democratization and 
legal aid programs were as much American interest group politics as 
Tysons. The Administration basically used these programs as patronage for 
those in its New Left base who were losing on the core of domestic 
policy. The Administration didn't care whether they had an impact 
because real policy was the economic one and the real political policy 
was to support Yeltsin's dictatorship. The democratization-legal 
programs did not get in the way because the money went to "democrats" who 
defined democracy as the Yeltsin dictatorship.
That was a tragedy. The economic and legal programs must be 
joined. Corruption is not something that just happened, perhaps because 
of the Russian character as some seem to suggest. Corrupt people are 
the epitome of the rational actors that underlie classic economic theory. 
The rational actors of the IMF theory are unencumbered by considerations of 
morality and ethics and simply follow their self-interest. Nazdratenko,
governor of Primorsk, was one of those on a technical assistance program to
Arlington, Va., where he learned about the tax system. Some day it may do
him some good whenever local governors are allowed to have autonomous taxes,
but in the interim he will act like a rational actor and he is. 
The esssence of market and democratic theory is to say that people 
are selfish but that institutions and incentives can be set up that will 
lead them to socilly-beneficial behavior. Westerners of the 1990s 
thought--and will think again--that emerging markets are the most 
profitable place to invest, not Swiss banks. A Russian political 
insider in one of the world's most profitable emerging markets will 
invest at home if it is profitable. But the IMF program created 
incentives that made it seem more profitable to send abroad money that was 
acquired legally or illegally. Laws in and of themselves are no good. They 
must be reenforcing and reenforced by incentives, negative and positive, 
for rational actors to follow them. Ethics must be bolstered by 
incentives to act in an ethical manner. Ethics largely involve 
long-term self-interest where factors such as reputation matter, and it 
is crucial to create incentives for long-term economic thinking if the 
economy and ethical behavior are to develop. The economists and the 
democracy-legal program must work together.
The economists are now learning the importance of institutions 
and moving away from the anarchy of the original IMF program. Those in 
the democracy problem must also move away from a definition of democracy 
and civil society that is also essentially anarchic and anti-institutional. 
As the theorists on democracy in Latin America emphasize, solid democracy
results from pacts among elites. But that presupposes the existence of solid
elite groups who can make and enforce a pact. They did not exist in 
Latin America prior to the 1970s and they don't exist in Russia today. 
Isolated small civil society groups or isolated training of small 
businessmen, as worthy as that is, are not as important at this stage as 
working with people like Nazdratenko or trying to create solid, big civil 
society groups.
This means changing the attitude towards "democrats." I can't 
get support and technical assistance for the people with whom I work because 
Moscow University is "conservative." If they only knew that Sergei Tumanov 
had been chairman of the trade union of Moscow University! If only 
they knew that Mikhail Guboglo worked closely with Abdulatipov in 
drafting Duma legislation and has tried to 
support Gagauz autonomy from Moldovan "democrats"! But Tumanov and 
Guboglo are democratic to their bones. They are strong supporters of a 
market economy with the social protections and government regulation of 
business of Western Europe. Until their kind of democrats, people with 
connections with serious institutions, come within our definition of 
supporting democracy and legal institutions as well as small groups and 
people, we are wasting our money.


St. Petersburg Times
October 16, 1998 
House of Hope Puts a Cap on Russia's Drinking 
By John Varoli

"I am an alcoholic," said artist Dmitry Shagin, making a deep and heartfelt
admission before a crowd of hundreds at a recent rock benefit concert.
In response, the crowd burst into wild applause.
When the clapping died down, Shagin added, "But I haven't had a sip in five
The audience answered with moans of disappointment.
Despite their enthusiasm for unabated boozing, with the money these concert-
goers paid for their ticket, they were effectively supporting the House of
Hope the Hill - an alcohol rehabilitation center organized and attended by
several of that night's leading names.
The reaction Shagin received is endemic of attitudes toward heavy drinking in
this country - regardless of the fact that Russia is widely considered one of
world's most alcoholic nations. 
"Alcoholism is a national tragedy in Russia," says Dr. Yevgeny Zubkov, an
official who helped found the House of Hope - known in Russian as Dom Nadezhdy
Na Gore - one of Russia's first private alcohol rehab centers.
Evidence to support Zubkov's claim abounds - in scientific reports, official
statistics and casual observations. Since Soviet president Mikhail Gorbachev
began his anti-alcoholism campaign in the 1980s, consumption has jumped 600
percent, according to the Russian National Academy of Sciences. The average
Russian adult now annually consumes the equivalent of 38 liters of pure
Meanwhile, the life expectancy for the average Russian man has been declining
throughout the 1990s, dropping to the current low of 57.4 years, primarily due
to binge drinking. 
According to Zubkov, about 50,000 Russians die each year from alcohol
poisoning and accidents due to drunkenness, giving Russia a per capita rate
six times greater than that of the United States. In addition, about 80
percent of all crimes are committed by people under the influence of alcohol. 
Yet few officials want to admit publicly the true severity of the problem and
take effective measures to tackle it.
"The problem of alcoholism in Russia is more severe than any financial
crisis," said St. Petersburg businessman Valeri Gusev, a House of Hope
sponsor. "The financial crisis will eventually pass, but the problem of
alcoholism will persist, and in the end, we cannot talk of rebuilding Russia
when half the population is often drunk and raising their children under those
Bucking the trend, a number of medical specialists, prominent cultural
personalities, and businessmen have been teaming up to fight the disease.
The House of Hope, which opened in summer 1997 on the initiative of the
American-based International Institute for Alcoholism Education and Training,
has the backing of several leading pop cultural figures - from Yury Shevchuk,
the lead singer of the popular rock group DDT, to Shagin of the famous Mitki
art collective. And most have gone through the Alcoholics Anonymous program in
Though the House of Hope is a separate entity from Alcoholics Anonymous, which
first appeared in Russia in the late 1980s, it fully uses AA's 12-step program
as a guide to recovery.
"Our hope is that slowly the House will become an model of successful anti-
alcohol treatment in Russia," said Shagin, who serves on the House of Hope's
board of directors.
"The goal of the center is to bring humane anti-alcoholic treatment to
Russia," said Zubkov. "Russia's problems are quite specific and have their
roots in spiritual crisis."
Treatment at the House of Hope lasts one month, during which time patients
take their first four steps. The remaining eight are to be taken in the three
months after the patient returns home.
The first step along the path to help is to admit loss of control over one's
life, and the second is to admit that there is a higher power that can help,
said Yakov, a councilor at the House of Hope, who himself has gone through the
treatment. Yakov declined to give his complete name due to an AA tenet that
members preserve their anonymity.
"Our treatment will only help if the patient wants to help himself," he said.
"We do not force anyone."
The House itself - a three-story, solidly built building of red brick - was
purchased for $28,000, funded by private donations. Still, some expensive
renovations are needed.
Construction is underway to build a Russian bath, a chapel and a wing for
women, who are currently not allowed to take part in the program. Right now
the House can accommodate 16 inpatients; 10 are currently living there, though
Yakov hopes the number will grow. 
As much as $120,000 is needed, said Zubkov, in addition to the center's
$70,000-per-year operating budget.
While alcoholic treatment did exist in Soviet times it often consisted only of
imprisonment in the brutal detox centers, widely known as LTPs. The House of
Hope takes a much gentler approach, and one that relies greatly on
"The idea is come to God, clean oneself, and then go out and help others,"
said Shagin. "There are no strict rules that one has to believe, but in the
end many come to understand that it is only possible to overcome one's
alcoholic problem with God's help."
"It is important to have the House," said a Russian singer who went through
the treatment and wished to maintain her anonymity. "It is a place where one
can go when there [seems to be ] no more reason to live and no way out."


10/16/98 No.20 Part 4

(Aleksandr Pushkin's famous tragedy Boris Godunov ends with these few words
[but without the question mark])
By Aleksandr Buzgalin
Aleksandr Buzgalin is a Doctor of Economics and a professor at Moscow State
University. He is a leader of Russia's Democratic Socialist Movement.

The Russian people, who have now been ruled for seven years by a new Boris,
are suffering more than they have for a long time--apart from during the
excesses of serfdom or Stalinism. In seven years of "successful market
reforms" (as the Russian authorities and the Western establishment assessed
the process of transformation in Russia before the crisis of August 1998),
the wealth of two-thirds of the population of the country has decreased by
40-50 percent--probably nobody has the exact figures, because the statistics
do not include hidden incomes on the one hand, and on the other hand
"forget" to include many lumpen millions in the population of the country.
Moreover, one-fifth live below the poverty line, that is, on the brink of
starvation and destitution.

In several depressed regions the majority of the population is close to
collapse. People can only afford electricity, heat and ordinary food
occasionally. NTV television showed a series of chilling reports about
conditions in a number of regions of the far east, the far north and central
Russia. Furthermore, it is not just the nonpayment of pensions and salaries
which is becoming more and more widespread, but also the number of
redundancies. According to statistics announced during the protest marches
on October 7 by the Federation of Independent Trade Unions of Russia,
unemployment in the country is approaching 15 percent.

Moreover, the situation took a dramatic turn for the worse in the immediate
aftermath of August 17, when prices rose by more than 50 percent in one
month, and incomes fell almost proportionately in real terms. If the decline
in the quality of life was once erratic--at certain times the incomes of the
population actually rose, albeit insignificantly: in 1997, for example, the
average salary rose by almost 5 percent in real terms--and the mass
consciousness entertained the expectation that the general situation in the
country would soon improve. If the incomes of at least the top third of the
population--the "middle class"--used to grow steadily ("Can you afford to
treat yourself and your family to a slap-up meal once a week in...
McDonald's? Then you are a member of the middle classes"--this was how
people half-jokingly and half-seriously defined this layer of society until
recently). If the "new Russians" (who make up barely 5 percent of the
population but control 90 percent of the propaganda and determine the
prevailing spiritual climate in the country) were generally happy with the
authorities and the pace of the "reforms"...

...if this is how everything was two months ago, then the August crisis has
changed the situation at nearly every level of society. Most of the
workforce have seen their situation deteriorate dramatically due to the
sharp rise in prices and the absence of index-linked salaries just
mentioned. Nonpayment of pensions and salaries has been exacerbated.
Unemployment has risen noticeably. A new trend is mass redundancies in the
more highly paid banking, insurance and advertising sectors and the general
sharp fall in living standards of the so-called "middle class". This fall
has been most keenly felt by the "shuttle traders" (and they make up nearly
10 percent of those in employment), who have lost the opportunity for
profiteering on Chinese, Polish and Turkish goods because of the sharp
depreciation, of two-and-a-half times, in the value of the ruble in relation
to the dollar.

But the main blow to the top third of Russians has been the loss of their
bank savings. Even the elite of the nouveaux riches--the financial
oligarchs--have suffered from the crisis and are becoming more and more
critical of the authorities. The panic among the population may have
subsided towards the middle of October, but the crisis is at its height.

But if it is all so bad, why is it all so quiet?

At the height of the financial crisis, Prism's correspondent spoke at a
large international symposium in Paris, where almost all the participants,
more than 150 people, expressed sympathetic puzzlement at the contrast
between these figures on the decline in the quality of life and the
insignificance and weakness of the strike and protest movement. One
respectable professor said without hesitation: "We would have a revolution
if the bosses didn't pay our salaries for six months at a time and the
bankers lost all our savings."

But that is France. What about Russia?

Let us look at the facts again. In 1997, the number of protests and strikes
rose significantly from the previous year. In 1996, strikes which lasted for
more than one shift were recorded at 8,278 enterprises. Some 660,000 people
took part in them. In 1997 strikes took place at 17,000 enterprises, with
more than 880,000 people participating. It is probable that this trend will
continue in 1998. Even so, the total number of strikers remains relatively
insignificant considering the scale of the crisis.

The scale of the demonstrations of October 7--when the Federation of
Independent Trade Unions of Russia (FNPR), in conjunction with the Communist
Party and other opposition groups, held an all-Russia day of action--was not
as massive as the opposition had hoped. It is unlikely that we will ever
obtain exact figures, but the authorities put the total number of those who
took part in street demonstrations at between 700,000 and 1 million, the
trade unions and opposition at between 2 and 3 million. In addition, to be
fair, all sides speak of 600-700 towns and centers where demonstrations and
other protest actions took place.

So what is the problem? Why are the overwhelming majority of people so
passive, if not entirely silent?

There are many reasons, and they are all worthy not just of a mention, but
of systematic presentation. However, there are some which are more
significant. Chronologically these could be put like this. 

First, Russia is a country (or perhaps it could even be called a
civilization). where the people have very strong historical traditions, and
one of these traditions is that of state paternalism (put simply, faith in a
"good tsar"), which intensified during the Soviet period and is far from
eliminated now. Communality and collectivism also exist as one of the
traditional social forms, but they apply more to the organization of labor
than to political life.

Second, the years of "reform", accompanied, as just mentioned, by a deep
crisis--not just of the economy but also of authority, institutions and
spiritual values--and the demolition of the very foundations of life, have
given rise to a fear among the masses of any sort of change. Finding a
strategy for survival has become the priority for most Russians.

Third, the development of market principles and competition--particularly
tough competition as a result of the crime wave and the lack of clear rules
and regulations for market activities--has made the slogan from the period
of colonization of the Wild West very popular: "Everyone for himself."
Traditions of collective struggle, in creating powerful trade unions from
below, for example, have not yet been created. They did not appear
immediately in the West either. in the USA, for instance, strong mass trade
unions only appeared after 100-150 years of capitalist development.

In Russia large but ineffective trade unions, with a formal membership of
about 50 percent of those in employment, remain from Soviet times,
amalgamated into the FNPR. Until recently the leaders of this organization
adopted positions of de facto support for the authorities. They only
switched allegiance on October 7 from the current president to a possible
future one--Moscow Mayor Yuri Luzhkov. As for new trade unions formed from
below, these are as yet very few and far between.

Fourth, employees in today's Russia, from workers to professors, have been
forced to spend all their time fighting for the survival of their families,
holding down two or three different jobs, and terrified of redundancy as a
threat not just to their status but to life itself. In these conditions,
people are afraid to take part in protests, or if they are not afraid to,
they are physically unable to in the face of the threat of losing their last
means for survival.

Last, but not least, the citizens of Russia, especially the lower classes,
have lost faith in their ability to change anything, even if their actions
could help bring one of today's political leaders to power, even from the
ranks of the opposition (and in Russia, let us remember, most people's
thoughts and actions are geared towards a charismatic personality rather
than the political structures of civil society).

These are just the most important of the host of reasons for the relative
passivity of the Russian people.

Yet this passivity is indeed only relative. Although the number of
participants in the protest movement remains insignificant, some 1.5 percent
of the total number of people in employment, the substance and inflammatory
nature of their actions is growing. One fact is particularly worthy of
attention. Although the number of people participating in demonstrations,
protest meetings and strikes under the aegis of radical neo-Stalinist
organizations has fallen sharply--in Moscow on October 7 only some 100
pensioners gathered under Anpilov's banner--the general radicalization of
the protests is clear. In almost every town, almost all the October 7
marchers came onto the streets with the most radical slogans heard since
such protests began, the central one being the call for the president's

No less important is the fact that the mood of the workers is closer and
closer to breaking point. The results of most opinion polls show this.
Despite the traditions of long-suffering, the fear of change and the absence
of strong and effective forms of self-organization, the majority of Russian
citizens suffering from the perpetual crisis are beginning to think more and
more that things cannot go on like this. A mood similar to that which led to
the radical shift in August 1991 and brought down Gorbachev is gradually
becoming predominant. Back then people had grown tired of the paralysis of
authority of the CPSU and Gorbachev. Now they are tired of the paralysis of
authority of the "reformers" and Yeltsin.

The question remains: What will happen tomorrow? That is a subject for
further discussion...


Russia beer sales to boom, challenge vodka - report

LONDON, Oct 19 (Reuters) - Beer sales in Russia are expected to grow by 60
percent by 2002 as the dominant market position of vodka comes under threat
from more youthful and trendier beer brands, a new report said on Monday. 
Market analysts Datamonitor ( said beer sales in Russia,
Europe's third largest market, had increased by 13.5 percent a year between
1993 and 1997 with the market's value growing at 19.2 percent. 
In 1993 the value of the beer market was just five percent of the vodka market
but will be over 50 percent by 2002. 
Datamonitor said lager sales increased by 1,127.3 million litres between 1993
and 1997, driven by Russia's transition to a market economy and better access
to imported beers. 
``Another fundamental factor has been the change from the production of cheap,
generic beer to more expensive, branded brews,'' Datamonitor said. 
'`Ales and stouts are now an esssential part of brewers' portfolios as Russian
consumers savour stronger-tasting beers.'' 
Datamonitor's drinks analyst Ben Longman said beer would take an increasing
share of Russian consumers' wallets. 
``That will also mean that beer and cider will take away share from soft
drinks, spirits and wine,'' Longman said. 
Earlier this month, Vladimir Shishin, general director of Russia's Association
of the Beer Industry, said that Russia's 220 breweries produced around 250
million decalitres of beer last year. 
He said total consumption was 18 litres per head of population but believed
the potential market was 60 litres. 


Russia's Duma may vote on impeachment in November

MOSCOW, Oct 17 (Reuters) - Russia's State Duma lower house of parliament may
vote next month on impeaching President Boris Yeltsin, Itar-Tass news agency
reported on Saturday. 
Even if the Duma approves the impeachment motion it has to be backed by the
Federation Council upper house, which is usually loyal to Yeltsin. The Russian
constitution makes it extremely difficult to oust the president. 
Tass quoted the Duma's Communist speaker, Gennady Seleznyov, as saying the
opposition-dominated chamber was likely to concentrate on three charges --
Yeltsin's role in the war in Chechnya, the quelling of a rebellion in 1993 and
the winding up of the Soviet Union in 1991 -- rather than the envisaged five. 
``Seleznyov does not rule out that the vote on the question of impeaching the
president will take place in the lower house of parliament in November,'' Tass
Seleznyov was addressing officers at a military medical academy in St
Petersburg, Russia's second city. 
He reiterated that he felt Yeltsin should stand down voluntarily on health
Yeltsin says he intends to see out his term to 2000. 
The Kremlin said the 67-year-old president, who is recovering from bronchitis,
was spending the weekend at one of his country residences and was scheduled to
meet Prime Minister Yevgeny Primakov on Monday. 
Seleznyov is among a number of politicians to say recently they are prepared
to stand for the presidency. 


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