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Johnson's Russia List
 

 

October 27, 1998   
This Date's Issues: 2447 2448 


Johnson's Russia List
#2448
27 October 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russian draft plan spells out dangers for economy.
2. Moscow Times: Yulia Latynina, INSIDE RUSSIA: Regions Look To Hamurabi
For Crisis Plan.

3. M. F. Stock: RE RUSSIAN MILITARY HARDWARE.
4. Rossiyskaya Gazeta: Nemtsov Plans Nizhniy-Based 'Government in Exile.' 
5. Komsomolskaya Pravda: Yavlinskiy: Primakov 'Cannot Handle' Economy.
6. Russia Today: Rod Pounsett, Too Broke for Elections.
7. the eXile: Mark Ames, RUSSIA'S PURSE-SNATCHER BARONS. The Semantic 
Smokescreen That Made Suckers Out Of Us All.

8. New York Times: Boris Nemstov and Ian Bremmer, Into a 3-Month
Maelstrom.

9. Reuters: Aides aim to keep Yeltsin going till 2000 - press.]

*******

#1
Russian draft plan spells out dangers for economy

MOSCOW, Oct 27 (Reuters) - Russia's draft anti-crisis plan, as published by
the daily Kommersant on Tuesday, said failure to adopt urgent measures would
lead to a drop in output, social tension, hyperinflation, separatism and
sovereign debt default. 
The draft of the government's priority measures said industrial output in 1999
would fall eight to 10 percent year-on-year without decisive action. 
``This will bring about additional tension both in the financial and social
spheres,'' it said, according to the version printed in Kommersant -- Russia's
main business newspaper. 
It also warned of payments problems, falling incomes and lower tax revenues,
adding this would lead regions to push for greater economic independence. 
If the trend continues, the draft said Russia faced a federal budget crisis in
the fourth quarter, with revenues amounting to only six to seven percent of
gross domestic product, the broadest measure of a country's economic
wellbeing. 
It added that minimum budget requirements, not including debt servicing,
called for revenues of 9-10 percent of GDP. 
Despite a recent sharp drop in imports, the draft said the current account
balance in 1998 would be four or five times less than in 1997, and foreign
borrowing and investment possibilities were much reduced. 
``This is why there remains a threat of a sovereign default -- the inability
of the state to carry out its foreign debt obligations,'' it said. 
The draft set maximum possible money emission at 40-60 billion roubles, beyond
which it said there was a danger of inflation. It added much depended on the
amount of foreign credits available. 
Finance Minister Mikhail Zadornov said last week a maximum 20 billion roubles
would be printed to help cover the fourth quarter budget deficit of 65-75
billion roubles. 
The draft said there was a danger of hyperinflation, although this was being
kept in check at the moment by the recent stability of the rouble and of
energy prices. 

*******

#2
Moscow Times
October 27, 1998 
INSIDE RUSSIA: Regions Look To Hamurabi For Crisis Plan 
By Yulia Latynina
Special to The Moscow Times

Those who say that Russia still does not have an anti-crisis program are
mistaken. There is a program, in the form of dozens of draconian resolutions
implemented not by the federal government but by the regional authorities. 
Measures taken so far can be split into two groups. The first comprises those
that are designed to take control of financial flows. The republic of
Kalmykia, for example, has announced that it will not pay taxes to the federal
budget, and the republic of Sakha has created its own gold reserves. The
republic of Chuvashia has started to set up its own regional clearance system;
the authorities in the Samara region have decided to create a banking pool;
the republic of Buryatia has stopped local branches of Moscow banks
transferring payments beyond its borders. 
The governors' determination in their dealings with the banks contrasts
starkly with the helplessness of the federal authorities, and will probably
bring about the collapse of the existing branch banking system run by the
oligarchs. Filling the gap, there will be a revival of small regional banks
that will channel budget funds, regional money surrogates and preferential
credits destined for the construction of new homes for the governors'
relatives. 
The second group of laws controls the market by regulating prices, as in the
Voronezh and Stavropol regions, and the republics of Sakha, Dagestan,
Chuvashia and Northern Osetia, and by banning the movement of food products
out of the region without the local administration's authorization, as in the
Vologda, Bryansk, Kaluga, Tula, Samara and Omsk regions, and the republics of
Chuvashia, Dagestan, North Ossetia and Udmurtia. 
For those who remember something from their Ancient Oriental history classes,
the laws of Hammurabi, the sixth Amorite ruler of Babylon, illustrate how such
measures operate. 
"If an axe weighs three minas, then its hiring price for one month is one
silver shekel. If the axe weighs one mina then its hiring price for one month
is half a silver shekel," was one law. 
A society built on such economic principles has been variously characterized
through the ages as "barbarity" (Aristotle), "despotism" (Montesquieu), "the
Asian means of production" (Karl Marx) and "a totalitarian irrigational
economy" (Karl Wittfogel). The main difference between this and the market
economy is the absence of the formation of free prices, while the main
difference from the socialist economy is that personal wealth and private
ownership are fully acceptable within its framework, but only as an attribute
of power. 
While banks and free trade are the primary targets of the governors' attacks,
industrial enterprises have hardly been affected. This is partly explained by
the fact the governor of a region does not neccessarily call all the shots.
Key decisions are often made by the main local tax-paying enterprise. As a
rule it is more correct to divide Russia's regions not into "red" and
"democratic" ones, but into those ruled by the governor and those ruled by the
local aluminium plant, metal works or oil company. 
One way or another, the major industrial enterprises are allied with the
governors and have an interest in ensuring that shares belonging to the
federal authorities are transferred to the regional property fund. So it is
safe to say the next offensive by the governors will target federal property. 
Yulia Latynina is a staff writer for Expert magazine. 

********

#3
From: "M. F. Stock" <stock@overta.ru>
Subject: RE: RUSSIAN MILITARY HARDWARE
Date: Tue, 27 Oct 1998

The past couple weeks on Russian TV news (ORT, RTR, HTV), we have seen a 
continuous parade of Russian military hardware. Primarily, these displays are 
in connection with arms sales, and therefore seem to be advertisement for the 
military-industrial complex that is slated for renewed government financial 
support under Maslyukov's economic recovery plan.
But it makes me wonder -- How would this have been read back when the
faces at 
the May Day Parade were carefully studied?
Hark, what news breaks in Moscow Times?
Maslyukov has been given the job of running the 'powerful new state
commission 
to oversee arms exports' and what better way to help Russia's primary exporters 
of high technology than to advertise with newsbites on all the major TV 
stations.
Speaking of Russia's high tech exports, does any of the millions that the US 
via Department of Defense projects to support the Russian Atomic Cities or the 
Biological warfare groups, support these exporters? 

********

#4
Nemtsov Plans Nizhniy-Based 'Government in Exile' 

Rossiyskaya Gazeta
22 October 1998
[translation for personal use only]
Report by Vladimir Noskov, head of Rossiyskaya Gazeta's
Nizhniy Novgorod correspondents' center, under the "All Familiar
Faces" rubric: "Kiriyenko and Nemtsov in Nizhniy Once Again.Why?"

Nizhniy Novgorod -- Yuriy Lebedev, Nizhniy Novgorod's new mayor, had
not yet had time to settle into his new office before guests from Moscow --
Sergey Kiriyenko and Boris Nemtsov -- descended on him.
It turns out that the retired leaders of the Russian Government, who
used not to bestow visits on their fellow countrymen, were the new mayor's
godfathers. It was after receiving their blessing, when they were still
high-ranking officials and could not openly interfere in the election
campaign in Nizhniy Novgorod, that Yuriy Lebedev made a dash to fight for
the mayor's seat. They told the people of Nizhniy Novgorod this at the
inauguration, which Yuriy Lebedev organized on his own account, contrary to
the city's charter.
Of course, local journalists had a lot of questions to put to the
guests from Moscow. In reply, for some reason, Boris Nemtsov endlessly
apologized to the people of Nizhniy Novgorod for the fact that he went away
to work in Moscow, calling that a foolish action. Sergey Kiriyenko
explained the need for the measures which he consciously took 17 August. 
In his opinion, he now has nothing to repent of: The country would have
dived into the economic abyss anyway.
Neither concealed the fact that they have no intention of quitting big
politics. But they have once again decided to make Nizhniy Novgorod their
launch pad. At least, Nemtsov announced here that he is creating the
"Young Russia" political movement, with whose help he plans to get into the
next State Duma.Kiriyenko has no intention of going into the State Duma, and
he
explained that he is preparing some special plan to get Russia out of the
crisis. With whom is he preparing it?
The people of Nizhniy Novgorod are unable to understand something
else. Why did both famous fellow countrymen announce that they are very
keenly interested right now in the problems of Nizhniy Novgorod, which they
once again called the "reform capital"? Why have they decided right now to
actively seek and attract foreign investors and investments to the city? 
The people of Nizhniy Novgorod, astounded by such unexpected attention,
cannot understand what prevented them from doing this when they were
sovereign leaders of the government.
Local analysts believe that by displaying overt liking for Yuriy
Lebedev, Kiriyenko and Nemtsov are, as it were, setting him against
Governor Ivan Sklyarov. Evidently as a token of his gratitude to his
Moscow benefactors, Lebedev hastened to swear allegiance to them. In
particular, he even made an office available to Nemtsov in the city
administration building. The people of Nizhniy Novgorod are now trying to
guess in what capacity the ex-vice premier intends to work there: Will he
bid for the governor's seat, for speaker of the lower chamber of
parliament, or for the country's presidency? Nemtsov calmed the
journalists: "The government in exile will be located here."

*******

#5
Yavlinskiy: Primakov 'Cannot Handle' Economy 

Komsomolskaya Pravda
October 23-30, 1998
[translation for personal use only]
Interview with Yabloko Leader Grigoriy Yavlinskiy by Mikhail
Rybyanov under the "Diagnosis" rubric; place and date not given:
"Yavlinskiy, in Good Health Again, Does Not Believe Government
Will Normalize Economy. In Yabloko Leader's Opinion, Nobody Will
Give Government Money for Country's Treatment"

After recuperation, Yavlinskiy looks even younger than before and
perhaps only an unusual pallor shows that Grigoriy Alekseyevich underwent a
heart operation only last week. Although this procedure can hardly be
called an operation. At any rate, there was no need to cut open the chest. 
A device for widening a constricted vessel was inserted into one of the
Yabloko leader's cardiac arteries with the help of a special probe. This
technology was first invented and tested in the USSR, but it is now
believed that foreign doctors have mastered these methods best of all --
that is why Grigoriy Alekseyevich underwent the entire procedure in a
German clinic. In his first interviews after being taken ill, when asked
about the diagnosis, he himself used the word "infarct" and admitted that
he would now have to seriously alter his daily routine for some time.
While Grigoriy Yavlinskiy was lying in a hospital bed, several
top-level politicians decided that his movement is, by contrast, in very
good health: A series of statements were made about readiness to form
electoral coalitions with Yabloko. The reasons for this enthusiasm are
clear: Yabloko ["apple"] has finally ripened politically, and everybody
would now like to pluck it, or at least bite off a little piece of its
electorate. For example, [Moscow Mayor] Yuriy Luzhkov, who, according to
physicians, occupied the same bed at City Hospital No. 23 with heart
trouble 10 years ago, wished Grigoriy Alekseyevich a speedy recovery. And
stated that he has great respect for Yavlinskiy as a politician and
economist and that he would make an excellent premier -- with a hint that
Luzhkov himself should be elected president alongside that premier. When
one's rival cannot be destroyed by force, one tries to neutralize him by
declarations of love....
Incidentally, as we have learned, the day after Yavlinskiy's
hospitalization, a messenger from the Moscow Health Department visited the
hospital and demanded that the physicians produce the Yabloko leader's
medical history. Perhaps Yuriy Mikhaylovich Luzhkov was taking an interest
in the diagnosis of his future rival in the presidential election?
[Rybyanov] Grigoriy Alekseyevich, aren't you suspicious about
Luzhkov's statements giving a high assessment of Yabloko's role in
contemporary politics? Don't you see some foul play on the part of Yuriy
Mikhaylovich?
[Yavlinskiy] On the contrary, I am very grateful to him for the kind
words about us.
[Rybyanov] Are you ready to hold negotiations on forming coalitions
with any parties or movements?
[Yavlinskiy] We are ready to discuss all sorts of questions with a
wide range of people -- with Luzhkov, and with Lebed, and with Zyuganov. 
But the coalitions that are being offered to us now.... So far, I do not
understand the point of them.
[Rybyanov] Over the month that you did not take part in open
political life, haven't you been disappointed in Primakov's actions?
[Yavlinskiy] He is doing what he became premier for. And he was
appointed premier in order to be Yeltsin's political stand-in. With regard
to the economy -- no, he cannot handle this task. Because he opted for a
totally wrong, Soviet-style method of forming the government: This is a
good person and that is a good person, why not invite them to join the
government? It is a great pity that this is what is happening.
[Rybyanov] Yabloko recently submitted to the government a package of
economic proposals on ways to emerge from the crisis. What is theiressence?
[Yavlinskiy] We believe that the government should now rely on its
own resources and not count on loans.
[Rybyanov] So they won't give us any more money?
[Yavlinskiy] I don't think so. To fool everybody so blatantly-- and
expect more money after that? The financing of the anticrisis program
should, in principle, come from three main areas -- out of the population's
savings, out of the money that has escaped abroad, and out of foreign
loans. This government is incapable of obtaining either the first, or the
second, or the third.
[Rybyanov] But the emergency budget for the fourth quarter has a
100-billion-ruble gap in it. How can it be filled? And if it is not
filled -- what will happen then?
[Yavlinskiy] Then the government will have another economic team. Or
some nongovernmental options will come forth.[Rybyanov] What does that mean?
[Yavlinskiy] If they won't give the government money, who might theygive it
to?
[Rybyanov] Do you have an answer to this question?
[Yavlinskiy] We'll see. Let us return to this topic in a month orsix weeks.

*******

#6
Russia Today
http://www.russiatoday.com
October 26, 1998
Too Broke for Elections
By Rod Pounsett

Why, with so much opposition to his stewardship, is Boris Nikolayevich Yeltsin
being kept in his post when the facts, visible and background, suggest he
should go immediately?
Judging by his recent television appearances, his health is clearly far worse
than his aides would have us believe. The man we saw just did not confirm the
frequent claim that "his health is normal for a man of his age." Even his own
claim that he is now recovered from his bout of bronchitis and is fit to
resume normal duties sounds hollow. I am no medic, but to me the latest
Russian television pictures showed a Yeltsin looking more like a patient
dragged from an intensive care unit than a man fit to run crisis-ridden
Russia. Indeed, the suggestion that he was well enough to proceed with a visit
to Austria this week seemed reckless to the extreme.
But it is not just his health which prompts calls for his exit from the seat
of power. Ordinary Russians think he should go because they are fed up with
the way he has been running the country both in sickness and in health. Many
put all the blame for the current mess in Russia squarely on his now-drooping
shoulders. And even former allies, like Moscow Mayor Yury Luzhkov, have joined
the chorus of "Boris must go!"
So why is everyone still acting as if there will be no presidential election
until it is either forced upon the country because Yeltsin dies, or he comes
to the end of his official term in 2000 with supporters and opponents in the
meantime blinkered to growing public dissent? 
According to my usually reliable sources in the Kremlin, like everything else
these days in Russia, it is about a lack of cash. Few of the presidential
contenders or political parties which back them can now afford an election
campaign. And the country cannot foot the associated ballot bill for printing
election documentation, setting up and staffing polling stations and
processing the votes.
Unfortunately, considering the economic chaos in which Russia finds itself,
this "too hard up for the democratic process" grumble from behind the Kremlin
walls sounds absolutely feasible. I say unfortunately because Russia is in
desperate need of strong new leadership and, therefore, a presidential
election. Whatever good he may have done in the past, including his leadership
out of the Soviet Union stranglehold, Yeltsin no longer shapes up to the job,
either physically or mentally.
He says he is upset by the attacks on his fitness for duty. But I think his
sensitivity
to criticism should take second place to his alleged concern for the country.
Ideally he should now, like many around him have done, recognize he has
outlived whatever use he has been to the nation and step aside to let someone
else take the reins. 
If it really is a matter of cash which is putting off elections, then for the
sake of the country everyone had better put their heads together and agree a
holding strategy. And it has to be a strategy for limiting lame duck (or
should it be "lame bear") Yeltsin's involvement in domestic government or
foreign affairs policy. 
Maybe it is time for a government of national unity, the sort of government
which democracies sometimes choose to take over in times of war. Russia is,
after all, at war -- with its own mismanagement. And until it wins that
battle, perhaps political ideology should be put aside, or at least extreme
differences neutralized, until the country can afford the democratic process. 
Extreme as this seems, there is no doubt of the need for something dramatic to
happen apart from the constant empty promises of decisions on the way from
Prime Minister Yevgeny Primakov.
Maybe if everyone came clean and told the whole truth about the depth of the
cash shortages, the people would accept a short-term delay in going the polls.
Truth, however, seems in short supply in Moscow these days. On one hand we
hear that Primakov has been asking everyone abroad to consider humanitarian
aid for Russia this winter, while on the other there are members of his team
still boasting that Russia can survive without Western charity. 
Despite what his colleagues say, I am sure the West will come up with
assistance this winter. And the next time Mr. Primakov is out with his begging
bowl perhaps he should see if there is any spare cash to fund the democratic
process in Russia. 

*******

#7
From: "Editor-Mark Ames" <exile.editor@matrix.ru>
Subject: eXile
Date: Sun, 25 Oct 1998 
http://www.exile.ru

RUSSIA'S PURSE-SNATCHER BARONS
The Semantic Smokescreen That Made Suckers Out Of Us All
By Mark Ames

"Fortunately, there is good news in Russia that makes this a time of new
opportunity. Despite the outrages and inequities of their robber baron
capitalism, self-help and prosperity are growing in ways our macroeconomic
charts have no way of describing. Moscow and St. Petersburg are boom towns.
Governors and mayors are finding ingenious ways to raise money and provide
services that are no longer coming from the central government."
It may seem strange, but just a few months ago, such Goebbels-like inverses
on the truth were the Party Line. Now In this case, the quote is taken from
a June 17th, 1998 editorial in The New York Times, written by James H.
Billington, the U.S. Librarian of Congress. Reading such cockeypock
today--and it is cockeypock--you get this eerie feeling that these people
were, if not downright sinister, then at the very least, totally psychotic.
In fact, Russia was being controlled not by "robber barons" or "oligarchs,"
but rather by a posse of purse-snatching chumps who were no more qualified
to control Russia's wealth and build the foundations of capitalism than,
say, former Zhirinovsky PR Man and convicted felon Michael Bass. 
Nearly all Westerners doing business in Russia were shocked by the
financial collapse in August. The reason why you didn't know how much
danger your finances and Russia's were in was because, by constantly
referring to the gang of seven that controlled Russia's wealth as an
"oligarchy" or "robber barons," you were sub-consciously comforted by the
thought that they descended from great, if morally ambiguous, historical
names: Mellon, Carnegie, Rockefeller, the contemporaries of Caesar, Sallust
and Plato... If they'd been called "Purse-Snatchers," it's unlikely people
would have been so easily fooled.
The term "robber baron" was first coined by E.L. Godkin in 1867, who wrote
about ruthless railroad magnates for The Nation. America's robber barons
were, arguably, a necessary evil, the Supermen who drove America from its
belated Industrial Revolution into the forefront of world economic
powerhouses. That's why they had the oxymoronic "baron" attached to the
negative "robber." By simple association, any reader would be led to
believe that Russian "robber barons" are similar to America's. 
Here was the hitch. Take the "baron" out of "robber baron" and all you've
got is... a robber. Robber barons monpolize and build. Robbers, however,
just rob. And if a robber was given control over an entire nation, he
wouldn't stop robbing... until... the country went broke. 
As for "oligarchs," the word comes from the Greek word "oglio," meaning
"few," was first used to describe small groups of reactionary Greek
aristocrats who, in the early 5th century BC, conspired to overthrow
Athenian democracy, which they saw as mob rule, the rule of the commoner.
What the original aristocrat-oligarchs objected to most in democracy was
that it empowered the commoner who, they believed, lacked education and
respect for culture and law. 
In Russia, as always, the inverse is true. Here, "oligarchy" doesn't mean
overthrowing the rule of the mob, but rather, it means a few mobsters
ruling over everything--the President, the aristocrats and commoner
alike--showing absolutely no respect for law and having less cultural
sensibility than your average East LA carjacker. 
If calling the Russian mob-bosses "oligarchs" was a whitewash, then calling
them "robber barons" was downright criminal. 
Let's compare. John D. Rockefeller's Standard Oil built 1,012 miles of
trunk oil pipelines between 1880 and 1882 alone. Andrew Carnegie, by
consistently reinvesting profits, turned Carnegie Steel into the world
leader in steel production by 1901. He also donated over $350 million to
charities in his lifetime, including endowments for 2,800 libraries.
Russia's "robber barons" did things like siphon off state budget money
intended for teachers' salaries so they could "buy" massive, resource-rich
companies--which they then stripped and leveraged into oblivion, laying
waste to the population, destroying culture, and bankrupting once-wealthy
companies.
Last month's issue of Sovershenno Sekretno dug the sordid pasts of the
"robber barons" who ruined Russia for decades to come. So let's get a
little more familiare with the assholes who destroyed everything.
Let's start with the slimiest of them all, Alexander Smolensky, who heads
the largest private bank in Russia, SBS-Agro. Smolensky's higher education
consisted of furtively purchasing a diploma from an obscure institute in
the town of Dzhambul. After a stint in the Red Army, he found work in
printing, and worked his way up to the position of foreman for a publisher
affiliiated with the Economic Administration of the USSR's Ministry for the
Construction Materials Industry. Confidential reports from his superiors
characterized Smolensky as "having a tendency towards swindling."
Right they were. In 1981, the future oligarch was sentenced by the
Sokolniki District Court in Moscow to two years in prison for embezzling.
Immediately after getting out of jail, he went to work in another
construction firm, and in 1989, with the help of then-Moscow Mayor Gavriil
Popov, Smolensky founded his Stolichny Savings Bank. How did he travel the
road from jail to mayor-backed banker? If we knew the answer to that, we
could tell you how Michael Bass went from Lompoc prison to briefly acting
as Zhirinovsky's PR man... and we'd be a lot richer for it.
The first few years were pretty dicey financially for Stolichny, and
Smolensky's reputation was tarnished by repeated investigations into
embezzlement charges. The investigations were quashed after Smolensky
extended a loan to the Interior Ministry. In 1993, the Finance Ministry
opened an investigation into the disappearance of $25 million from a
Stolichny account, which had allegedly been transferred to the Vienna
branch of ABN-AMRO. Austrian police joined in the investigation, but it was
mysteriously hushed.
At that time, the Austrian press began to loudly accuse Smolensky, who
lived part-time in Vienna, of being connected to a Russian Mafia kingpin,
one Lenni Makintosh. Smolensky was enjoying the mafia High Life, cruising
Vienna's imperial roads in a Rolls Royce, living in Tony Montana-like
mansions, marking himself as the trailblazer in gangsta-like New Russian
chic. Austrian authorities began a public campaign to prosecute and
possibly deport Smolensky but, after intervention from the heads of the
Russian Foreign Ministry and Interior Ministry, the case was dropped.
In 1995, Stolichny Bank looked like it was going under. Depositors were
pulling out, and Sberbank and Vneshtorgbank cut off credits. Smolensky's
own bodyguards reportedly worried that he was on the verge of getting iced
in his podyezd by up-and-coming bandits. But then--and here, we should
insert a John Williams crescendoing deceptive cadence--the ex-con was saved
in the nick of time by... stand up please, sir!... "young reformer" Anatoly
Chubais. As chairman of Yeltsin's election campaign, Chubais was charged
with creating a friendly oligarchy that would support Yeltsin in exchange
for the country's riches. 
For his support, Smolensky was handed the nation's agro-industrial bank
network, Agroprombank, the second largest in Russia, for next to nothing.
He merged his new baby with tiny Stolichny and formed SBS-Agro.
Coincidentally, eXile readers will recall that Chubais, who oversaw the
auction, was given a $3 million "interest-free loan" from Stolichny right
around the time the Agroprom auction took place.
So, how does this grotesque Horatio Alger tale end? As the Sovershenno
Sekretno section on Smolensky concludes, "Today, SBS-Agro owes $2 billion
to Westerners, and $100 million in Central Bank credits issued to SBS-Agro
after the crisis, money that vanished right away without a trace." Oh yeah,
and don't forget the $200,000 of Independent Media money that disappeared,
along with a couple billion more in domestic deposits. Smolensky, more than
anyone, was responsible for wiping out the fabled "emerging middle class"
in Russia, since he had the second-largest deposit base after Sberbank.
If you think of Smolensky as a Carnegie or a ruthless Athenian
aristocrat--that is, a robber baron or oligarch--then it's hard to imagine
him being responsible for so much brazen destruction. But when you look at
the real Smolensky--no education, ex-con jailed for embezzlement,
relentless schmoozer with Mafia dons and government heads, whizzing around
Central Europe in a Rolls and fighting to keep from getting deported, and
then you imagine that this Smolensky, this ex-con was suddenly, overnight,
promoted into the role of oligarch and Russia's chief banker... well, it's
hard to imagine things turning out any differently than they did. 
Mikhail Khodorkovsky, who, as head of the mega-oil supergiant Yukos, would
be roughly analogous to John D. Rockefeller as per the Western media
"robber baron" spin. Khodorkovsky is reported to have made his first nickel
by... selling oil? Uh, no. Working in related chemicals or the energy
sector? Nuh-uh. H'm... here's a wild guess, but what the hay... He made his
first buck using his connections as a Communist Youth League leader to sell
Russian girls to rich Westerners? 
Bingo!
According to the Sovershenno Sekretno article, a series of lawsuits filed
in New York this year by young Russian models against wealthy suitors who
owed them for "services" leads back to Khodorkovsky and his humble robber
baron beginnings. Back in 1989, the Komsomol leader created a joint-venture
with one Richard Hughes in order to ship Russian models to New York. In the
August issue of New York magazine, Hughes explained that their first client
was the first Miss USSR, 17-year-old Yulia Sukhanovaya, who was eventually
signed to John Casablanca. "Every time we tried to get an exit visa for
Sukhnovaya, we ran up against resistance from the authorities," Hughes was
quoted as saying. 
"In the end, with the help of Khodorkovsky, we got the permission, but he
and I had to personally escort the girl onto the airplane." Hughes claimed
that the lucrative business of selling Russian girls to New York agencies
eventually helped fund their next joint venture, selling computers, which
eventually led to Bank Menatep.
On a darker note, according to a September 7th, 1998 article in The Village
Voice by Jim Ledbetter, "For at least part of this decade, it was illegal
for any U.S. bank to do business with Menatep. A 1995 CIA report identified
Menatep as one of the world's most corrupt banks, with close links to
organized crime."
In 1996, Bank Menatep bought a 10-percent stake in Independent Media, the
publisher of The Moscow Times and St. Petersburg Times. 
It sounds too wickedly funny to be true: A media company putting all of its
funds in a bank run by an ex-con, and losing it all; and selling an
interest to another bank capitalized by babe-trafficking, a bank that the
CIA considered to be one of the most dangerous, corrupt banks in the world.
For some reason, the Times had, until losing all that money in their
SBS-Agro account, taken their anger out on uber-villain oligarch Boris
Berezovsky, who had been the media's favorite whipping boy until this year.
Berezovsky, however, has always been closest Khodorkovsky, as witnessed by
the attempted merger of Berezovsky's Sibneft with Khodorkovsky's Yukos. 
Berezovsky was just beginning to make headway into remonting his image from
bloodthirsty godfather to ruthless "robber baron." As recently as September
7, 1998, The New York Times called Berezovsky "a capitalist in the
bloodless image of Commodore Vanderbilt." You read that right: Berezovsky,
for years known as the blood-stained godfather, somehow got the Times to
tell its readers that he's actually a blue-blooded aristocrat.
Ledbetter explained it this way: "One reason why Berezovsky gets such
favorable treatment in the U.S. press is that [he] employs an American
firm, Edelman Associates, to handle his public relations (the account is
managed by, of all people, former Reagan aide Michael Deaver)."
If I were Deaver, I'd want people to believe that my sweaty, car-dealing
Jewish client was in fact a genteel Christian aristocrat. Waytago, Mike! 
Berezovsky gained power by clawing to the top of the most dangerous,
mafia-infested business of all--Soviet automobile distribution. Later, in
exchange for supporting Yeltsin, he was given Aeroflot, ORT, and Sibneft,
and you can bet those companies have experienced boom times and massive
capital investment ever since. Actually, an article in MK by Leonid
Krutakov detailed how nearly all of Aeroflot's foreign earnings were
siphoned off into Berezovsky's personal Swiss bank account.
Sovershenno Sekretno's expose on Berezovsky is frankly too dangerous for us
to quote, but let's just say it links him to a very notorious, elitny pimp
who uses his posse to collect kompromat, and is linked to murders as far
away as Paris. Because Boris Abramovich was, and we quote,"v beshenstve"
when another Moscow newspaper wrote about this link, we thought we'd give
our already paranoid psyches a break by passing on this one. But it's
enough to know this: if you're going to compare Berezovsky to railroad
robber baron Vanderbilt, then you may as well refer to Vladimir Zhirinovsky
as "a democrat in the charismatic image of John F. Kennedy."
If there were two men who epitomized the wild capitalism of their time,
then John D. Rockefeller would have to be the American robber baron mascot,
while Uneximbank founder and nickel magnate Vladimir Potanin would
represent the "robber baron"-in-quotes of the Russian '90s. 
The link between the two men goes even further. It has to do with a shower.
Barbara Sears Rockefeller put her family's $12 million Manhattan townhouse
up for sale this past April. Her realtor, Wolf Jabukowski, reported that
"numerous Russian buyers" were interested. The home featured a
"nickel-plated shower," built in 1921, which Rockefeller called the
"Robber-Baron Shower." Nickel. Robber-Baron. Russians. Just a coincidence? 
Actually, just a stupid joke, unless you're one of several Western
journalists who, without even getting paid for it, wrote straight PR fluff
pieces on Potanin-the-good-robber-baron. The list of Western journo
suspects includes Business Week's Patricia Kranz, The LA Times's Carol J.
"Ironhead" Williams, and, in a notorious incident earlier this year, Fred
Hiatt of The Washington Post. 
Hiatt referred fawningly to Potanin as a "baby billionaire" who came to
America in early March of this year "seeking to show that not all 'robber
barons,' as they are commonly known in America, are the same."
Yeah... and Boris Fyodorov might fly out of our butts.
It's common knowledge that Norilsk's privatization auction was completely
rigged. Well, okay, fine. But that's what robber barons do, those clever,
sinister geniuses. So Potanin's scheme to rig the Norilsk privatization
must have been a pretty clever operation, right? 
Here's how it worked. In order for an auction to be valid, there must be at
least one competing bid. Since the baby billionaire was charged by Anatoly
Chubais to oversee the Norilsk auction, he was empowered to disqualify
everyone else's valid bids, no matter how much higher than his own. Needing
one competitor, the baby billionaire allowed only OOO Reola, to bid.
Reola's "bidÓ came in at $170 million, or $1 million below Unexim's. The
baby billionaire was the winner! 
Here's the really funny part. The legal founder of Reola turned out to be a
fella named Rashid Ismatulin from Alabushevo, a miserable little village
outside of Moscow.
When Sovershenno Sekretno went to Alabushevo to find the mysterious
would-be Nickel magnate, he wasn't home.
"He's probably out drinking somewhere," his embittered old mother told the
reporters. The baby billionaire's rival for Norilsk was such a destitute
zero that he had recently sold his passport to a thief, Evgeny Merkulov,
for 50 rubles, just to score another bottle of vodka. Merkulov has spent a
total of 11 years in jail for theft and robbery, and had been snatching up
passports as part of his new gig.
Today, Norilsk's market capitalization is worth barely a fraction of its
true value. It has struck foreigners as a classic strip-the-assets,
hide-the-profits, and screw-the-shareholders company. Also, the auction was
so shabbily rigged that many analysts think it is a likely candidate for
renationalization.
So there you have it, a sordid portrait of the lowlifes who stripped and
bankrupted the nation, all with the help of a little PR work from your
friends in the journalism world, who, by dignifying common mobsters with
words like "robber barons" and "oligarchs," made a lot of people feel a lot
more comfortable than they should have. These guys weren't interested in
building anything. Like all purse-snatchers, they wanted to strip, rip and
split while the gittin was good. And boy was it good. That such a
ridiculous collection of balding goons like these--at times comical, at
times scary--should have left their nation bankrupt three years after
having been handed its wealth on a silver platter is no surprise at all. In
fact, after reading stories like these, the banking collapse is no longer
shocking, just depressing. 

*******

#8
New York Times
October 27, 1998
[for personal use only]
Into a 3-Month Maelstrom
By BORIS NEMTSOV and IAN BREMMER
Boris Nemtsov was First Deputy Prime Minister of the Russian Federation from
March 1997 to August 1998. Ian Bremmer is president of Eurasia Group and a
senior fellow at the World Policy Institute. 

During the last few months in Russia, no one could be blamed for asking,
"Can this nation be saved?" 
In July, the International Monetary Fund sent Russia $4.8 billion to prop
up the wildly overvalued ruble. The I.M.F. and the Russian Central Bank did
everything possible to prevent devaluation, fearing that it would inhibit
foreign investment. In August, the central bank was spending nearly $500
million a day to do so. 
When the money ran out in mid-month, Government accounts were frozen, the
ruble was sent into free fall and Parliament readied for battle with Boris
Yeltsin's Government. President Yeltsin's lack of leadership left Russia
without the resolve to manage its economy, and a rapidly changing cast of
Government characters left a general sense of confusion. 
Recent appointments give little reason for hope. Replacing those who left
office in August -- including the co-author of this article -- Prime
Minister Yevgeny Primakov's new economic team is a hodgepodge of retrograde
central planners from the days of Mikhail Gorbachev's perestroika. 
Amid talk of imposing price and capital controls, restricting the ability
to convert rubles and restoring st ate management of the private sector,
their solution to the crisis is to print new rubles and pay the back wages
and other bills the Government owes. 
This strategy will add to the already formidable disincentives for
Western investment. Most troubling of all are recent proposals to halt the
open market for currency by establishing one official rate for the ruble.
This would inevitably lead to a black market rate. Internal estimates have
inflation reaching 20 to 25 percent a month and the actual value of the
ruble falling to 30 to 35 to the dollar (down from about 16.5 now) by the
end of 1998. 
Although printing money will keep people from feeling impoverished,
within three months inflation will be intolerably high, real income will
decrease substantially, and social tension will surely follow. Parliament,
which overwhelmingly supported the Primakov team, will find it increasingly
impossible to continue doing so. 
There are three possible scenarios for what will follow. Yeltsin, whose
health is fragile, could resign. We don't see this happening, given his
temperament. (Impeachment, despite current speculation, is a legal
impossibility.) The second possibility is that Primakov could be sacked.
Parliament would surely throw its support behind the hard-line Mayor of
Moscow, Yuri Luzhkov, and the Communist leader Gennady Zyuganov. The third
scenario is that President Yeltsin will stay with Primakov and bring in a
new team. 
Who will ultimately come out politically stronger from the current
crisis? Not the oligarchs, at least not immediately. Because of the ruble's
collapse, many of the richest Russians are in deep trouble. The casualties
include some top bankers -- Vladimir Gusinsky (MOST Group), Aleksandr
Smolensky (SBS-Agro) and Vladimir Potanin (Uneximbank). 
Even Boris Berezovsky, the most powerful oligarch, has lost stature as
the Duma has reasserted state control over "his" television network. The
oligarchs will no doubt rise again, but their current weakness is one of the
few positive outcomes of the turmoil. 
One beneficiary of the crisis is Aleksandr Lebed. The former general has
earned legitimacy through a successful term as Governor of Krasnoyarsk. And
he is coy about what policies he will pursue, a clever strategy in today's
climate. 
Luzhkov and Zyuganov have been bolstered by their recent cooperation.
Neither is well disposed to the integrationist free market vision of the
West or the political reforms undertaken by President Yeltsin. Both would
nationalize industry for political, not economic, purposes. They do not
advocate a return to Communism, but their alternative could be just as
damaging: persistent corruption, a crackdown on the press, a dictatorship of
bureaucracy. 
Finally, Primakov himself stands to benefit. A man without a party
affiliation or presidential ambition who maintains good relations with
Madeleine Albright and Saddam Hussein, he understands the importance of
pragmatism. After his ministers fail to resolve the crisis, he could disavow
them and bring in a team that is more pro-free market. Privately, Yeltsin
has intimated such a "one step back, two steps forward" approach in recent
days. 
Primakov could work with the healthy stable of reformers who remain in
Russia. In addition to those known at the national level, there are more
than 100 mayors in the provinces under the age of 35. 
The biggest problem among the liberal opposition is fragmentation. All
believe themselves uniquely loved by the Russian people, uniquely qualified
to lead Russia out of its present crisis. But divided, they cannot attract
enough electoral support. If they unite in a single political bloc, a more
balanced and stable power structure would result. 
There are reasons to be optimistic about Russia. However critical we may
be of an increasingly absentee Yeltsin, basic freedoms remain intact --
opposition parties function, the press is unfettered, human rights are
guaranteed. And for all of the country's woes, there are enough
reform-minded leaders to help pull Russia through its crisis. 
Russians need time to reflect. As the effects of the new economic
policies come home, they will want low inflation, stable prices, goods in
the stores and no lines. For the past decade, Russia, like Poland and
Bulgaria, has followed a zigzag road to democracy. This is a zig. 

*******

#9
Aides aim to keep Yeltsin going till 2000 - press

MOSCOW, Oct 27 (Reuters) - Boris Yeltsin's aides are trying to keep the ailing
president in office until his term ends by making him stay at home with Prime
Minister Yevgeny Primakov as effective vice-president, Russian newspapers said
on Tuesday. 
The day after Yeltsin's doctors ordered him to cancel a one-day trip to Vienna
for summit talks with the European Union, commentators suggested the main aim
of his Kremlin handlers was to keep Yeltsin going until he is due to step down
in 2000. 
Primakov, appointed last month amid financial crisis, flew to Vienna on
Tuesday in Yeltsin's place after doctors said the president was suffering from
an ``asthenic'' or weak condition marked by fatigue and irregular blood
pressure. 
The newspaper Sevodnya said the Kremlin wanted no repeat of the public
relations fiasco two weeks ago when Yeltsin staggered and nearly fell in
public during a trip to Central Asia. Officials said then that he was
suffering from a cold and cough. 
``Neither the numerous presidential contenders nor, even more, the Kremlin
itself are ready for early elections,'' commentator Georgy Bovt wrote in
Sevodnya's leading article. 
``A tacit pact has apparently been reached among the political elite to
preserve, as far as possible, the status quo until the year 2000: Primakov as
premier and vice-president, with the president at Gorky-9 (a residence near
Moscow).'' 
Kommersant newspaper took a similar line. ``The main task of the Kremlin now
is to show that a Yeltsin who follows his doctors can carry on until 2000 is
better than a Yeltsin who stubbornly attempts to show that he has been written
off too soon,'' it said. 
Several newspapers said a senior Kremlin official had told Russian media
chiefs recently at a closed briefing that Yeltsin would not travel abroad at
all until 2000. 
Demonstrating the seriousness with which the Russian press viewed Yeltsin's
new health setback -- the latest in a long series -- the daily Nezavisimaya
Gazeta portrayed him as incapable of travel. 
``When it became clear that they could not put Yeltsin in front of the TV
cameras, and even putting him on a plane for two hours was dangerous, they
replaced him with the prime minister,'' it said. 
Despite attempts by Kremlin officials to play down Yeltsin's problems, the
newspaper Izvestia suggested they were no longer portraying him as a basically
healthy man but as a ``difficult and recalcitrant patient'' prone to defying
doctors' orders. 
``The political crisis ... has become not so much the result of the
'incapacity' of the president, but a direct consequence of the fact that the
president's entourage no longer contains competent people ready to defend him
rather than their own interests,'' commentator Yelena Tregubova wrote. 

*******

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