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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

November 3, 1998    
This Date's Issues: 2457  


Johnson's Russia List
#2457
3 November 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russia PM defends plan to parliamentarians.
2. Marshall Pomer: Primakov Program: Is Hough Right?
3. Moscow Times: Sujata Rao, Cabinet Approves Plan for Economy.
4. Christian Science Monitor: Judith Matloff, In Poorer Russia, 
Risk Rises for Nuclear Sites.

5. Jamestown Foundation Monitor: ARMY'S BUDGET PROBLEMS CONTINUE 
and MORE NEW MISSILES DEPLOYED. 

6. The Times (UK): Anna Blundy, Youth suicides plague Russia.
7. Interfax: Poll Probes Russians' View of Communists in Power.
8. Interfax: Luzhkov: Russia 'Classic' Example of IMF Errors.
9. Baltimore Sun: Kathy Lally, New democracy, old tricks. Deception: 
Russian politicians have quickly mastered the art of strategic
confusion where candidates' names are concerned.

10. Reuters: Russia PM trusts market, says former colleague.
11. Moscow Times editorial: Corruption Outcry Has No Muscle.
(Re Yavlinsky).

12. Interfax: Duma Group Leader Calls for Power Redistribution.]

*******

#1
Russia PM defends plan to parliamentarians
By Patrick Worsnip

MOSCOW, Nov 2 (Reuters) - Prime Minister Yevgeny Primakov defended his
government's economic plan to parliamentary leaders on Monday despite the
chilly reception it has received from foreign creditors and the Russian press.
The plan, which envisages greater state control of the economy, was adopted by
Primakov's cabinet on Saturday. 
A delegation from the International Monetary Fund has already expressed its
disapproval by failing to offer a tranche of $4.3 billion of urgently needed
loans. 
``State intervention in economic life is essential to establish economic
order,'' the premier told leaders of both parliamentary chambers. He described
this as a ``worldwide practice'' of countries in crisis. 
His plan includes tax breaks for industry and some financing from the central
bank through printing more money. 
The Primakov plan, weeks in the making, was designed to address a crisis that
erupted when the last government devalued the rouble and froze debt
repayments. That government was then fired by President Boris Yeltsin, who
brought in Primakov. 
Yegor Stroyev, speaker of Russia's Federation Council, the upper house which
groups powerful regional leaders, said after Monday's meeting his chamber
would probably back the new plan. 
``We hope the economic and political situation in Russia can be stabilised on
the basis of these measures,'' Stroyev said. 
But Grigory Yavlinsky, leader of the liberal Yabloko party, said the plan
would depress gross domestic product (GDP) by 10 percent in 1999 and drive up
inflation and the budget deficit. 
Still not unveiled in its entirety, Primakov's proposals were also ridiculed
on Monday by the liberal newspaper Sevodnya as ``full of dreams and based on
illusions.'' 
The IMF has urged Russia to produce a realistic 1999 budget and a programme
``which could be supported by the international community.'' The draft 1999
budget is due on November 19. 
Russia has $17 billion in foreign debt payments due early next year, and the
government owes its own citizens billions of roubles in back wages, pensions
and other debts. 
Central bank chief Viktor Gerashchenko said on Monday he did not expect the
current 90-day moratorium on the foreign debts of commercial banks to be
extended when it expires on November 18. 
Russian and U.S. Department of Agriculture officials held talks in Moscow on
Monday on food procurement, but gave no details. Russia may need food aid or
special loans to buy food. 
Despite the critical response to his economic plan, Primakov has been given
some credit for stabilising Russia's political environment as President
Yeltsin fades from the limelight. 
Last Friday Yeltsin flew to the temperate Black Sea resort of Sochi to
recuperate from what doctors say is fatigue. He was due to meet Defence
Minister Igor Sergeyev there on Tuesday. 
The Kremlin on Monday angrily rejected charges by Communist Party leader
Gennady Zyuganov that Yeltsin drank too much and was unfit to run the country.
``We can have different political views...but polemics are one thing and
personal insults quite another,'' Yeltsin's press secretary, Dmitry Yakushkin,
said. 
Justice Minister Pavel Krasheninnikov sent a letter to Zyuganov complaining
about his remarks. 
The Kremlin has said Russia's day-to-day affairs are now largely in Primakov's
hands but Yeltsin remains in control of the world's second largest nuclear
arsenal. 
On Monday Yeltsin signed a decree authorising the sale of a fresh tranche of
shares in Gazprom, the world's largest natural gas company, 40 percent owned
by the Russian state. Russia hopes to raise money for the budget from the
sale. 
His spokesman said he would go ahead with meetings planned for this month with
Japanese Prime Minister Keizo Obuchi -- due in Moscow November 10-13 -- and
Chinese President Jiang Zemin. 

*******

#2
Date: Mon, 02 Nov 1998 
From: Marshall Pomer <mpomer@earthlink.net>
Subject: Primakov Program: Is Hough Right?

Dear Professor Hough,

I am only an occasional reader of JRL, and I know that you are a frequent
contributor. So my reactions to your analysis of the Primakov program
perhaps would be different if I had read your previous commentaries.
It is hard to tell what you like and what you don't like about the program.
And I don't see grounds for the "to the right of Gaidar" epithet. 
Your analysis usefully highlights four issues:
1. 30% inflation -- Is this an inappropriate target for 1999? It seems
more or less OK to me. The sudden drastic loss in exchange value for the
ruble necessitates a period of high inflation. Once inflation starts it
can be destructive to try to quell it too fast. More important, tax
receipts are likely to remain low, and thus government must either rely on
the "inflation tax" or forego necessary expenditures.
2. lower taxes and tax collection -- Lower tax rates certainly can help to
improve compliance. Indeed, high rates have contributed to a situation in
which most enterprises stave off insolvency by engaging in barter.
3. price controls and rationing to protect the poor -- I think improving
income distribution by paying arrears and pensions, if necessary printing
money, would be far more cost effective in combating hunger and deprivation
than supporting bureaucracies that would likely retard the workings of the
market. The use of administrative remedies requires competence, integrity
and institutional machinery, all of which are costly and in short supply.
Emergency government action to supplement market supply, however, may be
called for.
4. agricultural reform, structural changes, state regulation and subsidies
-- You fault the Primakov program for not doing more in these areas. You
state, "It balances if the subsidies of unspecified size are actually being
cut and the economy is less regulated than under Yeltsin." Are you opposing
government intervention in industry and agriculture? 
While redistribution is likely to be more effective than price controls or
rationing for purposes of combating poverty, greater government control is
justified in bringing about industrial and agricultural change. Government
needs to participate more actively in financial intermediation so that
savings can be translated into productive real investment. Subsidies,
including subsidized credit for investment, are likely to retard rather
than facilitate restructuring unless strong government controls are
implemented by well-trained professionals.
Most worrisome, the Primakov program may well leave in place an unstable
and parasitic banking system. Apparently, the intent is to gradually, so as
to not create new "market shocks," liquidate weak banks. However, this may
not suffice, especially given the power and influence of the "oligarchs."
It may be necessary for government to license closely supervised "narrow
banks." Such institutions, forbidden to invest in speculative assets or to
have a net negative balance in assets denominated in foreign currency,
would be the only banks to benefit from full government guarantee of all
savings and demand deposits. 
I agree with you that the program as it now stands does not offer a
coherent long-range development strategy that includes serious institution
building. However, this is perhaps excusable at the current juncture.
Deep structural and institutional changes depend on government winning
credibility. Moreover, a huge obstacle to revitalizing industry and
agriculture has already been eliminated, namely an overvalued ruble. It is
appropriate to focus now on stabilization in a monetary and social sense
(1,2,3). 
All in all, the program represents a hopeful beginning. Offering a more
balanced approach to economic reform, it recognizes the roles of market
incentives and market discipline without subscribing to the narrow economic
orthodoxy that has been applied thus far under Yeltsin.

******

#3
Moscow Times
November 3, 1998 
Cabinet Approves Plan for Economy 
By Sujata Rao
Staff Writer

The cash-strapped Russian government finally approved its long-awaited plan to
tackle the economic crisis - but revealed few details, and economists said
Monday that budget numbers still don't add up. 
Faced with a yawning budget deficit estimated at 70 billion rubles ($4.4
billion at Tuesday's official rate) in the fourth quarter, Russia will have to
print money - but no more than 12 billion rubles this year, First Deputy Prime
Minister Yury Maslyukov said. 
Maslyukov said at a news conference Monday that the 12 billion-ruble ceiling
had been fixed upon with the blessing of the International Monetary Fund. 
"Any more would be catastrophic for the economy," he said, adding that the
government was forced to print money, potentially fueling inflation, only as a
last resort. 
Maslyukov did not say what other sources of financing could be used to bridge
the deficit. This appears to indicate that Russia still is hoping to receive a
delayed $4.3 billion installment of a $22.6 billion IMF-led bailout approved
in the summer - even though IMF has declared itself unsatisfied with what the
government told it about its plans last week. 
The government's plan represents a "step backward" in the process of moving
toward free market reform, Interfax reported the IMF mission as saying. The
mission left Moscow last week. 
The plan, approved at a Saturday meeting of the Cabinet and to be formally
unveiled later this week, was kept under wraps. But according to draft
versions leaked to Russian newspapers, the program calls for tighter
government control over the economy, assistance for the largely unreformed
industrial and agricultural sectors and measures forcing exporters to
repatriate 75 percent of their foreign-currency earnings as against 50 percent
at present. 
Other features reportedly included indexing wages and pensions to inflation,
price controls on medicines and lower tax rates. 
It became evident Monday that tax cuts could run deeper than earlier reported.
In an effort to get Russia's largely insolvent industrial sector back on its
feet, the government could slash the present 20 percent value added tax to 10
percent to 15 percent, while the profits tax could be reduced from 35 percent
to 30 percent, Maslyukov said. 
"We must provide advantages for those branches of industry which are taking an
active part" in developing production, Maslyukov said. 
Maslyukov, who has been placed in charge of the economy by Prime Minister
Yevgeny Primakov, admitted the immediate effect of tax cuts would be less
revenue. But he promised to offset this through "more powerful tax
administration." 
Analysts, however, cast doubt on Maslyukov's statement that monetary emission
could be limited to just 12 billion rubles, especially in light of the IMF's
wariness about delivering more cash. With Russia cut off from foreign lenders
due to the debt default, and with chronically poor tax collection crippling
efforts to raise revenue at home, printing money is the only way left to cover
the budget deficit, they said. 
"The 12 billion-ruble figure is like a dream," said Thierry Malleret, chief
economist at Alfa Kapital. The figure will be closer to 70 billion rubles - in
other words, the amount of the deficit, he predicted. 
The only other solution now is to try to stem capital flight from Russia, said
Denis Smyslov, an economist with Global Fund Management. "This will increase
foreign reserves at the Central Bank, which could then loan money to the
government to finance the budget," Smyslov said. 
Forcing exporters to repatriate 75 percent of their hard-currency earnings -
by selling it to the Central Bank or on the domestic currency exchange - is
one of the better aspects of the draft plans, he added. 
It remains unclear where Prime Minister Yevgeny Primakov will get the money to
fulfill his pledge to settle all wage and pension debts to the population by
year-end. The government is believed to owe some 40 billion in wage arrears. 
Some revenue could come from the proposed sale of a 5 percent stake in gas
monopoly Gazprom, though with fuel prices depressed the government may have to
accept a low price for the shares. 
On Saturday, Primakov said at a news conference that the government has
additional potential sources of revenues such as increased control over
alcohol production and forcing companies where it owns shares to pay
dividends. He said the government earns a paltry 900 million rubles in
dividends a year, though it holds stakes in 5,000 companies. 
Primakov struck a defensive note, saying that Russia expects to receive
foreign aid because "it is not through our fault alone that we find ourselves
in our present circumstances." 
The plan was presented to parliamentary leaders who met with Primakov on
Monday. But Gennady Zyuganov - leader of the Communists, the largest single
State Duma group - withheld comment, and liberal Yabloko leader Grigory
Yavlinsky vigorously criticized the plan, saying it would lead to economic
disaster including up to 300 percent inflation. 
Russia has indicated this time that it is prepared to brave IMF disapproval
and institute tighter government control over the economy. But analysts
believe the plan's main drawback is its apparent lack of specifics. 
"I do not believe the IMF has any fundamental or total objections to
increasing capital controls, provided it is done properly," Malleret said. But
widespread corruption will likely impede efforts in this field, he added. 
The IMF has said Russia's priority now should be to draw up a "realistic"
budget, with sweeping expenditure cuts - but such a budget will almost
certainly be rejected by the Communist-dominated Duma, the lower house of
parliament. 
The program's vagueness is all the more striking because it comes almost two
months after the new government took office. Economists say the haphazard plan
is inadequate to deal with the current financial crisis which erupted Aug. 17
when the government defaulted on domestic debt and devalued its currency. 
Since then the ruble has lost about 60 percent of its value against the dollar
and the banking system has collapsed, with depositors and foreign creditors
going unpaid. 
But the banks could soon have to find money to meet foreign debt obligations.
Central Bank chairman Viktor Gerashchenko said Monday that a government-
imposed 90-day moratorium on some foreign debt payments will not be extended
beyond its Nov. 18 expiration. 
The end of the moratorium is expected to be followed by a series of bank
insolvencies as commercial banks are believed to owe billions of dollars they
do not have. 
"If they go through with this it would be surprising but very positive," said
Eric Kraus, an economist with Dresdner Kleinwort Benson. "Most commercial
banks will be unable to pay their foreign obligations and hopefully dead banks
will be bankrupted." 
Katy Daigle contributed to this story. 

******

#4
Christian Science Monitor
NOVEMBER 3, 1998 
[for personal use only]
In Poorer Russia, Risk Rises for Nuclear Sites
Crimes rise for troops at strategic units. Nuclear workers strike.
By Judith Matloff 

MOSCOW 

September was not a good month for Russian nuclear security.
First there were the five soldiers at a nuclear testing facility in Novaya
Zemlya who killed a colleague, seized hostages, and tried to hijack a plane.
The next week a sailor in Murmansk killed seven people aboard a nuclear
submarine and locked himself in the compartment where nuclear weapons are
normally kept. Then a sergeant killed two comrades at a complex that handles
spent nuclear fuel.
Military officials say these are isolated incidents, and this former
superpower still has strict controls over its 30,000 nuclear weapons, silos,
missiles, bases, and submarines.
But analysts worry that as Russia slips further into economic disarray, severe
drops in living standards may create terrible dangers.
With workers and soldiers unpaid for months, the temptation to sell secrets
and materials such as plutonium exists. Stress and low morale can lead to
fights between guards. And lack of money means required repairs may not be
carried out.
"Human beings are human with all their weaknesses," says Vladimir Kosyrev, a
retired general, who paints disturbing scenarios of possible safety slip-ups
or even mutinies.
According to the military general prosecutor's office, crimes committed by
troops of strategic-missile regiments, including nuclear and space units, rose
25 percent last year over the previous year. About 30,000 Defense Ministry
troops guard Russian nuclear sites. This is on top of the estimated 600,000
civilians who work in high-security closed cities or factories.
The head of the military department supervising nuclear sites, Col.-Gen. Igor
Volynkin, told journalists Oct. 9 that he personally rejected 8 out of 30
graduates of military schools whom he deemed unfit to serve in nuclear
facilities. "Russia is capable of maintaining nuclear armaments in ensuring
its nuclear security," he said.

Grounds for concern

But complaints are growing among the military and civilian workers about wage
arrears that in some cases go back 10 months, and a need to grow their own
food or moonlight in other jobs just to survive.
The past few months have seen an unprecedented number of work slowdowns,
strikes, and demonstrations in the sector by civilian workers, who are owed
800 billion rubles ($50 billion) in back wages, according to Union of Atomic
Industry Workers chairman Igor Fomichyev. He warns that insufficient resources
for maintenance repairs increased the risk of a Chernobyl-type accident.
"Certainly there are grounds for anxiety," says Makhmut Gareev, president of
the state-run Academy of Military Science, who also frets over potential leaks
of information or servicemen acting irresponsibly out of desperation. "Russian
officers and soldiers are extremely patient. But there are limits to patience.
A threat of security violations exists," he says.
Andrei Fyodorov, head of the political section at the Council on Foreign and
Defense Policy, a state-linked center based in Moscow, worries about plans to
ease restrictions on 20 closed cities and research sites connected with the
nuclear military-industrial complex.
"You're talking about hundreds of thousands of people who will be difficult to
control when they disappear from these areas. They could appear in other parts
of the world. Also, these cities are now free of organized crime. The mafia
could infiltrate when they open up, and make money stealing equipment or
knowledge."
Alexandre Goltz, military correspondent for the influential news magazine
Itogi, estimates that more than 15,000 tactical nuclear weapons such as bombs,
torpedoes, motors, and surface-to-air missiles are at risk because no proper
inventory exists.
Military officials stress that the incidents at the start of this article were
at nonstrategic facilities and thus security was not at its tightest. They say
there were no torpedoes or nuclear equipment on the submarine, and that Novaya
Zemlya's nuclear field was abandoned some time ago.

US pays for nuclear safety

US officials also publicly tend to downplay the risk, although some privately
admit to concerns about potential disaster. Since 1992, Washington has spent
hundreds of millions of dollars on incentives for the removal of Ukraine's
nuclear arsenals, completed in 1996, and on trying to improve Russia's nuclear
safety.
On Sept. 23, US and Russian officials signed two deals in Vienna aimed at just
that. One offers assistance in switching over personnel in classified nuclear
towns to civilian roles. The second is linked with implementing the 1993
bilateral agreement on the delivery to the US of uranium obtained from
scrapped nuclear weapons and turned from a highly enriched to a depleted
state.
US officials say one thing that would help lessen the risks would be if the
Russian Duma, the lower house of parliament, ratified the START II agreement,
which would limit nuclear warheads in each country to 3,000.
Even if the Duma continues to stonewall, however, Russian officials have
conceded that they cannot sustain their vast nuclear arsenal. Deputy Prime
Minister Yuri Maslyukov said Russia should reduce the number of warheads over
the next decade.
"The state in its present condition does not have the means to maintain the
current quantitative level of several thousand warheads," he told reporters
last month. "The maximum we can hope for is a level of several hundred nuclear
warheads by 2007 to 2010."

*******

#5
Jamestown Foundation Monitor
2 November 1998

ARMY'S BUDGET PROBLEMS CONTINUE. Russia's armed forces remain in a dismal
financial state, according to a raft of figures released over the weekend.
The Russian Defense Ministry press service said on October 30 that, as of
October 27, the armed forces had received only 31 billion rubles out of some
80.4 billion allocated for defense in 1998. The overall debt of the Finance
Ministry to the army, the press office said, now totals approximately 34
billion rubles. Despite recent efforts by the government, wage arrears to
the Defense Ministry's uniformed and civilian personnel total some 9 billion
rubles.

Those numbers are unlikely to improve any time soon. The Defense Ministry's
press service also said on October 30 that the military leadership had sent
a proposal to the government calling for a doubling of pay levels for both
conscript soldiers and officers (Itar-Tass, October 30).

The situation with regard to weapons procurement is apparently no better.
According to the Defense Ministry's armaments chief, Colonel General Anatoly
Sitnov, Russian government debts for the purchase of weaponry and the
financing of military-technical research work now amount to some 18.36
billion rubles (Itar-Tass, October 27).

MORE NEW MISSILES DEPLOYED. Moving quickly to restore confidence in their
newest ICBM following a failed test flight (see the Monitor, October 26),
the Strategic Missile Forces (SMF) have taken delivery of five more RS-12M2
Topol-M missiles. These are to be installed in silos at the SMF base at
Tatishchevo, near Saratov, where two Topol-Ms were put in service on a trial
basis last December. The complex at Tatishchevo once housed eleven regiments
with 110 SS-19 and ten SS-24 missiles. These are the only silo-based SS-24s
deployed in Russia.

Russian officials continue to insist that a complete regiment of ten
Topol-Ms will be in service at Tatishchevo by the end of the year. The
program has certainly received priority financing. It does not seem,
however, that much of this money has made its way down to the Votkinsk
engineering plant in the Udmurt Republic that produces the missile. The
RS-12M2 Topal-M is said to be the only weapon with its own separate line in
the budget. First Deputy Prime Minister Yuri Maslyukov's announcement that
Russia should produce thirty-five to forty of these missiles each year
reportedly brought the leaders of the Defense Ministry to tears, as this
effort would have swallowed up the entire defense budget. Now the stated
goal is to build ten of the new missiles each year. However, with last
month's test failure, a cloud remains over the program. More testing will be
needed, using up more of these expensive weapons (Russian media, October
26-29).

*******

#6
The Times (UK)
3 November 1998
[for personal use only] 
Youth suicides plague Russia
FROM ANNA BLUNDY IN MOSCOW

TWO recent high-profile suicides have this week served to highlight the
problem of young people taking their lives in Russia, where the child suicide
rate has more than doubled since 1985. 
Igor Barsukov, the 25-year-old son of Mikhail Barsukov, former head of the
Federal Intelligence Service, and Liza Kurekhin, 15-year-old daughter of
Sergei Kurekhin, the late rock star, added to the statistics last weekend. 
In Soviet times, suicide was a taboo subject and anyone attempting to kill
themselves was sent to a mental hospital. A disproportionate number of
patients wore straitjackets and all were treated largely by means of powerful
sedatives. 
According to World Health Organisation figures, youth suicide rates in Russia
doubled to 26.2 per 100,000 people in 1994, bringing Russia's overall figure
up to 31 per 100,000 for the past few years. The United States has 12.4
suicides per 100,000 people earch year. 
Igor Barsukov, who died on Friday night, left a familiar suicide note reading
"Father and Mother, forgive me," before shooting himself in the head with a
pistol awarded to him after working with the intelligence services during the
war in Chechnya. He was deeply affected by the horrors of war. 
Liza Kurekhin, depressed since the death of her father two years ago,
swallowed more than 60 pills. 
According to ambulance service statistics, there are between 10,000 and 12,000
suicide attempts in Moscow every year, of which one third are by youngsters. 
Yelena Vrono, of the Research Centre for the Family and Children, says the
problems for young people in Russia are the same as elsewhere. 
"They have emotional conflicts with their peers, or lack of understanding from
their parents," she says. Ms Vrono believes the main reason for the increase
in child suicides is the availability of hard drugs. 

******

#7
Poll Probes Russians' View of Communists in Power 

MOSCOW, Oct 30 (Interfax) -- In a recent poll 39% of Russians said
that if the Communists led by Gennadiy Zyuganov came to full power in
Russia, they would try to resolve the country's problems in keeping with
acting legislation, preserving private property and without blocking
market-oriented changes.
The results of the poll of 1,608 Russians conducted October 23-26 were
reported by the Russian Public Opinion Center on Friday.
Somewhat fewer people - 36% - said that if the Communists come back,
they will try to return the country to pre-perestroyka times and
nationalize banks, prohibit private property and reinstate government
regulation in the economy.The remaining 25% were undecided.
Housewives, officials, managers, experts, women in general, people
under 40 with higher education, residents of small towns and rural areas,
and those who voted for President Yeltsin in the 1996 elections tended to
believe in the restoration of the Soviet system more than the averageRussian.
The opposite opinion was held by office employees, the self- employed,
men, persons aged 40-45 with a secondary education and relatively high
incomes, residents of big cities, and those who voted for Zyuganov.

*******

#8
Luzhkov: Russia 'Classic' Example of IMF Errors 

MOSCOW, Oct 30 (Interfax) -- The situation in Russia is "a classic
result of the incorrect recommendations" on market reforms and economic
management given by the International Monetary Fund to the Russian
government, Moscow Mayor Yuriy Luzhkov said Friday at a meeting with a
visiting delegation of the Parliamentary Assembly of the Council of Europe.
He said there is a number of examples showing "how absurd the IMF
requirements were for countries such as Russia."
For eight years Russia has been receiving assistance "which was not
linked with the necessary conditions," Luzhkov said. Suffering from
objective difficulties in the sphere of industrial production and "severe
blows in the social sphere," Russia has been spending the Fund's money on
food, he said.
While providing financial assistance over this period, the West has
not set out a single specific task for Russia in regard to industrial
development, job creation and so on, Luzhkov said. "Nobody in the West
tried to stop the Russian government's criminal actions to establish
financial pyramids," he said.
A huge number of companies seizing money from the population has
appeared in Russia over the period of reforms, Luzhkov said. "(Former First
Deputy Prime Minister) Anatoliy Chubays, (former Prime Minister) Viktor
Chernomyrdin and (former Central Bank Chairman) Sergey Dubinin have
perfectly learned the ploys used by these morons in building pyramids and
created the T-bill pyramid" offering annual yields of 160-200%, he said.

*******

#9
Baltimore Sun
November 2, 1998
[for personal use only]
New democracy, old tricks
Deception: Russian politicians have quickly mastered the art of strategic
confusion where candidates' names are concerned.
By Kathy Lally 

ST. PETERSBURG, Russia -- This westward-longing city cultivates an image of
being eager to embrace democratic principles, and in remarkably little time it
has grasped one of the most cherished arts of America's political system: the
dirty trick.
Elections are coming up Dec. 6 for St. Petersburg's 50-member city council,
and the 16th District is full of eager candidates circulating petitions to
run. Four of them are named Sergei Andreyev.
Like generations of Baltimore politicians before them, they have discovered
the name's-the-same game.
The 6th District has its own enthusiastic democrats offering themselves up for
public service. Two of them are named Sergei Mironov and one is named Alexei
Mironov. Another district has three Oleg Sergeyevs.
The city council members operate out of a magnificent building reminiscent of
Baltimore's ornate City Hall, only more so. Both buildings have a beautiful
rotunda, but St. Petersburg's was a palace finished in 1844 as a present for
the czar's daughter. Baltimore's imposing edifice went up a little later in
the century, with less opulent means.
In search of the parallels, a call went out Friday from Russia to the
Waterfront Hotel in Baltimore's Fells Point. "Miss Kathy if you don't mind
waiting a minute," a young man's voice said as he disappeared into the urgent
background noise in search of Gene M. Raynor.
Raynor has run elections for years, first as the head of the city's Board of
Elections Supervisors, then as head of state elections and now as head of
William Donald Schaefer's election campaign for state comptroller.
"They're learning fast," Raynor said about the St. Petersburg race.
He thought back to one Baltimore City Council election in 1962, when William
Donald Schaefer filed, and so did Donald William Schaefer. "Of course,
everyone knew William Donald Schaefer as Don," Raynor said. "That was back in
the Pollack days. We had an awful time getting that fella out of the race."
The Pollack days occurred during the reign of one of Baltimore's last
illustrious political bosses, James H. "Jack" Pollack. He's dead now, and so
are the machine politics that he ran as resolutely as any emperor. But the
memories live on.
"They might be new at democracy," laughed state Sen. George W. Della Jr., "but
they're playing some old-time politics."

Cabdriver wins

Della remembers another Pollack-era maneuver. "He filed a guy named Kaplan, I
think. He was a cabdriver, but he had the same name as a well-known candidate.
The cabdriver won! He got elected to the legislature, but when he got down to
Annapolis he didn't like it and he resigned."
Then there was a DiPietro who won a legislative seat because everyone thought
he was Dominic "Mimi" DiPietro, the famous East Baltimore politician.
"We've had lots of them," Raynor said. "The very best thing is to confront
them right away and try to get them out of the race."

Conflict with mayor

The St. Petersburg candidates will have to do a lot of talking. Something
funny is going on in at least five of the races, and the incumbents in those
districts all have one thing in common: They have run afoul of the city's
mayor, who has the title governor here.
"I could have predicted some dirty tricks," said Sergei Mikhailovich Mironov,
the first deputy chairman of the city council, "but I never expected such a
large scale."
The five city council members organized and campaigned for a city charter,
adopted in January, that expanded the powers of the council -- officially
called the Legislative Assembly -- at the expense of the governor, Vladimir A.
Yakovlev.

Strategic attack

"The charter was adopted but the administration of the city was very much
against it," Mironov said. "Only those deputies who were very involved in that
have these doubles in their districts. So we should ask who profits by that."
Mironov stops short of accusing the governor. "It seems the conclusion is
absolutely clear," he said, "but I'm sure the governor himself is not the
initiator. But there is a great deal of opportunity for people surrounding the
governor to produce such initiatives. Maybe they think they will please him.
Or maybe someone is setting the governor up."
Mironov thinks there may be as many as nine candidates in his race, and the
alphabet will put him at No. 8, after Alexei Yuriyevich Mironov and Sergei
Valentinovich Mironov.

Titles count, too

The job title is listed after the name, and the incumbent Mironov's begins
"first deputy to the chairman ." Alexei Mironov is trying to get his job
listed as first deputy to the chairman of the small company where he works.
"This makes the campaign very difficult," the incumbent said. "I have to
explain my program, what I've done and what I hope to do. Then I have to tell
voters, `If you agree with my program, if you are satisfied with my work,
please don't forget, my number is eight and my patronymic is Mikhailovich."
Reached by telephone, the other Sergei Mironov said his program was a secret.
"Now I can say nothing," he said. "Now I am doing nothing."
Another incumbent, Sergei Yu. Andreyev, is running against a plumber named
Sergei Yu. Andreyev and two others with different middle names, one a night
watchman in a garage and another who has a small business.

Counterattack begun

The incumbent Andreyev, who visited Baltimore recently to study city
budgeting, has started to do what Raynor advises. He is running a campaign to
get residents of his districts to retract their signatures from the petitions
of his opponents, hoping to disqualify them from the ballot.
Andreyev said he was honored with three Andreyev opponents because it is well-
known he hopes to run against the governor in two years. He is curious about
the activities of the governor's entourage, especially his image maker. (The
Russian word sounds like eemadge maker, and the man's last name translates as
"Nightmare.")
The governor's office referred a reporter to Alexei Koshmarov (Nightmare) for
comment, but he was not available.

Fortunate one

Another incumbent has the good fortune of an unusual patronymic -- or middle
name. He is Oleg Yelizarovich Sergeyev. Two of his prospective opponents are
Oleg Yevgeniyevich Sergeyev, a retired military officer, and Oleg
Gennadiyevich Sergeyev, who is unemployed.
"They couldn't find a Yelizarovich," Sergeyev said. In another district, he
said, the dirty tricksters couldn't find a Liverovsky to run against the
incumbent, so they chose a Yuri Boldyrev, who has the same name as a greatly
loved city politician. There's another Yuri Boldyrev in another district.
"It smells very bad," Sergeyev said.

Costs of reform

Sergeyev heads the council's health committee. In April, after he led a
successful effort to change regulations covering pharmaceutical sales -- which
he said cut down on corruption -- his skull was cracked as he left his
apartment building by someone swinging a tire iron. He spent four months
recovering from serious injuries.
"I stopped a stream of money going to someone's pocket," he said.
In Baltimore, the campaigning sounds safer, more settled, predictable even.
"Excellent," was the way Raynor described it. "William Donald Schaefer is
going to win big-time."
Then again, he's the only William Donald Schaefer on the ballot.

******

#10
INTERVIEW-Russia PM trusts market, says former colleague
By Peter Henderson

MOSCOW, Nov 2 (Reuters) - Russia's economic team, led by Prime Minister
Yevgeny Primakov, has a fundamental belief in the markets which the West has
missed, a leading banker and former colleague said on Monday. 
Rair Simonyan, president of Russian operations for U.S. investment bank Morgan
Stanley, said he worked with Primakov during the Soviet days at an economic
think tank and that the premier had been a reformer, oriented to the market
economy. 
"They (Primakov and others) played an extraordinarily important role in the
mid to late 80s destroying the old system, and they began to introduce a
market economy based on common sense," Simonyan told Reuters in an interview. 
"The problem is they, including Primakov, know where to go, but not how to get
there," Simonyan said. 
Primakov, who recently said the theory that markets will solve everything is
false, nevertheless believes markets will solve a lot, he added. 
However, he was cautious that Primakov could lead Russia out of economic
crisis, saying the premier had to walk a tightrope between the politics of
compromise and financial necessity. 
Simonyan worked with Primakov on and off for 15 years beginning in the 1970s
at a Russian economic think tank. He is one of the few Russians who knew the
prime minister well during the Soviet era and he is now strongly allied with
the West. 
He said Primakov, who later became a KGB spy, had started as an economist
reformer of the generation that quietly fought the stagnation of the Soviet
Union under leader Leonid Brezhnev. 
Simonyan described Primakov as a loyal and sensible man who quietly rebelled
when the two worked at the Institute of World Economics and International
Relations, the top economic think tank in the Soviet Union, charged with
studying the West. 
In the very cautious spirit of the day, Primakov, who eventually led the
institute, tested the limits of the system. 
"In between the quotations from Lenin and Brezhnev there were real messages to
improve the system, to use market mechanisms," Simonyan said. "Primakov took
big risks." 
Simonyan also gave Primakov credit for current political stability. 
"Primakov is a master of political compromise, and in that respect he is a
success," he said, referring to a September standoff between parliament and
president. 
Then, the Communist-dominated State Duma lower house twice rejected President
Boris Yeltsin's candidate for prime minister, Viktor Chernomyrdin. Primakov
was brought in as a compromise, enjoying the support of both liberals and
leftists. 
But Simonyan said Primakov was too academic and not well enough versed in the
real world of economics, despite years of observation. 
Simonyan gave a cautious forecast of the future, saying his old colleague
possessed good sense and a will to compromise when a fine understanding of
modern markets was needed. 
But social-oriented policies, which Primakov says he supports, could lead to
increased corruption along with higher subsidies. 
"The thesis that could be appealing to Primakov could turn into something of
the opposite sort," Simonyan said. 
He predicted Primakov would eventually be pinned between an unravelling
economy and a weakening political coalition, and that the premier would risk
his own future and change his economic team, coming down in favour of more
market-oriented policies. 
"Sooner or later he will be forced to," Simonyan said. 

******

#11
Moscow Times
November 3, 1998 
EDITORIAL: Corruption Outcry Has No Muscle 

Presidential hopeful Grigory Yavlinsky has finally put some flesh on his
allegations of corruption in the government. He deserves mild praise for
giving the issue of corruption the prominence it deserves. But the specific
allegations he has produced are somewhat underwhelming. 
The most detailed allegation made by Yavlinsky concerns a decision by First
Deputy Prime Minister Yury Maslyukov to provide a license to mobile telephone
company Vimpelcom. The allegation is serious given the company's high profile
- it is the only Russian company with a full listing on the New York Stock
Exchange. But the company has already offered a fairly plausible rebuttal of
allegations that there was anything corrupt about Maslyukov's decision to
provide Vimpelcom with a mobile phone license. 
First, the license was issued before Maslyukov joined the government. Second,
while Maslyukov was involved in rescheduling Vimpelcom's payments for the
license, this was not extraordinary given the chaos of September. Many
companies delayed payments to the state because of the banking and financial
crisis. 
Yavlinsky's other allegations against First Deputy Prime Minister Vadim Gustov
and Deputy Prime Minister Gennady Kulik are interesting but hardly new.
Gustov's close ties to local business in the Leningrad region where he used to
be governor have been widely reported. Kulik's embarrassing record as a senior
minister in 1991 is outrageous but also not news. 
The most extraordinary thing about Yavlinsky's allegations is that they have
provoked such a laughable show of false naivete from Russia's political elite.
What! Corruption in the Russian government. How could Yavlinsky even dare
suggest such a thing? 
In fact, corruption is a huge and enduring problem in the Russian government.
The government may be new but it has its own list of lobbyists to placate. 
Yavlinsky has done well to show the skeletons in the closets of many Cabinet
ministers. But he ignores much more current instances of corruption. 
First, the proprietors of Russia's biggest banks have been allowed over the
past two months to strip systematically all of the assets of their banks and
ship them abroad. Why has the Central Bank delayed so long imposing any
effective control on SBS-Agro and Inkombank? And why are the politicians so
indifferent to the incredible story of the loss of a controlling stake in
Purneftegaz, the last big oil company in state hands. 
Indeed, it is hard to understand why Yavlinsky has chosen to make the
allegations he did. Clearly, he wanted to maximize their political resonance.
It would have been more heroic if he had chosen some harder targets. 

*******

#12
Duma Group Leader Calls for Power Redistribution 

MOSCOW, Oct 30 (Interfax) -- Leader of the Russian Regions group in
the State Duma Oleg Morozov has interpreted a statement made by deputy
presidential administration head Oleg Sysuyev, in an interview with the
Financial Times, as President Yeltsin's intention to begin constitutional
reform in 1999.
The Financial Times publication indicates that Boris Yeltsin could
make public a decision to reduce his powers early next year.
In a later interview with Interfax Friday, Sysuyev said there could be
no talk today of any redistribution or curtailment of presidential powers. 
"Yeltsin fulfils and will fulfil his duties in full until his
constitutional term expires", however, "this does not mean that the
president should check on government actions every day", Sysuyev said. He
explained that since the government was formed with the active
participation of the Duma, it should also be responsible for efficient work
within the government.
Meanwhile, Morozov has told Interfax that he is not happy with the
president's intention to set this mechanism in motion as late as next
February. There is too little time left to draft constitutional amendments
before the next presidential elections. "This work must start immediately,"
Morozov said.
Morozov, who heads the commission which is drafting a political accord
between the branches of authority, said that the Duma could enact this
accord, the first article of which provides for coordinated efforts on the
part of parliament, the Cabinet and the presidential headquarters in
working on constitutional reform.
The Communist Party of Russia parliamentary group refused to sign the
accord at the last moment, even though the president had done so.
If Yeltsin agrees to speed up the drafting of constitutional
amendments and confirms the need for them, this will signify that he admits
the need to remedy "the obvious shortcomings of our state structure, in
particular the infinite powers of the president," Morozov said.
This will also be "the response of a man who is obviously not in good
health," he said. Everybody can see now that Yeltsin "cannot fulfil all
his duties," Morozov said.
Sysuyev's remarks suggest that the president "is bracing himself for
the most painful job - transferring power and deciding what will follow his
departure," he said.

*******


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