November 10, 1998    
This Date's Issues: 2468 •2469• 

Johnson's Russia List
#2469
10 November 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russian deputies cautiously back crisis plan.
2. Bloomberg: Russia's Maslyukov Urges Parliament to Ratify START II 
Treaty.
3. The Times (UK): Michael Binyon and Charles Bremner, Russian food crisis 
threat to the West.
4. Fred Weir on debate over anti-Semitism.
5. AFP: Russians Face Arctic Winter with No Heating.
6. AP: Schools Shut Down in Russia.
7. Washington Post editorial: Moscow Poisons.
8. Moscow Times: Kirill Koriukin, U.S. Trusts Russia's Aid Distribution.
9. The Independent: Helen Womack, The party's over, but not for Tamara.
10. Grzegorz W. Kolodko: The Kolodko Seven-Point Plan for Russia.
11. Reuters: Elizabeth Piper, Desperate Russians take a mystical chance.
12. AFP: Brezhnev's Grandson Sets Sights on Kremlin.
13. New York Times letter: Carol Saivetz, Caspian Oil Pipeline.]

*******

#1
Russian deputies cautiously back crisis plan
By Andrei Khalip

MOSCOW, Nov 10 (Reuters) - The Russian government presented its economic plans
to tackle an acute economic crisis to parliament on Tuesday, surprisingly
winning at least partial endorsement by both Communists and centrists. 
The cabinet of Prime Minister Yevgeny Primakov, which is nearing its 100th day
in the office, is seeking rapid passage of its anti-crisis programme, which
includes the 1999 budget. 
Communists, the leading force in the State Duma lower house, like the plan's
vague outline of a greater state role in the economy and calls for a
``socially-oriented'' market economy. These points, as well as a proposal to
print money to cover budget needs, have already alienated foreign creditors. 
The plan, which has not been made public, aims to pull Russia out of a crisis
that erupted in August when the previous government devalued the rouble and
froze debt repayments. 
Communist Party leader Gennady Zyuganov, whose support for the plan is hardly
likely to endear it to the International Monetary Fund -- which is holding
back on further credits to Russia -- said he would not mind ``a tough 1999
budget.'' 
Zyuganov said before Tuesday's hearing that the anti-crisis plan was ``a step
forward towards the real economy and the social protection of citizens.'' He
praised the government's desire to help domestic producers and the defence
industry. 
Meanwhile, the parliamentary leader of the centrist Our Home is Russia group,
Alexander Shokhin, lauded the government's ``diplomatic manoeuvring,'' which
he said allowed it to present liberal approaches and some tough monetarist
proposals despite generally conservative guidelines. 
``Now there are some warm words coming from the left corner about the
government turning towards the producer. But if you listen to (First Deputy
Prime Minister Yuri) Maslyukov attentively, you can find liberal approaches,''
said Shokhin. 
``For example, one of the draft budget versions assumes a two-percent deficit,
which makes it a super-tough budget.'' 
For now, the anti-crisis plan is a series of scenarios ranging from worst-case
to optimistic. Shokhin said the cabinet was most likely to go for tough
economic decisions, as the prospects of getting foreign credits or debt
reschdeduling were unclear. 
Shokhin said such steps were likely to dent relations between the government
and the Duma, which have been relatively good since Praimakov took over. 
Primakov is a compromise figure approved by the chamber after President Boris
Yeltsin -- who has been recovering for the last several weeks from another
bout of ill health -- was forced to drop his first choice to end a political
stalemate. 
Despite Tuesday's positive note, concrete economic proposals have so far
failed to materialise. 
In another development on Tuesday, most deputies remained opposed to
Malsyukov's calls to ratify the START-2 arms deal with the United States and
intensify efforts to close a further deal, START-3, in a bid to improve
Moscow's case for Western help. 

*******

#2
Russia's Maslyukov Urges Parliament to Ratify START II Treaty

Moscow, Nov. 10 (Bloomberg) -- Russian First Deputy Prime Minister Yuri
Maslyukov urged the lower house of the country's parliament to ratify the
START II treaty on reducing nuclear arms. 
Maslyukov spoke to the lower house, or Duma, at a closed session today,
presenting the government's anti-crisis program. 
``It's essential to resolve several questions, raising Russia's authority in
international circles,'' said Nikolai Kharitonov, leader of the Agrarian
faction in the Duma. ``Maslyukov urged us to ratify START II by Nov. 17 to
help boost confidence to Russia.'' 
Prime Minister Yevgeny Primakov is scheduled to meet U.S. President Bill
Clinton on Nov. 17. Russia's economic crisis will likely dominate the agenda
of the talks, though nuclear-arms proliferation and global security issues
still remain high on the list of topics for discussion. 

*******

#3 
The Times (UK)
November 10 1998
[for personal use only]
Russian food crisis threat to the West
BY MICHAEL BINYON AND CHARLES BREMNER

RUSSIA is on the brink of severe food shortages that could pose a security
threat to the West, intelligence sources have concluded. 
The fears confirm Moscow's predictions that supplies could run out in
weeks. Yesterday the European Commission proposed an emergency package of
food aid worth £285 million to stave off starvation. 
Robin Cook, the Foreign Secretary, has said that "any sane person must
regard the situation in Russia as serious - as it is for the Europeans as
well". He said that all intelligence reports agreed that food supplies would
run out; the only argument was whether this would be in a few weeks' time or
in the spring. 
Western intelligence services, especially the Central Intelligence Agency
in Washington, spend much time and energy looking at satellite data from
Russia to determine food supplies, which are seen as a crucial factor in the
stability of the Moscow Government. Observations have already detected one
of the worst grain and potato harvests for years. Supplies can be estimated
by loadings on lorries and trains. 
The worry in Western capitals is that severe food shortages could lead to
demonstrations and rioting that might topple the Government. This could lead
to unpredictable political consequences as well as the possible flight of
thousands of refugees to the West. 
Soldiers, who are already badly paid and underfed to the extent that some
conscripts have starved to death, could be among those worst affected,
especially in Siberia. Aleksandr Lebed, the former general and Governor of
the Krasnoyarsk region, recently gave a warning of military mutiny unless
food and wages were guaranteed. Neighbouring provinces are reported to be in
an even worse state. 
Moscow has privately begged Western governments for help, but no formal
proposal has yet been made to Brussels. Both sides agree that emergency aid
would be limited and should not become institutionalised. EU officials have
said that if aid found its way into the wrong hands, it could end up back on
world markets, helping no one. Russians must promise not to re-export the food. 
The proposed aid would include a million tonnes of wheat, half a million
tonnes of rye, 100,000 tonnes of pigmeat, 150,000 tonnes of beef and 50,000
tonnes each of milk powder and rice. Mr Cook said. "We want to assist Russia
through this winter. But the country has more than enough capacity to feed
its own people in the long term." 

******

#4
From: fweir@rex.iasnet.ru
Date: Tue, 10 Nov 1998 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT Nov 10) -- Several Russian politicians have
called for banning the Communist Party -- the country's largest
political formation -- after it failed to publicly condemn one of
its members for anti-Semitic remarks.
"The Communists should be banned as the carrier of an idea
that could break Russia apart," financier Boris Berezovsky told a
TV interviewer at the weekend. Mr. Berezovsky is a former deputy
chairman of the Kremlin Security Council and current secretary of
the Commonwealth of Independent States.
"They are turning into nationalists and for the first time
they have declared this absolutely openly. . . The Communists
have placed themselves outside the laws of the civilized world
and outside the laws of Russia," he said.
Mr. Berezovsky's demands were echoed by a number of leading
politicians. Former Prime Minister Yegor Gaidar accused the
Communists of turning into Nazis and said "if Russia wants to
remain a democratic country it should ban the Communist Party."
The controversy erupted last week when the vast majority of
Communist parliamentarians refused to support a resolution of
criticism against General Albert Makashov, a Communist deputy who
referred to Jews in public speeches using an ethnic slur, blamed
them for causing Russia's economic crisis and suggested they
should be rounded up and jailed.
The motion of censure in the Duma, Russia's lower house of
parliament, was sponsored by film-maker Stanislav Govorukhin, a
left-wing parliamentarian who warned that Gen. Makashov's
inflamed rhetoric was a threat to Russian national unity and a
disgrace to the Communist Party.
But the measure failed when only a handful of Communists,
who hold nearly half the Duma's seats, voted for it. Communist
Party leader Gennady Zyuganov said the resolution was unnecessary
because Gen. Makashov had already been reprimanded inside the
Party.
"We have a pluralism of opinions, and people can say what
they want," says Yuri Ivanov, a Communist Duma deputy. "Makashov
has been criticized by his comrades, and that's enough."
But at a Moscow rally marking the 81st anniversary of the
Bolshevik Revolution last Saturday, Gen. Makashov repeated his
attacks on the Jews, and Communist Party leaders also present
made no move to curb him.
"The Communists have a serious internal problem," says
Nikolai Petrov, an analyst with the Carnegie Endowment in Moscow.
"Zyuganov does not want a split, and so he's had to make
allowances for Makashov".
Mr. Zyuganov slammed Mr. Berezovsky's call to ban the
Communist Party as "an expression of utter extremism" and warned
that all such appeals are contrary to Russia's Constitutional
law.
The Communist Party was banned after the collapse of the
USSR in 1991, but revived when Russia's Constitutional Court
upheld its legality. But it has never declared a clear post-
Soviet ideology, and Mr. Zyuganov tends to appear in the guise of
nationalist, social democrat or Stalinist depending on his
audience of the moment.
It remains Russia's largest political party, and Mr.
Zyuganov routinely leads the pack of possible presidential
candidates in opinion polls. But the same polls show the
Communists not only the most popular, but also the most unpopular
party in the country -- a paradox that led to Mr. Zyuganov's
defeat in 1996 presidential elections and would likely do so
again.
"This controversy reveals the basic problem the Communists
have," says Mr. Petrov. "The Party's internal disunity and lack
of ideological cohesion makes it impossible for Zyuganov to
create an electable image for himself. The Party's enemies find
it easy to exploit situations like this controversy over
Makashov."

******

#5
Russians Face Arctic Winter with No Heating 

MOSCOW, Nov. 10, 1998 -- (Agence France Presse) Thousands of Russians in the
Far North, facing the bitter cold of the Arctic winter with no heating and
little food, have appealed to Moscow and the United Nations to send urgent
help. 
Russian media have described in grim detail the plight of people in the
Kamchatka and Chukotka peninsulas where electricity is cut off for hours at a
time due to lack of fuel and where food supplies are running low. 
The authorities in Chukotka asked the federal authorities last week to
organize the evacuation of 4,500 people from Shmidto region where there is no
more fuel, NTV television reported. It said local people were "in danger of
dying" because of the difficulties in shipping supplies through the Bering
Sea. 
Prime Minister Yevgeny Primakov recently sent Emergencies Minister Sergei
Shoigu to Kamchatka and on Monday was due to leave personally for a tour of
the Far North where he will assess the population's needs in fuel and food for
the winter, Deputy Prime Minister Vladimir Bulgak said. 
The prime minister said the situation in the Far North was "extremely
critical," adding that the former government should have tackled the problem
of winter supplies to the area, back in July or August. 
According to the army daily Krasnaya Zvezda, several inhabitants of the
Kamchatka peninsula died last week and many more were injured in domestic
accidents caused by repeated electricity cuts lasting three to five hours each
day. 
"A girl of 13 was killed when a pocket lamp she was holding in her mouth while
doing her homework in the dark, exploded," Izvestiya newspaper said. 
The paper said that in some cases electricity was cut off "for 20 hours a day
and it may just as likely come back on at 8:00 p.m. as at 03:00 a.m. or 10:00
a.m." 
"Those who are lucky, jump out of bed or stop what they are doing immediately
to get washed, prepare meals or wash clothes as quickly as possible...The rest
of the time, people live by candlelight, at a cost of 12 rubles a candle,"
Izvestiya said. 
The paper said that in schools, children were forced to keep their outdoor
clothes on and that lessons which normally last 45 minutes had been reduced to
20 minutes. Photographs showed children at a kindergarten lying in beds under
blankets in order to keep warm. 
After receiving little response from Moscow, the regional assembly of
Kamchatka wrote directly to the United Nations on Oct. 30 to appeal for urgent
humanitarian aid in the form of 120,000 tonnes of fuel oil and 30,000 tonnes
of diesel oil. 
"Social unrest has reached a peak. People are sending telegrams to the United
Nations, to Japan and to (U.S.) President (Bill) Clinton" Shoigu said. 
Krasnaya Zvezda said Kamchatka had been unable to buy fuel oil because the
federal authorities themselves had failed to settle debts owed to the region. 
It said the Defense Ministry owed 300 million rubles ($20 million) to
Kamchatka, the border guards 46 million rubles ($3 million), and the Interior
Ministry 16 million rubles (about $1 million). 
On Oct. 21, the governor of Kamchatka, Vladimir Biryukov appealed to the
Defense Ministry for help but the Pacific Fleet merely provided 3,000 tonnes
of fuel oil. 
An oil tanker left Murmansk on Saturday with 12,000 tonnes of heating oil to
supply the town of Pevek in Chukotka. Itar-Tass news agency said the quantity
would be enough to get the town through the winter. 
The oil tanker was escorted by the nuclear-powered ice-breaker "Soviet Union"
because the sea sometimes froze to a depth of one meter (three and a quarter
feet), Itar-Tass said. 

******

#6
Schools Shut Down in Russia
November 10, 1998

MOSCOW (AP) -- Schools and day care centers in Russia's Pacific port city of
Vladivostok shut down Tuesday because there was no heat in the city, a news
report said.
Vladivostok Mayor Viktor Cherepkov appealed to the prosecutor's office to file
charges against local energy supplier Dalenergo for not turning on heat even
though temperatures are dropping below freezing, according to the Interfax
news agency.
But Dalenergo retorted that the city has not paid its debts or signed a
contract for winter heating. As a result, Dalenergo didn't have enough money
to buy fuel for the winter or repair some of its pipes, officials said.
Still, Dalenergo officials promised the entire city would get heat in the next
two days, Interfax reported.
Heating the Far East has been a serious problem since the 1991 fall of the
Soviet Union, as local energy suppliers and regional governments, all short on
cash, squabble over unpaid debts.
The situation is particularly bad in Vladivostok, where a long-standing
rivalry between Cherepkov and regional governor Yevgeny Nazdratenko has all
but paralyzed many city services.

******

#7
Washington Post
November 10, 1998
Editorial
Moscow Poisons

ECONOMIC conditions in Russia are bound to produce unsettled politics. But no
economic troubles could excuse a resurgence of antisemitism. This is a poison
with a long pedigree in Russia, but one that has been blessedly missing for
the most part in the cauldron of post-Soviet politics. Now it is, at least for
the moment, back in the mix.
Retired general Albert Makashov, a Communist extremist and leader of a 1993
rebellion against President Boris Yeltsin, said last month that "yids" should
be blamed for Russia's economic collapse. Given the source, the comment was
not a surprise. What was worrying was the flabby response from the Communist
Party and its leader, former and perhaps future presidential candidate Gennady
Zyuganov. The party's refusal to condemn the hateful rhetoric is hardly
compatible with its desire to be seen as a modern, social-democratic party
deserving of respect.
It's a good sign that the strongest condemnations of Mr. Makashov's remarks
have come from inside Russia, starting with a firm statement from Mr. Yeltsin
himself. Some critics have gone too far, though, demanding that the Communist
Party now be banned. Russians have convincingly and repeatedly demonstrated
that they don't want a return to communism. The party attracts perhaps a fifth
of the electorate in opinion polls, and its demonstrations, even at a time of
extreme hardship, draw pitiful crowds. But to deny that fifth of the
electorate its place at the political table would neither suppress
antisemitism nor serve the interests of democracy.
To a large extent, the latest fracas in Moscow must be seen in the context of
electoral politics. Mr. Yeltsin, ailing and absent from day-to-day governing,
is no longer much of a factor. Parties and candidates are jockeying for
position for an election scheduled for 2000. This campaign is taking place in
a painful environment of falling incomes, rising inflation and broken hopes,
under the guidance of a government that seems to have no idea how to begin to
right the economy. All this will stress tolerance and civility as never
before. So far Russia's young democratic institutions are holding. They
deserve Western encouragement. 

******

#8
Moscow Times
November 10, 1998 
U.S. Trusts Russia's Aid Distribution 
By Kirill Koriukin
Staff Writer

The U.S. government trusts Russia to control the distribution of the $600
million U.S. food aid package, a senior U.S. Department of Agriculture
official said Monday. 
USDA General Sales Manager Chris Goldthwait, who headed the American
delegation at the Moscow aid talks, said in a telephone interview from
Washington on Monday that only two U.S. officials will be permanently based in
Russia to monitor the distribution, and that the American side considered the
force sufficient. 
The two officials will be "traveling around" and making themselves "available
for any reports of mismanagement," but "the actual control will be the
responsibility of the Russian side," Goldthwait said. 
The American side takes Russian officials' determination to prevent abuse of
the loan "at face value," he added. 
Under the agreement reached Friday, Russia will receive a $600 million,
20-year cheap loan from the United States to purchase 1.5 million tons of
wheat and other products from U.S. farmers. A further 1.5 million tons of
wheat and 100,000 tons of other foodstuffs will be sent to Russia as
humanitarian aid. 
According to the deal, proceeds from the sale of the food are supposed to be
used to pay off Russian government's debt to the Federal Pension Fund and
finance other social programs. 
Just as the U.S. side made it clear it was not going to exercise tight control
over the aid distribution, Interfax reported that three private Russian
companies have been handpicked by the government to sell the food on the
Russian market. 
Leonid Cheshinsky, president of the grain trading firm Roskhleboprodukt, was
quoted by Interfax as saying that his company and two others, Prodintorg and
Myasomoltorg, have been given the right to distribute the aid package. 
No open tender has been held for the right to work with the aid package.
According to former Deputy Agriculture Minister Leonid Kholod, neither
Prodintorg nor Myasomoltorg are market leaders in the wholesale food trade,
but Roskhleboprodukt, formed in the early 1990s from the remains of the Soviet
grain procurement ministry, is one of the biggest firms on the market. 
As a state agency, Roskhleboprodukt oversaw the distribution of Western
humanitarian aid in the early 1990s, when millions of dollars' worth of aid
ended up in the pockets of private companies linked to corrupt officials. 
Cheshinsky on Friday blamed the embezzlement on other traders, saying
Roskhleboprodukt had "accounted for every cent" it managed in the 1992
humanitarian aid campaign. 
Analysts doubted that just two U.S. officials would be able to spot abuses if
they took place. 
A two-member team in charge of controlling such a large aid package is clearly
"on the low side," said Peter Westin, an analyst with the Russian-European
Center for Economic Policy. Russia may face a situation seen in other
countries when food aid "ends up on the black market," he added. 
The USDA officials may be able to keep track of the consignments as they come
into the country but can do little to control their distribution in the
provinces, Westin said. 
Meanwhile, offers of more food aid kept pouring in. European Union officials
said Monday that the EU was also preparing a 400 million ecu ($472.2 million)
food package for Russia, although the Russian government has not yet made a
formal request for aid. 
"We are waiting for a formal request and in the meantime we are preparing a
proposal," Reuters quoted one official as saying. 
The EU aid package would include about 1 million tons of wheat, 500,000 tons
of rye, 50,000 tons of rice, 100,000 tons of pork, between 100,000 and 150,000
tons of beef and some milk powder. The EU said the food would be donated on
condition that it is sold at market prices and the proceeds put in a special
fund for financing social programs. 
Russia's wheat harvest was poor this year, but experts have argued that an
efficient distribution system, not aid, was the answer to the problem. 

*******

#9
The Independent
10 November 1998
[for personal use only]
The party's over, but not for Tamara
By Helen Womack

Russians engaged in the grim business of celebrating the anniversary of the
October Revolution again last weekend. It is a habit they just cannot seem to
give up. 
For the few thousand die-hards who marched under the red banner the 7 November
holiday, renamed the "Day of Accord and Reconciliation", remains sacred. To
the majority, who stayed in to watch an enfeebled Boris Yeltsin make the
equivalent of the Queen's Christmas speech, it was just an excuse to crack
open the vodka. By evening, the sounds of drunken arguments were coming
through the walls from right and left, above and below. 
I was lucky. I had an alternative way of spending the holiday. I had an
invitation to one of Tamara Lavrentieva's delightful musical salons. 
Tamara begins to hold these little private parties around the piano when
winter sets in. Professional Russian musicians have an expression to dismiss
this kind of amateur event: they call it "Aunt Sonya at a Namesday Party". But
Tamara, who has that wonderful Russian ability to be serious without
embarrassment, is striving for the atmosphere of the aristocratic salons held
on the Arbat in Pushkin's day. She offers only light snacks because she wants
the guests to concentrate on the music. 
Not a musician herself but a social worker and ceramic artist, she attracts
good performers. Then the audience joins in. The children, especially, love to
do their party pieces. Everyone leaves feeling inspired and hoping for another
invitation. 
When I came to Russia in 1985, Tamara's home on Podkolokolny (Under the Bells)
Lane was like a lamp glowing in what seemed a grey, bewildering and hostile
world. 
The star of those early salons was a pianist from the Tallinn conservatoire,
Irina Borisenko. Because she was as thin as a rake, everyone jokingly called
her "Pufik" (Little Cushion), which she hated. Penniless and for a while
homeless, Pufik lived at Tamara's, playing for her supper and giving music
lessons to Tamara's daughter Dasha, then just a little girl. 
The salons gave Pufik a stage, on which she played Rachmaninov and
Tchaikovsky, and Dasha an opportunity to show her progress. Sometimes friends
would sing. Often Tamara's husband, Anton, would perform his own ballads to
the guitar. 
Eventually, Pufik left for Paris. She hoped that nobody would know her
nickname there. But word leaked out on the Russian emigre grapevine and she is
still "Little Cushion" although a big star in France now. 
The salons were not the same after Pufik departed. Other factors came close to
defeating Tamara. Her husband took to Russian Orthodoxy and went through a
phase when he believed singing for pleasure was a sin. Market reforms began
and other friends were too busy trying to make their fortunes to care about
music. 
But Tamara's salons have been enjoying a revival. On Sunday night, she
gathered an audience to explore the historical roots of pop music. A
musicologist explained that music had always served two purposes: to lift the
spirit and to make the feet tap. While Dasha, now an art student, floated
about in a beaded dress from the 1920s, Tamara played old records of the first
Soviet jazzman, Utyosov, as well as some LPs brought home from Germany by a
soldier at the end of the war. Anton was back strumming and singing without
any conflict in his soul. 
Then, as it was half-term, the kids were allowed to have a disco with Prodigy,
which was pronounced by the musicologist to be a perfectly acceptable
continuation of the great foot-tapping tradition. 
"How do you find the energy to organise all this in the middle of an economic
crisis?" I asked Tamara as the guests were leaving. 
"When you have children, you are obliged to be an optimist," she said. 
In Russia now, there is a mood of resignation, as people see that Yeltsin's
revolution has failed "The party's over," said one American businessman,
packing to leave. 
But at Tamara's, the party goes on. Perhaps because she has never placed too
much faith in politicians. Because she has known the only difference she can
make is in her own life and that of her immediate circle. 

******

#10
From: "Grzegorz Kolodko" <grzegorz.kolodko@yale.edu>
Subject: Kolodko's Plan for Russia
Date: Mon, 9 Nov 1998 

Professor Grzegorz W. Kolodko
First Deputy Premier and Minister of Finance in Poland in 1994-97
Senior Research Fellow
Yale, School of Management
Box 208 200, 135 Prospect Street
New Haven Connecticut 06520-8200
tel. (203) 432 6131
fax (203) 432 9994
email: grzegorz.kolodko@yale.edu

The Kolodko Seven-Point Plan for Russia:

I. First, Russia must fast become able to feed its own people. Instead of
sending food, in the forthcoming years technical and financial assistance
(not business) is required. With the help of FAO (technical assistance) and
the World Bank (soft lending) over next 3-5 years Russia should become
self-sufficient in food production. It matters a lot since as much as 60% of
household's income is spent on food. 

II. Second, the Russian government and Central Bank must tackle the issue
of stabilization. The IMF should be involved, but only in this process of
stabilization. The IMF simply is not able to handle any other issues, which
other international organizations may address while assisting Russia's
transition. 

Stabilization further must involve forgiveness of some part of Russia's
enormous debt, a potential debt for equity swap, controlling the supply of
money and a systematic overhaul of the taxation system. Debt forgiveness is
simple math, not politics; Russia will never be able to repay its entire
debt, now approaching altogether $200 billion, even in the most optimistic
of assumptions for the future. A special program of debt forgiveness for
reforms should thus be enacted, giving Russia a chance to climb out of its
present economic malaise. As much as 80% of the old debt inherited from the
Soviet Union and 50% of the remaining debt should be written off in a
similar way as it was done in Poland, i.e. on the basis of strict
conditionality that further market reforms are continued. It must be
acknowledged now - when it is not yet too late - that the Russian debt
cannot be paid and must be restructured on the behalf of both Russian
economy and international creditors. Without managed and directed by wise
policy concern approach both will lose much more. 

Another way to address this issue is to exchange debt for equity. Since
debt may not be repaid, even in the long run, for foreign creditors a better
way to receive a return on loans is to take a stake in the future
profitability of Russia's assets. A large - the biggest ever - program of
debt for equity swaps would be international in scale and would require
approval from all funds, organizations and governments involved. This
program must not be left to the IMF supervision, but should be managed by
special ad hoc international body called jointly by the G-7 group, the new
Russian government and the World Bank. 

As for money supply, the question of whether to 'print' more money misses
the point. The real question is to what degree monetization of the fiscal
deficit must and can be covered by additional money supply, and the effect
on inflation. The Primakov government must determine how much inflation is
unavoidable, and how to use inflation to restore financial order and tackle
the widespread practice of bartering, the problem of debt arrears and other
price distortions. 

Taxation, as everyone knows, is a matter for the Russian government and must
involve a coherent system that is reasonable and enforceable. Here indeed
technical assistance - that is assistance, not insistence - of the IMF is
very much needed. 

III. The second point is the integration of Russia into the world economy.
Now, without further delay, is the time for the Clinton administration and
other leading industrial nations to admit Russia into the World Trade
Organization. Though Russia cannot yet meet all the criteria, a special
case should be made for its acceptance to this organization. WTO membership
would enable a gradual, feasible liberalization of Russia's trade into the
world economy, and would contribute to the overall globalization of trade
and commerce. Russia's accession to WTO will help to put faster the economy
on the path of export-led growth what is as much in Russia's own interests
as it is in the interest of its creditors, foreign investors and trade
partners.

IV. Regional development is another essential piece of the program. With 89
separate regions, it is incorrect to view Russia as a single, homogenous
entity. The United Nations Development Program (UNDP) is uniquely capable
of helping Russia address the disparate problems of its many regions. It
should be utilized for this purpose alone, leaving trade for the WTO and
fiscal stability for the IMF. Thus special set of regional programs must be
urgently work out, with the support of UNDP. It should help to raise capital
formation within the regions and streamline the institutional framework for
region's development and integration with neighboring countries. 

V. Upgrading Russia's infrastructure is important as well, and can be
achieved with the assistance of the European Bank for Reconstruction and
Development, which must concentrate on this issues, leaving other activities
for commercial private banks. The EBRD should help finance the improvement
of Russia's decaying roads, railroads, telecommunications and even internet
capabilities. The long-term infrastructure program must be linked with
regional development policy. 

VI. Another necessary point in The Plan for Russia is the alleviation of
poverty and the establishment of a viable social safety net. If the poverty
level is defined as income below $1 per day, then 40% of Russians live below
the poverty line. A great deal of people is living in very poor conditions,
and something must be done in the near future to alleviate this hardship.
The only institution prepared to assist Russia in meeting this challenge
today is the World Bank. It must not always work in concert with the IMF.
Sometimes their interests simply are not aligned, and the World Bank should
be taken as a separate entity prepared to work with Russia mainly on poverty
reduction. It must also act on time to counteract the policies enlarging the
poverty, sometimes advised by other international organizations and foreign
investors. 

VII. Finally, the long-term development of Russia must involve reform of
the institutional and legal framework for investment. The proper
organization to help in this regard is the OECD, with its long-term approach
and expertise in building sound investment institutions. Everyone talks
about the emergency in Russia today, but actually, the crisis is not about a
short-term emergency. It is about a long-term overhaul of the institutions
and structures that will enable a productive system of investments to take
the place of the current chaos. OECD is capable to assist the process of
facilitating higher savings, capital formation and its better allocation. It
must work on the behalf of the smooth absorption of foreign direct
investments. 

Throughout the seven points of the plan, two very important issues
predominate. First, a significant part of the transition must involve the
building of sound institutions. Even the early American approach to
Russia's transition placed too much emphasis on privatization and
liberalization without sufficient regard for the institutions that will
sustain the free market system. Consequently, the systemic vacuum filled
not with a plan or market system, but by crony capitalism, corruption, weak
regulation and organized crime. 

Investment in human capital also is not to be ignored. While Russia is
relatively good in maintaining an educated, well-trained work force, human
capital must not be under-utilized. Misallocation and a failure to reward
achievement and education are resulting in an exodus of qualified human
capital from Russia. This must stop if the restructuring plans for the
country are to be sustainable in the long term. 

******

#11 
FEATURE - Desperate Russians take a mystical chance
By Elizabeth Piper

MOSCOW, Nov 10 (Reuters) - Marina Nikolayevna, whose roubles don't stretch
very far in these crisis-ridden days, has invested the last of her money and
hope in Russia's self-styled queen of parapsychology. 
The 76-year-old pensioner has given up on the state. Politicians led the
country into crisis and her doctor prescribed medicine she could not afford. 
Instead she has followed many Russians, whose hard but fairly stable lives
were shattered by the country's economic woes, to the door of the banisher of
all bad karma -- Maria Lit. 
``I have come here for a consultation to see if they can get rid of all my
pains. My whole body aches and I have trouble with my eyes,'' said Marina, who
receives 400 roubles a month ($22) from her pension. 
Standing on the doorstep of the crumbling grey building which houses a world
of incense and soothing music, she stops before the thick metal door and looks
up at the sky. 
``Do you think the consultation will work? My God, I hope so.'' 
Many stressed, depressed and ill Muscovites believe parapsychology offers real
help to overcome problems that have been heightened by the economic crisis.
They have turned in their hundreds to Lit, a 29-year-old mystic. 
``Many more people are coming here now...Most are depressed or stressed and
seek some relief from their troubles,'' Lit said. 

TAKE A LOOK AT YOUR SOUL 

Lit and her team of 15 specialists use their powers to channel universal
energy to reawaken a client's soul and infuse it with a positive karma. 
``Their newly-awakened positive energy will break down any negative influences
like depression, or illness,'' Lit said, peering through the candlelight from
her leather sofa. 
The crisis, which has led to a rouble devalutaion, price rises and job losses,
has been good for business and Lit said most of her clients have lost their
jobs and self respect. 
``But they have to understand that a person who just lives in a material world
-- where all that concerns them is working for money -- that kind of person
will have a lot of problems. 
``At this time emotions are running low and the Russian people are not trained
to express themselves,'' she said. 
But it is not just the crisis which has prompted a fascination with mysticism
and alternative medicine. Homespun faiths and superstitions have attracted
thousands of Russians for decades. 
Many treat Lit as a another descendent of Grigory Rasputin, a mystic priest
who held powerful sway over the Tsarina Alexandra in the dying days of Russian
Imperial rule. 
But she has broken with the mystical tradition of launching mass seances. She
keeps hers private. 
Many of the former mystical glitterati have been discredited. 
Hypnotist Anatoly Kashpirovsky, who said he could induce orgasms in women at
huge seminars, secured a seat in the State Duma because of his popularity.
Since then, people have complained that his television programmes, aimed at
curing the masses, made them feel worse not better. 
Lit is adamant that her methods and beliefs work. 
She said that while pharmaceutical medicine eliminates only the symptoms of an
illness, parapsychology finds the underlying reason for it and treats both
body and the soul. 
Her treatments and ideology, which are shown on night-time television, have
struck a chord with Muscovites. 
Marina Nikolayevna is one of many Russians who lost their faith in public
health care with the fall of Communist rule. 
During the Soviet era, practitioners of alternative medicine risked arrest,
now they risk being mobbed by autograph hunters. 
``Traditional doctors just give you prescriptions for the same pills time and
time again, they are expensive and just don't work,'' said Marina. 
The Russian government, which no longer has money to provide free health care
for everyone, has given its blessing to a long list of alternative healers. 
Lit said her two centres -- both are on streets beginning with the lucky
letter 's' -- have been registered by the State Duma, the lower house of
parliament. 

CANDLES, TAROT AND UNIVERSAL ENERGY 

Dressed all in black, wearing leather trousers and an off-the-shoulder top,
Lit looks more like a woman ready for a night on the town than a mystic. 
She says her belief in parapsychology was given a new lease of life when she
studied philosophy at a Moscow university and met her mentor Yekaterina
Sadova. 
``She (Sadova) had been everywhere -- all around India -- and knew so many
religions. She confirmed my belief in the power of the soul,'' she said. 
Lit has developed what she described as a logical diagnostic and treatment
process. 
Clients fill out a form, detailing their history and, if possible, the history
of the previous two or three generations. 
It is very important that they write down all the bad events in their lives,
Lit said. For women the number of abortions, husbands and accidents are
crucial to the diagnosis. 
The treatment, which Lit was reluctant to discuss in detail, takes place in
one of the consultation rooms. Each room is painted a different colour to ease
the clients' problems. 
Pictures of astrological signs adorn the walls, shells decorate the floor and
candles burn in every corner and on every table. 
And each room has its bag of tricks: tarot cards, rune stones and incense. 
In her television programme, robed mystics waft candles around a client's head
in time with sombre music. 
``The ultimate goal is to encourage the client to believe in themselves,'' Lit
said. 
She says the downtrodden will start to believe in themselves after Russia is
reborn from the crisis. 
``I suggest the economic crisis is not a crash, but is an opportunity for the
country's victims to take the future. It is their revenge.'' 
People should acknowledge their responsibility for the crisis and use this
recognition to get in touch with their souls, she said. 
``When a baby is born it cries, now in Russia we are being reborn and we will
cry.'' 

******* 

#12
Brezhnev's Grandson Sets Sights on Kremlin 

MOSCOW, Nov. 10, 1998 -- (Agence France Presse) Andrei Brezhnev, grandson of
former Soviet leader Leonid Brezhnev, is trying to break into politics by
tapping the glory of his grandfather and the nostalgia for the coddled days of
Communism. 
And the bushy eyebrows, the shock of thick hair and the stocky build help as
he tries to woo fellow Russians struggling with today's post-communist
financial crisis. 
Not only does he sound like his grandfather, the 37-year-old looks like him
too. 
"We want to reunite those who remember that when the country was led by my
grandfather there were more good things than bad, that their lives were calm
and predictable," said Brezhnev of the man who ruled the Soviet Union for 16
years until his death in 1982. 
The Brezhnev era was marked by a crackdown on political dissent and a tougher
stance toward the West, though many Russians now facing economic hardship look
back on it as a period of relative prosperity, polls show. 
"Ninety-nine percent of Soviets were happy, and only 1 or 2 percent were
discontent with not being able to read certain books or illegally change
rubles against dollars," the young Brezhnev says. 
Undeterred, he even tries to turn this to his advantage. 
"Obviously my grandfather banned the publication of works by (former Soviet
dissident Aleksander) Solzhenitsyn. But today, now that it's authorized, who
reads Solzhenitsyn anyway?" he said of the 1970 Nobel prize winner for
literature in 1970 and one of the giants of anti-Soviet dissent who was
finally expelled from the Soviet Union in 1974. 
"He should still be thankful today to my grandfather who made a hero out of
him," Brezhnev said. 
His group, the All-Russian Communist Social and Political Movement, insists
that in the old Soviet days under his grandfather "the bombing of Iraq or
Serbia was inconceivable." 
Officially registered as a party in September, the Movement says it has 5,726
active members and insists that "100 to 150 new members are joining everyday,"
according to its number two man Semyon Kruglov. 
The Brezhnev movement is already gearing up for legislative elections of
December 1999 when it hopes to win over Russians who otherwise would cast
their ballot for the Communist Party of Gennady Zyuganov, which is tipped to
win in the polls. 
To hear the first campaign speeches, peppered with references to Soviet
patriotism and Communist ideals, it is difficult to see how his party actually
differs from the traditional Communists behind Zyuganov. 
Of the 19 million members of the old Soviet Communist Party, "there are still
a few million in Russia, these are our voters," said Brezhnev, noting that
Zyuganov's Communist Party has only 560,000 members. 
Not short on confidence, Brezhnev said he has "not ruled out running as a
candidate in the next presidential election" scheduled for June 2000. 
A specialist in foreign economic policy, Brezhnev graduated in 1983 from the
prestigious Institute for International Relations, which when he was a student
was reserved for children of the Soviet elite. He started his career working
first at the foreign trade ministry, which was directed by his father Yury,
the only son of the late Brezhnev. 
When the Soviet Union collapsed, he was among those who managed to adapt
quickly and became a businessman, working as the director of a children's
foundation. 
"The idea of creating a party came to me last spring when the daily
Komsomolskaya Pravda urged readers to send in their comments on the Brezhnev
era," he said. 
"I saw that of the 150 letters the paper received, only one had negative
memories. Its author said that life under Brezhnev had been bad, but said that
today it was even worse," Brezhnev said. 
"If we win the elections, the number of discontents will maybe be greater than
under my grandfather, but our aim is to make everyone happy," said Brezhnev,
who inherited another trait from his grandfather -- that of reading his
speeches.

******

#13
New York Times
November 10, 1998
Letter
Caspian Oil Pipeline

To the Editor: 
The United States must rethink its geopolitical objectives and policies for
the Caspian Sea region and re-evaluate its attempts to exclude Iran (news
article, Nov. 8). Even as we try to convince Russia that it has a stake in
Caspian developments, we must be careful not to foreclose other routes. An
export route through Iran would be economically viable, and if it continued to
Turkey, it would serve Turkey's long-term interests as well. 
These objectives can be achieved only by remaining committed to a policy of
multiple pipelines. If and when the Baku-Ceyhan route now favored by the
United States becomes economically feasible, it can complement a network of
existing pipelines that have laid the framework for a stable Caspian region.

CAROL R. SAIVETZ
Cambridge, Mass., Nov. 8, 1998
The writer is a research associate at the Davis Center for Russian Studies at
Harvard University.

******