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Johnson's Russia List


November 13, 1998    
This Date's Issues: 2474 2475

Johnson's Russia List
13 November 1998

[Note from David Johnson:
1. Moscow Times: John Freedman, New Plays Are Sign of Golden Age.
(DJ: This item is representative of our wish explore a Russia outside
of the realm of politics, high or low.)

2. AP: Russia May Approve START II Treaty.
3. Reuters: Anti-Semitism row hurts Russia Communists.
4. the eXile: Mark Ames, Russia Must Become Evil. (DJ: Rumor has it
that there will soon be a Washington DC edition of the eXile to torment
Americans at home too. Also: the November 5th issue of Rolling Stone
has a story about the eXile. You have been warned.)

5. Los Angeles Times: Richard Paddock, Premier Blames Ex-Officials for 
Russia's Loss of Credibility.

6. Business Week: RUSSIA'S `SHOCK THERAPIST' LOOKS BACK. (Gaidar).
7. Financial Times: John Thornhill, RUSSIA: Almost half of 1,500 banks 
face closure.

8. Moscow Times editorial: Arrears Force Primakov to Be Kiriyenko.
9. AFP: Agriculture Officials Rule out Famine, Thumb Noses at Aid.]


Moscow Times
November 13, 1998 
New Plays Are Sign of Golden Age 
By John Freedman
Staff Writer

If anyone challenges my claim that Moscow theater is not only alive and
well, but that it is enjoying what someday may be looked back upon as a
Golden Age, this is what I will say: "What about October 1998?" What about
it? Try this for size. 
In one month, we witnessed five premieres from four world-class
directors. It began with two "Hamlets" - Robert Sturua's production at the
Satirikon followed by Peter Stein's for the International Confederation of
Theater Associations. Valery Fokin unveiled his world premiere production of
Anton Chekhov's "lost" play, "Tatyana Repina," at the Theater Yunogo
Zritelya. Kama Ginkas gave us two vastly different shows, Alexander
Pushkin's fairy tale "The Golden Cockerel" at the Theater Yunogo Zritelya,
and Oleg Bogayev's stark "Room of Laughter" for the Tabakov Theater. 
October was such a good month that even when it was bad - and it often was
- it still broke new ground. One of the scourges of the 1990s has been the
dearth of contemporary Russian plays being staged. But in October I saw
eight such shows. There have been entire seasons when I have seen barely
more than that. At least five new works are slated for November, indicating
that we may be on the way to one of the most prolific years for new Russian
drama in this decade. 
I'll admit it: Except for Bogayev's excellent "Room of Laughter," none of
the plays impressed me as being out of the ordinary. With the same exception
of "Room of Laughter," few of the productions added much luster to the
plays. The significance for the time being is in quantity rather than
quality. But in the context of the scarcity that has prevailed for the last
eight years, that is no small thing. 
Here are brief accounts of some new plays I saw in October: 
-Kirill Panchenko directed Yury Mamleyev's "Night Visitor, or Wedding With
a Stranger" at the Theater Na Perovskoi. This black comedy of lowlifes
encountering the supernatural eventually wears thin, although I found the
first act to be an accomplishment. 
Mamleyev's play, bringing together drunks and weirdos to celebrate a
wedding in the woods, is filled with jokes about cancer, drownings and
suicide. It could be off-putting were it not for Panchenko's light touch. As
it is, the funniest punchlines come at the grimmest moments. A stand-out is
the granite-jawed Yury Sherstnyov as Nelepov, a morose man with a sullen
sense of humor. 
The second act, in which the groom's death does not interfere with the
drunken party, tries too hard to match Mamleyev's definition of the play as
a metaphysical tragifarce. The stranger of the title is real in the play,
but Panchenko makes him a disembodied voice. This dampens the humor of the
early scenes, and, as the dialogue becomes increasingly abstract, the cast
is reduced to playing horrors that don't frighten and are seldom funny. 
-Nikolai Kolyada's "We Are Starting a New Life, or the Oginski Polonaise"
received its third Moscow production in four years at the Stanislavsky
Theater. This play about a Russian-born woman who returns to Moscow from the
United States to tie up loose ends in her life has always seemed to me a
topical trifle. The characters - poor Russians and the wealthy American girl
with a transvestite friend - are cliched through and through. Under the
enervated direction of Leonid Heifetz and in the drab set by Yury Galperin,
this show is flatter than it is slow. 
-At the Mayakovsky Theater, Tatyana Akhramkova's production of Grigory
Gorin's comedy "A Plague o' Both Your Houses" is a professional take on a
slick comic sequel to Shakespeare's "Romeo and Juliet." The Prince of Verona
seeks to stop the feud between the Montagues and the Capulets by forcing
them to become relatives by marriage. Gorin writes well-crafted plays of
little substance, and "Plague" is no different. 
-Alexander Volodin, most famous for his play and film script "Five
Evenings," wrote "Somewhere Retribution Has Accrued" nearly 30 years ago,
but it was updated at the Chekhov Art Theater by director Igor Vlasov to
correspond roughly to our era. Originally titled "Petruchio," this strange,
episodic piece weaves the story of a runaway duke with those of dump
dwellers, performers and war refugees. The more the duke tries to escape his
own unhappiness, the more he becomes entangled in others' sorrows. 
Vlasov's direction clarifies little in the rambling, piecemeal story,
although nice performances from Diana Korzun as the duke's faithful servant
and Alexander Semchev as a shrewd entertainer provide occasional focus. Word
is, this show has been taken back to the drawing board and probably will not
reopen until January. 
-Anatoly Sergeyev's "The Costume Girl" ostensibly reveals the
behind-the-scenes talent required to support a talentless pop star. But in
the show that Natella Britayeva directed at the Yermolova Theater Center, I
was hard-pressed to find anything but cynical no-counts bumping heads and
overinflated egos. Britayeva's attempt to turn this pop-schlock play into a
sometimes-musical has dire consequences for anyone who appreciates music. 
-At the Moscow Oblastnoi Kamerny Theater, Valery Yakunin staged Yelena
Poddubnaya's historical drama, "The Private Life of a Queen." This is a
conscientious treatment of a traditional, able examination of the
behind-the-scenes life of Elizabeth I. As played by Yelena Tsagina, this
queen is deceptively colorless and obsessed with the rule of her country.
Her personal qualities show through slowly in a chance comic meeting with
Shakespeare, her uncomfortable romantic involvement with Lord Lester, and
her wry, pragmatic handling of her ambitious advisors. 
Good or bad, all of these productions encourage me to quote the
playwright Olga Mikhailova who, like many, is fed up with the endless
recycling of the same classic plays: "How nice it is," she told me recently,
"to watch a show when you don't know how it ends." 


Russia May Approve START II Treaty 
By Barry Renfrew
November 12, 1998

MOSCOW (AP) -- Russian parliamentary leaders agreed Thursday to revise a
bill that could pave the way for ratification of the stalled START II treaty
on sharply reducing Russian and U.S. nuclear arsenals. 
Gennady Seleznyov, speaker of the State Duma, Russia's lower chamber of
parliament, said a new version of the bill had been drawn up and was ready
for consideration by the chamber and the government. 
The bill could be acted upon in weeks if President Boris Yeltsin accepts
its provisions. 
``If the president agrees (with our final version), we'll put it on the
agenda for ratification,'' Seleznyov said. 
START II would cut Russian and U.S. nuclear arsenals in half to 3,500
warheads each. START II was signed by both nations in 1993, and the U.S.
Senate ratified it in 1996. 
The revised bill in the State Duma would specify how the agreement would
be implemented and financed, Seleznyov said. 
Lawmakers had objected to Yeltsin's call to approve START II because it
only gave them the option of ratifying the treaty without spelling out other
details, he said. 
It was not clear if the United States would accept any changes or
revisions raised as conditions for the Duma to approve the treaty. 
The Duma repeatedly delayed action on START II. Communist and nationalist
deputies charged it would weaken Russia and be too expensive to implement. 
However, the government of Prime Minister Yevgeny Primakov, who took
office in September, has made a major effort to get the treaty approved. 
Some Russian officials have indicated that the government hopes that
quick ratification of the START II will improve Russia's prospects of
receiving much-needed aid from the International Monetary Fund to tackle the
country's economic crisis. 
Roman Popkovich, head of the Duma's Defense Committee, said Thursday that
ratification of START II would enhance Russia's defense capability. The
treaty would allow Russia to devote large sums of money to developing new
weapons and reviving the cash-strapped military, he told the Interfax news
He said Duma deputies were concerned about such issues as the expansion
of NATO and deployment of nuclear forces and NATO forces closer to the
Russian border. But he claimed that possible revisions to the treaty would
not alter its essence. 


ANALYSIS-Anti-Semitism row hurts Russia Communists
By Peter Graff

MOSCOW, Nov 13 (Reuters) - A fierce row over anti-Semitic comments by a
prominent Russian Communist threatens to cripple the party at its moment of
greatest influence since the fall of the Soviet Union, political analysts said
on Thursday. 
The party has found itself under attack by the media, the Kremlin and a row of
mainstream political leaders for shielding Albert Makashov, a deputy in the
State Duma lower house of parliament who called for Jews to be rounded up and
Communists helped defeat a measure in the Duma to censure Makashov last
Wednesday. Communist leader Gennady Zyuganov said the furore is a smear
campaign by political opponents. 
The scandal has erupted just as the party seemed to be growing in stature. 
It blocked President Boris Yeltsin's reappointment of former Prime Minister
Viktor Chernomyrdin in September and helped crown his compromise replacement,
Yevgeny Primakov. A Communist, Yuri Maslyukov, is now first deputy premier,
putting into practice party policy on increasing state control of the economy.
But the anti-Semitism row has drawn uncomfortable attention to the extremist,
nationalist fringe of the biggest party in parliament and now threatens to
tear the movement apart. 
``A split of the party is inevitable,'' Andrei Piontkovsky, a political
analyst with the Centre for Strategic Studies said. 
``There is not one Communist Party but several, and Zyuganov wants to be
leader of them all.'' 
By mishandling the affair, Zyuganov has risked having himself and his
followers branded extremists just as a broad swathe of the electorate is
looking for a centre-left political alternative, Piontkovsky said. 
``Russia needs a social democratic party. Zyuganov cannot lead one, but
perhaps (Duma Speaker Gennady) Seleznyov can.'' 
Seleznyov was the only member of the Communist parliamentary party to break
ranks last week and vote in favour of censuring Makashov. Seleznyov says he
might consider a presidential bid. 
Moscow Mayor Yuri Luzhkov, a strong presidential contender who has been
staking out centre-left ground, praised the Communists last month for shifting
to the centre, but has since become one of the party's most outspoken critics.
Maslyukov, the most senior Communist in government since 1991, called the
failure of the censure vote ``a disgrace.'' 
The Makashov scandal has brought about the fiercest wave of anti-Communist
rhetoric on Russia's three main television networks since they united in 1996
to back President Boris Yeltsin's re-election bid against Zyuganov. 
Zyuganov said on Thursday the uproar was fabricated by his opponents ``to
distract attention from the fact that people are hungry and unemployed in
freezing buildings.'' 
Certainly the scandal's timing has greatly benefitted the Kremlin, replacing
Yeltsin's poor health and Russia's economic woes as the main news items on the
But Piontkovsky said Zyuganov had nobody but himself to blame for failing to
stop scandal early with a prompt rebuke to Makashov. ``I would say he is not
very shrewd,'' he said. 
Zyuganov and his supporters have fanned the flames further by launching an
all-out counter-attack on the media. 
Communists sent a letter to the government on Wednesday calling for oversight
committees to regulate the media. The staffing of these panels would reflect
``Russian society in demographic, ethnic, political and other terms'' -- seen
by many as thinly disguised code for limiting the role of Jews. 
Some liberals have called for the Communist Party to be banned outright,
although Primakov, who is counting on Communist support in the Duma, has said
he opposes such a move. But legal cases stemming from Makashov's remarks are
likely to continue. 
On Thursday Yeltsin demanded law enforcement agencies take steps to put a stop
to ``national and political extremism.'' 
Justice Minister Pavel Krasheninnikov was quoted as saying his ministry had
opened an investigation into Makashov's remarks, which he compared to the
statements of German Nazis. 
Fomenting ethnic hatred is a crime in Russia, but for prosecution to procede,
the Duma would have to vote to lift the immunity Makashov enjoys as a deputy. 
The party may have more difficulty shielding Makashov from such a measure than
it had last week during the censure vote. 
Zyuganov said last week he would have supported the measure if it also
condemned statements insulting to ethnic Russians. But such a cautious formula
could be hard to find if the Duma is faced with a clear-cut vote on whether to
allow prosecution. 
On Thursday Zyuganov gave a sign that he might be willing to sacrifice
Makashov if pressed. After a meeting with the Israeli ambassador in Moscow, he
told reporters Makashov's statements were ``inappropriate, lacking in self-
control and incorrect.'' 


the eXile
November 5 - 18, 1998 
Feature Story
Russia Must Become Evil
by Mark Ames

Yeah, yeah, yeah, we get the point: Russia is totally fucked. The previous
so-called reformist regime stole and destroyed everything. The present
government is screwing things up even worse by tinkering with communism.
All this gloom and doom stuff, it's so 1998. Today's search for ever-more
melodramatic "signs of desperation" in Russia is just an adult's easter egg
hunt, only less challenging. You may as well head into a jail and search
for "signs of blood-stained mop handles."
Russia's plight appears so totally hopeless to Westerners in large part
because no one in the West can figure out how to fix the mess. They're as
stuck in the narrow corridors of communist-reformist ideological debate as
most Russians.
The one ideology that the West has not only rejected but even denied entry
into the discourse is nationalism. Nationalism-that is, patriotism, a
quasi-religious commitment to national sacrifice, even the willingness to
engage in armed conflict to achieve political goals, as the United States
routinely does (see Kosovo, Iraq, Somalia, Sudan, Afghanistan, etc.).
The very word "nationalism" causes the Western humanist to instinctively
cringe, just as the word "vagina" used to make me cringe as a kid. This
same Westerner, particularly if he's American, conveniently forgets that
without its near-fanatical, even aggressive nationalism, America today
might very well be something like... well, like Russia today.
Here's proof that nationalism, patriotism, and war have worked for America.
Eight years of New Deal socialist projects failed to pull America out of
the Great Depression of the 1930s, despite myths about its success, a myth
that even Prime Minister Yevgeny Primakov promotes. What did finally beat
the decade-long Depression was 3-1/2 years of mobilized, blood-soaked,
nuke-'em-high patriotism and victory over the Axis Powers, a watershed that
led to the greatest economic boom perhaps in America's history. On the
other hand, the loss in Vietnam in the early 1970s, and the concurrent
anti-patriotic, anti-nationalistic backlash in society, led to what was
certainly the darkest period of my life, a time simply known as "The 70s."
America was a wounded giant, its people cynical, and its economy suffering
from stagnation, stagflation, earth shoe-clad dirtheads, and incredibly
unfunny marijuana jokes. The times were so desperate that America voted in
someone considered on the far nationalist right of the Republican Party
spectrum, Ronald Reagan, whose platform advocated military buildup and
confrontation. Despite having a completely insane economic plan, he did
succeed in creating the first new generation of "Proud To Be American"
idiots since the early 60s. Reagan's nationalistic religion renewed
confidence in the country. What followed was a decade of reckless economic
When that began to peter out, and a banking collapse loomed in 1990,
President Bush shuffled his cards and pushed America into a complete
blowout war in the Persian Gulf, a victory almost unprecedented in military
history. For America, the present decade's economic boom began literally
the day the cruise missiles started slamming into Baghdad. Consider: on
January 15th, 1991, on the eve of the Gulf War, the Dow Jones Industrial
Average stood at 2490. A bear market had ravaged the market for some six
months or more, and recession gripped the economy. On February 15th, after
a month of camcorder smart bombs snaking their way into bunkers, chimneys,
car hatchbacks and day care centers with the zany comic style of a Sam
Raimi film, the viewing public responded by pushing the Dow up to 2934.7.
That one month of military success and flag-waving patriotism translated
into a leap of some 20% in the nation's paper wealth. Just seven years
later, with America still-unchallenged, the Dow would soar to over 9,000,
as the economy has yet to experience a single downturn.
Let's take an even more extreme example. When the Nazis took control of
depressed, corrupt, decadent Germany, they made nationalism into a state
religion. The results were astonishing. Unemployment plummeted from over 6
million in 1932 to less than a million in 1936, while the GNP soared over
102% in the same period.
Take the counter example in Russia. First
Gorbachev, then Yeltsin, promoted a policy of anti-nationalism and
groveling to the West. Some say it's because they literally despised their
own country, and aspired to be Americans.
Former Vice Premiere Alfred Kokh, the man responsible for having sold off
most of Russia's prized state assets, proved himself to be one such person.
In a radio interview in New York the former Privatization Minister called
Russia "hopeless," its people "incapable of creating anything new" and said
"the long-suffering masses are responsible for their own suffering" because
they "jailed themselves and shot themselves during the repressions [...]
they get everything they deserve." Igor Chubais, brother of the godfather
of Russian reforms, Anatoly Chubais, wrote that Russia's elite considers
the Russian people to be "simply a tiresome, annoying nuisance which for
some reason has to be paid wages." If these guys were the Einzatsgruppen in
1943 Rostov, such opinions might all make sense... but these guys are
Russians, charged with transforming the country. For them, these
Russophobes, transforming Russia meant destroying it.
The last two Russian regimes have been the most Western-leaning, least
nationalistic regimes in Russia's history. For playing the sensitive,
ponytailed humanist, they were rewarded with two humiliating defeats in
Afghanistan and Chechnya, the abrupt dissolution of an empire that took
centuries and untold millions of lives to build, and the complete collapse
of their economy. Anyone here knows what sort of pride Russians take in
their government: the emotions range from shame to disgust to hopeless
rage. In short, Russia has taken the inverse of the American model of
nationalist pride. And the results have been... well, the complete inverse
of America's.
Arguing for nationalism may be simplistic and dangerous, but it's also
extremely logical.
Anatol Lieven, an expert of the Former Soviet Union for the International
Institute For Strategic Studies in London, explained, "In the absence of
religion and communism, patriotism is one of the relatively few emotions
that can guarantee a degree of responsible behavior on the part of the
elite. Russia is an excellent example of what happens when the elite has no
commitment beyond their own self-interests."
Patriotism and nationalism can positively affect a nation's economy because
they motivate the elite to work for the common good, while the masses tend
to trust and respect the laws more. In other words, nationalism is the
sunlight necessary for civilization-including democratic civilization-to grow.
"When you have an elite that isn't committed to its people, then you have a
kleptocracy as in Russia, because they don't care about the country's
well-being," said Lieven, who was a correspondent in Russia from 1990 to
1996. "If the average person sees the elite stealing from the state left
and right, which is what happened here, then by what conceivable right can
you tell the average person not to break the law. On the other hand, the
effects of patriotism or nationalism can be better tax collection,
enforcement of contracts, and the creation of a civilized market economy."
Of course, nationalism, especially in an ethnically-mixed, volatile country
like Russia, can be dangerous. Alexei Malashenko, a specialist on
nationalism for the Carnegie Endowment, distinguished between ethnic-based
nationalism of the kind promoted by crypto-Nazi Alexandr Barkashov's RNE,
which he sees as destructive, from a state-nationalism of the sort common
in Europe and the United States, which he said "can play a positive role."
In his opinion, Moscow Mayor Yuri Luzhkov best represents such a platform.
Edward Limonov, as leader of the extremist National-Bolshevik Party, has
been pushing for nationalism as a solution to Russia's ills since forming
his party five years ago. At first, Limonov's party platform-buy Russian
products, ban dollars, default on foreign debt, impose economic
dictatorship and nationalize banks-was seen as so extreme as to be either
frightening or laughable. Today, many of his programs have been adulterated
and even made policy.
"To build a state and a state economy, you need to motivate the masses,"
Limonov said. "Russians have never been purely motivated by money, but
rather by emotions. What they need now are victories. Not just in war, but
inside the country."
While Westerners debate the dangers of Russian nationalism and engage in
Weimar comparison Easter egg hunts, the Russian political mainstream has
already moved deep in that direction. Tragic ex-dissidents and
English-speaking Westerbees like former Foreign Minister Andrei Kozerev are
so far off the mainstream map as to make even Limonov seem reasonable. The
three leading presidential candidates for the next elections, Mayor
Luzhkov, KPRF leader Gennady Zyuganov, and "gruff-voiced" General Lebed,
are all trying to claim the nationalist vote, whether as opportunists like
the Communist leader, or as missionaries, like Lebed. Of the three, General
Lebed is undoubtedly the least known quantity, having expressed admiration
for General Pinochet's "reasonable" tally of 3,000 kills.
"I would agree that patriotism is the answer in Russia, so long as it isn't
a dangerous form," Lieven said.
* *
When I first came to Russia in late 1993, I was bewildered by the contempt
foreigners showed towards the Russians, and even more shocked by how
passively the Russians, in particular the younger, educated Russians,
accepted it. It was a time when many younger Russians were still ashamed of
themselves in comparison to Westerners, something that used to drive me
into acid-burping rages.
The foreigners who first came to post-Soviet Russia were overwhelmingly
rejects and failures in every sphere, both career-wise and sexually. Most
of us would have been grateful to land a gig as night shift manager at
Mister Donuts; our idea of a satisfying one-night stand was getting a rim
job from Sparky by smearing peanut butter on our asses. We arrived ashamed,
hoping not to be caught. And, to our surprise, in Russia we met a people
even more ashamed than we were.
Why did Russians feel shame towards their country? One reason is that "blue
chip" foreigners who came here to help transform Russia had nothing but
contempt for anything not familiar.
One American I'd met in late '93, Mike Fogel, came over as part of Jeffrey
Sachs' Harvard team to work as an advisor to then-Finance Minister Boris
Fyodorov. Mike came from a neighboring surfer-suburb of mine. But we were
on opposite sides of the paradigm world. His utter loathing of everything
Russian was limitless.
"What have the Russians ever built?" he'd ask, over and over. "These people
are hopeless. They've never built anything that the world needs. Not one
"The Kalashnikov," I noted.
There was no arguing with him. I saw no way out except to try to incite a
pogrom against foreigners. I went so far as to compose a few rage-filled
articles detailing conversations I'd had with foreigners, and considered
trying to publish them in Zavtra. It was absurd-Zavtra at the time was a
real peasant-fascist, smelly-underwear newspaper that would have tossed me
out of the office, but I was driven. I only lacked courage.
And then Zhirinovsky won the parliamentary elections.
I bumped into Fogel shortly after. He'd lost that contemptuous,
overconfident swagger. The sneering was still there, but it was less
convincing, more embittered.
I saw Fogel one more time, a month after those elections. He kept calling
me for some reason. I avoided him as much as possible, but finally, I gave
in when he offered to buy me drinks on the Harvard bill. We met at the
Armadillo bar, and he started off with the usual anti-Russian diatribe
before changing his tune.
"I decided over Christmas to read Tolstoi for the first time ever and I was
amazed... that Russians felt so many emotions. I didn't know Russians felt
this way," he told me. "I feel like I should have learned some of the
language while I was here. I should have studied it."
I didn't indulge him. I've seen this part in the Tom Hanks film way too
many times, the penance, the epiphany. It was a trap, plain and simple.
A few weeks later, with Sachs and Fydorov out of power, Fogel split town.
Fogel's deportation was my first victory ever in life over the Beigeists,
the first shot fired in a war that went public with the eXile. It was
amazing to me to see that someone like that could actually be wounded. All
on account of a fake "extremist nationalist." So you can see, I'll always
have a soft spot for the nationalists. They've never threatened me a
fraction as much as bloodless beigeocrats like Fogel. Russian voters made
the wrong choice by voting in Zhirinovsky, but for that one January day, I
remember thinking, what a wonderful mistake!


Los Angeles Times 
November 12, 1998 
[for personal use only]
Premier Blames Ex-Officials for Russia's Loss of Credibility 

ZMOSCOW--Prime Minister Yevgeny M. Primakov, seeking aid from the
International Monetary Fund, said Wednesday that he will not bring back
so-called reformers from Russia's previous government to handle negotiations
because they have lost credibility in the West. 
Speaking to members of parliament, an irritated Primakov aimed his
comments at Anatoly B. Chubais, a former government official who said after
negotiating a huge international bailout this summer that Russia had
"conned" foreign financial institutions out of $20 billion. 
Since Chubais' remark--first reported in September by the Kommersant
Daily newspaper and then by The Times--Russia's efforts to secure a
much-needed $4.3-billion installment of the IMF loan have been unsuccessful. 
Russia has also faced difficulty in securing foreign loans because it
squandered the $4.8 billion it received from the IMF in the first
installment of the $22.6-billion loan package negotiated by Chubais. The
money, largely spent to prop up the ruble, disappeared into the hands of
bankers and investors within weeks. 
Russia, with its economy in shambles and no clear plan to resolve its
fiscal crisis, is desperately in need of cash. First Deputy Prime Minister
Yuri D. Maslyukov said Saturday that Moscow must find $3.5 billion this year
and $17.5 billion next year just to repay debts. 
At a meeting Wednesday with members of parliament's lower house, Primakov
was asked by lawmakers to find new negotiators to take over the ongoing
talks with foreign lenders. 
"You suggest that we replace the negotiators. With whom?" the prime
minister asked. "I want to ask you a question: with the person who said in
an interview with the Los Angeles Times that we conned you out of $20
billion? Do you think they [the IMF] will talk to him? No one will talk to
Chubais, a key architect of Russia's economic transformation who ran
President Boris N. Yeltsin's 1996 reelection campaign and later served as
his chief of staff, could not be reached for comment Wednesday. His
spokesman, Andrei V. Trapeznikov, said he could not comment on Primakov's
statement because he and Chubais had not discussed the matter. 
In the lengthy Sept. 8 interview with Kommersant Daily, which was quoted
in The Times a day later, Chubais was asked whether the government had the
right to lie about Russia's fiscal instability. 
"In such situations, the authorities have to do it," Chubais told
Kommersant. "We ought to. The international financial institutions
understand, despite the fact that we conned them out of $20 billion, that we
had no other way out." 
Chubais, 43, praised by Western newspapers as a "young reformer,"
bitterly denounced The Times for its article reporting that he said Russia
had "conned" the international community out of the money by concealing the
severity of the country's economic crisis. 
In one interview, Chubais charged that he was the victim of an attack by
"the opponents of Russia." In a letter widely distributed to news
organizations, Chubais wrote that The Times' article "absolutely distorted"
his position; it was investors, he wrote, not international lenders, who
were "cheated" out of $20 billion. 
But Wednesday was not the first time that Chubais' words have come back
to plague the new government. His comments prompted some U.S. lawmakers to
question the wisdom of future aid to Russia. 
And in September, then-Deputy Prime Minister Alexander N. Shokhin, who
had begun negotiating new loans 
with the West, quit after a week on the job when Primakov reappointed a
Chubais associate--Mikhail M. Zadornov--as finance minister. 
"I had thought that we needed to renew the face . . . of the government,
not to create the feeling that we are negotiating only to take the money and
swindle our partners later," Shokhin said. 
Sergei L. Loiko of The Times' Moscow Bureau contributed to this report. 


Business Week
November 23, 1998
[for personal use only]

Russia's liberal economic reformers are watching from the sidelines as the
three-month-old leftist government of Prime Minister Yevgeny Primakov
struggles to find solutions to the country's financial crisis. Prompted by the
Aug. 17 devaluation of the ruble and the default on short-term debt, that
crisis marked the end of an era of reform that had begun in 1992 with ``shock-
therapy'' designed by economist Yegor T. Gaidar.
Moscow Bureau Chief Patricia Kranz recently asked Gaidar to look back and
analyze problems of the reform era as well as dilemmas facing the current
government. Gaidar, 42, oversaw Russia's reforms as a Cabinet member in 1992
and 1993 and later as a government adviser. He is now director of the
Institute for the Economy in Transition in Moscow. With other pro-market
liberals, he is also working to create a center-right coalition to compete in
parliamentary elections scheduled for December, 1999. Gaidar met with Kranz in
his office near the Kremlin.

Q: How do you assess the Primakov government's economic policies?
A: This is a left-wing government. And yet from the beginning, they said: ``We
won't attack the market, we won't attack private property, and foreign
investments are a good thing.'' After seven difficult years, there is a
consensus in society: The market economy is not something that can now be
undone. When [current ministers] were in opposition, they always declared
there was an easy solution: Print money, spend money, and regulate the
economy. Now they're afraid of doing this.

Q: The government seems slow in taking steps to solve the crisis.
A: They do not know what to do. Recently, when people in Russia were asked if
they supported printing money to pay pensions and salaries, 44% said no and
only 20% said yes.... In the present situation, there are only two ways out.
One is the continuation of liberal market-oriented reforms. If you are unable
to move in this direction--and the current government cannot because of its
[views]--then you should reintroduce socialism. If you are unable to do that,
then you are at a dead loss.

Q: Why did economic reforms fail?
A: Compare Russia to other former socialist states and you can see that the
Russian transition was very slow--low growth of gross domestic product, huge
budget deficits, and an inability to restructure state obligations. Because of
this, there were serious gaps in government finances, and low tax revenues. In
Poland, Estonia, the Czech Republic, and Hungary, there was a consensus. Their
elites wanted to become integrated with Europe and understood that in order to
do so they must have stable finances, property rights, and so on. In Russia,
there was no sense of regained independence. Russia's elite has been divided
for centuries about whether Russia should be like a European country, or
different. So the lack of consensus was much more serious.

Q: Were reformist governments corrupted by powerful business interests?
A: We had different governments with different attitudes. The government of
[Prime Minister Viktor] Chernomyrdin in 1997 and early 1998 was strongly
connected with business interests. The [later government of Sergei] Kiriyenko
was free from this influence. It was pushed out because it was not loyal to
the so-called oligarchs. The essence of their influence was not money but
control of the media and the decision-making process.

Q: Is there a type of free market that would be more suited to Russia?
A: Any market reforms in Russia are going to encounter problems. There is no
way the American or German market system can be simply transferred to Russia.
Seventy-five years of Communism and a weak respect for private property ensure
that. But exactly because we have a corrupt bureaucracy, which uses its powers
to extend favors, we need liberal-market reforms.

Q: Do you think there will be early Presidential elections?
A:If nothing drastic happens to the President, then the elections will go
ahead as planned [in 2000].

Q: How are reformers preparing for parliamentary elections in 1999?
A: Our crucial goal is to avoid the situation of the 1995 [parliamentary]
elections, when our vote was fragmented. As a result of splits in the
democratic camp, the Communists won little more than 20% [of the vote but]
became the dominant force in the Duma. This time, the left side of the
political spectrum is crowded. That offers, in my view, a serious opportunity
for [us.] And that is what we are working on.


Financial Times
13 November 1998
[for personal use only]
RUSSIA: Almost half of 1,500 banks face closure
By John Thornhill in Moscow and Jeremy Grant in London

Almost half Russia's 1,500 banks face closure over the next few months because
the government does not have enough money to save them, Andrei Kozlov, the
first deputy chairman of the central bank, said on Thursday.
The collapse of hundreds of Russian banks could force foreign creditors to
write off billions of dollars of additional losses leading to a further credit
contraction around the globe.
Foreign bankers estimate that, following the devaluation of the rouble,
Russian banks may be able only to honour $1bn-$2bn of the $6bn of foreign
exchange contracts they signed with western banks.
Russian banks may also default on billions of dollars of commercial borrowings
and syndicated loans.
David Levey, managing director of the sovereign risk unit at Moody's Investors
Service, the credit rating agency, said most Russian banks were effectively
insolvent and were unlikely to pay their debts to foreign creditors.
"There is not much of that money that is going to be coming back. Banks are
going to take a hit on this," he said.
Many of Russia's banks, which have been devastated by the devaluation of the
rouble and the government's default on its domestic debt (GKO) market, could
be forced into bankruptcy when a 90-day moratorium on repaying foreign debts
expires on November 14.
The moment the moratorium is lifted, angry foreign banks - once among the most
enthusiastic investors in Russia's nascent financial markets - are likely to
go on the offensive to recover their debts through the courts.
Lawyers suggest foreign creditors may also intensify their efforts to track
down and seize the overseas assets of exposed Russian commercial banks -
however tortuous that may prove in practice.
In a speech to the parliamentary budget committee, Mr Kozlov said it was
essential to find Rbs40bn to support the most important savings and regional
banks and preserve the integrity of the banking system. But Mr Kozlov said the
central bank's restructuring plan envisaged the closure of 720 private banks.
Mr Kozlov estimated the central bank would need to inject Rbs141bn into
Russia's crisis-stricken banks to keep the entire industry afloat. "However,
we do not have such money," Mr Kozlov said.
Some of Russia's biggest commercial banks, such as Tokobank and Inkombank,
have already collapsed amid huge losses. But creditors have found it almost
impossible to salvage any assets because of the opacity of Russian banks'
accounts and the difficulties of enforcing contracts in local courts.
They also allege that some Russian banks have used the cloak of the 90-day
moratorium to strip their banks of remaining assets.
"Nobody knows what is left," said one Moscow lawyer. 


Moscow Times
November 13, 1998 
EDITORIAL: Arrears Force Primakov to Be Kiriyenko 

Two months ago, in his first policy address after taking office, Prime
Minister Yevgeny Primakov said that his top priority would be to end the
arrears on state-sector wages and pensions. 
He would use "extraordinary measures" to end the heartless policies of
previous governments that had impoverished average Russians. 
This week, Primakov quietly admitted that he was reneging on this promise.
Wages and pensions have not been repaid and there is no plan to repay them
anytime soon. 
Millions of pensioners have not received their government money for
months. The miners who were persuaded to drop their vigil outside the White
House with promises of extra money have also been deceived. Nuclear workers
responsible for the nation's safety are waiting for their pay. Large
sections of the army are still in desperate straits. 
To its credit, the government is trying to keep up on current payments.
But many are still missing out. And the pensions and wages they now receive
have not been indexed to reflect the 50 percent jump in prices over the past
two months. 
It would be pointless to dwell on the government's breach of faith. It is
still early days. But the current government does not seem any more able to
pay wages and pensions on time than the previous government of Sergei
Perhaps Primakov meant what he said when he promised to pay off wages and
pensions. It was certainly exactly what the Communists who voted him into
office wanted to hear. 
But the last two months should teach Primakov and the Communists that
there is no painless solution to the problem of wage and pension arrears. 
The one easy option is to print money, but even Primakov has been forced
to accept that this will trigger uncontrollable inflation. 
Failing that, the government must follow the same policies that were
already being implemented by the Kiriyenko government. It must try to
increase tax collection or cut spending in other areas, both unpopular
measures. It must threaten regional governments, which are the cause of much
of the nonpayments problem. It must bankrupt companies that refuse to pay
their bills. 
The government should also look closely at social sector payments and cut
the large amount of funds that are either wasted or else channelled into
middle-class welfare for relatively well-off Russians. 
To tackle these problems, Primakov's government will need political
strength to fight entrenched lobbies. In the meantime, the pensioners and
miners will just have to wait. 


Agriculture Officials Rule out Famine, Thumb Noses at Aid 

MOSCOW, Nov. 12, 1998 -- (Agence France Presse) Russian agriculture
officials dismissed rising speculation that famine would stalk the country
this winter and warned huge aid handouts from the West would hurt more than
help, news agencies reported Wednesday. 
"Rumors about looming hunger in Russia are obviously an exaggeration. They
benefit the importers of food products, who spread them in order to make
more profits," Russian Agriculture Minister Victor Semyonov said. 
Semyonov said he feared a repeat of the early 1990s, when food bailouts
from the West, spread unevenly by a corrupt system, drove many domestic
farmers into bankruptcy. 
Last week, Russia signed a landmark deal with the United States to receive
hundreds of millions of dollars in food aid, marking the most massive
humanitarian package extended to Russia since the ill-fated 1993 effort. 
The European Union (EU), which is grappling with surpluses of food, is also
preparing an aid package. 
Recent reports of a record-low harvest, compounded by the approach of the
coldest winter in decades, have prompted offers of humanitarian aid from
around the world. 
But a top agriculture official said Wednesday Russians would be better off
than predicted, as the years actual harvest exceeded official figures by 15
"We had and still have a substantial 'shadow' grain turnover and the
farmers do it intentionally," the Russian Grain Unions director, Arkady
Zlochevsky, said. 
The State Statistics Committee reported 51.5 million tonnes of grain had
been harvested in Russia by the beginning of November -- down by almost
half from 1997 figures. The record low harvest was attributed to an intense
summer drought. 
On Tuesday, the governor of the Krasnoyarsk region, Aleksander Lebed
(pictured), who controls approximately one-fifth of Russia, warned of
famine in Russia's far-flung regions, battered by the successive drought
and cold. 
The Russian branch of the Red Cross said Wednesday
more than 1 million Russians will be in urgent need of aid this winter. 
Grain producers countered the ominous predictions, saying this years yield
combined with the previous years reserves were enough to see Russians
through the winter. 
"The Russian population will not suffer from any shortage of food products
in spite of this years terrible drought," said Zlochevsky. 
He said that with enough grain to go around, imports would make up the
shortages in meat and dairy products, filled out by food deliveries offered
as barter payments for debts on Russian gas from neighboring Ukraine,
Belarus and Moldova. 
Additional anti-hunger measures included the creation of an emergency food
reserve and an increase in the use of grain fertilizers by five to six
times, he said. 
Despite this, Russians in many of the hardest-hit regions have already
begun to sound warning bells. 
Administrations in the near-uninhabitable far northeast, where a series of
evacuations began weeks ago, appealed to the federal government for aid as
ports freeze over, blocking the regions only viable shipment routes. 
The White Sea region of Murmansk turned to neighboring Scandinavian
countries for food over two months ago. 
The EU has prepared a proposal amounting to up to $480 million in aid, for
which Russia still has not made a formal request, though EU officials said
Monday they expected an appeal to arrive from Moscow before the end of the
Red Cross branches in Russia, Belarus, Moldova and Ukraine have put
together a package totaling 25 million Swiss francs ($18.1 million) in
donations from Switzerland, Norway, Singapore, Denmark, Britain and Russian
charity organizations. 
The emergency program, the largest of its kind in years, is entitled
"Winter 1998-1999."


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