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Johnson's Russia List


November 24, 1998   
This Date's Issues: 2489 •2490• 

Johnson's Russia List
24 November 1998

[Note from David Johnson: 
1. Fred Weir on Yeltsin and his health.
2. Moscow Times editorial: Leaders Mar Memory of Starovoitova.
3. AP: CIA Denies Watering Down Reports. (Re Chernomyrdin and Gore). 
4. RFE/RL: Floriana Fossato, Primakov's Grace Period Appears Near End.
5. AP: Muscovites Turn to Soup Kitchens.
7. Grace Kennan Warnecke: How The Crisis In Russia Has Affected Small
Business: Lessons From The Volkhov Incubator.

8. New York Times editorial: Death of a Russian Democrat.
9. Moscow Times: Julia Solovyova, Hardships in North Remain Despite Aid.
10. Reuters: PM plays down ambitions as Yeltsin fades.
11. Reuters: Ex-communist countries slow down reforms-EBRD.
12. Reuters: US, Russia would save with nuclear cuts - Cohen.]


Date: Mon, 23 Nov 1998 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT Nov 23) -- In what has become a familiar
occurrence of late, Russian President Boris Yeltsin was rushed to
the hospital Monday. His spokesman said he is suffering from
The Kremlin was quick to downplay this latest in a string of
health problems for the 67-year old leader.
Mr. Yeltsin's spokesman said the President was not too ill
to fulfill his duties, and that he met in the hospital Monday
afternoon with visiting Chinese President Jiang Zemin.
But analysts say the depressing downward spiral of Mr.
Yeltsin's health is taking a toll on Russia's fragile political
In recent months the ailing President has appeared rarely in
public, and even on those occasions has seemed stilted, feeble
and disoriented.
"The president is no longer the president. It is clear he
can no longer fulfill his functions," says Viktor Kremeniuk, an
analyst at the Institute of Canada-USA Studies in Moscow.
"This is yet another demonstration of how central the
president is in Russia's Constitutional system," he says.
"Without Yeltsin on the job, nothing gets done. So his
illness is worsening our social and political crisis -- as he
goes, so goes the country."
Mr. Yeltsin had open-heart surgery two years ago, and has
since been regularly sidelined by what his aides call minor
But Russia's political and economic crisis is growing
critical. Without a strong President at the helm, the country
appears to be drifting into a harsh and turbulent winter.
The government of Prime Minister Yevgeny Primakov has
restored a semblance of stability following a near meltdown of
the economy in August, but has not enacted any comprehensive
program to extract Russia from its crisis.
The apparently political murder of a leading liberal
lawmaker, Galina Staravoitova, at the weekend has greatly
heightened tensions and left many Russians convinced the country
is headed for catastrophe and the return of dictatorship.
"Extremists are already banging on the gates of power," says
Mr. Kremeniuk. "Primakov has very little time to do something, and
the chances of escaping collapse are getting worse every day."


Moscow Times
November 24, 1998 
Leaders Mar Memory of Starovoitova 

Galina Starovoitova was 52 when she was shot dead this Friday. She had no
significant known business dealings, just a powerful and admirable dedication
to the politics of appealing to people's better natures. 
No one can say for sure who killed her. But that has not stopped former Prime
Minister Yegor Gaidar and former privatization chief Anatoly Chubais from
fingering "the Communists," on the flimsy grounds that the Communists disliked
her; it has not stopped high-ranking Communist Gennady Seleznyov from the
equally frivolous counter-charge that "democrats" allied with Starovoitova
could have killed her to attract public attention and sympathy. 
This sort of talk is worse than useless. It is irresponsible and divisive.
Neither side has any evidence to support their claims. But both clans see a
political angle to play, a way to turn this horrible, pointless death to a
quick political gain. 
Never mind that Starovoitova had a son and a grandson, or that her murder
shook the nation deeply. For too many of Russia's national politicians, this
is apparently less a time of mourning than a time of low scheming. 
Notable exceptions to this have been President Boris Yeltsin, Prime Minister
Yevgeny Primakov and Yegor Stroyev, head of the Federation Council, all of
whom warned rightly against such unfounded speculations and allegations. 
This is not to say that there are no conclusions to be drawn from her murder.
There are. Primakov is right to be alarmed at where Russia seems to be
drifting. Even before the killing, there were the startling allegations and
counter-allegations among Federal Security Service officers, who last week
held dueling news conferences to accuse each other of running a contract
murder business within the FSB, the main successor to the KGB. This is the
same FSB that will be leading investigations into Starovoitova's murder -
hardly a reassuring thought. 
Primakov and Yeltsin are right to ignore the Communists' opportunistic calls
for a state of emergency. Instead, Russia's two most powerful men ought to
concentrate on uprooting the government corruption that has brought Russia to
this sorry situation, and on disbanding or radically reforming the security
Neither has shown any political stomach for that. So those who turned out
spontaneously to the public squares of Moscow and St. Petersburg to mourn
Starovoitova's passing - and all other Russians who shared her worry over the
fate of their country - ought to look beyond the current band of timid and
self-absorbed name-callers, in search of politicians who, like Starovoitova,
have the moral courage the nation needs. 


CIA Denies Watering Down Reports
November 23, 1998

WASHINGTON (AP) -- U.S. intelligence pulls no punches in its secret reports to
the White House despite a flap three years ago over a highly critical agency
assessment of Vice President Al Gore's chief Russian negotiating partner,
administration and intelligence officials said Monday. 
The senior officials were reacting to an article Monday in The New York Times
that said Gore's office had rejected a secret 1995 CIA report on Russia's
then-Prime Minister Viktor Chernomyrdin. The CIA presented what its analysts
considered conclusive evidence of Chernomyrdin's corruption, the paper
reported. But when the assessment was returned to the CIA from Gore's office,
someone had scribbled a barnyard epithet across its cover. 
As a result, agency analysts now censor themselves by withholding other
negative information on the prime minister, the newspaper reported. 
White House and agency officials declined to discuss the 1995 CIA report or to
speculate on who was responsible for the colorful, handwritten rejection. But
they said Gore remains one of the most voracious consumers of intelligence
within the Clinton administration, encourages and gets unvarnished reporting
and enjoys cordial relations with the CIA. 
``The notion that we pull any of our punches is simply wrong. We call them as
we see them,'' said CIA spokesman Bill Harlow. ``The vice president is one of
our most ardent consumers of intelligence. He asks a lot of questions and he
demonstrates an in-depth interest in a variety of subjects.'' 
An official in Gore's office also said the vice president has a close
relationship with the CIA. 
The issue of CIA objectivity runs deep at agency headquarters. 
During the Bush administration, Robert Gates had to struggle to win
confirmation as CIA chief amid criticism that he had tailored intelligence on
the Soviet Union to conform with Reagan administration policies. In 1996,
then-CIA Director John Deutch is widely believed to have ruined his chances of
becoming defense secretary by telling lawmakers that Iraqi leader Saddam
Hussein was gaining political strength despite U.S. pressure. 
Gore and Chernomyrdin formed a close working partnership over five years,
negotiating issues ranging from proliferation to nuclear arms reduction to
economic restructuring. Gore, who almost certainly had closer contact with the
Russian prime minister than anyone at the CIA, may have considered himself
better qualified to judge Chernomyrdin. 
The Gore official, speaking on condition of anonymity, said the vice president
felt Chernomyrdin was willing to compromise on delicate matters and to back up
his commitments. 
With Western nations considering propping up the ailing Russian economy, the
issue of official corruption in Moscow has gained importance. 
Chernomyrdin, former head of Russia's huge natural gas monopoly, Gazprom, has
long faced accusations from political foes that he used high office to amass a
Chernomyrdin served as Russia's prime minister for five years before being
ousted in March by President Boris Yeltsin in an abrupt Cabinet shuffle.
Yeltsin brought him back as acting prime minister in August, but Chernomyrdin
was unable to win parliamentary support to regain the post. 


Russia: Primakov's Grace Period Appears Near End
By Floriana Fossato

Moscow, 23 November 1998 (RFE/RL) -- Immediately after taking office in
September, Russian Prime Minister Yevgeny Primakov said that his government's
first priority would be the payment of back wages and pension payments. In
many cases, the arrears had not been paid for months, even for years. 
It now appears that Primakov, seeking to avoid a social explosion at the peak
of Russia's financial crisis, promised what cash-strapped Moscow could not
deliver. After more than two months in office, his government, like previous
ones, will probably soon have to acknowledge its inability to fulfill the
Work stoppages over wage arrears are again in the news. Russian media reported
last week that over 12,000 teachers in the Far East region of Primore went on
strike to demand more than eight months' back wages. In some cities, teachers
plan only limited protest actions, but strikers in the northeast part of the
region are threatening to stop work indefinitely. 
Russian news agencies also report that in recent weeks teachers launched
protest actions on unpaid wages in several other areas. They include the
Siberian Chita Oblast, the Urals region of Sverdlovsk, the Leningrad region
and the Republic of Udmurtia. 
Primakov reportedly said at a recent meeting with State Duma women deputies
that his government is paying current salaries, but will be unable to pay
arrears for pensions and child support before the end of this year. The
situation appears to be the same on back wages for state-sector workers and
military officers. 
Finance Minister Mikhail Zadornov said recently that October salaries were
being paid on time. But Russian media reports estimate that the previous
months' debt owed to state-sector workers reached 14 billion rubles. 
The government's financial problems are leading to more than just threats of
work stoppages. 
Last week (Nov. 17), Kirsan Ilyumzhinov, the President of the southern
Republic of Kalmykia, said that because of Moscow's failure to provide
Kalmykia with promised subsidies, the republic was being forced to consider
itself "de facto outside the Russian Federation." He added that Kalmykia would
no longer transfer taxes to the federal budget. 
The next day, Ilyumzhinov said that Russia was showing signs of what he called
"a federation crisis" that could lead to its break-up. Later in the week he
back-pedaled, saying he was only trying to draw attention to his region's
economic woes. 
Ilyumzhinov's remarks nevertheless triggered a furious reaction both in the
Kremlin and in parliament. President Boris Yeltsin instructed his Security
Council to review whether Ilyumzhinov's statements were consistent with the
country's Constitution. Leaders of both houses of the Russian parliament have
harshly denounced Ilyumzhinov. 
Finance Minister Zadornov responded to Ilyumzhinov's accusations by saying
that payments from Moscow had been made on time, but that part of the money
was diverted. Suspicion about Ilyumzhinov's use of federal and regional funds
has been growing in recent months. 
Meanwhile, most of the impoverished population of Kalmykia has not received
wages, let alone the wealth Ilyumzhinov promised during his 1993 campaign for
the republic's presidency. Critics have also accused him of using illegal
means against his political opponents and of having played a role in the
murder of a journalist earlier this year. No legal charges against Ilyumzhinov
have been brought. 
"Nezavisimaya gazeta," a daily controlled by controversial financier Boris
Berezovsky, said last week that Primakov cannot ensure stability in Russia.
That, along with strike actions and the Kalmykia crisis, is another sign that
Primakov's political grace period seems rapidly to be coming to an end. 


Muscovites Turn to Soup Kitchens
November 23, 1998

MOSCOW (AP) -- Inside a bright little cafe one snowy morning, respectable
members of Russia's fading intelligentsia are chatting over soup and tea.
Suddenly, a tall, white-haired woman in a full-length, cream-colored fur coat
begins to sob.
``We're not bums!'' she wails.
The others quickly reassure her. Of course they aren't. Over there -- that man
was a prominent screenwriter. That woman -- once a leading engineer at a
radar-making plant.
Now, however, they are among Moscow's swelling underclass, eating free meals
in an off-hours soup kitchen.
With winter approaching, alarms are being raised in Russia about people going
hungry. The United States, the European Union and the International Red Cross
have agreed to help, even as top Russian officials insist the country has
plenty of food.
It might, but that doesn't mean people can afford it. Since Aug. 17, when
Russia devalued the ruble and defaulted on its foreign loans, the typical
Russian's meager income has fallen by two-thirds, and many people continue to
go without any pay at all.
In post-Soviet Russia, Moscow was the one place that clearly benefited from
the country's patchy economic reforms. It rapidly became a boom town. But it
also took the main blow when the economy collapsed last summer. Although a
person of means can still splurge and pay the equivalent of $5 a pound for
German sausage, $1 a pound for Spanish oranges and $10 for a bottle of French
wine, many older and poorer Muscovites now face the hunger and other problems
fellow Russians have suffered for years.
The city offers free meals to retirees at cafeterias in each of its 28
districts, but their capacity falls far short of the growing need. The
Salvation Army and hundreds of Russian Orthodox parishes have stepped in to
fill the gap. Neither the city nor the charitable organizations can say how
many people may be homeless or hungry, but all concede they cannot meet the
demand for free food.
``It's a big problem in Moscow right now,'' says Nemerud Negash, an Ethiopian
immigrant who helped found the Center for Humanitarian Aid, a non-profit
dedicated to helping the homeless.
The numbers of needy in Moscow has been growing rapidly, especially since the
economic collapse, Negash says. A few months ago, his organization was serving
130 to 150 free meals a day. Now, he says, it serves 200 -- a number that is
fixed only by the limit of the center's resources. Every day, he says, he
turns people away.
Negash's center serves meals from the yard of the 300-year-old Church of the
Apostle Saints Peter and Paul, located a couple blocks from three of Moscow's
main train stations, which are magnets for the homeless.
One recent day, with the temperature hovering around 5 degrees, the homeless
begin lining up well before the 1 p.m. start of the free lunch hour. When the
gates open, there is a brief scuffle as volunteers block the hungry from
rushing the churchyard. A line of sorts is formed. First women, then men,
shuffle past a folding table laden with a bucket of bread, an urn of hot soy
milk and a pot of steaming mixed grains and fish.
``I come almost every day,'' says Lyudmila Baranova, a slender, clear-eyed
woman of 36 who lives in the nearby train station. She came from Velikiye
Luki, a small city to the west where she had worked as a seamstress until
being laid off in May.
She arrived in Moscow two months ago, figuring her prospects had to improve.
In her hometown, ``There are no jobs, no charity,'' she says.
But in Moscow, she earns no more than 50 rubles a day, about $3, peddling a
newspaper written by the homeless. She is disgusted by the situation in
``Things are much, much worse,'' she says. ``We lived without problems in the
old days. We don't need the Soviet Union back, but we don't need this, either
-- not what's going on now.''
While a vast social gulf separates the homeless shivering in the Peter and
Paul courtyard from the fallen intelligentsia eating at the ``U Kuzmi'' cafe,
the essential difference is that one group has homes, the other doesn't. Both
are living on the edge of hunger.
Nina Petrukholva, the former engineer, eats almost every day at ``U Kuzmi,''
where a consortium of Western and Russian charities and the city government
pays for a few dozen people to eat modest, three-course meals of soup, salad
and a small entree between 9 a.m. and noon, before regular patrons arrive.
Petrukholva used to hike and climb mountains, and she looks far younger than
her 74 years. A lively, cultured woman, she still cross-country skis in the
winter, attends free performances at Moscow's theaters and indulges her love
of classic Russian literature and music.
She once headed a large department in the Soviet Union's main radar
engineering and manufacturing enterprise. In Western terms, she was a high-
ranking executive, someone who might have expected to pamper herself in
retirement with travel and occasional fine meals.
Instead, she gets by on a pension of just over 400 rubles a month, the
equivalent of $23.
``People ask me, `How do you survive on such money?''' she says. ``I reply:


Date: Mon, 23 Nov 1998 
From: Harley Balzer <>
Subject: Comment on who might have shot Starovoitova

David: This deals with one of the saddest stories to come out of Russia
in the past decade. 

By Harley Balzer

The murder of Galina Starovoitova was political. Thieves do not typically
leave behind automatic weapons equipped with silencers. There are probably
far more politicians interested in not solving this crime than solving it.
But if the Russian authorities for once decide to make a serious effort,
there are lots of places they might look. This is a tribute to Galia's
forceful advocacy of important values.
Who shot Galia? The list of those who threatened her over the past decade
contains more than a few candidates, a tribute to her outspoken defense of
human rights, religious groups, and the rights of ethnic minorities. Her
life was threatened repeatedly from the beginning of her political
activism, and she never trimmed her rhetoric or curtailed her efforts in
the face of these threats.
In Russia's male chauvinist social environment, it is shocking that someone
would have targeted a woman for a political assassination, but Galia was no
ordinary woman.
In the Soviet era, the KGB found ways to let her know that they were
unhappy with her studies of inter-ethnic relations in Leningrad--a topic on
which she wrote two excellent books. Nor were they happy that she
befriended foreign colleagues at a time when the policy was to meet them at
the Institute but not invite them to your home. We ducked down some
stairwells together in the almost funny games that characterized "late
stagnation." I remember one evening in early 1986 when we met after work
and walked along Nevskii Prospekt and through side streets looking for
something to buy for supper. After some 90 minutes, we went back to their
apartment and made omelets. Galia's comment: "Real socialism will be when
you can buy something for money." Unlike so many people who have blanked
out the past, she never forgot what daily life was like in the USSR.
The first serious threats to her life started when she championed the
Armenian cause, and was elected to the USSR Supreme Soviet despite a
massive KGB campaign of dirty tricks. (When airplanes dropped leaflets on
Erevan warning Armenians to beware of a "false friend" from Russia,
everyone there knew who had access to aircraft for such purposes.)
Galia's received threats when she advocated independence and autonomy for
non-Russians in the Soviet empire. General Lebed's aides with the 14th Army
in Trans-Dniestr let her know that such talk was dangerous. (Incidently, I
am now aware of three cases over the past six years when aides to Lebed
have either threatened someone's life or talked casually about shooting
people. Does anyone out there know of others?)
Galia was one of the most implacable foes of the Communist Party. She
proposed a law on lustration following the August 1991 coup attempt, and
opposed the early release of the coup plotters. More recently, she was
among the loudest voices denouncing the blatant anti-Semitism of Albert
Makashov--an instance of genuine ugliness that the Communist Party refuses
to disavow. Nationalist publications routinely denounced Galia, referring
to her as a "destroyer" and a "Russophobe." The latter was a particularly
nasty slander for someone who was a genuine believer and represented the
best qualities in Russian Orthodoxy. (She was the only non-Jew on the
Council of the Jewish Committee, a role that she considered to be
absolutely normal for a genuine believer.)
More immediate political motives may deserve particular attention. Having
been kept off the Presidential ballot in 1996 for technical reasons, Galia
was considering both a run for Governor in Leningrad Oblast and a possible
Presidential bid in 2000 (or sooner, if elections are held earlier). Her
party, one of several offshoots of Democratic Russia, was one of the few
already to have registered for the next Duma elections, and they are
running a slate in the upcoming Petersburg municipal elections. Their brave
public attacks on corruption in Petersburg are certainly one plausible
motive for a mafia-style "hit."
Another possibility is one that Galia talked about with me at dinner in
Moscow just a month ago. Vladimir Zhirinovskii's Liberal Democratic
"Party," having captured the Governorship of Pskov, is aiming at also
winning the election for Governor in Leningrad Oblast. This would give
their organization control of the Northwest corner of Russia, including key
ports where the standard ways of doing business make "On the Waterfront"
look like childrens' games. Galia was one of the few Russian politicians
whose oratorical skills might have allowed her to overcome well-financed
economic and criminal interests in an election.
Finally, though less likely, there is the upcoming Presidential campaign.
Galia was determined to be the first woman to make a run at the Russian
Presidency. Again, her qualities as an orator and a principled politician,
while unlikely to get her elected, would have made her a formidable
presence in a system where who gets to the second (runoff) stage is
critically important.
So there is no lack of suspects. And solving this murder is critically
important. In five other recent (and unsolved) assassinations of Duma
deputies, it was possible to find direct economic motives--the victims were
involved in banking, commercial or other activities in addition to or
related to their political role. In Galia's case, the motives appear to be
purely political. Even the hypothesis that this crime might have been
perpetrated by the LDPR or Petersburg criminal circles would involve a
scenario where they wished to remove a potential opponent, rather than an
economic competitor. It takes Russia's politics to a new depth of degradation.
Harley Balzer, Director of the Center for Eurasian, Russian and East
European Studies at Georgetown University, was privileged to be a friend of
Galina Starovoitova.


Date: Mon, 23 Nov 1998
Subject: How The Crisis In Russia Has Affected Small Business

[a version of this article appeared in the Wall Street Journal]

How The Crisis In Russia Has Affected Small Business: Lessons From The
Volkhov Incubator 
By Grace Kennan Warnecke
President, SOVUS Business Consultants
Co-Founder and Chair, Volkhov Business Incubator

In Russia it's bootstrap time. For the past 6 years, foreign capital has
flooded into a Russia with minimal controls. This sprawling country with
its highly educated populace and vast emerging markets, was a tantalizing
prospect for investors and reformers alike. But the latest crisis has seen
the financial pipelines dry up and Russia is now forced to take a long hard
look at itself without the "distraction" of foreign investment -- a fact
that becomes increasingly clear as soon as one leaves Moscow and travels to
the hinterlands. 
I recently spent a week in the small city of Volkhov, Leningrad oblast, at
the Volkhov Business Incubator, a facility created to grow and support
small businesses. Sponsored by the City of Volkhov and the Alliance of
Russian and American Women, and financed by a grant from USAID, the Volkhov
Incubator has flourished -- an anomaly in the bleak economic landscape that
is northern Russia today. Forty-eight new businesses exist, more than half
led by women, thanks to the dogged efforts of the IncubatorÕs founders and
Why has the Volkhov Incubator been successful? Because it provided guidance
and support to start-up business much needed in a country that has had
virtually no history of private entrepreneurship. In a society where
criminal elements tend to prey on the unprotected, the Incubator rents
secure office space at below market rates.
It provides credit and equipment leasing in a country where there is no
bank credit for small and microbusinesses. It also offers basic business
courses otherwise unavailable in the regions and a women's empowerment
course for women entrepreneurs.
Upon hearing the alarming reports from Russia, I didnÕt know what to expect
when I arrived there in late September. I feared for the future of the
Incubator, with which I had been closely associated for four years. What
would remain of the enormous investment of time and money as a result of
the economic crisis?
The reality was not the disaster that I had feared. As is usual in Russia,
people carried on. In Moscow, with the ruble falling, restaurants listed
prices in YEs (or Yankee Equivalents). Away from the glittering Moscow
orbit, most Russians live so close to subsistence that, on the surface,
"the crisis" did not have a great impact. People kept harvesting their
potatoes, and canning vegetables, fruits and jams for winter, as they
moaned about the devaluation of the ruble. The most visible manifestation
of the "crisis" had been an orgy of shopping that left bare shelves in many
stores. But the ruble's plunge seemed to be accepted either by denial or
heroic stoicism.
The Incubator's bank account in St. Petersburg's Baltisky Bank remained
safe and available. Like most regional banks, Baltisky had not invested in
GKOs (government bonds). Elena Ugrumova, Vice President for Trade
Finance, said with some pride, "We overcame the crisis and made our
payments. We are now seeing people coming from Moscow who want to put
their money into our regional banks."
Today, not one of the Incubator's forty-eight clients has gone bankrupt,
although it is too early to predict what will happen in the future. Some
Incubator clients are actually doing better. Tanya Shitova, who runs
"Salon Chic," a small knitwear manufacturing firm, reported that orders had
increased because the ruble's devaluation made imported goods too expensive
for the Russian consumer. Other local manufacturing firms are showing
improved sales as well. Those sales may be offset by higher prices for raw
materials, but after seven years of talk about increasing domestic
production and no action, local production has now become essential.
Igor Grusdev, General Director of the Volkhov Incubator, confirmed that the
Leningrad oblast has not been as hard hit as the Moscow region. He has
seen, however, many people withdrawing their money from banks altogether,
or transferring it into the larger banks, in particular Sberbank, the
central government savings bank. "The reason our businesses are healthy is
because they are very basic and simple. Not one of our clients even owns a
debit or credit card."
Maxim Vishnevsky, Incubator Deputy Director for Finance, viewed the
attitude of the government toward business more critically and reflected
the general opinion of oblast small businesses and entrepreneurs. "What
small business needs," he recommended, "is stability, no inflation, and
lower taxes -- basically what Alexander Shokhin promised. Instead, we get
the present confusion. Tax agents are the enemies of small business;
no-one knows what expenses are deductible; people waste their time trying
to interpret the law. The government's attitude to the business-owners is
guilty until proven innocent. There has to be more trust."
Why then do Russians bother to start small businesses in light of these
formidable obstacles? Some told me that they do so because they like being
their own boss. Others believed that without their own business they could
end up penniless. As in many countries, small business owners, while
complaining about long hours, unjust laws, taxes, the hostile business
environment, still liked having something to call their own and to be in
control of their destiny. Their tenacity is RussiaÕs best chance of seeing
better days. 
Russians are survivors. Doubtless the country will keep going although in
what form remains a cipher. Small business now has an opportunity to play
a growing role in the ever changing and turbulent Russian economy if the
country"s political leaders remove some of the many obstacles in its path. 


New York Times
November 23, 1998
Death of a Russian Democrat

The Russian reform movement has produced few leaders with an
uncompromising dedication to democracy. Galina Starovoitova was one, and
her murder in St. Petersburg on Friday was a terrible loss for Russia. In a
bleak season of economic collapse and political timidity, the killing can
only heighten fears that Russia is slipping into an ugly era of intolerance
and political violence. 
Initial evidence suggests that the killing was a political assassination.
Ms. Starovoitova was gunned down in the lobby of her apartment building,
shot three times in the head, typical of Russian contract killings. She was
a member of the Russian Parliament and a recently declared candidate for
governor of the region around St. Petersburg. In recent weeks she had
spoken out forcefully against political extremism, denounced the
anti-Semitic statements of a Communist parliamentarian and was campaigning
aggressively against financial corruption in the St. Petersburg municipal
Ms. Starovoitova's activities were fully in character with a career built
around principles of liberty, tolerance and the rule of law. She championed
democracy and human rights long before they became politically acceptable
in Moscow, and courageously stood by Boris Yeltsin and other reformers as
Russia struggled to find a new political course when the Soviet Union
An ethnographer by training, Ms. Starovoitova proved to be a skillful and
effective politician. She first gained national attention a decade ago when
she set aside her academic work about the ethnic history of Leningrad and
ran successfully for a seat in the Soviet parliament from Armenia, a
startling victory for a Russian. She later represented St. Petersburg in
the Russian legislature. 
Ms. Starovoitova was a woman of irrepressible energy and infectious
But her good humor and quick smile belied a steely commitment to combat the
corruption and ethnic divisions that she correctly considered to be the
enemies of Russian democracy. 
The least Mr. Yeltsin can do is to hunt down her killers and bring them to
trial. That would be the exception in a nation where political violence is
rarely prosecuted. Her countrymen can honor her memory by following her


Moscow Times
November 24, 1998 
Hardships in North Remain Despite Aid 
By Julia Solovyova
Staff Writer

Almost three weeks after Emergency Situations Minister Sergei Shoigu flew to
the Far East where fuel shortages left many people without electricity and
heat, officials say the situation has improved in some remote northern
But other regions still are without enough fuel and food to make it through
the long winter. 
After desperate authorities in the Kamchatka region appealed to the United
Nations for fuel aid, a government commission visited several of the hardest-
hit regions and promised that it would find a way to get the needed supplies
Soon, tankers loaded with fuel and led by icebreakers were on their way. 
The situation has dramatically improved in the Kamchatka, Chukotka, Sakhalin
and Magadan regions, said Colonel Anatoly Sarovsky of the Far East regional
center for civil defense and emergency situations. 
"The tension has been relieved. People will not freeze," he said by telephone.
"Delivery will be continuing nonstop throughout the winter." 
This optimistic scenario was challenged by Boris Misnik, the head of the State
Duma's committee on the north. 
"Things do move, but way too slowly, expensively and too late," he said. 
Misnik said 10 northern regions are seriously short of supplies. 
Fuel deliveries have got through to Kamchatka, and the Pacific peninsula is
again supplying residents with electricity and heat, a local emergency
official said. 
Deliveries to Kamchatka are made easier because the Pacific ports remain open.
But deliveries are far more difficult to regions like Chukotka where
settlements are small and spread out, and where rivers and ports are frozen
over for much of the year. 
A Finnish-owned tanker carrying 13,400 tons of fuel to the Chukotka port of
Mys Shmidta was stuck Monday 117 kilometers from the coast together with a
nuclear icebreaker. The tanker was expected to get through Tuesday. 
While regions in the extreme north have on average 84 percent of the necessary
fuel and coal supplies in storage, Misnik said, some of those regions are in a
desperate state. 
The Koryak autonomous region has 14 percent of the coal and 23 percent of the
fuel oil it needs, and Sakhalin Island is facing starvation with food stocks
only 12 percent of what they should be, he said.Misnik said the most
"unsettling" situation is in Yakutia, where about 5,000 people from five gold
prospecting towns near Oimyakon are in dire straits. 
The state closed the towns more than a year ago. Although many of the
residents were not relocated, the towns no longer officially exist and no
longer get deliveries of supplies. People are staying warm by taking apart and
burning abandoned houses. 
More than half of the 2.64 billion rubles ($154 million at Monday's official
rate) allocated for northern deliveries has been paid to the regions, Misnik
said. But the money has lost much of its value since the August collapse, he
The Finance Ministry has allocated 1.5 billion more rubles to pay for
transporting emergency supplies, said ministry spokeswoman Irina Yershova. 


ANALYSIS-PM plays down ambitions as Yeltsin fades
By Timothy Heritage

MOSCOW, Nov 23 (Reuters) - Prime Minister Yevgeny Primakov could be only a
heartbeat away from ultimate power in Russia, but he is doing his utmost to
play down his ambitions as President Boris Yeltsin battles pneumonia. 
Power has shifted inexorably to Primakov in the two months since he became
premier while Yeltsin's health and authority have waned, helping to limit the
impact of the president's admission to hospital on financial markets. 
As Yeltsin's constitutional understudy, the 69-year-old former foreign
minister would be in a powerful position to run for the presidency if Yeltsin
were forced to resign. 
Primakov's public response is to shrug off any talk that he harbours
presidential ambitions. But concealing ambitions is a tactic he has used to
great effect in the past to survive and keep moving up in Soviet and Russian
``All lunacy must have its limits. I exhausted mine when I agreed to become
prime minister,'' Primakov told the Izvestia newspaper in an interview
published last Friday. 
``I do not plan to compete for the presidency. I'm the wrong age for that, you
Those words recall Primakov's comments just days before Yeltsin turned to him
in September as a compromise candidate to be prime minister after the
Communist-led opposition rejected his first choice in two of three possible
parliamentary votes. 
``I am grateful to everyone proposing my candidacy as the chairman of the
government. But I must say clearly -- I cannot agree to that,'' he told Itar-
Tass news agency on September 8, three days before he became premier. 
Since then, Primakov has consolidated his position. He has been credited with
restoring political stability after the tense period that followed the last
government's decision in August to let the rouble devalue and to freeze some
foreign debts. 
As expected, his main problem has turned out to be the economy. Many investors
doubt he has a coherent vision of how to pull Russia out of crisis and
distrust his moves away from the more liberal market reforms of his
But Yeltsin's authority has declined to the extent that Kremlin aides
acknowledge he has given Primakov responsibility for the day-to-day running of
the economy. The prime minister has also stood in for Yeltsin on two foreign
``(Primakov) is effectively the deputy president, assumes his duties in the
event of the president's absence and under the constitution is obliged to
think of his prospective presidency,'' Oleg Sysuyev, Yeltsin's deputy chief of
staff, told RIA news agency on Sunday. 
``He is obliged to consider himself a candidate for the presidency -- that is
written in the constitution...He must think of himself as a man who at any
moment might have to take on the responsibilities of the president.'' 
Sysuyev said age was no obstacle and other countries had been ruled
successfully by leaders older than Primakov, who would stand in for three
months until a presidential election were held if Yeltsin had to resign or
were incapacitated. 
Some commentators say Primakov is to all intents and purposes running the
country while Yeltsin remains as a figurehead, hoping to stay on as a supreme
arbiter and guarantor of the constitution until his term ends in mid-2000. 
Whether or not he secretly wants to be president, Primakov is using what he
regards as a reliable formula for success. 
He is careful to say he takes instructions from Yeltsin and supports his long-
term ally on every public occasion. 
He has adopted a low-key approach, limiting his public speeches and meetings
with the media. At an economic summit with 20 other leaders in Malaysia last
week, he kept a low profile that contrasted with Yeltsin's flamboyance during
trips abroad. 
True to style, he dismissed suggestions on Monday that he was about to step in
even temporarily for Yeltsin. 
``I spoke to the president by telephone yesterday. I have received no special
instructions,'' he told reporters. 
Primakov, a former Communist who learned his political skills in Soviet times,
is well aware that open ambition proved the downfall of others Yeltsin came to
regard as a threat. 
Yeltsin, who still has the right to appoint and dismiss the prime minister,
sacked former Prime Minister Viktor Chernomyrdin abruptly last March after the
media speculated he was his chosen heir as president. 
He also removed Alexander Lebed, now a regional governor, as his national
security adviser in October 1996 for openly harbouring presidential ambitions.
If Primakov runs for the presidency, his likely rivals include both Lebed and
Chernomyrdin. Other leading contenders could include Moscow mayor Yui Luzhkov,
liberal leader Grigory Yavlinsky and Communist Gennady Zyuganov. 


Ex-communist countries slow down reforms-EBRD
By Gill Tudor

LONDON, Nov 23 (Reuters) - Former communist countries made less collective
progress towards a market economy in 1998 than in any year since the fall of
the Berlin Wall, the European Bank for Reconstruction and Development (EBRD)
said on Monday. 
In its annual Transition Report for 1998, the EBRD said a couple of countries
moved ahead with reforms and others made up lost ground after costly wars, but
Russia and several of its neighbours backtracked as crisis swept the emerging
"Progress in transition has been slower and more erratic than in any year
since the fall of the Berlin Wall (in November 1989)," the EBRD said. 
"Policy reversals have become more common. A larger number of countries are
resorting to administrative controls in response to crisis. The hard-won gains
of the first phase of transition have been placed increasingly at risk." 
The EBRD, set up in 1991 to support the transition to a market economy in 26
countries of central Europe and the former Soviet Union, said countries which
had embraced the reform process most effectively had been most resilient to
the emerging markets crisis. 
"It's been a year of stress-tests," EBRD Chief Economist Nicholas Stern told
"The countries which had progressed more, particularly Poland and Hungary,
have survived relatively well. Other countries, particularly Russia, have been
hit extremely hard." 
The EBRD report singled out Poland and Hungary for pushing ahead this year
with tricky institutional reforms, notably in the Polish banking sector and
Hungarian business. 
Some countries where the reform process had been derailed by war, such as
Armenia, Azerbaijan, Bosnia and Tajikistan, had started to make up lost ground
in 1998 by implementing long-delayed plans or adopting new programmes. 
But overall progress, measured by a set of "transition indicators" ranging
from institutional reforms to price liberalisation, was dragged down by the
Russia was the main offender, the EBRD said, showing reversals in banking and
the securities markets, and in liberalising prices, trade and the foreign
exchange system. 
The virtual collapse of Russia's financial system in mid-August, when the
government devalued the rouble and effectively defaulted on domestic debt,
opened a grim new chapter in this year's general emerging market turmoil. 
But the EBRD also rapped Belarus, Turkmenistan and Uzbekistan for reversals
which it said had nothing to do with the broader crisis. 
"Governments in these countries have explicitly favoured alternative economic
paths that have, over time, increasingly diverged from the reform patterns of
other transition economies," the report said. 
Stern said the transition indicators showed greater overall progress on
privatisation and liberalisation than in the field of institutional reforms,
such as competition policy and the banking system. 
The EBRD said the financial sector in transition economies was cramped by the
legacy of communism, tending to be both small and heavily bank-based. 
"When compared with those of market economies at comparable levels of
development, the banking systems of transition economies appear relatively
stunted, particularly in lending to the private sector," the report said. 


US, Russia would save with nuclear cuts - Cohen
By Charles Aldinger

WASHINGTON, Nov 23 (Reuters) - Defence Secretary William Cohen said on Monday
that deeper cuts in U.S. and Russian nuclear arms would save scarce defence
funds in both countries, but refused to say whether the Pentagon had pressed
Congress to make unilateral U.S. cuts. 
He was asked at a news conference about a New York Times article saying the
Pentagon had quietly recommended in a report last April that Congress consider
unilateral cuts because of weakening security threats coupled with budget
Cohen said the military, under orders from Congress, was exploring a variety
of options on nuclear disarmament but called the report ``a highly classified
``We intend to keep it at that level for the time being,'' he told reporters. 
The Times reported that senior Clinton administration officials said the
military's proposed cuts would reduce the U.S. arsenal below the 6,000 nuclear
warheads allowed on both sides under the first strategic arms reduction
treaty, or START-1. 
Defence officials, who asked not to be identified, told Reuters on Monday that
both the Navy and Air Force as well as the Energy Department would like to see
the U.S. arsenal slashed because it costs billions of dollars a year to
maintain warheads that will never be used. 
But they stressed that the United States did not want to send the wrong signal
on unilateral cuts to Russia's Duma, the lower house of parliament, which has
not ratified the START-2 Treaty to bring nuclear warheads on each side down to
between 3,000 and 3,500. 
``As I have indicated before, it is costly to the United States to maintain
those (START-1) levels,'' Cohen told reporters. 
``It is more costly to Russia to maintain those levels. And that is the reason
why we have tried, on each and every occasion, to persuade our Russian
counterparts it is in their interest, as well as the United States, to ratify
START-2 as quickly as possible so we can reduce the levels and then move on to
There have been signals from Moscow that the conservative Duma is moving
toward passage of START-2, perhaps as early as December, because Russia cannot
afford to maintain its present nuclear arsenal in the throes of a devastating
financial crisis. 
A senior White House official told the Times that neither President Bill
Clinton nor Cohen has made a decision on the Pentagon's recommendations and
would not do so until Russia's Communist-dominated Parliament completes its
latest deliberations on START-2. 


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