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Johnson's Russia List


November 25, 1998   
This Date's Issues: 2491 2492 

Johnson's Russia List
25 November 1998

[Note from David Johnson:
1. Reuters: Timothy Heritage, ANALYSIS-What next for Russia after

2. Reuters: Quotes from mourners at Russian liberal's funeral.
3. Harley Balzer: Memorial service for Galina Starovoitova in
Washington DC.

4. The Globe and Mail (Canada): Geoffrey York, Russian teachers.
5. Stuart Ferency: Anecdotal Illustrations to Jeffrey Sach's comments.
6. New York Times: James Risen, Gore Rejected C.I.A. Evidence of Russian

7. Irish Times: Michael Foley, Press freedom call eclipsed by reality.
8. Moscow Times: David McHugh, Primakov Campaign Gathers Support.
9. Reuters: Peter Henderson, INTERVIEW-Russian virtual economy faces 
real abyss. (Clifford Gaddy).

10. Moscow Times: Ex-IMF Official Blasts Lending.]


ANALYSIS-What next for Russia after Starovoitova?
By Timothy Heritage

MOSCOW, Nov 24 (Reuters) - The murder of liberal parliamentarian Galina
Starovoitova has shocked Russians into deep soul-searching about the state of
their country after seven turbulent years of democracy and where it is headed
President Boris Yeltsin's admission to hospital with pneumonia on Sunday, two
days after the State Duma deputy was shot dead in St Petersburg, simply served
to strengthen the impression of many that Russia is dangerously rudderless. 
"No one expected the road to freedom to be so hard or that it would take so
much courage to carry on the struggle honourably and to stand up for our
ideals," Vladimir Lukin, a prominent liberal, told mourners for Starovoitova
on Tuesday. 
The economy is in dire straits, divisions between liberals and Communists are
as wide as ever, faith in the legal and political authorities is almost zero,
and Yeltsin's illness has increased pressure on him to quit before his term
ends in 2000. 
The sense of gloom is heightened by the lack of a clear alternative to Yeltsin
and the lack of public trust in politicians, particularly after a series of
anti-Semitic remarks by a Communist deputy went largely unpunished. 
Marina Salye, a liberal activist, voiced the fears of many democrats in the
newspaper Nezavisimaya Gazeta. 
"The murder of Galina Starovoitova is...the start of a mass attack on what
remains of the incomplete process of democratisation," she said. 
Many liberals fear the democratic reforms made since the Soviet Union
collapsed in 1991, and the liberals who made them, are under threat and that
no one is there to defend them. 
Yeltsin embodied the nation's hopes when he became Russia's president in 1991
but his seven years in the Kremlin have failed to bring peace and prosperity.
Opinion polls show the vast majority of Russians have lost faith in him. 
Inflation is rising again, industrial output has failed to take off as
planned, privatisation is widely regarded as making a chosen few rich and
corruption is rife. Contract killings and corruption are common, and few
murder cases are solved. 
Yeltsin's decline, and actions such as sending to troops to try to quell
separatists in the Chechnya region in 1994, have deprived him of moral
authority and resulted in what many commentators say is a power vaccuum and an
anarchic society. 
"Galina Starovoitova's murder is a tragic illustration of the lack of any
authority in the country," the newspaper Kommersant said on Tuesday. 
Power has gradually ebbed away from Yeltsin towards Prime Minister Yevgeny
Primakov in the last two months. Some commentators welcome the shift, saying
Primakov now provides more stability than Yeltsin. 
But others question Primakov's commitment to market reforms and say he could
now harbour presidential ambitions, reducing the chances that he will carry
out badly needed reforms because they could prove painful and damage his
election chances. 
Many commentators say this scenario could doom Russia to political inertia and
economic crisis at least until a new president is elected. 
"That's the impression one has to have -- that President Yeltsin is only able
to carry out his duties in a highly limited fashion and that all domestic
politics in Russia are focused on the question 'When will President Yeltsin's
era end and what will come after that?'" German Deputy Foreign Minister
Guenter Verheugen said in a radio interview. 
Despite the gloom, liberals are hoping Starovoitova's death could be a turning
They are calling for all liberals and so-called democrats to put aside the
petty differences and rivalries that have divided them for years and unite
against the communists and nationalists who dominate the Duma lower house of
Nikolai Svanidze, a television commentator, said Russians must learn from
Starovoitova's murder by analysing what had made it possible so that such
tragedies are not repeated. 
"Society, for its self-preservation, must find out how this murder became
possible," he said. 
Some say Yeltsin would offer a way out by resigning. Others say he should stay
until his presidential term ends to delay the inevitable mudslinging that an
election would bring and the delays it could cause for economic reforms. 


Quotes from mourners at Russian liberal's funeral

ST PETERSBURG, Russia, Nov 24 (Reuters) - Mourners at Tuesday's funeral of
Russian liberal politician Galina Starovoitova ranged from former prime
ministers to the ordinary people of St Petersburg who admired her battle for
Many called for the killers who gunned down the 52-year-old grandmother and
academic on Friday to be identified and brought to justice. All paid homage to
her courage and honesty in her increasingly lonely role as a defender of human
The burial ceremony at the Alexander Nevsky Lavra monastery was delayed by
three hours to allow thousands to file past her coffin. Here are some of the
remarks by speakers during eulogies at the preceding civil ceremony beside the
open casket: 
Former First Deputy Prime Minister Boris Nemtsov: ``Why did they kill Galina
Vasilyevna? Why did they kill our comrade? There's only one answer. The
scoundrels wanted to scare us.'' 
Former First Deputy Prime Minister Anatoly Chubais: ``Do they want to scare
us? They will not succeed...They do not kill the helpless, they kill those who
get in the way. And it is clear in whose way they get -- that of Communists
and bandits.'' 
Deputy Prime Minister Valentina Matviyenko, representing Prime Minister
Yevgeny Primakov: ``Forgive us who hold power, forgive us, your colleagues who
were unable to protect you. It is terrible that it has become normal to kill
priests, journalists and now deputies.'' 
Starovoitova's son, Platon: ``They killed her out of fear. The killers and
those who gave the orders might escape concrete investigations. But I believe
they won't escape the anger of the people. Sooner or later, the people will
crush them underfoot.'' 
Oleg Sysuyev, deputy chief-of-staff to President Boris Yeltsin: ``I feel we've
been distracted by opinions and in some ways have, out of our revolutionary
habit, made our own uses of this tragic death. In fact, we should be saying an
excellent person has gone, a wife, a loving grandmother, a beautiful woman --
that is in itself the greatest tragedy.'' 
Former Prime Minister Viktor Chernomyrdin: ``These shots were fired at all of
us. I want to say once more that the authorities must acquire true authority
in order to defend their citizens. If people start talking to politicians in
the language of bullets, then we can imagine where that will get us.'' 
Yuri Yarov, aide to President Boris Yeltsin: ``We must direct the whole power
and force of the law against nationalist extremism and political
terrorism...Irrespective of the true motives for this murder, a crime on this
scale is a political act about which the public should know the whole
truth...The death of Galina Starovoitova should not become a reason for
division in society -- the best memorial to her would be the uniting of all
democratic forces.'' 
Vladimir Lukin, opposition liberal member of parliament and former Russian
ambassador to Washington: ``The authorities sleep and only when world public
opinion begins to talk out loud do they wake up...No one expected the road to
freedom to be so hard or that it would take so much courage to carry on the
struggle honourably and to stand up for our ideals.'' 
Liberal member of parliament Irina Khakamada, of the morning after
Starovoitova's murder: ``I woke up in a different country.'' 


Date: Tue, 24 Nov 1998 
From: Harley Balzer <>
Subject: Memorial service for Galina Starovoitova

Friends, colleagues and admirers of Galina Vasil'evna Starovoitova are
invited to a memorial service at the Russian Orthodox Church of St. Nicholas
on Tuesday, December 1 at 6:15 p.m. The Church is located at 3500
Massachusetts Avenue, NW in Washington, DC. 

There will no doubt be many individuals and institutions wishing to remember
Galia, and we encourage everyone to do this in the way they deem
appropriate. We see this meeting as an opportunity for those of us who knew
and valued Galia to express our feelings and seek consolation in each
others' company.

Marjorie Mandelstam Balzer
Blair Ruble
Angela Stent
Fr. Dmitri Grigorieff
Harley Balzer

For information call:
Center for Eurasian, Russian and East European Studies, Georgetown
University (202) 687-6080
Kennan Institute, Woodrow Wilson International Center for Scholars (202)


Date: Tue, 24 Nov 1998 
From: Geoffrey York <>
Subject: Russian teachers

By Geoffrey York
The Globe and Mail (Canada)
Nov. 23, 1998

YERMOLAYEVO, Russia -- For the school teachers of the tiny Siberian
village of Yermolayevo, payday is an unpredictable event.
Sometimes they get $28 for a month’s work. Sometimes they get only a
package of milk and cheese, or perhaps a stack of lumber from a local
timber mill. Often they get nothing at all.
Yet even after three years without a regular wage, Tatyana Paramonava
felt physically sick when she made the traumatic decision to join a
strike by the village teachers last month. Soon she had to take medicine
for headaches and high blood pressure.
~It’s difficult for me to speak about it,” sighs Mrs. Paramonava, who
had taught faithfully in Siberian village schools for 33 years before
she walked off the job.
~Everyone feels the same -- we feel sick. This is the first time I’ve
ever been on strike. We don’t want to strike. We are teachers and we
want to teach. But we want to live, and how can we live without money?”
This autumn, after years of unpaid salaries, Russian teachers have
finally reached the breaking point. A wave of strikes and protests has
swept across Russian schools, leaving hundreds of towns and villages
without any schools for weeks at a time.
Russia’s education system, once the pride of the country, is sliding
slowly into an abyss of poverty and decay. School buildings are falling
apart, often without electricity or heat in the winter. Teachers are
demoralized. Parents cannot afford the rising cost of textbooks and
other fees. Inequality is rising dramatically -- low-income students are
dropping out of school, while affluent parents are transferring their
children to private schools.
Earlier this month, several schools in the Far Eastern city of
Vladivostok were forced to close because they had no heating in
subfreezing weather. Other schools shortened their classes, while their
students struggled to keep warm in winter coats.
The new government of Prime Minister Yevgeny Primakov, embroiled in a
severe budget crisis, has promised to pay back all the money owed to
Russia’s public-sector workers, including teachers. But two months after
his promise, little has changed. Debts to teachers are rising daily.
Thousands of teachers have gone on hunger strikes or protest marches.
By the beginning of this month, about 48,000 teachers were on strike to
demand their unpaid wages.
Remarkably, the Russian education system has continued to produce
bright and intelligent children. A survey of learning achievements in
maths and sciences in 1995 found that Russian children were still
performing better than children from Canada, the United States, Germany
or Sweden.
But these impressive scores are the legacy of the old Soviet education
system, which is now disintegrating. ~The results largely reflect the
inherited attainment of school systems,” said a recent report to the
United Nations Children’s Fund (UNICEF). Schools are now ~running on
air,” the report warned. ~The quality of schooling has fallen.”
While the Russian education system falls apart, the Russian elite have
sheltered their own children by sending them to foreign schools in
Western Europe. Even the grandson of President Boris Yeltsin is studying
at a private school in England.
In Russia’s remote Siberian heartland, the village schools are in
desperate straits. The teachers of Yermolayevo were given less than a
third of their $90 monthly salary in September. Even after going on
strike in October, they ended up with less than half of their unpaid
~Children should be the priority, but less and less attention is being
paid to education,” said Nadezhda Sokrutenko, a teacher and director of
the village school.
~The strike was a forced measure. We feel some responsibility for the
kids. But we have no money for furniture, equipment or textbooks. Winter
is coming and we need to buy warm clothing.”
Yermolayevo is a village of rustic wooden houses and 900 inhabitants on
the Yenisey River in central Siberia. Education is a basic value here.
When the teachers went on strike, dozens of parents supported them by
writing letters to the regional government, pleading for money for the
unpaid wages. The teachers, for their part, were so conscientious that
they assigned homework for their students to do during the strike. But
it wasn’t enough.
~I’ve done my homework already,” complained 7-year-old Sasha Yakimov,
who is loitering aimlessly at the village school. ~Now I feel sad and
bored. I have nothing to do. We need our education.”
Mrs. Paramonava, the veteran teacher, is owed the equivalent of about
four months salary. Even if she is finally paid this money, it will have
lost half of its value because of the collapse of the ruble. Yet when
the teachers went on strike in October, they didn’t bother demanding
wages for previous months.
~We’re not even asking for our debts -- we’re only asking for our
salary for September,” Mrs. Paramonava said. ~The government makes
promises and promises, but we don’t believe them.”
Even before the crisis that hit Russia when the ruble collapsed in
August, many teachers had gone two or three years without regular wages.
In real terms, Russia’s education spending dropped by almost 70 per cent
from 1989 to 1996.
Today the crisis has compounded the problems. Federal and local
governments have less revenue, budgets have been slashed, and the pile
of unpaid wages is steadily growing bigger.
~This situation is not sustainable,” the UNICEF report said. ~The
commitment of the large core of generally female teachers has been
sorely tested by worsening pay and conditions, and cannot be assumed to
continue. School systems have been living on borrowed time. Those
teachers with outside opportunities may leave the profession.”
Russia is spending less than 4 per cent of its gross domestic product
on education, well below the average in Western countries. ~It is a
concern that this country, which has so many children, allots a
relatively small slice of national income to education,” the UNICEF
report said.
To keep their schools alive, Russian parents and students often have to
raise money through donations or other schemes such as selling raffle
tickets. Sometimes the children mop up the floors themselves because the
schools are so short of staff.
All of this means that education is an increasingly unpleasant
experience for Russian children. An international survey of 13-year-old
girls found that the Russian girls had a much more negative feeling
toward school than those of any other country. Only 18 per cent said
their school was ~a nice place to be,” compared to 72 per cent in
Germany and 47 per cent in Poland.
Inequality, meanwhile, is rising sharply. While regular schools are
falling into decrepitude, many affluent parents are transferring their
children to fee-charging private schools, where class sizes are smaller
and teacher salaries are several times higher. Hundreds of private
schools are flourishing in Russia today. Many of the best teachers are
switching to private schools, leaving other schools drained of talent.
Since 1991, more than 30,000 kindergartens and pre-schools in the
former Soviet Union have closed down. Of those that remain, many are
charging fees or asking for ~contributions.” If a family cannot pay, its
children are unwelcome.
Increasingly, it is affluent Russian families that can afford to send
their children to pre-schools and universities. Low-income families are
half as likely as other Russian families to send their children to a
At the university level, bribery and corruption have become
commonplace. Wealthy students can obtain good exam grades by bribing
their professors. Poorer students are often forced to drop out of
university because their stipends are too small to survive on. Since the
collapse of the ruble, most stipends are worth less than $10 a month.
Authorities have announced new fees for libraries and laboratories and
higher fees for dormitories.
The higher fees have prompted a wave of protests by thousands of
university students, including one in Yekaterinburg earlier this year
that was broken up by baton-wielding police.


From: (Stuart Ferency)
Date: Mon, 23 Nov 1998 
Subject: Anecdotal Illustrations to Jeffrey Sach's comments

Having been both participant in and observer of the economic life in the NIS
since 1992, I found Jeffrey Sach's commentary(CDIR 2487) true to my
observations. A couple of anecdotes serve as illustration.

In 1994, at one the auctions of state property I observed that year, I
witnessed the auction of a truck base. Did the state recover fair value for
its assets? Are you kidding? The sale provided the previous director with
ownership of the facility and its attendant equipment. Some facilities in the
NIS look very different than those which we are accustomed to see in the US,
but a truck base in the NIS looks just like a trucking company in the US. This
one had 115 Kamaz, cab-over diesel, tractors and 135 dump trailers in its
inventory along with 10 hectares of land covered with repair facilities,
spares and the appropriate equipment in machine tools to maintain and overhaul
these trucks. Unusual, given what I have seen of industrial facilities in the
NIS, these trucks, trailers, buildings and equipment were in magnificent
shape, well maintained and nearly new. I could have recouped the entire
auction price of the facility if I had sold only 9 of the nearly new tractors
for fire sale prices of only $5000 each. In this case only 3% of the value of
the assets sold had been recovered, but what might the state coffers have
looked like if even just 30% had been recovered? Unusual example? Not at

Interesting, as well, was the April 1996 meeting that I had with the Russian
individual responsible for administering the World Bank ARIS loan of 210
million dollars that the Russian government received to benefit the
agricultural sector that year. The purpose of the loan was four fold:
establish model terminal markets, develop a market price reporting system,
establish a system of farm support similar to our county extension agencies
and nurture seed development facilities. The conversation with this
individual clearly illustrated the naiveté the Russian government had in
dealing with the World Bank. At the outset, I was assured that the these
programs were not really interesting to the Ministry of Agriculture (MOA). If
that was true, I asked, why had the MOA not sought to modify the loan to meet
their true needs before accepting the loan? In reply, the official answered
that he had no idea that any modification could be made. Imagine! I
explained that:
1. It was a loan and therefore, since the Russian government was required to
repay the loan the with interest, it should be entitled to have input.
2. Generally in the West we borrow to meet our needs, not the needs of the
3. The participating World Bank countries fund the WB to meet borrower's needs
(in this case Russia's needs). Further, if Russia refused the loan the WB
officials involved would, on their own, have sought to modify the loan to
better meet Russia's need.
In September of 1996, I had the opportunity to discuss this matter with Jan
Piercy, US Executive Director of the World Bank. I explained the situation,
to which Ms. Piercy replied that I was indeed correct. The conversation
saddened me. 

As Jeffrey Sachs pointed out, shouldn't we have realized that unlike Poland,
Russia has no memory of a market economy. We certainly need the Russians to
make choices. However, we first need to make sure that they have adequate
knowledge of the issues involved in the decisions to be made. 

The level of education and experience with a market economy has been
developing over time. Now, when Russians can better understand our efforts,
we have pulled out our assistance. What sense does this make? 


New York Times
November 23, 1998
[for personal use only]
Gore Rejected C.I.A. Evidence of Russian Corruption

WASHINGTON -- When the CIA uncovered what its analysts
considered to be conclusive evidence of the personal corruption of Prime
Minister Viktor Chernomyrdin of Russia in 1995, they sent it to the White
House, expecting Clinton administration officials to be impressed with
their work. 
Instead, when the secret CIA report on Chernomyrdin arrived in the office
of Vice President Al Gore, it was rejected and sent back to the CIA with a
barnyard epithet scrawled across its cover, according to several
intelligence officials familiar with the incident. 
At CIA headquarters in Langley, Va., the message seemed clear: The vice
president did not want to hear allegations that Chernomyrdin was corrupt
and was not interested in further intelligence reports on the matter. 
As a result, CIA analysts say they are now censoring themselves. When, for
instance, the agency found that it cost a German business executive $1
million just to get a meeting with Chernomyrdin to discuss deals in Russia,
it decided not to circulate the report outside the CIA, officials said. 
Gore, who held regular talks with Chernomyrdin that became an important
channel for relations with Russia, declined to comment on the handling of
the report. "I never discuss top-secret documents," Gore said in an
Yet a senior aide to Gore said his office always wants more intelligence,
not less. "The real attitude around here about intelligence is, can't do
business without it," the aide said. 
But that was not the lesson learned at the CIA. The incident has fostered a
perception in the agency's ranks that the administration is dismissive of
"inconvenient" intelligence about corruption among the Russian leaders with
whom White House and State Department officials have developed close
personal relationships. 
These complaints seem unrealistic to the White House and foreign policy
officials who insist that they could not allow allegations of corruption to
deter them from working with the Russian leadership on a range of issues,
from curbing the spread of weapons to increasing U.S. trade with Russia.
Some add that making corruption among the Russian leadership a high
priority would be a losing battle. 
"What does the CIA want us to do, not deal with the prime minister of
Russia?" a senior administration official said. 
This disagreement between the CIA and the White House has flared during
Russia's economic crisis, and CIA officials argue that the White House
should be more interested in unvarnished information about corruption in
Moscow, especially as the United States and other nations were trying to
determine whether Russia deserved billions more in Western aid money. 
Instead, these critics say the administration seems willing to try to deal
with the crisis with one eye closed. 
"They never want to hear this stuff," complained an intelligence official
who asked not to be identified. Another said: "They don't ignore it. But
they don't want to have to act on it." 
Several senior administration officials acknowledged in interviews that
they had received a number of reports from the CIA alleging corruption by
Chernomyrdin, who was ousted as prime minister in March and made an
unsuccessful bid to return to the post this fall. 
Officials also say the agency has submitted many other reports alleging
corruption among other senior Russian leaders, including Anatoly Chubais,
who until recently was considered by administration officials to be one of
their closest and most important Russian allies on economic reform. 
But the administration officials contend that the CIA reports never
contained enough evidence to prompt them to distance themselves from
Chernomyrdin, Chubais or other senior Russian officials who had become
important counterparts in diplomatic and economic relations. 
In fact, several administration officials were dismissive of the CIA
reports, saying they were often inconclusive and thinly sourced. Those
officials also said that they had frequently asked the CIA for more
conclusive proof, but that the agency never delivered. 
"To my knowledge, they have never presented us with a smoking gun," an
administration official said. "I would describe some of the agency's
material as being in the realm of rumor." 
CIA officials counter that the administration established impossibly high
standards of proof to make it easier for the White House and State
Department officials to dismiss their reports. 
"These people have expected something no one in the intelligence community
could provide -- judicial burden of proof," an agency official said. "Did
we have an authenticated videotape of the person actually receiving a
bribe? No. But reporting from established, reliable sources was written off
as 'vague and unsubstantiated."' 
Agency analysts refused to describe much of the classified evidence they
provided to the administration against Chernomyrdin and Chubais. But they
insisted that it was more detailed and conclusive than allegations of
bribery and insider dealing that have been made in the Russian media and
In response, Andrei Trapeznikov, a spokesman for Chubais in Moscow,
complained that if the CIA had evidence against Chubais, the agency should
make it public. 
"If they have something, they should tell it officially," said Trapeznikov,
head of press relations for Unified Energy Systems, the Moscow company
where Chubais is now president. "We haven't seen these reports." 
Told that administration officials had been dismissive of much of the CIA
reporting, Trapeznikov said, "I think that shows the situation." 
Chernomyrdin was unavailable for comment, and his staff refused to discuss
the matter when reached in Moscow. 
The administration never even paid much attention to the many allegations
that have been made publicly against both men over the last several years. 
Chubais, unpopular in Russia for his management of the economic reforms,
was ousted from the Yeltsin government for a time last year after reports
that he and four other government officials had each accepted $90,000 in
advances for a proposed book on the country's privatization efforts. The
publisher was partly owned by a bank that had made several successful bids
in privatization sales. 
The privatization program itself has also been at the center of charges of
insider dealing benefiting a handful of the new Russian oligarchs. 
Meanwhile, Chernomyrdin, the former head of Russia's huge natural-gas
monopoly, Gazprom, has been publicly accused of using his influence over
Gazprom's privatization program to make himself one of the country's
richest men. His personal fortune has been estimated to be as high as $5
billion, his Russian critics have said. 


Irish Times
November 24, 1998 
[for personal use only 
Press freedom call eclipsed by reality 
By Michael Foley 
Moscow Letter: There is a monument outside Moscow's Central House of
Journalists depicting a Soviet journalist wearing a fine military uniform,
high boots and a cape.

He has a camera slung from his neck and holds a notebook with pencil poised.
It is dedicated to all the journalists who covered the Great Patriotic War.
The journalist looks confidently ahead as snow falls on his notebook and
military cap. His role is to bring honour and glory to the Motherland and the
Communist party.
The successors of that anonymous journalist have no such certainties. Those
scribes from all over the former Soviet Union who gathered last week to
celebrate the 80th anniversary of the foundation of the Russian Union of
Journalists at the same place are not even certain of a wage. Even the
restaurant of the Central House of Journalists has been commercialised and let
out, and few members of the union could probably afford to eat there today.
The 200 delegates came from across Russia, central Asia, the Ukraine and
Belarus as well as the Baltic countries. Their number included the young
associations, the bodies that have sprung up to represent those working in the
new and small independent media. 
The leadership of the old unions are survivors. Some were members of the
Communist Party, the party that is now calling for tighter control of the
media. Many would be nostalgic for the time when they were certain of their
role and of a good income at the end of the week. Now they call for press
freedom and freedom of expression and are linked to international
organisations that were on the other side during the Cold War.
But while the leadership was able to celebrate that the union was still in
place (admittedly with a membership at about 56,000, half of that during the
period of the Soviet Union), the celebration was overshadowed by the reality
of being a journalist in what was the Soviet Union.
Seven years after its dissolution there is still little press freedom or
freedom of expression. From Kazakhstan to Kirgizstan and Tadjikistan to
Belarus and Ukraine, the story is of harassment using tax laws, laws that
forbid insulting high officials and the president and compulsory registration
of media. One evening there was a ceremony where the president of the union,
Vsevolod Bogdanov, presented commemorative medals to the children of
journalists who had died while reporting.
Koutikkadam Seidakhmet, a journalist with Argumenti I Facti, in Kazakhstan,
told the conference that there had been a degree of press freedom in 1992, but
it had been eroded. Pressure had been heaped on democratic journalists and
petrol bombs had been thrown into newspaper offices. A black list of
journalists disliked by the authorities had been prepared. The government had
made it so expensive to start up new media that the only media mogul in
Kazakhstan was the president and his family.
In 1992, when independence came to many of the former Soviet Republics, the
new constitutions all included guarantees of press freedom and freedom of
expression. In the intervening years that has been eroded. The president of
the Belarus Association of Journalists, Zhanna Litvina, spoke of how the
official media was used for propaganda purposes, of new regulations forbidding
officials from speaking to the independent press, giving information or
comment and of laws that closed newspapers deemed to have insulted the honour
and dignity of President Lukashenka.
Igor Zaseda of the Ukrainian Union of Journalists said that journalists had
been killed. In Russia, meanwhile, regional newspapers have had to withdraw
Moscow correspondents because of the costs. Journalists are also increasingly
willing to write complimentary pieces about local politicians or business
interests in return for a fee.
There has, however, been one unexpected benefit from the economic crisis.
Aleksey Simonov of the Glastnost Defence Foundation, the media legal defence
foundation, says that the economic crisis forced the media to less obsessed
with itself. The media has begun to understand that survival was not just
survival of the media, but total survival and that outside the power
structures there is a society. Newspapers have started writing stories on how
to survive and have become more relevant.
The total number of newspapers has fallen, but actual newspaper sales has
increased. For the first time, since the end of the Soviet Union, people are
buying newspapers because they are useful and important to their lives.
The "least bad situation" is in Russia, Kirgizstan and Moldova, says Mr
Simonov. It is getting worse in Ukraine. Ukraine is nearing the same situation
as Belarus. Turkmnistan is the very worse case. "There is no problem of
freedom of speech in Turkmenistan because there is no freedom of speech."
Kazakhstan is now nearing the situation of Belarus. In Armenia there is a free
press, of sorts, but there are no laws. In Azerbaijan, like Belarus there is
little press freedom. 
As Mr Simonov finishes his assessment of the health of freedom of expression
in the Russian Republics and CIS states, a few elderly journalists, raise
their vodkas and start to sing the old national anthem of the Soviet Union.
Some younger people look embarrassed. "It is just old men being nostalgic,"
says one. 


Moscow Times
November 25, 1998 
Primakov Campaign Gathers Support 
By David McHugh
Staff Writer

In September, the Kremlin turned to Yevgeny Primakov to break the country's
political deadlock. Now, Kremlin aides are looking hopefully to Primakov once
again - as their preferred successor to Boris Yeltsin as president. 
That is the consensus interpretation of remarks by top presidential assistant
Oleg Sysuyev, who said Primakov "is obligated" to think about becoming
president - and that he could be a successful one to boot. 
"The prime minister is in fact the president's deputy. ... He fulfills his
duties in his absence and under the Constitution must think of his
presidential prospects," Sysuyev was quoted as saying by RIA-Novosti over the
Technically, Sysuyev was referring to Primakov's constitutional role as
Yeltsin's temporary replacement should the president die or resign. In that
case, the Constitution says Primakov would serve for three months until a new
presidential election. 
But Sysuyev's praise went far beyond pointing out the constitutional
"In the history of other countries there have been effective and successful
rulers who were older than the 69-year-old Russian premier," Sysuyev said,
thus addressing one of the chief drawbacks to the idea of President Primakov -
his age. 
Primakov's stance has been steadfast dismissal of any notion that he would be
interested in the presidency. On Monday, he dismissed the notion of moving up
presidential elections, "which, I hope, will be held in 2000." 
Yeltsin's doubtful health and the Aug. 17 ruble devaluation have pushed him to
the sidelines of politics. His latest health scare landed him in the Central
Clinical Hospital on Sunday with pneumonia and a temperature of 38.9 degrees
Celsius, although on Monday his temperature was down and he met with Chinese
President Jiang Zemin in the hospital. 
On Tuesday, his condition remained unchanged and he was continuing his course
of treatment, which the Kremlin has said includes antibiotics, Interfax quoted
Kremlin officials as saying. Spokesman Dmitry Yakushkin said pneumonia should
take eight to 10 days to treat, but that Yeltsin would stay as long as he had
to and possibly continue holding meetings in the hospital. 
Many observers say Primakov is the only person who can keep the current crop
of top bureaucrats, politically dependent tycoons and Kremlin aides from
oblivion once Yeltsin goes. Hence the sudden praise of Primakov's presidential
"The presidential staff understands perfectly well that Yeltsin is no longer
in charge of anything, and that he is not capable of governing the country,"
said political analyst Yevgeny Volk, who heads the Moscow office of the
Heritage Foundation. "They are looking for patronage from someone who would
not dissolve the presidential administration completely." 
Other contenders inspire no such confidence. Moscow Mayor Yury Luzhkov might
seek reversals of the cozy privatization deals struck under Yeltsin. So might
Communist Gennady Zyuganov. And Krasnoyarsk region Governor Alexander Lebed's
anticorruption slogan and outsider stance suggests he would make a clean
sweep, too. 
Primakov, however, is more of a company man - an insider and product of the
establishment, by virtue of a long career heading research institutes where
many top bureaucrats, legislators and diplomats were educated, and through his
service as foreign intelligence chief and foreign minister. 
Nikolai Petrov, a political scientist at the Moscow Carnegie Center, said
"it's obvious that Primakov ... is the ideal choice for preserving the rules
of the game for many structures and persons, and for preserving their personal
Petrov and several other observers have suggested that if the political elite
finds Primakov acceptable, they might find a way to fudge the constitutional
requirement and extend the 90-day interim period right up to the 2000
elections. That would mean in many ways a continuation of the status quo. 
Currently, with the dependable Primakov in charge, the parliamentary parties
and presidential candidates can focus on getting ready for scheduled elections
without worrying about Yeltsin firing all or part of the government - as he
liked to do every few months in his more vigorous days. 
This is the so-called party of power's second try at anointing a successor.
Earlier this year, it appeared the financial elite had decided on Prime
Minister Viktor Chernomyrdin as the candidate to ensure painless transition
and protection of their cheaply obtained oil and mineral holdings. But
Yeltsin, apparently intent on reminding people he was still the one in charge,
yanked the red carpet from under Chernomyrdin's feet by firing him in March. 
When Chernomyrdin's successor, the hapless Sergei Kiriyenko, was fired in the
wake of the Aug. 17 ruble devaluation, Yeltsin suddenly found he did not have
the political prestige to bring back Chernomyrdin. The opposition Communists
in the State Duma made him settle for Primakov, a compromise figure who found
broad acceptance across the political spectrum. 
Yeltsin's political and physical condition have worsened so badly that most
think he's unlikely to come roaring back and fire Primakov as he did
As a result, "the show 'Successor II' is likely to be a more finished product
than it was starring Chernomyrdin," wrote Izvestiya columnist Yelena
Volk said Sysuyev's open courting of Primakov is another example of Yeltsin's
personal aides looking for new masters. 
"It's a very significant sign, I think," Volk said. "It means people in his
inner circle do not believe in his ability to remain as president." 
In addition to Sysuyev courting Primakov, Yeltsin's former spokesman Sergei
Yastrzhembsky has joined Luzhkov's administration; former legal adviser Sergei
Shakrai now works for Primakov, and another former Kremlin staffer, Igor
Shabdurasulov, has taken shelter as head of ORT television, believed to be
controlled by tycoon Boris Berezovsky. 
Izvestiya columnist Tregurova suggested that Sysuyev's announcement may have
taken even the prime minister by surprise. "Truly, things happen all by
themselves in Russia," Tregurova wrote, suggesting that Yeltsin and even
Primakov "found out at the same time as the rest of the country." 


INTERVIEW-Russian virtual economy faces real abyss
By Peter Henderson

MOSCOW, Nov 24 (Reuters) - Russia's crisis has pushed the economy deeper into
the realms of fantasy and the government is losing its power to keep the
country in one piece, a senior U.S. economist said on Tuesday. 
Clifford Gaddy, a fellow at the Brookings Institution think tank, who has
described Russia's convoluted system as a virtual economy, said Russia at best
was heading for a downward spiral. 
The collective fantasy of the virtual economy is that inefficient industry is
productive, wages are well earned, and the government is a benevolent
regulator. Debts pile up but its popular, though cynical, support is reflected
in an old Soviet joke: They pretend to pay us, and we pretend to work. 
"Continuing along the track Russia is now on is a dead end -- not just for the
economy to become prosperous, but for an economy that can be viable, for a
state that can hold the country together," Gaddy said by telephone from
Gaddy and Barry Ickes, of Pennsylvania State University, argued earlier this
year that Russia's economic inefficiency was masked under a buildup of tax,
wage and payments arrears since there was not enough cash to pay inflated
prices and wages. 
"The ultimate pretence (is) that the Russian economy is larger than it really
is. It is this pretence that allows for larger government, and larger
expenditures, than Russia can afford," they wrote. 
But the virtual economy is popular -- ending it would require cutting the
budget, pensions, wages and jobs, closing factories and generally realising
pain put off by the accumulation and occasional mutual cancellation of debts. 
Crisis and the breakdown of the weak banking system, the major conduit of cash
money in the economy, had made the virtual economy stronger, making scarce
resources more sought after and the cost of dismantling the system more
frightening, he said. 
"Almost everything the crisis has caused tends to reinforce the virtual
economy." Efficiency and the market suffered. 
Regions were increasingly dependent on the virtual economy as the post-crisis
tax base shrank, Gaddy said. 
"This virtual economy always tends to break the national economy into more,
almost self-contained, regional economies." 
As the tax base shrank a region would prefer taxes in kind -- construction of
a school, for example -- leaving the federal government nothing. The region
would have handed over cash. 
The federal government often would take some payment in kind rather than face
non-payment by cash-strapped firms or risk bankrupting industry by insisting
on cash from everyone. 
Gaddy said Russia's only salvation was radical reform, culling out enterprises
that were inefficient, then shutting them down or reforming them -- a long and
expensive process. 
"They have got to start eliminating this pretence at the core of the virtual
economy that these enterprises are creating value." 
Previous foreign assistance had allowed the government to close its budget gap
and the virtual economy to limp on. Real reform would take more funds with a
different aim -- restructuring business. 
"Without fairly massive Western assistance, I don't think the Russians are
going to consider doing this. They are always going to consider it is easier
to muddle through," he said. 
But muddling through could lead to disaster, since the federal government is
progressively weakening, Gaddy said. 
"I'm not looking at internal strife immediately as the most likely bad outcome
for Russia. I see breakdown, where social functions of the federal government
can't be accomplished." 
He pointed to a food shortage expected this winter as a harbinger of future
problems. The grain harvest was the lowest in decades but he said the real
issue was of distribution rather than absolute lack of food. 
Those regions with food to spare kept it from poorer ones, and the federal
government was unable to buy or take it. 
"More and more functions of state, to the extent they are fulfilled at all,
are fulfilled at the local level. This creates some major difficulties for
functions that can only be fulfilled at the national level, like national
security, control over nuclear materials, environomental questions, public
"This winter's problem with food should be a real signal... This is not a
problem of a bad harvest, this is the problem of an incredibly weak and poor
federal government in Russia. 


Moscow Times
November 25, 1998 
Ex-IMF Official Blasts Lending 

A former International Monetary Fund representative in Moscow said Tuesday
that the international community should not have given Russia any aid while
the government was handing out property and sweeping tax exemptions to favored
"Should the international community have continued to support Russia in the
presence of these non-transparent schemes?" said Augusto Lopez-Claros, who
headed the IMF's Moscow office from 1992 through 1995. "My own private view is
that, no, they shouldn't have." 
Lopez-Claros, who is now chief Russia and CIS economist at investment bank
Lehman Brothers, was referring to the state's treatment of organizations such
as the National Sports Fund, which was allowed to import goods tax free, and
major Russian banks, which got state property for a tune during 1995
Lopez-Claros also said international lenders should have paid more attention
to the Russian government's social policy before releasing loans. 
Lopez-Claros was speaking at a breakfast with members of the American Chamber
of Commerce. During his tenure as IMF representative in Moscow, the fund
issued about $4 billion in loans to Russia. 


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