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Johnson's Russia List


December 1, 1998   
This Date's Issues: 24972498 

Johnson's Russia List
1 December 1998

[Note from David Johnson:
1. Itar-Tass: Deputy Minister Says 44 Million Russians Live in Poverty.
2. Newsweek: Andrew Nagorski, A Recipe for Disaster. (Re Wedel).
3. Interfax: Most Russians Condemn Anti-Semitic Remarks.
4. AFP: Russia Carried out 2.5 Million Abortions in 1997.
5. Financial Times: John Lloyd, MEDICINE: Russian doctors left to face 
empty cabinet .

6. David Mandel: Comment on Renfrey Clarke's "Who Killed Galina Starovoitova."
7. Gary Matthews: Poland.
8. Moscow Tribune: John Helmer, THE IMF HAS MONICA'S LIPS.
9. Frank Durgin: The causes of Russia's economic woes.
10. Reuters: Timothy Heritage, ANALYSIS-Russian liberals' coalition hits 

11. Komsomolskaya Pravda: Aleksandr Gamov, "Will Comrade Zyuganov Unite 

12. Interfax: Sergeyev Assails 'Lethal' Defense Budget.
13. Komsomolskaya Pravda: Starovoytova's Killers Had Special Services 

14. Reuters: IMF, Russia experts seek solution to economic mess.
16. Itar-Tass: Zyuganov Calls On West To Support Russian Government.
18. Interfax: Communists Lead Opinion Polls in Russia.
19. Interfax: Poll Assesses Performance of Russian Leaders.]


Deputy Minister Says 44 Million Russians Live in Poverty 

Moscow, 27 Nov (ITAR-TASS) -- Following the financial collapse in
Russia in August 1998, 44 million people, or around 30 percent of the
country's population, now have to live below the poverty line, Sergey
Kiselev, Russian Deputy Minister of Labor and Social Development, said
today, addressing a conference of the presidential council for cooperation
with public organizations of war veterans, reserve, and retired officers. 
[passage omitted: urgent need for better welfare provisions]


December 7, 1998
[for personal use only]
A Recipe for Disaster
By Andrew Nagorski 
By putting too much faith in one team of reformers, America only added to
Russia's economic mess 

Even seven years after the fall of the "Evil Empire," Russia has continued to
supply the world with plenty of bad guys. Unreconstructed communists, neo-
fascists and gangster hit men aren't difficult to come by in Moscow. It's the
good guys who are hard to find. 
That's a lesson Washington hasn't quite learned. In her new book "Collision
and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998,"
George Washington University anthropologist Janine Wedel argues that the
Clinton administration was determined to cast Boris Yeltsin's young reformers
as the good guys. This, she says, unwittingly contributed to Russia's current
economic mess. The result, Wedel contends, is that American aid to Russia has
proved to be "a disaster from beginning to end." 
Unfortunately, she's largely right. Washington's most significant blunder was
a failure to recognize that Yeltsin's reformers were introducing a system that
only worsened endemic corruption, crime and cynicism. Nor did the Clinton
administration heed warnings that some of Yeltsin's team were themselves
profiting from the reform process. To American officials, Yeltsin's chief good
guy was Anatoly Chubais, from 1992 until earlier this year the senior Russian
official in charge of privatization and reforms. "Chubais and his protégés are
the Adam Smiths of Russian reform economics," Thomas Dine, the assistant
administrator of the U.S. Agency for International Development (AID), argued
in 1995. Financed by AID to the tune of $57.7 million between 1992 and 1997,
the Harvard Institute for International Development ran a Moscow operation,
the Harvard Project, to support reformers. The Harvard team and Chubais called
the shots on how large infusions of aid were spent. 
Harvard economist Jeffrey Sachs and Chubais advocated "shock therapy" for
Russia--the elimination of most price controls and speedy privatization of
state companies. But the recipe didn't work very well. The freeing of prices
initially led to hyperinflation, wiping out the savings of average Russians.
And privatization resulted mostly in what many Russians called the "great
grab"--bankers, managers and outright criminal gangs taking control of the
country's most important assets for prices well under market value. 
The Yeltsin team, meanwhile, may not have been working solely for the public
good. According to The New York Times, the CIA repeatedly tried to warn Vice
President Al Gore and other officials about corruption charges against former
prime minister Viktor Chernomyrdin, Chubais and other key Yeltsin aides. The
agency's warnings, said the Times, were ignored. Last year, AID cut off
funding for the Harvard Project after two of its directors were accused of
using their positions "for private gain"-- charges they both denied. And
Chubais and four aides were embarrassed last year by the revelation that they
received about $90,000 each from a Swiss company with interests in Russia,
purportedly in the form of an advance for a book about privatization. 
The U.S. role in Russia's economic collapse shouldn't be overblown. There's
little point in asking "Who lost Russia?" Russia wasn't America's to lose, and
Western economic assistance plays only a limited role in the country's
economy: Russia would, in all likelihood, still be a mess today even if
Washington had found a way to direct its money in a sensible, clearly
accountable manner. Still, Russia's people (and America's taxpayers) would
surely be happier if all of those billions of U.S. dollars had done just a
little more good. 


Most Russians Condemn Anti-Semitic Remarks 

MOSCOW, Nov 26 (Interfax) -- Most Russians, 83%, consider anti-Semitic
remarks inadmissible, while 8% do not see them as harmful, according to a
recent opinion poll.
The share of Russians unperturbed by anti-Semitic opinions averages 6%
to 10% in all social-demographic groups.
Some 43% of Russians denounce the State Duma's rejection of a
resolution condemning anti-Semitic remarks by deputy Albert Makashov. 
Nearly a quarter, 23%, said they approve of the rejection.
Of those that tolerate of anti-Semitic remarks, 44% supported the Duma
decision and 33% opposed it.
The poll of 1,500 Russians was conducted by the Public Opinion Fund on
November 14 and received by Interfax Thursday.


Russia Carried out 2.5 Million Abortions in 1997 

MOSCOW, Nov. 30, 1998 -- (Agence France Presse) Some 2.5 million abortions
were performed in Russia in 1997, with seven pregnancies in 10 ending in
terminations, Interfax news agency reported Sunday, citing Health Ministry
The agency said the figures were published to coincide with Russian Mothers
Day, which was being marked for the first time on Sunday. 
According to the ministry's statistics, every tenth abortion is performed
on women under 19 and more than 2,000 on girls under 14. Two women in three
suffer from health complications as a result of the terminated pregnancies,
the statistics indicated. 
Abortion has long remained the leading method of birth control in Russia,
though the 1997 figures indicated that the number of abortions has fallen
by 25 percent in the past four years. 
The abortion statistics take on even more significance in light of Russia's
overall population figures. The Russian population has declined by well
over 1.5 million people since 1992. 


Financial Times
November 28, 1998
[for personal use only]
MEDICINE: Russian doctors left to face empty cabinet
Even once shiny, state-of-the-art hospitals are struggling to survive the
financial crisis, writes John Lloyd

City Hospital No 2 is buried in a suburb of St Petersburg composed of row
after row of massive, already-sagging apartment blocks. Although the hospital
opened in the early 1990s, it too is scruffy looking; its entrance hall is
echoing and empty, with an air of indifference where some attempt at warmth
might be expected.
But its operating theatres and intensive care units are sparkling, high-tech
and carefully tended.
Racks of medicines stand in whitewood cabinets. In the ophthalmic department -
the treatment of cataracts in the disproportionately elderly population of St
Petersburg is a specialty - state-of-the art machines jostle for space in the
crowded examination rooms.
City Hospital No 2 is a show hospital, well funded and generously staffed. Yet
it illustrates, better than the dank, stench-ridden barracks which are often
the norm for hospitals in the Russian provinces, the crisis in Russian
The state now supplies no more than 20 per cent of City Hospital No 2's budget
- the rest comes from paying patients. The doctors and administrators give a
clear impression that those who can afford it buy treatment while those who
cannot are treated as and when they can be fitted in.
To repeated questions of "How do you actually manage?" the answer is most
often something like: "We do it with patience," the response of Vitaly Khilko,
a senior surgeon.
This obfuscation springs largely from wounded pride. Professor Khilko is an
innovative neuro-surgeon who claims to have pioneered new forms of surgery in
the 1970s. He and his colleagues, especially the more senior ones, find the
present state of Russian medicine hard to bear. And to face the certainty that
it will deteriorate is hideous.
But it will. "We have spent a lot of money and energy bringing our practices
up to the highest levels," says Yuri Shulev, another neuro-surgeon.
"But now there are no funds to renew the medicines, and no funds to service
and maintain the equipment. Strokes are one of the most common causes of death
- and if we can get the patient to hospital in time we can often save him. But
the ambulance service is not geared up to this, and we have no funds to reform
No funds. It underlies all of the conversations in the hospital, as the shock
of what happened in August - when the rouble crashed and the scale of the
fiscal crisis was revealed - sinks in.
The crash came on top of already exiguous funding. The state pays the
equivalent of £5 to buy food for one patient for two weeks, with a further £4
for medicines over the same period. Now the doctors fear they will soon be
looking at an empty budget.
Private medical insurance companies, both Russian and foreign, have started up
in the past few years but, says Oleg Vasiliev, dean of the Academy of Military
Medicine who practises at the hospital, they represent a tiny fraction of the
hospital's income.
"Our psychology is against it. They really only exist for foreigners. Russians
have the psychology of fatalism, which is mixed with the feeling that the
state will take care of it. If they have money, they buy vodka. You can avoid
strokes if you lead a healthy life and don't drink heavily. But who listens?"
When poverty and fatalism meet, it seems hopeless. Worse, the unbalanced age
structure of St Petersburg, a legacy of the second world war when men were
slaughtered, means there are 1.2m pensioners in the city, mostly women, and a
birth rate which is dropping fast.
The population fell by 600,000 last year. Russian men are dying in their late
fifties and Russian women are not reproducing.
It had been getting better here and there. Christopher Davis, a fellow of
Wolfson College, Oxford, and an expert on Soviet and Russian health, says that
many infectious diseases were on the decline and the infant mortality rate,
high by international standards, was falling slightly. But cancer, heart
problems and tuberculosis have all worsened; and the brutal fact that Russians
live on average 10 years less than western Europeans has not changed.
Now, says Dr Davis, further decline is inevitable. "The cuts in the budget
only mean they can't afford western medicines - which make up 70 per cent of
the total.
"And the fact that western drugs replaced Russian ones has severely damaged
the pharmaceuticals industry here, so it can't respond. The same with the
medical equipment industry. It is a serious, a very serious situation." The
doctors of City Hospital No 2 - who earn $125-$360 (£75-£220) a month on their
state salaries - see colleagues leave the profession to go abroad or seek more
lucrative work.
They see their equipment rendered inoperative and their medicines run short
and struggle with patients aged and fearful, who often refuse to leave their
hospital beds to go back to the isolation of bleak rooms.
"We will manage with patience," says Prof Khilko, but patience is becoming a
much abused commodity in Russia. 


Date: Mon, 30 Nov 1998
From: mark david mandel <> 
Subject: Comment on Renfrey Clarke's "Who Killed Galina Starovoitova"

I'd like to comment on Renfrey Clarke's thoughtful article on
Starovoitova's murder. He notes correctly that her unconditional support for
"radical reform" (restoring capitalism through "shock therapy", and to hell
with the social and economic costs) led her "to make a string of political
errors that helped guarantee that her hopes of democracy and human rights
would largely be dashed." But he hastens to add: "It would be an insult to
the memory of a brave and intellectually honest woman to suggest that she
shared in responsibility for her murder."
One of these "errors" was her support for Yeltsin's coup d'Etat
against the Supreme Soviet and against the constitution in October 1993, in
which tanks gutted the "White House", killing several hundred people. (She
may not have been the most vociferous supporter of the coup, but no one I
queried here or in Russia can recall her having opposed it publicly.) And
contrary to what his supporters and the Western press continue to claim,
Yeltsin was not acting against a "communist coup". Rather he was ensuring
the political conditions for continuing economic policies that have created
the worst peace-time economic crisis in modern history. This should not be
left out of any honest evaluation of Starovoitova's record as a democrat.
The coup effectively put an end to any progress Russia had made on the way
to becoming a law-based state. It removed all effective oversight of the
state administration, an administration that by all accounts is one of the
most corrupt in the world. 
Yes, Starovoitova's murder is a horrendous crime. But that's no
reason to make a martyr for democracy out of her. 

David Mandel 
Université du Québec à Montréal


Date: Mon, 30 Nov 1998
From: (Gary Matthews)
Subject: Poland

Let me also chime in about Poland's "foundation" for market economics. 
Anne Applebaum is quite right that there was an entrepreneurial spirit 
which prevailed, albeit at times more in the shadows than others, 
throughout the years of imposed communism. I was stationed in Poland 
during the mid-60s and it was very palpable, even in the midst of the 
then wave of repression against Church, "Zionists," and others. As 
any U.S. visa officer of those times (and no doubt since) knows very 
well, we were always impressed how almost any Pole from Nowy Targ (or 
wherever) would immigrate to the U.S. (not infrequently on a 
non-immigrant visa) and do very, very well in a fairly short while. 
Many of the affidavits of financial support which we received from 
relatively new Polish immigrants, on behalf of relatives and others 
then seeking a visa, showed remarkable success in businesses of all 

Poles are probably born with strong entrepreneurial talent. While 
this was difficult to manifest during the PZPR years, Anne is on the 
mark in pointing out that they nonetheless managed to acquire a 
reservoir of trading experience and market savvy during those times. 
Hence, Poles were fast out of the starting blocks when communism 
collapsed and have been galloping ahead ever since.


Date: Mon, 30 Nov 1998
From: (John Helmer)
Subject: Monica & Michel

>From The Moscow Tribune, December 1, 1998
John Helmer

The difference between Monica Lewinsky and Michel Camdessus, managing
director of the International Monetary Fund (IMF), is that he doesn't
complain about how often he has to do it.
When Camdessus, a Frenchman, appointed the IMF's first representative
to Moscow, before the collapse of the Soviet Union, he picked another 
Frenchman he knew well, and trusted. He told him to beware of the 
economists from the permanent IMF staff, who were working on
Russia, many of them American. He opened a rear-door channel between his
representative and himself, so that they -- the Americans -- wouldn't
know in advance what advice Camdessus was getting on Russia.
For several years, Camdessus protected his man in Moscow, and he in turn
provided him with a stream of precise, skeptical reports about the economic
plans of Russian policy-makers like Yegor Gaidar, Anatoly Chubais, 
Boris Fyodorov, and Alexander Shokhin. Warnings that their policies were 
dangerous for the Russian economy, risky for the IMF, and folly for 
Camdessus to endorse were plentiful in the run-up to the climactic events 
of 1993. They can be found in Camdessus's archive, and in the files 
kept by IMF officials at the time, as well as by several non-American 
members of the IMF board.
At the start of 1993, the Clinton Administration decided to overthrow the 
Russian parliament, rewrite the Russian constitution to make Boris Yeltsin
all-powerful, and instal the prime minister Washington preferred, Yegor 
Gaidar -- instead of the prime minister voted by parliament, Victor 
The Clinton putsch almost succeeded in March of 1993. But Yeltsin lost his
nerve after hearing from his defence, security, and intelligence
chiefs that they wouldn't take orders if the president introduced an illegal
state of emergency. Gaidar had been in the wings, coaching the US Embassy 
and Yeltsin simultaneously. Camdessus was unsettled by what he saw.
Despite the setback in March, there were a number of plans the 
US had for the Russian economy that were put in motion. Traces of what
they were can be found in confidential documents written by George Soros, 
Jeffrey Sachs, David Lipton, a Sachs business partner and US Treasury 
official. They all went into IMF files. 
One of the American ideas was the elimination of the rouble zone that, at the
time, continued to unite Russia to the former members of the Soviet Union.
The Russian state's first default on an international loan agreement actually
took place in July 1993 -- not in August 1998 -- when Shokhin and Fyodorov
cancelled rouble credit agreements Russia had with Kazakhstan, Kyrgyzstan,
and other former Soviet states. At the time, the IMF representatives
in Moscow and Almaty were opposed to the Shokhin-Fyodorov move.
So too was Camdessus. But when he got the call from the White House, he 
reversed himself, and adopted the Monica posture. The IMF issued a 
new order that no former Soviet state could qualify for an IMF loan unless
it had severed itself from the rouble zone, broken its credit links
with the Russian Central Bank, and issued its own currency.
By August of 1993, Camdessus was dickering with a $1.5 billion loan for
Russia. But there were arguments between the Americans at the IMF and 
Camdessus's man in Moscow, as well as between the US director on the IMF
board and other directors. One of the latter went so far as to circulate
the opinion that Russia's parliamentary opposition had "more realistic
policies" than Gaidar (then First Deputy Prime Minister) or his gang.
The monetary limits the IMF wanted to insert into the new loan programme,
Camdessus was told, were impossible to achieve because of Yeltsin's
"own misguided policy choices."
The timing was bad for Micky's dickie. 
For Clinton had decided to try another putsch, and in September 1993 Yeltsin
went all the way, dismissing parliament, and the Constitutional Court to boot.
In the evening hours of October 3, on Gaidar's orders, the Central Bank and 
some Russian commercial banks trucked one billion roubles to the Kremlin to 
ensure that parliament would be crushed. The next day it was.
Camdessus didn't want to agree to the $1.5 billion loan, at least not for 
a trial three months. But Clinton told him Yeltsin had an election campaign
and a constitutional referendum to win by December, so down went Camdessus 
And here we are five years later, and here he is again. Only Micky doesn't 
have his loyal, but skeptical French retainer any longer. The Americans long 
ago insisted on putting their men in charge of the Moscow office. Martin 
Gilman, the current seat-warmer, is still playing with Gaidar as fondly as 
his boss with Clinton; and as if five years of Russian history never happened.
I've read that every day Clinton gets up and thinks to himself how sorry he 
is for what he did with Monica. Isn't he lucky he still has such a discreet
and obliging little Frenchman as Micky?
Now that the suckling of Clinton's policy in Russia is once again about to 
descend on Moscow, let's watch his genuflections very carefully. Maybe
we'll see whom Clinton wants to become the next president of Russia.


Date: Mon, 30 Nov 1998 
From: (Frank Durgin)
Subject: The causes of Russia's economic woes.

The leitmotif running through the IMF's prescriptions for Russia's
economic woes has been "tighten up on monetary and fiscal policies".
If one were to ask an Econ 101 class just what type of economic woes
the IMF has been seeking to cure, the resounding response would be "an
overheated economy operating at its full potential". Yet, when one
looks at the record, he or she will see that the eocnomy is operating
at less than 50% of its 1991 level, and unemployment is high. GDP is
continuing to fall. The forecast for next year is that it will fall by
3 to 9% and unemployment will rise by 70% 
The comparisons that follow may help to place Russian monetary and
fiscal policy into some sort of perspective.
Russia's money supply (M-2) in Sept of this year was 343.6 billion
rubles, i.e. equal to about 14-15% of GDP 
US money supply (M-2) is equal to about 50% of GDP.
Russia's money supply has shrunk by 8% since the beginning of the
US Money supply has expanded by some 7% since the beginning of the
Russian central banks rediscount rate in June of this year was 80%*
US Central bank rediscount rate in June was 5%


ANALYSIS-Russian liberals' coalition hits problems
By Timothy Heritage

MOSCOW, Nov 30 (Reuters) - The efforts of Russian liberals to unite to save
democratic reforms from a Communist resurgence are in danger of collapse
before they get off the ground, political analysts said on Monday. 
Shocked into action by the murder of Galina Starovoitova, an outspoken anti-
Communist parliamentarian, liberals led by former Prime Minister Yegor Gaidar
and ex-Finance Minister Anatoly Chubais vowed last Friday to create a rightist
But the problems that have prevented liberals uniting until now have already
resurfaced and Yabloko, by far the strongest liberal party, has refused to
join the new coalition. 
"We will not join forces with these politicians. They had six years to carry
out reforms, a chance that our country might never get again," Yabloko leader
Grigory Yavlinsky said in a television interview on Sunday. 
"That chance was wasted and now the word reform has become a swear word." 
Even President Boris Yeltsin's support is of limited value because his
popularity has sunk in a severe economic crisis and been further dented by
Starovoitova's murder, which prompted new fears about crime and a wave of
political mudslinging. 
One year before a parliamentary election and less than two years before the
next scheduled presidential election, the Communist Party is on the rise and
the liberals are in disarray. 
A deep economic crisis unseated the government of then Prime Minister Sergei
Kiriyenko in August and discredited the liberal reforms made by him and other
liberal governments since 1992. 
As the biggest force in parliament, the communists blocked Yeltsin's efforts
to install a relatively liberal prime minister and he proposed the cautious
Yevgeny Primakov instead. 
Primakov, a former foreign minster, then named a communist, Yuri Maslyukov, as
his first deputy and began a shift away from the liberalism of his
In their efforts to pick up the pieces, the liberals face many of the problems
that have divided them since their heyday after the Soviet Union and Communist
rule collapsed in 1991. 
They have been divided by petty personal rivalries and differences over often
minor issues, and lack a charismatic leader. Their reputations have also been
damaged by market reforms which many Russians say have been too tough and
failed to prevent crime and corruption flourishing. 
"Do they want to install new Chubaises as deputy premiers?" That won't
happen," said Communist Gennady Seleznyov, speaker in the lower house of
parliament. "Their time has passed." 
Some analysts say Gaidar and Chubais should leave the field open for
Kiriyenko, who retains some popularity and trust because he was premier for
only five months. 
Kiriyenko is launching his own party, one which he says could be separate from
the new liberal coalition. Yavlinsky, the one liberal untainted by reforms
because he has long been in opposition, has held out an olive branch to him. 
The Communist Party clearly has the upper hand and is widely expected to make
gains in the election due at the end of 1999. It already has nearly a third of
seats in the lower house and can muster a majority with its allies. 
The Communists have managed to paper over cracks in their unity, even though
party chief Gennady Zyuganov lacks charisma. 
"The Communists have managed to stay together not because they have something
positive to unite them but because they have been united in opposing Gaidar
and Yeltsin," said Alexei Kara-Murza, a political analyst who studies the
party closely. 
Even so, the Communists also face problems. 
They risk being seen as a pro-government party if, as expected, they approve
the annual budget in the next few weeks, and they need to find the right
balance between criticism and support of the government they helped install. 
They also face a new challenge from the centrist Fatherland movement created
this month by Moscow mayor Yuri Luzhkov. Although he could be a potential ally
in the next presidential election, some moderate Communists could defect to
Russia's constitution gives the parliament limited powers and makes the
presidency the ultimate prize. 
Most political analysts say there is almost no chance Russia's next president
will be a liberal reformer. 
But the Communists' chances of winning a presidential election are also slim.
Although their candidate could finish first in the first round, he or she
would be unlikely to win an outright victory or a two-candidate runoff. 
While the Communists and liberals face off on opposite ends of the political
battlefield, the way is open for a centrist presidential candidate or a leader
from the powerful regions such as Luzhkov or reserve general Alexander Lebed. 
For the Communists and liberals, that means another battle -- to ensure that
if a centrist is elected, he or she reflects their interests as closely as


'Democrats' Seen Suffering from Lack of Clear Leader 

Komsomolskaya Pravda 
November 26, 1998
[translation for personal use only]
Article by Aleksandr Gamov: "Will Comrade Zyuganov Unite Democrats?"

Terrorists by no means had to kill Galina Starovoytova to make
democrats finally realize that yes, the time has come to kiss and make up. 
The economic crisis that broke out 17 August has become above all a crisis
of democracy in Russia. Waking up one morning, democrats suddenly
discovered that a "Red dawn" was once again breaking over the country. Or
to be exact, that it had already broken....
If we count the Communists and their closest supporters who have now
filled the corridors of power, we get the following "price list." Eighty
percent of the government is made up of "Reds" and their ilk. Seventy-five
percent of the Federation Council is made up of Communists and their
allies. Ninety percent of the State Duma is made up of the inviolable bloc
of Communists, Agrarians, Russian regionals, and fair-weather deputies who
gravitate toward them.
So it turns out that the entire "bastion of democracy" is now in the
Kremlin. Or, even worse, in the Central Clinical Hospital.
The "People's-Patriotic Union of Russia," as the CPRF [Communist Party
of the Russian Federation] and around another 100 small pro-communist
movements and minimovements call themselves, is the only sociopolitical
organism that is led by one leader, Comrade Zyuganov. In the former
democratic camp it is all chiefs and no Indians.
"Actually our problem is not unification," twice ex-Premier
Chernomyrdin elucidated the other day, "but who the boss is." I will bet
that Luzhkov, Yavlinskiy, and Chubays think exactly the same. But none of
them lifted a finger to stick together the remnants of the once-powerful
movement. Which was capable -- this is hard to believe now! -- of
dismantling the totalitarian regime.
An "academician of constitutional sciences" is now being fashioned for
us out of former chief democratic leader Yeltsin. According to the Kremlin
administrators' plans, he should sit around at Gorki-9 until 2000 polishing
paragraphs of the fundamental law: How can he ensure that the country does
not go back to the accursed past? What if it is already going there?
Flying there? Rolling there?
Maybe what is needed is not to invent paragraphs but to think about
who in this diverse, bullet-riddled, but still ambitious democratic mob
could be the boss not in words but in fact. About who could toss to the
thinned-out democratic masses the old slogan "Let us take a leaf out of the
communists' book!"


Sergeyev Assails 'Lethal' Defense Budget 

MOSCOW, Nov 27 (Interfax) - Russian Defense Minister Igor Sergeyev
has strongly criticized the defense expenditure envisioned in the 1999
draft budget.The draft provides for 2.6% of GDP being allocated to defense,
Sergeyev told Interfax Friday.
"This is not just insufficient, it is lethal," he said.
"Maintaining the army requires 3.5% of GDP, as President Boris Yeltsin
determined" in a decree, he said.
"There are no guarantees" that the opinion of the Defense Ministry
will be taken into consideration, he said.
"The state commission chaired by the prime minister should meet for a
separate debate on defense spending" in the 1999 budget, Sergeyev said.


Starovoytova's Killers Had Special Services Training 

Komsomolskaya Pravda
November 27-December 4, 1998
[translation for personal use only]
Interview with Yelena Andreyeva, managing director of chief of
the "Bastion" Security Holding Company, "Russia's only woman
president of a security agency, and a contract murder prevention
expert," by Mikhail Rybyanov; place and date not given: "Special
Services Were Most Certainly Involved in This"

It is unlikely that this crime [the murder of Galina Starovoytova]
will be solved any time soon. It is quite obvious that it had been
prepared well in advance by a group of professionals that included former
special services personnel. Clearly this involved external surveillance
and wire tapping, and a car was waiting for the assassins once the task was
accomplished. The weapons that were used are unusual for the criminal
world (bandits usually use TT pistols). Only operational or recently
retired special services officers would be skilled in handling such weapons
and have access to them. They are expected to spend four hours a day in
the shooting gallery practicing their skills with various types offirearms.
The team that carried out the murder was also selected very cleverly
-- a man and a woman are not so conspicuous, and it is easier for them to
slip away. As far as I can remember, this was the first contract murder
performed in that manner. And it could have been committed out by a woman
who had experience in shooting prior to being employed by the special
services: The relevant subdivisions as a rule employ former sportswomen. 
With regard to the motives behind the murder, it is clear to me that they
have nothing to do either with financial matters or Moscow politics. It is
most likely associated with the elections to St. Petersburg's Legislative
Assembly.If a photo-composite of the assassins is compiled on the basis of the
testimony of Starovoytova's aide, the killers will be annihilated by their
own comrades. At least one of the perpetrators could be found using a
composite, because their ties with the special services are beyond doubt. 
All they have to do is match the photofit with photographs of former or
current staffers of the relevant FSB [Federal Security Service] or GRU
[Main Intelligence Directorate] subdivisions.... But if the only witness
proves unable to recollect anything at all, then in the future we could be
hearing about some other murder carried out by a man-woman team.


IMF, Russia experts seek solution to economic mess
By Janet Guttsman

WASHINGTON, Nov 30 (Reuters) - The International Monetary Fund sought expert
advice on resolving Russia's deepening economic crisis on Monday and said its
one-day closed-door meeting had provided ``an extremely useful'' exchange of
But a statement issued after the meeting of IMF experts, academics and
politicians offered no clues to how Russia might resolve problems centering on
a budget deficit, the death of investor confidence and economic policy doubts.
``A frank and extremely wide-ranging discussion took place on the causes of
the current crisis, policy options and the role that the IMF might most
usefully play in helping Russia to extricate itself from its current
difficulties,'' IMF First Deputy Managing Director Stanley Fischer said in a
``Among the issues discussed were the appropriate fiscal and other
macroeconomic policies and structural reforms needed to generate growth in
The meeting took place on the eve of a brief visit to Moscow by IMF Managing
Director Michel Camdessus, who is expected to urge the Russian government to
cut spending and improve its dismal record on tax collection. 
The fund, which halted lending after Russia devalued the rouble and defaulted
on some debts in August, is wary of the government's ability to meet its
financial promises and worried about unrealistic budget plans. 
Russia, already the IMF's biggest borrower, wants the fund to revive a stalled
lending programme so it has money in its reserves to pay debts and close a
widening budget gap. 
Camdessus, who is due to arrive in Moscow on Tuesday and to leave on
Wednesday, will meet Prime Minister Yevgeny Primakov. 
But the two men seem unlikely to see eye to eye. 
Former spymaster Primakov said on Saturday that IMF experts were ``kids who
have seen almost nothing in the world, but have read a lot of books.'' He said
Russia would have to print money if the IMF did not restart its lending
Primakov's government has announced plans to cut profit and value-added taxes
to stimulate growth, although talks on the 1999 budget were delayed for two
weeks on Monday. 
The IMF warns that printing money would fuel inflation and officials have said
they will only resume lending to Russia if both the government and the
communist-dominated parliament show a clear commitment to a tough programme of
economic reform. 
``In an environment like the one in Russia today, external financial support
is not enough. The crucial ingredient is a government and parliament genuinely
committed to structural reform and willing to implement measures that may be
politically unpopular,'' IMF Russia expert John Odling-Smee wrote in this
month's Central European Economic Review. 
``As for the IMF, future programmes will have to tilt the balance sharply in
the direction of actual measures to improve the fiscal situation, and not just
promises that these measures will be taken in the future,'' he added. 
His report was published on the IMF Website on Monday. 
Moscow already owes the IMF almost $20 billion. Some of that money, along with
Russian-issued Eurobonds and some debts inherited from the former Soviet
Union, must be repaid next year, lending new urgency to Russia's pleas for new
IMF cash and additional debt rescheduling. 



MOSCOW, Nov 28 (Interfax) - A recently published article on Russia
by U.S. Deputy Secretary of State Strobe Talbott is causing mixed
reactions in the Russian Foreign Ministry.
Many theses in the article were borrowed from "Russian pundits who
are currently touring the West and who are criticizing the Cabinet that
is trying to extricate Russia from the crisis into which these pundits
have thrown the country," a source in the Russian Foreign Ministry told
This article and other public statements by Talbott "refute the
rumors that some coup has occurred in the Russian policy of the U.S.
administration," the source said.
On the whole, the article by Talbott "may be seen as the thoughts
of a person who has been studying our country seriously and for a long
time and who feels empathy towards it," the source said. "The U.S.
diplomat is giving us detailed recommendations on how the errors
committed in recent years should be corrected. But many of these errors
were committed in particular because some Russian statesmen were not
critical about advice from overseas."
Unfortunately, Russia has become less cautious about foreign
advice, the source said.
In the article Talbott wonders whether Russia is moving forward or
falling into a precipice. He also expresses concern that the new Russian
Cabinet led by Yevgeny Primakov might give up the ruble's realistic
exchange rate and a reliable monetary policy. Talbott says Russia may be
taken over by presses printing extra rubles in order to clear wage debts
and bail out bankrupt companies.
If high inflation starts in Russia, foreign money will not do the
country any good, Talbott writes in the article. Foreign loans will just
make a brief stopover in Russia before being moved into accounts with
Swiss banks or turned into real estate on the Riviera, he writes.


Zyuganov Calls On West To Support Russian Government 

Bonn, Nov 27 (Itar-Tass) -- Russian Communist Party leader Gennadiy
Zyuganov, on a visit in Germany, stated that the Russian Communist Party
backs the efforts of the current cabinet aimed that the development of
domestic production and at reform in the interests of consolidating the
economy and raising the living standards of the population. He delivered a
report on the situation in Russia to representatives of the public,
business people and bankers in Bonn on Thursday evening [26 November].
Zyuganov addressed a call to the West, above all to Germany, to
suppport the efforts of the new Russian cabinet and said there is no need
to fear to make investments in Russia. Criticising the course of the
previous cabinet whose policy, in his opinion, plunged Russia into a deep
crisis, Zyuganov disapproved of actions of the West that "gave credits to
the previous cabinet while only making promises of help to the presentone."
Zyuganov also criticised the International Monetary Fund which gives
aid to Russia "with political strings attached." In addition, he said this
relief "had not reached those for whom it was meant and was largely
embezzled." Therefore, he believes investment should be made for specific
projects and programmes.
Zyuganov expressed the confidence that it is precisely German
enterprises and companies that can give effective assistance to Russia,
largely for the reason that many of them, particularly those based in East
German lands, had "previously operated actively in our market and know
Zyuganov declared for stepping up the effort to combat corruption,
organised crime and banditry in Russia. He said Galina Starovoitova was
the sixth deputy of the State Duma killed by bandits. Therefore, decisive
measures are needed to put a stop to this utter lawlessness and social
evil, the Communist Party leader said.
Zyuganov flew to Berlin on Friday morning and will hold a number of
meetings in Berlin and in Potsdam, also with leaders of the Party of
Democratic Socialism.


New York Post
November 29, 1998
[for personal use only]

THOSE of you - all three or four of you - who believed me when I said the
Russians would continue to make their payments on their Eurobond debt are
beginning to get their reward. 
On Friday the Russians made the first coupon payment since the game changed
with the crash of their finances in August. This was on their 93/4 Eurobond
due in November of 2001. 
The Euros I've been most interested in, the 113/4 maturing in 2003 and the
83/4 maturing in 2005, have now rallied significantly, with the '03 now
about 10 points above the mid-20's price where we first got interested. 
That's better than the U.S. indexes, though, of course, nothing like what
you would have gotten from an Internet IPO. 
Now it looks as though the other interest payments on the Eurobonds will be
made in December and January. 
That should bring in more buyers. Many of the accounts in Switzerland now
buying this paper are Russians who know the Eurobonds will be paid. As it
is now, these bonds have yields to maturity of over 40 percent. 
Large institutions who own this paper are still selling it, as they try to
meet the low levels for Russian exposure dictated by their boards.
Speculators don't have boards to report to, unless you count the investment
banks' proprietary trading desks as speculators. 
Given the continuing rally in emerging market bonds, we're likely to
continue to see better prices on this paper. And if it takes a couple of
months longer to hit your price target for a sale, you're still collecting
that fat yield. 
Yes, there are still political assassinations and hard times in Russia. But
there's also a more realistic attitude towards their prospects. 
The Duma, or national parliament, now realizes that the country's oil won't
be developed without the legal framework provided by the standard
production sharing agreements. So the enabling laws for the PSAs will be
It wasn't just the Communists who had blocked these; the since-demoted
oligarchs had rightly feared the competition. 
In the meantime, the Administration's Russia policy club still hasn't
gotten over its snit about the failure of its sponsorship of its friends,
the "young reformers" such as Anatoly Chubais, and the
kleptomaniac/ex-Prime Minister Viktor Chernomyrdin. 
Leon Fuerth, the manners-challenged national security adviser to Vice
President Gore, has his fingerprints all over this week's scandal about the
coverup of Chernomyrdin's and Chubais' organized crime connections. CIA
spokespeople denied that there had been a coverup, but that's ludicrous. 
Along with other people who follow Russia, I've been writing about specific
examples of the criminality of Chernomyrdin for several years. 
If the CIA wasn't covering this up, then they are so incompetent that they
couldn't mail subscription forms. 
Since this is not the case, there has indeed been such a suppression of the
facts. Leon Fuerth's role in this might become an issue when people look at
Gore's record. 
Yes, the Russians have got themselves into a pretty deep hole. A lot of
them are going to be cold and hungry. 
But they are stubborn, resourceful people who have learned from their
mistakes. And they've made comebacks from worse disasters. 


Communists Lead Opinion Polls in Russia 

MOSCOW, Nov 27 (Interfax) -- If the Duma elections were held in
November 1998, the Russian Communist Party led by Gennadiy Zyuganov would
leave all others behind collecting 22% of the party ballot vote.
The figure comes from a poll of 1,600 Russians conducted by the
National Public Opinion Center on November 20-25 and reported to Interfax
on Friday.Following the Communists would be the Fatherland movement of Moscow
mayor Yuriy Luzhkov with 13%, Yabloko movement of Grigoriy Yavlinskiy with
10% and the Russian People's Republican Party of Aleksandr Lebed with 9%.
Women of Russia of Yekaterina Lakhova and the Liberal Democratic party
of Vladimir Zhirinovskiy would collect 3% each. Our Home Is Russia of
Viktor Chernomyrdin, the Agrarian Party of Mikhail Lapshin and the Party of
Working People's Self-Government of Svyatoslav Fedorov could count on 2%.
Young Russia of Boris Nemtsov, Russia's Democratic Choice of Yegor
Gaydar, the Movement in Support of the Army of Viktor Ilyukhin, the Union
of Popular Rule and Labor of Andrey Nikolayev would get 1% each. All other
parties and movements would also get 1%.
Meanwhile, 14% would not go to polling stations or would vote against
all parties and 15% were undecided.


Poll Assesses Performance of Russian Leaders 

MOSCOW, Nov 27 (Interfax) - In November 49% of Russians approved of
Yevgeniy Primakov as prime minister and 34% disapproved compared to 47% and
24% respectively in September. The latest poll of 1,600 Russians was
conducted on 20-25 November by the National Public Opinion center and
reported to Interfax on Friday.The statistical error in such polls is 4%.
Duma speaker Gennadiy Seleznev was supported by 30% and not supported
by 45% compared to 35% and 36% two months earlier.
The efforts of Federation Council speaker Yegor Stroyev are praised by
24% and criticized by 46% (28% and 39%).
Meanwhile, 12% of those polled said the current authorities will
manage to change the situation for the better soon compared to 22% in
September and 54% don't believe they will (46% in September).
The Cabinet is better at dealing with the country's problems after
Primakov's appointment - say 16% of the polled now and 33% in September, 
55% (43%) said it was no worse or better than before and 10% - that the
Cabinet was doing worse (9%).


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