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Johnson's Russia List


December 6, 1998   

This Date's Issues: 25052506 • 

Johnson's Russia List
5 December 1998

[Note from David Johnson:
1. Fred Weir on Primakov at World Economic Forum.
2. AFP: Russia must create wealth, not just dig it up: Primakov.
3. Reuters: Ex-PM urges world to leave doors open for Russia.
(Kiriyenko in Washington).

4. Jacob Kipp: Buying the Russian Army: A Real Problem with Serious

5. Abraham Brumberg: Re Starovoitova/Shlapentokh.
6. Jerry Hough: Food aid.
7. The Economist: Dirty tricks and democrats. (St. Petersburg election).
8. AFP: Russia wants to ramp up defence spending: minister.
9. Financial Times: Andrew Jack and Carlotta Gall, RUSSIA: Bank accounts 

10. RFE/RL: Matt Frost, Yelena Bonner Criticizes Lack Of Human Rights.
11. Valeri Jakushev: reply to Vladimir Shlapentokh on Abraham Brumberg.
12. Thad McArthur: Re The Monica Position/John Helmer. (IMF).
13. Reuters: Western business pleads for improvements in Russia.
14. Michael Mihalka: Job announcement Marshall Center.
15. Moscow Times: Duma Asks for Sell-Off Reversal.]


Date: Sat, 05 Dec 1998 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT) -- The Russian government will not abandon
market economics but intends to make sweeping policy changes to
escape the disaster left by years of misguided reforms, Prime
Minister Yevgeny Primakov said at the weekend.
"Unsuccessful reforms have given birth to economy of
distrust in Russia," Mr. Primakov told the World Economic Forum,
which wrapped up in Moscow Saturday.
"The toughest consequence of the crisis and the most serious
lesson we must draw does not concern the fall in production or
decline in the rouble exchange rate, but a total credibility gap,
a crisis of confidence," he said.
In a biting assessment of the country's worst post-Soviet
crisis, Mr. Primakov told the assembly of 200 global corporate
and banking leaders that Russia's economic potential has been
drained by massive capital flight, its banking system is in
ruins, the government is almost incapable of effective action and
the people are running out of patience.
Mr. Primakov put the blame on his predecessors, who built a
huge pyramid of government debt, encouraged the growth of a
parasitical banking sector and fumbled the task of revitalizing
Russian industry.
In August the entire house of cards came tumbling down,
after the government was forced to default on its domestic debts
and stop defending the national currency. The rouble plummeted to
about a third of its pre-crisis value, and in recent days has
been sliding dramatically again.
Foreign investment has fled Russia, and even the
International Monetary Fund suspended payments on a $22-billion
bailout package after the August crisis broke. The IMF's chief,
Michel Camdessus, concluded talks in Moscow last week with no
indication of when, or whether, aid might be resumed.
"There is no and there will be no isolation of Russia from
international financial organisations," Mr. Primakov said. "We
are interested in close ties with them. But the real market
strategy in future must be Russian, based mostly on Russian
In the absence of foreign investment and credit, Russia's
options are cruelly limited. The country must drastically slash
its reliance on imported goods and find ways to protect and
promote domestic manufacturing, he said.
One idea is to declare an amnesty on Russian capital that
fled abroad during the post-Soviet era -- which Mr. Primakov put
at $15-billion per year -- in order to draw it back into the
domestic economy.
"This is a paradoxical situation where Russia, which does
not have means for development of its own economy, finances
development of other countries," he said.
Another proposal would be to allow foreign banks to open
retail branches in Russia, which is currently against the law.
Russians have an estimated $40-billion kept in their mattresses,
thanks to their extreme lack of faith in national banks. 
That skepticism proved justified, Mr. Primakov said, when
most domestic banks failed in August, vapourizing the savings of
millions of depositors. 
"The Russian banking system proved weak and artificial, able
only to feed on the state budget," he said.
Russian citizens, whose living standards collapsed with the
rouble, urgently need to be given fresh hope, Mr. Primakov said.
"Mistrust of reforms has spread far enough," he said. "The
only way is to consolidate social accord."
Mr. Primakov's warning was echoed at the weekend by another
top Kremlin official, presidential aide Oleg Sysuyev, who urged
Western countries to step in with major new loans to Moscow or
risk social collapse this winter.
"We must think of new credits to fulfill our government's
major obligation, that of covering its social expenses, to bar a
social explosion," Mr. Sysuyev said.


Russia must create wealth, not just dig it up: Primakov

MOSCOW, Dec 4 (AFP) - Russia has to become more than just a mine of raw
materials and must start manufacturing world quality produce if it is to
survive its current economic crisis, Prime Minister Yevgeny Primakov said on
Sharing his vision of Russian economic resurrection with a forum of economic
and political chiefs and experts here, the premier said that Russia could not
rely merely on its vast mineral wealth to finance an increasingly insolvent
"We will not let the macro economy be used just for exporting energy resources
and importing goods, including food," Primakov told the forum. "This model of
the macroeconomy does not correspond to the interests of national producers."
Russia's cash-strapped government relies on oil exports for 25 percent of its
budget revenues, and the collapse of global prices for oil and other
commodities was a major factor in effectively bankrupting the government in
"Commodity prices are continuing to fall," Primakov said. "The economy of our
country is in crisis, spending on servicing foreign debt in 1999 if it cannot
be restructured, will not correspond to revenue to the federal budget."
Primakov said that his government had already confounded a string of warnings
earlier in the autumn which contended that Moscow would have to ban the
dollar, scrap imports and isolate itself internationally in order to deal with
the economic chaos gripping the country.
But he stressed that economic policies would now be aimed at creating a new
breed of Russian enterprises that could produce goods which could hold their
own against international competition.
He said imports were needed "so that production of our enterprises reaches
world standards." Foreign investment would be encouraged "but we will give
preference to direct investors in production and not short-term, as it has
been in the past."
The forum was also due to hear prescriptions from other government ministers
and central bank officials during the course of Friday's session.
The event comes amid more alarming indicators for Russia, which gave up hope
this week of imminent International Monetary Fund (IMF) funding to help the
government pay off wage and pension arrears and honour billions of dollars of
foreign debt which fall due next year.
The penury of the state has prevented the Central Bank from defending the
ruble in recent days. The ruble slumped almost four percent Friday to 19.57 to
the dollar, while on the street the dollar already fetches more than 20
Meanwhile, the economy ministry said on Friday that the economy could contract
5-7 percent next year if the IMF does not come through with funding, Interfax
Maslyukov said earlier on Friday that he was hopeful that Russia could obtain
eight billion dollars from the IMF next year to help refinance maturing debt.
"It's not all that easy, there are problems, but we are optimistic," Maslyukov
was quoted as saying by Interfax. 


Ex-PM urges world to leave doors open for Russia
By Janet Guttsman

WASHINGTON, Dec 5 (Reuters) - Former prime minister Sergei Kiriyenko has urged
the world community to leave economic doors open for Russia, but said it was
up to the government to decide whether to use them. 
Reformist Kiriyenko, sacked in August after just five months in office, said
competitive Russian firms needed free access to world markets and Russia
should be given the chance to join the World Trade Organisation, completing
negotiations on opening up its markets after it joined. 
Provided policies were appropriate, Moscow should also have access to funds
from the World Bank and the International Monetary Fund and the chance to
reschedule Soviet-era debts to private and official creditors. 
``These doors must be open for Russia, but it must be up to Russia to decide
whether to use them,'' Kiriyenko told a news conference on Friday. 
He declined to second-guess the policies of the new government of Yevgeny
Primakov, but said Russia urgently needed tough action to collect taxes and to
reform an inefficient tax system which placed too heavy a burden on producers.
Russia would need food aid this winter and care was needed to ensure the food
was distributed appropriately, he said. 
Kiriyenko's plea for access to Western markets and institutions were in sharp
contrast to comments on Thursday by international financier George Soros, who
said there was little the outside world could do to help. 
``The situation is out of hand and there is very little that can be done from
the outside until, probably, things get a lot worse and there will be some
political developments that will allow again some outside intervention,''
Soros said. 
Many Western advisers viewed Kiriyenko's government as the most reformist one
in Russian history, but he was unable to break Russia's steep economic
downturn and avert a currency devaluation and partial debt default. 
Kiriyenko said his government had considered ``halting the pyramid'' of high-
yield Treasury Bills as early as May or June, but ministers then decided it
would be better to try to solve the underlying problems of low revenue and
excessive spending. 
Many analysts said the Russian T-bill market resembled a pyramid scheme,
whereby the government had to borrow money at ever-higher interest rates just
to pay back previous loans. 
When investors, scared by events in Asia, stopped buying Russian bills, the
pyramid collapsed, yields soared to 150 percent and the government could no
longer foot the bill. 
The IMF, distressed at the debt default, the rouble devaluation and by fears
that the new government would start printing money to pay its bills, has
halted its massive lending programme to Russia. 


Date: Fri, 04 Dec 1998
From: "Jacob Kipp" <KIPPJ@LEAV-EMH1.ARMY.MIL> 
Subject: Buying the Russian Army: A Real Problem with Serious Implications

Lars-Erik Nelson has written a light-hearted piece on a tragic and serious
topic. "Let's Buy the Russian Army" as a Christmas present and put it on
the US payroll. $1 billion dollars for the whole thing for a year. It does
seem to be a very good deal. Of course, Minister Sergeyev says that next
year's 107 billion ruble budget ($6 billion) or 2.65% of Russia's collapsing
GDP will be lethal. What Russia needs is not the old army but a new one --
smaller, professional force, raised, designed, and maintained to fit
Russia's needs as a marginal great power with complex, multiple regional
security requirements. Moreover, it needs a sense of pride in the state and
society it would be charged to defend. Buying mercenaries is a tricky
business. They may not stay bought. Ultimately, we seem to want a
professional Russian military charged and committed to the defense of a
democratic policy and an open society. 
Brent Scowcroft's response to the current crisis within the Russian military
is serious and on the mark. Food aid and housing do seem appropriate,
especially in peripheral areas like the Russian North and Far East, where
existing infrastructure can hardly maintain the civilian settlements in
those areas. Moreover, we have a vested interested in maintaining what is
left of this military's professionalism as a one means of "stopping one of
the world's nuclear powers from disintegrating into anarchy, warlordism,
nuclear-weapons peddling, pogroms and civil war." 
General Odom is right on the details regarding the death of the old army,
although he overstates his case to make it seem like the entire army is
nothing but rapists, perverts, bullies, crooks, criminals and bums. Every
general is corrupt. But American soldiers who served with Russian airborne
troops in IFOR/SFOR have a different impression of those Russians. They
found a way after four decades of Cold War to work together. I have had the
good fortune to talk with many of these officers and some of these men on
both sides and have been impressed with their professionalism and mutual
respect. The force in Bosnia is only a small part of the 1.2 million men
under the Ministry of Defense and it maybe exception, but after three years
of cooperation it does deserve to be noted.
What Odom does not say is that there are other Russian generals who believe
the rot in the Army can be arrested by a simple expedient: restore the old
threat and rebuild morale by re-invoking the struggle with the West.
Nationalist and Communist have echoed such a solution. These generals and
the politicians have misread the situation. The Red Army cannot be
Obviously, the Russian army will have to be rebuilt from the ground floor
up. General Lebed has talked about creating good companies and battalions.
Many officers recognize the need for a professional NCO corps. Odom's
suggestion that we just let this army die a lingering and painful death and
let the missiles deteriorate in their silos seems simple and straight
forward. There are, however, a few questions to answer before we adopt that
course. What will replace this dying army? Platonov, one of the outstanding
scholars on Russia's time of troubles in the 17th century, wrote that the
military --a new and different military -- were among the victors in the
recovery from that crisis. Revolutionary Russia witnessed the death of one
army and the birth of several others [Reds, Whites, and Greens]. At the end
of a particularly bloody civil war fought by desperate and brutal men the
Red Army emerged victorious. American military intervention in that civil
war proved confused, ill-conceived, and counter-productive according to
George Kennan. As to letting the rockets rot in their silos, that in no way
will prevent the sale of fissionable materials, it will just make the
process more opaque and more dangerous in the context of pogroms and civil
war. We will not get back to General Grove's notion of an American monopoly
on atomic weapons but only encourage the collapse of our efforts to stop
proliferation. Moreover, there are other parts of the nuclear arsenal that
are more complex. We had the cut of electrical power to the docks at
Severnodvinsk where Russian nuclear-powered submarines await the decoring of
their reactors. If power had not been restored we would be taking about
multiple reactor meltdowns. I suspect Finns, Norwegians, and Swedes take a
different view of benign neglect toward that particular problem. Then there
are the large stocks of chemical weapons which have still not been
destroyed. Anarchy and chaos could make central control impossible and
eliminate any chance of arms control measuring reducing this horrendous
Moreover, does anyone really think that civil war in Russia will be anything
but a disaster for international stability as other powers have to chart
some course to manage chaos over a very large part of Eurasia. Please note
that a Russian meltdown will likely take sizeable parts of the rest of the
FSU with it. 
Given the declining state of health of the population and the collapse of
public health measures across the FSU states, it would probably be useful
to remember the burning of horse manure at the cavalry post at Ft. Riley
Kansas, the spread of respiratory influenza by rail across America to the
embarkation ports and then across Europe with the troops deployment in
theater. On the return trip the "Spanish Flu" was already deadly and killed
more persons than all the fighting of WWI. We live in a global village of
great interdependence. That should be the starting point in our search for
solutions in tough problems with potentially tragic outcomes. We are
dealing with complex systems.
Finally, I wish it was so simple to tie the nationalist-communists to the
Russian Mafia. That would make it a very simple struggle of good and evil.
The problem is that crime and corruption are endemic. No ideological litmus
test can be applied to Russian crime. It is neither a function of a few
"Russian Robber Barons," i.e., oligarchs practicing "savage capitalism," or
corrupt commissars who keep the Manifesto under their beds as they send
their ill-gotten gains to a Swiss bank account. Its roots are within the
evolving organism itself. There are more ties to the rest of the world than
many care to admit. Moreover, there are still honorable people of
character and good name, who have not become corrupted. As I have stated in
JRL in the past I think the application of stereotypes to the analysis of
Russia's trauma is dangerous in the extreme and can end badly. This is true
for society and the military. My bet is that national-communists
[Red-Browns] will also try to use the Mafia card to go after liberals and
democrats as tools of the oligarchs and will dress it in Makashov's brand of
anti-Semitism by linking "agents of Western influence" with crime and
corruption. Russia's press has so far shown itself strong enough to appose
such hate-mongering. 


Date: Fri, 04 Dec 1998
From: abraham brumberg <> 
Subject: Re Starovoitova/Shlapentokh

On second thought I am persuaded by Doctor Shliapentokh and others that my
comments on Galina Starovoitova violated the adage de mortuis nil nisi bonum
(I am not aware of the version offered by Doctor Shlaentokh). It
was inappropriate to criticize Doctor Starovoitova at this time and I
apologize for it.

This said, let me point out that what really riled me was that people who
contributerd heavily to making the present Russia so rapacious,
economically and socially unjust, and massively corrupt expressed their
grief in a manner that suggested that THEY were indeed the martyrs for
democracy whom the assassins's bullets were aimed at. Chubais a democrat?
Chernomyrdin, reputely one of the wealthiest people in Russia an upholder
of probity and justice? Luzhkov who stuffs his pockets (and Swiss bank
accounts) with his illicit earnings and uses his power to suppress
criticism in his bailiwick (see, inter alia, David Remnick's RESURRECTION,
pp.l67-69) a friend of democracy? Give me a break, Doctor Shlapentokh! 
These and others know well enough that Starovoitova's death will remain,
most likely, a mystery, like so many other deaths over the past few years,
because it is they who helped to make made Russia a place where thieves
and brigands move around with impunity and who derive no little benefit
from it,, (e.g., the "privatization" swindle). It may indeed be that some
of them hope desperately than no culptrit will be found who might imply
their complicity, too.. 

My specific criticism of Starovoitova may indeed sound a bit tawdry. And I
certainly do respect many of the things she said and did. But I am afraid
I consider Starovoitova in many respects a typical representative of the
intelligentsia whom you say I mock. Well, true--I have difficulty
admiring some of these people.I remember a well known "democrat" in Moscow
who got furious at me for asking him to provide proof for some of his
sweeping assertions: "Typical of you Westerners!," he said. "You cannot
get it into your heads that in Russia things can be true even if they rest
on no specific evidence." And two very distinguished "reformers" who told
me that Yavlinky was "a piece of dermo"--and who also failed to produce any
proof for their maladorous charge. And finally, Doctor Shlkiapentokh, I
feel I must remind you of the last time we met, several years ago, at a
meeting of a club of Leningrad intelligents, when I objected to your calling
nearly all Sovietologists as in effect "Communist apologists." I vaguely
remember Joseph Berliner making a similar point around that time. Tawdry,
that, but true.


Date: Fri, 4 Dec 1998 
From: "Jerry F. Hough" <>
Subject: Food aid

A number of contributers are criticizing the Russian food aid for 
the wrong reason. Without question, wheat is not the major Russian 
need. But Americans are still being conned by the Russian "market 
reformers." It is said that grain prices are low because of 
oversupply. This is nonsense. Prices are low because the state sets the 
prices low to subsidize the big cities such as Moscow. It is obvious 
that in a real market, wheat prices would be soaring on panic alone. 
Russia doesn't have chickens because it does not have feed grain. 
Russian agricultural policy has been worst than bandit capitalism, and 
really worst than Stalin's from 1929 to 1934. At least he provided 
tractors. The cost is horrendous. The cause of the health decline is 
a shortage of protein and the need to get calories through bread, 
potatoes, and vodka. To see eXile being taken in by the Chubais 
propaganda is particularly sad, and someone really needs to look at 
agriculture pricing and procurement seriously. 


The Economist
December 5, 1998
[for personal use only]
Dirty tricks and democrats 
S T P E T E R S B U R G 

IF DEMOCRACY can work properly anywhere in Russia, it should be in St
Petersburg. The country’s best-educated and most enlightened city will be
electing a new municipal assembly on December 6th. The voting will decide
whether the executive authority wielded by Vladimir Yakovlev, the city’s
autocratic governor, will be diluted by a “legislature” dominated by his
liberal and social democratic opponents. As an American historian might put
it, the election is about the separation of powers. 
This issue—uncontroversial to Americans but which in post-Soviet Russia has
generated passion, bloodshed and some bewildering changes of side by
democratic reformers—is more topical than ever in today’s local politics. The
weakening of central government has created a new class of local bosses with
almost unrestricted power, which is too often misused to enrich cronies and
silence critics. 
St Petersburg is now the only place where a serious attempt is being made to
place an elected check on a governor’s authority. It takes the form of a full-
time legislative assembly that was created at the beginning of the year by a
city charter, a sort of local constitution. “Local politics here are the same
as everywhere in Russia,” says Yuri Vdovin, of Citizens’ Watch, a local human-
rights group. “The difference in St Petersburg is that there are rather more
people who understand what is going on.” 
If critics of Mr Yakovlev do well in the election, they will redouble their
campaign for more open government and restrictions on his right to rule by
decree. If the governor’s cronies succeed, they may try to repeal the city
charter and its curbs on his authority. So he is fighting a mean campaign. His
tactics include using his clout in local media (the city government owns 38%
of the main television station, and controls the best-selling daily newspaper)
to denounce his opponents for their “political ambition”—a term that was
pejorative in the strange parlance of the Soviet era. 
Then there are the dirty tricks being used against the charter’s supporters.
Voters are harassed by spoof late-night telephone calls from people claiming
to be pro-charter campaigners. There are also spoiler candidates, who have
been paid (by whom, no one knows) $1,000 or so to stand against democrats
whose names they just happen to share. So Alexander Kravtsov, the author of
the city charter, may lose votes to a namesake who is an unknown student. 
Worse still is the intimidation of liberal activists which is set against the
grim background of the unsolved murder on November 20th in St Petersburg of
Galina Starovoitova, one of Russia’s best-known reformers. Opponents of the
governor have been subjected to beatings, shootings, police raids, house
searches and sudden inquisitions by tax inspectors. 
Mr Yakovlev denies any hand in these abuses. As for the death of the brave Mrs
Starovoitova, he says lamely that it was a “provocation” to discredit the law-
enforcement agencies. But he advanced this odd theory via an official news
agency; for a week after the killing, he vanished mysteriously from public
view. One of his aides said he was recovering from a back injury in North
Ossetia. When the authorities there denied this, he was said to have been
convalescing in Finland. The latest word is that he was in fact skiing in
Whatever Mr Yakovlev’s motivation—and many in St Petersburg believe he is
mainly a creation of the powerful commercial interests which financed his
election in 1996, rather than a political figure in his own right—a victory by
his supporters, whether fairly gained or not, will mean the end of the city’s
experiment in separating powers, at least until the gubernatorial elections in
two years’ time. 
A victory by his opponents would be a big step in the right direction, even
though their fractious ranks include sinners as well as saints. But the
election leaves most voters indifferent. Even the most optimistic democrats
think two-thirds of them will stay at home. “For one bunch of bandits instead
of another?” said one jobless ex-officer, asked if he would vote. 
Bandits or no, St Petersburg is in practical terms one of the richest and
best-governed cities in Russia: admittedly no great boast. Overt gangsterism
may be less pervasive than in other big Russian cities. Finances are
(relatively) sound and the budget is shiningly transparent—at least by
comparison with murky Moscow. 


Russia wants to ramp up defence spending: minister

MOSCOW, Dec 4 (AFP) - Russia plans to ramp up missile manufacturing and
defence spending, and will allocate seven billion dollars to the sector in
1999, a top government official said Friday in response to complaints from the
military about "deadly" cutbacks.
Deputy Premier Yury Maslyukov, Russia's economics chief who oversees the
lucrative armaments sector, said Moscow had earmarked 3.5 percent of gross
domestic product, some 133 billion rubles, on defence in 1999, including
outlay on 10 new missile systems to arm strategic forces.
Defence officials had previously complained that only 2.6 percent of GDP, or
99 billion rubles (five billion dollars) had been allocated for the military.
But Maslyukov painted a very different picture Friday, Russian news agencies
"I think that the economic situation will change for the better in 1999, and
we will channel more resources to the country's security," Maslyukov said.
He said that 10 intercontinental Topol M missiles were due to be commissioned
and delivered in 1999, the same number as this year, but the number could be
increased to 40 in 2000, news agencies reported.
"We must be prepared at any moment to hit any probable enemy," Maslyukov said
in a speech to the Moscow Heat Technology Institute.
Russia's 1999 budget, still to be endorsed by the government and approved by
parliament, provides for spending cuts across the board to try and balance a
lopsided spending-revenue equation.
Defence ministry daily Krasnaya Zvezda (Red Star) earlier bemoaned the
spending cuts.
"The money allocated by the state will be just enough to feed and clothe
soldiers. But how can we purchase new weapons systems, organise manoeuvres and
maintain troops at combat level," the paper asked.
Deputy Defence Minister Nikolai Mikhailov has already denounced the draft
armed forces budget, saying it represented "a blow to the army and the
military-industrial complex."
The crumbling Russian armed forces have been short of funding for years,
leaving some units unable to even house or feed their troops. 


Financial Times
December 5, 1998
[for personal use only]
RUSSIA: Bank accounts unfrozen
By Andrew Jack and Carlotta Gall in Moscow

Depositors in some of Russia's most troubled banks have had the chance this
week to withdraw their savings for the first time since the August financial
The state-controlled Sberbank began allowing its faithful depositors to
recover some of the money that had been held in their accounts - but with a
real value sharply diminished as a result of the devaluation of the rouble.
Andrei Kozlov, deputy chairman of the Central Bank of Russia, said yesterday
at a Moscow gathering of the World Economic Forum that officials hoped to
complete discussions with all the country's 1,500 banks by the end of the
year. That would lead to restructuring through a newly created state
organisation - but could lead to many banks being closed down.
The details seemed of little importance to the 500,000 customers from four
banks who have opted for a government-backed scheme to transfer their money to
Sberbank and withdraw some of their savings.
"We had all our savings in the next-door bank, MOST-Bank," said one pensioner,
clearly upset. Her husband beside her was filling out several bank forms.
"We're not sure how much we'll get back." Asked what she would do next, she
shook her head and said she did not know.
Most depositors were bitter but resigned. One man gesticulated at a small slip
of paper. "I had 10,000 roubles: that was worth $1,500 back in August. And now
the rate has changed so much it is worth just a third of that." Yet he said it
was better to take what was offered now than wait in the hope for any better
Sberbank bank was paying out the accounts in full, but only in roubles. Those
with dollar accounts were having to accept roubles at the exchange rate of
August 31, when the dollar was 9.33 roubles. Yesterday people were changing a
dollar for almost 20 roubles.
Officials indicated that only a handful of banks - likely to be fewer than the
18 previously stated - would receive special assistance because they were too
important to be allowed to collapse. That includes a number of regional banks
across the country.
Speaking at the same Moscow conference, Yevgeny Primakov, the prime minister,
floated the idea of an amnesty for Russians with money deposited in other
countries to bring it back to Russia, and suggested foreign banks could be
encouraged to accept Russian depositors' money in exchange for investing a
proportion of it in the country.
Mikhail Zadornov, the finance minister, said that Russia planned to levy new
taxes on exports as part of its efforts to raise government revenues from 9.3
per cent to 12.7 per cent of gross domestic product in an attempt to close its
gaping budget deficit. The measures are necessary in part to appease the
International Monetary Fund as the country attempts to win new financing and
restructure its debts to foreign creditors. 


Russia: Yelena Bonner Criticizes Lack Of Human Rights
By Matt Frost

Prague, 4 December 1998 (RFE/RL) -- On a visit to RFE/RL in Prague, Russian
human rights activist Yelena Bonner spoke about what she says was a lack of
progress in human rights in Russia over the last year and the importance of
next year's parliamentary elections.
Bonner said that despite Russian President Boris Yeltsin declaring 1998 "human
rights year" in honor of the 50th anniversary of the Universal Declaration of
Human Rights, no progress has been made in the defense of human rights in such
crucial areas as the army, the economy, the law, and medical and educational
services. Bonner lamented that while Russia's constitution safeguards human
rights on paper, there is "no mechanism for defending human rights in
practice." She described Russian society as being on a constant "high state of
psychological alert," brought about by a frightening accumulation of social
evils -- such as poverty, homelessness, drug abuse and a high crime rate.
Bonner said that in some respects the social conditions in Russia were as
bleak as at any time since the end of the Second World War.
On Russian political developments, Bonner spoke out against the idea of any
union of democratic forces ahead of next year's parliamentary elections. She
said that the Duma elections were of crucial importance --far more than the
presidential elections slated for the year 2000. But she said that last week's
proposed union of center right parties would weaken rather than strengthen the
chances of democratic candidates in the upcoming poll. 
Bonner argued that it was not desirable to place politicians such as former
prime minister Yegor Gaidar and former deputy prime minister Anatoly Chubais
in the same camp as the Yabloko party of Grigory Yavlisnsky for example. She
said the electorate believes both Chubais and Gaidar have "robbed" the people
through their controversial privatization programs.
Bonner said that the Yabloko party with its federation-wide organization and
its track-record in parliament over the last five years has proved itself to
be a credible and electable political party. It would be a mistake, said
Bonner, for Yabloko to associate itself with other political parties led by
politicians deemed "unacceptable" to the people.
In answer to a question on the consequences to Russia of Yeltsin's prolonged
health problems, Bonner said Yeltsin's absence was far from ideal. But she
said she is against the presidential elections being brought forward from the
year 2000 and believes Prime Minister Yevgeny Primakov was at least "giving
the appearance of being in control of the structures of government."
Bonner concluded her comments by saying that important changes need to be made
to the Russian constitution to safeguard human rights in the country. She said
that these changes must be made in total compliance with the law and not at
the behest of one of the branches of power. 


Date: Fri, 04 Dec 1998 
From: Valeri Jakushev <>
Subject: reply to Vladimir Shlapentokh on Abraham Brumberg


You're being too much pathetic in your letter, I think. To summarize,
your message will be: what a shame! Maybe the moment for Mr. Brumberg's
revelations was not quite appropriate, but...

If we would not think about the bad timing when these issues were
raised, certain points in the letter of Mr.Brumberg may be taken as
valid. I mean, of course, intolerance, arrogance and other "bad habits"
of the characters on the current political scene of Russia (including
democratic leaders). 

I do not know whether this is true about late Mrs.Starovoitova or not (I
do not watch much TV, so I don't know), but I think, it _may_ be true.
Take, for example, a well known defender of human rights Mr.Sergei
Kovaliov. Once I was listening to his interview a good while ago on
"Radio Svoboda" and was impressed by his intolerance, arrogance and
almost rudeness towards the interviewers. Or, take for example the more
polite Mr. Yavlinskii, who has an almost leninist ambition: all the
power or nothing. I mean, of course, his refusal to join any government
but instead, to grab all at once, as if he would have been backed by at
least 60% of the population. Unfortunately, many people in Russian
politics and even in academia, especially those who hold any position of
a boss (however, "chief" would be more appropriate ;-)) are "bolsheviks"
in their attitudes and behavior, which in its turn, give Mr.Brumberg to
make a generalization that this is the common feature of the Russian
"intelligentsia". True or not, but his point should be taken as

> Not only the Russian intelligencia, whom you choose to mock

I did not find any mockery there. Just wit.

> but certainly the majority of Americans
...and ...
> your attitudes
> toward death are not typical for most Americans

As I understand, Mr.Brumberg did not try to speak on behalf of American
people, but, instead, was sharing his personal observation with the DJL
Hence, here is the difference: collective or individual perception. Or:
intellectual vs. intelligent.

but this is the long, non-productive discussion which is going for ages
in boring forums like Literaturnaia or Nezavisimaia Gazeta. 


Date: Fri, 04 Dec 1998 
From: Thad McArthur <> 
Subject: Re: The Monica Position/John Helmer

Dear Mr. Helmer:

Thanks for your reminder in today's (Friday's) Johnson List. I had been 
meaning to send you some comments but had been too busy to do so when I 
read your column on the List earlier this week.
While your article is seemingly pretty hard on Monsieur Camdessus, he is in 
fact probably working very hard to promote exactly the thesis you put forth 
- that Clinton and the Americans are to blame, and that he and his French 
lieutenant valiantly tried to save Russia and the world from typically 
hamfisted and wrong-headed U.S. policy. It's just another attempt by 
Europeans, who are incapable of exercising any foreign policy leadership 
themselves, to disassociate themselves from U.S. initiatives they 
previously supported as soon as it becomes clear that the policy is not 
having the desired effect. The flip side of this coin is their frequent 
revisionist attempts to cast themselves as the true architects of any 
successful U.S. policy, even if they originally opposed it - see the 
Persian Gulf War, Pershing II and Cruise missile deployment in W. Europe, 
und so weiter.
I would be interested to know, exactly, who was this omniscient 
Cassandra-Frenchman who so clairvoyantly predicted the failure of IMF 
policy in Russia? I would also like to know if you actually read any of the 
memoranda in the files of the IMF which purportedly document the his 
dissent and that of the "non-Americans" on the IMF board, or did these 
Europeans, frantically back-pedaling away from a U.S. policy they 
previously whole-heartedly supported, simply tell you they existed? If you 
did read them, why didn't you quote from them?
While U.S., IMF and, yes, Western European, policy in Russian clearly 
cannot be said to have succeeded, the reasons for its failure lie more with 
the Russians themselves than with the policies. As far as I have been able 
to observe, the IMF gave Russia 1) money, which it took, and 2) advice, 
which it rejected. I find it perverse that some of the advice given by the 
IMF, which was, in fact, rejected by the Russians, is considered by many 
Western analysts to have been actually implemented and to have contributed 
to the downfall of the Russian economy.
Take for example the oft-repeated claim that the IMF pushed an 
overly-liberal capital control regime on Russia. The only people I have 
ever heard make this claim are the scribblers and think-tankniks who in all 
likelihood have never attempted to repatriate any capital from Russia. As a 
businessman who has tried (both successfully and unsuccessfully) on more 
than one occasion, I can tell you it is far from easy. In fact, having 
worked in India as well, whose stringent capital controls are 
world-renowned, and which are often held up by IMF bashers as an example of 
what Russia's should resemble, I can say that, in my experience, it is much 
easier to repatriate capital and to make foreign hard currency payments 
from India than it is from Russia.
Of course, this applies only to legally-obtained capital transferred by 
legal means according to Central Bank regulations. No capital control 
regime imaginable could prevent the kind of capital flight Russia has 
experienced given the corruption at the heart of the Russian banking 
system. IMF critics also fail to note the underlying reason for capital 
flight: confiscatory levels of taxation, arbitrarily enforced by a corrupt 
tax service wholly-owned by organized crime, which uses its control over 
the enforcement process to reward friends and punish enemies.
An absence of historical consciousness rather than faulty economics lies at 
the heart of our failed policy. The biggest mistake the West and the IMF 
made in Russia was to believe they could have any lasting influence at all. 
The cynicism, venality, and rapaciousness of the Russian political and 
economic elite made any Western policy, no matter how enlightened, futile. 
Unless Monsieur Camdessus' lieutenant was arguing for a wholesale 
withdrawal of all Western aid and engagement in Russia, any alternative 
policies he may have recommended would have met the same fate.

Thad McArthur


Western business pleads for improvements in Russia
By Patrick Lannin

MOSCOW, Dec 5 (Reuters) - Top Western businessmen on Saturday pleaded for more
fairness and openness in Russia as officials once again underlined the dire
state of its economy. 
The businessmen, representing billions of dollars of investment, said crime
and corruption remained obstacles but that Prime Minister Yevgeny Primakov
seemed determined to improve the economic situation. 
``There needs to be fair treatment and a commitment to an open market
economy,'' said Mathieu Vrijsen, the president of the European, Middle East
and Africa operations of U.S. chemicals giant DuPont. 
He was speaking at a special meeting on Russia of the World Economic Forum,
better known for its annual gatherings of top financial leaders in the Swiss
town of Davos. 
``We are talking about a level playing field for all, we are talking about the
rapid introduction of laws that are clear and transparent for all,'' said
Neville Isdell, chairman and chief executive of the British arm of drinks
giant Coca Cola. 
Russia is stuck in deep economic crisis, one of the worst since the end of
Communism in 1991, with its banking system in ruins and the rouble currency
losing ground virtually every day. 
Economic output is expected to slump this year and next, just as it seemed to
be heading for a slight rise, while inflation is already rising sharply. 
Foreign Trade Minister Georgy Gabunia underlined the seriousness of the
problems, saying the volume of foreign trade had fallen back to 1995 levels
and would only get back to the levels of last year by 2003-2004. 
He said Russia would streamline customs procedures and enter the World Trade
Organisation, which would boost transparency. 
Primakov, a former spymaster chosen as compromise prime minister to get the
backing of both the Communists and liberals in parliament, backs more state
intervention to guide the country out of its latest troubles. 
The businessmen said the government had to deal with key problems such as the
tax system and to ensure equal treatment. 
Andreas Schlaepfer, the head of the Russian operations of Swiss consumer giant
Nestle, said the tax code needed to be made clearer and more predictable. 
He said that business confidence would also be boosted if the judiciary was
made less corruptible. 
``The fight against criminality and corruption must pick up momentum, not just
in words but in deeds,'' said Percy Barnevik, head of key Swedish investment
firm Investor and of the Russian operations of industrial heavyweight ABB. 
``Primakov has a clear direction of what he wants to do, if he can deliver,
that is another matter, is it too early to tell,'' he added. 
The businessmen said they were here to stay but improvements needed to be
``The potential is here. Mistakes have been made but the philosophy of
muddling through must be stopped and long-term predictable and equitable
policies must be put in place,'' said Klaus Schwab, the president of the World
Economic Forum. 


Date: Fri, 04 Dec 1998 
From: "Michael Mihalka" <> 
Subject: Job announcement Marshall Center

I just wanted to let you know (and you can inform the list) that we have
an opening for a Russian studies person at the Marshall Center starting
next fall (in addition to our openings in democratic theory, transition
economics, civil-military relations and Central Asia). Details can be
found at our web site:


Moscow Times
December 5, 1998 
Duma Asks for Sell-Off Reversal 

The State Duma appealed to the government Friday to reverse a series of high-
profile 1995 privatization deals that took place under the loans-for-shares
Under the scheme, the government received loans from Russian banks against
stakes in Russia's most attractive state-owned companies. The loans were never
repaid, and the banks acquired the stakes for prices far below market value. 
On Friday, the Duma in a unanimous vote asked the government to go to court to
cancel the loans-for-shares deals, saying that otherwise the Russian
industrial companies could end up in the hands of Russian banks' Western
Among the "strategic" companies that changed hands under the loans-for-shares
scheme, the Duma named Norilsk Nickel and Sidanko, which were sold to
Uneximbank, Yukos, which wentto Menatep, and Sibneft, which came under the
control of SBS-Agro and companies owned by Boris Berezovsky. 
The list also mistakenly included the Tyumen Oil Co., acquired by Alfa Bank in


David Johnson
home phone: 301-588-3861
work phone: 202-332-0600 ext. 107
home address:
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