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Johnson's Russia List


December 8, 1998   

This Date's Issues: 2507 2508 

Johnson's Russia List
8 December 1998

[Note from David Johnson:
1. Reuters: Russian press wonders if Boris is back.
2. Reuters: INTERVIEW-Economist says IMF helped bankrupt Russia.
(Sergei Glazyev).

3. AFP: Liberals set to strengthen position in St. Petersburg.
4. Intefax: 1999 Forecast Grim If IMF Refuses To Provide Money.
5. Itar-Tass: Primakov on Russia's 'Economy of Mistrust.'
6. Moscow Times: Natalya Shulyakovskaya, Report: Moscow Hit Hard by

7. Reuters: Gorbachev rules out presidential bid.
Federal News Service for giving me permission to use some of their
translations. You can check out the FNS Kremlin Wire at

9. The Times of India: Muchkund Dubey, The Russia House. In Urgent 
Need of Indian Support.

10. The Moscow Tribune: John Helmer, RUSSIA WORE RED VELVET.
11. Times Higher Education Supplement: Nick Holdsworth, Extremists
Push for Young Voters.

12. Reuters: Russian nationalism threatens CIS -Berezovsky.
13. Interfax: Commission Report Says Privatization 'Unsatisfactory.']


Russian press wonders if Boris is back
By Peter Graff

MOSCOW, Dec 7 (Reuters) - Taken aback once more by the unpredictability of
President Boris Yeltsin, Russian newspapers speculated on Tuesday whether the
ailing and isolated Kremlin chief could stage a political comeback. 
Yeltsin, who rose briefly from his hospital bed on Monday to sack his chief of
staff, has often been written off as a spent force in the past, only to bounce
This time he drove to the Kremlin for three hours to fire Valentin Yumashev,
the loyal, secretive head of his administration who had been referred to in
Russian newspapers as ``Yeltsin's son,'' not least because of his friendly
ties to the president's daughter, Tatyana Dyachenko. 
Yeltsin then returned to the hospital outside Moscow where he has been
recovering from pneumonia, the latest of a series of infections over the past
month that had led commentators and opponents to write him off as finished. 
``The President is cured'' said the daily Izvestia in a front page headline. 
``He felt around him an informational and political sarcophagus, built not
without the participation of his so-called 'family circle,' and only gathered
the strength to break through,'' it said. 
Izvestia also said that the decision to replace Yumashev with Security Council
Secretary Nikolai Bordyuzha was a sign that Yeltsin is gearing up for a
showdown, both with his Communist opponents and, if necessary, with members of
the government of Prime Minister Yevgeny Primakov. 
``The president has militarised his administration,'' it said. 
But not all newspapers were convinced that there was a sensible plan behind
Yeltsin's actions. 
Moskovsky Komsomolets ran a front page cartoon showing a squinting Yeltsin in
bandages and pyjamas, riding a bewildered horse in front of a Kremlin fortress
in flames, lopping off heads left and right with a sword. 
``What to expect from Yeltsin -- the building of a new pyramid of Kheops or a
last farewell showdown with his opponents gone wild -- already nobody can
predict,'' the paper said. 


INTERVIEW-Economist says IMF helped bankrupt Russia
By Brian Killen

MOSCOW, Dec 7 (Reuters) - Russia should rethink relations with the
International Monetary Fund as its advice until now has only helped to drive
the country into bankruptcy, a leading Russian economist said. 
Sergei Glazyev, a former foreign economic relations minister who helped draft
the present government's economic plans, told Reuters at the weekend that
Russia should negotiate with the Fund on cooperation but not follow its
recommendations blindly. 
``The IMF, with its extremely formal, bureaucratic and primitive position on
questions of macroeconomic policy, has become one of the most important
factors in the unfolding of Russia's economic crisis,'' he said. 
``It is not just that the Fund gave incorrect advice, extremely primitively
considering Russia's economic system as a collection of financial markets and
ignoring all the processes going on in the real sector of the economy. 
``But the Fund also effectively pushed the Russian government into bankruptcy
when it gave the green light and approved the policy of building financial
pyramids,'' he said, referring to growing dependence in recent years on
issuing state securities to finance budget deficits. 
``Either the IMF cannot count, or it consciously closed its eyes to the policy
of self-destruction of the financial system.'' 
The IMF's role as a global economic troubleshooter has been widely criticised,
including by the World Bank chief economist, after the recent crises in Russia
and other emerging markets. 
Glazyev, head of the analytical department at the Russian Federation Council
(upper chamber of parliament), said the Fund was instrumental in Russia's
slide into its present mess. 
Speaking on the fringes of a conference organised by the World Economic Forum
in Moscow, he did not mention the IMF's long-standing insistence on fiscal and
structural reforms. 
The IMF orchestrated a $22.6-billion rescue package for Russia in July to help
defend the rouble and give the then government of Sergei Kiriyenko a chance to
implement reforms. 
But the Fund has come under fire in Russia from some leading politicians who
see few benefits from its advice or loans. 
Gennady Seleznyov, speaker of the State Duma (lower chamber of parliament),
said on Thursday that the government should pay its debts to the IMF and ``get
these shackles off Russia's legs.'' But Glazyev said Russia still had to
negotiate with the IMF. 
``We have to carry out negotiations with the Fund, but we must rethink the
significance of the Fund in international financial policy and its role as an
economic adviser. 
``In any case, I think the policy of the Fund, as far as its influence on the
internal policies of other countries is concerned, has completely failed and
been discredited,'' he said. 
Glazyev said the main result of the IMF's influence on Russia was ``the
discrediting and collapse of economic reforms.'' 
However, he believed the main guilt lay with the previous government's policy-
makers whom he described as incompetent. 
``But they relied on the Fund and its authority. If it wasn't for the Fund's
authority, the policy of self-destruction of the economic system could have
been stopped much earlier.'' 
Glazyev is close to Russia's First Deputy Prime Minister Yuri Maslyukov, who
is responsible for the economy and for relations with international financial
Maslyukov is due to visit Washington later this month for talks on cooperation
with the IMF which could lead to new, much-needed credits. 


Liberals set to strengthen position in St. Petersburg

SAINT PETERSBURG, Russia, Dec 7 (AFP) - Liberals are expecting to strengthen
their position in Saint Petersburg's city assembly after benefitting from a
high voter turnout inspired by the murder of leading democrat Galina
The electoral commission said that 40.56 percent of the registered 3.7 million
voters turned out in Russia's second city on Sunday, against just 14 percent
for the last city elections in February 1997.
Reformist liberals had been tipped to score well on the back of a surge of
support following the murder on November 20 of Starovoytova, a deputy who had
denounced the corruption tainting the politics of her native city.
Preliminary results showed just six candidates, four independents and two
democrats, were elected in Sunday's first round of voting. Definitive first
round results will be announced on Tuesday.
Voters will return to the polling stations on December 20 to elect the
remaining 44 members of the assembly, with the top two candidates standing in
each constituency.
The democrats -- the largest bloc on the outgoing council -- will field 44
candidates in the second round, including 24 from the Yabloko party led by
Grigory Yavlinksy, 18 from the Democratic Russia party of Yury Boldirev and
two from the Soglassieh (Concord) group.
The Communists will have 10 candidates, while 34 independents have also
progressed to the second round.
Elena Starikova, St Petersburg's Yabloko spokesman, said: "Our victory is
completely in line with the composition of the political powers in St
Anton Ostapov, a political analyst from the city's Institute of Sociology,
told AFP on Monday: "I think the percentage of democrats on the city assembly,
which is currently 30 percent, is going to increase, but it is still too early
to be totally certain.
"The democrats' position is strong but some independent candidates also have a
good chance of being elected in the second round."
The assembly plays a key political and economic role alongside the city's
governor, Vladimir Yakovlev. 


1999 Forecast Grim If IMF Refuses To Provide Money 

Moscow, Dec 4 (Interfax) -- If the IMF refuses to provide money for
Russia, the country's economy could contract by 5%-7% next year as forecast
in the Ministry of Economics "less favorable" outlook for 1999.
"The forecast made by the Ministry of Economics earlier will not be
recalculated if Russia doesn't receive the next tranche of an IMF loan,
because it was based on a "less favorable" decision in talks to restructure
the foreign debt, delays receiving foreign loans, continued drops in world
market prices for commodities," First Deputy Economics Minister Arkadiy
Samokhvalov told Interfax Friday [4 December].
Under this scenario, Russian GDP will drop by 5%-7% next year, money
emission could be up to 130 billion rubles, annual inflation will be
50%-60%, and the ruble will drop sharply.
Unemployment could increase to 9.3 million, or 12.7% of the workforce,
and the subsistence level will be 20%-40% higher by the end of 1999.
The optimistic scenario assumed that all matters concerning foreign
loans and debt restructuring would be settled quickly, and the government's
anti-crisis measures would produce positive results. In this case GDP
would drop no more than 3% and inflation would be 30% next year. 
Unemployment would be 2.4 million, or 3.3%, in 1999.


Primakov on Russia's 'Economy of Mistrust' 

MOSCOW, December 4 (Itar-Tass) -- Unsuccessful reforms have left
Russia with an "economy of mistrust," Prime Minister Yevgeniy Primakov said
at the World Economic Forum working in Moscow on Friday.
Worse, there is a wide mistrust of reforms in Russia, he said.
"The hardest consequence and lesson of the crisis has been not the
fall of production or the fall of the rouble, but a total crisis of trust,"
Primakov said in his address.
He said the trust crisis hit all levels of the economy and relations
between the state and the population, debtors and creditors, different
power branches.
Primakov said the "economy of mistrust" resulted from ignoring the
problems of the real sector of the economy, ill-considered import policies
concurrent with a bloated rouble rate, which he said clustered to undermine
national producers.
He said another factor was that "the Russian banking system proved
weak and artificial, able only to fatten on the state budget."
Also feeble proved the judiciary system, especially toward investor
rights, Primakov said.
He said the state machinery worked with utmost inefficiency and acted
"inconsistently and chaotically" under pressures of differently vectored
political and other forces.
Trust was hit worst by Russia's August 17 unilateral moratorium on
repayment of GKO and OFZ debts.
The most dangerous upshot has been that "mistrust of reforms has
spread wide enough" in Russia, Primakov said, adding that the sole remedy
to it was accord in society.


Moscow Times
December 8, 1998 
Report: Moscow Hit Hard by Crisis 
By Natalya Shulyakovskaya
Staff Writer

A recently published report on the economic and social situation in Moscow
confirms that Muscovites have faced a sharp drop in living standards since
August as a result of the financial crisis. 
Prices have risen, wages and pensions have stagnated or fallen and
unemployment is on the rise. 
Until the crisis, Moscow's economy was booming. Because Muscovites had much
more to lose, the financial fallout was expected to hit the capital worse than
any other region in Russia. And the report, released last Thursday, was the
first comprehensive set of numbers confirming this trend. 
According to the city government's calculations, the cost of a subsistence
basket of goods jumped from 861 rubles per person in July to 1,265 rubles in
September. In other words, the basic cost of living jumped by 47 percent in
two months. 
Average incomes in Moscow climbed to 1,914 rubles in September up from 1,899
in July, a rise of under 1 percent. 
In October, a Muscovite's real income on average was 33 percent down on a year
before, the report said. By that stage, the cost of a subsistence basket of
goods had climbed to 1281 rubles. 
In July, the city's 2.5 million pensioners' average pension covered 61 percent
of the cost a special cheaper basket of consumer goods which is supposed to
meet pensioners basic needs. 
But this figure dropped to only 42 percent by October. Prices leapt in the
wake of the August devaluation but the average pension remained at 407 rubles.
Pensions in Moscow are higher than in the rest of Russia because the city sets
a minimum pension level and pays the difference. The city in November decided
to raise this minimum level to 450 rubles from the 400 previously provided. 
Unemployment is also on the rise. Based on unofficial surveys, the study found
that in September, 340,000 Muscovites, or 6.2 percent of the active
population, were unemployed. 
No comparison was given for this unofficial figure but the much lower
"official" unemployment figure rose by 21 percent over the past year. 
With social pressures growing, the Moscow government is left with far fewer
means to cope with the capital's needs. The government in November passed a
new budget for the fourth quarter that cut spending by 13 percent. The city is
also planning to increase charges for services such as heating and maintenance
to compensate for the inflation. 
Consumer prices were on average 80 percent higher this past October than in
December 1997 in Moscow. Food prices jumped 94 percent but alcohol was only 62
percent more expensive. 
The report, covering the period from January through October 1998, revealed
that in the third quarter of this year, foreign investment in the Moscow
economy was a scant 12 percent of the investment made during this year's
second quarter. 
All together investment during the first nine months of 1998 was only one-
third, or 34 percent, of investment made during the same period of 1997. 
In 1997, Moscow received $8.4 billion dollars in foreign investment - more
then half of all foreign investments made into the Russian economy, said Yury
Usaty, the head of the foreign investment department of Moscow government. 
Manufacturing volume in October was down by 35 percent of the level in


Gorbachev rules out presidential bid

MOSCOW, Dec 7 (Reuters) - Former Soviet president Mikhail Gorbachev on Monday
ruled out another bid to be president of Russia. 
In a live interview from Moscow broadcast on CNN, Gorbachev said he believed
the Russian public was more receptive to his message of moderate reform than
they were during the last presidential election in 1996. 
In that poll Gorbachev received only around one percent of the vote. The next
election is scheduled for 2000 but could be held earlier if President Boris
Yeltsin resigns, is incapacitated or dies. 
``I will not run. I think what is needed today is to bring young people into
politics,'' Gorbachev said through a translator. 


Date: Mon, 07 Dec 1998 
From: "Alexey V.Kozyrev" <>


Even a Far-Left Cabinet Cannot Avoid "Bourgeois Monetarism"

Can default and hyperinflation be avoided? Will there be a
chance to get out of the crisis? And in what shape will the country
face the elections? The answer to all these questions may hinge on
next year's budget. Will the government be able to secure the
adoption and implementation of a realistic budget? What can be the
consequences of the tax reform that will be its basis? Will the
international financial institutions meet Russia half-way? These
are the questions Yelizaveta Osetinskaya discusses in conversation
with former First Vice-Premier and now Chairman of the Board of 
RAO UES Russia, Anatoly Chubais.

Q: One of the reasons why the new budget for next year hasn't
yet been put together is the servicing of foreign debt. What
agreements can be negotiated with the international financial
institutions and how?
A: There is only one way to address that problem: to come up
with a serious budget for 1999 and seek a compromise with the 
IMF. The government and the IMF must begin moving toward each other. 
The key figure, to my mind, is the initial surplus of 2-2.5 percent
without taking into account the cost of servicing the state debt
without which the IMF is unlikely to meet us half-way. I think it
is a daunting task because it would require a really austere
budget. But the point is that we need such a budget regardless of
the position of the international financial institutions. 
Now about compromises on foreign debt. There may be such a
compromise although admittedly it is not all that good. But there
has been a glimmer of it recently. Out of the $17 billion, $4
billion is our debt to the IMF itself. One can try to persuade the
IMF to refinance its own credit. In other words, we will be given
$4 billion in order to give back to the Fund the previous $4
billion. But first, that credit has yet to be obtained. And second,
even if we do get it, that does not cover the rest of the debt. The
fact of obtaining such a credit would make a dramatic difference to
the country's position. It opens up a range of new opportunities.
For instance, a World Bank loan is impossible without an IMF loan.
And vice versa, if we get an IMF loan, we can seriously count on a
loan from the World Bank. The Japanese link their loan very
strongly to the World Bank loan. Most important, World Bank and IMF
credits determine the country's rating, that is, its opportunities
for further borrowing. In any case, only an IMF loan can pave the
way for any civilized solution.
Q: Is the present government capable of making a deal with the
A: I don't know. What I know for sure is that it requires a
substantial centralization of macro-economic policy, which is not
the case today. There is no one person in charge of macro
economics. That is extremely dangerous for the government itself,
in the first place. And it dramatically diminishes the government's
chances to come to terms with the IMF. Besides, if such a macro
economic center does not appear, inflation next year will run not
to two but to three digits a month.
Q: Will the reform proposed by Georgy Boos improve tax
A: That debate is many years old. The government knows all the
pluses and minuses. Boos is right that the current nominal taxation
level is indeed too high. But one cannot expect tax collection to
improve merely because the tax burden will be cut. For cash
revenues to increase another fundamental condition is to be
observed: the taxpayers should be confident that taxes at new rates
will be collected by the government with utter ruthlessness. In
other words, political changes are needed that would it bring it
home to everyone: "yes, they cut the taxes, but such taxes as there
are they will collect down to the last kopeck." Today there is
confidence of the opposite. And the government by some of its
steps, for example, by deferring the debts of agriculture for five
years, contributes to that confidence. So, if a tax reform is
carried out without that precondition, its consequence will be a
sharp drop of tax revenues and the number of payers. And that
spells a federal budget disaster.
Q: This bring us to the question of whether the government has
the political will?
A: So, far it is not in evidence. It seldom happens that
something that didn't exist before suddenly appears out of nowhere.
Why should it suddenly appear? 
Q: So, after a while, some people should go from the
A: Not necessarily, perhaps, some new people will come in. 
Q: The liberals consider that one of their main achievements
is to create the institution of private owners, if you like.
Nevertheless, these owners are frequent guests at the meetings of
the Operational Issues Committee and are on the list of federal tax
dodgers. And some of them would be nothing loath to get rid of some
of their property and give it back to the state. Can such owners be
considered to be truly effective? 
A: Of course they can. And your example only goes to prove it.
You shouldn't think that tax-paying performance depends on the form
of ownership and not on the effectiveness of the tax system. As for
their wish to shed property, it's not surprising. They want to get
rid of bad property. This is normal behavior of a normal
proprietor. He has some property that is effective and some that is
not. And he wants to part with ineffective property. I don't know
the details of the MENATEP-YUKOS group, but I think there is 
more to the MENATEP situation than meets the eye. Perhaps some people
would like to get rid of it. But try to approach the owners with
this suggestion: "Please, surrender Yukos to the state too", what
will they reply? So, I think it's normal. It is another question
that the institutions which are supposed to protect property are
very backward. Moreover, much of organized crime is, odd though it
may sound, protection of property. It arises because civilized
forms of protecting property do not work. The law courts, the law
enforcement system and the penitentiary system are inefficient. The
government is derelict in its function of protecting property. So,
a group of mobsters comes forward to perform these functions of the
state. A lot has yet to be done in the way of protecting property.
But we have crossed the watershed and there is no going back. Even
though property is weak and underdeveloped it won't be taken away.
Good property, that is. As for bad property, they will give it back
Q: Don't you feel that the present left-leaning government is
a sign of the collapse of the liberal idea in Russia?
A: Not at all. There is an inexorable law: the more
responsible a government becomes and the longer it stays in power,
the more liberal it becomes. By the way, Maslyukov spoke at the
State Duma about a 2 percent budget surplus. I wish I could afford
saying the same in my time. The government answers for what happens
in the country. And it has to act in such a way as to make ends
meet, which is another word for "bourgeois monetarism." It is
another question that the government feels tempted to yield to
lobbyists who are basically anti-liberal. And of course, it is torn
by the same inner contradictions. The result will depend on what
prevails: if it yields to lobbyists, they will wreck a coherent
policy and destroy the government -- and very quickly. If it goes
for monetarist unpopular actions, in the first place a tough
budget, it will turn out to be a stable and enduring government.
And make a note that both these scenarios would demonstrate a
victory and not a defeat of liberal ideas in Russia.
Q: What is the outlook for the right-wing bloc?
A: I think the prerequisites for a right-wing movement are
more in evidence than ever and it can be created. This is the
objective aspect. But the subjective aspect is the ambitions and
inflated egos of 10-15 leading politicians in the country. I think
there is enough common sense around. As for the leader, the logic
is simple: because we are creating an electoral movement which 
must win the Duma elections, the leader must be the right-wing
politician with the highest popularity rating.
Q: Do you think everyone will go along with this approach to
choosing the leader? How will Chernomyrdin behave? 
A: I don't know, but I think Chernomyrdin will be more
prepared to face the facts than some of his associates. That's
where the main problem lies. But everything would depend on the
balance between ambition and a sense of what the country needs
Q: A serious challenge both to the left and to the right comes
from the third force, the centrists. Their undoubted leader is Yuri
Luzhkov. Will the right be a match to such a strong opponent?
A: I think Luzhkov naturally belongs somewhere between center
and center-left. He is undoubtedly "pinkish", undoubtedly "Soviet".
As for Luzhkov's strength, it is a fact, but it is a fact of today.
The situation is evolving. Luzhkov makes mistakes some of them are
big mistakes. His worst mistake was his idea of the "center-left"
which was ill-thought-out and ill-considered. It was obvious that
it would peter out within a month, which it did. Now Luzhkov will
have to spend the rest of the time explaining that he is not left
of center, but dead center, and that he hadn't said what he really
meant and had been misunderstood. That undermines his authority.
Besides, the economic situation in Moscow is by no means easy. If
Luzhkov continues to think that the main cause of all his
misfortunes is the anti-people GKO pyramid, he will go on thinking
along the lines that "macroeconomics is a whore of imperialism."
Every passing year and even quarter will make Luzhkov look more and
more like a man of yesterday, and this is the main danger in store
for him. If he meets that challenge, all honor and praise to him,
but so far there is little sign of it. 


The Times of India
December 5, 1998
The Russia House 
In Urgent Need of Indian Support

ECONOMIC terms like `recession', `depression', normally used to describe
economic downturn or meltdown do not capture the present predicament of the
Russian economy. For, what has befallen the Russian economy is nothing short
of a `disaster' or a `catastrophe'. The crisis has been building up ever
since the commencement in 1992 of the IMF-prescribed policy of fiscal
stabilisation, liberalisation and privatisation. Even after the horrendous
consequences of this policy became clear, the policy continued to be applied
almost as a conspiracy between the IMF, its major stakeholders and the
Russian mafia of private businessmen, corrupt officials and politicians, to
totally ravage the Russian economy. The bubble burst on August 17, 1998 when
the government devalued the rouble, declared bankruptcy by freezing the
short-term state bond market and introduced a 90 day moratorium on Russian
banks payments due to non-residents. 
Since 1992, the total output in Russia has been halved. The loss is much
greater than the decline in US output by some 35 per cent in the Great
Depression from 1929-1933. Inflation has continued to a point where the
rouble has become virtually useless, as 85 per cent of the transactions in
the economy no longer take place in monetary terms but in terms of barter
and inter-enterprise and wage arrears. The dollar has replaced the rouble as
a medium of exchange, unit of account for all major transactions and as a
store of value. 

Decline in Standard 

Because of the rigour of the fiscal stabilisation programme, the real
sector of the economy has been systematically starved of liquidity.
Consequently, there has been a collapse of investment and an erosion of the
physical capital in plant and equipment. Technology is fast becoming
obsolescent and the human capital of science, education, culture, medicine,
etc. has been virtually destroyed. 
The living standards of the people have steadily declined. Today
one-third of the population is living below the poverty line. Longevity has
gone down at a rate of which there no parallel in recent history, even in
developing societies. The middle class has been wiped out, particularly
after the crisis of August 17, 1998.
The policy of stabilisation, liberalisation and privatisation has been
followed in the absence of market institutions and private enterprises. The
result has been the rise of a new class of private monopolists whose sole
motive has been profiteering. They have systematically gone about stripping
the assets of the units put under their charge and transferring resources so
acquired to their foreign bank accounts. They have also been feverishly
buying stocks and property abroad. As a result, there is a continuing flight
of capital, at the rate of $60-$100 billion per annum.

Silver Linings

Lenin had described the Trotskyists' policy of total nationalisation as
``the tortured dream of the idealists''. The policy followed in Russia since
1992 can very well be described as the ``tortured design of the free
marketeers''. It has not been able to deliver capitalism to Russia. But in
the process it has destroyed the Russian economy and may end up destroying
democracy in Russia. For, the economic devastation in Russia is similar to
what happened to Germany after the World War I, culminating in the rise of
the Weimar Republic. The extraordinary powers bestowed on the President
under the current Russian constitution carries the danger of Russia sliding
into a fascist regime through a democratic process under an unscrupulous and
demagogic leader. Given Russia's position as the second largest military
power, this would have grave implications for global peace and security. 
Fortunately, there are some silver linings on the horizon. There is
relative political stability in Russia. In their long tradition of coping
with adversities, the Russian people have not succumbed to chaos and
violence that have followed economic crises in other countries. Besides, in
spite of their recent erosion, much of Russia's rich natural and human
resources are still intact. Finally, even though Mr Boris Yeltsin continues
to be the President, there is, in fact, a new government in Russia. 
In Mr Yevgeny Primakov, Russia has for the first time a Prime Minister
who enjoys the full support of the Russian Duma. He is going about picking
up the debris of the shattered economy in order to build a new structure, in
a realistic and cautious but at the same time firm and resolute manner. 
Mr Primakov has already indicated the direction of his government's
economic policy. The state will restore order to the budget, honour all its
obligations, defend property rights, enforce tax payments, clamp down on the
shadow economy and give priority to restoring the real economy. It will also
lower tax rates, impose partial currency controls and print a limited amount
of money to pay off wage arrears. On November 10, the Duma approved the
government's economic plan. 
The IMF has, however, refused to accept that these add up to an economic
policy. It has withheld the release of the next tranche of $ 4.3 billion of
its $ 22 billion emergency support, agreed to in July 1998, pending
submission by Russia of a more elaborate and concrete plan of action.
Western government leaders, commentators and investors have seen in this
policy the spectre of the return of communism.

US Policy 

The US administration seems to be in no hurry to take the lead, as it did
in the case of Brazil, in putting together a rescue package for Russia or
pressuring the IMF to do so. This is because the US government and companies
have, by and large, kept themselves away from the Russian economy and,
therefore, do not have much stake in its revival. In contrast, the Europeans
have exposed themselves more to the Russian economy. But they are also
content to follow the US lead and wait and watch. However, both the US and
EU have concluded agreements to supply large quantities of foodstuffs to
Russia to enable it to tide over the shortage during the current winter.
It is in this background that Mr Primakov will be visiting India towards
the end of December. He deserves our full understanding and support. We
should make maximum contribution to the mitigation of human suffering in
Russia and to the success of the economic policies of the Primakov government. 


Date: Mon, 07 Dec 1998
From: (John Helmer) (

>From The Moscow Tribune, December 8, 1998
John Helmer

For some bullies, it's usually not enough to get their way. The
really pathological characters demand their victims apologize for 
causing so much trouble. 
Remember the plot of "Blue Velvet", the well-known movie by David Lynch, 
which satyrizes American small-town morals by depicting a sadist named
Frank, who kidnaps, tortures, rapes, murders, and screams obscenities, until
he's exposed by a young man named Jeffrey.
Jeffrey starts with a human ear, discovered in a field, and unravels a 
monstrous criminal gang, corrupt police, and drug dealings. What drives him 
is an innocent need to get to the bottom of mysteries, and help maidens in 
distress along the way.
Jeffrey's maiden is Dorothy, an out-of-tune singer whose husband and child
are Frank's prisoners, and whose song, "Blue Velvet", Frank is crazy about.
"Yessir", Dorothy has to say whenever she speaks to Frank. And whatever
he says or does to her, Frank makes it clear: "Don't look at me!"
If you believe Strobe Talbott and Lawrence Summers, the senior US 
Government officials in Moscow this week, they're just two innocent young
guys, looking to get to the bottom of the Russian mystery, and save
Dame Democracy, if they can figure out how.
It's been a bit of shock, so Talbott claimed in a recent speech, that
the Russian economy collapsed all of a sudden in August. But then he
managed to find the blame quickly enough -- that old villain, communism,
which has been producing what Talbott called "the drag of history",
making it impossible for democratic Russia, the one he's been
saving for eight years now, to break free. Communism, said Talbott, is 
a "gravitational pull that threatens to suck Russia backward and inward."
That's vintage Lynch dialogue. Add in the film Frank's need, whenever he gets
angry, to inhale oxygen through a mask, and it looks like our American
boys have got the Russian bad guy dead to rights.
Only wait a minute.
Talbott and his boss, Secretary of State Madeleine Albright, have also
been saying their Russian maiden has to "heal herself". According to
Albright, also in a recent speech, "it's not up to Washington to write a 
prescription... The policies we would like have to be worked out 
democratically." "The Russians' future course," Talbott has added, "is
noone's choice but their own."
Dorothy had to do whatever Frank ordered, or else he would cut off
another ear of her husband's, or maybe kill her child. She didn't even
have a choice about singing "Blue Velvet". That's what Frank wanted to
hear, every night.
But what about Russia? As soon as the Primakov government suggested
there might be an alternative to the monetarist prescriptions forced
down the economy's throat by the International Monetary Fund, Talbott
said that was "defying simple arithmetic." 
When Prime Minister Primakov publicly suggested so-called reformers Anatoly
Chubais and Yegor Gaidar might be responsible for Russia's disaster, Talbott
and Albright started to attack.
Everyone knows how close Talbott is to Gaidar. Twice Talbott tried to
overthrow the Russian government at Gaidar's urging, and at the second
attempt he succeeded. That was back in 1993. So what is Talbott really
after this time? Is he here to save the lady? Or to deliver another
warning? Is Talbott Jeffrey the earnest hero, or is he Frank the bullying
villain? And what about poor Mother Russia? Who should tell her she's
singing off-key? And what should she do -- stop singing altogether?
People say "Blue Velvet" is a post-modernist classic that mocks the very
senses of reason and trust ordinary folks think we can count on. If you
laugh, you're laughing at yourself. If you take the plot seriously, you're
a fool.
So what should Russia do, now that Talbott is here? She could play it safe
and say "Yessir". But one thing's for sure. Whatever she does, it wouldn't
be wise to look him in the eye.


Date: Mon, 07 Dec 1998
From: "Nick Holdsworth" <>
Subject: A posting for your list

Nick Holdsworth, Times Higher Education Supplement, Friday December 4th
For personal use only.
Extremists Push for Young Voters

Political extremists are taking advantage of Russia’s economic crisis to
attract more students in the run up to next year’s parliamentary elections.
Communists, nationalists and rabble rousers from the political fringe all
claim that students and youth activists form their core support and will
rally to the hustings when Russians go to the polls in December next year.
The collapse of the rouble, capital flight and reluctance of the
International Monetary Fund to bail out President Boris Yeltsin’s lame duck
administration, is fuelling discontent on campus, where student grants have
more than halved in value since August’s economic collapse.
“We’re not using Russia’s crisis to recruit more young members ­ the crisis
is working on students itself, quite independently,” says Irina Zhukova,
deputy chairman of the youth committee of the Communist Party of Russia
“Many students now work for us because their stipends are not enough for
them to live on. They come to us for help and we either give them work or
contact employment centres to find jobs.”
Students from the provinces, where huge numbers of people haven’t been paid
for months and the cash economy has given way to barter, were especially
vulnerable and saw in the Communists an answer to the corruption of the
current Kremlin administration, she added.
Student membership of the KPRF tended to be concentrated in those
universities where Communist professors and lecturers taught, she added. In
Moscow the Institute of Transport Engineering, the Aviation Institute,
Bauman Engineering University and Moscow State, were strong Communist
The Russian press and detractors of the KPRF ridicule the Communists as a
party of pensioners and Stalinist cranks, but today more than 80% of members
were under 30, she claimed.
Vladimir Zhirinovsky’s right wing nationalist faction, the Liberal
Democratic Party of Russia, is targeting young people as part of a policy to
maximise its youth vote.
The first Russian party to advocate lowering the age of voting from 18 to
16, the LDPR promotes its appeal to students through its youth wing Russian
Union of Free Youth and a non-political body, the Russian Centre for
Supporting Youth Organisations.
Zhirinovsky, whose parliamentary antics have included a televised assault on
a female Duma deputy, where he pulled her hair and swung punches during an
argument in the Duma chamber, tours Russia by boat and train during the
summer months, talking at institutes and haranguing western decadent values
among Russia’s youth.
Nearly half the LDPR’s 600,000 members throughout Russia are students or
young people, the LDPR says.
“Young people are the future of this country and therefore we take care of
them. We’re very concerned to protect Russia’s young people from moral
dangers,” LDPR spokesman Mikhail Sokolikh said.
Reminded that two years ago an LDPR deputy in the State Duma proposed a new
law allowing male polygamy, Sokolikh said the party was a broad church with
many lively members who liked a joke.
The party had branches in 50 of Russia’s 89 oblasts (regions), including one
in Novosibirsk, Siberia where an institute professor was also a member of
the local Duma for the faction.
“Today young people are politically inactive; we have to attract young
people. We hope the Russian people will open their eyes and realise we are
the only party able to get Russia up off her knees.”
LDPR member, Zhenya Rosso, 18, a student at Moscow State University of
Statistics and Information Sciences, said the party was working to make
Russia great again.
“The biggest problem we face today is corruption and stealing. We need to
return Russia to decency,” he said.
Eddie Limonov’s National Bolshevik Party ­ whose hammer and sickle symbol
within a white circle on a red background parodies the Nazi swastika flag,
is also after the student vote. Founded three years ago by the 55 year old
bohemian writer and artist, the staunchly anti-American party advocates a
return to the revolutionary radicalism of Russia’s 20th century roots.
The party claims a membership of 5,200, mostly students and plans an
alliance with the left-wing groups the Russian Union of Officers and Viktor
Anpilov’s Russian Workers Party, to gain seats in next year’s elections.
“We’ve a lot of members from the law faculties of universities and other
institutes. Students are attracted by our ideas. In the 50 regions where we
have branches only four are headed by people older than 40.”
Limonov, who spent 20 years living in New York and Paris before returning to
Russia in 1992, attracted by the “stormy weather”, said the “red
nationalism” of a party which talked of justice rather than democracy was
attractive to young people.
Sergei a 19 year old student at Moscow’s Humanitarian Institute of Radio
and Television, emphasised the importance of Limonov’s strong, charismatic
leadership and vehement anti-American line in attracting young people.
Talking the in the party’s dingy basement headquarters beneath a police
station in central Moscow, Sergei who declined to give his surname, said:
“Most of the students at Moscow’s elite universities are drug-addicts who
are more interested in night clubs than politics. We’re not for these sorts
of idiots, we’re for those who are thinking about Russia’s future.”


Russian nationalism threatens CIS -Berezovsky
By Larisa Sayenko

MINSK, Dec 7 (Reuters) - Boris Berezovsky, the secretary of the Commonwealth
of Independent State (CIS), said on Monday growing ethnic chauvinism in Russia
might threaten the loose grouping of ex-Soviet republics. 
``All (CIS) presidents view with concern Russia's growing chauvinism,''
Berezovsky, a Russian oil-to-media tycoon and former Kremlin aide, told
reporters during a visit to Belarus. 
``This (chauvinism) is probably the biggest concern for each CIS state,
because it would affect all of them without an exception,'' said Berezovsky
who had paid flying visits to nine of the 12 CIS states in the last few days. 
Earlier on Monday Russian President Boris Yeltsin sacked his chief of staff
and three deputies. A spokesman said Yeltsin was disappointed by their
response to political extremism in Russia. 
Berezovsky praised the move, saying Yeltsin ``is trying to react dynamically
to Russia's fast-changing situation, which he has not done for a long time.'' 
Berezovsky, who is of Jewish descent, led calls last month for a ban on the
Communist party after it failed to censure a member for making anti-Semitic
statements. He repeated his calls on Monday. 
``Yes, I think that the Communist Party should be outlawed in Russia. It's
really turning into a Nazi party,'' Berezovsky said. 
Last week Communists and their allies in the State Duma lower house of
Russia's parliament overwhelmingly backed a call for legal action against
Berezovsky for demanding the ban. 
He said rising extremism might not only damage Moscow's relations with other
former Soviet states but could also worsen tensions in restive regions within
Russia, such as Chechnya and Dagestan. 
``The process of Russia's disintegration continues -- in Chechnya and
Dagestan,'' he said. ``Russia cannot overcome its nationalist complex.'' 


Commission Report Says Privatization 'Unsatisfactory' 

Moscow, Dec 4 (Interfax) -- A special Duma commission has declared the
results of privatization in the Russian Federation as unsatisfactory.
A commission report signed by its chairman Mullanur Ganeyev
(Communist) was circulated in the lower house on Friday [4 December].
However, Ganeyev admitted that opposite opinions were expressed during
the discussion of the matter.
The report says privatization did not revitalize the economy as had
been expected. On the contrary, it was marked "by a drop in production by
half" accompanied by high and long and drawn-out inflation. The commission
said that in size of the GDP Russia has fallen to the level of
underdeveloped countries. On August 1, federal revenues constituted only
40.9% of the planned low level.
"The foreign debts totalling $169 billion accumulated by the country
predetermine the possibility of a financial collapse in the near future
with the following loss of national independence," the report says.
The implementation of the privatization program "did not liven up
government investments," the report says. To prove this point Ganeyev said
that investments in fixed assets in August amounted to 28.7 billion rubles
or 6.5% less than during the same month last year.
"Not a single objective of privatization proclaimed (by the program)
has been achieved such as the development of a market- oriented economy, a
rise in production efficiency, the attraction of investments, promotion of
social security and others," the report says.


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