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Johnson's Russia List


December 10, 1998    
This Date's Issues: 2511  2512  

Johnson's Russia List
10 December 1998

[Note from David Johnson:
1. AFP: Washington troika to Moscow for talks on financial aid.
2. RFE/RL: Floriana Fossato, Commonwealth Of Independent States Await 

3. Reuters: Russian productivity 15 pct of N American-McKinsey.
4. Moscow Times: Chloe Arnold, Grudge Match Pits Chubais Against Duma.
5. Reuters: Arctic Fights Crisis with Hunger Strike.
6. Cameron Sawyer: Re 2509-Sweetbaum/Blundy.
7. EWI Russian Regional Report: Yurii Rodygin, AFTER STAROVOITOVA MURDER,

8. William Mandel: Comment on Buying Russian Army/2504-Kipp.
9. AP: Caspian Pipeline Urged Forward.
10. Moscow Times: Andrei Piontkovsky, SEASON OF DISCONTENT: The Gallows 
Of Our Social Democrats.

11. Journal of Commerce: Oleg Kirsanov, Russia plans food bank to control 
market price.

12. Reuters: Mother kills baby, blames Russian economic crisis.
13. AFP: Communists Stall on Ratifying START 2 Treaty.
14. Russia Today: Rod Pounsett, Time's up Primakov! 
15. Reuters: USDA to present food aid pacts to Russia - aide.
16. AFP: Russian Tax Collection Bounds Forward.]


Washington troika to Moscow for talks on financial aid

WASHINGTON, Dec 9 (AFP) - A high-powered US troika was to open talks in Moscow
Thursday on steps the government of Prime Minister Yevgeny Primakov must take
for billions of dollars in financial aid to begin flowing again to Russia.
Deputy Secretary of State Strobe Talbott, the administration's top Russia
policymaker, arrived in Moscow Wednesday for the three days of scheduled
meetings, a US embassy official said.
He was to be joined later in the day by Deputy Treasury Secretary Larry
Summers, who oversees economic policy and Vice President Al Gore's top adviser
on Russia, Leon Fuerth.
The mission to Moscow marks the most serious attempt to date by the US
administration to tackle the aftermath of the August crash in Russia, which
has left the pro-western reform program hanging by a thread.
It also follows a visit by International Monetary Fund chief Michel Camdessus
to Moscow earlier this month during which the top lender sought to point
Russia in the direction of an economic strategy that the West can support
The troika will meet with Primakov, Deputy Premier Yury Maslyukov, Central
Bank governor Viktor Gerashchenko and key members of the State Duma, Russia's
lower house of parliament, US officials said.
No meetings are planned with Russian President Boris Yeltsin, who is
recovering from pneumonia, but the envoys will hold talks with Nikolai
Bordyuzha, Yeltsin's new chief of staff and head of the Russian security
There also planned to meet with popular Moscow mayor and presidential hopeful
Yuri Luzhkov.
In detailed talks, the delegation is expected to give an assessment of those
economic measures that could be met with western financial backing.
The US envoys are expected to deliver a tough message to Primakov, making
clear that the 20.6 billion dollar aid package from the International Monetary
Fund will remain frozen until Russian reforms are back on track.
But officials here say the Russian government is slowly coming to the
realisation that it will not receive financial aid without a concrete plan.
"For some time, there had been a sense that if you simply give us the money,
we are smart people and we will figure it out," said a senior US official.
"Increasingly, they have recognized that we can't do that," he added.
US concerns center on Maslyukov's plan to restore state subsidies to Russia's
defense sector, a plan that would firmly be rejected by the international
lending institutions.
"We will listen to what their thinking is on this," said the official, who
asked not to be named. 
"To the extent to which we can be helpful and constructive in providing
comments and advice, we will obviously do so."
The envoys will offer assistance to revive the banking sector, encourage small
business development and provide food aid but the official acknowledged that
these steps "don't fix the immediate crisis."
The delegation will also seek to ensure that the relationship with Russia on
other fronts remains afloat, touching on the situation in Kosovo, Iraq and
Russian cooperation with Iran.
To show that the relationship remains strong, the delegation hopes to schedule
a new meeting of a US-Russia bilateral commission, established by Gore and
former prime minister Viktor Chernomyrdin to promote technical and scientific
The full commission has not met since March.
Secretary of State Madeleine Albright also plans to visit Moscow in January. 


Russia: Commonwealth Of Independent States Await Reform
By Floriana Fossato

Moscow, 9 December 1998 (RFE/RL) -- The Commonwealth of Independent States
(CIS), a loose grouping of 12 former Soviet republics, was formally created
seven years ago today, but the anniversary went largely unnoticed in Moscow.
There were no official speeches or celebrations and only a handful of Moscow
publications took notice of the date. The lack of fanfare may be a sign that
Russia is too busy dealing with its growing economic and political crisis to
deal with the moribund CIS. 
The accord among Russia, Ukraine and Belarus that de facto ended the Soviet
Union on Dec. 8, 1991, was only the beginning of the creation of the CIS. Most
other ex-Soviet republics, with the notable exception of the three Baltic
states, decided to join only 13 days later.
In recent years, calls for reform of the CIS have increased, following
criticism by the leaders of member states that the body has become largely
ineffectual. Some critics have said the CIS has failed to preserve a single
and efficient economic space. Others have expressed concerns that Russia was
aiming to keep CIS member states within its sphere of influence.
Since August, Russia's economic crisis, which has led to job losses, rising
prices and food and fuel shortages, has spread to most of the former Soviet
Union and has threatened to further strain relations within the CIS.
However, no CIS member state has so far expressed an open intention to declare
the failure of the experiment and the end of the organization. Coinciding with
Russia's economic crisis, CIS Executive Secretary Boris Berezovsky has
launched a new initiative to reform the group. 
Berezovsky, who became CIS secretary in April, has recently visited nine of
the 12 member states to present a reform plan that he says should improve
Berezovsky has said he hopes the CIS heads of state will endorse his plan, but
so far only a handful have expressed cautious support. Among them are
Kazakhstan, Kyrgyzstan, Ukraine, Moldova, Georgia, Armenia, and Tajikistan.
Azerbaijan and Turkmenistan have remained skeptical. 
Berezovsky reminded journalists (Oct. 7) that Russian Prime Minister Yevgeny
Primakov has endorsed his plan.
Last month, at a meeting of top CIS officials, Primakov said Russia's economic
crisis had forced CIS members to work together to find a solution to their
shared financial troubles.
Primakov urged the member states to accelerate the creation of a free economic
zone in the CIS and a new committee to coordinate a regional anti-crisis
According to Berezovsky, the plan seeks to offer an acceptable framework for
mutually beneficial economic cooperation among CIS members. As the first step,
Berezovsky has proposed the creation of one or several CIS free trade zones,
insisting that voluntary economic integration would be the only way to help
CIS states' integration into the world economy.
Berezovsky has been careful to assure CIS member states that the plan has a
primary economic goal and that it would not threaten the sovereignty of any
nation. In Minsk, he said again (Oct. 7) that the Soviet Union cannot be
resurrected -- a constant concern of CIS states. But he acknowledged that "All
(CIS) presidents view with concern Russia's growing chauvinism." He added that
"this (chauvinism) is probably the biggest concern for each CIS state, because
it would affect all of them without an exception."
However, Interfax news agency quoted Berezovsky also saying that "to a very
large extent" he is satisfied with the way the discussion of reform is
proceeding. He said that "from the language of ultimatums, we have moved to a
real analysis of the matter."
Berezovsky said a meeting of CIS heads of states to discuss future
developments would probably take place in February. He said the process of CIS
reform would continue for the next year to year and a half. 


Russian productivity 15 pct of N American-McKinsey

MOSCOW, Dec 9 (Reuters) - Russian productivity is a fraction of that in North
America, though most of the legal barriers to new growth could be easily
removed, a senior Western analyst said on Wednesday. 
"Russian real productivity touches just about 15 percent of North American
productivity," Michael Obermayer, managing partner for Central and Eastern
Europe at consulting firm McKinsey & Company, told a business conference. 
He said most of the barriers to growth could be removed without major
political opposition. 
But Russia would have to tamper with non-productive companies which, if
reformed, could swamp a job market where 10 percent, or seven million people,
already were unemployed. 
"If you count the people stranded in obsolete industries... the number of new
jobs to be created amount to at least 18 million in this country," he said. 
"This social bombshell obviously is the main reason for the current policy
hesitations for the federal and local levels." 
Obermayer said the government through indirect subsidies was supporting value-
subtracting companies, such as steel and cement producers, while a service
sector which could offer new jobs was unable to grow. 
"Labour is locked into companies that are not viable today, and remains so due
to barriers towards restructuring," he said. 
Obermayer, quoting early results from a McKinsey study, said Russia could not
return to the war-like economy of the former Soviet Union and predicted its
future was the service type economy of North America. 


Moscow Times
December 10, 1998 
Grudge Match Pits Chubais Against Duma 
By Chloe Arnold
Staff Writer

The State Duma gave perhaps its most-hated enemy, Anatoly Chubais, a raucous
and sometimes off-color roasting Wednesday as he defended his performance in
his new job as head of the national electrical utility. 
The Communists, who dominate the often-unruly lower house of parliament, blame
Chubais for the privatization of the nation's mineral and oil wealth to
politically connected insiders. The tone Wednesday was ugly, and the deputies
abused Chubais so long they ran out of time and had to put off a vote on a
resolution calling for his removal. 
"Old love never fades," Chubais said, tongue in cheek, on his way out. 
The deputies minced no words. 
"You and your people have quite simply robbed the entire nation," spluttered
Georgy Tikhonov, from the Communist-allied Popular Rule group. "You ought to
step down now before we set the prosecutor's office on you." 
Anatoly Chekhoyev, a Communist deputy, told the Duma he was sure everyone knew
what the word "Chubais" meant to Russians. "But even more pertinent to today's
debate is what the word 'Chubais' means in Eskimo," he said. 
To the disappointment of the Duma, however, deputy speaker Vladimir Ryzhkov,
presiding over the session, cut Chekhoyev off before he could reveal the
word's Eskimo origins. "I must ask deputies to stick to the resolution in
hand," Ryzhkov warned. 
All 272 deputies present voted in principle to pass a resolution "On Urgent
Measures to Ensure Reliable Power Supplies in the Autumn and Winter Period of
1998-1999." A final vote will have to wait, however. 
The resolution urges the government to appoint more experienced personnel to
the board of UES, where Chubais is chairman, and to prevent "non-
professionals" from gaining positions of power in the power industry.
Discussion of the intricacies of the resolution will continue Friday. 
"Chubais has wrecked all of the country's property," Communist Party boss
Gennady Zyuganov said Tuesday. "Now he has savaged the energy industry,
already managing to bankrupt several major power systems and leaving entire
areas without light or heat." 
Others were less critical of Chubais, although they recognized the need for
the government to take urgent steps to fortify the country's power system. 
"Of course, it is essential to strengthen RAO UES, but where is the money for
the process going to come from?" Sergei Sigarev from the Liberal Democratic
Party wanted to know. "There is only as much [urine] as there is beer, as they
Chubais, not known for meekness, did not respond to the catcalls but stuck to
his report. He conceded that there was indeed a problem with supplies of fuel
- used to fire the electrical generating plants - and suggested measures to
overcome the difficulties. 
"I would like to recommend to the State Duma that they consider two large-
scale issues," he said. "The first is the introduction of a ban on oil
delivery to countries who do not pay up front and the second is the
introduction of increased export taxes for crude oil." 
He said that this year, CIS countries alone owed Russia $640 billion for fuel.
He added that Russian oil exports increased in November by a million tons, or
15 percent, compared to the previous month - which could have kept the
domestic electrical system working. 
Power plants in the Far East, including the Khabarovsk, Chita, Chukotka and
Primorye regions, have suffered serious fuel shortages this winter. 
Chubais sprang to prominence at the beginning of the 1990s as the architect of
privatization. He has served in the Cabinet, as Kremlin chief of staff and in
President Boris Yeltsin's 1996 re-election campaign. 
He was fired as first deputy prime minister in a government reshuffle in
March, but took over UES and at the same time served as foreign debt
negotiator from June to August. 
Later Wednesday, Chubais got a dig of his own in during an appearance on NTV's
"Geroi Dnya" program. When he was asked whether he was aware that several Duma
deputies were considering going on hunger strike until he resigned from UES,
Chubais was not sympathetic. 
"Judging by the girth on some of those deputies, it would do them good to lose
some weight," he said. 


Arctic Fights Crisis with Hunger Strike 

PEVEK, Russia, Dec. 09, 1998 -- (Reuters) Even the longest of long-suffering
Russians have cracked in Russia's frozen north, where 11 workers are on hunger
strike to protest against an existence that the economic crisis has reduced to
bare subsistence. 
For three and a half years, the power workers in the remote Arctic port of
Pevek, 900 km (560 miles) west of Alaska, have received almost no pay -- only
food packages once a month to avert starvation. On Nov. 27, they decided
starvation was preferable. 
"We are like hostages here, or even more like slaves," said Aleksander Bosak,
50, who is on hunger strike with his wife Vera. 
The couple had hoped to receive their back wages and buy an apartment in the
less austere climate of central Russia. The collapse of Russian ruble since
August to less than a third of its value has killed that dream. 
In Soviet times, families who endured the hardships of the extreme north
earned handsome supplements. State-controlled prices in Pevek, population
7,000, were the same as elsewhere in the Russian Far East. 
But in brutal post-Soviet capitalism, the firms flounder and the high price of
supplies reflects the town's isolation. 
"We cannot buy tea, cannot buy sugar. Our children have not seen fruits or
vegetables for months, an apple is a big holiday for them," said Vera Bosak,
who works in a heating plant. 
Exhausted after weeks without food, she burst into tears at the mention of her
children. One of the strikers was taken to hospital last Friday. 
The workers say that for the past three and a half years they have only been
given one kg (2.2 pounds) of flour, rice and beans a month for each member of
the family. 
Their wages should be 1,000 to 2,000 rubles ($50 to $100) a month, but they
say that in fact they only receive about 100 rubles every three months. Some
have sold possessions. 
"My son has been wearing the same boots for five years," said Vyacheslav
Grigoryev, 44, also a heating plant operator. 
Alongside the town's bleak five-story apartment blocks, the workers' dreams
are stacked in the form of metal containers packed with their personal
effects, ready for a move. 
With little or no money, and travel expensive because there are no railway
lines or roads going south, the chances are slim. 
Yet across the region of Chukotka, which is as far east on the map as New
Zealand, people have been trickling out, and the population has almost halved
to around 95,000 in nine years. 
Around Pevek several villages are now ghost towns, with broken windows, and
machinery lying abandoned in the ice. 
Pevek's isolation means it is completely dependent on getting supplies by sea,
and only the use of a nuclear-powered ice breaker allowed a ship to dock
recently with fuel for the winter. 
By Tuesday, the ships were themselves frozen solid into the ice, and awaiting


From: "Cameron F. Sawyer" <>
Date: Wed, 9 Dec 1998 
Subject: 2509-Sweetbaum/Blundy

I agree 100% with Jeffrey. Anna Blundy's piece is pure, unadulterated,
ignorant bigotry. My experience with 90-odd Russian employees over seven
years has been exactly the same as Jeffrey's. There are certain cultural
differences, but like workers all over the world, I assume, if you pay them
a fair wage and treat them with a modicum of respect they pay you back in
spades. In our company we have much less employee theft than would be
typical in the U.S., and the typical Russian employee is much more loyal
than the typical American and is much more willing to accept the hardships
of working in a startup company with delayed gratification. And Russian
workers are much more willing to make personal sacrifices for the sake of
team spirit. 
In many ways Russia is a hellishly difficult business environment, but
the high quality of the kind of workers and other personnel we are able to
hire - from drivers and unskilled construction workers all the way up to
higher management - is a sheer joy and one of the great advantages of
operating a business in Russia.
I don't know if I would go so far as to blame everything on Jeffrey Sachs
and Harvard - mistakes in macroeconomic policy were made on all sides -- but
Russia's problems are certainly not the result of defects in the moral
character of the Russian people.

Cameron F. Sawyer
Sawyer & Co.


From: dlussier@IEWS.ORG
To: RRRecipients@IEWS.ORG
Date: Tue, 8 Dec 1998 
Subject: RRR-Internet Edition (08 December 1998)

EWI Russian Regional Report [from the The EastWest Institute]
**Internet Edition**
Vol. 3, No. 49, 08 December 1998

by Yurii Rodygin

NIZHNII NOVGOROD--The murder of State Duma Deputy Galina Starovoitova makes
clear the nature of the so-called "democrats" in modern Russian politics.
In their speculations about the possible forces behind the gruesome murder,
the media have accused the Communists, the extremist General Albert
Makashov, or some mysterious criminally-connected contenders against
Starovoitova in the St. Petersburg Legislative Assembly elections.
However, murdering an opposing candidate is not typical for Russian
political life: there are plenty of other more effective methods of
neutralizing an opponent. Contract killings are virtually always motivated
by money.
It seems that Starovoitova learned by accident something she was not
supposed to know. This would be a very logical reason for somebody to
physically eliminate her. At the same time, there is no evidence that she
was engaged in a search for compromising information--she was too
idealistic and uncompromising for that, it simply was not her style. So,
whatever incriminating information she had learned, it was probably by
accident. Given her principled nature, those who stood to lose from her
knowledge of this information knew that it was useless to try to bribe or
intimidate her, so physical removal was the only option left. However, if
Starovoitova had indeed learned something incriminating by accident, this
narrows the circle of potential suspects considerably, pointing mostly to
her immediate friends and partners. There is a very good chance that she
overheard a phrase or saw a document that became her death sentence. Quite
possibly this phrase or this document had something to do with the upcoming
elections and their financing. In either case, the Communists have nothing
to do with this murder, whereas "democrats" are likely to be involved.
Russian democracy today is characterized by an absence of a real party
system. Outside the Communist Party, all other forces on the political
arena are so-called "movements," led by charismatic leaders and their close
associates. All these movements are financed from undisclosed sponsors,
and the leaders are accountable before them, not before party members.
This system also provides for top-down financing of the movement's
operations, as funding for local organizations comes from Moscow, not from
the local membership dues. Sponsors are almost always private individuals,
and only the movement's top leadership deals with them directly. This
scheme is true of all "democrats," be they Yegor Gaidar, Anatolii Chubais,
or Grigorii Yavlinskii. Lack of transparency provides no guarantees that
the movements are financed by clean money. Of course, leaders of these
movements are honest people, by and large, and once in power they make
decisions based on their political convictions. However, policy making is
definitely affected by the sponsors.
Consider Moscow Mayor Yurii Luzhkov, who despite his tremendous
success in managing the nation's capital cannot rid it of corrosive and
pervasive corruption. Luzhkov lacks a party of masses, whose membership
dues would support his political ambitions. This means that should he
succeed to the Kremlin, Russia would have another Yeltsin. Recall that at
first Yeltsin also was an idealistic democrat, but the need to rely on the
money of sponsors irreparably damaged him. His 1996 reelection campaign
was openly financed by dirty money, as exemplified by the shady episode
with hundreds of thousands of dollars in cash intercepted on the way out of
the White House.
Therein lies the basic reason why Russia's democrats cannot unite:
they all have different and competing sponsors. All the original
perestroika-era democrats have long vanished from the political scene, most
likely because they could not bear playing by the rules of the game where
money is the main trump card. Some, like former St. Petersburg Mayor
Anatolii Sobchak, have fallen victim to the warring criminal moneyed
interests, as some competing criminal gang triumphed over his own sponsors.
At the same time, most "democrats" today prefer this arrangement.
They like to repeat that a "movement" is more democratic than a political
party. However, this argument is flawed. In today's "movements" the
leader makes all the policy decisions, including fundraising, which means
he or she is not accountable to the rank and file. This leads to a lack of
democratic transparency and complete alienation of the voting public from
the political movements. Voters have no real stake in any movement,
however attractive its proclaimed political ideals might be. In contrast,
the Communists have a real party with a bottom-up structure, regular
congresses and collegial decision making. Whatever Zyuganov's personal
qualities, in the end of the day he is still personally responsible to the
party members, and his policies are dictated by his fellow Communists. If
he deviates from the party line, he will be replaced.
In this sense, the Starovoitova murder, far from implicating the
Communists, actually plays into their hands. Implicitly, it points to the
circles of "democrats" as potential perpetrators, suggesting the inherent
superiority of the Communists' party organization. Several people have
told me that they do not want to back any of the democratic "movements"
anymore. If Luzhkov and Yavlinskii fail to organize a normal political
party by the next presidential election, they plan to vote for Zyuganov
instead, even though they abhor his policies.


From: (William Mandel)
Date: Wed, 9 Dec 1998
Subject: Comment on Buying Russian Army/2504-Kipp


How about asking Bill Gates to put up the billion (one month's
increase in what he's worth) to buy the Russian Army, then fine him a
billion for software monopoly, then forgive it in exchange for his donation
to world security? Outrageous? Not nearly as much as the buying-Russian-army
proposal itself.
When a columnist for the N.Y. Daily News advances the notion, one can
shrug it off. One doesn't expect historical perspective from a tabloid. But
when Brent Scowcroft, Gen. William Odom (ret.), and Jacob Kipp, whose
address suggests that he's on active duty, seriously discuss ways to manage
the Russian Army, it is time to recall Clemenceau's remark that war is
entirely too serious a matter to be left to the military.
We have our own experience with that. Douglass MacArthur, commanding the
Korean War, wanted to attack China when it had a flat-out defense alliance
with the Soviet Union, which possessed nukes. Truman fired him. Kennedy's
military advisors favored a Desert Storm against Cuba, when Soviet missiles
were found there. But Moscow now had more than bombers with which to deliver
those nukes. So Kennedy and Khrushchev settled for removal of the Soviet
missiles from Cuba in exchange for later removal of U.S. missiles in Turkey,
plus a pledge that we would not repeat the Bay of Pigs, which is what
Moscow's missiles had been emplaced to prevent.
Kipp writes: "the Red Army cannot be resurrected." Hitler resurrected
it, less than five years after Stalin beheaded it by execution of its field
grade officers on a truly mass scale. All that is needed to restore morale
is a perceived external enemy. When Americans write of preserving it as a
force for law and order (Nelson) or charting "some course to manage chaos
over a large part of Eurasia" (Kipp), Russians react: who do they think we
are, Guatemala?
This country has a very serious case of megalomania.
Last night I saw a remarkable co-production of 1991, "The Prodigal Son,"
a film biography of composer Prokoviev. To be reminded via Eisenstein clips
of Alexander Nevsky, of Ivan the Terrible, to hear once again the audio clip
of the sonorous announcer on June 21, 1941, "Pobeda budet za nami": victory
will be ours; to see once again the narodnoe opolchenie -- the draft-exempt
over-and-under-age and physically rejected volunteers -- being organized on
the streets of Moscow and marching to the front right outside the city with
rifles and heavy machine-guns on their shoulders, to die in their great
majority but to hold the Germans until the Soviet counter-offensive the day
before Pearl Harbor, the first time the Wehrmacht was ever forced to
retreat, is to ask myself: how nutty are we to think that we can tell a
country with that history what to do, above all with its armed forces?
In an earlier posting, I wrote of Washingron's present policy toward
Russia as representing a particular perception of what is in America's
interest. A policy that turns a people which thought, less than a decade
ago, that America can do no wrong, into one that regards our government as
an enemy, is not in America's interest. A policy that causes the Duma and
the military to focus on funding the specific weapon, the new Topol missile,
that by its nature has us as its target, is an incomparably more serious
violation of the duties of office than lying to Congress or whoever about a
sexual liaison. 


Caspian Pipeline Urged Forward
December 9, 1998

WASHINGTON (AP) -- Low oil prices shouldn't deter construction of a proposed
$3.8 billion pipeline to transport oil from the Caspian region through Turkey
to the Mediterranean Sea, Energy Secretary Bill Richardson said Wednesday. 
Addressing a conference on Caspian oil potential, Richardson admitted there
``are clearly hurdles to overcome'' in getting a consortium of international
oil companies to build the 1,400-mile pipeline. 
But he said that's the most sensible option to get oil from the potentially
rich Caspian fields to Western markets. 
``A sensible long-term view of the region's development, oil demand and price
trends in the oil market demand that we move ahead on these decisions now in
order to prepare for the future,'' Richardson said. 
The Clinton administration has pressed oil companies, among them Exxon, Amoco,
Unocal and British Petroleum, to support the pipeline from Baku, Azerbaijan,
to Ceyhan on Turkey's Mediterranean coast. 
Richardson said the United States is merely serving as an honest broker to
spur the pipeline's development, which would be mostly privately financed. 
The 11-company consortium has been reluctant to proceed. A decision from the
companies on whether to endorse the pipeline had been expected a month ago. 
The consortium is negotiating with Turkey on incentives and other conditions
to reduce the cost and the political and economic risk of such a huge
Oil industry analysts say much of the reluctance stems from uncertainty over
how much oil the Caspian fields actually will produce and a general reluctance
to commit to such a project when investment capital is scarce and oil prices
are likely to remain low. 
Richardson said progress was being made. ``It is no longer `if' we will have a
pipeline from Baku to Ceyhan, but when,'' he said in remarks to the Caspian
oil conference held by Cambridge Energy Research Associates. 
Despite the currently depressed oil market, Richardson said the pipeline ``can
make commercial sense'' and if it is to be built ``must be commercially
Over the long-term the pipeline will provide the best route for Caspian oil to
European markets and avoid problems of shipping through the Bosporus. Turkey,
divided into European and Asian sections by the strait, has threatened to
restrict such shipments on safety and environmental grounds. 
The pipeline is a key to the Clinton administration's broader strategic goals
of developing east-west oil and gas transportation corridors in central Asia,
avoiding Russia and Iran. The system eventually would include pipelines for
oil and gas from Kazakstan and Turkmenistan. 
As part of that, Richardson said he signed an agreement Wednesday to finance a
feasibility study for possible construction of a trans-Caspian pipeline that
would bring Kazak oil and gas to Baku, from where it could be transported on
the proposed Baku-Ceyhan line. 


Moscow Times
December 10, 1998 
SEASON OF DISCONTENT: The Gallows Of Our Social Democrats 
By Andrei Piontkovsky 

Regular readers of this column will know that I never write anti-communist
articles. To attack an underdog does not feel quite fair. I always preferred
stronger and more dangerous opponents like the president, the government, the
oligarchs or the Moscow mayor. 
And it even seemed that through its evolution toward contemporary European
social democracy, the Communist Party of the Russian Federation might play a
positive role in Russia's political life, articulating and defending the
interests of the masses whose standard of living and social status suffered
during reforms. 
Last Friday, Communist leader Gennady Zyuganov addressed the 1998 Russia
Meeting of the World Economic Forum, delivering an excellent social-democratic
speech emphasizing his allegiance to democratic values and human rights. If
you closed your eyes you could almost believe you were listening to Chancellor
Gerhard SchrÚder or Prime Minister Tony Blair. Earlier, State Duma Speaker
Gennady Seleznyov greeted delegates in much the same way. Yet the very next
day, when addressing a different audience, Seleznyov adopted a very different
line, advocating the reintroduction of katorga, or hard labor, with such harsh
conditions that prisoners "would beg the Lord for death each day." 
"Doesn't he realize how damaging such statements are for Russia's image
abroad," one of the organizers of the forum exclaimed to me bitterly. 
Poor professor. He hasn't yet seen the speech of another prominent Communist
leader, Krasnodar Governor Nikolai Kondratenko. Compared to him, Seleznyov
looks like a great humanist, something between Andrei Sakharov and Mother
Theresa. Seleznyov, at least, was not appealing for capital punishment and
referred only to criminal offenders, but Kondratenko went all the way,
demanding mass public hangings of political opponents he defines as "traitors
to the Fatherland." 
The crash of the oligarchical model of capitalism and the deep crisis of
Yeltsin's regime makes it very likely the communists will come to power.
Unable to conceal their impatience, they succumbed to the intoxicating smell
of approaching power and discarded their social-democratic mask, showing us
that they have neither understood nor learned anything from the past. The
statue of Felix Dzerzhinsky, founder of the secret police and architect of the
Red Terror, that the communists provocatively intend to return to the center
of Moscow is supposed to terrify anyone who dares to stand in their way. 
No longer do they consider it necessary to convince people that they have
changed, that they are not responsible for the crimes of previous communist
regimes. On the contrary, they proudly assume responsibility for the Red
Terror, the Gulag, and the liquidation of the peasants, and shamelessly
present themselves as successors to the executioners of the Russian people -
Lenin, Stalin and Dzerzhinsky. 
After the scandalous recent statements by Communist Deputy Albert Makashov one
observer wrote: "The Jews can't say they weren't warned." 
Nor can Russians say that any more, either. Awaiting us now are Kondratenko's
gallows, Seleznyov's katorga and blacklists of journalists who are branded
enemies of the people. 
Russians have no Promised Land to where they can make their Exodus from the
new communist Pharaohs. The only thing that decent people can do is make their
choice and take sides with those about to be hanged rather than with the


Journal of Commerce
10 December 1998
[for personal use only]
Russia plans food bank to control market price

MOSCOW -- The Russian government will soon create an emergency food reserve
that will allow the state to regulate the food market amid an acute economic
crisis, Agriculture Minister Viktor Semyonov said Wednesday.
"This will be a tool for the state to regulate the market to avoid unjustified
hikes of prices as well as dumping," he said at a press conference.
"The new government pays adequate attention to agriculture as it understands
that it is basic for the Russian economy," Mr. Semyonov said.
He said that, in future, a similar food reserve would be used for market
"The problem in Russia is not the lack of food, but the lack of an efficient
distribution system and sufficient leftover stocks," he said.
The government plans to purchase the following items for emergency food
reserves for 1999:
1.2 million metric tons of grain.
130,000 tons of meat.
860,000 tons of milk and dairy products.
22,000 tons of vegetable oil.
35,000 tons of other foods.
Meanwhile, the final agreement on U.S. food aid to Russia cannot be signed by
the two nations, because the United States has failed to finalize the amounts
and items included in the aid package, Mr. Semyonov said Wednesday.
"The matter is not in the Russian side here. This is an internal matter of the
U.S., as they want to make some changes in the amounts of the supplied items,"
he said.
Russia expected to receive the final version of the agreement from the U.S.
Department of Agriculture on Dec. 2, after which the pact was scheduled to be
signed by Gennady Kulik, the deputy prime minister in charge of food and
agriculture, and by the U.S. ambassador to Russia.
But the USDA postponed sending the agreement, and Mr. Kulik's department
expected to receive it this week.
"There is evidently infighting over various groups in the U.S., and the final
amounts might differ from those earlier announced," Mr. Semyonov said.



Mother kills baby, blames Russian economic crisis

MOSCOW (Reuters) - A penniless young woman allowed her new-born baby to die
by leaving it naked in subzero temperatures on the balcony of her home in
Russia's central Tatarstan region, Interfax news agency reported Wednesday.
At her trial the woman told the court she held the Russian government
responsible for the baby's death because it could not guarantee its citizens
a normal life, Interfax said. The trial is still under way, it added.
Millions of Russians are struggling to survive a deep economic crisis
which has driven up prices, wiped out life savings and destroyed jobs. 


Communists Stall on Ratifying START 2 Treaty 

MOSCOW, Dec. 09, 1998 -- (Agence France Presse) Communist leader Gennady
Zyuganov said on Tuesday that the Russian government should not
ratify the START 2 disarmament treaty until it had guaranteed the country's
future security measures, Interfax news agency reported. 
Zyuganov said the government should outline what military strength Russia
would have after the destruction of military hardware set out in the treaty. 
The Communists dominate Russia's lower house of parliament, the Duma, and are
among deputies who have dragged their feet on ratifying the treaty which was
signed in 1993. 
START 2 aims to reduce Russia's nuclear warheads to 3,000 and leave the United
States with 3,500. 
The Duma fears the treaty leaves Russia at a disadvantage, but after progress
in recent months ratification appeared possible by the end of the year. 
U.S. Senator Richard Lugar recently warned during a visit to Moscow that the
United States would not accept any conditions imposed on the treaty by the


Russia Today
Dec. 9, 1998 
Time's up Primakov! 
By Rod Pounsett

Russia's foreign debt now stands at $159 billion and repayments are on hold.
Government revenues, especially from tax collection, remain appallingly low.
Heating systems are being switched off all over Russia and people are dying as
a result, because the authorities cannot afford to buy fuel. Unemployment is
at its highest levels for years. And of those still in work, many remain
unpaid. Crime is on the increase. Without emergency aid from the West the
nation faces a winter of starvation. Russia's banking system is in chaos. The
IMF has frozen all loans to Russia. Businesses that have either not already
gone bankrupt or shut up shop and moved abroad, are at a virtual standstill
and the ruble is still under attack. 
Yet after months of procrastination and false promises the Russian government,
lead by Prime Minister Yevgeny Primakov, has failed to come up with a
realistic rescue plan. 
And what do we hear from the premier? "We are not planning any sackings unless
someone proves incompetent," he says. What more evidence of incompetence does
he need? 
I am not suggesting Primakov should mimic the knee-jerk reactions of part-time
President Yeltsin, who delights in popping his head above the hospital
blankets every now and again to sack someone just to shift the blame. Although
I think he was probably right push his chief of staff, Valentin Yumashev, an
overzealous behind-the-scenes fixer, out of the Kremlin. But Primakov has to
accept that time is running out if Russia is to be rescued from disaster. 
It is now clear that the majority of the has beens currently holding
ministerial office in the Russian government are incapable of constructing an
economic package that can halt the meltdown. What measures they have put
forward are universally judged as being a recipe for further decline -- let
alone recovery. They seem more concerned with propping up out of date
unprofitable enterprises and increasing bureaucracy and the welfare state than
cutting out old wood and balancing the books. 
Agreed, Primakov has brought some measure of political stability, albeit
dangerously temporary, and he does seem to have won popular support. So maybe
he should stay around for a while. But it really is time for him to bring in
some genuine professional help and get rid of those who, for most informed
observers, have proved their incompetence. 
In fact, reading between the lines of what we do know about the plans drawn up
behind closed doors, there is some attempt to include a few sensible measures
first advocated by the previous governments of Sergei Kiriyenko and Victor
Chernomyrdin. So perhaps Primakov should think about pulling back some of the
better talent from those governments in order to help implement some common
sense policy. For one thing that might be enough to get the IMF to change its
mind about freezing much needed loans. 
Sadly, I suspect Primakov will bluff it out until the results of his
government's incompetence turns the tide against him and he ends up getting
sacked himself and relegated to the history books as the worst-ever manager of
Russia. That is, if there is anyone left in Russia competent of writing the
history books. 


USDA to present food aid pacts to Russia - aide

WASHINGTON, Dec 9 (Reuters) - The United States could present long-awaited
food aid agreements to Russia for review as early as Thursday, a key U.S.
Agriculture Department official told Reuters.
``We're getting very close,'' USDA General Sales Manager Chris Goldthwait
said on Wednesday. ``It may be tommorrow that we present the formal
agreements to them.''
How quickly the pacts are signed will depend on whether any problems
surface during the review.
``If the Russians think we've done a satisfactory job, we can have the
signing very fast,'' Goldthwait said.
Goldthwait said he was aware of reports on Reuters and other news agencies
quoting U.S. Secretary of State Madeleine Albright as saying that Russia's
support for Iran's missile program could jeoparidize millions of dollars in
U.S. assistance.
'`As I can best put it together (reading several different wire service
stories), she was not thinking of food assistance'' when she made her
remarks, Goldthwait said.
The United States and Russia reached agreement in early November on policy
issues surrounding a 3.1-million tonne food aid package. Since then, USDA
officials have worked to craft specific food aid pacts incorporating those
policy terms.
The 3.1 million tonnes of U.S. food aid is divided into three sections: an
outright donation of 1.5 million tonnes of wheat; some $600 million in
concessional loans to allow Russia to buy another 1.5 millions of U.S.
commodities; and additional donations of 100,000 tonnes of food that will be
distributed in Russia by private voluntary organizations.
The agreements that are closest to being ready to present to Russia are
the wheat donation and the PL-480 concessional loan pacts, Goldthwait said.
Under the third initiative, USDA is close to deciding which projects to
support from the approximately 40 proposals submitted by PVOs, he said.
Goldthwait could not say with precision how quickly USDA's Commodity
Credit Corp. would tender for the 1.5 million tonnes of wheat to be donated
for Russia. But based on conversations with USDA Farm Service Agency
officials in recent days, ``I have the impression they would probably be
going into the market rather soon again,'' he said.
Those purchases could either be channeled to Russia or to other countries
that have been earmarked for U.S. food donations under a Clinton
administration plan to buy 2.5 million tonnes of U.S. wheat for donations
overseas, he said.
To date, the CCC has bought 1.26 million tonnes of wheat under that
initiative. Its last purchase was two months ago.
In another area, Goldthwait confirmed that U.S. meat sold under the
concessional loan portion would probably be cuts rather than the whole
carcasses that Russia requested.
But which specific meat cuts will be sold will have to be decided ``when
we get to the point of putting out the purchase authorization,'' he said.
USDA will look both at what the Russians need and the cuts of meat that
are ``generally available in our market,'' he said.


Russian Tax Collection Bounds Forward 

MOSCOW, Dec. 09, 1998 -- (Agence France Presse, Reuters) Russia collected 19
billion rubles ($930 million) in taxes in November, a 38 percent jump on the
previous month, the State Tax Service reported on Tuesday. Seventy percent of
that amount was cash, Interfax quoted tax chief Georgy Boos as saying. 
The tax collect in cash reached 13.5 billion rubles, equivalent to the entire
tax take last month, Boos said, adding: "We plan to collect more in December."
Tax collection has recovered since the summer financial crisis reached its
nadir with an Aug. 17 default on domestic debt and a de facto ruble
devaluation which paralyzed the country's financial system. 
But in dollar terms the November receipts were just half those of July before
the ruble was devalued. 
Boos is the architect of a radical tax-cutting plan incorporated into the 1999
draft budget, which the authorities hope will in fact boost the tax haul by
persuading companies to declare revenue, earned in the shadow economy. 
Prime Minister Yevgeny Primakov on Tuesday signed an order submitting 19 tax
bills to the State Duma. The measures include slashing value-added tax to 14
percent from 20 percent and profit tax to 30 percent from 35 percent. 



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