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Johnson's Russia List


December 11, 1998    
This Date's Issues: 2513  2514  

Johnson's Russia List
11 December 1998

[Note from David Johnson:
1. AFP: Russia crisis forces military workers to take things into 
own hands.

2. Moscow Times: Poll Sees Savings Drop.
3. Excerpt on Russia from NBC interview with Secretary of State
Madeleine Albright.

4. Jamestown Foundation Monitor: POLL FINDS MOST RUSSIANS BELIEVE HUMAN 
5. Miriam Lanskoy: Kirienko at Harvard.
6. Ray Finch: cracking down on crime.
7. RFE/RL: Jeremy Bransten, Russia/Ukraine: Relationship With NATO 


9. W. George Krasnow: Voice of America Interview on Primakov government.
10. Ray Thomas: Re 2510/Weir/Foreign Banks.
11. Moscow Times editorial: Right Center Has Platform But Little Else.
12. Financial Times: Andrew Jack, Poor fail to get relief from dachas.]


Russia crisis forces military workers to take things into own hands

VLADIVOSTOK, Russia, Dec 11 (AFP) - True survivors of Russia's economic
collapse are taking things into their own hands. Sometimes they are things
that belong to other people -- like the military.
Viktor Kharin, 44, is one such survivor, an opportunist who found there
was a profit to be made in pilfering steel from under the nose of the mighty
Pacific Fleet which employs him.
"What can you do," shrugged the slim bearded entrepreneur. "My wife won't
allow me to walk off into the sea and drown."
Kharin lives in this far eastern port on the Sea of Japan which the tsars
founded over a century ago to rule the east -- as Vladivostok's name translates.
Once the pride and joy of Soviet general secretaries, the Pacific Fleet
now moored in Vladivostok has lost something of its former grandeur,
however. Officers now openly admit that they have been recruited by the
"patonuvshy flot" -- the fleet which sank.
Kharin is still employed by a branch of the sinking armada, working in
factory 198 which used to churn out the metal that once helped create some
of the world's most dangerous vessels.
Now the fenced-off plant is redundant, as the ships it once helped build
are sold off to nearby clients such as South Korea for scrap metal.
The factory thus may have little use for its steel supplies, but Kharin
and associates quickly found an alternative purpose for the metals. They
noticed that the only business here that was actually booming was the
construction of princely castles owned by Russian entrepreneurs on the
outskirts of town.
These so-called new Russians preferred to top their creations with metal
roofs and to protect their garages with steel doors.
"Over here we had rolls and rolls of steel," Kharin said. "Over there we
had very rich clients. It added up to a simple equation."
So Kharin placed a few calls and soon he had his first customer. Only a
few weeks later other steel takers began calling him. Soon he was running a
It was a business born in the heart of the Russian military -- a capital
offence that could have seen the entrepreneur executed for treason only a
few years ago.
But rules have changed. Kharin concedes that it is impossible to drive
steel out of the Pacific Fleet's door without someone noticing.
Instead, Kharin says his bosses "close their eyes" to the fact that a few
rolls of metal go amiss. 
Whether a bit of extra pocket money makes the administration nod off just
as their plants' gates open for a truckload of dacha metal, Kharin does not say.
The gates that do pull open for Kharin are rusty, and the Red Army stars
that emblazon them have not gleamed in years.
The entire military complex built on one of Vladivostok's least inhabited
peninsulas is standing still in grave silence. A few young naval types
dressed in heavy blue wool greatcoats parade sullenly to the nearest bus
stop when the day is done.
Fenced in one corner is a garage for scrap that once served as the navy's
armory. Locals do not know if any lethal ammunition is still buried there,
but one woman pointing to the snow piles hiding nondescript objects
identified the spot as the "factory dump."
Across the street from the armory sits an unimposing navy base where young
recruits learn the drills. Next door, deep inside factory 198, is Kharin's
metal sales shop.
But unless he starts selling abroad, a prospect Kharin admits is unlikely,
his business may soon cease to exist.
Russia's August financial collapse took the factory's best clients with it.
Kharin, who also moonlights as a taxi-driver, said he recently picked up a
local financier who lives under a roof supplied by Russia's Pacific Fleet.
"He says he has no company any more, no money, and a big fancy house,"
Kharin said. "Those guys are soon going to sell off their little castles,
but who can buy them?" 


Moscow Times
December 11, 1998 
IN BRIEF: Poll Sees Savings Drop 

MOSCOW -- Some 33 percent of Russians consider themselves to be poor,
according to a survey released by the Public Opinion Fund that also plots a
major decline in savings. 
Only 23 percent of the 1,500 people surveyed by the organization Nov. 28
assessed their income as average, while 43 percent said their income was quite
Whereas 12 percent of those surveyed said they were accumulating some savings
in spring this year, only 3 percent have been able to put money aside since
the economic crisis began in August. 


December 9, 1998
Washington, D.C.

BROKAW: Russia. The Administration has made a big bet on Yeltsin. He's
collapsing and so is his country.
ALBRIGHT: We will continue to work the problem. I don't think it
requires a new strategy; I think it requires us to be realistic about
what is going on there, support the reformers.
BROKAW: But candidly, hasn't it proved to be much more vexing than you
ever anticipated?
ALBRIGHT: Yes, it's more difficult; but it doesn't mean that we giveup.


Jamestown Foundation Monitor
10 December 1998

ago today--December 10, 1948--the United Nations General Assembly approved
the Universal Declaration of Human Rights. Several Russian media have noted
the anniversary, and others have run related stories. One concerned a report
just released by a presidential commission about the human rights situation
in Russia during 1996-1997. Using the results of surveys taken by the Public
Opinion Foundation, the commission found that 75 percent of those polled
said human rights are not observed in Russia, 17 percent said they are
observed and 8 percent were undecided. Forty-four percent of those polled
said the human rights environment had worsened over the past few years, 32
percent said it was unchanged, 14 percent said it had improved, and 10
percent were undecided. The top five rights which respondents said were
being observed in Russia were freedom of conscience and religion (cited by
35 percent of the respondents), freedom of speech (33 percent), freedom of
movement and domicile (25 percent), the right to private property (25
percent) and the right to education (22 percent). The top five rights which
respondents said were not being observed were the right to life and security
(44 percent), the right to employment (43 percent), the right to
environmental safety (33 percent) and the right to social security in the
event of a disability (29 percent). The presidential commission noted that
60 percent of those polled said that they had not personally experienced a
rights violation (Russian agencies news agency, December 9).

RUSSIAN STATE. "Nezavisimaya gazeta" devoted its main front page article
today to analyzing the issue of human rights on the UN Universal
Declaration's fiftieth anniversary. The newspaper said that Russia's record
was not ideal, and listed by way of illustration everything from the war in
Chechnya to the murder of Galina Starovoitova to delays in salaries and
pensions to the mistreatment of Russians in the other former Soviet
republics. The newspaper, however, also lashed out at CIS states for
ignoring human right, and at some veteran Russian human rights activists for
ignoring the interests of the Russian state (Nezavisimaya gazeta, December 10). 
"Nezavisimaya gazeta" was particularly disturbed by the comments of former
dissident Valeria Novodvorskaya, who said in a recent interview that the
human rights issue had simply been an instrument that "we, the CIA and
United States used as a battering ram for the destruction of the communist
regime and the break-up of the Soviet Union." Novodvorskaya, known for her
radically anticommunist views, warned that the human rights issue should not
be used to "chop down the branch on which we are all sitting"--that is, to
undermine the Yeltsin government and allow the communists back in power.
These and other comments by Novodvorskaya were subsequently challenged by
Sergei Kovalev, President Boris Yeltsin's former human rights ombudsman who
broke with the Kremlin over the Chechen war. A debate between Kovalev and
Novodvorskaya was published in the weekly "Novye Vremya" (Novye vremya, No.
48-49, December 6, 1998).

KIRIENKO FIZZLES AT HARVARD. Last week in Russia there was much speculation
of a possible bright political future for Sergei Kirienko--as one of the
leaders of a new democratic-centrist bloc, or, alternatively, as a possible
prime minister under a future President Yuri Luzhkov. Kirienko, who served
as Russian prime minister from May until August of this year, concluded a
speaking tour of the United States with a lecture at Harvard University on 7
December at which a Monitor correspondent was present. 
In this presentation, Kirienko did not come across as a dynamic political
leader, nor even as a person with a very solid grasp on Russia's economic
realities. A quiet, soft-spoken man, he relies on wry jokes and folksy
homilies to explain the political challenges facing Russia. His fundamental
argument was that reform had stalled in Russia because cultural values were
slow to change and unfortunately the people had not yet accepted the need
for radical market reform. He said that it was a pity that in Russia, unlike
in America, the poor are more likely to vote than the well-off. 
Kirienko made repeated references to the communist threat--the way that the
communists in the Duma sabotaged economic reform, the way that they are
toying with anti-Semitism. This is well and good--but for the past several
years democrats have been trying to build a political coalition around
anticommunism, and this strategy has clearly failed. 
One perceptive observation Kirienko made was that Prime Minister Yevgeny
Primakov's apparent success in achieving political consensus is due to the
simple expedient of avoiding making any decisions over economic policy. If
there is no policy, there is no disagreement. 
Offering few original insights into Russia's current economic plight,
Kirienko's basic argument was to insist that tough reforms are necessary
(spending cuts and tax increases), and to argue that sooner or later the
Russian government will be obliged to adopt such policies--even a future
government, elected on a populist ticket. 
Kirienko ducked just about every economic question from the audience. Why
were the interest rates paid on treasury bonds (GKOs) so high? What happened
to the US$4.8 billion loan tranche which the IMF sent in July? Was in
retrospect the 17 August default a mistake? As for future Western policy
towards Russia, he ran through the familiar wish-list of proposals, such as
restructuring Soviet era debt, fresh IMF loans tied to macroeconomic
stabilization, Russian entry to the World Trade Organization, and freer
access for Russian goods to Western markets. Kirienko seemed to overestimate
the extent to which the West is willing to make such concessions in the wake
of the August debacle. One observer was reminded of the saying that those
who cannot learn from their mistakes are condemned to repeat them.


Subject: Kirienko at Harvard
Date: Thu, 10 Dec 98 
From: Miriam Lanskoy <>

Dear David,
Today's issue of Monitor contained a very negative assessment of
Kirienko's presentation at Harvard on Dec 7. I was in the audience as well
and do not completely share that view. Perhaps I expect too little of
officials at his level -- for instance, Kokoshin, who spoke a few weeks ago,
said exactly nothing and blandly. Kirienko may not have revealed any new
information but he certainly provided a coherent view of the situation.
>From where I sat, the audience (at least the Russian speakers) laughed at
his jokes and seemed reassured by his message. I share the Monitor's
impression that he might not have learned from previous mistakes, but those
mistakes are not about GKOs: They are about the failure to create a
national, grass-roots, democratic, party organization that would field
candidates for Duma elections. I'm curious what impressions your other
readers formed. My notes on the talk follow.
Best Wishes,
Miriam Lanskoy
Institute for the Study of Conflict, Ideology, and Policy at Boston University

Kirienko views causes and results of crises
By Miriam Lanskoy

In the past, Russia's democrats have not been able to unite into a single
party or movement. Sergei Kirienko, the former prime minster looks forward
to an upcoming conference of all the democratic figures on December 10, but
recognizes ³that it won¹t be easy² to unite them. Asked if the new
democratic movement that has taken form since the assassination of Galina
Storovoitova will aim at establishing a true national party and field
candidates in the 1999 Duma elections, Kirienko sidestepped the question.
³We will work to the presidential elections,² he said.
On December 7, Kirienko analyzed Russia's recent history from the
democratic perspective. He stressed that the real cause of Russia¹s crisis
does not reside in the sphere of economics but stems from the ³lack of a
political consensus and a resultant weakness of the government.² The belief
that the events of 1992 had endowed Yel¹tsin with a popular mandate to carry
out economic reform was an ³illusion.² The population was unprepared for
the hardships that reform would entail and had never agreed to take on the
heavy burden of reform. For this reason the government was not able to
formulate and maintain a coherent reform plan. Economic reform has not
failed in Russia; in fact, it has never been seriously undertaken.
According to Kirienko, over the last few years the biggest mistakes were:
1) Unrealistic expectations about the pace and ease of reform and an
underestimation of its costs. 2) Overreliance on macroeconomic measures
while paying little attention to restructuring enterprises. 3) The
imposition of overly high taxes.
The legislature represents the unwillingness of the electorate to carry
the weight of reform. Consequently, it has prevented a real revision of the
state budget, so that over the last 7 years the size of the budget deficit
has actually grown. The two branches of government were so bitterly opposed
that they were unable to agree on a common policy ³even under crisis
Prime Minister Evgeni Primakov has ³without question secured political
stability. But this is at the cost of no economic action.² So far, his
government has carried out no economic measures and there has been no
conflict with the legislature. But time is running out and he will have to
act to forestall the possibility of hyperinflation in the spring. Even the
most reactionary members of the current government now know that currency
emissions will not solve anything. They will have to pass a tight budget as
a basis for securing credit. 
How will the Communist faction in the Duma react to that? They will look
for enemies, scapegoats. According to Kirienko, Makashov¹s recent comments
were a trial balloon. That attempt clearly failed, so they will look for
other enemies; bankers, liberal reformers, foreign economic advisers, or the
Kirienko identified 3 possible scenarios for renewed reform:
1) An honest public appraisal of the depth and breadth of the problem and
the consequences of the solution.
2) The use of populism to disguise the difficult policies. This has been
used by Lech Walesa in Poland, and to some extent by Yel¹tsin in Russia.
3) ³When the patient is tied up, there is no need for anesthesia,² or the
Pinochet solution.
The Russians will hold onto the idea that no solution is necessary as
long as possible. If any outsider ³tries to force a solution, he will
easily become that scapegoat.² 
The best policy for the West is to let the Russians choose their own path
but to keep certain doors open. The most important ³doors² are: 1)
Restructuring the former USSR debt. (The interest on the debt is $17
billion which equals 10% of Russia¹s GDP.) 2) Extending the agreement with
the World Bank and the IMF to supply additional credits. These loans must
be based on stringent conditions, but in principle they should be available.
3) The possibility, after having met the relevant conditions, of allowing
Russia into the World Trade Organization. 
In the past IMF aid was used to cover the budget deficit. Since the budget
supported inefficient enterprises, the money was wasted. IMF credits should
be targeted at ³restructuring the economy in order to achieve a balanced
budget.² The Russian government should be held responsible for how the money
was spent. Western credits could have gone to better uses but ³the blame
for this lies with Russia.²
There is the possibility of the first option, a forthright approach to the
nation¹s problems, but this will require a change in the consciousness of
the electorate. Already 61% of the population are economically independent
of the government. They need to draw political conclusions from their
financial independence. The generation which grew up during the reform
lacks the habits of political action. ³We have the political institutions,
we need to learn to use them, " he told the forum, hosted by Harvard
University's Davis Center for Russian Studies.


Date: Thu, 10 Dec 1998 
From: ray finch <>
Subject: cracking down on crime

David, one of my sources within the power ministries handed me this
announcement. It may help in clarifying the criminal situation in

As proof of their recent initiative to crack down on crime, the
Minister of Internal Affairs yesterday reported that the police were
on the verge of arresting individuals believed to have been involved
in the murder of Tsar Nicholas II and his family. According to an
early press release, blood samples from the crime scene are apparently
linked to an organized crime group (OCG) operating out of Switzerland,
led by the crime boss Vladimir Ulyanov, better known under the klichka
(nickname) of "Lenin". While there hasn't been confirmation of these
rumors, sources close to law enforcement bodies believe that this case
may be closely connected to the still unsolved murder of Sergei Kirov.
Informed officials close to this investigation believe that it's only
a matter of time before the link between this murder and that of
approximately 10 million faceless Russians is firmly established. 
These same sources, however, would not comment as to whether or not
this same investigation was related to the murder-by-starvation of an
equal number of peasants some years prior. Forensic experts believe
that the crime weapon may have been a pistol, razor, Marxist
philosophy, vodka, sin, tradition or fate. The case files for this
investigation, however, have apparently been misplaced, and while
there is no question that those responsible will be brought to
justice, the matter has been deferred until a certain investigation
surrounding a group of traitorous doctors is cleared up. The minister
went on to claim that senior police officials are on the verge of
apprehending high-level crime bosses within the Stalinogo OCG who may
have had a hand in the construction of a series of illegal human labor
camp-factories. According to the minister, this same OCG may have
played a part in the collapse of the USSR, however, these reports
would seem to contradict earlier allegations that criminals belonging
to the Milindcomogo OCG were responsible. Confidential sources in the
Kremlin claim that such reports are complete fabrications and that
"band formirovaniye" (illegal separatist rebels) in Chechnya are
behind both the collapse, as well as the prominent murders of A. Men,
D. Kholodov, V. Listev, G. Starovoitova etc.... The four heads of the
recently murdered foreigners in Chechnya would not comment on this
charge, but pointed out that a likely suspect is under trial in
Switzerland. These allegations, however, were strongly denied by the
Ministry of Crime, which is seriously considering initiating legal
actions against its accusers. 


Russia/Ukraine: Relationship With NATO Improving
By Jeremy Bransten

Brussels, 10 December (RFE/RL/) -- NATO's annual foreign ministers' meeting
ended in Brussels yesterday on a positive note, with the foreign ministers
of Ukraine and Russia both saying that their countries' relations with the
alliance continue to improve.
Ukraine and NATO, in particular, announced new initiatives to promote
closer ties. Both sides announced that for the first time, the alliance will
send military officers to Kyiv to open a permanent liaison with the
Ukrainians. And Ukrainian Foreign Minister Borys Tarasyuk said that
Ukrainian President Leonid Kuchma will travel to Washington next April for a
high-level summit meeting with NATO leaders during the alliance's 50th
anniversary summit.
Tarasyuk said the NATO liaison process will strengthen cooperation
between NATO and Ukraine. He says the liaisons will be sent to Ukraine in
addition to the ones already there at the NATO information and documentation
Tarasyuk also said Ukrainian President Leonid Kuchma will take part in
NATO's 50th anniversary summit next April and the Ukrainian delegation has
put forward their proposals to NATO member states on the outcome of the summit.
While the first day of talks at NATO focused on the upcoming admission of
Poland, Hungary and the Czech Republic, alliance officials yesterday met
with their Russian and Ukrainian counterparts within the framework of the
NATO-Russia Permanent Joint Council and the NATO-Ukraine Commission. The
institutions were established last year with the aim of improving the
alliance's relations with the two countries.
The atmosphere between Tarasyuk and NATO Secretary General Javier Solana
was noticeably warm. Russian Foreign Minister Igor Ivanov, attending the
NATO-Russian Permanent Joint Council session for the first time, projected a
more reserved demeanor. But nevertheless, he told reporters at a news
conference that if one remembered what relations between Russia and NATO
were like only a year ago, "you will see that we have come a long way on the
road from mutual suspicion to cooperation."
Both Ivanov and Solana cited efforts to bring peace to the Serbian
province of Kosovo as a positive example of new NATO-Russian cooperation. 
Ivanov said the two sides did not directly discuss NATO's current plan to
develop a new strategic concept. U.S. Secretary of State Madeleine Albright
urged NATO ministers to widen the alliance's mission in future to move
beyond a narrow definition of mutual defense. She said that with new modern
missile technology, for example, threats could come from far beyond the
alliance's borders and she urged ministers to be prepared to take action.
But Ivanov warned that Russia firmly believes that any decision to use
force internationally can only be taken on the basis of a unanimous United
Nations Security Council decision.
Regarding NATO's upcoming expansion plans and its declared "open-door"
policy to new members from Eastern Europe, Ivanov said Russia's position
remains unchanged: it opposed NATO expansion in the past and continues to do
so. But he said this difference of opinion should not stand in the way of
greater Russia-NATO cooperation in 1999 and he urged both sides to move from
words to greater cooperative action.
A senior NATO official told reporters that alliance leaders hope Moscow
will join the air verification mission over Serbia's troubled Kosovo
province. He said this would be an especially welcome sign of deepening
cooperation between Russia and the alliance. Bulgaria and Romania, among
non-NATO members, have already signed up. And Ukraine said it would as well.
But Ivanov, when asked about the issue today, remained non-committal.
NATO officials, however, have been at pains to point out that in their
view, much has already been achieved in improving Russia-NATO ties. In past
months, Russia has participated in two Partnership for Peace exercises. NATO
officials are now in Moscow to prepare the opening of a military officer
retraining center and both sides are also preparing a joint environmental
disaster response center - an idea proposed by Moscow.
NATO and Russian officials also announced today that the alliance will
provide logistical help to Russia next year in preparing for the so-called
Year 2000 computer bug. NATO members have already spent millions of dollars
to reconfigure their computers to avoid any failures in air defense and
command systems once the new millennium arrives. They will be actively
sharing their knowledge with Moscow.
All eyes are now turned to Washington, for NATO's much-awaited 50th
anniversary summit next April- by which time, officials say, the alliance
will have already expanded to include Poland, Hungary and the Czech Republic
and the alliance's new strategic vision will be unveiled. Just what kind of
vision Washington would like to see was made amply clear by U.S. Secretary
of State Albright. But it remains to be seen to what extend America's allies
will share her view. 


RFE/RL Newsline
10 December 1998

"Moskovskii komsomolets" on 8 December asked Yelena Vasina, a leading
stylist from the L'Oreal Professional salon, for advise on how to spiff up
some of Russia's leading politicians. For Prime Minister Primakov, she
suggested a hair cut would not be a bad idea. Communist Party leader
Gennadii Zyuganov would be better off wearing shirts with wider collars and
ties with a large knot to offset his large head and wide face, she said And
former Prime Minister Sergei Kirienko, according to Vasina, needs to update
his eyeglass frames with something more dignified. JAC 

Otechestvo has attracted the support of 20 regional governors, including
Nizhnii Novgorod Oblast Governor Ivan Sklyarov, "Kommersant-Daily" reported
on 9 December. The newspaper also reported that several members of the
left-wing Movement for the Revival of the Urals will likely join as well. In
November, Nikolai Lubenets, mayor of Trekhgornii in Chelyabinsk Oblast,
formed his own branch of Otechestvo. The daily reported that Luzhkov visited
Lubenets in September during a short trip to the Urals. Elsewhere in the
Urals, Sverdlovsk Oblast Governor Eduard Rossel was not invited to join
Luzhkov's party, "EWI's Russian Regional Report" concluded on 3 December,
because Luzhkov believes that Yekaterinburg Mayor Arkadii Chernetskii has a
better chance to win upcoming gubernatorial election. On 10 December,
"Kommersant- Daily" reported that Luzhkov signed an economic cooperation
agreement with Rossel, but the newspaper quoted the former as making a joke
at the latter's expense while visiting the oblast. JAC 


Date: Fri, 04 Dec 1998
From: "W. George Krasnow" <> 
Subject: Voice of America Interview Transcript

W. George Krasnow: former professor and
director of Russian Studies at the Monterey Institute of International
Studies and the author, as Vladislav Krasnov, of
(1) Solzhenitsyn and Dostoevsky: A Study in the Polyphonic Novel, U of
Georgia Press, 1980;
(2) Soviet Defectors: The KGB Wanted List, Hoover Inst. Press, 1985; and
(3) Russia Beyond Communism: A Chronicle of National Rebirth, Westview
Press, Bolder, CO, 1991

Transcript of a Voice of America Interview with Dr. W. George Krasnow, a former
defector and professor of Russian Studies and now president of Russian American
Goodwill Associates. Recorded December 3, 1998.

Q: When and how long did you work with Yevgeny Primakov?
A: I worked with him for about a year in the beginning of the 1960s when
he was the
director of Radio Moscow’s propaganda broadcasting to Northern and Central
and I was a junior editor of its Swedish department.
Q: How closely did you know him?
A: Although he was not my immediate boss, sometimes I had to visit his
office to get an
approval for one article or another. He was the one who gave the approval
for my mission
to Sweden as part of a Soviet delegation. I believe he either wrote himself
or signed my
Q: What sort of person was Primakov?
A: Since he was my senior boss, we did not associate on a familiar basis.
He was fairly
high up in the party and had to follow the party line. A dissident he was
not. But he had
the reputation as an intelligent and knowledgeable professional man, a good
linguist, and
“liberal” by the standards of the Khrushchev era. 
Q: So why did you defect?
A: I did not believe it was possible to “liberalize” or to “reform”
Communism. I wanted
to learn more about the “forbidden fruits” of the West, and defected to
Sweden where I got
political asylum.
Q: How do you feel about failing to live up to Primakov’s recommendation?
A: Not bad at all. Especially now, when the whole country, including
Primakov, defected
from Communism. Perhaps, they did it too late, but better later than never.
I don’t know
what Primakov expected of me. But my mission was to strengthen peace and
between Soviet and the Swedish people. I find nothing wrong with my efforts
to extend
that friendship to others, including the Americans.
Q: Well, it’s easy to say so now, but defection used to be a very serious
crime, wasn’t it?
A: Of course, myself and my whole family were blacklisted. I know that
because I
analyzed the smuggled out KGB blacklist in my book on the Soviet defectors.*
All that
has changed in August 1991. Before - I used to be persona non grata. But
when in
August ’91 I was invited to lecture before the Soviet Military Political
Academy, I
introduced myself by reading my entry in the blacklist - and the officers
stood up. I felt I
was a persona “very” grata.
Q: What do you do in Russia and did you see Primakov again?
A: Now that I am out of university, I go to Russia on business and to see
my relatives and
friends. I have been to dozens of cities in Russia, Georgia and Ukraine. I
did not see
Primakov. I had no reason to. But I am glad he didn’t bother to see me
either, especially
when he was the head of the F.S.B. 
Q: Were you surprised at his appointment as Prime Minister?
A: Not at all. I was delighted. Under the circumstances, I thought he was
the best choice.
Q: Why? Because he was “liberal” at Radio Moscow or did you liked his
A: No, it has nothing to do with the past. Simply, when I was in Russia
during the three
weeks of crisis, August 15 - September 10, I saw the Duma in a frantic
search for an exit
from the precipice to which the so called reformists have brought the
country. Primakov
seemed to me a decent man and compromise figure.
Q: Did you say the so called reformists?
A: Of course, after the seven decades of Communist rule, people were
tired to hear
about revolution and revolution, they wanted reforms. Naturally President
surrounded himself with all sorts of reformists. Some of them were genuine,
but naïve
about the West. The others were opportunists who saw the reforms as the
means of 
gaining power and getting rich. All had Communist cultural habits ingrained
in them.
Q: But wasn’t it also an opportunity to break the power of the militarized
Soviet economy
and integrate Russia with a global free-market economy?
A: An opportunity it was, but the West, and the United States in
particular, forfeited that
opportunity. We told the Russians that we wanted to advance both democracy and
free-market. But because of our wrongheaded approach we advanced neither. Even
worse, in the eyes of Russian masses we helped the reform extremists to
discredit both
democracy and free-market. Even the destruction of Soviet military might
went too far for
our own good. What pains my heart most, the admiration for America I saw
in Russia in 1991 is now gone. Instead, I witnessed a disturbing swell of
Q: So, what went wrong?
A: Basically, two things. First, we threw our support behind a single
President Boris Yeltsin, giving him practically a carte blanche, even when
he violated all
democratic rules in getting himself re-elected. Instead of fostering the
spirit of tolerance
and compromise, we took sides and thus contributed to the bitternesss of
internal Russian
politics. Imagine how the Americans would feel if, say, the Russians send
their people
and money and the NGOs to the States to keep Clinton from the impeachment.
Then he
would certainly get impeached, and the Americans would blame Russia for
that. But
that’s exactly what the United States did to Yeltsin.
Q: And what was the second mistake?
A: The second mistake was to aggravate the first. We did it by imposing,
through the IMF
and the World Bank, a course of reforms totally unsuitable to Russia. It was
conceived by
a small clique of bookish economists. What is worse, it was adopted, both in
Russia and
the U.S., without much debate or due democratic process. As a result, our
support for the Yeltsin government degenerated to a support for the most
extreme clique
within his government.
Q: Why do you call them extremists? 
A: Well, I know they prefer to call themselves pro-Western liberals. But
the way they
administered the shock therapy on Russia makes them more like the
Bolsheviks. You can
shoot your way through and impose Communism. But democracy, and a free
market, you
have to foster, it is a long evolutionary process, certainly for Russia,
where traditions of
free enterprise were stamped out more than in any other country. Yet, they
shot their way
through the Parliament literally and then tried to shove the “reform” down
the hungry
throats of the Russian people.
Q: Are you saying that we rushed the things?
A: We certainly did, and so did the Russian “reformers” whom we so
eagerly supported.
Where the saints tread carefully, the fools rush in. No wonder, the program of
privatization produced not a free market, but crony capitalism, oligarchs,
and ubiquitous
corruption on a scale that prevents the Russian government from collecting
the amount of
taxes that the IMF demands. A vicious circle of our making.
Q: Do you think that Primakov can do better than his reformist predecessors?
A: I certainly hope so. For the first time since August 1991 he gave
Russia a pause to
think over what has been happening and what needs to be done. Above all, he
is the first
premier appointed by a consensus in the Duma.
Q: So, what do you think needs to be done?
A: First of all, we should let the Russians to figure it out. I’m not
about to repeat the
mistake of the Clinton administration by telling the Russians what they
ought to do. I’m
glad that Primakov did not pretend that he knew what needs to be done when
he come to
power. He is decent enough to try to find a course of reform based on
consensus and
popular support. It won’t be easy, but I wish him good luck.
Q: According to the latest reports, Primakov’s negotiations with the IMF’s
Camdessus over the next installment of the $22 billion loan broke down. Do
you think
that Primakov deserves the loan?
A: He certainly deserves it more than his predecessors. The current
financial crisis is not
of his making. But if the IMF insists on pushing the previous course of
reforms, if I were
Primakov, I would not accept the loan. It is in the interests of the United
States to use its
influence to prevent Russia from sliding further down to an abyss. Unless we
do, we may
face the arc of chaos compared to which Iraq, Bosnia, and Kosovo would look like
peanuts. Russia’s disaster may well become an American disaster.
Q: Well, after denouncing the U.S. support for Yeltsin, now you sound
like a Primakov
A: No, I am not. I’m neither for Primakov, nor against Yeltsin. I am
against the U.S.
government’s meddling in Russian politics on behalf of one individual or
another. We
should be able to deal with respect with any leader whom the Russians
produce according
to their rules and who is not hostile to us. Primakov has the right to
disagree with our
economic prescriptions. After all, now even U.S. officials admit the failure
of our
excessive optimist about Russia.
Q: Are you referring to Mme Albright’s statement?
A: Yes. The problem was not that we were excessively optimistic. The
problem was that
we were not at all realistic. And the reason was that our foreign policy has
been guided by
emotionalism and superficiality of the media, against the best advice of
especially the dissident scholars.
Q: Who are you referring to?
A: There are several of them: Jerry Hough, Steven Cohen, Suzanne Massie,
Brumberg, Susan Eisenhower, now Janine Wedel, and many others who have
warned that
our current policy, including the IMF reform prescriptions, can only breed
crime and
corruption in Russia. I myself argued against the current policy on C-SPAN.
Q: And yet, Clinton’s policy toward Russia seem to enjoy a bipartisan support?
A: That is, until August 17 when the disaster struck. While I cannot push
my advice on
the Russian government, as a U.S. citizen I must say that we ought to have
an open public
debate and a genuine hearing on the Capitol Hill to review and revamp our
Russian policy
as soon as possible. Before we can preach democracy and free market to the
Russians, we
ought to put our democratic house in order 
The interview was conducted, in English, by Ed Warner, a VOA reporter.


From: (Ray Thomas)
Subject: RE: 2510/Weir/Foreign Banks 
Date: Thu, 10 Dec 1998 

> PRIMAKOV's suggestion, unprecedented from a Russian leader, is to
remove the
>restrictions barring foreign-owned banks from providing retail services
>deposits and loans - to private individuals.

The best news to come from Russia for some time. I hope that
Primakov's suggestion is acted upon and that Western banks, and Eastern
banks, respond to the opportunities. Not that I love banks any more
than I love landlords, but banks do play a necessary role in a
capitalist economy. Without banks the idea of a transition to
capitalism is meaningless.
The banks are needed partly so people can deposit savings, but more
importantly to facilite inter-firm financial transactions. Many small
firms, in the British economy at least, only depend upon short term
credit granted by the banks which enables them to put off paying their
suppliers until they have received money from their customers. They
pay high rates of interest for their permanent overdrafts but
effectively exist only because of the credit created by banks. Mr
Heseltine caused a flurry a few years ago when he said that as a
businessman he had followed a policy of not paying firms bills until the
creditors were beating on the door. But the fact is that many small
firms are able to conduct their business only because they follow such
policies - which are in effect supported by the banks. Larger firms
who may be the victims of late payment can deal with late payers through
financial threats of various kinds which will be supported by the banks.
They don't have to call in the Mafia.
The welcoming of foreign banks to provide a basis for expanding credit
should not include any credulity about the advice which bankers give.
Banks depend on their success on their ability to provide financial
services, NOT advice. Banks are bad advisers for two reasons. First
they have an interest in the outcome. Banks make money by creating
credit and lending at higher rates of interest than they pay to
depositors. So their advice is always tinged by what they see as their
business prospects.
The second reason for not taking advice from banks is they don't know
about anything outside their own experience, and that experience is
limited to their previous customers. The IMF view of the world, for
example, and therefore the advice it gives is shaped by the credit and
loss of previous customers. It could not give good advices to Russia,
and cannot now give good advice to Russia because it has no relevant
banking experience of dealing with anything like the situation faced by


Moscow Times
December 11, 1998 
EDITORIAL: Right Center Has Platform But Little Else 

The founding congress of the new right-centrist party has been
accompanied by much posturing, but its influence in the next few years is
likely to be very limited. 
The party will have one advantage over almost all others, except the
communists: It has a clear ideology. 
The party is unabashedly committed to economic liberalism, smaller
government, free markets, private enterprise and integration into the world
This would have placed it on the right wing of politics in the West a
decade ago, but in the United States and Britain, at least, these ideas have
become the common currency of both left and right. 
The movement is also committed to most of the political ideals of
liberalism. It stresses defense of human rights, rejects aggressive
nationalism and militarism and accepts the independence of the former Soviet
republics. It sheds no tears for the demise of the Soviet Union as a Great
To those in the West, this may sound like a fairly rational, coherent
platform. Unfortunately, the West is likely to remain this party's most
loyal constituency. 
The biggest problem facing the new party is that for better or worse the
public largely blames some of its leaders for the economic hardships of the
past six years. Yegor Gaidar is regarded as the author of "shock therapy"
and Anatoly Chubais bears the stain of Russia's privatization program.
Sergei Kiriyenko, if indeed he joins the bloc, is tainted by the events of
Aug. 17. 
Many of these criticisms may be unjustified. Prime Minister Yevgeny
Primakov's supposedly leftist government is now being forced to adopt many
of the policies that these hated liberals have been trying to implement for
But the mass of Russians will view the right centrists as a bunch of
smart-assed, corrupt intellectuals in the pockets of Western business. In
fact, this has always been true, even in 1992. Throughout their reforms,
Gaidar and Chubais always had a core constituency of one person: President
Boris Yeltsin. Now that Yeltsin is weak, and even more so once Yeltsin
leaves the political scene entirely, Pravoye Delo will be isolated. 
Still, the bloc is necessary and should not be written off completely.
Despite ridiculous fragmentation among his democratic and right-wing allies,
Gaidar's Russia's Choice party came close to crossing the 5 percent barrier
needed to enter the State Duma in the 1995 elections.With the right leader
-- Kiriyenko or Nemtsov, perhaps -- Pravoye Delo could succeed this time.
That would be a useful, if by no means crucial, voice in Russian politics.
Anything is better than the communists. 


Financial Times
December 11, 1998
[for personal use only]
RUSSIA: Poor fail to get relief from dachas
By Andrew Jack in Moscow

Picturesque dachas or wooden country cottages may provide welcome weekend
breaks for Russia's urban yuppies, but their gardens offer few chances for
the country's poor to grow vegetables and shield themselves from the current
economic crisis, a group of researchers said yesterday.
Many commentators argue that Russians survive in spite of the high levels
of poverty shown in official statistics because they grow their own food in
family-owned dachas that ring the country's cities. At a recent conference
in Moscow, Greg Thain, head of the Russian Market Research Company, said:
"Dacha owners are starting to dig up their lawns to grow vegetables again."
But researchers at a seminar sponsored by the International Confederation
of Free Trade Unions this week claimed the widespread belief that Russians
have returned to their peasant roots to survive was a myth. "To say that the
10 per cent of Russians who are officially malnourished have 'survival
strategies' is wrong. Both words are misnomers," said Simon Clarke, a
sociology professor from Warwick University in the UK.
From surveys in four Russian cities, his team concluded that the poorest
households do not have access to agricultural land, and have neither the
time nor the money to grow their own crops.
Those who do grow food tend to be richer, still spend considerable sums
on buying food and rarely sell their home-grown vegetables - which go to rot
The researchers argued that the government would do better to encourage
the reform of commercial agriculture and provide more effective social
assistance to the poor rather than encourage and subsidise petty
agricultural production.
Their interviews in Samara, Kemerovo, Lyubertsy and Syktyvkar also
debunked the belief that many Russians have embraced the market economy and
survive through reliance on income from a range of informal activities, such
as undeclared second jobs.
The researchers found that only 5 per cent of the urban populations of
these cities was regularly involved in an activity other than their official
registered jobs, and overall it contributed just 6 per cent of household
income. By contrast, a quarter of households depend on pensions and other
social benefits for more than half their income.
They concluded that 18 per cent of the workers in the four cities were
employed in the "new" private sector as opposed to the state sector or
privatised companies, and received wages on average 30 per cent higher than
those in these other sectors.
The team warned that policymakers' hopes that the poor could survive
through financial support from family and friends was misguided because such
income was precarious and only provided for short periods.
Despite anecdotal examples of workers paid in goods that they could
re-sell to make additional money, Mr Clarke said most were paid only a small
proportion of their salary in kind, and generally in oil, flour or other
foodstuffs that they consumed themselves. 



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