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Johnson's Russia List
 

 

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


Johnson's Russia List
#2514
11 December 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AFP: Almost One in Five Russian Couples Are Sterile.
2. Business Week: Patricia Kranz, RUSSIA: HOW BAD THIS TIME?
Only massive borrowing will keep it out of default.

3. The Moscow Tribune: John Helmer, CURMUDGEON'S CHRISTMAS.
4. Jan Plamper: Help NITs Memorial.
5. Moscow Times: Ben Aris, Charity Stops at Home.
6. AP: Russia Relies on Imported Medicines.
7. AP: Russia Puts Privatization on Hold.
8. Nicolai Petro: Kirienko.
9. AFP: IMF Deputy Head Optimistic about Russia.
10. Jamestown Foundation Monitor: RUSSIAN LAWMAKERS CONTINUE TO NAYSAY 
START II RATIFICATION. 

11. Nezavisimaya Gazeta: INTERVIEW WITH PRIME MINISTER YEVGENY 
PRIMAKOV. "WE ARE ABSOLUTELY NOT RETREATING FROM MARKET TRANSFORMATIONS
IN SOCIETY." (Excerpt).]


*******

#1
Almost One in Five Russian Couples Are Sterile 

MOSCOW, Dec. 11, 1998 -- (Agence France Presse) Sterility afflicts almost one
Russian couple in five, the country's deputy health minister said Thursday. 
Between 15 percent and 20 percent of Russians couples today cannot have
children, Itar-Tass news agency quoted the minister Tatiana Stukolova as
saying. 
"In more than half the cases, this sterility is due to abortions carried out
too early on the woman, or to untreated venereal diseases in the man,"
Stukolova said at a conference of public health experts. 
In Soviet times, abortion was the main method of contraception in Russia and
two women in three suffer from health problems caused by abortions, according
to Health Ministry statistics. 
The figures for 1997 however show that during the past five years the number
of abortions has dropped by 29 percent. However this "success" is also
paralleled by a decline in the Russian population which has gone down by 1.5
million people since 1992. 
Moreover, the number of women aged 19 and under who have had an abortion
remains high. 
In 1997, 2.32 million women had an abortion in Russia, including 250,000 to
280,000 aged less than 19. 
The number of babies being born to teenaged mothers is fairly high however.
One Russian child in 10 is born to a woman under 20, Stukolova said. 
She called for more efforts to get health information across to the public,
both through the media and through advertising campaigns.

*******

#2
Business Week
December 21, 1998
[for personal use only]
RUSSIA: HOW BAD THIS TIME?
Only massive borrowing will keep it out of default
By Patricia Kranz in Moscow 

When the International Monetary Fund organized a $22.6 billion bailout for
Russia last July, experts warned that it would not be enough to get the
battered nation through the next several months. They were correct--painfully
so.
Five months after the ``rescue,'' which was orchestrated in large part by
the U.S. Treasury, Russia is floundering--on the edge of another default. The
ruble has fallen 14.3% since Dec. 1. Tax receipts are only at 59% of target
levels. Revenues from oil--which provide one-third of export earnings--are
plunging as world oil prices flirt with $10 a barrel. And President Boris
Yeltsin is ill.
Once again, Russians are frantically exchanging rubles for dollars. The
government doesn't have enough money to pay wages. And people are cold and
hungry in Russia's far north. ``The situation can only deteriorate further
until sensible economic policies are put in place,'' says Thierry Malleret,
chief economist of Moscow-based Alfa Bank.
In other words, Russia is close to where it was last summer when it
defaulted on $40 billion in short-term debt--one-third owned by
foreigners--and shook the world's financial markets. And this time, there are
fewer places to go begging for new capital and less confidence that Russia can
take measures necessary to fix its structural problems.
The reason: Despite the October appointment of compromise candidate Yevgeny
M. Primakov as Prime Minister, Russia has not come up with enough cuts to
whittle down its projected $5 billion deficit. Instead, it is looking to
foreign borrowing to help pay for at least half of it. That money may never
arrive--at least not without massive strings.
NEW COLLATERAL. The most likely scenario is that Moscow could take out loans
with private western banks, collateralized by a commodity. Gold would be the
easiest, because it is held by the government. Oil and gas revenues are
technically the property of private companies, but some deal for them would
not be impossible. Gazprom and Lukoil already have borrowed money
collateralized by export receipts. Says David Riley of London-based rating
agency Fitch IBCA: ``The bottom line is that no one is going to lend based on
the word of the Russian government. That's not a quantity worth a lot of money
at this moment. If they are going to borrow from private creditors, they will
have to be pretty imaginative.''
Already, the IMF has refused to provide any more money to Russia until it
formulates a realistic budget and reform plan. But Russia also has asked the
IMF to roll over $4.2 billion in 1999 loan payments. Without this, Russia's
Finance Ministry forecasts that the economy could contract by 5% to 7% next
year.
December is a critical month. Russia has asked the London Club of
commercial creditors to accept $360 million worth of principal payments, due
Dec. 2, in long-term bonds rather than in cash. If there is no agreement by
Dec. 23, when the grace period ends, Russia will be in technical default--and
the markets could be in turmoil again.

*******

#3
Date: Fri, 11 Dec 1998 
From: helmer@glas.apc.org (John Helmer)

>From The Moscow Tribune, December 11, 1998
CURMUDGEON'S CHRISTMAS
John Helmer

In an average year, I get called artless, truculent, vituperative,
contumelious, impertinent, churlish. And that's just from the educated 
class.
This year was worse than most. But it's also had blessings which even a
curmudgeon can appreciate at Christmastime. So, for each of the twelve days to
come, I'm going to be celebrating something that makes Russia, still, the 
best of all possible places to be in the world:
1. The best borsch. This has been cooked for a decade at the same small,
stand-up cafe called Na Skoryu Ruku ("At the quick hand"), a stone's throw
from the statue of Krupskaya, Lenin's wife, on Milyutinski pereulok. This
was one of the first cooperative restaurants in Moscow. It hasn't
been franchised, and even if the owner has grown rich -- he deserves to --
he hasn't moved to New York or Zurich.
2. Kultura television. The only good thing President Boris Yeltsin did for
Russia in his entire career was to order the government to create this
television channel. 
3. Radio Orfee. The best classical music radio broadcaster in the world --
except for the early morning and late evening, when the entire 12-hour
programme ahead is read out, minute by minute. It's desperate financial
condition proves that Yeltsin never knew what he was doing when he
ordered funding for Kultura. 
4. The best city roadster. My car, the 1986 self-insuring Zhiguli, which
sparks into life every minus-20 degree morning, whatever the Siberian winds
can throw at her. She doesn't have self-warming seats. She doesn't have
rear window washers. She mists if I breathe. She doesn't go faster than 80 
kmh. But no car in the entire city of Moscow wants to tangle with her.
5. The best farmer's cheese. The cheese row at Leningradskiye rynok --
only don't taste the samples you are offered, because they have been
lightly sugared. Always sample from the bottom of the cheese.
6. The best dessert. Kasha guryevskaya is named after a 19th century reforming
minister of finance who didn't invent the pudding. He stole it. It was on
a visit to Guryev's friend, a certain Major Yurisovsky, that the kasha first 
appeared on the table. It had been prepared by Yurisovsky's chef, Zakhar
Kuzmin. The legend is that Guryev became so enamoured of the dish, he wouldn't 
be satisfied with knowing the recipe. He insisted Kuzmin leave his friend's 
kitchen, and come to work in his own. There he cooked the kasha so often, and 
so famously, Guryev's guests came to think of it as Guryev's own. Thus, it 
came to be that a man whose financial reform and political career 
were ignominious failures, became famous throughout Russia for a pudding that 
was another man's achievement. Yegor Gaidar, Boris Fedorov, 
Anatoly Chubais, and Sergei Kirienko won't be so lucky.
7. The best restaurant. The House of Writers on Povarskaya ulitsa
doesn't require you to be a writer, or cultured, or even literate. And to 
appreciate what Francesco Pistacchio did to transform the lair of drunks the
restaurant was at the turn of the 90s into what it is today, all you need is
a mouth.
8. The best art gallery in the world is TsDKh, the Central House of Artists.
It represents dozens of artists, changing shows every week or 
fortnight. It demonstrates that the freaks of New York, London and Paris still
haven't managed to pass themselves off as the humanitarian aid Russia needs. 
9. The best performance of the year -- Prokofiev's Cinderella,
danced on the Bolshoi stage this season by the Lyons Ballet Company of France.
10. The best adaptation of a western invention -- the Green Line at 
Sheremetyevo Airport.
11. The best 19th century painting. Story-telling isn't fashionable in 
painting any more, but then, outside Russia, the education of painters
doesn't oblige them to know much at all, even how to read. The cure for
all that ails modernism is to be found if you knock politely at Victor 
Vasnetsov's wooden house at number 13, Troitskaya ulitsa. If the door opens
-- Vasnetsov died in 1926 -- ask to see Sleeping Beauty. 
12. The best time of the night in the world could be the soft blue
that doesn't quite turn to black for the entire Moscow summer. But it isn't. 
The best time of night is on Sunday, for that ineffable instant when the 
screen fades to grey, and Yevgeny Kiselev, the television anchorman who 
thinks he's Dame Freedom's gift to Russia, has huffed and puffed his last, 
stamped his sanctimonious foot a final time, and is gone.

******

#4
Date: Thu, 10 Dec 1998 
From: Jan Plamper <jplamper@socrates.berkeley.edu>
Subject: Re: Help Memorial? (fwd)

Dear Mr. Johnson,

I am taking the liberty of forwarding this appeal by Profs. Zelnik,
Paperno, and myself to you. I know that you usually don't publish appeals
for donations on your list, but I am wondering if you would make an
exception. The people at Sakharov-founded Memorial, former dissidents, are
crystal-clear and have an excellent reputation.

Thank you very much for any help, Jan Plamper

----------

Dear Colleagues,

We, a group of scholars, teachers, and students of Russian history and
culture, are writing to ask you to join us in donating to our colleagues in
St. Petersburg, historians of NITs (Nauchno-Informatsionnyi Tsentr)
MEMORIAL. We believe that our friends at MEMORIAL are doing work of great
scholarly and social merit. 

What does NITs Memorial do, what people stand behind it? NITs MEMORIAL is a
cramped apartment with an archive, a library, and computers. NITs finds and
exhumes victims of terror, collects sources (archival and oral), organizes
exhibitions and conferences, and publishes books. NITs was founded by
Veniamin Iofe, a former dissident (1965-68 in Mordovia labor camps), who
also co-founded MEMORIAL, St. Petersburg in 1988. Irina Reznikova is
probably the world's foremost expert on the Solovetskii Island Camp.
Mikhail Shkarovskii studies religion during the Soviet period (see his 1995
_Slavic Review_ article). And Viacheslav Dolinin, organizer of a
Solidarity-inspired underground trade union (which earned him a 1981-87
camp term), has amassed an impressive collection of samizdat and objects of
camp byt (from zek spoons to a Solovetskii Kremlin prison door) for a
future MEMORIAL museum. These four people really run NITs, but there are
numerous others whose projects on the history of repressions NITs supports
logistically.

We know the people at NITs from their fall 1997 visit to Berkeley and
Stanford. And one of us, Jan Plamper, did social work with victims of
Nazism and Stalinism, all MEMORIAL members, during 1992-1994 in lieu of his
German military service. 

This fall, with the Russian economy in shambles, it often seems as if there
are only two tangible achievements since 1991: a free press and a fledgling
civil society. MEMORIAL is synonymous with that civil society.
Unfortunately, NITs Memorial's sources of support have dried up. Western
foundations (Ford, MacArthur, Soros), who funded them in the early 1990s,
say that by now organizations like NITs should be on their "own feet," but
there is no financial ground in Russia to stand on. Coming to terms with
the Soviet past is a low priority for the current government.

That is why we are asking you to make a donation to NITs MEMORIAL. An
existing Berlin-based non-profit organization with tax-exempt status called
"Foerderverein fuer MEMORIAL/St. Petersburg e.V." ("Society for the support
of MEMORIAL/St. Petersburg") has generously allowed us to use their
financial structure. This organization is run by volunteers and there are
absolutely no overhead costs. Foerderverein fuer Memorial/St. Petersburg
annually reports to the Berlin tax inspectorate. All donors will receive a
tax exempt receipt, authorized by the Berlin tax inspectorate. MEMORIAL, it
should be added, is registered in Russia as a non-profit organization. You
will also receive an annual report by NITs on its research and activities
over the past year.

Personal checks in U.S. Dollars should be made out to "Foerderverein für
MEMORIAL/St. Petersburg," for "NITs," and should be sent to:

Foerderverein für MEMORIAL/St. Petersburg
Postfach 610 382
10926 Berlin, Germany

For those who wish to wire money directly to NITs MEMORIAL's account at
Foerderverein für MEMORIAL/St. Petersburg (please be aware that banks charge
a fee for wiring):

Bank fuer Sozialwirtschaft Berlin
Account #/Kontonummer: 3320002
Routing #/BLZ: 10020500
For/Stichwort: "NITs MEMORIAL" 

We will repeat this appeal a year from now and try to ensure that NITs
MEMORIAL has stable support from private people in the U.S.A., Germany, and
other Western countries, as long as Russian funding remains unavailable. 

Reginald Zelnik
Professor
Department of History
University of California, Berkeley

Irina Paperno
Professor
Department of Slavic languages and literatures
University of California, Berkeley

Jan Plamper
Graduate Student
Department of History
University of California, Berkeley

******

#5
Moscow Times
December 11, 1998 
Charity Stops at Home 
By Ben Aris 
Ben Aris,a former youth worker for the Greater London Council, is a free-lance
journalist in Moscow. He contributed this comment to The Moscow Times. 

Charity may begin at home, but this time it got stuck at the Russian border.
Once again the average Russian is in desperate need of help, but donors are
throwing their hands up in despair. Since the huge influx of non-governmental,
or non-profit, organizations in the early '90s, only a handful of
international NGOs are still working in Russia. Most have been defeated by the
bureaucracy of municipal administrations, the tax police and the customs
service. 
And since their resources are limited and there are plenty of other countries
in need, they have been taking help elsewhere. According to the Moscow office
of the British Charities Aid Foundation, there are more international non-
profit organizations in tiny Georgia than there are in Russia today. 
Like anywhere in the world, charities in Russia exist to promote the interests
of social groups that are unable to represent themselves-- he mentally ill,
the homeless and those that, for whatever reason, find themselves outside
society. They aim to provide immediate support to these groups while something
is done to try and solve their problems. 
But as winter closes in the Salvation Army and Medicines Sans Frontiers both
report that in Russia not only are the numbers of homeless visiting their soup
kitchens and free medical treatment clinics up by about 20 percent over last
year, but other social groups are fast joining the lines. 
Over the last two months Medicines Sans Frontiers has seen an increasing
number of working Russians arrive for free medical treatment. Having not been
paid for months, these people can no longer afford their state-subsidized
prescriptions. The Salvation Army says that they are getting more pensioners
at the soup kitchen who are taking their soup home with them in glass jars as
they can no longer survive on their pensions. 
The general public is being forced to turn to charities to survive, but
because of the government's obstructive policies the same charities are
finding themselves unable to help. The sheer bloody-mindedness of a
bureaucratic machine that has hardly changed since Soviet days means they are
working with less and less resources. 
Tax breaks were given to selected charities so they could earn cash for their
causes through commercial activities but, unsurprisingly, organized crime
gangs quickly took control of many of these organizations. Now the state has
not only repealed these tax concessions but made it far more difficult for
new, legitimate organizations to register as charities. 
In Moscow there is a special committee that sits just twice a month to
consider applicants for the Charity Passport that charities need beforethey
can operate in Moscow. A small organization with little political clout (and
most Russian charities are run by about three part-time workers) stands little
chance of registering. 
The customs service is extremely wary of imported "humanitarian aid" and
reluctant to let it through. The Salvation Army says that it has more than
3,000 sleeping bags in customs that have been stuck on the border for more
than a year and a half while they try and meet a Kafka-esque set of
regulations. The Red Cross reports that last year customs agents burned a
consignment of toys from Sweden destined for Siberia, because "toys" doesn't
appear on the list of goods designated as aid. 
Likewise, the Charities Aid Foundation says it has problems with the tax
police over cash donations, since that authority is unhappy with sourceless
income. Now the organization has a box that it opens once a month and has to
sign a sworn deposition that the money was a gift. They now prefer to get
money through bank transfers, which is simply not conducive to the impulsive
giving that constitutes most of the funds that are donated. 
Some organizations like the Red Cross are big enough and carry enough
political clout to handle such problems, but the smaller organizations are
stymied and often simply have given up. 
Nor is there a coordinated state policy to charity that might provide some
sort of answer. Last year's budget included money for social support of groups
like the homeless, but only St. Petersburg spent any of this money. 
Meanwhile, humanitarian aid is piling up at the border. Donors that were
sending food and clothes are sending it elsewhere. Organizations can't get
their hands on the free food languishing in the bonded warehouses and have
taken to buying food on the wholesale market f a waste of their extremely
limited resources. 
It is another example of the fudge of policy today that will lead Russia into
a jam tomorrow. The government spends its time fighting fires and is unable to
put together strategies that will make a real long-term difference. The latest
brouhaha over the proposed $1.5 billion in food aid to Russia from the United
States and the European Union is a classic example. 
It is a single large deal that can be trumped by both sides as an example of
all the good things that are being done to help the man in the street, but the
real benefits the food aid will bring are dubious. There is not an acute lack
of food in Russia. The problem is the weak distribution system that is
staggering under a cash flow crisis caused bythe fall of the banking sector. 
The food aid will be a drop in the bucket while the real work will be left
undone. And without the last resort of real charity to turn to, people will
die while they wait. 

******

#6
Russia Relies on Imported Medicines
December 11, 1998
By ANGELA CHARLTON

MOSCOW (AP) -- Dora Mikhailova's pulse quickens when she tugs open the steel
door to her local pharmacy and approaches the counter to ask for her next
batch of insulin.
It's no longer just a question of how much the price has gone up. It's a
question of whether there will be any left at all.
Russia produces very little insulin, leaving its 2.2 million diabetics reliant
upon imports. But imports have become prohibitively expensive since the
government devalued the ruble in August when the economic crisis hit.
Officials estimate Russia has a month or two of insulin supplies left.
Diabetics aren't the only ones worried: Before August, about 90 percent of
medicine in Russia was imported or made from imported materials, according to
the Health Ministry.
``We'll survive without Uncle Ben's (imported rice),'' said Mikhailova, a
55-year-old telephone operator, after the pharmacist gave her five days worth
of insulin instead of the month's supply her prescription calls for. ``But
without insulin?''
Mikhailova could fall into a life-threatening coma within days if she does not
get the medicine.
Russia has never had much of a pharmaceutical industry. Czarist and then
Soviet regimes relied on medicine producers in satellite countries, such as
Poland and the Baltics.
With the demise of the Soviet bloc, Russia lost cheap access to those
medicines, while drug companies from around the world discovered a vast new
market in Russia with virtually no domestic competition.
The cash-starved government has promised to ensure crucial medicines,
including insulin, even if that means costly imports. But that will also mean
skimping on things such as salaries at hospitals and other parts of Russia's
disintegrating health care system.
Long before the Soviet collapse, patients were sometimes told to bring their
own anesthesia, bandages, even plaster for casts if they wanted to be treated.
Poorly paid doctors regularly demand bribes for basic procedures.
``In fact, the crisis didn't change anything. It just highlighted the
situation,'' said Yuri Katlinsky, head of the Health Ministry's medicine
department.
Facing sharply devalued wages or extended wage delays, many Russians are no
longer buying aspirin or are forgoing anesthesia for minor surgery, said
Margarita Pudnikova of the International Federation of the Red Cross.
There have been no signs of hoarding or panic medicine buying, but that's
partly because pharmacies don't have or won't sell more than a few doses at a
time. Still, lines sometimes form outside pharmacies before they open, on
rumors that they have a new shipment.
Several times a day, Dr. Ivan Ignatkov, head of the Russian Diabetes
Association, receives a phone call from an alarmed mother or diabetes patient
saying their pharmacy has run out of insulin. He moans sympathetically, then
instructs them to come to his office, where he has a limited supply of samples
from foreign drug companies.
``What kind of system is this?'' he asked heatedly, hanging up after yet
another phone call. ``Our country can build rockets.
The solution, most agree, is for Russia to develop a pharmaceutical industry.
But that means starting from scratch. Russia's few drug companies rely largely
on imported raw materials.
Mikhailova, like all Russia's insulin-dependent diabetics, is supposed to get
her insulin free. Rarely has she been so fortunate.
In a familiar pattern, $30 million was allocated by the government for
diabetics this year, but just $420,000 had been released as of Oct. 31,
Ignatkov said.
In Soviet times, Mikhailova said, she knew to bring a bottle of cognac if she
wanted good insulin. In recent years, cash has proved more effective.
A few months ago, it cost her 66 rubles ($11) for a month's supply. Now,
because of the devaluation in the ruble, it costs her 220 rubles (the
equivalent of $11 at today's exchange rate), no small change for Mikhailova,
with her 1,200-ruble ($60) monthly salary.
Twice the pharmacist has told her there was no insulin at all. The first time,
Mikhailova said, she broke down in tears -- and the exhausted pharmacist did,
too.
Katlinsky is pinning his hopes on foreign investment. Ignatkov, his eye on the
immediate future, wants foreign aid.
The European Union, Red Cross and foreign drug companies are providing some
medicine. However, Katlinsky warned, many aid shipments are past their
expiration date.
In addition, he estimated that 30 percent to 40 percent of medicine aid is
misappropriated. ``Corruption is no secret in our country,'' he said.
At a recent pharmaceutical trade show, most attendees appeared to be seeking
personal medical advice or looking for free samples instead of placing bulk
orders.

********

#7
Russia Puts Privatization on Hold
December 11, 1998
By GREG MYRE

MOSCOW (AP) -- Russia's economic crisis has virtually halted the sale of major
state assets to private investors, and revenues this year are only a fraction
of those forecast, the government said today.
The government had hoped to earn $400 million by auctioning off state
property, but it has earned only $70 million through October, the Finance
Ministry said.
The country's economic downturn has frightened away foreign investors, and the
government has decided to postpone auctions of two large companies, the
Rosneft oil company and the Svyazinvest communications firm.
The government is still planning to auction off a 2.5 percent stake in the gas
monopoly Gazprom later this month, the Interfax news agency reported.
The delay in selling state assets has contributed to the government's chronic
cash shortages. It owes billions of dollars to workers, pensioners and foreign
creditors.
The government is currently working out an austere budget for next year, when
the economy is expected to continue shrinking. The economy is likely to
contract by 5 percent this year and has been shrinking throughout this decade
in one of the worst depressions ever suffered by an industrialized nation.
Russia's draft budget provides for repaying only $9.5 billion of the $17.5
billion in foreign debt that falls due next year. That means the government
will seek to stretch out repayments of the additional $8 billion.
``Without the debt burden being eased, Russia in 1999, 2000 and the following
years really just cannot exist. It's as simple as that,'' Finance Minister
Mikhail Zadornov said Thursday.
``We are counting on understanding by creditors and investors in restructuring
both domestic and foreign debts,'' Zadornov said.
But creditors have not yet expressed a willingness to rework the debts Russia
already has, and the prospect for more foreign loans is hazy at best.
A $22.6 billion loan package put together by the International Monetary Fund
has been frozen since August's debt default and ruble devaluation.
The IMF has demanded that Russia draw up a sound budget as a requirement for
more loans, and specifically warned against factoring in foreign loans that
had yet to materialize.
The 1999 budget is a key test for Prime Minister Yevgeny Primakov, who was
appointed in September after the previous government devalued the ruble and
defaulted on some debts, sending the economy into a freefall.
The budget was also drawn up in the near-total absence of President Boris
Yeltsin, who has frequently been ill in recent months and has not been
involved in the day-to-day business of government.

******

#8
Date: Fri, 11 Dec 1998 09:26:20 -0500
To: David Johnson <davidjohnson@erols.com>
From: "Nicolai N. Petro" <kolya@uri.edu>
Subject: Kirienko

I did not attend Mr. Kirienko's latest speech at Harvard, but I would not
rush to judgement based on one public presentation. Kirienko's very long
interview in "Banki i bankovskaya deyatelnost'" (October 19, 1998) still
strikes me as one of the most honest and insightful discussions of the
Russian economy ever published.

*******

#9
IMF Deputy Head Optimistic about Russia 

WASHINGTON, Dec. 11, 1998 -- (Agence France Presse) The deputy head of the
International Monetary Fund on Thursday expressed confidence that Russia would
remain open to doing business with the global industrialized economy. 
"It has become increasingly clear that the Primakov government ... has no
intention of changing the main line of Russia's economic strategy since 1991,
which is to engage with the West, and to engage with the industrialized world
in the global economy," IMF deputy managing director Stanley Fischer said in a
speech here. 
But he added that the government of Prime Minister Yevgeny Primakov "needs to
first reestablish macroeconomic stability" by implementing a budget that will
generate a surplus sufficient to meet interest payments on its debt. 
Fischer stressed that Russia also needed to simplify its tax code but said he
was "worried" about proposals to lower taxes without first improving
collection methods. 
The government must also restructure its industrial and banking sectors, he
said. 
The IMF earlier this month failed to grant additional credits to Russia to
help shore up its economy but said a mission from the fund would return to
Moscow in January to reassess the government's long-term policies and
prospects. 

******

#10
Jamestown Foundation Monitor
December 11, 1998

RUSSIAN LAWMAKERS CONTINUE TO NAYSAY START II RATIFICATION. Among the
positive outcomes of the December 9 talks in Brussels between Russian
Foreign Minister Igor Ivanov and U.S. Secretary of State Madeleine Albright
were assurances given by Moscow that Russia's parliament would soon ratify
the START II strategic arms treaty. According to Albright, Ivanov told her
that the Russian parliament would likely ratify the treaty by the end of
this month. U.S. officials, moreover, reportedly described Ivanov's message
to Albright as one of the most promising to come out of Moscow in recent
years on the subject of nuclear disarmament (Washington Post, December 10;
International agencies, December 9). It was at least in part on that basis,
presumably, that Albright made the decision to travel to Moscow next month
to launch talks aimed at drafting a follow-up START III treaty which will
mandate nuclear arms reductions beyond those contained in START II.

Ivanov's assurances to Albright notwithstanding, however, there have been
indications in Moscow this week that Russian lawmakers may in fact not yet
be ready to move on START II ratification. On December 8, for example, the
Russian Duma again postponed discussions which were to have been held on the
treaty (see the Monitor, December 9). A day later, the chairman of the
Duma's Geopolitics Committee, Aleksei Mitrofanov, said that though Duma
members are now closer to ratification than they were a year ago, lawmakers
on the whole remain more inclined "to say no than to say yes" to the treaty.
Mitrofanov's committee is one of several responsible for the drafting of a
new treaty ratification bill which many in Moscow thought would win quick
approval by legislators (Itar-Tass, December 9).

Yesterday, moreover, lawmakers appeared to take a step back in their
deliberations on the treaty. In hearings initiated by the Duma's "Anti-NATO
Group," Russian lawmakers reportedly tied ratification of START II to both
NATO enlargement and the Western alliance's plans for reform. In a draft
recommendation drawn up by lawmakers, START II ratification was made
conditional on the establishment of international guarantees that NATO would
not expand to the east and that the alliance would not act in a fashion
threatening to Moscow.

Legislators who attended the hearings appeared also to tie ratification, at
least indirectly, to the alliance's policies toward Yugoslavia and the
Kosovo crisis. They said that NATO activities in the Balkans represented
"interference in the internal affairs" of the Yugoslav government. In that
vein, lawmakers recommended that the Russian government consider offering
military aid to Yugoslavia and terminating Russian cooperation with
NATO--under the aegis of both the Partnership for Peace program and the
NATO-Russian Founding Act (Russian agencies, December 10).

It is unclear whether yesterday's hearings represented a new hardening in
the position of most Russian lawmakers on START II, or whether they were
simply an exercise in eleventh-hour political posturing by disgruntled
hardliners. But the rhetoric heard yesterday--and especially the linkage of
START II ratification to a grab-bag of other foreign policy issues--is
reminiscent of the manner in which Russian lawmakers have stonewalled
ratification to date. It also suggests that treaty ratification may in fact
not yet be a done deal, and that the Russian government will have to step up
its lobbying efforts to ensure that ratification comes to pass. Indeed,
Russian First Deputy Prime Minister Yuri Maslyukov warned legislators on
December 9 not to link treaty ratification to discussions of the 1999 state
budget, a development which would certainly complicate efforts to win
approval for the treaty (Itar-Tass, December 9).

*******

#11
Excerpt
From: "Alexey V.Kozyrev" <alexa@fednews.ru>
Date: Fri, 11 Dec 1998 
Subject:INTERVIEW WITH PRIME MINISTER YEVGENY PRIMAKOV

TITLE: INTERVIEW WITH PRIME MINISTER YEVGENY PRIMAKOV
(NEZAVISIMAYA GAZETA, P. 1, 8, DECEMBER 9, 1998)
SOURCE: FEDERAL NEWS SERVICE [www.fednews.ru)

YEVGENY PRIMAKOV: "WE ARE ABSOLUTELY NOT RETREATING FROM MARKET
TRANSFORMATIONS IN SOCIETY"
(Interviewed by Vitaly Tretyakov)
IN HIS INTERVIEW TO THE NEZAVISIMAYA GAZETA EDITOR-IN-
CHIEF THE CHAIRMAN OF THE RUSSIAN GOVERNMENT ONCE AGAIN 
CONFIRMED HIS RELUCTANCE TO THINK ABOUT THE POST OF PRESIDENT

Yevgeny Maximovich Primakov received me on December 5,
Saturday, at noon. The White House was almost empty. And the Prime
Minister's waiting room for visitors as well. Exactly at the
appointed time his deputies Kulik and Bulgak left his office and I
entered it. We talked with Yevgeny Maximovich for half an hour
without recording the conversation. The Prime Minister displayed a
very good knowledge of what the press writes about him and his
government.
In addition to this I must inform our readers that Yevgeny
Primakov is one of the most difficult politicians to interview. He
says only what he wants to say and it is virtually impossible to
get anything over and above that out of him, especially if a tape
recording is being made.
Q: Yevgeny Maximovich, I will start with a question that
concerns a sentence that you often repeat these days. That our main
problem is not the economic crisis, not the political crisis but
the crisis of credibility. How are you and your government planning
to overcome this credibility crisis?
A: That's a good question. I think that we are already doing
something to overcome this credibility crisis, although I am aware
of our limitations. We are yet to do a huge number of things. We
declared that we do not regard ourselves as bankrupts and that we
will pay our debts. Many in the West thought that we would act like
our predecessors who had unilaterally simply refused to pay the
debts and proclaimed a unilateral moratorium. Some even thought
that we could act in the same way as the Bolsheviks did in 1917.
Simply refuse to return any debts. But we announced at once, in
fact, one of my first statements in the post of Prime Minister was
devoted to this, I said that we will pay our debts, both internal
and external. And we definitely will repay our foreign partners the
credits that we got from them and the same goes for our domestic
donors. It is another matter that we will not be able to pay
everything at once. Because, for instance, when we joined the
government we inherited only a foreign debt of 17.5 billion dollars
that we will have to pay already next year. Seventeen and a half
billion dollars! This compares with the entire revenue part of our
budget. We cannot pay so much at present. So the question of
restructuring our debt was raised and, luckily, we have come to
terms with the London Club. They treated us with consideration. I
hope we will reach an agreement with the Paris Club as well. Of
course, there are foreign debts which we must pay and will pay
without any restructuring. There are also debts that can be
restructured, in particular, the Soviet debts. As to Russian debts,
we will have to discuss this separately.
Well, this is first. Secondly, the very policy of introducing
order in economic relations in the process of the assertion of the
market should generate more trust. For instance, we should not
engage in privatization just for the sake of some financial goals.
The more so in a way when everything is sold for a song and winds
up mostly in the hands of some individuals. If the government were
setting itself the task of redividing property, as some politicians
are suggesting, it would have been sufficient for us just to
announce this publicly and the whole of society would have agreed
with us. But we will not take such a step because, firstly, this
will harm the economy -- we have a whole number of well-performing
privatized enterprises. Secondly, we did not do this because this
could turn out to be a bloody redivision of property. But I can say
for certain that we will no longer have the privatization of the
kind that we had before. Is this not a way of restoring
credibility? Or, for instance, the fight against crime. I spoke
about this when I addressed the governors. I responded to
lamentations that some officials are being subjected to
investigation. I said that we should not have procrastinated
investigations and long preliminary detention. At the same time no
post whatsoever should protect a person from responsibility if he
commits some crime, if he violates the law. Is this not a road to
restoring trust? Because of past practices a caste of untouchables
has formed in our society. In India, as you know, the untouchables
are the lowest caste while in our country the untouchables are the
highest caste. By breaking this mechanism we will also restore
credibility. If we say, for instance, that regardless of posts held
or the importance of some enterprise we will prosecute for shady
dealings, this is also a restoration of credibility.
Take, for instance, the uncovered scams with sand. They were
supposedly selling quarry sand to each other. If all this sand were
put into freight cars this would add up to 20,000 freight trains.
But the quarries had nothing to do with this. Those guilty of this
fraud have now started making payments into the budget. They owe a
tremendous sum for VAT. We have already won our first case in the
court of arbitration. And if all the debts to the budget are not
paid immediately then, regardless of personalities, we will demand
the opening of criminal cases. This was a swindle that was
practiced throughout the country. Insurance companies were behind
this. Can this be described as a market? And since we are against
this, since the government has taken action, and Georgy Boos has
played the main role here -- I must say that he has started his
work in his new post very well -- is this not a restoration of
society's trust? It seems to me that it is only thus that we can
restore credibility.
Q: All this correct. But for the majority of the population
the important things are very simple: we must restore some trust in
the ruble because the ruble has been devalued, people are now being
paid the same wages as before August 17 but can buy much less for
what they get. Until the reverse process begins, there will be no
faith in the government.
A: I fully agree with you. This is one of the main elements of
credibility. But this cannot be done overnight. Because when we
came to the White House we found that the Pension Fund had a debt
of 35 billion rubles. Thirty five billion rubles! This is a huge
sum. In order to rectify the situation... We are paying current
pensions just as we are paying current wages in the public sector,
current wages of servicemen and employees of law enforcement
agencies. But we also must pay our debts. I told you honestly that
we cannot pay out these debts overnight. We definitely will do this
in the first half of next year, we will pay all our debts to the
pensioners and other categories of the population much earlier. I
think that honesty is also a way of restoring trust. 
You mentioned the problem of indexing. We will be doing this
to the extent that our resources and possibilities allow us. We are
now trying, for instance, to do a lot for the recovery of the real
economy. What model did we have in the past? We exploited the 
very high price for energy resources, sold oil and gas and bought
finished products. As a result domestic production collapsed. At
the same time a certain stabilization was being established on the
macro level, but it became an end in itself. We are like addicts.
Because we still do not have enough money, we have to go around
with an outstretched hand and we are handed out money. But now
Camdessus has asked: how have you spent this money? 
Q: But that is a strange thing for him to ask. He constantly
worked with all the previous governments... 
A: He constantly worked with the government and at the same
time he is of the opinion that at least a part of this money ought
to have been spent on the creation and development of the country's
economic base so that we could stop taking credits. He said they
are going to judge the government's performance as follows: will
you be developing your economy with an eye to the future, with due
account for the need to definitely get certain sums in the form of
credits, credits for the development of industry, agriculture, the
implementation of some federal or regional projects, or will you
seek credits just to pay wages, salaries, pensions and so on? 
Q: But in the past they provided money for this. Everybody
knew that IMF money was spent precisely on this... 
A: I do not want to polemize with you on this. I want to say
in no uncertain terms that we will be doing everything to restore
our real economy. When I speak about protection of the domestic
commodity producer I want everybody to understand that this should
not be perceived as any opposition to foreign participation, as our
desire to isolate the country and withdraw it from the world
economy. Look how Germany recovered after World War II under 
Ludwig Erhard. 
True, it was easier for them. They had the Marshall Plan. What
did Erhard do? Erhard directed absolutely everything into the
economy and this economy was created on the territory of Germany.
It created employment in Germany, generated revenue in the form of
taxes and so on. But this did not mean that Germany was isolating
itself from the rest of the world. I would like to say that we will
be doing everything precisely on such a basis. Of course, we will
index incomes. The moment we get some possibilities to do this. And
this is necessary because people indeed are tightening their belts.
But at present the main thing for us is for people at least to be
paid their wages. This is a rudimentary human right. But at the
same time I want to tell you that 80 percent of the wage arrears
are not in the public sector. Eighty percent! What does this mean?
It means that it is thus that the market economy is working. Not
market economy in general but the market economy that has been
created here in Russia. This means that 80 percent of gainfully
employed people are not being paid wages at the enterprises where
they work. And these enterprises do not belong to the state.... 
Q: I have a feeling that at least the Moscow public cannot
fathom the main elements of your government's economic policy. Some
say that there are too many leftist things in it, that there is too
much government administration. It could be a good thing, perhaps,
but to make matters worse, we do not know how to introduce this
regulation because the state apparatus is largely in shambles and
there is no discipline. On the other hand, this appears to be a
departure from the market. Could you name at least some three or
four main principles of your government's economic policy? 
A: There is no departure from the market. If we were to carry
out a large-scale nationalization this would have been a departure
from the market. But nothing of the sort is happening. We have not
nationalized the banks and we have not nationalized a single
enterprise. Many bank managers that are now deep in trouble came to
us and asked to be nationalized. These are structure-forming 
banks. These are very strong banks. They have a ramified network
throughout Russia. But we did not accept their requests. We did
this for two reasons. Firstly, we have no money for this. You see.
we would have to take over these banks together with their debts.
And, secondly, and most important, we do not want to create a state
banking system. On the other hand, the state will have its banks
within this system. It was predicted that there will be no free
exchange of dollars. This free exchange remains. It was predicted
that there will be a fixed rate of the ruble. We don't have one. On
a floating basis the ruble establishes its correlation with the
dollar. It was predicted that we will deprivatize enterprises. This
is not so. In some instances, of course, we will question some
things, but only by recourse to the courts if there are violations
of the law. It was also predicted that we will refuse to pay our
debts, that we will violate the existing legislation. I can list a
lot of such predictions. And none of them proved true. This shows
that we absolutely are not retreating from market transformations
in society. But at the same time the influence of the state must be
strengthened. I am somewhat surprised when a clearly expressed
program for the future is demanded of us in conditions when the
prime thing that we should do is to take the country out of its
present situation. Nobody asked the previous government about the
economic line it intended to pursue. Have you in your newspaper
ever asked those governments about their economic line? And they
would have answered that they were building a market economy. So,
likewise, we are saying that we are building a socially-oriented
market with government participation because without this it is
impossible to build a really civilized market, not a market for
thieves. Such is our position....

********

 

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