December 16, 1998    
This Date's Issues: 2520 • 2521 • 

Johnson's Russia List
#2521
16 December 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Konstantin Evdokimov: Kirienko's web site.
2. UN/ECE PRESS RELEASE: THE RUSSIAN CRISIS: BY NO MEANS A UNIQUE EVENT.
The United Nations Economic Commission for Europe announces the publication
of the third issue of its 1998 Economic Survey of Europe.
3. Cameron Sawyer: Re 2519-Buzgalin/Anti-Semitism.
4. PRESS CONFERENCE WITH YEGOR GAIDAR, SERGEI KIRIYENKO, BORIS NEMTSOV, 
ANATOLY CHUBAIS AND OTHER DEMOCRATIC COALITION ORGANIZING COMMITTEE 
OFFICIALS. Moscow, December 10, 1998.]

******

#1
From: "Konstantin Evdokimov" <evdokim@gis.net>
Subject: Kirienko
Date: Tue, 15 Dec 1998

JRL dedicated a susbstantial amount of space recently to Kirienko's
appearance at Harvard. Those of your readers who missed his presentations in
the US may find it interesting to check Kirienko's and his "New Force"
movement's web site: http://www.kirienko.ru/english/index.html, that was put
up on December 12. Unfortunately, you have to be able to understand Russian
to read all materials posted there. It illustrates many of the points made
by JRL's contributors.

*******

#2
Excerpt
UN/ECE PRESS RELEASE 
WEDNESDAY, 16 DECEMBER 1998
THE RUSSIAN CRISIS: BY NO MEANS A UNIQUE EVENT
The United Nations Economic Commission for Europe announces the publication
of the third issue of its 1998 Economic Survey of Europe
[DJ: Full text of report at http://www.unece.org/ead/pub/survey.htm]

The third issue of the Economic Survey of Europe published by the United
Nations Economic Commission for Europe (UN/ECE) provides in its chapter 1 an
overview of economic developments in 1998 and discusses at length the policy
implications of the Russian crisis. It also suggests some preliminary steps
forward. Chapter 2 discusses the economic situation in more detail in the
western market economies and in the transition economies of eastern Europe,
the Baltic states, and the CIS. Particular attention is given to an analysis
of the origins and unfolding of the Russian crisis and its impact on other
transition economies. Chapter 3 reviews international trade developments in
eastern Europe, the Baltics and the CIS; and chapter 4 looks at the
development of current account balances and their financing, especially in the
wake of the Asian and Russian crises. Chapter 5 examines the attempts to
create a system of Production Sharing Agreements in Russia which, in their
promise and relative failure, illustrate at a micro-level many of the problems
which have held back the reform of the Russian economy. Finally, the Survey
contains a Statistical Appendix containing long time-series for the principal
macroeconomic variables in the ECE member countries. These tables, as well as
those in the text, reflect revisions and updates made by national statistical
offices and available to the secretariat as of mid-November 1998.

Lessons of the Russian crisis

This issue of the Economic Survey of Europe devotes particular attention to
the Russian crisis (pp. 7-13 and pp. 31-41). It concludes that the policy
course that has been followed so far has led precisely to the present
unpromising situation, and thus a fundamental reappraisal is necessary. The
standard policy prescriptions which were followed in Russia turned out, given
the institutional setting and the difficult initial conditions prevailing in
the country, not simply to be ineffective, but to give increasingly perverse
results which moved the country further and further away from establishing
effectual free markets and stable government.
There is wide agreement that a major fiscal imbalance was the proximate cause
of the present Russian financial crisis. But the persistent fiscal problem is
itself the consequence of the grave, and the more fundamental problems of the
process of economic and political change in Russia. Essentially, the crisis
reflects major failures in the actual Russian transformation model. The
Russian fiscal dilemma was made progressively more, not less, acute by the
policy mix adopted in 1995, and the actual dynamics of the particular
stabilization recipe in fact led to an increase in the budget deficit rather
than its reduction. The perverse incentives generated by macroeconomic policy,
moreover, were magnified by the deeply flawed privatization process which
produced a private ownership structure which neither encouraged effective
corporate governance nor the efficient allocation of resources.
Given the profoundly inappropriate character of so much of the Russian
institutional infrastructure for the new market environment, disinflation
turned out to be a more easily achievable goal, given the operational policy
levers actually available to policy makers. The increasingly excessive
emphasis on price stabilization necessitated increasing monetary austerity as
the commitment to what became, in effect, an exchange rate anchor, involved a
further policy commitment to high interest rates. To help complete this
particular vicious circle, the higher interest rates raised the cost of debt
service, and thus increased the fiscal burden. This process ruled out a return
to growth, and fixed investment has continued to fall throughout the entire
period.
Whilst there is little doubt that there has been some concealment of
corporate
profits, particularly in light of the continued complex and arbitrary tax
structures, aggregate corporate profits have actually fallen. Enterprises and
regions increasingly resort to monetary surrogates and barter, further
extending the demonetization of the economy. All this has continued to shrink
the tax base. The issue of non-payment of taxes by the important energy sector
further reveals the unusual character of the Russian fiscal dilemma. The
popular perception that arrogant oil and gas barons were simply unwilling to
pay the taxes they owed needs some correction. In the complex Russian tangle
of non-payment, the government also came to demand effectively that energy be
provided free of charge (that is, with no disconnection for non-payment) to a
substantial proportion of users.
In sum, the path taken in an attempt to restore fiscal balance in Russia
since
1995 has proved to be counterproductive and, in the end, has resulted in a
disastrous financial and political crisis. In this unpromising atmosphere, it
is easy to be paralysed by the sheer scale of the problems, yet positive first
steps can lead to others, provided that there is an overall sense of
direction. The greatest source of disorientation, however, has come from the
belief that economic policies can be advocated in an institutional vacuum. A
critical lesson which emerges yet again from consideration of the Russian
crisis is that active assistance in the creation of appropriate institutions
should never have been relegated to the rank of "second-generation" transition
issues.
The implementation of any set of economic policies must perforce be done
through institutions, the state and its public administration. Arguably the
most serious consequence of the "policy overshooting" on transformation issues
was the widespread and deliberate downgrading of the role of the state. Even
for the establishment of an effective fiscal administration, there will be
little progress without the creation of a professional civil service, a
functioning public administration, and the development of broader societal
attitudes regarding the legitimacy of the state and of its right to levy
taxes. It is evident that the gap which must be bridged in this respect is
substantially greater for Russia and other countries of the CIS than for most
of the states of central and eastern Europe.
The Survey argues (pp. 10-11) that the policy impasse, however desperate it
may appear at present, can be broken by articulating a coherent and long-term
strategy to tackle these myriad problems. A carefully sequenced programme is
needed in which high priority must be given to creating the key institutional
foundations of the market economy and for changing the structure of incentives
so as to encourage entrepreneurship and fixed investment. The precise content
should be decided by the Russians themselves, but it must be designed to
convince the G-7 and the Russian public of the credibility of the strategy and
therefore attract the necessary financial and popular support for the
programme. This will be costly B but there are no qUick solutions, and further
delay will be even more costly.
The Russian crisis is by no means a unique event. Recent cases of economic
distress in other transition economies (for example Bulgaria, Romania and some
of the CIS countries, especially Ukraine and the Republic of Moldova) in fact
have much in common. The 1997 exchange rate crisis in the Czech Republic
although not so acute and devastating was also symptomatic of important,
transformation-specific economic weaknesses and was followed by a painful
economic downturn. A common feature is that the causes of these crises are
deep-rooted in the microeconomics of transition. The principal microeconomic
factors that have led to macroeconomic distress during the transition are
often related to market distortions and/or the malfunctioning of markets;
perverse incentives and the perverse behaviour of economic agents; weak or
poorly functioning regulatory, judicial and other state institutions; weakness
and poor regulation of the banking system; and inherent inefficiencies in the
corporate sector of the economy. The lesson here is that without microeconomic
reforms macroeconomic stabilization is likely to be short-lived and may even
produce perverse effects; but without a reasonable degree of macroeconomic
stability, the micro-reforms may not be undertaken.
Russia's experience has once again highlighted the daunting policy task of
restructuring and rehabilitating the corporate sector in many transition
countries. The lack of satisfactory progress in structural reforms in some
transition economies, especially in dealing with unviable enterprises, has
often been due not so much to a lack of understanding of the problems and an
absence of "political will" to address them, but to the very severe political
and resource constraints stemming from the sheer magnitude of the required
restructuring effort. The existence of a large, critical mass of unviable
firms is a major stumbling block to the successful implementation of the whole
transformation policy agenda. Its restructuring will continue to require
special efforts not only by national policy makers but also by the
international community at large....

For any further information and queries please contact:
Economic Analysis Division
United Nations Economic Commission for Europe (UN/ECE)
Palais des Nations
CH B 1211 Geneva 10, Switzerland
Tel: + + (4122) 9172718
Fax: + + (4122) 9170309
E-mail: info.deap@unece.org

*******

#3
Date: Tue, 15 Dec 1998 
From: "Cameron F. Sawyer" <sawyerco@matrix.ru> 
Subject: RE: 2519-Buzgalin/Anti-Semitism

Aleksandr Buzgalin's "ANTI-SEMITISM: THE TRAGIC CONSEQUENCE OF A CRISIS IN
THE SYSTEM" is very clever, sometimes well-reasoned, and sometimes true.
Nevertheless, the general line of argument really boils down to a subtle
and characteristically Russian blaming game, and leads to the wrong
conclusions.
Yes, the reaction in Moscow to Makashov's anti-Semitic bloopers was
hysterical. Yes, it is somewhat unfair to accuse the KPRF of being the
only anti-Semitic force in Russia today, and accuse all Communists of
being, essentially, fascists. Yes, anti-Semitism has a long and ugly
history in Russia, and the current government is not completely innocent.
But then comes the characteristically Russian (let it not be logical, so
long as it is deeply felt) nonsequitur: it is understandable for people to
feel anti-Semitism, because Jews are the very sponsors of the current
regime and of the reforms. Huh??!!
One cannot properly understand the passionate anti-Communism of the Russian
media, or the hysterical reaction to Makashov's anti-Semitic remarks in the
Duma, without keeping in mind the fact that Russia suffers from the same
kind of division in society that many other countries suffer from, namely
between the opinion elites and ordinary citizens. Your ordinary average
vodka-guzzling Russian, in my experience, is likely to feel a certain
amount of usually rather mild anti-Semitism, and is likely to feel that the
oligarchs have ripped off the country and therefore him. He is likely not
to think too much about Yeltsin, much less Chubais, Gaidar, or Fyodorov.
But that does not make him particularly inclined to support the KPRF, and
one shouldn't think that he is merely brainwashed by the Russian media.
Zyuganov, according to a new poll I just saw, is indeed the most popular
potential presidential candidate. But he only enjoys the support of about
20% of the population. He is opposed by almost the whole rest of the
population. The next most popular candidate, just a couple of points
behind Zyuganov is - guess who? - Yavlinksy, a Jew! Almost every other
figure who registers on the radar is more or less anti-Communist.
The opinion elites in this country are not Jews, at least not most of them.
They are a different, and no less distinct or influential class of people:
Muscovite (and to a much lesser extent, these days, Petersburg)
intellectuals, a class of people as highly educated and cultivated as any
in the world (or more so, if you take their own opinions about themselves).
These are practically a different species from your factory worker in,
say, Ryazan. These people are skeptical and critical about Yeltsin, but
have always generally supported him, respect Yavlinsky a lot more than he
deserves, and ridicule Zhirinovksy. And most of all, they hate
Communists, more so than did Joe McCarthy or Ronald Reagan. They hate
Communists with a passion, and for good reason - Communists, starting with
Lenin, systematically oppressed and attempted to physically eliminate the
entire class of Muscovite intellectuals, murdering millions of them and
exiling millions more, spying on them and strictly controlling all of their
activities. The burden of oppression during Communism fell hardest on this
group of people, not on average people. I suppose everyone knows about
Lenin's infamous telegram, during the Red Terror, rebuking his Red Guard
death squads for softness, and urging them to shoot more professors and
teachers.
So it is absolutely true, as Buzgalin suggests, that the whole Russian
media (other than that bought and controlled by the KPRF, like RTR) is
biased against Communists, and with a passion. But not for the reasons he
says. Maybe Communists are not all fascists, but Russian Communists are
definitely throwbacks. The souls of the Russian people have passed them by
- even today, under hideous conditions, where people in Ryazan are reported
to be eating dogs, and when everyone knows that all the oligarchs are Jews,
and are fabulously rich, there are no pogroms. And there is no serious,
organized fascist movement against which liberals have any reason to lock
arms with the Communists. Nor are the Communists blamed for everything, as
Buzgalin suggests, nor are there such sharp policy differences in the Duma
as Buzgalin suggests. Buzgalin gives the impression that the Communists
are fighting courageous battles in the Duma against capital flight and
other injustices of the reform period. In fact, Communists in the Duma
spend most of their time promoting generally serious, technocratic,
detail-oriented legislation, and cooperate with the government. Communists
make efficient bureaucrats, and many of their proposals are responsible.
Their position on taxes is actually more enlightened that that of the
government and of many liberals. But their rhetoric, coldly calculated to
arouse resentment and passion among Russians in the provinces, seems
anachronistic and simply doesn't strike any chords.
In short, the KPRF is not really a victim of the Russian media - it just
does not much inspire the imagination of the Russian people. The KPRF
lacks a figure, and lost their great opportunity when they alienated
Luzhkov over Makashov's anti-Semitic statements. Their hour has arrived,
and they appear to be wasting it. Zyuganov, it seems, is no Lenin, and
they have been unable to make a deal with Luzhkov, who might at least have
been their Trotsky [Trotsky was co-opted by the Bolsheviks from another
party not long before the Revolution, especially for his magnetic
leadership and organizational abilities]. Buzgalin is hallucinating if he
thinks that anyone in Russia outside his narrow circle of Western-inspired
friends gives a damn about "democratic socialism". There is not any "left
wing" such as Buzgalin describes, of any significance, outside of the KPRF
and splinter groups, and there is no "market-oriented" fascist right wing,
either. The only significant leftist outside of the organized Communist
groups is Yavlinsky himself (who, by the way, is not as much a liberal as
most people think). "Democratic socialism" is a refined, intellectualized
political faction which can spread only among an entrenched intelligentsia
(such as in New York or Cambridge). The entrenched intelligentsia in
Russia is in Moscow, and hates Communists and everything Communist the way
Jews hate Nazis, and for similar reasons. 
The political spectrum in Russia at present is divided up on generally
pragmatic lines - there are, on one extreme, fascists and nationalist
blowhards who tend to be more hostile to liberalism and a market economy
the more extreme their other views tend to be, and on the other side there
are leftists with varying degrees of hostility to liberalism and with an
increasingly fascist flavor as you go down the spectrum. But you have to
go rather far down the spectrum, towards either the left or the right, to
find any wholesale opposition to the basic liberal tenants of democracy and
a market economy. It is unfair to simply call all Communists fascists,
but in fact there are few ideological differences between the two extremes
of the spectrum. They are separated mostly by their style of working -
Communists, at least the mainstream party, are very conservative, very
cautious, technocratically oriented, and are surprisingly scrupulous about
the Constitution. Fascists, on the other hand, don't really have any
mainstream party, unless you count the LDPR, but the LDPR is really fascist
only in the clownish antics of Zhirinovksy. The LDPR as a party is rather
technocratic and bland, generally supports the government, and appears to
have no ideas whatsoever.
And in fact it is quite amazing the extent to which basic ideas of
democracy and a market economy continue to go unquestioned in Russia, after
market and democratic reforms have produced such a spectacular failure. No
matter how many times the cabinet is changed, no matter what new faces
appear in the government, no matter how many times an end to "market
romanticism" is formally declared, the basic liberal direction of the
country is not changed. Russia is entering its darkest hour [did I use
that cliché already?], and there may yet be a political cataclysm. But so
far there is no sign of that, and if Russia gets through 1999 as a
democratic and capitalistic country, I believe it will never go back.
By the way, how did you like Buzgalin's warning that we had better not make
too much of a scandal about anti-Semitism, or else Jews will get blamed for
the crisis? What a troglodyte, masquerading as a "leftist intellectual".
I think we can safely ignore Buzgalin and his ilk; as far as I can tell he
does not speak for anyone in Russia today. He ought to move to New York
and write for The Nation.

*******

#4
Excerpt
Date: Tue, 15 Dec 1998
From: "Alexey V.Kozyrev" <alexa@fednews.ru> )
Subject: FNS: DEMOCRATIC COALITION MEETING
[DJ: Visit the FNS Kremlin wire at http://www.fednews.ru]

TITLE: PRESS CONFERENCE WITH YEGOR GAIDAR, SERGEI KIRIYENKO, BORIS
NEMTSOV, ANATOLY CHUBAIS AND OTHER DEMOCRATIC COALITION ORGANIZING 
COMMITTEE OFFICIALS (PRESIDENT HOTEL, 14:30, DECEMBER 10, 1998)
SOURCE: FEDERAL NEWS SERVICE

Nemtsov: Dear colleagues, the meeting of the Organizing
Committee to set up the right-center coalition has just ended. A
most important step has been taken on the road to uniting all the
right-center forces in our country.
We adopted two very serious documents. The first concerns the
organization of our work. We adopted the statute of the Organizing
Committee. After a rather lengthy debate we adopted the second
document -- a statement. It will be available for publication in a
matter of hours after the editorial commission makes the 
amendments
in it for which we had voted. The most important amendment was
suggested by Mikhail Mikhailovich Zhvanetsky.
The statute of the Organizing Committee says that a
Coordinating Council is being established. It consists of leaders
of socio-political parties and movements that have the right to
take part in the elections to the State Duma, as well as the heads
of the commissions who were elected at the meeting of the
Organizing Committee.
Alexander Nikolayevich Yakovlev was unanimously elected head
of the commission for political matters of interaction with
political parties and public organizations. The commission for
organization is headed by Anatoly Borisovich Chubais. The regional
commission will be headed by me. The commission for economic
matters will work under the leadership of Boris Grigoryevich
Fyodorov. The program commission will be headed by Yegor 
Gaidar. 
It was also unanimously decided to include in the Coordinating
Council Sergei Vladilenovich Kiriyenko. We also decided that the
composition of the Coordinating Council may consist not only of
leaders of socio-political parties and movements and heads of
commissions but also of personalities who get the support of the
Organizing Committee.
So we now have a working body, the Coordinating Council,
which, I believe, will quickly get down to work. Somewhat later you
will be handed out a press release. And now you are welcome to 
put your questions.

Q: (Off mike.)
Chubais: Frankly, I have not yet heard such statements.
Speaking of my position, it is that our country absolutely needs
interaction with international financial institutions. To achieve
this interaction both sides must take steps towards each other. The
Russian government must make steps in their direction and the
international financial institutions must take steps in the
direction of Russia.

Q: Sovershenno Sekretno. I have a question to Boris Yefimovich
Nemtsov. Specialists say that your newborn movement will have for
some time a low rating. But only a year remains before the
elections. What are the sources of financing your election
campaign? What are the sources for financing your day-to-day
activities? You will have to travel, you will have to have offices,
security guards and so on.
Nemtsov: We have not discussed these extremely important
questions yet. But I do not expect our movement to experience any
problems with financing. Simply because we have a huge number of
Russian businessmen behind us. There already not hundreds of
thousands but millions of entrepreneurs in Russian now. We do not
intend to accept money from oligarchic structures and monopolies.
We do not want to have any binding obligations to them. 
We also believe that our movement will be a popular one, that
we will live on membership dues. I do not expect any serious
problems to arise.
As to the low rating that you mentioned, public opinion polls
point to the opposite. They say that if we stay together, that if
we form the election list not bureaucratically but primarily by
studying public opinion, then we have very good chances to be the
biggest democratic organization in the State Duma.
Indeed, the problem of leadership is a very serious one. But
we believe that this problem should be resolved democratically. The
list should be headed by the one of us who has the biggest trust of
the electorate. The second name should be of the person whose
credibility level is high but lower than that of the previous
person, and so on.
If lists are thus formed on the federal level and on the
regional level, I assure you, we will have very good chances to win
a majority in the State Duma. 

Q: NTV. Speaking of allies. How do you plan to cooperate with
the YABLOKO faction? What can you say about Yavlinsky's statement
that the creation of your coalition will split the electorate and
you will fail to secure enough votes to get into the Duma? As a
result, the interests of many democratic-minded voters will not be
represented in the Duma again.
Nemtsov: We are doomed to secure seats in the Duma. We are
absolutely open for cooperation, including with YABLOKO. We do not
have differences over fundamental issues. We are against the sway
of crime and fascism in the country, we are against censorship in
the Russian Federation, we want everybody to be in equal
conditions, we are for a competitive market economy with uniform
rules for everybody. 
I think our movement has good possibilities for closer
contacts. There are also some obstacles. They can be described 
as follows -- the political ambitions of certain leaders. Such
obstacles do exist. But it seems to me that in the name of Russia's
revival these are not the biggest of obstacles, that we will be
able to overcome them.
More than that, we agreed today that questions of interaction
with other organizations and parties will be in the center of our
attention. A special commission has been set up for this purpose.
Besides, Sergei Vladilenovich Kiriyenko expressed the desire, and
we supported him, to take part in this process. I mean in the talks
with all the political parties and movements that are close to us
ideologically.
With whom we will not be able to come to terms? With fascist
and nationalistic organizations. We are not likely to find a common
tongue with communist organizations. Frankly, we do not need 
that. 
As to the rest, we are really open for cooperation and I think
that this cooperation will be constructive and fruitful and produce
results as we approach the elections. 

Q: Otkrytoye Radio. What is the name of your organization? We
heard that it is Just Cause. What movements have already joined
you? Are you a movement or a bloc? When will you elect your 
leader?
Nemtsov: We have not discussed the name so far. So far the
name is Organizing Committee to set up a right-center coalition, or
a coalition of democratic forces. This is not the name that will be
written in the election ballots. The question of the name of our
organization, of course, is an important one. At a meeting of
prominent personalities, prominent cultural figures such questions
are not solved. Of course, our movement will have a name. I do not
see any particular problems here.
What political parties have taken part? The meeting of the
Organizing Committee was attended by representatives of the Party
of Constitutional Democrats, the Youth Union of Russia's Democratic
Choice, the movement Democratic Russia, the Peasant Party, the
Moscow Helsinki Group, the Congress of Intellectuals, the Right
Center Youth Association, the All-Russian Association of Privatized
and Private Enterprises, the National Collegium of Evaluators, the
Russian Guild of Realtors. 
Our work was also attended by the governor of Tver oblast
Vladimir Ignatyevich Platov. He was unanimously included in the
Coordinating Council. The head of the Moscow City Duma Vladimir
Mikhailovich Platonov also took part. Also a whole number of mayors
of Russian towns. For instance, the mayor of Abakan Bulakin, the
mayor of Tambov Ilyin, the mayor of Togliatti Zhilkin, the mayor of
Tver Belousov.
Among other participants there were representatives of Kuzbass
workers committees and many people who are prominent in culture and
the arts. You must have seen them when you entered the hall at 11
this morning.

Q: A question that I wanted to put yesterday but without
success. The demonstration staged yesterday by the left-wing forces
once again, what do you think about that? Is this just an instinct
or are they acting in a calculated way? Was that directed only
against you? Can this be described as anti-Semitism? Or are they
against modernization of the country?
Chubais: Old love does not rust, as the saying has it. If I am
to speak seriously, frankly, nothing of importance had actually
happened. You see, all the decisions were adopted and even
announced before the Duma session. The session just rubber-stamped
what the Central Committee of our Communist Party had decided a 
day before.
Actually, it was not a coincidence that it had been done a day
before today's event. As far as I understand this is traditional
Communist wording -- to relieve one of his duties for anti-Soviet
activities.

Nemtsov: I am sorry, I did not name the Republican Party among
the members of the organizing committee. I am sorry. And also the
Forward Russia movement. I am now correcting this mistake. And I
also forgot to name the Party of Social Democracy.

Q: We all know that the last straw that made you create the
coalition was the murder of Galina Starovoitova. Did you discuss
how this could be reflected in the name of your bloc? And when you
spoke about prospects, did you take into account the results of
elections in St. Petersburg?
Chubais: As Boris Yefimovich has said, we did not discuss the
name. We observed a minute of silence in memory of Galina
Vasilyevna Starovoitova. But we did not discuss the name.
As for the results of elections in St. Petersburg, I think
there are only preliminary results. And they show who has lost. The
communists have lost. They have suffered a devastating defeat. The
bandits have lost. Almost none of their candidates won in St.
Petersburg. We will discuss the final results after the second
round.

Q: How can ordinary people join your movement? Where should
they turn to and how will this be done?
Chubais: We need a small organizational period to find
premises. When this is done, we will immediately use all available
information channels to inform regions where and who they should
turn to. Give us some time to do this.

Q: What is the correct name your bloc -- a democratic
coalition and center-right coalition? And who proposed to delete
the words "Our Cause is Rightful" from the text? Or did you have
any doubts about this?
Nemtsov: You can name it either way, whichever suits you 
more. This is as far as the first question is concerned.
On your second question, we voted on whether the phrase "Our
Cause is Rightful" should be removed or not. The vote was that it
be deleted. That's all. It was a democratic decision.

Q: How are you going to register the coalition technically
because only 10 days are left before December 19. Secondly, is
Khakamada, who is not here today, with you or not?
Nemtsov: She is just not in Moscow at the moment. As for
registration, we do not need to register the bloc by December 19.
The thing is that this a bloc of parties and movements which have
the right to participate in elections. Under the law, we can form
a bloc on the eve of elections. 

Q: Not long before this meeting, Yegor Timurovich, you said
that there would be no coalitions with those who supported the
government. As far as I know Alexander Nikolayevich has supported
the government. Perhaps I am wrong. So my question is as follows:
have you worked out a single position with the regard to the
government? Has this question been solved? Or we will see a new
split among the members of this association a week from now?
Gaidar: Dear colleagues, a question of fundamental importance
for us now is the question of creating a strong democratic and
center-right, you name it, bloc which will defend a set of basic
principles -- democracy, private property, fair competition, low
taxes, and efficient and economical state. We do not want to put
ourselves in the shoes of sectarians and destroy any possibility of
cooperation with political forces and movements which share out
views.
Yes, I personally -- there is a position of Yegor Timurovich
Gaidar of the Democratic Choice of Russia. I personally do not like
many of what the government is doing now. As for our collective
attitude toward the government and some of its steps, this is what
we will have to work out and decide.
As for whether there can be a split over this issue, I do not
think so.

Yakovlev: I just want to say that our congress recently
adopted a decision to support the government of Primakov. We did
not discuss this issue today. And I think that our party will not
decide this by the number of ayes or nays. It would be wrong
politically.
If we support a certain step by the government, we will
support it. If not, we will not support this or any other step.
That's all. Does this hamper the consolidation of democratic
forces? I do not think so.
Yegor Timurovich has mentioned the fundamental principles on
which our agree. I am absolutely agree with these principles.

Q: Why did you decide to create this coalition? And what will
be your economic platform?
Kiriyenko: Why did we decide to unite? I have answered this
question many times. There has been a question about differing
positions. Indeed, perhaps we have many differing positions.
Someone offered a very good idea today. I do not remember who it
was. He said that unfortunately the existing practice in this
country is that if you agree with a person on all 99 points but
disagree over one point, you consider him as your biggest enemy.
Although it should be the other way round.
Now when the main question is where the country should be
going -- whether we preserve the democratic principles of state
management and a market economy or we will recoil back to a
totalitarian state, state regulation and planned economy, which I
do not want and I will do what I can to prevent this. All those 
who share these two fundamental principles -- what is important for
me is not against whom we have united but for what we have united.
I have formulated my for. Because all those who were at the
meeting and not only them, because for me a coalition does end on
those who sit at this table. This was pointed out several times
today that we are open to further agreements. 
This is a fundamental thing, which was mentioned by Boris
Yefimovich and which I mentioned today. I was included in the
coordinating committee for my agreement with it. I believe it
possible to find a common language and reach an agreement with 
all those who stick to these fundamental things.
When we are confronted with such a critical choice, we cannot
afford to pay more attention to disagreements, although there are
so many of them. We cannot afford to pay attention to personal
ambitions which also abound. All this has to be put aside and we
must find overlapping interests, and not only with those who have
come here.
I'd like to stress that our statement says that we are
beginning consolidation work. This is very big and hard work. We
will face a lot of problems. But we have to do it. We have a year
before elections.

Q: Is your association ready to lean on one spiritual idea
that will lead you to your victory at elections?
Fyodorov: There is one simple ideas that has brought us
together -- freedom. This is a very spiritual idea. Any normal
person likes this idea....

Q: Many of those who are sitting in the presidium now can be
called victims of the present regime. Has the new movement
formulated its attitude toward this regime?
Fyodorov: Does our appearance betray us as victims? If yes,
they you are wrong. We are okay. 
Nemtsov: We have experience of management, including in
critical conditions and in extremely complex situations. I think
this is invaluable experience. And although no one has left Bely
Dom to the sound of applause, including us, we believe that this
experience will help us.
We think it will help us avoid mistakes. Secondly it will help
us organize our work better and, more importantly, explain to
people what is happening in the country, what was done correctly
and what not and ho we are going to live and what we are going to
do.
We have to learn to admit our mistakes. We have to learn to
make conclusions from mistakes. We have to learn not to make the
same mistakes several times. I think we have already learnt all
this.

Q: Boris Yefimovich, if you are the right-wing center, can you
tell us who belong to right-wing forces? Did you invite
Chernomyrdin to your meeting?
And a question for Yegor Timurovich. You named fundamental
values which have brought you all together. In principle, Primakov
has named them too. He speaks about fair competition, low taxes,
etc. Don't you think that many of your complaints are too late and
that the government of Primakov has proved by some concrete steps
that not everything is hopeless from the point of view a left-wing
revenge as it seemed several months ago?
Nemtsov: We are absolutely open to cooperation will all
parties and movements. I have already said which parties and
movements are closed to us and which are open. In this respect, 
we are ready for cooperation with the Our Home Is Russia.
What happened today is just the first step. This is not a
sectarian organization. The organizing commission is open to new
members. We are ready, and this is stated in the regulations, to
admit new participants. So this is only the beginning of the
process, not its end.
Gaidar: Low taxes mean first of all an efficient state.
Because one way or another, but the state exists at the expense 
of people. A responsible program of tax cuts is also a responsible
program of cutting ineffective state expenses and obligations. To
my mind, the government of Primakov has so far not presented such
a program. Without this, any tax cuts are likely to be short-term
and may lead to difficult consequences for the budget.
Nemtsov: As far as tax cuts are concerned, I would like to add
one thing. It seems that the reduction of the VAT to 14 percent is
the reduction of taxes. But in reality the government has proposed
to introduce a new tax, namely the sales tax of 5 percent for all
goods and 10 percent of goods covered by excise taxes. If you
calculate who the tax base changes in regions, you'll see that it
will shrink in all regions except Moscow where it will grow. So we
have to take a more serious look at the question of tax cuts. But
it is true that the accent has been put on the reduction of the
VAT. But the introduction of the sales tax has been hushed up. By
the way, it is 5 percent. If you put everything together and given
the fact that this tax will be collected unevenly in different
regions, the conclusion is obvious -- changes in tax legislation
does not ease the tax burden, but will simply create a situation in
which Moscow will have more money and provinces will have less
money.
Fyodorov: I can add that if tax cuts are made up for by more
money printing, as it was done in November when 10 billion rubles
were printed, you can understand where it all will lead. We can
abolish taxes altogether and start printing money. But this is not
an economic policy. This is something strange.

Q: What will be your regional policy? We see the only
governor, from the Tver region, here in the presidium. Do you plan
to invite other regional leaders to your movement?
Nemtsov: We talked today about the need to invite
non-political organizations, primarily the committees of soldiers'
mothers, local government organizations, women's non-communist
organizations, workers' non-communist committees. We believe that
we should not concentrate entirely on interaction with regional
leaders.
Most problems, social problems -- delays in the payment of
wages, unemployment, absence of an effective motherhood and
childhood support programs -- are local government problems. We
believe that such a combination of high-profile political leaders
and organizations and the zemstvo movement which comes all the way
up from the grassroots will make our organization a truly mass,
people's organization. This is what we should be seeking to
achieve.
A liberal movement in Russia must become a popular movement,
because millions of people hope that the state will not prevent
them from doing their job and will establish fair rules, that there
will be order in the country, not terrorism and lawlessness. And
we will be able to make these hopes come true.

Q: Two questions for Sergei Vladilenovich Kiriyenko. You said
that you have agreed to be included in the organizing committee of
the bloc. Does this mean that you accepted the offer after a good
deal of persuasion? And will you be able to register your party,
New Force, on time and if not, from which bloc will you run for the
Duma?
Kiriyenko: No, it does not mean that there was a good deal of
persuasion. That's all as far as the first question is concerned.
As for the registration of the movement New Force, I think we
will complete it by the 19th. The purpose, as I have already said,
is that we are beginning big and serious work. It is going with
difficulty as many of your questions indicate. We do not have here
at this table all those whom we would like to see in our bloc. 
I think that the main problem is that -- and this is where we
often disagree -- I believe that the main task is not to unite
leaders. This is a different task. The task is to preserve
democratic management principles and a market economy in the
country. In order to achieve this, we have to bring together the
people who will vote in the next elections. So, these are two
absolutely different tasks and they require different approaches.
This is big and painstaking work and it cannot be done just by
moving leaders from one table to another.
I identified this task when I spoke about the need to create
my own movement. And that's what I am doing now. I will do my best
to conclude this work. It is true, though, that it would be best if
we could reduce the number of lists to the minimum before elections
so that people would not have problems during elections. Ideally we
should have one list. This is the ultimate goal. We may not achieve
it. It is possible that we will have several lists. 
In principle, this depends not on ambitions of the leaders and
not on how we shift them around the table, but on one principal
factor -- how people will vote? All the rest will have to serve
this objective, including ambitions.

Nemtsov: Let's have the last three questions.

Q: My question is for Alexander Nikolayevich Yakovlev. I see
that you are the only WWII veteran here. I belong to the generation
of Gagarin because we were born in the same year, 1934. You have
decided to remove the words "our cause is rightful". Don't you
think that this recoil is connected with the memorable words, our
cause is rightful and we have defeated a Napoleon in the 1941-1945
war?
Yakovlev: I am very sorry, but Boris Yefimovich has already
said that we voted on this. And the majority voted for the removal
of these words.
Secondly, this has nothing to do with the Great Patriotic War.
The idea was to get rid of slogans. That's all.

Q: I have two questions for Mr. Chubais. Do you think that the
government has sidestepped from liberal reforms but the economic
reform is continuing? How, do you think, the current crisis can be
overcome?
And my second question. What do you think about the idea of
Marshall plans for Russia?
Chubais: As for the government's performance and my evaluation
of its performance, I think that apart from a dozen program
statements and draft programs or priority measures there is one 
key document by which one can judge the government's performance. 
This document has a short name -- budget. 
If I understand it correctly, the government is approving this
document right now. Let's wait and see. This document should answer
all questions. Then everything will become clear. It will be clear
what will happen to our relations with the IMF and to the
government.
There is one thing I understand very clearly. The economic
realities are such that the longer the government works, the more
responsible policy it carries out, the more liberal it has to
become. 
At least when I hear first deputy prime minister Maslyukov say
that the new budget will set the primary surplus at 2 percent, I
understand that they deserve a Chicago award for monetarism. 
I do not know whether they will achieve this or not, but it is
clear that the government has to apply the toughest Chicago
monetarist, anti-people bourgeois principles, whether it likes it
or not. Otherwise it will be swept away quite quickly.

Q: My question is for all of you. Just recently you said that
the greatest threat to reform comes from nomenclature capitalists.
Today you say that this threat comes from communists. My question
is, why have you changed the enemy? And in this connection, how 
are you going to lean on the youth who have no idea of what the total
CPSU control is, but who remember August 17 very well?
Gaidar: There is a not very obvious, but very strong coalition
of the nomenclature and the CPRF. It is visible at the federal
level, in the government. But it has been around in many regions,
where they have virtually merged into one, for a long time. I think
that the calls for fighting nomenclature capitalism and resisting
the CPRF are not mutually exclusive. These are the two sides of 
the same coin.
Secondly, I understand that there is a certain part of young
voters who do not know what communism is. But on the other hand,
these young voters have gotten used to a certain set of realities
that are part of their existence -- they do not have to go to the
local Komsomol committee to get permission to go to Bulgaria,
nobody decides for them what books they have to read, they have a
choice. When these values are endangered, these young voters are
very likely to become extremely active. 
Nemtsov: Thank you dear colleagues. Our press conference is
over.

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