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Johnson's Russia List


January 6 , 1999    
This Date's Issues: 3004 3005 

Johnson's Russia List
6 January 1999

[Note from David Johnson:
1. Fred Weir on the public mood and prospects for 1999.
2. Moscow Times EDITORIAL: No Fair Trial For Kokh, A Foreigner.
3. Kerry Franchuk: re Dolan/Responsibility for Russian Problems.
4. Newsday: Dimitri Simes, Be Wary of Any Russia-Belarus Link.
5. Frank Durgin: Re Mark Jones and Russian economy.
6. Carl Olson: US POWs in Russia.
7. RFE/RL: Florence Fossato, Russia: A Devil-May-Care Mood Prevails.
8. Moscow Times: Sergei Minayev, When Street Life Is Your Only Life.
9. Reuters: Dollar-loving Russians careful of new euro.
10. Vlad Brovkin: Kto Vinovat?
11. Ray Thomas: RE: 3003- Dolan/Responsibility.
12. Gordon Hahn: Russians are very political.
13. The Times (UK): Anna Blundy, Nuclear waste 'to bankroll Lebed 


Date: Tue, 05 Jan 1999 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT Jan 5) -- After a year of economic disaster
Russians are in a bleak mood and fearful that 1999 will bring
even greater hardships, opinion surveys show.
"People are very uncertain about the future, and they expect
things will only get worse," says Leonid Reznichenko, a public
opinion expert at the Institute of Sociology in Moscow.
"There has never been a time in post-Soviet history when so
many negative indicators came together," he says.
Eight out of ten Russians in a recent survey rated 1998 as a
far harder year than 1997, and the majority cited the country's
financial collapse last August as the crucial event.
Millions of people lost their savings when Russia's banking
system disintegrated last summer after the rouble was devalued
and the government defaulted on most of its debts. 
Prices for staple goods have soared in the wake of the
crisis, leaving many poorer Russians fearful of starvation for
the first time in their lives.
"It was a terrible year. So many people lost their jobs,
lost their money, lost their hopes," says Tamara Poletz, a 38-
year old accountant. 
"There's been so much bad news. I pray things will get even
just a little bit better."
According to sociologists the situation differs from the
despair Russians felt 8 years ago, after the demise of the Soviet
"In 1992 people were very insecure and fearful of the
future, but they also hoped their sacrifices would bring a better
life in time," says Mr. Reznichenko.
"The present situation is characterized above all by the
absence of hope. Our surveys show people have no faith in
anything. They do not trust politicians, and talk about politics
only irritates them," he says.
Two years ago a survey conducted by Mr. Reznichenko's
institute found the only official institution Russians really
trusted was the Post Office.
But in 1998 even the Post Office broke down, tying up mail
for months after it failed to pay its railroad and air transport
"Russians are not willing to believe in anything now. Our
polls show that people are most likely to vote for the polician
who promises not to make things worse, and not the one who
promises to make things better," says Mr. Reznichenko.
"People are afraid of any changes. After all their
experiences, they have come to think of change as evil." 


Moscow Times
January 6, 1999 
EDITORIAL: No Fair Trial For Kokh, A Foreigner 

This Christmas, U.S. officials closed the gates of America in the face of
Alfred Kokh, the former Russian privatization chief. They did so because it is
their standard practice to deny entry to foreigners who stand accused - not
convicted, just accused - of any crime. 
Kokh stands accused of corruption. Russian prosecutors have implicated
him in
the privatization of two of some 21 apartments they say were illegally
distributed to Kremlin bureaucrats. Kokh also accepted a $100,000 advance on a
book about privatization from an Uneximbank-connected company, and after
Uneximbank won some choice privatizations, many observers characterized that
advance as a thinly-disguised bribe. 
The evidence against Kokh on that count is compelling. Certainly it was more
than enough to remove him from his government post, as Boris Yeltsin did in
1997, opining that Kokh was "too close" to some banks. This latest public
embarrassment at the hands of the American authorities could not have happened
to a nicer guy. 
But even so, the case underlines the problems of the U.S. practice of
visas to people simply because their country's police force suspects them of a
crime. It violates one of the most cherished principals of the democratic
political system, the presumption of innocence: A person accused of a crime is
considered to be innocent unless prosecutors can prove his guilt in a court. 
As any Russian who has ever applied for a tourist visa knows, this noble
ends at the U.S. border. Foreigners applying for permission to visit the
freest country in the world are presumed guilty - of lying, of intending to
work illegally, of intending to overstay their tourist visa - unless they can
"prove" otherwise. 
This becomes all the more odious when the American government accepts an
accusation coming from a law enforcement system as flawed as Russia's. These
are the same lackluster prosecutors who routinely make zero progress on high-
profile corruption and murder cases, yet find plenty of time to pursue
frivolous cases against environmentalists like Alexander Nikitin or Grigory
The only thing that makes this indefensible U.S. policy tolerable is that it
is so haphazardly enforced. Nikitin, for example, got an invitation last year
to visit the U.S. White House even as he stood accused of treason. 
It would be admirable if the U.S. government, which for so long so closely
associated itself with Kokh and the other young privatizers orbiting around
Anatoly Chubais, could be bothered to do some soul-searching on its Russian
involvement. Instead, it seems to want the entire matter to go away - like


Date: Tue, 05 Jan 1999
From: (Kerry Franchuk)
Subject: re: Responsibility for Russian Problems

Mr. Dolan's assessment of blame for Russia's problems ("Responsibility for 
Russian Problems," JRL 3003), explores an either-or scenario that is as 
faulty as that which pins 100% blame on either Russia or the United States. 
To imply that the options for western advisors were either to encourage the 
privatisation that we have witnessed in Russia, with its banditry and 
corruption, or to advise against privatising at all, maintaining 100% state 
control, is simplistic: there are infinite shades of grey between and 
beyond these two alternatives. In such a complex, never-before-tried 
operation as the privatisation of a massive command economy, how can we 
point to only two possible solutions or, after the fact, point to one 
culprit for the failures? Something else could have been done, and the fact 
that it wasn't is the fault of many actors. Our postmortem historical 
analysis and proposals for righting the wrongs must take this into account.

Kerry Franchuk
Program Officer/Administrateur de programme
Office for Central & Eastern Europe Initiatives/
Bureau pour les initiatives en Europe Centrale et de l'est
International Development Research Centre/
Centre de recherches pour le développement international
Ottawa, CANADA


Date: Tue, 05 Jan 1999 
From: Dimitri Simes <> 
Subject: January 4 Newsday Piece by Dimitri K. Simes

Please see the following article that appeared in the january 4 edition of
Newsday. I hope you find it of interest. 

Be Wary of Any Russia-Belarus Link
By Dimitri K. Simes. Dimitri K. Simes, president of the Nixon Center,
is a special correspondent for Newsday.

A RECENT ACCORD between Russia and Belarus has not gotten much attention
in the United States.
Between the forthcoming trial of President Bill Clinton, an
occasional missile strike on Iraq and the joy of the holiday season, the
accord has not seemed particularly significant. Moscow also did not want
to overplay the importance of its new axis with Minsk. The government,
eager to win International Monetary Fund loans, as well as other debt
relief and humanitarian assistance, was hesitant to advertise a close
association with Belarus' autocratic and eccentric President Aleksandr
Indeed, the accord is not binding and serves as more of a declaration
of intent. The next steps in the relationship depend on further
negotiations between the two nations and are subject to approval by
referendum. Nevertheless, for the first time since the collapse of the
Soviet Union in December, 1991, Russia has undertaken meaningful steps
toward unity with another post-Soviet state, and that state - Belarus
- happens to be strategically located and antiwestern, particularly
In fact, the accord was in the making for quite some time and was
almost signed two years ago. However, Anatoly Chubais and other Russian
radical reformers then in Boris Yeltsin's government managed to kill it
at the last moment. Chubais argued that Russia's market-oriented economy
was incompatible with the still largely socialist economy of Belarus,
that unification would cost Moscow billions of dollars in subsidies to
Minsk and, finally, that the IMF and other foreign lenders would not
favor a Russian alliance with Lukashenko.
Those arguments were reinforced by the Clinton administration, which
had just made a major contribution to Yeltsin's re-election as
president, using the IMF as a proxy and arguing that unification with
Belarus could lead to Russian isolation from the West. If these
arguments were insufficient to persuade the ailing Yeltsin not to sign
the accord, opponents also somewhat disingenuously told him that the
agreement could allow Lukashenko to replace him as the leader of a new
unified state. Despite his limited attention span, Yeltsin, who did
something similar to Mikhail Gorbachev several years earlier, was
instantly impressed by an alleged threat to his authority.
By now, however, Yeltsin's authority is increasingly declining. He
has made it clear that he does not plan to run for another term in
2000, which he would not win even with the help of the United States.
In addition, the new prime minister, Yevgeny Primakov, in his former
capacity as foreign minister was one of the champions of the aborted
agreement with Belarus. Furthermore, Chubais is no longer in the
government, and both the Clinton administration and the IMF have lost
much of their previous clout in Russia.
The U.S. and British attack on Iraq also played a role. Most Russian
politicians, including those with impeccable democratic credentials,
believe it was staged to divert attention from President Bill Clinton's
troubles at home. They also complain that the decision to punish Iraq
without consultation with Moscow demonstrates the Clinton
administration's contempt for Russia's role in the world. Russia has few
cards to play to challenge the American global leadership, and an accord
with Belarus is one easy way to deliver a subtle message that Russia
still has resources to enhance its geopolitical position.
It remains to be seen how far and how fast Russia's integration with
Belarus will develop. Even the currency and customs union, announced in
the joint declaration last week, will be difficult to implement. There
is no immediate danger that the Russian army will reappear on the Polish
border. Furthermore, Lukashenko himself is unlikely to surrender his
personal ambitions for unity with Moscow and will likely insist on
maintaining power over Belarus' military and security services. In
addition, even more than in 1996, Russia today needs IMF assistance,
leaving Washington considerable leverage over Russian decision-making,
including its unity with Belarus.
Nevertheless, there is a danger that if the Clinton administration
decided pre-emptively to abandon Russia, refusing to provide aid to the
Primakov government on terms that would be acceptable to the Russian
parliament and to Russian public opinion, all kinds of nationalistic
projects, as senseless as they might be from the standpoint of Russia's
own interests, could suddenly gain momentum.
A speeded-up integration with Belarus - with a clear
anti-American connotation - is just one possibility. A more lenient
attitude toward nuclear, missile and other high-technology transfers to
Iran and other states, regardless of U.S. proliferation concerns, may
then also be in the cards if Washington cuts off assistance.
The new Russian budget contains an optimistic assumption that
there will be a release of additional IMF credit and some form of debt
relief. Moscow is clearly trying to use its weakness to blackmail
Washington into further giveaways.
The problem is that the near-catastrophic weakness is real, and
there is a genuine chance that, left to its own devices, desperate but
nuclear-armed, Russia may move in a direction detrimental to vital
American interests. The accord with Belarus is a harbinger of things to
come unless the Clinton administration can get its act together in
dealing with the Russian crisis.


From: (Frank Durgin)
Date: Fri, 1 Jan 1999
Subject: Re Mark Jones

It was highly enlightening to read Mark Jones comments on JRL 2530. I
think we should all give him his due. He has been right all along in
predicting it would end in tears. And I am afraid events will prove
him right in his dire prediction that 1999 will end in blood. If he
seems to shout, its because he has to. Most of us have proven to be
quite hard of hearing. 
Mark said that a child could have foreseen it all. I would suggest
that a chimpanzee could have foreseen it. A chimp would have noted
that every time he punched the "tighter monetary and fiscal policy"
button, his cage got colder, the human misery index went up a few
notches, and the economy sank deeper into oblivion. What a chimpanzee
would have figured out with a couple of punches, the Gaidars,
Chernomyrdins, Krienkos and the IMF sages still haven't figured out
after almost eight years of continual punching that same old "tight
money -tight budget" button.
Future economic historians (if the world survives Russia's looming
social upheaval) will surely marvel at the fact that some 65 years
after Keynes showed the world that budget deficits could serve as an
instrument for curing depressions, and a quarter of a century after
Nixon declared "We are all Keynsian's now", those who were setting
economic policy for Russia were prescribing ever progressively tighter
monetary and fiscal policies. 
At the end of 1997, Russia's GDP was down by over 50% from the
pre-reform level. In 1998, according to the IMF's "World Economic
Outlook", it fell another 5.7%, and in 1999 will fall another 8.3%.
Unemployment continues to rise, and, as many reports posted on the JRL
have shown, the numbers of sick and hungry men, women and children
sleeping in the streets, or huddled in unheated and unlighted houses
is rapidly growing
Yet the response to this is the tightest budget since 1992. The budget
for 1999 calls for expenditures of some 570 billion rubles, a sum
equal to less than 15% of GDP. In USA dollars that's $30 billion, a
figure considerably less than the some $90 billion Americans spend
every year on Alcoholic Beverages and the some $50 billion they spend
on Tobacco Products. The deficit is planned at some 2.5% of GDP. By
way of contrast the US Budget deficit in the 1980's and early 1990
averaged over 4% of GDP. 
As Michael Gordon has pointed out, when the debt servicing costs are
excluded, Government revenue will exceed spending by 1.7% of GDP. The
budget will thus have pronounced deflationary effects. Compare
Russia's government spending of 14.7% of GDP with government spending
as a percent of GDP in 1992 of over 50% in Sweden, over 45% in
Belgium, Holland Norway, Luxembourg and Denmark, and some 30% in Japan
and the US.
The IMF's hackles are being raised by the Primakov plan to borrow from
the central bank (what the opponents of the plan call "print money")
and thus expand the money supply, which had fallen by more than 8%
since Jan of 1998. Russia's money supply (M-2) as a percent of its GDP
is the world's lowest. In Sept. of this year was equal to 14-15% of
GDP. Contrast that with the US where money supply is equal to about
50% of GDP and still expanding. Compare it with that of many of the
other industrialized nations of the world where it runs some 80% of
GDP. Money is the lifeblood of any economy. Shrink the US money supply
to 15% of GDP and slap on the Russian Central Bank rediscount rate of
some 80% and overnight you'll precipitate a Yeltsin-Gaidar type
depression in this country
Seventy to eighty percent of all transactions in Russia are now
conducted via barter. There are huge backlogs of unpaid wages (80% of
that backlog being in the private sector), and when wages do get paid,
they are just as often as not paid in kind. Companies carry out
transactions via barter and pay taxes and wages with goods, not to
avoid taxes, but simply because of the scarcity of money - they just
do not have it to pay out.
The creation of new money is an every day occurrence here in the US
and throughout the capitalist world. Every time a bank makes a loan,
it creates new money. When it grants a construction loan it creates
the money without which the construction project could not and would
not have been carried out. When it makes a consumer loan it creates
the money without which a car or house would not have been purchased
and consequently manufactured, thereby producing employment for the
workers, profits for the company and tax revenue for the government.
The IMF's insistence that the root of Russia's problems is its
inefficient system of tax collection is all backwards. It is not a
high tax harvest that produces vibrant economies; it is vibrant
economies that produce high tax yields. Tight fiscal and monetary
policies do not produce vibrant economies.
There are gargantuan unmet human needs in Russia all fuelling social
and political unrest. All of these are growing. And it is tight money
and fiscal policies that are preventing Russia's vast economic
potential of idle plants, equipment and manpower to get buzzing once
again and on with the business of satisfying those needs and soothing
social and political unrest.
It is interesting to note that while Talbot, the IMF, etc, deny Russia
the opportunity to carry out a Rooseveltian type new deal, Japan, is
planning on a record breaking 82 trillion yen (about $700 billion)
budget for 1999. According to Sheryl WuDunn, it includes a
"significant increase in spending for the construction of roads,
bridges, dams ands other public works intended to revive the sinking
The prime argument against Russia following a similar course is that
an expansion of the monetary base will cause inflation. But there are
many forces other than money supply that drive inflation, a prime one
being the velocity of circulation of money. When this is driven upward
by the expectation of inflation or fear for the future (of which there
is plenty in Russia), it produces inflation. 
The dire state of the economy and its attendant social misery, social
unrest and political chaos are themselves a cause of inflation. What
rational person would leave his capital in that economic and
politically crumbling nation? Estimates of the amount of capital
Russian's have stashed overseas since the beginning of the reforms run
between $100 billion and $200 billion. It is estimated that this year,
a record breaking $25 billion to $30 billion will have been stashed
overseas. According to the Moscow Times, for every dollar invested in
Russia since the beginning of the reforms about $15 flew out.
This capital outflow exerts a downward pressure on the ruble, thereby
increasing the prices (inflation) of many imported necessities. 
Something like half of all food consumed in Russia, for example, is
now imported. As long as the economy continues its slide; as long
human misery and social and political unrest continue to mount; and
as long as chronic uncertainty and the threat of civil war hangs over
the nation, whatever capital is left in Russia will continue to flow
out, and the downward spiral of the past 7 years will continue on its
inexorable course.
Inflation is something to be avoided, but not at the price not paying
workers; not at the price of keeping factories idle; not the price of
keeping manpower unemployed, hungry and cold; not at the price of
pushing a nation to the brink of a civil war. Even a chimpanzee would
understand that.


Date: Fri, 1 Jan 1999 
From: (Carl Olson)
Subject: US POWs in Russia

No wonder that Joe Walker (JRL 3001) is having trouble finding out what
happened to thousands of Americans imprisoned in the Soviet
gulags from World War II, Korean War, and Vietnam War. The
U. S. Government has put up numerous obstacles along with
the Soviet and Russian Governments.
Even though there is a US-Russian Joint Commission on
POW/MIAs, it routinely fails to press for substantial
information from the Russian gulag files. I think there was
a story a couple months ago about another rebuff by the
Russians or a refusal to press the issue by the U. S.
Here are probably the best sources:
1. For recent articles on the Joint Commission, the
Washington Times library would be good. 202-636-3100.
2. For the public's efforts to get the facts, contact the
POW/MIA groups at 202-223-6846.
3. For the Defense Department's current story, contact the
Defense Prisoner of War/Missing Personnel Office at the
Pentagon, 703-602-2102.
4. In Congress, Senator Bob Smith of New Hampshire has been
very active on this issue. 202-224-2841.
5. Some good books have been written by British
authorities, particularly about U. S. and British POWs that
Stalin was holding as hostage for the deliverance of
millions of Soviet expatriates under Operation Keelhaul. 
"Operation Keelhaul" by Julius Epstein (Devin-Adair), "The
Last Secret" by Nicholas Bethell (Basic Books), and "The
Secret Betrayal 1994-1947"(Scribner's) and "The Minister and
the Massacres" by Nikolai Tolstoy (historian and descendent
of Leo).
5. The best comprehensive American book is "Soldiers of
Misfortune" by James D. Sanders, Mark A. Sauter, and R. ort
Kirkwood, published by National Press Books (paperback
Very memorable was the heated resignation memo that Col.
Millard A. Peck posted at his office in the Pentagon on Feb.
12, 1991. Here are som quotes:
"I hereby request to resign my position as the Chief of the
Special Office for Prisoners of War and Missing in Action.
"That National leaders continue to address the prisoner of
war and missing in action issue as the 'highest national
priority' is a travesty. From my vantage point, I observed
that the principal government players were interested
primarily in conducting a 'damage limitation exercise', and
appeared to knowingly and deliberately generate an endless
succession of manufactured crises and 'busy work'. Progress
consisted in frenetic activity, with little substance and no
real results.
"The sad fact, however, is that this is being controlled and
a cover-up may be in progress. The entire charade does not
appear to be an honest effort, and may never have been.
"So as to avoid the annoyance of being shipped off to some
remote corner, out of sight and out of the way, in my own
'bamboo cage' of silence somewhere, I further request that
the Defense Intelligence Agency, which I have attempted to
serve loyally and with honor, assist me in being retired
immediately from active military duty."
Nothing much seems to have changed with the Clinton
Administration's priorities.

Carl Olson
State Department Watch


Russia: A Devil-May-Care Mood Prevails
By Floriana Fossato

Moscow, 5 January 1999 (RFE/RL) -- As Russia entered what seems to be the
longest winter holiday season of the past few years, a very symbolic event
occurred: No sooner did the inhabitants of Ivangorod, a town on the Estonian
border, start celebrating the New Year than they were flabbergasted to
discover that no water would come out of their household taps. Because of
unpaid bills, Estonia had cut the water supply to the town and refused to
treat its sewage.
Some basic explanatory remarks about Russian holidays are needed here. If
anyone thinks Russians went back to work yesterday (Jan. 4), refreshed after
New Year's parties, they are utterly mistaken.
The country actually went out to celebrate at lunch time on Dec. 31 and
expected back until next Monday, Jan. 11. First, it was New Year's Eve and
then came the following weekend. This Monday was also not a working day as
Jan. 2, a traditional day off, fell on a Saturday and the government decided
to compensate citizens for the unfortunate coincidence. Today and tomorrow are
officially -- but only officially -- working days while Thursday, Jan. 7, is
Orthodox Christmas. And then another gift from the government will come -- a
non-working Friday to bridge the way to Saturday. Sunday was declared a
working day, but it is hard to imagine who will show up.
Actually, this celebratory spirit took over the country as early as the
Western Christmas (Dec. 25), and far too many business calls have remained
unanswered ever since.
Now, back to that earlier matter -- running water. Russia's Ivangorod is
separated from Estonia's Narva by the Narova river, and it's about the sole
natural division line between the two. The cities were built as one. The
smaller Ivangorod sends all its sewage to and gets one-quarter of its water
supply from Narva.
Being small didn't prevent Ivangorod from piling up enormous unpaid water
The water saga dragged on for seven years, that is, ever since Estonia
regained independence after the breakup of the Soviet Union. Ivangorod's debts
were repeatedly offset by deliveries of Russian goods (primarily energy), or
restructured, or forgiven outright. As 1998 ended, Estonia looked at the water
debt, now exceeding $1 million, and decided that enough was enough. 
Ivangorod stayed without water for just two days: The city administration
turned on four artesian water wells, located on Russian territory. The
administration has not explained what prevented it from doing this over the
past seven years.
Because of the lack of other significant news, the water row was reported by
most functioning Russian media, but went largely unnoticed among the public.
Russian TV channels have reduced the broadcasting time of daily news bulletins
during the holidays and Western TV crews were busy sending pictures of crowds
shooting fireworks and pouring champagne all over Red Square. 
The comments on the celebrations, suggesting that Russians were defying the
economic crisis with their unwary optimism, were challenged by a headline in
the last pre-holiday issue of the business daily Kommersant (by the way, most
Russian newspapers have ceased publication until Jan. 12). Rather than
optimism, the paper described the feeling as "pofigism" -- a colloquial
expression best translated as "utter carelessness."
Perhaps one explanation is that after seven years of painful economic
transition and the financial crash of last August, even the most active part
of the population is exhausted and frustrated. Many seem ready to give
everything up and water it down with huge amounts of alcohol -- thanks to the
opportunity provided by the season.
The question is whether these frustrated front-runners of Russia's
are now poised to permanently join their less ambitious countrymen, those who
gave up long ago or had not even started anything. Those -- like the officials
in Ivangorod -- who hadn't quite believed that communism had actually ended
and that they should take responsibility for their own well-being.
Back we go to the festivities calendar: A colleague -- a Moscow-based
reporter -- attempted to do a year-end report on the Russian steel industry.
He spent five hours calling officials at the country's biggest steel mills.
Only two -- Severstal and Magnitogorsk -- answered. The third -- Novolipets
k-- called back when the responsible official dropped by his office at the end
of the day. Is it a coincidence that, of the entire Russian steel industry,
only Severstal and Magnitogorsk managed to maintain production amid the
collapse of world markets, and Novolipetsk found a way to minimize losses --
while all other mills saw a plunge in output?
That observation could wake up those early celebrating steel-makers -- along
with thirsty Ivangorod administrators. It could, if only they cared. 


Moscow Times
January 6, 1999 
When Street Life Is Your Only Life 
By Sergei Minayev
Special to The Moscow Times

SMOLENSK, Central Russia -- Sergei Alishev, 14 and living on the streets,
wants to be a tram driver when he grows up. They don't have to go to school,
he figures, but are paid "enough to eat well." 
To eat at all is a daily struggle for Sergei, who lives on the 30 rubles
a day
he can panhandle in front of Smolensk restaurants, where he is a familiar
figure, dressed in his old rabbit fur hat, jacket with a broken zipper and
boots that are way too big. 
When he sees somebody he thinks might have money, his reaction is quick and
looks professionally worked out. He darts up to the person. "Please, dear sir,
I have nothing to eat," he exclaims, crying. 
"I have no mother and father and have nobody to feed me. Don't have a cruel
heart and don't leave me like this. Give me just 50 kopeks. God will bless you
for that." For emphasis, he tugs the sleeve of the stranger's jacket. 
His life history is a typical one for a Russian street kid. 
Sergei used to live in the village of Novospasskaya, 60 kilometers from
Smolensk, with his parents - until they started drinking heavily. "My father
is a tractor driver in the local collective farm. They have nothing to do
because everything is bankrupt," he says. His mother has some money from a job
in Yelnya, the nearest small town. 
His father starts his day by meeting friends to buy vodka, and his mother
joins the drinking when she returns from work. Once in a while, his father
would beat him up. "He did not care where he beat me. He was doing it with his
arms and sometimes with his feet to my stomach, kidneys and head as if I were
a dog," Sergei says. "One day he beat me up so badly that I could not get up
and lay on the floor for several hours. I decided to run away." 
So he took the train to Smolensk, 400 kilometers west of Moscow. There, he
heard that kids his age could earn up to 100 rubles a day as drug couriers in
"The capital, I thought, was big and I was going to find new friends and
business there. I heard that guys like me work transporting and distributing
drugs there. It is not dangerous for people my age, I was told. I wanted to be
cool," he says. 
So he persuaded the conductor to let him ride just one stop, then hid
carriages until he reached Moscow. 
It did not take him long to find new "friends" in Moscow. "It is correct to
say that they found me," Sergei recalls. "This guy Alexei, about the same age
as I am, met me right in the railway station and said he could propose a
promising business."Alexei and seven others were living in the attic of an
apartment building near Belorussky Station. 
The group had different lines of "business." One was robbing drunks,
which the
other boys did while Sergei served as a lookout. Some of them went to a gay
pickup spot in Kitai Gorod near the Kremlin and worked as prostitutes -
something he said he didn't care to do. 
His adventures in Moscow were finished, however, when police picked him
up for
begging and sent him back to Smolensk, where he later escaped from a youth
shelter. But he did not want to go to Moscow again because, as he says, "I did
not want a criminal future." 
"Money should be made honestly and I decided that being a beggar is the best
thing for me," he says. Sometimes friends' parents let him stay over at their
apartments and sometimes he finds a place to sleep on the wall of the town
Good days bring Sergei some 30 rubles ($1.50): "I don't ask for money
from old
people because they just don't have it. I also never deal with young guys
because some bastards I once asked for money beat me up." 
He has developed his own market research of sorts. "Women give money quite
often, but it is small change because they are mostly cheap, while a man who
gives money is rare, but if he does give money, it can be as much as five
rubles," he says. 
Sergei says he spends 20 rubles for food a day and saves the rest. All he's
got are his clothes and money he has saved. When asked where he keeps his
savings, he smiles and says that "it is in a safe place. It is buried under a
stone in one of the [kremlin] wall's towers, and you will never find it, even
if you try." 


Dollar-loving Russians careful of new euro
By Peter Henderson

MOSCOW, Jan 5 (Reuters) - Russians hoarding billions of cash dollars on
Tuesday gave a slightly mystified welcome to the greenback's mighty new
competitor, the euro. 
Linguists and journalists alike scratched their heads over how to fit the
``yevro'' into their language while ordinary Russians pondered the
possibilities of the new currency. 
``What should a real Russian do with his dollars?'' the official newspaper
Rossiiskaya Gazeta asked, warning that the ``only free cheese is in a
It said readers should beware of promises of easy riches in schemes
linked to
the new currency and not to hurry to switch savings into euro bank accounts,
but it conceded that lovers of cash could not do much with the new currency
until 2001. 
Russians keep most of their savings, an estimated $30-$50 billion, at home.
That is the largest stash of greenbacks outside the United States. 
Life in Russia could change with the advent of the euro, launched on
January 1
b y 11 European countries. Much foreign trade and foreign borrowing is now
calculated in dollars. 
Russia's financial elite was undaunted, with the world's largest natural gas
company Gazprom saying it was ready to switch its European accounts into the
The Russian central bank has also begun quoting a rouble-euro rate
although a
date for foreign exchange trade in the new currency has not been set yet. 
Cautious euro support came from an unexpected sector, the communist daily
Sovietskaya Rossiya. 
It optimistically forecast that European imports could become 30 to 40
cheaper due to increased competition among suppliers and easier accounting. 
But the newspaper, which darkly warned it was no coincidence Europe
agreed to
unify its monetary system within days of the breakup of the Soviet Union, in
December 1991, said Russians had rung in the new year with no thoughts of
dollars or euros. 
``Russians this New Year experienced nostalgia not for the dollar, but
for the
Soviet past,'' it said. 
It is still difficult to talk about the ``yevro'' in Russian. 
One television commentator said it was unclear which end of the word the
stress should be on while linguists have not agreed whether the sexy new
currency has any sex at all. 
``It has no gender,'' said a spokesman for the Moscow Interbank Currency
Exchange, when asked which of Russian's three genders -- masculine, feminine
or neuter -- the euro was. 
The general consensus among EU languages like German and French is that the
euro is a boy -- it is ``der euro'' and ``un euro'' but in its Russian
incarnation the ``yevro'' looks like a neuter word because it ends in ``o.'' 
Baffled local media seem to have decided it is definitely not neuter but
both ways on the other two genders. 
``For now the best thing is to avoid using gender,'' advised Vladimir
a senior lecturer in Russian language at the prestigious Moscow State


Date: Tue, 05 Jan 1999 
From: (Vlad Brovkin) 
Subject: Kto Vinovat?

Kto Vinovat?
A debate is raging among American Russia-watches Kto Vinovat? Who is
to blame that Russia is in misery, that instead ofa market economy unbound
from Soviet constraints and creating the land of the plenty, Russia is cold
and hungry today. A paradox seems to have occurred. Instead of markets and
freely circulating money and goods, there are no goods and no money. The
dream of Lenin to create a moneyless society of equals seems to have been
achieved after the collapse of communism. Everyone is equal in his misery
and poverty, as there is no money in a typical Russian town.
As usual the liberal American mind tends to blame Americans. Its is
the Harvard advisors who gave the wrong advice, It is the IMF that did not
give enough money and it is the business community that did not invest in
Russia. These are the standard explanations. The way out is seen by such
thinkers as Steven Cohen in Give them, Give them, more. Give them a huge
package of aid, IMF should release the next tranche of aid, Investment,
Food aid, and a Marshall plan type package has to be delivered to the
Russians so that they know that we mean good and that the long era of
suspicion and cold war is replaced by compassion, understanding, aid and
eventual recovery. Of yes, also we should not admit new members to NATO
lest the Russians feel threatened or upset.
What is wrong with this reasoning? Mainly that it is a discourse of
Americans about themselves. It is a cry of a guilty liberal American mind
that strives to give and give and give until the problem goes away. There
is nothing in this reasoning that requires anything of the Russians
Likewise Paul Mann (JRL 3003) echoing Cohen urges the US to rethink
its nuclear doctrines and pour billions more into securing Russia's
dilapidated nuclear arsenal. And of course NATO expansion was a mistake.
But what about Topol M missiles. Why is it that no one dares to say out
loud that Russia has to rethink its military strategy. Why is it that no
one dares to say to the Russians that it is unethical to keep producing
ballistic missiles targeted at the US and at the same time accept billion
of dollars to safeguard missiles and other nuclear facilities. That it is
unethical to forgo payment pensions and soldiers for the sake of producing
new ballistic missiles.
Why is it that no one in Russia except timidly perhaps Yavlinsky says
out loud that the Russian true national interest lies in nuclear
disarmament. Russia cannot compete in any kind of arms race. It would be
wiser to use the precious few resources it has to develop its prehistoric
infrastructure rather than build new missiles. This policy is an example of
the Soviet mind-set that still reigns in Moscow. The starving country is
whipped into producing new missiles instead of concentrating on
constructing roads, schools and new businesses. Edwin G. Dolan (JRL 3003)
is right. The Russians are to blame themselves that they are led by either
ex-Komsomol thieves or ex-KGB empire builders. He is right that the Russian
people do not care. TheAmerican Liberals who are eager to help Russia
must comprehend that Russia is still in the grip of its Soviet past. Its
people are not citizens conscious of their rights and responsibilities
paying taxes to their elected representatives accountable to them.
A government in Russia is perceived as a Vlast - power to be obeyed
outwardly and cheated in reality. This is a old Soviet trait that has long
historical roots. A citizen cannot be made out of the Homosoveticus
overnight. Under the best of circumstances the values of accountability and
respect for law would develop only slowly and only with the new generation
if at all.
The Russian elite, whoever they are, known as reformers or Communist
retrogrades, business tycoons, new mayors or governors ? all of them
exhibit a patronizing and disdainful attitude toward the masses. They
parade their power over the poor masses with ostentatious lifestyles and
imported autos, striving to come across as Western and refined. Those who
call themselves reformers, dubbed here as a dream team by some naive
American officials with all their Western veneer, still have no clue as to
the notions of respect for the law for all, honesty, integrity, and public
service. They all have perceived their proximity to Vlast as a ticket to
enrich themselves, build political parties of their own, media empires of
their own, and friendly corporations loyal to them.
Russian elite is rooted in the culture of rotten Soviet nomenklatura.
It is not surprising that they have privatized Soviet industry into their
own hands and the hands of their pals and relatives. They have been doing
similar things under the Soviets as well. Stop thinking of Russia after
1991 as a free and democratic Russia. Start thinking of it as a rule of
nomenklatura freed from restraint. What we have in economy is not virtual
economy and not a barter economy, but a Soviet economy appropriated by the
former custodians in a hurry to liquidate the assets and move them to safe
heavens in the west.
Before any Western aid is effective, the Russians have to create a
rule of law, real property rights, real accountability and responsibility.
Russia has to break out of the vicious paradigm of vlast vs, narod. In
1990-91, for the first time in Russian history there was a short period
when the people thought of the government as their government. They trusted
it and were ready for sacrifice and hard work. That leaves a hope that if a
genuine democratic government comes to power, not another dictatorship or
another edition of an obkom secretary, if rule of law is established, then
and only then conditions may arise for western investment, and economic
Vlad Brovkin (American University) 


Date: Tue, 05 Jan 1999 
From: (Ray Thomas)
Subject: RE: 3003- Dolan/Responsibility

I'd agree with edwin dolan that Russians are responsible for Russian
The problem really goes back to Peter the Great who opened up Russia to
western ideas. Ever since that time Russians have been charmingly and
credulously interested in what is happening in Europe and particularly
what is happening in the United States.
So when the US and US-dominated international organizations plus
mutterings from Thatcherite Britain told them about the ideology of
capitalism the Russians foolishly believed that was the way western
economies worked. 
I'd also agree with Ed Dolan that there should be realistic
collaboration on specific problems of mutual interest such as nuclear
safety, education, environment. But can I make a plea that banking be
added to the agenda?
Instead of talking down the Russian economy as being worthless and so
making it more difficult for Russia to get any credit, could there be
expressed some sense of wonder that the Russian economy manages to exist
without a banking system??
Could this agenda include expression of appreciation of the role played
by banking systems in the US and in Europe is supporting capitalism and
the bank accounts of citizens? The importance of an independent banking
system my be blindingly obvious to those of us who get paid standing
order and settle most of our bills by direct debit. But, perhaps
because it is so much part of our daily life, it was left out of the
ideology of capitalism which has been on display for the past decade or
Capitalism unadultered by banking has not worked in Russia. The main
factor seems to be that the economy is demonetised. Someone has got to
explain to the Russians that they can't have successful capitalism
without a banking system independent of government.
Remember they are very credulous. 
Ray Thomas, Social Sciences, Open University
Tel: 44-1908-679081 Fax: 44-1908-880292
Post: 35 Passmore, Tinkers Bridge, 
Milton Keynes MK6 3DY, England


Date: Tue, 05 Jan 1999 
From: Gordon Hahn <>
Subject: Russians are very political

Dear David a response to the anonymous remark taken from the Moscow Times
printed in JRL 2538:

"Aside from a few well-publicized but poorly attended Communist rallies,
the Muscovite never hears about a party gathering or political assembly;
rarely does one even hear a discussion of politics."

This is probably the most absurd statement about post-Soviet Russia I have
encountered. In fact, Russians are very political. All the Russians I know
-- excluding the obvious political scientists, historians and politicians
-- are deeply concerned about politics, and, I would argue, are more
politicized than Americans, despite the fact that Russians do not have the
luxury of sitting at home quite so often or listening to political talk
shows on the car radio the way we can so easily here.
The cynicism and disdain with which this representative of the American
business community in Moscow can only give one pause to think: perhaps
one-half of the 'Amerikanskie biznesmeny' have encouraged and participated
in Russian corruption, whle the other half is so jaded and/or alienated by
it that American business in Russia is now contributing to the polarization
of Russian-American relations.

Gordon M. Hahn
Hoover Inst.
Stanford U. 


The Times (UK)
6 January 1999
[for personal use only]
Nuclear waste 'to bankroll Lebed campaign' 

WITH a year to go until Russian presidential elections if Boris Yeltsin sees
out his full term, it has been suggested that Aleksandr Lebed, the gruff
Governor of Krasnoyarsk, might be attempting to raise money for his campaign
by insisting that his Krasnoyarsk Gubernatorial Foundation be the mediator
through which Ukraine would pay Russia for the disposal of nuclear waste. 
Segodnya newspaper reported, in an article called The Temptation of Nuclear
Profits, that $69 million (£40 million) allocated by the Ukrainian Government
for storing and processing waste in the Krasnoyarsk area has gone missing. The
money, to be precise, probably never existed because Atomenergo Resource, the
Ukrainian mediating company, is supposed to pay only 15 per cent of the sum
due in cash. 
Mr Lebed complains that the goods, services and IOUs that make up the
rest of
the payment always arrive late and never in full. 
The agreement is that the Zheleznogorsk iron ore processing factory in
Krasnoyarsk accepts 250 tonnes of nuclear waste per year at a fee of $275 per
kilo. "By recycling one kilogram of used nuclear fuel, one can earn up to
$1,000," Yevgeni Adamov told deputies of the Krasnoyarsk territorial
legislative assembly yesterday, suggesting that there was an urgent need to
bring payments into line with the rest of the world. 
Mr Lebed has elected to hold Ukraine to ransom on the issue and is
refusing to
accept any more nuclear waste until the debt is paid at a reasonable rate. 
He also insists that his foundation must mediate in the affair, according to
information obtained by Segodnya. As the waste piles up, experts agree that a
concentration of nuclear material can result in "unpleasant incidents".


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