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Johnson's Russia List


January 7, 1999    
This Date's Issues: 3006  

Johnson's Russia List
7 January 1999

[Note from David Johnson:
1. Reuters: Russians mark Christmas,Yeltsin lauds church.
2. AP: Premier, Mayor Top Russian Poll.
3. William Kauffman: Re 2533-Pertman/Language Study.
4. Angela Stent: New book on Russia and Germany.
5. RFE/RL: Floriana Fossato, Russia: Media Face Dire Financial 

6. AFP: Russians buy cars and homes as Christmas gifts to avoid
tax law.

7. Rossiyskaya Gazeta: Money Supply Seen Growing But Still Low.
8. Sovetskaya Rossiya: Yevgeniy Ivanov, "What Is the President 
Doing? Endless Day of Rest."

9. Keith Darden: Belarus-Russian Union.
10. Victor Chudowsky: belarus union.
11. Rus Postel: Privatization.
12. Canadian Press: Bruce Cheadle, Canadian food aid set to arrive
on Russian Orthodox Christmas eve.

13. Reuters: Tatyana Ustinova, Russian crisis brings down office 
rents in Moscow.]


Russians mark Christmas,Yeltsin lauds church
By Gareth Jones

MOSCOW, Jan 6 (Reuters) - Millions of Russians flocked to churches on
Wednesday to celebrate the Eastern Orthodox Christmas Eve, the eighth since
the fall of the atheistic Soviet Union in 1991. 

Patriarch Alexiy II, head of the Orthodox Church, led worshippers in a lavish
ceremony at a reconsecrated chapel in the precincts of the huge, newly rebuilt
Christ the Saviour Cathedral in central Moscow and urged all Russians to show
patience and fortitude at a time of deep economic crisis. 

President Boris Yeltsin, who has encouraged the revival of the church as a
vital link with Russia's pre-revolutionary traditions, was resting at his Rus
country residence outside the capital on Wednesday. 

But in a message addressed to the patriarch and all Orthodox believers,
Yeltsin hailed the church's contribution to Russian national life through the

``After suffering decades of oblivion in Russia, the great traditions of
Orthodoxy are reviving, churches are being built and restored, the number of
believers is growing. The birth of Christ is again widely observed across the
whole land,'' he said. 

``Russia without Orthodoxy is unthinkable. The church stood at the very
origins of the Russian state and strengthened the spirit, the moral fibre of
the people at critical moments in our history,'' the president said. 

The Kremlin said it did not know whether Yeltsin, recently recovered from a
bout of pneumonia, planned to attend church this Christmas. 

But underlining the growing ties between state and church, Prime Minister
Yevgeny Primakov, Moscow Mayor Yuri Luzhkov and other top officials were due
to attend the patriarch's midnight mass on Wednesday evening at the Cathedral
of the Epiphany. 

The Orthodox Church marks the birth of Jesus Christ on January 7, like other
Eastern Christian churches using the ancient Julian calendar. 

In his Christmas message to the nation, Patriarch Alexiy said Russians were
struggling to cope with poverty, crime and ethnic strife after a crippling
financial crisis last summer provoked a slump in the rouble, job losses and
rising prices. 

``Terrible poverty, the failure to pay people their well-earned wages, the
excessively high level of crime and immorality in society, inter-ethnic
strife, the crisis in education, culture and the health service are all
problems constantly encountered by people,'' he said in a statement. 

``May God grant that the state authorities, society and all of goodwill do all
they can to overcome the present chaos,'' said the statement, posted on the
church's site on the Internet. 

Television news programmes led their bulletins with film of the bearded
patriarch, clad in flowing robes, swinging incense and intoning the Old Church
Slavonic liturgy. 

``This is a day not for merriment but for quiet reflection on spiritual
matters,'' said a commentator on RTR state television. 

Orthodox Christians traditionally observe a fast on Christmas Eve which they
break only after the first evening star appears in the sky. 

Patriarch Alexiy, 69, said the church had to make further inroads into
everyday life -- a sentiment unthinkable in Soviet times, when the church
laboured under KGB controls and believers faced harassment and persecution. 

``It is essential to revive and strengthen the monasteries, set up new
ecclesiastical institutions of study on all levels, especially Sunday
schools,'' he said. 

Alexiy also called for Russians to be more tolerant. 

Russia has become increasingly strained by ethnic and religious tensions,
especially over anti-Semitism in sections of the Communist Party, the biggest
grouping in parliament. 

``It is our Christian and civil duty to abide in harmony, goodwill and
cooperation with each other, to be tolerant of each other and render every
assistance and support to those in need.'' 


Premier, Mayor Top Russian Poll
January 6., 1999

MOSCOW (AP) -- Moscow Mayor Yuri Luzhkov and Prime Minister Yevgeny Primakov
would be the top two contenders if a Russian presidential election were held
now, according to a poll released today.

Neither man has announced his intention to run in 2000, when President Boris
Yeltsin's term expires.

Luzhkov said he might run for president if he thinks there is no other capable
candidate in the field. Primakov has said he doesn't want the job, though some
of his supporters have encouraged him to consider it.

In the poll, Russians were given the names of leading politicians and asked if
they would support them for president. They were able to choose more than one

Thirty-seven percent said they would back Luzhkov's candidacy, while Primakov
received 36 percent support, putting them in a statistical dead heat.

Communist leader Gennady Zyuganov, who came in second in the 1996 presidential
election, won the support of 30 percent. Siberian governor Alexander Lebed and
liberal lawmaker Grigory Yavlinsky both had the backing of 23 percent.

The nationwide poll of 1,600 Russians was conducted at the end of December by
the All-Russia Public Opinion Research Center, a leading independent polling
service. The poll had a margin of error of plus or minus four percentage

Yeltsin's frequent illnesses have reduced him to a part-time leader, and has
encouraged Russia's leading politicians to begin informal presidential

Yeltsin says he'll serve out his term and scolded his potential successors
last month for what he said was a premature campaign.


Date: Wed, 6 Jan 1999
From: (William Kauffman)
Subject: Re: 2533-Pertman/Language Study

While traditional Russian language enrollments may be declining
there is a large untapped market for the Slavic language departments -
undergraduate and graduate students enrolled in science and engineering.
While the Russian economy may be in shambles that is where the technology
is and will be although the near term future business opportunities will be
in the Spanish speaking world.
However, with rare exceptions the Slavic Departments here have not
approached this nonconventional market except in their own terms - take
classes with the humanities majors. This has not worked and has discouraged
many engineers and scientists, who do after graduation attend night school
classes at the community colleges. The Russian language experts must
realize that science and engineering students have their own tough courses
which are the core of their academic effort and as such cannot spend hours
in language classes and labs on the other side of campus and hours
memorizing the endings for the different cases. They need to develop two
three-credit hour courses which emphasize THE CORE LANGUAGE SKILLS and hope
that the students will come back for the embellishments or pick them up on
their own. For my own part, while I may sound like the village idiot from
the depths of Siberia, I am still able to buy a tickedt for the ballet or a
bag of potatoes, or to exit at the proper subway station. I invite my
Slavic language colleagues to develop such an effort in order to address an
existing need. Those who will engage in the efforts of the International
Space Satation and whatever lies beyond, will be appreciative. Perhaps it
should be recalled that we did create "Physics for Poets!"


Date: Wed, 06 Jan 1999
From: Angela Stent <> 
Subject: My new book

Dear David,

I would be grateful if you put this announcement about
my new book on your list. Entitled Russia and Germany Reborn: Unification,
The Soviet Collapse and The New Europe (Princeton University Press, January
1999) it discusses Russo-German relations in the twentieth century, using
new archival material. It focuses on Soviet decision making during the
negotiations on unification; the development of Russo-German ties since
1991; Russia 's and Germany's place in the new Europe; NATO enlargement,
and future scenarios for Russian-German relations and their impact on
Europe in the next century. I interviewed many of the participants who
negotiated German unification, including Mikhail Gorbachev, and also
officials who are involved in current Russian-German ties. 


Russia: Media Face Dire Financial Straits
By Floriana Fossato

Moscow, 6 January 1999 (RFE/RL) -- In the aftermath of last year's near
collapse of Russia's advertising markets, the country's fully and partially
state-owned television channels are in desperate financial condition.

Several times in the last month, Russian Public Television ORT seemed to be on
the brink of bankruptcy. The state of finances at the fully state-owned media
holding VGTRK (RTR) is also far from satisfactory.

Throughout December, Moscow media circles anxiously expected the government to
announce some kind of initiative, aimed at dealing with the dire straits of
Russian television networks. In the last week of 1998, some important moves
were unveiled. However, few details are available, as the initiatives were
announced at the beginning of Russia's long winter celebrations and were
surrounded by secrecy. As a result analysts say a number of questions about
the future of Russia's fully or partly state-owned television networks remain.

In separate moves, President Boris Yeltsin and then a partnership of Russian
financier-turned-politician Boris Berezovsky and international media magnate
Rupert Murdoch announced they were coming to the rescue.

One day after a Kremlin meeting in which Yeltsin compared the heads of
Russia's main television networks to "power ministers," seemingly recognizing
their political weight, Berezovsky, the man who reportedly has heavily
influenced ORT in the last few years, finalized a deal with Murdoch to create
a joint advertising company. 

Unveiling the deal in an interview with the daily "Vremya MN," on Dec. 28, ORT
General Director Igor Shabdurasulov said the new company would start operating
in January and would have exclusive rights over the sale of ORT advertising,
thus replacing "ORT Reklama," a structure led by Sergei Lisovsky, the founder
of "Premier SV." 

In the same interview, Shabdurasulov said that President Yeltsin had signed a
decree that would allow ORT to obtain a $100 million line of credit from

Shabdurasulov said that the new -- and still unnamed -- advertising company
includes Murdoch's "News Corporation" and a number of Russian structures.
Apart from ORT, another television network in which Berezovsky has
considerable interests, TV6, and the Russian tycoon's car dealership, Logovaz,
will be part of the new company. 

Berezovsky owns 37 percent of TV6 and, through Logovaz, he directly controls 8
percent of ORT. He is also the leading force behind a consortium of banks
owning another 38 percent stake in the network. Liberal politicians ousted
from government in August have argued that Berezovsky also controlled the
network through top managers loyal to him. 

Shabdurasulov said that the advertising company will be controlled by its
Russian shareholders and added that their contribution to the venture will be
financial. However, it remains unclear where ORT will find the funds necessary
to participate in the venture. Shabdurasulov has repeatedly said in interviews
that ORT "does not have a penny in its coffers."

The former leader of the "Our Home Is Russia" faction, Aleksandr Shokhin, told
RFE/RL that "The coincidence in the timing (of the creation of the new
advertising company and of the presidential decree on ORT) raises
questions.... It would be very interesting to know how the Vneshnekonombank
credit line will function and details of its financial sources.
Vneshnekonombank is a state institution that does not have enough funds to pay
(Russia's) foreign debt. I cannot rule out that Vneshnekonombank could borrow
this money, maybe from Murdoch himself, and then use it as a loan for ORT."

Media experts forecast that the developments are likely to have important
consequences for the future of the first channel of Russia's television, as
well as for the country's advertising market. The president of another Russian
television network, REN TV, Irena Lesnevskaya, told RFE/RL's Russian service
that "a new monopolist is emerging on the Russian advertising market." 

Until the August financial crisis "Premier SV" had been one of the two main
players on Russia's advertising market (the other is "Video International," a
company that has the exclusive rights of advertising over NTV and RTR).

Ahead of the announcement of the new advertising deal with "News Corp."
Lisovsky was formally charged by the tax police with avoiding tax payments. 

Following the near collapse of the advertising market last fall, "Premier SV"
could not meet the terms of its contract with ORT and accumulated millions of
dollars of debt with the network, that in turn was on the brink of bankruptcy,
as it was unable to pay program producers, transmission providers and salaries
for its employees. 

Shabdurasulov has said that ORT currently owes some $100 million to its

Shabdurasulov linked the network's problems to preparations for Russia's
future parliamentary and presidential elections. Several bankruptcy suits were
filed -- and then revoked -- against the network for its inability to pay its
debt. In an emotional appeal for help from President Yeltsin, Shabdurasulov
said that "colossal pressure has come down on ORT" from Moscow Mayor Yury
Luzhkov and communist members of the Duma ahead of election campaigns.

It is not the first time Murdoch and Berezovsky have launched a common
initiative. In April, "News Corp." purchased 38 percent of PLD, a Russian-
based telecommunications provider, from London-based "Cable and Wireless" and
immediately sold half of the stake to Logovaz. Media analysts said then that
the venture would provide Murdoch and Berezovsky with satellite channels over
Russia and Europe, necessary for the broadcasting of television programs. 

After the April deal, the two media magnates denied they had plans to move
into media, but most observers remained skeptical. The December deal could
create new opportunities for Murdoch and Berezovsky.

ORT and government officials said the presidential decree providing for the
Vneshnekonombank line of credit would not be published. But Shabdurasulov said
that, according to the decree, a two-year loan will be given using part of ORT
shares as collateral. He said that between 12 and 16 percent of the shares,
evenly divided between the state and private shareholders, are to be
transferred to the bank. He did not give details of the shareholders'
distribution within the private stake transferred to the bank as collateral.

According to Shabdurasulov, Vneshnekonombank would not have the right of
transferring or selling the shares during the two-year period. He added that,
if the loan is not repaid, the state will lose nothing, as it will simply
repossess its own stake, as well as the private one.

Shabdurasulov, who called the loan a "tactical solution," acknowledged that it
is unlikely to bring security to ORT's finances, since it only equals the
amount of the company's debt. He said ORT has submitted to Yeltsin a plan to
sell an additional 25 percent of the company to private investors, preserving
for the state a controlling 26 percent stake, but further developments are at
the moment unclear. Some Russian media have suggested that Murdoch could be
interested in acquiring the stake. 

The Vneshnekonombank loan, without solving long-term problems for ORT, raises
a number of financial questions.

The liberal "Yabloko" faction's Igor Lukashev, a member of the State Duma's
committee on information policy, told RFE/RL that "there are doubts about the
legality of the decree. There is a law on the budget, where all incomes and
expenses should be included. Therefore, it is not clear where the $100 million
(of the loan,) not mentioned in the budget, would come from." 

Legislators note that Vneshnekonombank's standing is also unclear. Deputy
Finance Minister Mikhail Kasyanov recently said that Vneshnekonombank -- a
state-owned institution that is the payment agent for managing Russia's debt
-- could be on the brink of default.

In the last days of 1998, Russia effectively defaulted on an important part of
its foreign debt. It failed to pay $362 million on Soviet-era debts that it
owes to the London Club of commercial banks. 

The Finance Ministry and Vneshnekonombank had prepared a restructuring
proposal giving creditors new government-issued bonds instead of cash. Russia
needed to agree with 95 percent of its creditors on the new plan, but
reportedly only 72 percent approved it. However, Russian officials insist that
the approval of two-thirds of the creditors would be enough, as it qualifies
the changes included in its restructuring proposal as "non-essential." 

As creditors are seeking legal clarification, Kasyanov has already said that
the lenders could not declare Russia in default, because the entity legally
responsible is the debt agent, Vneshnekonombank.

Meanwhile, other Russian television networks are also seeking financial
support from the state. The president of VGTRK, Mikhail Shvydkoi, met last
month with Kremlin administration head Nikolai Bordyuzha, whom Yeltsin
recently asked to handle television issues. 

Following the meeting, Shvydkoi told RFE/RL service that the second, fully
state-owned channel "is looking for the possibility to obtain a credit,
although a lesser one than ORT." 

Shvydkoi added that television executives and government officials are meeting
to draw up a plan for the future financing of VGTRK. The plan, he said, will
be ready by January 15. 


Russians buy cars and homes as Christmas gifts to avoid tax law

MOSCOW, Jan 6 (AFP) - Despite economic woes, wealthy Muscovites started
celebrating the Russian Orthodox Christmas by giving themselves cars and
apartments before the introduction of a law forcing them to declare purchases
over 4,000 dollars.
The law, signed by President Boris Yeltsin and due to come into force on
January 24, is aimed at giving tax inspectors a clearer view of the real
revenues of the population.
Tax officials hope it will help identify tax dodgers, including a number of
people who 'forget' to declare their incomes.
Russians were only obliged to pay taxes themselves after the collapse of the
Communist regime in 1991, before which the Soviet state taxed them at source.
After the fiscal D-Day, individuals will have to declare any transaction
more than the value of 1,000 minimum monthly wages (around 4,000 dollars).
They will also be obliged to declare purchases they make during the coming
year which together total more than 3,000 minimum wages (around 12,000
However, the minimum monthly wage is fixed at only 83.5 rubles and remains a
largely theoretical figure, with most Russians, even the worst off, earning
One Moscow car salesman in a large showroom said that at the end of
Japanese Nissan autos and Swedish Saabs were "selling like hot cakes," with
sales up 20 percent on the same period last year. 
He added: "Clients tell me quite openly that they are hurrying to buy before
the famous law comes into force."
Staff at the central car dealers Presnya in central Moscow are also pleased
with developments.
"Normally there are no clients after December 20: they head off abroad to
celebrate the holidays," said saleswoman Svetlana.
She added: "But this year our Mitsubishi cars (costing between 27,000 and
55,000 dollars) went one after the other, with customers sometimes not even
bothering to look at the colour."
Several real estate agents have likewise reported a bumper festive season.
"It is not only the end of the financial year which has led to this slight
rise in real estate sales," said Andrei Soborov, director of the agents Moscow
"We have the approach of January 24 to thank for this 15 percent rise on
year's figures," he said.
Despite the economic crisis which has been raging since August and which has
seen the ruble lose 70 percent of its value, three-room flats in Moscow were
selling like Christmas trees at the end of last month.
Soborov said he expected an influx of even more customers just before the
law comes into effect.
He said: "It's in the Russian character to wait until the last minute."
He estimated that another group of buyers would be waiting to snap up
properties after the law is introduced, taking advantage of lower prices as
the number of purchasers dwindles.
"And don't worry about the revenue declarations: the people are used to
finding ways of sidestepping the rules," he added.
Alexei, a mechanic, echoed the sentiment.
"What can the law do if I say I bought my new car or second home together
my parents, my friends or friends of my parents?" he said.
Ultimately, nobody has forgotten the famous quip by the Russian writer of
last century, Mikhail Saltykov-Shchedrin, who said: "The severity of Russia's
laws is softened by the non-obligatory nature of their application." 


Money Supply Seen Growing But Still Low 

Rossiyskaya Gazeta 
5 January 1999
[translation for personal use only]
Roundup of reports from Aleksandr Potemkin's "Financier's Column"

Money Supply Growing [subhead]
Money supply in Russia is about 15 percent of GDP, which is several
times lower than in countries with a developed market economy.
The greatest tightening of money supply occurred in 1996, when it was
less than 14 percent of GDP (as against 18 percent in 1993). A steady
increase in ruble money supply began in 1997. However, 1998 saw a rapid
increase in resources held in foreign-currency accounts (expressed as
rubles) because of the explosive increase in the exchange rate of the
dollar. Money supply, including foreign-currency deposits, rose from 16
percent of GDP in 1996 to 23 percent of GDP in 1998. However, even
including resources held in foreign-currency accounts, money supply as a
proportion of GDP is much lower in Russia than in other countries. Money
supply continued to grow steadily in the fourth quarter of 1998. The State
Duma has confirmed a quarterly emission ceiling of 25.2 billion rubles [R].

Foreign Investors Not Hastening to Russia [subhead]
Direct foreign investment in Russia during the whole reform period has
remained at a low level.
Admittedly, a trend toward growth in investment has emerged since the
mid-nineties. For example, in 1995 and 1996 foreign capital investment in
the country's economy was approximately $2 billion a year, which was three
times greater than in 1994. In 1997 foreign investment topped $5 billion. 
However, capital flows from abroad began to dwindle in 1998 owing to the
crisis that broke out in Russia. Total direct foreign investment is
expected to be around $2.5 billion (it was $1.2 billion in the first half
of the year). [passage omitted covers inflation in the last two months of
1998, the need for Sberbank interest rates to serve as one of the main
regulators of money flows, and the start of restructuring of GKO and OFZdebt]


Paper Scorns Yeltsin's 'Work on Documents'

Sovetskaya Rossiya
6 January 1999
[translation for personal use only]
Article by Yevgeniy Ivanov: "What Is the President Doing?
Endless Day of Rest"

According to a brief ITAR-TASS report, Boris Nikolayevich Yeltsin will
spend 5 and 6 January, in other words the days before the [Orthodox]
Christmas holiday, "in his Rus residence near Moscow." And, of course, he
will be engaged in his most favorite presidential activity, that is to say
"work on documents."
In the past the head of state's press service did not try to explain
in advance precisely what papers Boris Nikolayevich was planning to
scribble his signature on. It would appear, however, that it is becoming
increasingly difficult to describe in words the president's extraordinary
preoccupation with state affairs, and hence it is necessary to show some
inventiveness. The ITAR-TASS report names documents that are "at the
present time under the president's examination...." These are the laws "On
the Coordination of the International and Economic Relations of the Russian
Federation Components" and "On Introducing Amendments and Additions to the
Russian Federation Criminal Code," which have been adopted by the State
Duma and approved by the Federation Council, as well as "others."
Having named one or two of these "others," the creative inventiveness
of the president's press service, alas, was exhausted. And no wonder. It
is, after all, increasingly difficult to conceal that which is universally
known. The influential London journal The Economist made the Kremlin's
terrible secret the central theme of one of its recent editions. The
journal entitled the article: "Nonpresident Yeltsin." And added the
following subhead: "Time To Put An End to the Fiction That Yeltsin Is
Running Russia...."


Date: Wed, 06 Jan 1999 
From: Keith Darden <> 
Subject: Belarus-Russian Union

After reading Simes' piece (JRL 3004) and some other recent writing on
Belarus, I want to clarify some things about the status of
Russian-Belarussian relations and about Belarus in general. Simes
states that "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." This is not the case. In
fact, Belarus and Russia have had a fully-functioning customs union with
one another since 1995. Over three years ago, Belarus, with some minor
exceptions, took on the Russian external tariff regime and adopted the
Russian legal base for foreign economic relations. The customs services
of the two countries were integrated, and the customs posts and border
checkpoints between the two countries were removed. The customs union
does not remain to be worked out, as Simes states in the message. It
already exists.

Currency union is another matter. There was an attempt at currency
union in 1993-4, but this was scuttled with the election of Lukashenko,
strange as it may now seem. The sides could not come to an agreement on
who should control the emission of currency (whether the Russian central
bank, both central banks, or a joint bank) and they could not set a
mutually acceptable exchange rate for the Belarussian ruble and the new
joint currency. I doubt very much that these two issues have been
resolved. They may be resolved within the year, but it will take some
concessions from the Russian side (which they have traditionally been
hesitant to make). Regardless of its ultimate effects, the recent
treaty with Belarus is not coming out of the blue. A major agreement is
signed every year. Some aspects always go un-implemented, but a good
bit of integration has already taken place. 

Putting the issue of relations with Russia aside, I wanted to bring some
other matters about Belarus to the fore. There is a common
misperception that the Belarussian government makes up its economic
figures, particularly its 10% growth rate. I was told by a very senior
western economist working closely with the Belarussian government that
this is probably not the case. But a 10% growth rate does not
necessarily mean that the economy is healthy. The story is that
Lukashenko simply commands factories to produce, even if they are
producing at a loss. Hence, production grows, but the factories don't
sell much and most factories I visited there had massive stockpiles of
their goods stored up. Nonetheless, production increases. Moreover,
the government was lending out money for new construction at 2% interest
rates. Given that inflation was in the high double digits, this meant
that the government was giving money away in order to spur production. 
All of this contributes to the growth, but not the health, of the
economy. Thus, the government isn't doctoring the books, but one needs
to think more carefully about what lies behind the figures. 
Unfortunately, an analysis of what growth figures mean (particularly in
other so-called successes like Georgia) rarely accompanies their
publication in the wider press.

I also cannot help noticing that people often seem to forget that
Lukashenko was democratically elected, that his referrenda were not
rigged, and that Belarussians do not live in an insulated Stalinist cave
with no information other than that fed to them by the regime. True,
Belarussian national TV expresses the views of the government, but few
people rely on Belarussian TV for their information. Unlike some of its
neighbors, Belarus does not block Russian broadcasts and (at least in
Minsk) everyone that I knew received and watched all three of the main
Russian channels (ORT, NTV, RTR). Until recently the main opposition
press, Svoboda, was still publishing in Minsk despite its harassment by
the regime (I understand that it is now publishing again, but under a
different name). Several opposition papers were also trucked in from a
press in Lithuania. All these papers were sold openly on the street in
the capital when I was there a year ago. Also, Belarussians usually
have family members or friends in other post-Soviet countries and hear
about conditions elsewhere through these channels. But, not
surprisingly, they often don't like what they hear. It is not because
of a lack of information that they fail to see things the way we want
them to. 

In short, we might not like the way they choose their flag, or their
leaders, or their relations with their neighbors, but it isn't our
country and we can't do their voting for them. And no one can argue
that they have not been as free (if not more) to choose their fate as
any of their neighbors. All polls indicate that the idea of union is
strongly supported on both sides of the border. I don't really think
that it is in American interests to interfere.


Date: Wed, 06 Jan 1999 
From: Victor Chudowsky <> 
Subject: belarus union

Re: Simes/Belarus in JRL #3004


Dr. Simes is absolutely correct that the Belarus/Russia union is
a "harbinger of things to come." However, much commentary and
coverage of this event on JRL has viewed it in isolation of other
"things to come" in the CIS, and sooner than we think. This
event is not only about a union with Lukashenka's neo-Soviets on
a small chunk of 25% radioactive real estate, in order to counter
NATO expansion. What has gone virtually unnoticed is that during
the very same week that the Russia-Belarus union was touted, the
Russian Duma ratified the long-delayed Friendship and Cooperation
treaty with Ukraine. This event may be just as significant.
The treaty was signed by Yeltsin and Kuchma last year. It
was noteworthy because it was the first unambiguous recognition
of Ukrainian sovereignty outside of the legal parameters of the
CIS treaty. Russia got to rent the base at Sevastopol, while
Ukraine won recognition of its borders and control over the city
of Sevastopol and the Crimean peninsula. The Ukrainian
parliament ratified the treaty immediately, while the Russian
Duma refused, basically over the fleet, Sevastopol and Crimea,
and rights of Russian-speakers - the feeling was Yeltsin gave too
much away. 
A year later, the Russian Duma suddenly changed its mind and
ratified the treaty in order to fulfill their hopes that
Ukraine's relationship with Russia would follow the example of
the Belarus/Russia union. This, at first glance, seems
counterintuituve - recognizing Ukraine's sovereignty in order to
unite with it. However, the Duma vote was based on a shrewd
reading of Ukrainian politics, namely:
1) public opinion in Ukraine indicates more Ukrainians feel
their country should be allied with other Slavic countries rather
than Europe;
2) roughly between a third and a half of the current
Ukrainian parliament would support some sort of union, while
perhaps a majority would favor closer integration with the CIS by
joining the CIS interparliamentary assembly and the CIS military
alliance. In the past, votes supporting such have been boycotted
by rightists, preventing a quorum. It is difficult, of course,
to separate what is meant by "union" as opposed to "alliance" to
the Ukrainian left, but most want a close military, economic and
political relationship with Russia on the basis of sovereignty; a
far smaller number want an end to Ukrainian statehood and full
union with Russia.
3) the current speaker of the Ukrainian parliament (and
perhaps the 2nd most powerful politician in the country)
Alexander Tkachenko, supports a Ukrainian "union" with Russia,
including a common currency.
In short, supporters of Kuchma's "pro-European" foreign
policy are on the defensive, while those favoring union with
Russia are on the offensive. Duma speaker Gennady Seleznev
recently addressed the Ukrainian parliament and was warmly
welcomed by the left, which later raised a red flag in the hall. 
Tkachenko then traveled to Moscow - while supporting a union, he
wanted the treaty signed first, so the two countries could unite
as equals. The Duma realized that the best way for the two
nations to draw closer was to recognize Ukrainian sovereignty and
use the carrot rather than the stick. The previous policy of
nationalist blather was not working. In short, it was
Tkachenko's initiative and his demand - sovereignty for a closer
relationship - which got the treaty signed.
Kuchma, on the other hand, was embarassed last month when the 
Council of
Europe again threatened to kick Ukraine out over human rights and
legal issues, again showing how problematic "pro-European"
foreign policy is without "pro-European" domestic policy.
So, the Belarus/Russia union is an effective political tool
aimed at Ukraine - it keeps the idea of reunion alive in
Ukrainian politics. For Russia, a union or formal alliance with
Ukraine would be a far greater prize than Belarus - 52 mil
people, a sizable weapons and space industry, profitable steel
and chemical industries, tons of food and a vast amount of real
estate. The cost of such a "union" is not a consideration for
anyone apart from the shrinking band of Russian and Ukrainian
liberals. Their opponents feel time is on their side - after
all, presidential elections will be held soon in both countries.


Date: Tue, 05 Jan 1999
From: (Rus Postel)
Subject: Re: 3003/Privatization

Much has been written in these columns about the apparent failure of
and the question of responsibility. While it is clear that there are many
that affect the results of economic policy so that surprises occur, still
the powerful generally have the means to 'correct' 'adjust' and 'fine-tune'
policies, they generally are able to end up on their feet, with more in their
pockets. I find that in examining historical events, it is most useful to
who benefited and how they achieved that. It is also very helpful to
the motivations of the actors when possible. Of course in an evolving
it is difficult to make those determinations as the play is still being
acted out.

Nevertheless, we can begin to see and we can project based on history.
First we
must stop assigning a beneficent desire to "help a struggling people achieve
democracy and stability" as US policy. US policy is developed by a small group
made up of a few elected (by less than 50% of the population) officials, their
appointees, often representatives of the wealthy class, and advisors, more
of the wealthy class, and academics that cater to the wealthy class. In the
economic policies have resulted in extremely unequal distribution of
wealth, with
a small % of the population owning most of the wealth, a growing underclass
struggles with poverty, and growing reluctance by the wealthy to support
the rest
of society (witness reductions in social spending). Who do US policy makers
to deal with in other countries? I think we can learn from history. Looking at
nations where US has had significant influence (South American countries,
Eastern countries after W.W.II, Indonesia), it becomes clear that US is not so
concerned about the legitimacy of these governments (elected vs
non-democratic) as
about being able to have access to resources, labor and markets. These are the
interests of the US 'oligarchs'.
How has privatization occurred in countries in which the US has significant
influence? In the US itself, the rich get richer. In the recent 'give away'
of new
TV bandwidth, those already owning rights to existing bandwidth, i.e. the
conglomerates, just got more. The public got ... nothing! Oh, I should say
get the opportunity to view more commercial broadcasting, and further
enrich ...
our oligarchs. In the late 1800's, the US privatized millions of acres of
land as
encouragement to have railroads built. Who benefited? The families of these
capitalists are still among the richest. The public got the railroads,
which were
profitable for the operators, these same capitalists. Who were/are these
capitalists? Are they greedy, do they avoid taxes, are they concerned about
good (enough to act on that concern)? In other countries we similarly do
not ask
many questions. In fact it is easier to understand the needs and
motivations of
another capitalist, and find ways to cooperate many times, than it is with a
So it is of little concern to US policy makers who gets the goods. Of
is whether they'll deal on favorable terms.
However, these things are rarely left to chance, and it is well known by most
readers of this list that the US has illegally tampered with Russian politics,
like the most recent presidential election in which the US supported Yeltsin
monetarily, and the events in '93. It will be interesting if/when we are
to see CIA files regarding US involvement in this period, eh?
As bleak as current situation seems to be in Russia, does it signal a policy
failure? If so, why does the US government continue to promote the 'failed'
policy? I suggest that if there are not major changes in the situation (for
example, if privatization were to be reversed), that in time US policy will
to have been 'successful' by its own criteria: US (and now multi-national)
will have free access to natural resources, Russia may possibly provide
very cheap
labor and western firms will have greater access to Russian markets, without
onerous tariffs. Bonus points if Russia maintains a strong enough military,
as our
oligarchs, like oligarchs from time immemorial, are invested in military
and love those government subsidies for development and manufacture of such
, and
as we are currently bombing our main antagonist in the cradle of
civilization back
into the stone ages (thereby symbolically ??? what does this symbolize?) we
need a potential threat to justify our HUGE 'defense' expenditures.

If westerner contributors to this (great) list insist on maintaining their
pollyanna view of the US as the wise, just, concerned culmination of social
evolution, they aren't providing useful insight to Russians or Americans, or
anyone. What is needed is rigorous and honest review of facts, historical and
present. Only then will we be able to develop thoughts and plans for
improving the
lives of all humanity .... if that's of interest.

author is Californian student of world economics.


Date: Tue, 05 Jan 1999 
From: (Fred Weir)
Subject: Canadian food aid

Canadian food aid set to arrive on Russian Orthodox Christmas eve
By Bruce Cheadle
OTTAWA (CP) A chartered Canadian jetliner is winging to
Siberia today to deposit 14 tonnes of humanitarian aid in some of
Russia's most remote and inhospitable arctic communities.
The benefactors led by the Canadian Red Cross and the
Canadian International Development Agency and funded by the
federal government are well aware their unprecedented mission
will be but a frozen drop in the icy expanse of Russia's troubled
Far North.
But the initial $500,000 worth of goods, most of it
foodstuffs, is seen as an opening to further aid for the region.
``It's like an introduction, a reconaissance,'' Judith
Lavoie, Europe desk officer of the Canadian Red Cross, said
Monday at the Ottawa hanger of Inuit-owned First Air.
``It's difficult to have an accurate report on what's
going on so we are going to have a look.''
Russia's Far North is home to some 12 million people,the
legacy of Soviet-era economic planners who built permanent
communities on the tundra to develop raw materials.
But with the collapse of the former U.S.S.R. and Russia's
subsequent financial troubles, the region's unsustainable
population increasingly has been left to fend for itself. This
year's economic meltdown, combined with drought,
floods and an unusually early and harsh winter, have led to
forecasts of the hardest northern winter since the Second World
A key task of today's mission will be to scout out how
bad things really are and discover what type of aid is
particularly needed.
The Boeing 727, chartered from First Air on a
cost-recovery basis, will deliver flour, margarine, condensed
milk, cooking oil, blankets, wooden matches and other goods to
about 1,500 people in three mainly aboriginal villages in 
Chukotka, an area the size of Alberta near the Bering Strait.
``We hope that this will be of help to them,'' said Diane
Marleau, the minister responsible for international co-operation.
``It happens that these supplies are arriving on Orthodox
Christmas (eve) so it's kind of a nice touch as well.''


FEATURE - Russian crisis brings down office rents in Moscow
By Tatyana Ustinova

MOSCOW, Jan 7 (Reuters) - Russia's financial crisis has injected a new
competitive edge into the commercial real estate market and brought down
rents, but experts are not sure if the bottom has been reached. 
The crisis, which erupted last August with a devaluation of the rouble and a
moratorium on some foreign debt repayments, led to an exodus of foreign
investors and forced big redundancies at those banks and brokerages which
The resulting glut in office space has sparked some brisk trade as companies
look for cheaper accommodation or seek to sub-let part of their existing
property. Moscow landlords are discovering what it means to operate in a
tenants' market. 
Those companies which have stayed afloat are tending to renegotiate rental
terms, seeking a better deal, or are sub-letting surplus premises to third
parties, thus creating a secondary market of cheaper office space. 
``All that has provoked the revival of the market, raising the number of
deals, with clear downward pressure on rents,'' according to a survey by
Russia's Guild of Realtors. 
``There is such a tendency and it has revived the market by offering more
space,'' Konstantin Aprelev, the Guild's vice president, told Reuters. 


Aprelev saw pressure on rents coming from the emergence of new free space on
the market as companies downsized because of the crisis and sought to save
money by sub-letting. 
The offices available for sub-letting are generally high quality space
requiring little extra spending on refurbishing. 
``About 40,000 square metres (430,600 square feet) of Class A office space
will become available in this sub-market through the first quarter of 1999 as
a result of downsizing,'' according to the latest market review by Noble
Gibbons, international real estate advisers. 
At present, there is a total of about 150,000 square metres (1.615 million
square feet) of free space on the Moscow market, with 30,000 of this class A,
according to realtors. 
Noble Gibbons estimates about 32,000 square metres of additional newly
c onstructed Class A office stock will emerge by spring to compete with fully
fitted-out sub-lease space. 
Some high-profile projects were completed in 1998 or are due to be completed
in 1999. 
For example, the construction of a 30-floor office tower, part of the
ambitious Moscow International Business Center project, known as Moskva-City,
is expected to be completed early in 1999. 
Turkish Enka has already launched two office blocks with almost 25,000
metres of high quality premises in a huge business complex on Paveletskaya


Rents for new office space have dropped almost 20-25 percent from pre-crisis
levels, according to real estate experts. 
Noble Gibbons says that average asking rents for fitted-out Class A offices
fell to around $600 per square metre per year from $700 in the summer. It
expected a further decline in the short term to about $500. 
In most cases rents for Class A space sub-leased from major multinational or
Russian financial institutions is negotiable and may reach a much lower level.
Aprelev said the drop in rents corresponded to the level of losses
suffered by
businesses. ``The rental price has almost halved,'' he added. ``And it is
fairer as Moscow has always offered artificially high costs on the market. 
``There has never been such an offer before and the prices are fair but
it is
clear that they will go down further.'' 
Some real estate consultants hesitated to predict the future. ``It is too
early to say how far the continuing and expanding crisis will depress office
rents,'' says the latest review of Stiles and Riabokobylko, Healey and Baker's
Moscow partner. 
Some believed that without economic revival, transparent legistation and,
importantly, political stability, the market will remain depressed. 
``Every indicator points to a further softening in prime rents over the next
six or 12 months,'' Noble Gibbons said. 


However, Noble Gibbons forecast a possible shortage of high quality office
space as some developers are putting on hold construction projects as the
crisis develops. 
``Then, if the crisis proves to be short-lived, office rents may firm up as
demand for the space again eclipses supply,'' said the Noble Gibbons review. 
Meanwhile, multinational companies with long-term commitments to Russia
in the market and are confirming leasing arrangements. 
Gren Carr-Jones, managing director of Pioneer Real Estate Advisors, said he
had not noticed a slump in his business. 
``We have concluded leases since August 17 actually at the same level as we
agreed prior to this,'' he said, adding that buildings with good international
property management remained appealing. 
``The number of buildings which look attractive is limited and once that is
taken up, I think prices will revert back to near what the top quality rent
price was prior to August 17,'' he said. 
The Russian Guild of Realtors predicted a bumpy long-term recovery period
ahead for the economy. ``The real estate market as part of Russia's economy
will follow the same route to recovery and reach the level of summer 1998,''
it said. 



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