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Johnson's Russia List


January 8, 1999    
This Date's Issues: 3007 3008  

Johnson's Russia List
8 January 1999

[Note from David Johnson:
1. AP: Poll: Many Russians Exhaust Savings.
2. Reuters: Tough US monitoring of Russia food aid urged.
3. Kathy Crane: Re: 3006-Kauffman language study for scientists.
4. Reuters: Russian patriarch urges faith in hard times.
5. Christian Science Monitor: Judith Matloff, MOSCOW MAYOR.
Russia's dynamo 'candidate.'

6. AFP: Gov't Draws up Privatization List for '99.
7. RFE/RL: Ben Partridge, Central Asia: Ethnic Russian Population

8. Ekonomika i Zhizn: Regional Businesses Respond to Crisis.
9. Sovetskaya Rossiya:Aleksandr Portnov, "Holes in the Treasury.
Prof. Aleksandr Portnov on the Realities of the Budget."
('Virtual Budget,' Crooked Regime Lambasted).

10. The Economist: Russia and Belarus. Hallo Minsk, farewell Kazan? 
11. Business Wire: From Abkhasia With Love.]


Poll: Many Russians Exhaust Savings
January 7, 1999

MOSCOW (AP) -- More than half of the people in Moscow questioned by a poll
have exhausted their savings -- and the situation may be even worse in the
rest of Russia.

The poll released Thursday found that 54 percent of about 800 residents
surveyed said they no longer had any savings. The Russian Center for Public
Opinion Research did not provide a margin of error for its poll.

Russia is in its worst economic crisis since the fall of the Soviet Union
being hit in August by the global crisis in emerging markets. Many Russians
lost their jobs and have been living on their savings, while others saw their
money disappear when dozens of Russian banks collapsed.

The situation is likely to be more serious outside Moscow, one of the few
places in Russia to have experienced significant prosperity in recent years.
Other parts of Russia have endured years of economic decline.

Asked if they would deposit money in a foreign bank because they no longer
trust Russian banks, 34 percent of those surveyed said they would do so, the
poll said. Of those who would use a foreign bank, 63 percent said they would
choose a Swiss bank, it said. The poll was conducted at the end of December.


Tough US monitoring of Russia food aid urged
By Doug Palmer

WASHINGTON, Jan 7 (Reuters) - A key member of the House of Representatives
accused the Clinton administration on Thursday of doing too little to ensure
that U.S. food destined for Russia under an $850 million aid package does not
fall into the wrong hands. 

``It just seems to me that where the U.S. package fails is in the
distribution,'' Representative Marcy Kaptur, an Ohio Democrat, told reporters.
``The possibilities of graft are considerable on every level.'' 

Kaptur threatened to use her position on the House Appropriations Committee to
cause ``major problems'' for the White House unless it heeded her advice and
expanded the role of key U.S. agencies, such as the State Department, in

The White House has left too much oversight responsibility to the U.S.
Agriculture Department, which is ill-equipped to carry out the task, said
Kaptur, who visited Russia in late November and early December. 

At a separate event, U.S. Agriculture Secretary Dan Glickman said Kaptur had
``some very legitimate concerns, but I think we can address them.'' 

Later this month, Glickman will travel to Moscow. A major reason for that trip
is to develop a ``personal confidence'' that systems are in place -- or soon
will be -- to ensure proper distribution of the aid, Glickman said. 

Shipments have not yet started under the food aid package, which was finalised
shortly before Christmas. 

U.S. officials scrambled to put together the package in response to the worst
Russian grain harvest in 50 years and a severe financial crisis that has
curbed Russia's ability to purchase imports. 

In a recent letter to Kaptur, Glickman also said that Russia could have
problems feeding itself for some time to come because of credit, fertiliser,
seed, fuel, machinery, and agricultural chemical shortages that threaten the
1999 crop. 

A major portion of the U.S. food aid package is a 1.5 million-ton wheat
donation. The Russian government will distribute 400,000 tons of that to needy
groups in nearly 50 regions or oblasts specified by the agreement. 

The Russian government will sell the remaining 1.1 million tons at market
prices and use proceeds to finance the government pension fund. 

Kaptur expressed concern that the wheat and other donated commodities could
fall into hands of ``the Russian Mafia'' instead of making it to needy groups.

The 10-term congresswoman also said she was worried that proceeds from the
wheat sales could be used to finance Russian political campaigns instead of
the pension fund. 

The U.S. Agriculture Department plans to send two full-time auditors to keep
tabs on the food aid shipments, but that is not enough, Kaptur said. 

``Many eyes'' from throughout the administration are needed ``to watch what's
going on,'' Kaptur said. 

The United States should also use its leverage with the International Monetary
Fund by asking that agency to make proper distribution of the U.S. food aid
package a condition for more IMF loans to Russia, she said. 


Date: Thu, 07 Jan 1999
From: Kathy Crane <> 
Subject: Re: 3006-Kauffman language study for scientists

As an oceanographer in charge of joint US/Russian expeditions in the
Arctic, I must concur with William Kauffman's statement on the need for
Slavic Language departments to address the needs of scientists and engineers.

It is Russia that owns tens of first class oceanographic vessels, deep diving
submarines, nuclear icebreakers and submarines; not the hispanic countries.

In fact Russia's facilities in oceanography and certainly in the Arctic
have been in cases superior to the American facilities. This plus other
concerns related to global stability, are what push the large and growing
collaboration in the sciences and engineering between Russia and the US.

I have learned my
broken Russian through numerous night classes, (which
I never could attend on a regular basis), at Russian parties (which tend
to be much more colorful than night classes) and at the bottom of the ocean
when I needed to know the difference between "take me up vs take me down".

Scientists and engineers involved in these collaborative projects, be they
in the deep ocean or in deep space, need to communicate with their
shipmates; they need to plan delicate coordination of equipment, of a mission
in general... communication between the parties can make or break
an effort to collaborate. 

It was the scientific and engineering community in the USSR that was the
most outspoken in favor of democracy... of change. 
Today, most of the attention in the western news (and probably Russian news)
has a focus on the business community leaving the Russian scientists and 
engineers "out in the cold". Yet, there is a substantial effort on the
part of the United States to collaborate with Russian scientists. The
US business community may be running away from Russia, but the scientists
are not. We were never in this for the money.
The US Slavic
language departments could make an enormous impact on our abilities to
collaborate fully with our Russian colleagues by providing language classes
geared towards our needs.


Russian patriarch urges faith in hard times
By Adam Tanner

MOSCOW, Jan 7 (Reuters) - Russia's Orthodox Church is regaining strength
despite the severity of the country's crisis, its patriarch said in a
Christmas message on Thursday. 

``It was not an easy year for Russians,'' Patriarch Alexiy II said in an
interview on Moscow's TV Tsentr channel. ``It was a tough year for the

``But a Christian should always be an optimist,'' he said. ``If we feel that
God is with us it will be easier to live through all difficulties.'' 

The patriarch's interview was aired on the day Russians celebrated the Eastern
Orthodox Christmas by lighting candles, kissing icons and ringing bells in
ceremonies that underscored the revival of religious tradition since the fall
of communism. 

The past year was especially difficult for many Russians because of the sharp
devaluation of the rouble and near-collapse of the banking system following a
decade-long economic depression. 

The patriarch said that faith was especially strong in Russia's remote
provinces, where neighbours had come together to survive in hard times. 

``There is much more patience among people deep in the provinces,'' he said.
``The church is still reviving despite the difficulties.'' 

Moscow, blanketed by a heavy snowfall overnight, resounded to the peal of
bells on Thursday from the huge, newly rebuilt Cathedral of Christ the
Saviour, where Alexiy officiated at an overcrowded service. 

On Wednesday evening at the same cathedral, the bearded patriarch conducted a
midnight mass attended by Prime Minister Yevgeny Primakov, Deputy Prime
Minister Valentina Matviyenko and other senior government and Moscow city

The ministers' attendance highlighted the strong ties between church and state
in the post-Soviet era. 

At mass, the colourfully robed patriarch urged Russians to show fortitude and
compassion for their neighbour in these times of deep economic crisis. 

A Kremlin spokesman said President Boris Yeltsin was resting at his Gorky-9
residence outside Moscow. 

But in a Christmas message to the patriarch and all Orthodox believers on
Wednesday, Yeltsin praised the church's role in Russian national life and
warmly welcomed its reviving strength. 

``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. 

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

The Cathedral of Christ the Saviour is the most visible proof of the church's
reviving fortunes in the Russian capital, where it now dominates the skyline
as it did in tsarist times. 

Blown up on Josef Stalin's orders in 1931 and later turned into a swimming
pool, the cathedral has been rebuilt at breakneck speed in the past few years
on its original site, not far from the Kremlin in central Moscow. 


Christian Science Monitor
JANUARY 5, 1999 
Russia's dynamo 'candidate'
Judith Matloff 
Staff writer of The Christian Science Monitor


According to his aides, every time Moscow Mayor Yuri Luzhkov ponders a
decision, he asks: "What are the consequences?" These four words
quintessentially sum up the approach of the man many believe could be Russia's
next president.

The burly, bald dynamo in well-cut suits, who struts into rooms like a boxer
entering a ring, has built a fortune and a state-within-a state in the
capital, with an eye on the Kremlin.

Launching his Fatherland party last month, Mr. Luzhkov billed himself as the
best man to lead Russia out of its economic meltdown. Love him or hate him,
Muscovites can be heard uttering a mantra that awakens comparisons to the
train-running abilities of Italian dictator Mussolini: "Luzhkov gets things

Though not officially a candidate, he is generally expected to run for
president in 2000; sooner if President Boris Yeltsin should step down for
health or other reasons or die in office.

Luzhkov trained as an engineer and worked in the Soviet chemical sector before
cutting his political teeth during the perestroika years of Communist
liberalization in the late 1980s. Detractors maintain he is an authoritarian
mobster who runs this city of 10 million with a personally oiled political

Luzhkov will deny this. But since he became mayor in 1992, the city government
has gained a stake in nearly every major business in town from real estate
developments to hotels, restaurants, a television station, and an oil
refinery. He has fought off privatization of Moscow enterprises by the state.

Savvy administrator

To his credit, Luzhkov has displayed an acumen for administration impressive
by any megalopolis standard. He took over a capital filthy with Soviet decay
and brightened it into a place bustling with business.

Broken street lamps were replaced, potholes were filled, crumbling classical
façades were restored, and a new highway was built to relieve Moscow traffic.
Billions of dollars of investment poured into the city, which controls 13
percent of Russia's gross domestic product and 80 percent of its financial

Like the rest of the country, Moscow is suffering from the financial crisis.
Rents and taxes are down, banks and businesses that filled city hall coffers
are folding. But this seems to have made no dent in Luzhkov's popularity and
he has enough funds to run his campaign. Public opinion polls show him ahead
of many rivals.

Moscow resident Oleg Klodt says, "Luzhkov has shown us while running Moscow
that he is a very good chief. It doesn't matter to me if he's in the mafia. I
think he's better than the other candidates."

Urban legends abound of the lengths he will go to rejuvenate the city. One has
it that he seeded clouds outside the capital so the heavens wouldn't open on
his grandiose celebration of Moscow's 850th anniversary two years ago.

What is fact is the mayor's extravagant rebuilding of the Christ the Savior
Cathedral blown up by Joseph Stalin in 1931. The job required millions of
dollars, coming in part from businessmen seeking favors from City Hall.

Controversial policies

Critics describe Luzhkov as a control freak short on human kindness.
International human rights groups are outraged over his revival of Soviet-
style residency permits and the city police harassment of people with darker
skin tones, such as ethnic Chechens and African refugees. Moscow's tens of
thousands of homeless complain little has been done for them.

Staff, while praising the mayor's fondness for consultative teamwork, tiptoe
around his brusque temper and refrain from smoking in his presence.

"He, well, barks," says one person who has worked closely with Luzhkov.

The mayor doesn't seem to care what people say and already conducts himself as
though he were president, flying to Germany in December to make contacts with
the new government and signing cooperation deals with foreign cities.

Luzhkov cultivates an image of physical vigor to highlight the contrast with
President Yeltsin, sidelined with health problems for much of the past year.
Every Wednesday at 7 a.m. the mayor can be seen playing soccer at Moscow's
Luzhniki Park.

Luzhkov never misses an opportunity to make it known he gave up smoking and
drinking 10 years ago, rare healthy moves for a Russian man, and that he often
works late into the night and on holidays.

The mayor displayed his characteristic robustness at his party's founding
congress last month. Those looking for clues to Fatherland's ideology need not
look beyond its name. The platform has a pronounced nationalist-populist
flavor, with such slogans as: "Food and warm homes for all," "Stronger
leadership," and "Deeper ties with non-Western states." First and foremost is
a call for obedience to law. "We will restore authority in the country,"
Luzhkov declared at the congress Dec. 19. This desire for greater state
control may awake memories of Soviet-era totalitarianism, but it is reassuring
to many Russians during a turbulent time.

Other pronouncements do not bode well for free-market reforms. Blaming US
advisers for Russia's economic collapse, Luzhkov denounced what he termed
"vulgar monetarism" and said Russia should return to the state privatized
enterprises that were sold off "illegally."

Presiding over Russia's economic powerhouse gives Luzhkov a strong base to
prepare his campaign, but he must work hard to overcome outlying regions'
traditional hatred of rich Moscow to win a national vote. Aware of this,
Luzhkov has been busy networking in the hinterland, making deals with
provincial leaders and pledging anything from schools to jobs.

For instance, Luzhkov contracted marble from Khakassia, 2,000 miles southeast
of Moscow, to build the cathedral. In the process, he created quarry jobs and
hobnobbed with powerful aluminum industry bosses there. The result? The wooing
of votes from rival presidential contender Alexander Lebed, the local
governor's brother.

In another case, he sent a trainload of impoverished Moscow children on a free
holiday to a moribund resort village in the Caucasus mountains. Voilà - more
voters in the bag.

Many pundits believe that if elections were held today, Luzhkov's only real
rival for the presidency would be Prime Minister Yevgeny Primakov. Aides do
not rule out an alliance between the two men, but are coy about plans.

Pressed on the matter, one staff member gave a Luzhkov-type reply: "He is
considering the implications."


Gov't Draws up Privatization List for '99 

MOSCOW, Jan. 07, 1999 -- (Agence France Presse) Russia's impoverished
government has drawn up a list of 11 companies to be totally or partially
privatized in 1999, which could put billions of dollars into its empty
public coffers, Interfax reported Thursday. 

Chief among the proposals is the sale of a 25 percent stake in the
Svyazinvest telecommunications giant, the privatization of which was
shelved last year amid Russia's economic crisis. 

The stake, valued at 14 billion rubles ($640 million), is to go under the
hammer before July, Interfax reported, without citing sources. 

The state also plans to sell off another 2.5 percent in gas giant Gazprom,
following the successful sale of a first 2.5 percent last month to the
German energy company Ruhrgas for $660 million. 

That sell-off capped a miserable year for the State Property Committee,
which had a struggle to lure investors to take stakes in state-held
companies due to the Russian financial crisis and market meltdown. 

Also slated for privatization in 1999 is a 9 percent stake in oil major
LUKoil. The starting price is 4 billion rubles, Interfax reported. 

The government will need privatization proceeds to help counter a budget
deficit of more than 100 billion rubles. 


Central Asia: Ethnic Russian Population Decreases
By Ben Partridge

London, 7 January 1999 (RFE/RL) -- A new study says the demographic
composition of several Central Asian nations is undergoing a fundamental
change because of the departure of a large number of ethnic Russians since
the late 1980s.

The study also says the average age of Russians remaining in Central Asia
is much higher than that of the local population, and they constitute a
disproportionately large number of pensioners.

It says: "Within the next decade or so, death from natural causes will be
the main factor behind the decreasing number of Russians."

An analysis of demographic changes in the Central Asian states is contained
in "Russia and Central Asia -- A New Web of Relations" written by Lena
Jonson, a senior research fellow at the Swedish Institute of International
Affairs in Stockholm and the Royal Institute of International Affairs in

An influx of Russian settlers arrived in Central Asia in the wake of
Russian troops in the 19th century. They played a major role in
agriculture, irrigation, the building of railroads and towns, and the
founding of heavy and mining industries. After World War II, an influx of
Russians continued -- particularly to Kazakhstan. They were lured by
industrial schemes and housing programs.

After the 1991 breakup of the Soviet Union, the ethnic Russian population
in Central Asia was some 9.5 million -- or 19.5 percent of the total
population. Russians held a privileged position in society, and were
well-represented in politics, administration and the sciences.

But Jonson's book notes that the pattern had begun to change by the late
1980s. First, the Russian population had begun to leave for Russia; second,
the indigenous elite had initiated a process of "cultural nationalization;"
and third the Russian language began to lose its privileged position.

In the late 1980s, the large number of Russian immigrants from Central Asia
took the Gorbachev administration by surprise.

Some 250,000 people left Kazakhstan in 1994. The Russian exodus from the
Central Asian region peaked in 1995, but fell off in the following years,
although remaining fairly high. Ethnic Russians comprised more than half
the migratory flow, ethnic Germans almost a quarter, and Ukrainians some 8
percent. The exodus was sparked by economic reasons, including a crisis in
heavy industry, and by a cultural awakening in the Central Asian societies.

Jonson says new laws on citizenship did not discriminate against the
non-indigenous population, offering the possibility of becoming
nationalized citizens to all those already resident in the country. Still,
the Russian population felt marginalized. Outbreaks of ethnic violence, as
in Uzbekistan's Fergana Valley in 1989, contributed to a fear among
Russians that they had no future in Central Asia, despite the fact that the
ethnic violence was never directed at them.

In 1996, Russian authorities reported that a total of about one million
immigrants a year had recently been arriving in Russia, the majority of
them from Central Asia. They said 2.9 million people were likely to arrive
from Central Asia in the next few years.

In 1989, Russians made up 21.5 percent of the Kyrgyz population, but only
18 percent by 1994. In the same period, the Russian proportion of the
population in Kazakhstan dropped by 2 percent to 36 percent. Across the
region, the Russian population is declining.

The study says one important consequence of this trend is that the cultural
orientation of the Central Asian states will change. The report predicts:
"In future, the Central Asian countries are likely to turn their attention
southwards to countries with which they share cultural affinities, such as
Turkey, Iran and Pakistan." A similar process is taking place in Kazakhstan
and Kyrgyzstan in their relationships with China.

The report says: "The consequences of these processes will be that what was
once a common cultural legacy will dissipate, and Russia and Central Asia
will draw further apart."

Moscow has pursued a dual policy over the Russian minorities in Central
Asia. On the one hand, the administration of President Boris Yeltsin has
stressed that the rights of Russians in diaspora are inseparable from those
at home. On the other hand, Moscow, fearing an influx of Russians from
Central Asia, has encouraged them to stay put.

A five-point Russian government program finalized in August 1996 called for
legal safeguards for the rights of the Russian populations abroad; for
economic support for compatriots abroad; and for guarantees on the use of
the Russian language. However, Moscow has faced problems in implementing
the program.

No money has been forthcoming to support the commercial activities of
compatriots abroad; and the number of Russian schools and the exchange of
students have been cut. Russian TV broadcasts have been reduced, partly
owing to Russia's inability to pay transmission costs, and partly owing to
disputes with Central Asian governments on the broadcasting and
transmission of programs.

Cultural links with Russia are hampered by two additional factors which are
beyond Russian control. First, other foreign TV channels are beginning to
reach Central Asian audiences. Second, Russian journalists have been
expelled from Central Asian countries when they have criticized the
domestic situation, especially in Uzbekistan.

The report says: "Russian cultural influence in Central Asia is
waning...For the time being Russian remains the lingua franca of the
region...But how long this situation will continue if the Russian language
is not supported by Central Asian governments remains to be seen." 


Regional Businesses Respond to Crisis 

Ekonomika i Zhizn, No. 52
24 December 1998
[translation for personal use only]
Article by V. Komarov, Ekonomika i Zhizn observer: "Business
Barometer Shows Cloudy"

The economic crisis has had a non-synonymous effect on enterprises
in various regions and sectors. This is confirmed by the results of a
survey of managers of 400 companies in Moscow, St. Petersburg, Nizhniy
Novgorod and Yekaterinburg, conducted at the bginning of this month by
the GfK Market Research Russia Company.
It is notable that, in the capital and in the city on the Neva,
the situation in the economy is being perceived much more optimistically
than on the periphery, and that the managers of large and mid-sized
companies appraise the current situation more negatively as compared
with the representatives of small business.
The enterprises which are "most successful in their business" are
those engaged in production of computer equipment. The difference
between their positive and negative appraisals of the economic situation
(in percent) comprised only 4 points. "Black" pessimism distinguishes
the commercial structures which produce pharmaceutical products and
consumer goods (39 and 36 percent, respectively).
Almost half of the survey participants (45 percent) noted a
decline in their firm's turnover in the last month. Only 30 percent of
the respondents reported that there had been no change in their volume
of sales. The worst situation for this indicator was in Nizhniy
Novgorod, and the best--in Yekaterinburg.
A decline in wages and expenditures for leasing buildings was
noted by most of the survey participants (56 and 51 percent,
respectively). During December-January, the decline in expenditures of
this type will not be so "popular." Only 21 percent of the respondents
plan to worsen their "housing conditions," and only one in 10 structures
plans to "economize on its workers."
Over half of those surveyed (52 percent) referred to problems in
work with credit organizations. These arose most often in Moscow and
St. Petersburg. Nevertheless, only one in eight companies intends to
change to a different domestic bank, and only one in 20--to a Westernbank.
Despite all the problems, most of the respondents (63 percent)
have not changed their investment plans for next year. At the same
time, only 4 percent of the managers reported a total investment
"freeze." The most "rosy outlook" was held by financial organizations
and companies which performed activity in the sphere of construction,
transport and communications. The greatest "pessimists" work intrade.
Most often, the respondents planned to invest funds into
renovation of equipment and technologies (46 and 41 percent,
respectively). One other important sphere of investment was advertising
and marketing (40 percent). This was followed by personnel training (32
percent) and real estate (21 percent).
A significant part of those surveyed (38 percent) was convinced
that their firm would always exist, regardless of the ongoing crisis.
Almost one in five respondents (17 percent) predicted its work on the
market for more than 2 years, and almost one in four (24 percent)
predicted operation for a shorter time. The rest could not say anything
definite about the future of their companies.
Almost half of the survey participants (44.5 percent) predict a
return of the economic situation in the country to its pre-crisis level
no sooner than in 2 years. Of those surveyed, 23.8 percent of the
managers were more optimistic in their appraisals. The rest either
could not say, or did not believe there would be any improvement of the
situation. Nevertheless, most of those surveyed (58 percent) predicted
the emergence of a civilized market in the country already within the
next 5-10 years, and only 28 percent were in total disagreement with
this opinion.


'Virtual Budget,' Crooked Regime Lambasted

Sovetskaya Rossiya
31 December 1998
[translation for personal use only]
Article by Prof. Aleksandr Portnov: "Holes in the Treasury.
Prof. Aleksandr Portnov on the Realities of the Budget" --
passages within slantlines published in boldface

Let us be frank: The Russian Federation budget given its first
reading 24 December 1998 is simply enormous! Despite the document's vast
length -- over 2,500 pages -- it still resembles a tiny premature baby. In
order to examine it further, the Duma will need a powerful microscope,
because the Russian Federation's budget revenue is estimated at
just...473.6 billion rubles [R]. The budget is based virtually on the
current rate of R21.5 to the dollar, so it represents the paltry sum of
just...$22 billion, which is less than the Finnish budget, and commensurate
with the budget of...Gazprom.
But this is far from the limit: If the ruble fell by a factor of
three in the space of a single day, 17 August 1998, we cannot be sure that
it will not fall again to less than half its current value by the spring of
1999, and then our budget will shrink to $10 billion -- roughly the size of
the budget of the Grand Duchy of Luxembourg, which is slightly bigger than
Moscow.... Because there is no limit to our economy's decline, the real
budget may decrease further by a factor of about 10, reaching the level of
enigmatic Bermuda, with its population of 60,000.... Can 10 people cover
themselves with one blanket? Or 100 people with one handkerchief?!
Broadly speaking, the budget is a "derivative" of the size of GDP,
reflecting the pressure exerted on taxpayers by the tax service. For
example, U.S. GDP is estimated at $7,500 billion, and budget revenue is
$1,700 billion, in other words 23 percent of GDP. This money is extracted
by the U.S. tax service, which keeps close track of every dollar of
taxpayers' money.
Finance Minister M. Zadornov has announced that the Russian
Federation's planned GDP is R4 trillion ($186 billion); in other words, the
Russian Federation's budget revenue is just 11.9 percent of GDP. But he
said nothing about the fact that experts, taking account of the shadow
economy (the degree to which Russia is being plundered), estimate the
Russian Federation's real GDP to be $500 billion!!! It then emerges that
the Russian Federation budget represents just 4.4 percent of GDP, and this
implies that the Russian Federation Tax Service is so hopelessly impotent
that no U.S. patent pills will help it. In other words, almost all the
money circulating in Russia bypasses the treasury: It is caught up in a
frenzied whirlwind of profit-seeking in the shadow economy, and comes to
rest only in the bottomless pockets of bankers and wheeler-dealers...! 
Billions of dollars of this money continue to flood into foreign accounts,
and Ye. Primakov's government has not yet displayed either the desire or
the will to decisively alter the situation.
The Russian Federation budget is paltry because it is based on "poor
people's" money. Taxes are paid correctly only by the impoverished
population and bankrupt enterprises, because they, unlike the
wheeler-dealers and bankers, are unable to conceal or hide their revenue. 
For this reason the Yeltsin administration, for example, will not suffer at
all and will continue not to pay tax on its vast real estate. Oligarch
Berezovskiy will continue to spend his leisure counting his "honestly"
earned $7 billion (one-third of the Russian Federation budget), while the
Chernomyrdin family counts its "hard-earned" $5 billion (one-fourth of the
Russian Federation budget), and so on. So, there is money in Russia, but it
is in the private accounts of the superrich rather than in the treasury.
In order to make a true assessment of the "new Russian" budget, let us
recall that the RSFSR [Russian Soviet Federated Socialist Republic] budget
exceeded R300 billion. The official exchange rate was 64 kopeks to the
dollar, and at that time the population felt this rate to be artificially
low. The population has now learned from personal experience that a Soviet
cooperative apartment costing R5,000 is worth $50,000.... If we recall that
a kilowatt-hour of electricity cost just 2 kopeks in the USSR but 12 cents
in the United States, and if we recall the trifling, token cost of
apartment rent, municipal services, transport, and so on, it emerges that
the dollar should have been equivalent to no more than 20-30 Soviet
kopeks...! In other words, the RSFSR budget was over /$1 trillion/! There
is no denying that Soviet Russia was incredibly rich. It could afford to
maintain an extremely powerful Army, to fund science generously, to treat
pensioners decently, and to avoid even a single day's delay in paying the
wages of workers, teachers, and miners.
What is Yeltsin's Russian Federation now capable of...? Arithmetic
shows that, within a record-breakingly short space of time, the democratic
thieves [demokrady] have contrived to reduce the "real" budget by a factor
of no less than /50-60/, leaving at most 2 percent of Russia's former
economic might and causing infinite damage to a powerful country. No
leader or government in the entire history of mankind has yet succeeded in
working such wonders in peacetime. The Guinness Book of Records ought to
have a special section for the world's most self-destructive politicians,
where the leading positions would be taken by Yeltsin, Gaydar,
Chernomyrdin, and all their "democratic" loutish followers who have ruined
Russia and sent the Russian people begging.
Will such a vast country as Russia be able to exist on a budget of $22
billion...? Obviously not. So it is absurd and immoral to describe the
Russian budget as "real"; the 1999 budget has as much life as a corpse. It
is not a real but a typically virtual budget. Only in an illusory, virtual
world will this money enable Russia to "maintain" an army, a navy,
strategic aviation, ballistic missiles, or systems of education, health
care, social security, development, and so on.
Under the current political system the Russian Federation budget will
shrink every month and every quarter, in the same way as the wild ass's
skin shrank uncontrollably in the hands of Balzac's greedily ambitious
murderer [Raphael in "La Peau de Chagrin"], who had sold his soul to the
Devil. The size of this "New Year gift" to the Russian people demonstrates
that the Russian state has already practically ceased to exist. The
budget's horrifying "realism" has transported the country into an unreal,
virtual area, subject to Yeltsin's virtual Constitution, which guarantees
virtual rights to a virtual decent life, virtual work, virtual education,
virtual health care, virtual wages, and so on.... A virtual sleepwalker
president -- who, when discussing extremely important problems with the
premier, talks not about the Russian Federation budget but about Kazakhstan
and India -- is leading the country into a virtual "bright democratic
future" and, as virtual commander in chief, is in charge of an illusory,
virtual Army....
So, where have we been led by the false slogans about "the need for
reforms," and what did we leave behind...? Let us recall th\lion/!!! The
current U.S. budget is $1.7 trillion. It turns out that the USSR and U.S.
budgets were roughly equal. This explains the fear and loathing inspired
in the United States -- the leading proponent of the policy of private
capital -- by an enigmatic country which was growing and developing
according to laws of "state capital" alien to U.S. politicians. It also
explains foreigners' sincere joy at the USSR'S collapse.
The Russian Federation budget is now /100 times/ smaller than the USSR
budget; it amounts to just /1 percent/ of the USSR budget, and is
equivalent to a risibly small 1.5 percent of the U.S. budget. Contemporary
Russia is a bankrupt and ruined opponent of the West, despite the fact that
only very recently it presided importantly at the circular table of the
United Nations. Now it elicits neither respect, nor sympathy, nor pity from
the victors. As the ancients said, /woe to the vanquished/! The
paltriness of the Russian budget demonstrates clearly that Yeltsin's
followers have turned us into an illusory, virtual country, which next year
will have to pay $17.5 billion in interest alone; furthermore, the state
owes budget-funded workers R85 billion ($4 billion), and this means that
the entire real annual budget will be used to clear debts.
Russia is a bankrupt country. But it cannot be said to have become
bankrupt on its own: It was deliberately bankrupted by /Yeltsin's criminal
"course of reforms."/ In the Russian Federation the word /"reform"/ has
become synonymous with the concept of /"the horrific destruction and
plundering of one's own country."/ The unending nature of Russia's tragedy
is attributable to the fact that the brutes, thieves, and criminals who
covered Russia in shit are flourishing, have multimillion accounts abroad,
enjoy total impunity, and naturally insist that the criminal course be
continued. They are now determining the country's policy, or -- like A.
Shokhin, accused by the media of involvement in a murder -- are prepared to
become advisers (!) to the current cabinet. It is advisers like these who
have ruined Russia...!
The situation can be improved only by radically altering the
composition of the government in order to enable new people -- honest,
intelligent, and patriotically minded people -- to come to power. After
all, there is money in Russia, considerable money. If the Russian
Federation's real GDP is $500 billion, a proper tax service should "hive
off" at least 20 percent of it: This means our budget could be $100
billion -- four times more than now!!!
The government's actions must be designed to ensure that budget money
is raised not from the poor, as M. Zadornov plans, but from the shamelessly
rich /multimillionaire thieves/. The government must summon up the courage
for a decisive war against the mafia and the "shadow economy," which has
contrived to remain unpunished despite having exported abroad a sum of
money 20 or even 30 (!!!) times the size of the country's current annual
budget. The government should state honestly that the current Russian
Federation budget is a fig leaf concealing the huge organ of the predatory
shadow economy, which finds it more advantageous to corrupt state
functionaries with bribes than to share its money with the treasury.
The ludicrously insignificant size of the "real" budget demonstrates
that "Russia is great, but there is nowhere to retreat": The country's
incalculable riches have been squandered, all its reserves have been
totally cleaned out by thieves, and there is no time to delay. In fact,
the significance of the approval of the budget is purely political (Ye.
Primakov's support) rather than economic: With a budget like this Russia
as a country will inevitably /disappear/, because a bankrupt state is
/incapable/ of fulfilling its /state functions/!!! With such paltry funds
it is simply incapable of maintaining the most important state
budget-funded structures: the Army, the health system, education, pension
funds.... As usual, money will be found only for the upkeep of the pack of
greedy functionaries handling the criminal funding of private banks from
the state treasury.
In his domestic policy Ye. Primakov resembles a plane which, during
its flight, emits a signal intended for all tracking services: "I am a
friend... I am a friend... I am a friend..."! But it is impossible to be a
"friend" both to the hundreds of banks that have ruined Russia and to the
fleeced people now facing extinction! If Ye. Primakov's government wants
to be honest with Russians, it must admit that the course of Yeltsin's
"reforms" was criminal and ruinous, and that bankers and "new Russians,"
acting in their own personal interests, destroyed the USSR, plundered
Russia, and have now shamelessly pocketed money earmarked by law for our
budget. The past years of "reforms" have demonstrated that there is no
private-capital route to Russia's development; the country is doomed to
A fairy-tale situation has arisen on the eve of 1999: A Russian epic
warrior hero, mounted not on a dashing stallion but on the narcotics-filled
needle of the IMF and the International Bank for Reconstruction and
Development, has reached a crossroads and seen a magical boundary stone,
beyond which the old road disappears. The road to the future divides in
two: He can either hobble along in the previous direction, or turn sharply
to the left. If Koshchey the Immortal and Baba Yaga [evil characters in
Russian folklore] poison the warrior with "dead water" and he loses his
legs and reason altogether, the villains will drag him along the previous
disastrous route, "encouraging" him with injections of hard-currency loans.
Then Russia, ruined by thieving banking capital and the unrestrained greed
of the "new Russians," will disintegrate and, like the USSR, disappear from
the political map of the world. Unfortunately, the 1999 budget envisages
active use of hard-currency drugs to stimulate the Russian Federation.
But if, under the New Year tree, the warrior drinks some "living
water" from the magic spring of popular wisdom, he will break the needle
which preserves the life of Koshchey the Immortal, and save his own life by
choosing the route to the left. Then Russia will be headed by a
long-awaited /government of national salvation with a new course/,
self-reliant and geared to implementing major /state development programs/
in order to really save the dying country. There is now only one way for
Russia to escape the criminal "virtual area": a sharp turn to the left
onto a course involving the uncompromising destruction of the mafia and the
shadow economy and the tightest control of monetary flows, onto the course
of /state capitalism/. Let us wish that in 1999 the Russian warrior
recovers the vast treasures that have been stolen from him and avoids the
temptation of the devilish Western "injections." Let us wish that on New
Year's Eve he does not get the festive goblets mixed up and saves himself
by making the correct choice!!!


The Economist
January 9, 1999
[for personal use only]
Russia and Belarus 
Hallo Minsk, farewell Kazan? 
M O S C O W 

THE good news, goes a Moscow joke, is that Russia is narrowing the gap
between itself and its western neighbours. The bad news is that the countries
concerned are Belarus and Yugoslavia. The idea of closer political and
economic ties with Slavic countries, particularly the poorer and less
democratic ones, has been popping up in Russian politics ever since the Soviet
Union collapsed. In the past, though, the government’s more sober elements
were able to stop it becoming reality, since it would cost too much. 

Now Russia and Belarus are trying again. Their presidents, Boris Yeltsin and
Alexander Lukashenka, announced on December 25th plans for a common policy on
economic, foreign and military matters. On December 29th Vadim Gustov, one of
Russia’s first-deputy prime ministers, said the two countries would have a
common currency and a single budget by 2000. Two of the Belarussians who
joined a protest against Russia’s “occupation” of their country had to go
straight from the demonstration to hospital: nothing unusual under Mr
Lukashenka’s heavy-handed rule. 

There are three reasons why this deal may prove more solid than previous ones.
The first is Russia’s own politics. Union with Belarus has long been a pet
project of the new prime minister, Yevgeny Primakov. He championed it as
foreign minister, and his first prime-ministerial visit was a trip to
Belarus’s capital, Minsk. It is also strongly supported by the Communists and
their allies in the Duma, Russia’s lower house of parliament, who have set up
a “parliamentary union”, a grandly named talking-shop, with Belarus and

The second reason is that it will provide a source of Russian national pride
at a time when Russians feel humiliated over Iraq, squeezed by NATO’s
expansion and European integration and generally pretty powerless. Some
Russians think, a touch optimistically, that the currency they plan to share
with Belarus will be a “Slavic euro”. And stronger military links with Belarus
would be a convenient way for Russia to growl about Poland’s new membership of
NATO and the western alliance’s friendly eye on the Baltic states. 

Third, Mr Lukashenka’s old-fashioned economic policies—price controls, the
uninhibited printing of money and manipulation of the banking system—no longer
look hugely different from Russia’s. And the Belarussian leader is in a hurry,
both because his economy is (even) wobblier than Russia’s and because he seems
to think that, under existing agreements with Russia, he can leap across the
border and win Mr Yeltsin’s job at Russia’s presidential election next year.
Alternatively, Mr Lukashenka may be aiming for the presidency of the new
Russian-Belarussian Union, if it comes into existence. 

The biggest effect, though, could be an awkward surprise for Russia. It might
give that country’s own independent-minded regions new ideas. Tatarstan’s
president, for example, Mintimer Shaimiev, quickly welcomed the proposed new
union of Russia and Belarus and said that his republic would like to join
too—on equal terms. How ironic if a final spasm of Russian imperial thinking
prompted a new round of Russian disintegration. 


>From Abkhasia With Love

NEW YORK--(BUSINESS WIRE)--Jan. 7, 1999--Pictures of the President and
the First Intern are being printed on special postage stamps issued by the
obscure ethnic region of Abkhasia, currently struggling for independence from
the post-Soviet nation of Georgia, Business Week reports. And what an unsubtle
image it is. The stamps show Clinton in his underwear holding a champagne
glass, and Lewinsky dressed as a schoolgirl. Stamp experts estimate the issue
could raise Abkhasia a much-needed $100,000.



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