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

Johnson's Russia List
#3008
8 January 1999
davidjohnson@erols.com

[Note from David Johnson:
1. AFP: Primakov Thanks Church, Promises 1999 Will be Better.
2. Reuters: Yeltsin Could Head Russia-Belarus Union.
3. Reuters: Zyuganov Sees Budget Passed This Month.
4. Interfax: Russia Moves To Become Leader in Nuclear Fuel Recycling.
5. Renfrey Clarke In Moscow: AS SCHOOLS DECAY, RUSSIAN TEACHERS MOUNT 
PROTESTS.
6. Marcus Warren in Moscow: New Year clear out of books.
7. Larissa Titarenko: Re mark david mandel/Belarus.
8. Frank Durgin: Russian budget.
9. Rossiyskaya Gazeta: Interview with Federation Council speaker Yegor
Stroyev, "Yegor Stroyev: In Russia Reforms Are Necessary For Everyone and 
Not Just for a Minority."
10. Jamestown Foundation Monitor: TOP COMMUNISTS DISAGREE OVER HOW 
OPPOSITION WILL FIELD CANDIDATES THIS YEAR and PRESIDENTIAL ELECTION IN 
KAZAKHSTAN.
11. Steve Shabad: Barkashov.
12. George Krasnow: Summary of Kennan Institute talk on Looting of 
Russia by Christian Caryl and David Kaplan of US News and World Report. 
13. Intellectualcapital.com: Pete du Pont, Predictions 1999-style.
14. Borislav Petkov, Real Economy -- Virtual Market.]

*******

#1
Primakov Thanks Church, Promises 1999 Will be Better 

MOSCOW, Jan. 08, 1999 -- (Agence France Presse) Prime Minister Yevgeny
Primakov thanked the Russian Orthodox Church for its role in society at a
time of economic crisis and promised to make the new year a better one,
Interfax reported Friday. 
"Orthodox Christianity is Russia's main religion," Primakov said
Thursday evening during a joint Russian Orthodox Christmas appearance with
Patriarch Alexy II. 
Primakov thanked Alexy for "giving his very best to the country" and
promised to do his best in order to reverse the nation's unprecedented
economic nosedive, the news agency reported. 
For his part, the Patriarch said: "The difficult 20th century is coming
to an end. It brought our fatherland much suffering, many deaths and
troubles. But the courage and self-confidence of our people have always
helped them to overcome ordeals." 
Most of Russia celebrates Christmas on Jan. 7 according to the old
Julian calendar still respected by the Orthodox Church. 
Jan. 7 was instituted as a public holiday in Russia in 1991 after more
than 70 years during which the Orthodox Church was repressed along with
other religious beliefs. 

*******

#2
Yeltsin Could Head Russia-Belarus Union 

MOSCOW, Jan. 08, 1999 -- (Reuters) President Boris Yeltsin would be a
realistic candidate to head an eventual unified Russian-Belarussian state,
Interfax news agency quoted an aide to the Kremlin leader as saying on
Friday. 
The comment by Ivan Rybkin, a former parliamentary speaker and Yeltsin's
personal representative for relations with former Soviet states, echoed
speculation that a union could give Yeltsin a way of staying in office when
his second and final term as Russian president ends next year. 
"Rybkin stressed that he saw nothing unrealistic in this," Interfax
said. "We simply cannot replace the experience of people like Boris Yeltsin." 
A Kremlin spokeswoman declined immediate comment. 
After the signing of the latest in a series of declarations on an
eventual union on Dec. 25 by Yeltsin and Belarussian President Aleksander
Lukashenko, it is still not clear how likely reunification of the two
ex-Soviet neighbors is. 
Lukashenko is pushing hard to unite his nation of 10 million with
Russia's 150 million. But Russian liberals have lobbied against closer
ties, arguing that Belarus' still largely state-run economy would be a drag
on Russia's market and that it could give the authoritarian Lukashenko
influence in Moscow. 
Some integration in economic regulations and citizenship is already
taking place but it is not clear that any unified political structure would
have much power given Russian assertions that both states would remain
sovereign in a union. 
At 67, Yeltsin has had frequent bouts of ill health which have prompted
speculation he might even be unable to see out his term to mid-2000,
although he has appeared fitter of late. 
Russia's Constitutional Court last year cleared up some ambiguity over
whether he might be eligible to run for a third term in the Kremlin by
ruling that he could not. Some officials have said in the past that
creating a new post as head of a Russia-Belarus union could give him an
alternative. 
However, Yeltsin has lately given little indication that he wants to do
anything other than retire next year. 
Rybkin was quoted by Interfax as saying he did not believe Lukashenko
was a realistic candidate to head a united state. 

*******

#3
Zyuganov Sees Budget Passed This Month 

MOSCOW, Jan. 08, 1999 -- (Reuters) Russian Communist leader Gennady
Zyuganov, whose opposition party is the biggest in parliament, was quoted
as saying on Friday that the 1999 budget should be passed in a fourth and
final reading this month. 
RIA news agency said Zyuganov said in an interview that the Duma would
pass the budget despite many difficulties and said work in committee was
going on at a brisk pace. He said the second reading would be on Jan. 15. 
The budget, drawn up by Prime Minister Yevgeny Primakov's government to
address the financial crisis that broke last August, was passed
overwhelmingly by the Duma in a first reading on Dec. 24. 
It must be passed three more times in the lower chamber before being
sent to the upper house, the Federation Council, and then on to President
Boris Yeltsin for signing. 
Russia must pass the budget if it is to have any chance of receiving
much-needed loans from the International Monetary Fund. 
The IMF halted lending to Russia last year after Moscow devalued the
ruble and defaulted on some domestic debts in August, and fund officials
have said that the resumption of lending depends on credible Russian
economic reforms. 
Pro-government deputy Duma speaker Vladimir Ryzhkov was quoted as saying
on Wednesday that he could not rule out the second reading being put back
to Jan. 19 to take account of a large number of amendments proposed in
committee. 
On Thursday, Finance Minister Mikhail Zadornov said state spending for
January, excluding debt servicing, would be about 25 billion rubles or one
twelfth of annual spending under the 1998 budget. In the absence of a 1999
budget, monthly spending will be set in this way until one is passed. 
Zadornov told RIA that spending in some sectors would, therefore, be
lower than if the 1999 budget had been already passed by parliament. 
Zyuganov was quoted by RIA on Friday as saying some recipients of state
funding would be getting about a third less than they should be.

*******

#4
Russia Moves To Become Leader in Nuclear Fuel Recycling 

Krasnoyarsk, Jan 5 (Interfax) -- Russian Minister for Atomic Energy
Yevgeniy Adamov has stated that Russia will try to restore its leadership
on the market of recycling used nuclear fuel.
Adamov told the deputies of the Krasnoyarsk territorial legislative
assembly on Tuesday that this business brings quick profits and has not
been finally monopolized.
By recycling one kilogram of used nuclear fuel one can earn up to
$1,000, he said. Meanwhile, Russia earns just about $300 from recycling
nuclear fuel received from Ukraine.
He said that the development of exports of electricity generated by
Russian nuclear power plants is one of the atomic industry's priorities. 
But this can be done only if the industry's infrastructure is developed,
too, if an export electric power line is created and if the electric
current's frequency is synchronized, he said.
Adamov announced that nuclear power plants generate 13% of the
electricity produced in Russia. As before, nuclear power plants produce
cheaper electricity - one kilowatt-hour costs 11-16 kopecks. 

*******

#5
Date: Fri, 8 Jan 1999 
From: austgreen@glas.apc.org (Renfrey Clarke)
Subject: Russian teachers mount protests

#AS SCHOOLS DECAY, RUSSIAN TEACHERS MOUNT PROTESTS
#By Renfrey Clarke
#MOSCOW - When Russian authorities learned on December 15 that
striking teachers had blocked an important rail line, it may
finally have dawned on them that the situation in the country's
schools was a disaster threatening civil peace as well as future
prosperity.
#But even if Russia's rulers grasped this point, there was no
sign that they were planning serious moves to stop the education
system decaying still further.
#Prosecutors immediately launched a criminal investigation into
the actions of the 100 or so teachers and parents who had held up
trains for four hours near the town of Suda, in Vologda Province
north of Moscow. Meanwhile, the people responsible for wage
arrears to teachers throughout Russia of more than 16 billion
rubles (about USUS$800 million) remained unpunished. And students
continued trying to study, often with inadequate textbooks or
none at all, in dilapidated buildings that at times lacked water
and heating.
#It is too early to speak of a movement of teachers as a major
new presence in Russian political life. But since the current
school year began in September, barely a day has passed without
protest actions by education workers. Often, teachers have
withdrawn their labour and sent pupils home. In late November,
the Trade Union of Popular Education and Science Workers
reported, 52,000 employees of 1250 educational institutions in 32
of Russia's 88 administrative regions were on strike.
#Almost everywhere, the teachers' main demand has been for the
payment of back wages. In November, the press attache at the
federal education ministry was quoted as admitting that only in
Moscow, and in the cities of Samara and Sochi, were teachers
currently receiving their pay on time.
#Federal and regional officials alike have reacted to the wage
backlog by trying to off-load the blame. Under the current
formula, 50 per cent of the money for teachers' wages comes from
the federal government, and 50 per cent from the budget of the
local republic or province. Challenged to explain the arrears,
federal officials claim that money transfers for teachers' wages
have been going out on time, or close to it. But once in the
provinces, the federal authorities complain, the funds are
misdirected by local administrators.
#Regional leaders counter that especially since the Russia-wide
financial crash last August, huge shortfalls in local revenues
have left them no choice except to plug the most dangerous gaps
with whatever funds are at hand. Education, it is implied, is
among the needs that can wait.
#The depth of the crisis in Russian schools varies from one
region to the next, but a more or less typical picture is that
found in Novosibirsk Province in Western Siberia. Significantly,
this region was not on a recently-published list of the areas
where the problems of schools were most acute.
#Total spending on education in Novosibirsk Province in 1998 was
only half the projected sum, and the Moscow daily <I>Nezavisimaya
Gazeta<D> on November 13 quoted the head of the local education
administration as admitting, ``We can no longer guarantee the
right of everyone to free education.''
#Working as a teacher in the region is at best a marginal
economic proposition. Compared to an average monthly wage for all
workers in the province of a little over 1000 rubles (about
US$50), teachers in the capital, Novosibirsk, average about 600
rubles. The ``subsistence minimum'' income for an urban resident
of the province was 650 rubles in October.
#Wages in the countryside are less, about 400 rubles for an
experienced teacher. Commenting on this situation,
<I>Nezavisimaya Gazeta<D> remarked: ``A teacher's college
graduate, working in a rural school, cannot afford even a proper
diet.''
#Bad as this situation is, it would not be so disastrous if wages
were paid on time. But the best that teachers in Novosibirsk
Province can expect is to receive their pay two or three months
late. In some rural schools, wage arrears stretch back for as
much as nine months.
#Because the wages of Russian teachers are paid out - or at
least, promised - by regional governments, protests have been
aimed almost exclusively at the provincial and republican
authorities. In Novosibirsk Province, rural teachers struck for
two weeks in October and November, coming to the capital and
mounting daily pickets outside the provincial administration
building.
#At times, unpaid teachers in provincial Russia have resorted to
hunger strikes. In the city of Ulyanovsk on the Volga, 430
teachers from ten schools began a protest fast on November 18,
demanding payment of arrears owed since July. The action
attracted national attention when one of the participants, 43-
year-old primary school teacher Aleksandr Motorin, died of heart
failure on December 2.
#So far, few victories for teachers have been reported. A typical
experience seems to have been that of technical school teachers
in Yekaterinburg in the Urals who in mid-December were picketing
the provincial government building, demanding eight months of
back pay. According to <I>Izvestiya<D> on December 17, the
response from provincial leaders was that there was no money to
pay them, and that it was impossible to say when there would be.
#Of the developments that now seem to be in prospect, one is a
further radicalisation of teachers' tactics to include mass acts
of civil disobedience - as prefigured by the rail blockade in
December. Another is increasing national coordination of the
protests, with a view to making education a political issue at
the federal level. In recent months leaders of the Trade Union of
Popular Education and Science Workers have been pushing the idea
of Russia-wide protest campaigns. As a concrete demand, the union
leaders have called on the federal government to establish
special regional funds, outside the control of provincial
governors and presidents, to ensure that money for wages goes
directly to teachers.
#A further prospect is the increasing politicisation of teachers.
In St Petersburg before the December municipal elections a strong
teachers' movement arose, demanding that candidates make specific
commitments on education issues. According to Olga Makarova, a
Moscow journalist who follows education workers and their
struggles closely, teachers in many parts of Russia are now
voting heavily for Communists.
#As one of the most socially aware groups among Russian workers,
teachers are well placed to understand the implications for their
country if the collapse of education continues. Russia has only a
limited future as a supplier of raw commodities; its real
economic potential lies in its highly trained workforce. But
these skills are a quickly wasting asset. Makarova describes high
schools that no longer teach foreign languages or even
mathematics. Even basic literacy is declining; according to
figures cited recently in the weekly <I>Literaturnaya Gazeta,<D>
as many as ten million children in Russia do not attend school at
all.
#Russia's Communists sound off about ``national salvation'', but
it is the country's teachers who embody it in the most real
sense. As they move increasingly into political struggle, they
are unlikely to be satisfied with the existing left parties. The
ideas teachers will embrace, and the formations they will help
build, are among the more important riddles of Russia's political
future.

*******

#6
From: "Marcus Warren" <markusw@rinet.ru>
Subject: New Year clear out of books
Date: Fri, 8 Jan 1999 

I have a pile of books in my office I want to get rid of. They date from
the 70s, 80s and early 90s, most of them are in English and are
Sovietological. a sample: Glasnost in Action, the Soviet Communist Party,
Soviet Scientists' Memoirs (in Russian), Gorbachev's Challenge (Marshal
Goldman), Soviet Troop Control (Brasseys 1982), Political Succession in
the USSR (Rand 1965), Soviet but not Russian (1985). There are about 80
of the things. Anyone interested or in a position to recommend a college,
university or worthy cause in Moscow which might put them to good use? I
would suggest that they are of more interest to social scientists,
historians etc. than students of English. I am not asking for money, just
that they all go at once. No picking and choosing. 

*******

#7
Date: Thu, 07 Jan 1999
From: "Larissa G. Titarenko" <larisa3@ibm.net>
Subject: Re: mark david mandel <dmandel@web.net> JRL #3003 (Re 
JL#2534, Larissa G. Titarenko, "Who Will Be the Next President of 
Izvestia's OGRB The United State of Russia and Belarus?") 

Mark David Mandel (JRL 3003) would do us all a favor to quote me in
context. It seems that I became a “liberal critic of the Lukashenko regime”
for asking the question: Can Belarus in any way help Russia solve its 
problems? (and not the other way around as Mr. Mandel insists).
I am sure President Lukashenko may want to offer Mr. Mandel a job.
It strikes me that the following enviable Mandel statement is something
that Lukashenko would like to make, if he thought he could get away 
with it. I quote: 
"The great majority of the Russian workers can only envy the economic
situation of their Belarusian counterparts, as miserable as that is: 
unemployment is much lower, the employed actually get paid, and the
average real wage in industry is higher than in Russia.”

Just in case, I would like to offer a mini crash course on current
realities. For didactic purposes I use official Belarus data and
facts supplied by the opposition. Let me note in passing that 
Belarus opposition includes all “liberal,” democratic and one 
of the two Communist parties:

1. Belarus Pensions -- As of January 1, 1999 the increased monthly 
pensions are in the range of 1.5 - 3.6 million Belarusian rubles. At 225,000
to 250,000 such rubles to a dollar this is about $6.00 to $16.00 
2. Belarus Minimum Salaries -- As of the same date, the minimum 
monthly salary was increased to 500,000 Belarusian rubles, or to
between $2.00 and $2.22. 
3. Belarus/ Russian Average Salaries -- In the Fall of 1998, according to
Russian Goskomstat data, the average monthly salary in Russia was 
about $67.00 and poverty line was $32.00. According to Belarus data
the average salary was about $37.00. 
4. Russia /Belarus Unemployment -- According to the Russian Ministry
of Labor, the unemployment was 11.5%. For Belarus the comparable
data compiled by Belarus economists and published in a Moscow 
sociological journal was put at 9.0%. The trade unions put the 
unemployment figure for Belarus at close to 20%. The Russian 
“unemployment envy” seems a moot point. 
5. Belarus Real Wages and Pensions -- Member of Belarus Academy
of Sciences, Dr. Stanislau Bahdankevich, formerly the head
of the Belarusian National Bank and currently one of the leaders
of democratic (liberal?) opposition, notes (RFE/RL 30.12.98) that
(i) Lukashenko’s policy of administrative management
sans market reforms resulted in hyperinflation on the order of 
140-150 percent, (ii) a 200+ percent plunge in real wages and 
pensions, and (iii) “severe 1998 food shortages and the return of food
rationing.". (Food, by the way, is used to reimburse Russia
for natural gas and electricity.) 
In Soviet times inquisitive foreigners were frequently told: Vse 
vyterpim, lish’ by voiny ne bylo (We can put up with anything, 
as long as there is no war). Belarus is, indeed, an object of envy
for Russians, because after the collapse of the USSR Belarus
waged no Chechnya-style wars and was not involved in any 
bloody border conflicts. What worries many in Belarus is that
this may change if the union with Moscow becomes more than OGRB. 

*******

#8
From: durgin@maine.edu (Frank Durgin)
Date: Fri, 8 Jan 1999 
Subject: Russian Budget

Edwin G. Dolan, President of the American Institute of Business and
Economics very kindly E-mailed me yesterday that the figure of 15% of
GDP I gave for Russian Federal Government spending in my 
posting(JRL3004) was correct, but that one must also consider local 
and regional expenditures. 
Mr. Dolan is correct. According to Rossiiskii statisticheskii
ezhegodnik 1997(p.520), Federal , local and regional expenditures came
to a total of 28.9% of GDP in 1996.
While it reduces the US-Russian differential and makes my case less
dramatic, I do not think it in anyway destroys its validity. In the US
government spending for all levels of government combined amounted to
38% of GDP(1990). This is derived from the Statistical Abstract of 
the United States, 1997. 
Compare Russia's 28.9% with the some 58.9% for Denmark, 56.2% for
Sweden, 55.2% for Norway, 50.4% for Finland 51.25 for the
Netherlands, and 50% for Belgium.

*******

#9
Speaker Stroyev Rejects 'Foreign Models'

Rossiyskaya Gazeta
5 January 1999
[translation for personal use only]
"First Hand" interview with Federation Council speaker Yegor
Stroyev by Anna Kozyreva; place and date not given: "Yegor
Stroyev: In Russia Reforms Are Necessary For Everyone and Not
Just for a Minority"

Our interview with Federation Council speaker Yegor Stroyev took place
just before the New year. Of course, our first question contained a
request to sum up the results of the past year. What mark will it leave on
the history of the country and the upper chamber?
[Stroyev] Just before the New Year we held the last Federation
Council session of 1998, at which we discussed what we had managed to
achieve. Russians have been living by the new Constitution for five years
now; the Federation Council has been functioning for an equal length of
time. I have every reason to say that the Federal Assembly's upper chamber
is a stabilizing force which prevents social upheaval in the country during
the rockier periods of history. This is the first time in Russia's history
that such an apolitical body has emerged, which both has an influence on
state politics and is close to the people, as Federation Council members
are people who know the true situation in the regions better than anyoneelse.
As for the results of 1998, I must tell you frankly: This has been a
difficult year for everybody. It took the 17 August crash and the
formation of a new government before it was finally announced that the
reforms policy would be changed and we would reorient ourselves to the
development of domestic production, and the state's role in managing our
market economy was recognized.
[Kozyreva] Do you consider that a reassessment of values has taken
place in Russia during the last few months?
[Stroyev] It has not taken place yet, but the process has started; 12
years ago we set off for new lands without either a map or a compass,
navigating by the distant stars, many of which turned out to be
wills-o'-the-wisp. These years have greatly changed the country. The old
Russia has become a thing of the past. In the past it was a superpower
with a plan and command economy and the dictatorship of a single party. 
The Russia of the future -- a rich and successful country -- has not yet
been built. But what kind of country is present-day Russia? We still don't
know Russia very well. Because we have gotten carried away with political
disputes and election campaigns but done little to determine our current
position on the thousand-year line of our country's development. But if we
do not see clearly what state we are currently in, we will not be able to
pick an appropriate route for our future development.
[Kozyreva] In your view, what route is Russia taking? Many people
say that the route we are taking differs from that of the West....
[Stroyev] The Western type of civilization is oriented toward
material consumption and quantitative parameters of progress. It seems to
me that Russia is at the heart of a particular Eurasian world. We are a
special country and have our own individual spiritual life. We are a
country of great culture and learning, and the state in particular should
foster in people respect for the memory of our forebears. Russia cannot
take after foreign models -- it is destined only to be like itself. And it
is precisely in this direction that we should correct the reforms course. 
In Russia reforms are necessary for everyone and not just for a minority. 
Just as justice and order are for everyone and not just for the chosen few.
[Kozyreva] Yegor Semenovich, for a long time now -- even before 17
August -- the Federation Council has been saying that even with a market
economy the state should have a regulatory role; only this will result in
the reforms' beginning to benefit the majority of Russians. How can this
idea be implemented?
[Stroyev] You are right: We have regularly made constructive
suggestions -- about strengthening the role of the state in the management
of the market economy, pursuing an industrial policy, and improving the
finance and credit system. But for a long time we had no response from the
government. Now we have finally been listened to.
For the first time in recent years, a government has been formed in
the country which has examined in an unblinkered fashion the processes
taking place within society. We are now constantly in contact with
Yevgeniy Primakov when carrying out our work. Our experience of working
with him shows that the problems raised by the Federation components'
leaders can be resolved in a normal manner. Which is why we should support
the new government's efforts and assist it by restoring order in the
regions, using laws to back this up.
[Kozyreva] Today many people are not only talking about an economic
crisis but also about a crisis of power. What is your view of this?
[Stroyev] It is the people and not the authorities who have endured
all the problems of the last hundred years. Therefore, I say: The
authorities should listen to the people and the people should support the
authorities. Then normal, civilized relations will be created between the
people and the authorities.
[Kozyreva] Can we return to assessing the results of the Federation
Council's work last year?
[Stroyev] We held 13 sessions of the upper chamber, examining at them
250 laws of which around 200 were approved. Some 50 laws had to be
thoroughly reworked and harmonized and were adopted on the second or even
the third reading. In 1998 we worked more actively to exercise our right
to draw up laws. Some 120 draft laws were submitted to the State Duma by
our chamber and individual senators....
[Kozyreva] At the beginning of our conversation you said that the
Federation Council is a stabilizing force. But what should be done about
the fact that republic constitutions and kray and oblast statutes are
currently in conflict with the Russian Constitution? After all, such a
contradiction is a future source of instability!
[Stroyev] You have put a difficult question to me. Yes, in legal
terms, it is very important to bring Russian legislation into line with the
principles of federalism. If this is not done, it will be impossible to
ensure the unity of the executive and legislative branches of power at all
levels and, consequently, to preserve the country's unity. I think it is
time we set about drawing up a Federal Code -- a document which will serve
to strengthen the Russian state. But this is an economic as well as a
political question as strengthening the Federation and creating a stable
economy are two closely related tasks. The point is that the economy
always has united people and even entire states. And without economic
interest there will be no unification.
[Kozyreva] What would you say about the statements claiming that it
is essential to "edit" and amend the Russian Federation Constitution?
[Stroyev] The Constitution has played an enormous part in stabilizing
society, but certain of its provisions do need to be amended. This is
particularly true of the provision concerning the division of powers
between the branches of power. They should monitor one another.
The Constitution is not an icon which cannot be touched. However, the
Constitution itself should not be replaced -- the loopholes that have
developed recently should be closed so that we can build a federal state in
an intelligent manner. We should take a serious look to see what is
happening to the people. Russia's population is falling in spite of the
fact that immigrants are continuing to arrive in our country. It is
necessary to establish why this is happening and to look at the
Constitution with this in mind. It is necessary to determine what should
be done to change the situation.
[Kozyreva] You have stated on more than one occasion that Russia will
be a great power! What makes you believe your presentiment?
[Stroyev] Our people. Russia remains stable in the minds of the
people. The economic crisis is taking its toll of society, but still our
country is alive and well despite the predictions of a number of Western
political analysts. This deep inner stability means the survival of the
nation. It is for this reason that Russia has always gotten out of
deadlocked situations. As it will do so this time!
[Kozyreva] In 1999 there will be elections to the State Duma. What
wishes do you have for our political leaders?
[Stroyev] That they not forget their love for their country and are
proud of the Fatherland. I have a favorite four-line verse by Tyutchev
which sounds like a slogan:"Unity," the oracle of our times did claim,
"takes iron and blood to weld together...."
But we will try with love to shape its frame,
and we will see how that is stronger....

*******

#10
Jamestown Foundation Monitor
8 January 1999

TOP COMMUNISTS DISAGREE OVER HOW OPPOSITION WILL FIELD CANDIDATES THIS YEAR.
Viktor Zorkaltsev--a member of the Communist Party of the Russian Federation
(KPRF) and chairman of the executive committee of the People's Patriotic
Union of Russia (the "national-patriotic" opposition's umbrella group)--said
yesterday that the opposition would contest the parliamentary elections
later this year in three "columns." Zorkaltsev said the KPRF would put
forward its own list of candidates, headed by its leader, Gennady Zyuganov.
The Agrarian Party would put forward a second list, headed by its leader,
Mikhail Lapshin. A third bloc, called "Patriots of Russia," would also put
forward a list, which might be headed by State Duma Speaker Gennady
Seleznev, himself a top KPRF official.

Zorkaltsev said a fourth "national-patriotic" group of candidates might
emerge, headed by KPRF radicals such as Albert Makashov or Viktor Ilyukhin,
who heads the State Duma's security committee. Both men received notoriety
last year for making anti-Semitic statements. Zorkaltsev said a bloc led by
either man could win the 5 percent or more of the vote needed for
parliamentary representation only if it embraced the ideas of "friendship of
peoples, international solidarity and inter-confessional peace."

Meanwhile, Valentin Kuptsov, the KPRF's number two, played down centrifugal
tendencies within the party, stressing that Zyuganov and Seleznev would top
a "central" KPRF candidates list (Russian agencies, January 7).

PRESIDENTIAL ELECTION IN KAZAKHSTAN. Kazakhstan is holding a presidential
election on January 10. The only question in this election is the margin of
incumbent President Nursultan Nazarbaev's victory. He faces the risk that
overzealous local officials may needlessly magnify his victory margin, as
was the case in last October's presidential election in Azerbaijan. The
other candidates in Kazakhstan's presidential race are the independent
Senator Engels Gabbasov (see the profile in the Monitor, December 23),
Communist Party leader Serikbolsyn Abdildin, and State Customs Committee
chief Gani Kasymov, who is generally perceived as a strawman for Nazarbaev.
All three challengers stand, in varying degrees, to the left of the
president (Itar-Tass, January 3-7).

Former Prime Minister Akezhan Kazhegeldin had planned to run and was
potentially the strongest challenger to Nazarbaev. Kazhegeldin had
accumulated a large personal fortune while in government. His presidential
candidacy was disqualified by the courts under a law which bars the
candidacy of persons convicted of crimes or misdemeanors of any kind.
Kazhegeldin had been convicted and fined for a misdemeanor last year after
attending a meeting of an unregistered political organization. His program
was leftist and pro-Russian and he had banked mainly on the
"Russian-speaking" opposition to Nazarbaev.

*******

#11
From: "Shabad, Steven" <sshaba@newsweek.com>
Subject: Russian fascism
Date: Fri, 8 Jan 1999 

David, A small correction to Mark Jones's analysis of the Russian fascist
threat in 3005: the name of the Russian fascist leader, whom Mr. Jones
refers to throughout (with one exception) as "Barshakov," is actually
Aleksandr Barkashov.

Steve Shabad
Newsweek

*******

#12
Date: Wed, 06 Jan 1999 
From: "W. George Krasnow" <krasnow@compuserve.com> 
Subject: Kennan Institute lecture report on "Looting of Russia"

[DJ: This is George Krasnow's personal summary.}

Looting

What has been going on in Russia since 1991 is a massive "sell-off of the
country’s national wealth at a tremendous social cost to the Russian
people", said Christian Caryl, Moscow Bureau Chief of U.S. News and World
Report during his January 5, 1999 presentation on the "Looting of Russia"
at the Kennan Institute for the Advanced Russian Studies (KIARS) in
Washington. 

While the Russian people suffer the consequences in terms of lower living
standards, shorter longevity, ecological damage, political instability and
diminishing national security, the scale of looting is such, said Caryl,
that it undermines the credibility of U.S. supported economic reforms in
Russia and "impinges on American national interests quite directly." Caryl
was seconded by his college David Kaplan, senior editor of U.S. News and
World Report. 

The two focused on one particular scheme to loot Russia’s national
treasury: the so-called Golden ADA diamond-processing company, set up in
San Francisco in 1993 by three Russian immigrants. In the course of 1993 to
1995, Golden ADA managed to steal from Russia $178 million worth of
diamonds, jewelry, silver and rare gold coins. Caryl and Kaplan, whose
story was published in August 3, 1998 issue of U.S. News and World Report,
allege that this criminal scheme was abetted by corruption reaching "the
highest levels of the Russian government."

Purportedly, the company was set up to establish Russian independence from
the De Beers diamond cartel. However, the men behind Golden ADA were
swindlers who had no idea of diamond polishing business. They did nothing
to increase Russia’s diamond market share, but enriched themselves by
buying multiple sets of luxury cars, yachts, and real estate, presumably
for their patrons in Moscow to prepare for the time when they’d have to
flee the justice in Russia. The speakers compared the looting of Russia's
national treasure as if Fort Knox were looted, "except Fort Knox has only
gold bullions," while the Russian treasury abouds in priceless works of
art. 

While the case was still being investigated by both the FBI and the Russian
MVD, a decision was made, apparently at the highest level of U.S.
government, to seize Golden ADA’s headquarters in San Francisco and other
assets. Out of the total $178 million, the IRS recovered about $40 million
in the company’s assets. Under a deal struck in April, 1998, Russia will
get back $25 million, the rest going to the IRS (for unpaid taxes) and
other creditors. Remarkably, the IRS also seized dozens of automatic
weapons, bulletproof vests and 25 pounds of explosives.

Both Caryl and Kaplan praised MVD’s Major (now Colonel) Viktor Zhirov and
his team of "untouchables" who continued to investigate the case in both
Moscow and San Francisco inspite of constant threats on their lives. Zhirov
was actually attacked, butally beaten and had to spent some time in a
hospital.

Both presenters implicated a number of high Russian officials in the Golden
ADA conspiracy. Among them Yevgeni Bychkov, Yeltsin’s gem commissioner,
Boris Fedorov, the Finance Minister, both of whom authorized the transfer
of Russian treasures to Golden ADA, and President Yeltsin himself. After
all, some of the money that Golden ADA sent to Moscow were earmarked to
finance the printing President Yeltsin’s autobiography and to fund his
security force, as well as his 1996 re-election campaign.

After the FBI and the MVD began a joint investigation, they found evidence
of a criminal coverup at the highest levels of the Russian government.
According to Caryl and Kaplan, the "cleaner" Andrei Chernukhin who was sent
from Moscow to San Francisco to prevent the investigation, sought the
assistance from Russia’s most powerful men, such as Anatoli Chubais and
Yuri Luzhkov, the mayor of Moscow.

While the degree of their involvement in the coverup cannot be ascertained,
"none of this would have happened if the [Russian] goverment had a genuine
interest and will to fight the crime and corruption," said Caryl.
Attributing crime and corruption in Russia to "an enormous moral vacuum,"
Caryl especially warned the Americans against relying on such "wonderful,
young, intelligent, pro-American, English-speaking, and polished reformers"
as Fedorov and Chubais. At the very least, these reformers "emerge not in
the best light in this affair."

"But don’t unload all the responsibility on the Russians either," Caryl
went on, "because a lot of foreigners benefit" from the ever-growing scale
of corruption in Russia. "That’s why our government issued a directive
elevating international organized crime to a national security threat.
However, when asked about the photographs picturing the Golden ADA people
in the company of Al Gore and Hillary Clinton, the presenter demurred. Nor
did he know anything about the photographs of President Clinton with
Grigori Loutchansky, a shady Russian dealer, who, according to "60
Minutes," after making donations to Clinton’s re-election campaign, is now
barred from entering the United States.

Caryl and Kaplan asserted, however, that the Golden ADA is only one in a
series of schemes to plunder Russia’s national treasury which now threaten
both Russia’s national existence and U.S national security. 

*******

#13
Excerpt
Intellectualcapital.com
Predictions 1999-style
by Pete du Pont
January 7, 1999
Pete du Pont is the editor of IntellectualCapital.com. He is a former
Republican governor and congressman from Delaware. His e-mail address is
petedupont@intellectualcapital.com. 

Once a year every columnist gets to prove just how fallible he really is,
so herewith are my predictions for 1999 regarding some vexing public-policy
questions:.... 

What to watch, internationally....

•Russian and China will both move in more authoritarian directions in 1999.
Already the Chinese authorities are jailing democratic reformers. Liberty
scares the Chinese leadership, so freedom will contract rather than expand.
President Boris Yeltsin's health will key the timing of the coming
authoritarian push in Russia. Liberals will talk of reforming reforms, but
the centuries-old Russian yearning for a strong authority figure will
prevail. Look for former paratroop Gen. Alexandr Lebed to lead the tough
anti-crime authoritarianism that is coming next....

*******

#14
From: Boris Petkov <boris.petkov@sedlabanki.is>
Subject: Real Economy -- Virtual Market
Date: Fri, 8 Jan 1999 

Borislav Petkov
Financial Markets
Central Bank of Iceland
Kalkofnsvegur 1
150 Reykjavik
Iceland
Tel.: +354 5 699 652
Fax: +354 5 699 906
E-mail: boris.petkov@sedlabanki.is

Real Economy -- Virtual Market

The process of transition to market economy undertaken by the former
centrally planned economies has generated vast literature. Nevertheless
many economic and policy issues remain riddled with confusion and
inconsistency. The present comments focus on economic developments in
Russia in an attempt to interpret the events as a whole with a view of
identifying an appropriate economic policy.

Russia's sudden jump from detailed state plan, integrating all the
information within the economic system, to the disorderly and volatile
conditions of underdeveloped and overly liberalised markets was ill
advised. Still, the prospects for recovery from the financial (and
economic) crisis of mid-August even thought bleak are not non-existent.
Russia is still a large market with great potential demand. The country can
stabilise its economy; the question is how to accomplish the change (social
transformation) with minimum cost in human and capital terms

There are different views and explanations of the causes of the crisis in
Russia. Usually, the main problem is seen to be in the lack of efficiency
and competitiveness . Confusing and misleading comments concerning value
creation and destruction in the real economy then follow . Those comments
oversimplify the matter and leave it unexplained. The meaning of
"value-subtraction" is only relative and valid only for exchange purposes.
This is rather to say that the particular productive activity does not
yield profit. However, the product (commodities) that lost market value
during the process of production has its utility intact for the consumer.
No doubt those goods are not up to the contemporary standard of quality and
efficiency in use, but they are the one effectively demanded at that stage
of economic development. The majority of the people can't afford the better
brands (mostly imported), no matter what their preferences are . It is
important to note that the consumer choice effect is overstated at best
under normal economic conditions and becomes irrelevant for any practical
purposes under the conditions of a crises. Similarly vague, but
self-indulgent observations are another cause for concern. The First Deputy
Managing Director at the IMF, in a recent paper, when discussing the output
decline in 26 transition economies concludes: Fischer, at al., (1998:5):
"As of 1995, the reported average cumulative output decline during the
transition process was 41 percent.... Even though there were surely better
reform strategies than those actually pursued, the creative destruction of
the transition process would have implied large output declines even under
the best policies.". Definitely better policy and more coherent management
(at least less
mismanagement) could have helped to avoid great part of the loss of output
and employment. Needless to say that when the lives of real people are
affected, each fraction of a percentage point decline in output matters
significantly. But still worse are the proposed future (World Bank / IMF)
strategies. In brief they consist in fiscal "adjustment", that is to say
crude cost cutting leading eventually to deflation and recession plus
interest rate increase, supplemented with further deregulation of the
financial markets.

What then should the authorities really do? Revitalising the economy under
the burden of debt, capital flight, and the world at the brink of recession
(commodity prices and basic-goods prices falling) is least to say an uneasy
task. However, the rebuilding have to begin by utilisation of the available
capital and not by "creatively destructing" it. By creating strong
regulatory system and not by first pointlessly privatising without
regulation (too late perhaps for this measure). The importance of building
up of proper financial system can not be overemphasised. It is urgently
needed to facilitate transactions, provide credit and attract deposits. The
lack of liquidity within the economic system has to be overcome. This task
is not made easier when the belief that the financial markets are somehow
constantly in equilibrium is still fashionable. There is an important role
for the Central Bank of Russia to play. It should aim at reducing
speculation and liquidity preference in particular. The difficulty of the
situation calls as well for the establishment of limits on short-term open
positions of the banking sector. Currently, the commercial banks are easily
tempted in speculative activities, e.g., currency forwards . Those
activities essentially consisted in redistributing the IMF loans and
domestic savings to hedge funds investors and themselves. The loser of last
resort was of course the Russian taxpayer. Little is invested, if at all in
production. Commercial banks focus their operations on short-term lending
and are hesitant to extent long-term investment credits. Admittedly, the
interest rate reduction is tricky -- when the central bank increases
liquidity, it (the funds) leaves the country as foreign exchange outflow --
without capital controls being introduced. The effect of such controls , if
introduced would be overall much more positive, then the conventional
(detrimental to economic activity) defence of increase of interest rates.
Simultaneously the government has to decide along what lines the future
industrial complex will develop. The structure has to be broad enough to
allow for technological changes and gradual renewal of capital stock. It
has to be taken into account that under normal conditions Russian economy
is much closer to the self-sufficient than to the open-economy model. Its
external sector in relation to its output is relatively small.
Stabilisation of demand for investment should be pursed and policy towards
increasing investment spending should be implemented. 

In summery, it is unlikely that the development of the financial markets
will be stopped. However, if the capital market in Russia is to achieve
depth and volume regulation has to be tightened and the rights and
responsibilities of the participants clarified. Only after
those measures are being implemented will it become possible for the real
economy sector to overcome the severe liquidity crunch and start growing.

References:

Caddy, C., and Barry Ickes, 1998."Underneath the Formal Economy -- Why Are
Russian 
Enterprises not Restructuring", Transition, Vol. 9, No. 4, Washington: The
World Bank.
Fischer, S., Ratna Sahay and Carlos A. Végh, "From Transition to Market:
Evidence and 
Growth Prospects", IMF Working Paper 98 /52, Washington: International 
Monetary Fund.
IMF Survey, Vol.27, No. 20, November2, 1998, Washington: International 
Monetary Fund.
Kolodko, Grzegorz W. and D. Mario Nuti. 1997. The Polish Alternative. Old
Myths, 
Hard Facts and New Strategies in the Successful Transformation of the
Polish Economy. WIDER Research for Action 33. Helsinki: The United
Nations University World Institute for Development Economics Research
Kolodko, Grzegorz W. 1998a. "Post-Communist Depression and Negative Value
Added 
Output", Johnson's Russia List, October 09.
Kolodko, Grzegorz W. 1998b. Transition to a Market Economy and Sustained
Growth. 
Implications for the Post-Washington Consensus. Yale University, School of
Management.
Wicksell, J.G.K. 1901. Förelasningar i nationaleknomi. Haft I. Stockholm,
Lund: 
Fritzes, Berlingska. Trans.by E. Classen from the 3rd Swedish edn (1928),
ed. L. 
Robbins. Lectures on Political Economy, Vol. I: General Theory, London: 
Routledge and Kegan Paul, 1934. 

******