January 26, 1998    
This Date's Issues: 3029 • 3030 • 

Johnson's Russia List
#3030
26 January 1999
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Albright Telephones Yeltsin.
2. Moscow Tribune: John Helmer, HAND-MAID TO EVIL UNDONE.
3. AFP: Zhirinovsky to Run for Governor in Yeltsin's Former Fiefdom.
4. AFP: Yavlinsky: Communists Led Country to Ruin.
5. Robert Devane: Incident in Moscow. 
6. Moscow Times: Irina Yasina, INSIDE FINANCE: Lawmakers Face Tougher 
Year Financing Election Campaigns.
7. Newsday: Michael Slackman, For Start 2 Pact, It's Start-Stop.
8. USIA: INTERVIEW OF SECRETARY OF STATE MADELEINE ALBRIGHT ON ITOGI 
(RUSSIAN TV).
9. Rossiyskaya Gazeta: Vladimir Kucherenko, "Russian Account for the 
IMF. Results of Yuriy Maslyukov's Talks With IMF Extremely Significant."
(West's Ignorance of Russian Realities Eyed).]

*******

#1
Albright Telephones Yeltsin
26 January 1999
By BARRY SCHWEID

MOSCOW (AP) -- As the gap between the United States and Russia remained
wide, Secretary of State Madeleine Albright appealed to President Boris
Yeltsin today to not let ``one or another difference'' on key issues spoil
the relationship. 
Albright telephoned Yeltsin, who is hospitalized for treatment of an
ulcer, and spoke with him for about 25 minutes, James P. Rubin, the State
Department spokesman, said. 
``She raised the importance of maintaining the relationship in a position
of solving problems,'' Rubin said. 
Albright said Yeltsin sounded strong, but did not detail what he had said
to her. 
The Russian president's spokesman subsequently issued a statement saying
Yeltsin had expressed concern to Albright about steps taken in Washington
aimed at starting work on a national missile defense. He also told Albright
that Russia objects to the use of force in Iraq, the Balkans and elsewhere
without the specific approval of the U.N. Security Council. 
At the same time, the statement said, Yeltsin said he recognized that
``cooperation is a factor of international life'' and told her that
``differences on some issues should not obscure the common, basic strategic
goals of the two countries.'' 
Yeltsin also stressed the importance of the International Monetary fund
reaching a decision quickly on economic assistance for Russia, the
spokesman said. 
Yeltsin and Albright reconfirmed ``the importance of Russia and the
United States dealing with their bilateral relationship on the basis of
equality and respect,'' the statement added. 
President Clinton also has talked to Yeltsin by telephone since he was
here for summit talks in early September. Those September meetings were the
last in which Yeltsin was seen by a senior U.S. official. 
Albright offered Yeltsin assurances on arms control, saying the United
States remained committed to a 1972 treaty with the Soviet Union that bans
a national defense against missiles. ``We want to work with you if it needs
amending,'' Albright said. 
Recent declarations by Albright, Defense Secretary William Cohen and
other U.S. officials that the United States must gird itself to defend
against ``new threats'' from rogue states has alarmed the Russians that the
Anti-Ballistic Missile Treaty is doomed. 
Indeed, Sen. Jesse Helms, R-N.C., chairman of the Senate Foreign
Relations Committee, declared last week he intends to consign it to ``the
dustbin ofd history.'' 
Albright's pitch to Yeltsin was that Russia should join with the United
States in considering modifying the accord. 
On the economic front, Albright told the Russian leader that U.S. support
for international aid depended on the adoption of ``sound policies.'' 
Albright had planned to talk to Yeltsin on Monday, but the call was
postponed without explanation. That raised speculation that Yeltsin either
was too ill to talk to her or that the relationship had gone into a deep
freeze. 
From Iraq to the Balkans, on the secret transfer of Russian technology to
Iran, and on an emerging U.S. plan to build a missile defense shield,
Albright and the Russians are in clear disagreement. 
A special effort was due to be made later today on Kosovo, where the two
sides begin at least with the joint goal of a political settlement between
the Serbs and the ethnic Albanians, who are in conflict in the Serbian
province. 
Besides meeting again today with Foreign Minister Igor Ivanov, Albright
has been on the telephone with the foreign ministers of allied governments.
One possibility is a meeting of the so-called Contact Group of six nations
at the end of the week in Paris or London, although Rubin said one is not
set yet. 
There are at least two problems. 
Russia does not agree with the Clinton administration that bombing the
Serbs may be the only way to get Yugoslav President Slobodan Milosevic to
ease off on the ethnic Albanians in Kosovo. 
On the other hand, the Clinton administration does not want to send U.S.
ground troops to the province as part of a NATO peacekeeping force. 
Discussion of Russia's economic problems dominated a three-hour dinner
Prime Minister Yevgeny Primakov had with Albright in a small dining room at
the Russian White House on Monday night. 
Primakov, who is due to go to Washington in March to see Vice President
Al Gore, dwelled on Russia's debt problem. 
On a positive note, Russia has honored a pledge to pay off foreign
investors for the first quarter of 1999, making two Eurobond payments that
total $320 million. 
Reflecting frayed relations, Col. Gen. Leonid Ivashov, head of
international military cooperation at the Russian defense ministry, was
quoted by ITAR-Tass news agency as lashing out at the Clinton
administration as in violation of arms control treaties and of exaggerating
missile threats posed by Iran and North Korea to justify the possible
deployment of a national missile defense system. 
``The United States is misleading world opinion,'' he said. 
In a conciliatory vein, Albright sympathized with the ``hard times''
Russians are experiencing, and her strategic advisers sought an
understanding on reduced levels of tanks and other military equipment in
Europe. 

******

#2
Date: Mon, 25 Jan 1999
From: helmer@glas.apc.org (John Helmer)

From The Moscow Tribune, January 26, 1999
HAND-MAID TO EVIL UNDONE
John Helmer

A German physicist and writer at the time of Catherine the Great,
Georg Christoph Lichtenberg, wasn't thinking especially of Russia
when he declared:
"The great of this world are often blamed for not doing what they
could have done. They can reply: Just think of all the evil that we
could have done, and did not."
Lichtenberg was also being ironical. That's a form of wit diplomats
are wary of using for fear of being misunderstood. The U.S. Secretary 
of State, Madeleine Albright, doesn't suffer from that fear; she prefers
bluntness and didacticism. To Albright, Lichtenberg's observation is a 
challenge to the imagination, not a caution.
She is in Moscow to lecture the Russian government once again
on all the evil it is doing. The Russian government will reply -- if not 
across the negotiating table, then in the press -- with all of the evil 
Albright and the Clinton administration have started, but so far left 
unfinished. 
The breakout from the United Nations Security Council to use military
force, 
wherever the US decides, is one, still unfinished evil, though hardly a 
new one. The breakout from the Anti-Ballistic Missile (ABM) Treaty is 
another, to create the defence which the Soviet Union and the US have been
promising each other not to undertake since 1972.
Both are signals of the supreme confidence Albright acquired from the 
collapse of the Soviet Union, and the further disintegration of Russia. If 
Russia had anything credible with which to shake that confidence, Prime 
Minister Yevgeny Primakov would be the man to remember what it is, and say 
it now.
Instead, it's obvious he's bluffing. When he went to India last month
and announced that Russia is contemplating a "strategic triangle"
of itself, India, and China, he was speaking from someone else's
script, which should have been rehearsed with the allies first. 
As close as India has been to Moscow since its independence,
it's flatly opposed to alliances of the strategic sort. When it comes
to their security, the Indians don't trust the Russians; they don't 
trust anyone but themselves. And certainly not China, an adversary as 
permanent as adversaries can be in this world. 
And of course China's real attitude towards Russia is something verging on 
the contempt for weakness and loss of control, on which Chinese strategy has 
always been founded.
It's also obvious that Russia was bluffing in that other corner of the
world 
where, until recently, it looked to have allies of the strategic sort -- 
the Balkans and Mediterranean. Was there to have been quadrilateral
alliance of Russia with Serbia, Greece, Cyprus, and Syria, to anchor
today's national borders, and prevent local expansionism, aided and abetted
by the US and NATO? If that was the hope behind the deployment of the
S-300 anti-aircraft missile system on Cyprus, it ended when the Greek
government told the Cyprus government the deployment was off. However
bitter the Russians may be towards the Greeks now, their own toying
with Turkey is partly to blame for the loss of confidence they
inspire.
One of the problems Primakov has inherited is one of the causes
of that loss of confidence. For that reason, as Russia's prime
minister and strategic interlocutor with the great of this world,
there's a question he should quietly answer: Is there an evil
which Russia's leadership could have done, and refrained from doing?
When most Russians are asked that question, they say not. Why should
foreigners think any differently?

*******

#3
Zhirinovsky to Run for Governor in Yeltsin's Former Fiefdom 

BONN, Jan. 25, 1999 -- (Agence France Presse) Russian ultra-nationalist
politician Vladimir 
Zhirinovsky says he will run for governor of Sverdlovsk, President Boris
Yeltsin's former fiefdom east of Moscow, and will open contacts with the local
Mafia. In an interview to be published on Monday in the German daily Berliner
Zeitung, the chief of Russia's Liberal Democratic party said he would speak
with the Mafia in his bid for the top post in the Sverdlovsk region, east of
Moscow. "It's better to talk with them (the Mafia) than make war with them,"
he said. "In the Russian world, there is no way to get around it because the
criminal world is so powerful." General Aleksander Lebed, the hard-line
governor of Krasnoyarsk in Siberia, is having difficulties because of his poor
relations with the Mafia, Zhirinovsky said. "He has turned his back on the
local Mafia and businessmen," he said. "That's not the thing to do."
Zhirinovsky has also said he would run for the governorship of Saint
Petersburg, vacant since the former governor, Vadim Gustov, was named to the
government post of vice premier in charge of state security. Election dates in
Saint Petersburg and Sverdlovsk have not been set

*******

#4
Yavlinsky: Communists Led Country to Ruin 

MOSCOW, Jan. 25, 1999 -- (Agence France Presse) The Russian communists led the
country to ruin over 80 years and have no right to regain power in the
country, a leading reformer said here Saturday. 
Grigory Yavlinsky, leader of the reformist movement Yabloko, said the
Russian
Communist Party had "no right to power in Russia, neither historical, nor
moral, nor intellectual, nor professional," the Interfax news agency reported.
Yavlinsky, speaking at his group's central council meeting, added that the
communists "who had the right to govern alone for 80 years, used that right to
drive the country to ruin." 
On the economy, the reformist leader said Russia should not base its
hopes of
recovery on the International Monetary Fund (IMF) but use its own resources.

*******

#5
From: "Robert Devane" <robertdevane@glasnet.ru>
Date: Tue, 26 Jan 1999 
Subject: Incident in Moscow

This is in reference to an account relayed by an American expat, of having
been wrongfully imprisoned and abused by the Moscow militia near the Yugo
Zapadnaya metro station. As far as I am aware, there is a special unit in
the Interior Ministry that handles crimes against foreigners. Its telephone
number and contact details are available through the Citizen Services
section of the U.S. Embassy. There is also a diplomatic procedure, whereas
the U.S. Embassy may lodge a note of protest with the Foreign Ministry,
which would then refer it to the apropriate law enforcement agency for
investigation. I recall a recent case, where two of "Moscow's finest"
received prison terms for abducting and beating two French teenagers, much
in the same fashion as the American's experience described in JRL. 

Since I also live near Yugo Zapadnaya, I've had the displeasure of
witnessing the same scam (probably executed by the same scum). Frankly, it
would no more occur to me to confront those people, than to go jogging at
night in the Central Park. However, since it occurred to our good samaritan
to stand up for poor unsuspecting Russian victims (though, how anyone would
be unaware of these scams is completely beyond me), perhaps the person
would consider standing up for his own rights. I think that militia on the
take, willing to abduct a person off the street, is a hell of a lot more
scary a proposition than con men working the babushkas.

******

#6
Moscow Times
January 26, 1999 
INSIDE FINANCE: Lawmakers Face Tougher Year Financing Election Campaigns 
By Irina Yasina 

Finances and politics are inseparable. In a democratic state the
connection between the two becomes visible in one simple question: who pays
for elections. 
In Russia, the December elections to the State Duma are looming on the
horizon, and the next presidential elections are set for summer of next
year. This makes it necessary to re-examine the upheavals in state
finances, and even to look at the major events in the private sector
through the prism of the formation of war chests for electoral campaigns. 
It is no coincidence that the head of the government's finance
department, Alexander Pochinok, attached so much importance to the question
of election financing at a recent news conference. With his characteristic
tendency to idealize and over-simplify matters, Pochinok spoke of the need
to establish uniform rules for all participants - which sounds a little
strange coming from someone in his position. 
By law, budget funds make up only a small fraction of a candidate's
campaign funds. The lion's share is supposed to come from private sources.
So where does the budget fit in? 
In fact, Russia's brief democratic history has a distinct precedent where
considerable budget and quasi-budget funds were used in the financing of
campaigning. 
Prior to the 1996 presidential elections, the government issued two
tranches against its hard currency loans, which became known as "taiga
bonds." Intended to cover the debts of bankrupt Soviet foreign trading
structures to their suppliers, these securities were distributed in only a
few Russian banks, which proceeded to use the money from their sale to pay
for the famous singers and dancers who appealed to the population to vote
with their hearts. 
The situation today is fundamentally different, since no one is loaning
any money for either elections or domestic purposes. Can anything more be
wrung out of the budget? 
The answer is probably yes, since so far this year deputies have been
very active defending the interests of Russian producers, usually by trying
to ensure that extra funds are allocated to specific areas of the budget,
such as agriculture or oil production. 
Those deputies that manage to do this successfully can confidently expect
modest injections of additional campaign funds from grateful recipients of
state funds. 
Yet this still probably won't be enough to cover campaign costs, leaving
future legislators and presidents to consider what other resources they can
mobilize. 
Until recently, the greatest investors in politics were the
financial-industrial groups. This is easily explained: Their financial
well-being depends on the gratitude of the authorities - on access to one
or another official who allocates budget flows, say, or licenses. 
This sort of collaboration can sometimes have unexpected and extremely
unpleasant consequences for politicians, however, especially since the
conditions of such agreements are not set on paper and certified by a notary. 
This is something that the governor of Krasnoyarsk region, Alexander
Lebed, is finding out now that it is clear that he and the groups that
supported his election do not see eye-to-eye after all. Lebed believed that
the aluminum producers of Krasnoyarsk supported both him and his economic
theories, but they appear to have anticipated a speedier transition from
economic theory to the actual practice of supporting individual producers. 
And even Russia's oligarchs are having a tough time of it now. The head
of Inkombank, Vladimir Vinogradov, famous for his political investments, is
scarcely able to lend this kind of support now. 
Nor can anyone count on Uneximbank's Vladimir Potanin or Menatep's
Mikhail Khodorkovsky. The most that the co-owner of SBS-Agro, Alexander
Smolensky, can hope for is to squeeze some stabilizing credits out of the
Central Bank. 
Nevertheless, serious politicians are busy making serious plans, acutely
aware of the need to take control of the main flows of finance that
survived the crisis. 
How else can one explain the renewed battle for the chairmanship of
Vneshekonombank? To start reshuffling personnel at the very height of talks
with international creditors would appear to be plain crazy, but for some
senior officials, matters concerning control over Vneshekonombank's debts
are more important than the nation's overall negotiating position. 
Sberbank chairman Andrei Kazmin also has cause for concern, with the
approach of a shareholders' meeting where a change of management could be
implemented. 
And no doubt the chairman of Vneshtorgbank, Dmitry Tulin, is shifting
uncomfortably in his seat as auditors from the Central Bank continue
looking into the bank's affairs.

******

#7
Newsday
January 24, 1999
[for personal use only]
For Start 2 Pact, It's Start-Stop
By Michael Slackman. MOSCOW CORRESPONDENT

Moscow - Scattered at sites around Russia are 180 nuclear-armed
missiles that are so old authorities here are worried they are
unreliable and present an environmental hazard as well.
When they were rolled out of the factories of the former Soviet
Union, these missiles - capable of delivering multiple nuclear
warheads to targets thousands of miles away - were deemed to have a
service life of 10 years. Today they are more than 20 years old.
Although government officials here are reluctant to talk about
it publicly, they acknowledge this is the primary reason they are eager
for the lower house of parliament, the Duma, to ratify the Start 2
nuclear disarmament treaty with the United States. If ratified, it would
pave the way for removal of the aging missiles and open the door to
further arms reduction talks that could lead to decommissioning of even
more aging weapons.
Every time the legislators inch toward ratification, however,
Washington makes it politically impossible for Russians to achieve. In
December, when the White House decided to bypass the UN Security
Council, ignore Russia altogether and bomb Iraq, officials here became
so incensed they immediately shelved Start 2. Then this week, Washington
announced it wants to renegotiate a 1972 treaty that has served as the
cornerstone of arms-control relations between the two nations. And again
there is talk of postponing ratification.
"Any changes to the treaty would be counterproductive," said
Anton Sourikov, a military expert and aid to Yuri Maslyukov, first
deputy prime minister. "The mere discussion seriously undermines nuclear
disarmament." 
Yet, despite the nationalistic feelings that have hampered
efforts at ratification, there is growing internal pressure to finalize
the agreement. Officials know they cannot afford to modernize their
missileforce and will have to eventually scrap much of it even without
Start 2. If Russia takes that route, however, officials fear ending up
at a strategic disadvantage, having lost a portion of its arsenal
without winning any concessions from the United States.
What the Russian government hopes for is that heads will remain
cool long enough to ratify Start 2 and to negotiate a third arms
reduction agreement, Start 3, so that Russia and the United States
reduce weapon stockpiles simultaneously, maintaining a balance
officials here are eager to preserve. If that doesn't happen, the old
missiles will keep sitting in their silos.
"Because of a lack of money, Russia can't produce new heavy
missiles," Sourikov said last week. "In the absence of Start 2 and
Start 3, in order to keep the level of missiles corresponding to the
United States, Russia will be forced to prolong the service life of
those missiles now in service. It is a very dangerous situation. Not
unfortunate. Dangerous."
The Start 2 treaty has languished in front of the Duma since 1993.
But with the economic crisis that struck last August, there was
increased pressure to rid Russia of its aging missiles. Momentum began
to grow for ratification, until the United States decided to bomb Iraq
in December. Despite the bellicose reaction, however, the government
quickly began pushing for ratification once the holiday season hadpassed.
Then last week President Bill Clinton sent a letter to Russian
President Boris Yeltsin floating the idea of renegotiating the 1972
antiballistic Missile Treaty, a pact designed to preserve a concept
known as mutual deterrence - that is each side has the power to wipe
each other out, thereby deterring the other from attacking. If the
United States were able to develop a system that could knock out Russian
missiles in-flight, Russia would lose its deterrence capability and
would be fearful, in theory, that the United States would launch a
pre-emptive strike.
Predictably, the Russians are again angry and are again threatening
to hold up passage of Start 2 if the United States pulls out of the 1972
treaty. Yeltsin is preparing a response to the Clinton letter, officialssaid.
The missiles Russia would like to scrap were built in Ukraine when
it was part of the Soviet Union. Though officials say the initial
projected useful life was a conservative estimate, there is concern they
will leak fuel, degrade the environment and become so unreliable they
are a danger to anyone who tries to use them.
"The main idea is we have to reduce the amount of missiles and
warheads," said Alexander Golts, a military analyst with the Russian
magazine Itogi. "That's why they want to move immediately from Start 2
to Start 3."

********

#8
United States Information Agency 
25 January 1999 
TRANSCRIPT: SECRETARY OF STATE ALBRIGHT ON RUSSIAN TV JANUARY 21 
(Speaks of US decision to consider limited missile defense) (2190)

Washington -- Secretary of State Albright has told a Russian
television audience the United States has "good evidence" that the
Russian enterprises against which it imposed sanctions "were, in fact,
carrying on a relationship that is counterproductive" to all countries
concerned about the potential threat of weapons of mass destruction.

The organizations were cited for supplying Iran with technologies that
could be applied to the development of such weapons.

The Secretary of State said during a January 21 interview on ITOGI
Russian television that proliferation of weapons of mass destruction
"is of concern to the United States. It's of concern to the countries
in the region. Frankly," she added, "I think it should be of concern
to Russia and Russia's citizens."

Albright also defended the Clinton administration's decision to resume
research on a limited missile defense system.

She pointed out that "many different kinds" of "non-state actors" or
countries that are not part of an arms control system, as the United
States and Russia are, have been acquiring "weapons that we think are
dangerous -- long-range missiles ... with the potential of delivering
chemical or biological weapons.

"So we believe that it is essential for the United States to think
about how to defend ourselves against that."

Albright added that the missile defense program is still in the
research stage, and that any decision on potential deployment is "a
couple of years" away, depending upon whether the concept is found to
be feasible. "So we're a long from this," she noted.

She also emphasized that the U.S.-Russian Anti-Ballistic Missile (ABM)
treaty, originally negotiated and signed in 1972 "is the centerpiece
of our security. It has been amended in the past, by agreement, and
it's conceivable that it might have to be again by agreement.

"But we put a lot of emphasis and store on the ABM treaty," she said.

Following is the State Department transcript:

(begin transcript)

U.S. DEPARTMENT OF STATE
Office of the Spokesman
(Moscow, Russia)

January 25, 1999

INTERVIEW OF SECRETARY OF STATE MADELEINE ALBRIGHT
ON ITOGI (RUSSIAN TV)
January 21, 1999
Washington, D.C.

QUESTION: Welcome to Russia. Probably you will come to tough times,
but many people think that there are tough times in our relationship.
The relationship between America and Russia is, for example, more a
cold peace than world friendship. Do you agree with this?

ALBRIGHT: Good evening. First of all, thank you. I would like to say
that I know that this program is serious, and a good opportunity to
talk with the citizens of Moscow. I know that the past year was very
difficult for you, and for the Russian state. I hope that this year
will be better.

And to answer your question -- 

Q: Yes, is it more a cold peace than world friendship?

ALBRIGHT: No, I think that our relationship with Russia is a very
important relationship to both countries. We have a very large number
of issues that we have to talk about, and, I think, that we work on
together. I would say that we agree on many, many issues together. We
disagree on some, because we are both great countries with
responsibilities. I think that it is a good relationship, and one
that, I think, is central to both our countries. I very much agree
with Foreign Minister Ivanov, when he also wrote about the importance
of the relationship, and how we work and solve problems together. We
disagree on some, there's no question. But I think that it's a useful
and good relationship for both countries.

Q: But I have to ask you about some points of disagreement. One of
these points is the sanctions imposed by the United States for some of
Russian enterprises. Russian security officials said that there are no
evidences that these entities had some deals with Iran, or supplying
them with modem weapons technologies. Which evidences, which facts do
you have which allowed you to impose the sanctions?

ALBRIGHT: Well, I think, first of all, we have great concern about the
proliferation of weapons of mass destruction. This is of concern to
the United States. It's of concern to the countries in the region.
Frankly, I think, it should be of concern to Russia and Russia's
citizens, because one of the biggest problems that we have to deal
with today is the proliferation of these kinds of weapons, and the
difficulties of all our countries guarding against them.

We have good evidence that these entities were, in fact, carrying on a
relationship that is counterproductive, and not useful to your
country, or ours, or the other countries who care about making sure
that we are not threatened by these kinds of weapons. We have good
evidence of it, and I believe that Mr. Kiselyev agrees with that.

(NOTE: On January 12, 1999, the State Department issued a statement,
headed "Trade Penalties Against Three Russian Entities," which
included the following statement: "The U.S. Government has imposed
trade penalties against three Russian entities for materially
contributing to Iran's nuclear weapons and missile programs. These
three entities are NIKIET (the Scientific Research and Design
Institute of Power Technology), the D. Mendeleyev University of
Chemical Technology, and the Moscow Aviation Institute (MAI). Based on
existing authorities, including President Clinton's July 1998
Executive Order on weapons of mass destruction (WMD), the United
States is banning exports to and imports from these entities, as well
as U.S. Government procurement from and assistance to these
entities.")

Q: Mrs. Albright, Senator Warner from Virginia said once, in a live
show, that America should make some steps in Kosovo -- with, you have
information or even without information. Are you ready to take some
actions by your own -- without information?

ALBRIGHT: Well, first of all, there is no question that Kosovo is a
very serious problem, for all of us. This is not just the United
States. Again, I've had conversations with Prime Minister Ivanov
yesterday, because the Russian government also is concerned about some
of the things that are going on in Kosovo, and the fact that
Ambassador Walker, who is head of the OSCE (Kosovo Verification
Mission sponsored by the Organization for Security and Cooperation in
Europe), was not permitted to do his work.

So this is not just the United States being concerned about what's
going on in Kosovo. NATO is concerned about Kosovo. The United Nations
is concerned about Kosovo. I think that the international community --
together -- needs to try to get a political solution, and to make sure
that President Milosevic understands that he signed an agreement with
Ambassador Holbrooke, to have a lower number of VJ, the Yugoslav Army
forces, and the special police, and that he needs to live up to that
agreement.

The United States takes its positions and policies in conjunction with
those of NATO, and the international community, and the United
Nations. So I think we're very concerned. There's no question that
Senator Warner is a respected member of the Senate, who is deeply
moved by the kinds of things that are going on in Kosovo -- as are
most Americans -- the slaughter that we saw on television a few days
ago, the atrocities people found unacceptable.

Q: But is it possible that some military action will be taken, as you
told that Milosevic probably understands just the language of force?

ALBRIGHT: Well, I think that there is that possibility. One of the
actions that has been taken in the last week, by the NATO Council, has
been to say that what's known as the activation order for air
operations is on the table. That has been on the table. But we hope
that President Milosevic will understand that there is no future in
not living up to agreements, and that the people of Kosovo -- and they
also -- need to become a part of this discussion, a political
discussion, to develop the highest level of self-government and
autonomy for the people of Kosovo. That's what we're all trying to do,
is to get both parties to agree to work on some kind of a system that
would provide the people of Kosovo some autonomy.

Q: I would emphasize one more disagreement between our countries. My
country and many people are very concerned with late things, which
President Clinton described in his State of the Union. He spoke about
the increasing of military spendings; and after that, that the nation
should be ready to use chemical and biological attack.

Mr. Cohen, Secretary of Defense, he moved it further and told about
that America should develop its national missile defending system. And
so, in spite of, Russia would be against it because it breaks the AMB
treaty of 1972. What is your opinion here? What threatens America now?
Why should you increase the military budget? Why should you build your
"Reagan-style" national missile defense?

ALBRIGHT: Well, first of all, you've asked a lot of questions, and
I'll try to answer them in order. First of all, what the President
said about our military budget: Our military budget has been
systematically lowered since the high peak of the '80s, and has been
cut by something like 40 percent since its height.

So when President Clinton speaks now about increasing some of the
budget, it's not anywhere up to the levels of where it was. It's
basically done because the people in the military are concerned about
the some of the pay for the soldiers, sailors and airmen; some of the
ways of just maintenance and readiness; and trying to have a military
that is effective.

Then, the second part of this: I think -- and it goes to the question
you asked about our sanctions and Iran. President Clinton has said,
and I have said many times also, that what we see as the biggest
threat for us, as we move into the 21st Century, is the fact that
there are a growing number of countries that are acquiring various
technology, or pieces of technology, or parts to do with creating
weapons of mass destruction. That's a really new threat.

During even the height of the Cold War, the United States and the
Soviet Union worked out good arms control agreements. We might have
disagreed on things, but we had a system that -- I think we actually
all learned to understand that there were two rational actors, and
that we were dealing rationally with the problem.

What we see now are many different kinds of either non-state actors,
or countries that are not part of the system, who are acquiring
weapons that we think are dangerous -- long-range missiles, or even
with the potential of delivering chemical or biological weapons.

So we believe that it is essential for the United States to think
about how to defend ourselves against that. A national missile defense
program -- which, by the way, no decision has been made to deploy that
-- this is research at the moment, and no decision is going to be made
on that for a couple of years -- another year or so. Only after that,
if it is feasible, it might be deployed. So we're a long way from
this. But the reason for it is: I think our concern is that countries
that are not part of an arms control system, the way the U.S. and
Russia are, will use these various pieces in order to be a threat.

The ABM treaty, we have believed -- as I know many Russians have -- is
the centerpiece of our arms control, and it's very important to us. It
is the centerpiece of our security. It has been amended in the past,
by agreement, and it's conceivable that it might have to be -- again
by agreement. But we put a lot of emphasis and store on the ABM
treaty. So, the way that you phrased the question is: You make it all
seem as if it were all decided, and that we were going to have a huge
buildup, and that it was directed against Russia. None of that is so.

Q: The last question. In spite of all the contradictions, it seems
that you and Mr. Primakov, whom, of course, you're going to meet, you
have some kind of personal friendship. If it's so, I remember just one
case when you sang together. What was the song?

ALBRIGHT: Well, we actually had a very good time. This was at a
conference in Asia, and I think that many Russians know, "The West
Side Story." We changed that, and we made it "The East-West Story." So
we sang; we had a good time. I appreciate my personal friendship with
Prime Minister Primakov, and also with Foreign Minister Ivanov. I
think that personal good relations are important, as you try to deal
with the kinds of difficult issues that Foreign Ministers and Prime
Ministers have to deal with. So, I'm looking forward to seeing my
friends.

Q: Thank you very much.

ALBRIGHT: See you in Moscow.

*******

#9
West's Ignorance of Russian Realities Eyed

Rossiyskaya Gazeta 
22 January 1999
[translation for personal use only]
Article by Vladimir Kucherenko: "Russian Account for the IMF.
Results of Yuriy Maslyukov's Talks With IMF Extremely Significant"

The recent talks in the United States between the IMF leadership and
First Vice Premier Yuriy Maslyukov coincided with the third U.S.-Russian
investment symposium at Harvard. Most of our liberal media were quick to
describe the results of these events as black and hopeless for the
government. It need not bother looking for the IMF credits that it has
included in the 1999 budget. Television plainly relished the words of the
not unknown Boris Berezovskiy, who was quick to pile the whole blame on the
"procommunist" government. The gloomy commentaries that have appeared,
however, overlook some very important things.Freedom From Fear [subhead]
It has simply become the fashion to say that Russia will not get the
IMF loans because it is known to be a "failed" country and that next year
we will have to spend 80 percent of our budget repaying our debts. During
the visit to Washington, however, Yu. Maslyukov managed to move the
discussion on from a fundamental philosophical level (whether to give
Russia the loan or not) to a purely practical level: On what terms can we
borrow more money from the IMF to pay our foreign debts in 1999? And it
seems that the first vice premier managed to dispel some of the West's
persistent nightmares.
Of course, you could not call the pre-visit situation easy. The U.S.
side was in a state of tension: In place of the usual liberal, the man who
arrived for the talks was Yuriy Maslyukov, whose career record includes
leadership of the military-industrial State Commission on question of the
USSR Council of Ministers [as published] and the USSR State Planning
Committee, and his work in the Communist Party of the Russian Federation
parliamentary faction. (It must be borne in mind that Cold War fears are
still very much alive in the United States.) The "solemn" tone of articles
in a number of the Russian mass media also played their part.
Furthermore, back in November an IMF mission visited Moscow and left
in confusion. Previously the chief "negotiator" with the IMF had been A.
Chubays, Russian Federation special representative to the international
financial organizations, who was usually willing to accept all the IMF's
demands and then secured the passage of the corresponding Russian
Government decrees. Admittedly, they were rarely fulfilled, but they
provided a pretext for positive reports on the progress of the reforms. 
Now for the first time the IMF has heard about the real situation in the
country and some of the consequences of its own advice. Such candor is, to
be blunt, not very pleasant for this organization.
During the Washington talks, however, our transatlantic partners saw
for themselves that they are dealing with a man whose reasoning is entirely
within the coordinates of the market system: Economic terminology is
perfectly natural for him, and he even had occasion to correct his
interlocutor, who deliberately misuses these specialist terms. According
to eyewitness testimony, after these tests of competence Washington saw a
man who quite soberly assesses the present state of Russo-U.S. relations. 
Therefore those people who had arrived at the talks filled with tension
were subsequently quite relaxed.
At the talks they heard the almost ritualistic terms espoused by the
West and the IMF, and strictly speaking the talks were held to hear these
terms. For example, there was the thesis that Russia intends to default on
the payment of its foreign debts, particularly to the IMF and the World
Bank. Yu. Maslyukov also assured the creditors that the new government will
not hinder their attempts to monitor Russia's expenditure of the
borrowedfunds.
Some observers note with surprise that the present "procommunist" (a
term that is persistently drummed into the West) government, which has the
opposition State Duma's support, is pursuing a far tougher economic policy
than previous reform cabinets.
Why is this important? The proposed IMF credits will trigger a "chain
reaction" of accords with our country's other creditors which will be of
benefit to Russia. Our receipt of the Japanese loan will also depend on
this. All this will enable Russia to embark less painfully on a new tax
system in the second quarter of the year.
Should anyone fear that the IMF will not extend a helping hand to
Russia this year and that there will be a default -- our country's
violation of its foreign debt obligations? Of course they should, the
creditors above all. The West has already seen examples of this in Congo
and Sudan, which subsequently became international outcasts. But it
understands perfectly well that in Russia's case it also faces huge
difficulties. As one of our sources taking part in these talks stated, in
this instance the recent Asian crisis "will seem like as casual as the
February revolution compared with the horrors of the October Revolution."

Can the Disagreements be Surmounted? 

Nevertheless, what is the implication of the speech by Stanley
Fischer, first deputy managing director of the IMF, via the television link
between Washington and Harvard where the seminar on investments in Russia
was being held in parallel with the official talks? After all, Fischer
expressed the gravest doubts about the possibility of an IMF loan to Russia
and criticized the 1999 Russian budget as unrealistic.
Undoubtedly, the talks were beset by difficulties and contradictions. 
Particularly if you take the term talks to mean the broad process certainly
not restricted just to meetings of top leaders. But even these
disagreements can be fully surmounted during the joint work by specialists
preceding the arrival of IMF missions in Moscow. Recently, incidentally,
the latest delegation of IMF specialists began its visit. For example,
Fischer criticizes us for the fact that we are cutting the most collectible
tax -- value-added tax -- too much. This tax, however, is too heavy a
burden for our producers and could destroy those who are still
manufacturing. The main principle to which our government will adhere in
such talks is the fulfillment of the IMF's demands only if they are fair
and appropriate.
A very graphic illustration of such misunderstandings is the question
of the collectibility of taxes and the closely related question of the size
of the 1999 budget deficit. Newspapers have trumpeted the IMF's claims
that the authorities will not be able to keep the latter within the target
of 2.5 percent of GDP and that it could be 4 percent or even 6 percent. It
may be added that, contrary to the objective data, some IMF specialists are
also talking about a fall in tax takes.
In fact much can be explained by the West's very poor knowledge of our
reality and of the characteristics of life generally in conditions of an
economy marked by total nonpayments. It was created by the extreme
monetarist policy founded by Ye. Gaydar and A. Chubays, which dramatically
restricted the money supply in Russia and reduced the country to a realm of
barter and truly cashless "war communism" [name given to period of foreign
intervention and civil war in 1918-1920 marked by severe economic crisis].
An indicator exists showing the correlation between the country's GDP
and its money supply. For the economy to work normally the figure must be
at least 50-60 percent. In our country in February 1998, however, it stood
at just 16.7 percent and fell to 11.9 percent in September. The
devaluation of the ruble coupled with a virtually unchanged GDP led to an
even greater demonetization of our economy. Prices rose, and whether you
like it or not you either have to print more rubles or resort to
mutualoffsets.
Contrary to the IMF's gloomy forecasts, the tax take in "hard cash" is
rising now. Whereas in August and September the tax take was 15.5 billion
rubles [R] a month, in October it was R19 billion, in November it was R24
billion, and in December R24.7 billion. The proportion of "hard" cash rose
by 60 percent with inflation at 23 percent for October-November, and thus
the increase in taxes was triggered not by a rise in prices but first and
foremost by the stabilization of the economic situation, which was achieved
by the joint efforts of the state and enterprises. The use of mutual
offsets, so hated by the IMF, also had a beneficial effect. In December
there were mutual offsets worth R12 billion which enabled the economy to
breathe somewhat more easily. All these things provide good material for
work with the IMF and for seeking out a reasonable compromise with it. 
Many, a great many, of the Western economists' and financiers' mistakes
stem from an ignorance of Russia's specific conditions. Was the IMF not
dreading hyperinflation in our country in October, November, and December? 
And did this prediction come true? The fears that the government would
drown in an uncontrollable money supply also proved unfounded in exactly
the same way.As a participant in the U.S. meetings told us, the international
financial organizations are already beginning to understand the need for
offsets in conditions of a cash-starved economy. Abuses are inevitable
here. But the West cannot appoint its financial commissar for every offset
operation.So there is no need to dramatize the situation after Fischer's
speech.
You have to bear in mind the IMF's desire "to save face." In big politics,
the word "no" sometimes means the complete opposite. For example, "yes --
but on condition that certain procedures are observed." Western business
circles do not need a spectacular Russian default! This was confirmed
recently by the London Club of creditors. Much, it seems, will be decided
in the first quarter of the year.

Nevertheless, It Was Nonflying Weather 

Finally, what can one say about the fact that the first vice premier
could not attend the Harvard investors seminar? And why is all this being
interpreted as a sign of failure in Washington?
It is all the fault of the weather -- there was a heavy snowfall in
Boston where the university is situated. There was not enough time left to
get there, and the schedule of Yu. Maslyukov's meetings in the U.S. capital
was too tight. And even though Vladimir Resin, chief of the Moscow
Long-Term Development Complex, managed to obtain a Learjet, the bad weather
kept it grounded. Incidentally, Stanley Fischer was unable to attend for
the same reason.
As Anton Surikov, Yu. Maslyukov's press secretary, told us, the first
vice premier intends to compete for every investor in Russia and was thus
distressed at this failure. But there is no need to tear your hair out
because of this either. The main point of the visit to the United States
was to attend the Washington talks with the IMF, and the success of this
matter is the greatest incentive to private investors. Our government's
predecessors in the business of economic transformations were represented
in abundance at the Harvard seminar. But they, you will agree, have more
than enough free time on their hands nowadays. And they are certainly not
burdened with responsibility for the state of affairs in the economy.
And anyway, was this really the last seminar?

As This Issue Was Going to Press

The experts from the latest IMF mission began work in Moscow
yesterday. Their job is to analyze the results of the Russian economy's
development in 1998 and hold talks with the Russian leadership on the
program of assistance this year, Russian Federation Finance Minister
Mikhail Zadornov announced.
The work of the mission's experts will last officially until 6
February. As for its leader, Jorge Marquez-Ruarte, deputy director of the
IMF's European II Department, he will arrive in Moscow 25 January.
According to the information published by the IMF, Russia's total debt
at 31 July 1998 stood at $16.8 billion. The Russian Government hopes to
receive a tranche of around $5 billion from the IMF this year for the
restructuring of its debt to this international financial organization.

********