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Johnson's Russia List


Febuary 1, 1998    
This Date's Issues: 3037    

Johnson's Russia List
1 February 1999

[Note from David Johnson:
1. AP: Primakov: I Won't Run For President.
2. The Independent (UK): Phil Reeves, The spectre of Weimar hovers, 
but no Hitler - yet.

3. Reuters: Nigel Stephenson, Ten years on, new walls divide E.Europe.
4. St. Petersburg Times: Christa Lee Rock, 55 Years On, Blockade Still 
Lesson To Be Learned.

5. Sovetskaya Rossiya: Russian Poll Shows Kosovo Policy Concern.
6. Reuters: Peter Henderson, Soviet behemoth Uralmash copes in crisis.
7. Christian Science Monitor: Judith Matloff, Russia's Army faces battle
within its ranks.

8. Jamestown Foundation Prism: Vladimir Mironov, CAN RUSSIA'S DEMOCRATS 


Primakov: I Won't Run For President
January 31, 1999

MOSCOW (AP) -- Russian Prime Minister Yevgeny Primakov insisted Sunday he has
no interest in running for president, just days after running afoul of
President Boris Yeltsin by proposing limits on his powers.
``It's laughable to think that I want to strengthen my position to
in the presidential race,'' Primakov said in an interview on Russia's Itogi
television program.
Primakov, a former KGB chief and longtime diplomat, has taken over most
responsibility for the government's daily work in recent months while Yeltsin
has remained in the background with health problems.
Primakov has been careful to avoid any appearance of ambition for the
presidential throne -- but if he were to run, opinion polls say he'd be a
leading contender. Many Russians respect Primakov for his diplomatic skills,
his hard line with the West, and an eloquence rare among Russian politicians.
Russia's NTV television cited a poll Sunday that said if elections were held
today, Primakov would come in second behind Communist leader Gennady Zyuganov.
Primakov conceded that it was ``very nice'' to hear that he has high
ratings, but reiterated, ``I wouldn't want to take part in the presidential
Russia's next presidential vote is scheduled for the middle of next year.
Last week, Primakov tried to get parliament to drop impeachment proceedings
against Yeltsin in return for the president's promise not to dissolve
parliament this year.
The president bristled at the suggestion, promptly responding from his
hospital bed that he had no intention of giving up any of his powers.


The Independent (UK)
1 February 1999
[for personal use only]
The Global Crisis - The spectre of Weimar hovers, but no Hitler - yet 
By Phil Reeves

ANYONE looking for proof of Russia's economic disaster need only
telephone its official statistics department. Ask how many squillions of
roubles are now owed to the country's workers, and how many months these
unfortunate people have waited for their money. 
You might think that as this information is of unarguable public
interest, particularly to Russia's army of international creditors and to
its even larger army of miserably poor, it would be freely available. Wrong. 
So dire is today's crisis, the state's fact-gatherer, Goskomstat, charges
the equivalent of 5 from members of the public who want the latest news
about how much their government has - without so much as asking - borrowed
from them. As this is a week's income for the 40 million Russians below the
official poverty line, few of them can now afford to find out. 
In fact, the wage arrears bill stands at more than 77 billion roubles
(2.1bn) - although not all is owed by the federal government. Of this,
470m is owed to teachers, of whom tens of thousands went on strike last
week because they, too, had not been paid. Two officials were taken hostage
to publicise their misery. But Russia is used to the sight of its own
suffering; the media paid scant attention. 
The bubble burst last August, but trouble had been brewing for months. A
key source of hard currency - the sale of oil and gas - had dropped sharply
amid a fall in world prices. Tax collection was, as usual, inadequate. With
a widening hole in its budget - and the clamour of unpaid miners, doctors,
pensioners and many others ringing in its ears - the government relied
increasingly on short-term borrowing, selling T-bills often to
under-capitalised and criminally controlled banks. Asian jitters helped to
drive interest rates through the roof, locking the government into a mad
cyclical scramble to raise money at increasing cost just to stay abreast of
maturing short-term debt. 
In the end, the train came off the rails. A 14bn IMF rescue package
failed to inspire investor faith. Moscow defaulted on foreign and domestic
debts, and abandoned its battle to defend the currency. The rouble dropped
in value by 75 per cent. 
Scattered signs of recovery, brandished by the more optimistic Western
economists in 1998, vanished at once. Foreign investors fled and tens of
thousands of young Russians - the beginnings of an urban middle-class -
found themselves out of work as the economy sank back into refrigeration.
Russia's annual per capita income - 4 per cent of the United States' - is
expected to drop this year to 750 and perhaps lower. Economic output of
this vast former superpower is forecast this year to be well short of that
of Belgium. 
The causes of this disasterare rooted in both the chaotic aftermath of
the break-up of the Soviet Union and the Communist empire itself. Chief
among them was the failure of Russia's privatisation programme. Industries
that should generatewealth were too often sold for a pittance in rigged
auctions to cliques of Soviet-era managers intent on excluding outsiders at
any cost, and thereby choking investment and growth. 
The West sought with evangelical fever to impose an economic creed on a
society where decades of Soviet management - with its bartering, bogus
production figures, institutionalised corruption and centralised government
- had created an environment lacking the basic requisites of a market
economy. Without the right tools - such as access to long-term cheap
credit, functioning laws and real competition - there was never much hope
of kick-starting the engine of reform. 
So what next? The IMF, which has already lent 12bn to Moscow, is trying
to decide whether to hand over more. Russia faces another possible default
on a slice of its 94bn external debt; it has already said it can only pay
6bn of the 11bn (including 2.8bn to the IMF itself) that is due this year. 
The IMF wants promises of good behaviour before signing another cheque,
and no rouble printing sprees. The Russians seem to be gambling on the fact
that the fund will cave in, partly because its Western shareholders fear
isolating a volatile nuclear power and partly because another Russian
default would further damage the IMF's credibility. Russia hopes the low
rouble will boost exports and revive moribund domestic production. 
Whether it can contain the worst of its Soviet reflexes is unclear, but
the signs are not hopeful. One such came last week when a senior minister,
Vadim Gustov, fulminatedagainst the need to close any coal mines - the
centrepin of a World Bank-funded plan to restructure the hugely subsidised
and outdated mining industry. 
No one knows what the social and political consequences of further
economic decline will be. The more despairing onlookers summon up the
spectre of the Weimar Republic. They comfort themselves in the knowledge
that there is no Russian Adolf Hitler on the horizon. So far. 


FEATURE - Ten years on, new walls divide E.Europe
By Nigel Stephenson

PRAGUE, Feb 1 (Reuters) - Nearly 10 years after the fall of the Berlin Wall
symbolically ended four decades of isolation for the East Bloc, new fault
lines are dividing central Europe. 
Where once the region's political and economic elite looked east to Moscow,
today they look west to Brussels. 
Western cars ply the increasingly jammed streets of central European
and smart Western retail outlets have replaced many of the dowdy Communist-era
shops in Prague, Warsaw, Budapest, Bratislava, Bucharest and other cities. 
But analysts say a key distinction has emerged between the countries of
Central and Eastern Europe which are heading for quick European Union (EU)
membership and those which are not. 
Five countries in the region have begun talks with Brussels on rapid
-- the Czech Republic, Poland, Hungary, Slovenia and Estonia -- while the
rest, the ``outs,'' must wait. 
The European Commission confirmed its selection, made after assessing
in political and economic reform, before talks began in November, leaving
Slovakia, Romania, Bulgaria, Latvia and Lithuania in the EU's waiting room. 
For the EU-5, as they have been called, analysts see bright prospects,
recent storms in emerging markets further east in Russia and Asia, and more
foreign investment. 
``These five are in a category of their own. There are some differences in
performance but if you are to make a judgment in terms of long-term prospects,
the differences between them are secondary,'' said Stanislaw Gomulka, a reader
in economics at the London School of Economic and adviser to the Polish
finance ministry. 
For the ``outs,'' things could get worse before they get better, analysts
``The only country which could belong to the five is possibly Slovakia
but all
the others do differ,'' said Gomulka. 
Slovakia, the only country excluded from the fast-track EU talks for
failings, elected a new pro-Western government in September and wants a place
in the first rank. 
``It is not just economic performance so far but also quality of
the quality of laws, of regulations that are likely to have an impact on
future performance,'' Gomulka added. 


The European Bank for Reconstruction and Development (EBRD) set up in
1991 to
support the transition to a market economy in Eastern Europe and the former
Soviet Union, said in November that growth slowed in 1998 as the pace of
reform slipped. 
``For many countries, progress in transition...has been slower and more
erratic than in any year since the fall of the Berlin Wall,'' it said in its
annual Transition Report. ``Policy reversals have become more common, partly
in response to economic crisis. 
In central and Eastern Europe and the Baltic states economic growth would
to 3.0 percent in 1998 from 3.6 percent in 1997, though only the Czech and
Romanian economies would actually shrink, before 3.6 percent growth in 1999. 
The Russia crisis has proved the sternest test to date of reform in the
region. In the immediate aftermath of Moscow's August debt default, East
European stocks fell sharply. 
But analysts say the direct impact on the region was muted as many countries
had shifted their trade towards the West. 
``Central and Eastern Europe got hit through the financial markets as
investors were re-aligning their positions but the real economies were not hit
that hard,'' said Jan Svejnar, executive director of the William Davidson
Institute at the University of Michigan Business School. 
``The problem would come in 1999 primarily if Western Europe slows up
these countries are so dependent on exports to Western Europe,'' said Svejnar,
who also heads the economics institute of the Czech Academy of Sciences. 


Nonetheless, many countries have been busily cutting their growth
forecast for
the coming 12 months. 
Among the reform leaders, Hungary's economy grew 5.2 percent in 1998, by
finance ministry estimates. The government expects 4-5 percent growth this
year while analysts expect about four. 
Poland's economy ministry last week cut its 1999 growth forecast to 4.5-5.0
percent from the 5.1 percent in the budget, against 6.9 percent in 1998. 
But the Czech Republic, once seen as ahead of the pack, has hit hard times.
High interest rates, raised to protect the crown after a 1997 currency crisis,
sapped demand and helped plunge the economy into recession last year. 
The finance ministry said last week it expected final 1998 GDP down 2.6
percent and a 0.2 percent decline this year. 
The ministry blamed high rates, a strong crown, poor performances by the
and incomplete privatisation. 
Economists say Czech reform has been left half done. The European Commission
said in its November report that there had been a worrying slowdown in
preparing for membership but the Czechs nonetheless kept their place among the
Among the outs, Bulgaria has won praise for staving off economic collapse
years ago with an IMF-backed currency board system. It posted 4.3 percent GDP
growth in the first nine months of 1998. The government has scaled back 1999
growth forecasts to 3.7 percent due to what it expects will be declining
investor interest in the region. 
In Romania, there has been only patchy progress in implementing market
despite high hopes that the 1996 election of a centrist government would
reverse a go-slow approach to change during seven years of leftist rule. 
After being told it had nearly secured quick entry to an expanded NATO in
1997, Romania has been slow to proceed with privatisation and restructuring.
Mired in a prolonged recession, it is struggling to secure new funds from
Western lenders. 
The government sees a two percent decline in GDP this year. 
``Growth and stability have been maintained in those countries where
discipline in macroeconomic management and the depth of reform have been
strongest,'' the EBRD said. 


With emerging market conditions still uncertain, some investors are
turning to
the EU-5 as a relatively safe haven. 
``They are the countries where one can make the big analytical distinction
between them and the rest of Eastern Europe which is very much suffering in
the same way as Latin America from the withdrawal of loan and bond finance,''
said Jonathan Garner, director of emerging markets strategy at Robert Fleming
Securities in London. 
But the prospect of EU membership is also a lure for less savoury
elements of
the transition in central Europe. 
Organised crime is a booming business in the region. 
``There has been a tremendous increase (in crime) after the change of
regime,'' said Peter Csonka, an attorney and criminologist at the Council of
Europe in Strasbourg. 
Gangs smuggle across the region drugs, weapons, people, nuclear material and
other illicit goods. 
In an effort to curb a growing problem of illegal migration, the Czech
Republic plans to impose visa requirements on Ukraine, Bulgaria and Romania,
exacerbating the regional divide. 
EU membership is the big prize. Yet some analysts say Western enthusiasm for
EU enlargement has cooled, especially since the election of Gerhard Schroeder
as German chancellor. 
Jonathan Stein of Prague's East-West Institute said support for reform would
remain high as long as there was tangible progress towards joining. 
``The EU has really become the consensus goal for the political elite and it
would be extremely discrediting if that goal continued to recede on the
horizon,'' he said. 


St. Petersburg Times
January 29, 1999
55 Years On, Blockade Still Lesson To Be Learned 
By Christa Lee Rock

Wednesday marked the 55th anniversary of the lifting of the Leningrad
Blockade - the end of the vicious Nazi siege that forced Leningrad through
900 days of starvation, shelling and disease. 
An estimated 1 million people were lost during this crucial World War II
struggle, but thousands survived, and many of those survivors were out on
the streets this week, wearing medals, laying wreaths and remembering the
brutal Blockade that has left its mark on them and their city forever.
Meanwhile, children two or even three generations removed from this
monumental event were at school, learning their own lessons about hunger
and sickness, Hitler and Stalin.
The lessons of war are never easy to teach - especially to the children
of today's Russia. Political approaches to the subject have shifted
dramatically during the last decade: In the past, the Soviet victory was a
symbol of what great things could be achieved under a communist union. Now,
that kind of rhetoric seems riddled with problems.
So, 55 years later, does the perestroika generation even need the Blockade? 
Tamara Tuluzakova, principal of School No. 105 in the Vyborgsky District,
believes there is still much to learn from the war, and she's making
certain her 667 students don't let the Blockade fade into the rubble of
"Everyone must know the history of his country, especially those periods
when people had to gather energy for its defense," says the grandmotherly
Tuluzakova, who as a 6-year-old in 1941 lost several relatives to the Nazi
siege. "Being able to ask yourself whether you can defend your country is a
already a good sign of maturity." 
As it turns out, even for the youngest students at No. 105, forgetting
the war would be nearly impossible. The building is situated at 24 Ulitsa
Orbeli, just off Prospect Nepokoryonikh, which translates as Avenue of the
Unconquered. Down the street is Ploshchad Muzhestva - Bravery Square - and
a few tram stops from the school lies Piskaryovskoye Cemetery, the common
grave for over 600,000 Leningraders who died during the Blockade, most of
them from hunger. 
But besides its geography, No. 105 boasts a unique history as one of the
only schools that remained open throughout the entire war. Through years of
cold and hunger, children of all ages flocked to School 105, at the time
located further south at Bobruiskaya Ulitsa, for regular lessons in
history, math and literature - even though the Nazis had marked the
building as a key target and bombed it once, killing two teachers and three
first-grade girls.
"We studied, we went to all our classes - we even put on theater
productions," says Galina Devchekotova, 73, who attended the school during
the war and came back to talk to the students last Saturday. 
"The Blockade will live long in the hearts of Leningraders," says
Tuluzakova. "We are a special type of people. We saw a certain side of the
war and we can't forget that."
Back on Ulitsa Orbeli, Blockade education is worked into regular
educational programming for over a week - and in some cases throughout the
year. On Saturday, ninth-grade students were visited by elderly officers of
the war, and gave them respectful standing ovations at the beginning and
end of their oratories. In the second-grade classroom, next to the regular
textbooks and other colorful displays, the teacher keeps a small but
permanent Blockade shrine, featuring a young girl's diary and remnants of
the Nazi shell that splintered the school.
"In our generation, nobody talks about war," said Varya, an 11th-grader.
"But when we talk to our relatives or other veterans, it drives the reality
Aside from the anecdotes and war stories, the children at No. 105 appear
to get a fairly solid formal education about World War II. Students don't
concentrate on the period until 11th, or final, grade, but their main
textbook, the 1992 "History of the Fatherland," seems relatively free of
strict communist ideology. There are prominent chapters on Stalin's lack of
preparedness for the war and his famed "secret treaties" with Hitler, in
which the two agreed to divide up the world. On top of that, says teacher
Natalya Dunayeva, students read supplemental materials and are loaded down
with extra Blockade-related projects.
That does not mean, however, that it is suddenly easier for teachers to
elucidate on some of the war's stickier points. When asked how far she
strays from the old Soviet versions of war history in her teaching,
Dunayeva admits she has less authority in certain areas.
"I can't, for instance, tell my students whether or not it would have
been better to give up Leningrad [in order to save lives]," said Dunayeva,
who teaches history at practically all levels. "I simply don't know enough."
Such issues, however, are still up for discussion in Dunayeva's classes. 
"History is the conscience of the country. Know it, or you will have to
repeat it," intones Natasha, an 11th-grader. "Just look at Stalin, who was
a talented enough leader and yet led so many soldiers to a needless death."
"What might have been some of the other mistakes in our history?"
Dunayeva asks her students. 
Stanislav, who has been reading Alexander Solzhenitsyn's anti-communist
diatribe, "The Red Wheel," for a Blockade-related project, brings up the
unfairness of the Soviet system. 
"I've read that many of the Party leaders were living during the Blockade
as well as they had been living before it," he says.
The political arguments heat up, but some students prefer to talk about
the war's personal side - the stories their own relatives tell them of
starvation, being forced to eat glue and leather to survive, and losing
family members. They repeat their grandparents' tales with kind of pride,
even relish, but do they think their own generation would be able to endure
the same hardships?
"We don't have that kind of unity anymore," says a spunky student, Dasha,
amid a din of other 11th-grade voices. "Communism was bad, but without it
we would have never won the war."
"Nobody even tries to convince us that Russia is great anymore," adds
Others disagree.
"This is our native city, we would have to save it," says Kseniya, an
11th-grader who has been studying the works of Olga Berggolts, a Blockade
poet who took a strikingly similar stance in her patriotic verse. 
"I think we could survive another blockade, because we see heroes all
around us who set an example," says her classmate, Diana. 
"We already know what is possible."


Russian Poll Shows Kosovo Policy Concern 

Sovetskaya Rossiya 
28 January 1999
[translation for personal use only]
Report by Doctor of Historical Sciences Sergey Vasiltsov and
Candidate of Economic Sciences Sergey Obukhov: "Yugoslav Twist in
the Russian Mentality; After the Slaps in the Face" -- followed by
detailed breakdown of opinion poll results referred to in report

The latest exacerbation (caused by the Americans) of the situation in
the Balkans stemming from events in Serbian Kosovo means that the world is
once again faced with the threat of a full-scale armed conflict. Only this
time it is not in the Middle East, but in the heart of Europe. Whereas,
according to US public opinion polls, these problems do not concern the
average US citizen, who is busy following the sex trial against President
Clinton, the situation is different in Russia.
The results of the latest nationwide opinion poll in Russia, carried
out by our independent Center for the Research of Russian Political Culture
(a representative selection of 15,000 respondents interviewed in the street
in 76 regions of the Russian Federation), reveal that our citizens are
seriously concerned about the situation developing around Yugoslavia.
"NATO's provocative conduct serves to further demonstrate what could
happen to our own country as a result of losing our former military might,"
almost half of Russians questioned said. "Today Western countries are
bombing the Serbs they so dislike, but tomorrow they could be bombing
Russian cities which fall out of favor."
Threats by the United States and NATO countries to begin full-scale
strikes against Yugoslavia under the pretext of protecting the Kosovo
Albanians are seen by one in four of our compatriots as one of the hardest,
most shameful slaps in the face ever dealt by the West to Russia's
"democratic" leaders. Analyzing the lessons of the Yugoslav tragedy,
approximately one-third of Russians draw a far-reaching conclusion with
regard to domestic policy. Namely, if Russia does not want to permanently
become a third-rate country whose opinion is blatantly ignored and which
can not only be made to shut up when the opportunity arises but also
slapped in the face, then it is time for a complete change of guard at the
top state level.
Only one in five Russian citizens takes the complacent attitude that
there is no need to dramatize the situation. Finally, a mere 1.5 percent
of the respondents gloat about the Yugoslav tragedy (the Serbs are getting
what they deserve from NATO and in fact deserve more). A further
(obviously marginal) 1 percent demand that the Russian leadership join the
West's action against Yugoslavia without delay.
As a whole, if we summarize our compatriots' stance on the Yugoslav
issue, the following points are obvious: neutral, complacent views are
minimal, the pro-West position is breathing its last, and pro-Serb
attitudes are definitely dominant in Russia. The ratio of opinions is
1:0.2:5 in favor of condemning NATO's actions and reorienting Russia's
entire foreign policy. [Report ends]
As is well known, despite all the efforts of the Russian Government,
NATO is nevertheless preparing for strikes against the Serbs, thereby
making the conflict in Yugoslavia even more acute. With what opinion do you
agree on this matter? (Several versions of an answer are possible).
This action by NATO is one of the hardest and most shameful slaps
in the face ever dealt by the West to Russia's "democratic" leaders,
revealing the low, worthless opinion of the latter in the world community
(22.4 percent).
NATO's provocative conduct serves to further demonstrate what could
happen to our own country as a result of losing our former military might;
today Western countries are bombing the Serbs they so dislike, but tomorrow
they could be bombing Russian cities which fall out of favor (43.1percent).
If Russia does not want to permanently become a third-rate country
whose opinion is blatantly ignored and which can not only be made to shut
up when the opportunity arises but also slapped in the face, then it is
time for a complete change of the guard at top state level (34.6percent).
All this is unpleasant, of course, but there is no need to dramatize
events: All kinds of things happen in conflicts like this, and we must
show restraint and understanding (20.8 percent).
NATO's stance on Yugoslavia underlines the point that it is time for
Russia to abandon its dissenting opinions and firmly endorse the point of
view and actions of the United States and other Western states (1.1percent).
The Serbs are getting what they deserve from NATO and in fact deserve
more (1.4 percent).Other (9.0 percent).


FEATURE - Soviet behemoth Uralmash copes in crisis
By Peter Henderson

MOSCOW, Feb 1 (Reuters) - The Russian industrial and manufacturing powerhouse
Uralmash, built to build the Soviet Union, says it is growing despite the
capitalist turbulence shaking the country. 
Nestled next to the Urals mountains, it has an army of 15,000 workers
in its cavernous workshops, sending oil derricks to Siberia and car-sized
rollers to gritty steel mills. 
One of the few giants to survive Soviet times, it is holding on in Russia's
latest crisis due to management's cunning and the incredible structure of the
economy, where mastery of the fine art of barter is vital and cash is king but
seldom used. 
Uralmash has gained from the rouble's crisis-related 70 percent slump
the dollar since August while domestic industry as a whole has shown
unexpected post-crisis liveliness. 
``Most businesses were not as strongly affected (by the crisis) as they
have been, because despite the negative consequences of devaluation, it
improved the situation for a number of Russian industrial enterprises,'' said
Uralmash chief executive Kakha Bendookidze. 
``It was exports. Most organisations in one way or another are strongly tied
to export -- maybe not themselves, but perhaps through a client.'' 


Uralmash is a sprawling campus of grey-green welding shops and casting
workshops, served by its own railway and built by the Soviet Union in 1933 to
fit out burgeoning communist industry from its base in the Ural mountains. 
The creaky firm reclaimed an avant-garde reputation in the 1990s when
Bendookidze and a half dozen scientists turned corporate raiders to snatch up
a controlling stake for a song, sold new shares to foreigners and launched a
mergers and acquisition campaign. 
A 1997 share offering netted $36 million for the firm, which in 1998
bought a
larger competitor, Izhora works in cosmopolitan St Petersburg. Times have been
tough since as the economy has failed to grow and bright forecasts have been
scaled back. 


But the rouble crash and consequent implosion of Uralmash's sales in dollar
terms have had the classic Western economic result of making Uralmash more
``The rouble devaluation has basically been good for us, since buyers have
increased orders of our products,'' said Kirill Liats, Uralmash's director for
development, in an interview. 
The Russian government in August bent to market wisdom that the rouble was
over-valued and quit supporting its own currency. 
Suddenly imports were expensive -- and tough to find. 
Uralmash says foreign competitors' equipment has become three times as
expensive in roubles, but Uralmash has barely raised rouble prices, securing
domestic and foreign orders. 
Foreign credits to Russian industry have also dried up, Liats said. 
Magnitogorsk, a huge Russian metals producer, has given up plans to buy
equipment in favour of Uralmash equipment worth tens of millions of dollars,
he said. 
``We have been able to conclude contracts for expensive equipment that
either was not bought or was bought from abroad,'' Liats said. 
He said sales in rouble terms had inched up about two percent last year,
despite a 30 percent fall in dollar terms. 
Uralmash was not alone as Russian industry produced 7.1 percent more in
December than in November, a burst of activity that left some analysts
scratching their heads in wonder. 


Industry may fail to capitalise on the competitive windfall of the rouble
fall, since factories are mired in the peculiar environs of the Russian
economy, not a classic market at all. 
Russian companies and the government, especially regional ones, are
caught in
a virtually cashless economy of trading goods and offsetting taxes for
products. Uralmash has become especially adept at the barter trading side of
``If you can correctly understand the risks and analyse the liquidity of
barter, then you can sell whatever you want by barter,'' Bendookidze said.
``During times of currency fluctuation and banking system crisis, it is even
The benefit of a weaker rouble has been tempered by the Russian economy's
focus on barter transactions, which limits the effect of a change in currency
Thus the cash component of Uralmash sales is up but over 70 percent of sales
are still barter, down from 80 percent last year. Liats said that was the case
across the country. 
``Most factories don't have cash, and those who do need it for taxes, wages,
etc. There is no cash for daily needs. The firms look for other ways to work,
and the only one is barter. 
``That situation has not changed, unfortunately. I know a lot of companies.
There has been no cardinal change, only those companies that export have seen
a small rise, maybe a 10 percent increase in sales for cash, mostly in
Typical barter deals remain a tortured circle of agreements. 
One major Uralmash client, a coal mine, pays with coal for Uralmash
excavators. But the coal goes directly to the local power utility,
Sverdlovenergo, which credits Uralmash for power it uses in a circle of mutual
debt cancellation. 

Uralmash plans to keep to its pre-crisis reform plans, but workers will
as salaries and jobs are cut. 
Salaries were raised about 20 percent but only in the face of 50 percent
inflation in Yekaterinburg, Bendookidze says. 
The combined workforce at the Yekaterinburg plant and in St Petersburg had
already been trimmed to 31,000 from almost 80,000 under the Soviet authorities
but management says radical cuts are needed and plans to trim 10 percent in
Such changes should make Uralmash Industries profitable this year, according
to the Russian bottom line, Liats projects, but he said a profit to stricter
Western accounts would not come for another three years at least. 


Christian Science Monitor
1 February 1999
[for personal use only]
Russia's Army faces battle within its ranks
BY: Judith Matloff

We'll call him ivan, because he's afraid someone will kill him if his name
is revealed in this story.
He's been lying low in his mother's Moscow apartment since running away
from the Russian Army last week.
Ivan's crime, as seen by the law, is desertion. He had had enough of being
beaten in hazings that are commonplace in his regiment near the town of
Nizhny Novgorod, 240 miles east of Moscow.
When we first met him at the offices of an advocacy group, his cheek was
bruised and he was exhausted, having walked all night in the woods after
deserting his post.
"The seniors said they'd kill me if I squealed on them," he says of his
tormentors, who regularly battered him with fists, chairs, and stools for
such offenses as running errands too slowly.
"They said it's nothing personal, that it happens to all the new recruits
to show them their place. But I couldn't take it anymore," Ivan says.
As in many nations' militaries, hazing has always been present in Russia's
Army, even when it was renowned for discipline during the Soviet era. But
the violence has been aggravated by a lack of food and months-long wage
arrears - problems which have grown worse since the economic crisis erupted
in August. A good portion of Russia's 1.2 million enlisted men have been
reduced to foraging for berries or mushrooms in the woods or begging for
potatoes from villages near their regiments. Abuse, murders, and suicides
are on the rise. And with them desertions - thousands of them.
According to the Soldiers' Mothers Committee, a Moscow-based advocacy group
for servicemen, morale and conditions have sunk to their lowest level since
the breakup of the Soviet Union in 1991.
THIS fuels the sort of stress that can make a man want to shoot someone, or
himself, says committee leader Valentina Melnikova. "Since the crisis began
in August the problems have worsened. The number of people appealing to us
has doubled."Vladlen Maximov, military correspondent for Moscow's Novaya
newspaper, says the low spirits of officers are partly to blame. "These
guys are not paid their salaries for months and literally lack food. So of
course they don't care about the soldiers."
When it was first set up, the committee was dedicated to helping mothers
find sons missing in action in Afghanistan and then Chechnya. Now its task
has shifted to advising men on dodging the draft or seeking legal recourse
if they are caught when they run away. The organization's dingy
headquarters in Moscow is filled each week with dozens of youths and their
mothers who sit waiting to tell their tales.
Typical among them is Alexei Pushkarsky, who ran away from his regiment in
Vladimir, east of Moscow, Jan. 5. He says he could no longer endure the
beatings by older soldiers when he could not afford to meet demands to buy
chocolates, bread, and cream. After a particularly severe thrashing he took
refuge in an Army clinic, but doctors made him leave.
"After that I knew I was through. They said I was 'too clever' by hiding in
the hospital. They hit me on any pretext. Once, it was because I sang
badly. Another time I couldn't find them cookies. Sometimes it was just
'because,' " he says.
Ms. Melnikova says besides hazing and poor conditions, another increasing
problem is that many of the 150,000 youths recruited every six months are
physically unfit. Underweight, drug-addicted, and ill boys are being
drafted and cannot perform their duties properly.
The government denies this is the case, but it does concede disturbing
figures pertaining to abuse. The Military General Prosecutor's Office
reports that 57 soldiers died and 2,735 were injured from hazing during the
first 11 months of last year. Nearly 500 committed suicide.
It is less precise on the total number of conscripts who have gone AWOL,
although some experts put the figure at about 10,000 a year. Since a
partial amnesty was announced last March, 11,478 deserters turned
themselves in to authorities.
Many of those still on the run are armed. Unable to get proper jobs, they
often join criminal gangs. So alarmed are authorities about this threat
that they organized a massive sweep across Russia in mid-January. But only
about 400 deserters were rounded up in the operation, which spanned 50
cities and 46 regions.
Ivan insists he will not give himself up, and says he prefers to remain
underground if the committee can't help him.
"I had thought it was every man's duty to serve the Army. But I would not
have signed up if I had known the conditions. Joining the Army was the
biggest mistake of my life."


1/29/99 No.2 Part 3

By Vladimir Mironov
Vladimir Alekseevich Mironov is a senior fellow of the Institute of
International Economic and Political Studies of the Russian Academy of
Sciences in Moscow.

During the relatively short history of the sovereign Russian Federation the
democratic forces have already managed to become a byword for disunity. Many
democratic politicians see this disunity as the main reason for their
failure at the ballot box. Because of discord among the democrats, they
believe, the federal and regional legislatures are dominated by communist
and nationalist deputies, the task of creating legislation which meets the
requirements of a modernizing Russia is being held up, and the powers of the
president and the government to reform the country's political and economic
system are being curtailed. During election campaigns, most democratic
leaders are obsessed with overcoming the disagreements and achieving unity.
In the heat of the political struggle, however, the reasons for the
democrats' disunity and their inability to unite get blurred.

First, Russian society, which is in transition, is, to a great extent, sui
generis. Life's familiar landmarks have disappeared; traditions which
existed are no longer required. As a result, most of the population is in a
permanent state of stress in trying to deal with daily problems which used
to resolve themselves automatically by tradition and habit. At the same
time, a significant portion of the Russian population concentrate most of
its attention on physical survival. Political assessments are generally
based on emotion and appeal not to knowledge, but to faith.

At the same time, certain democratic principles have taken root in Russian
society--principles which Russians will not want to relinquish. The majority
of the population--despite the economic hardships and their clear
understanding that the ongoing crisis will be long and drawn out--continues
to support the economic reforms, the development of market relations, and a
mixed economy in which state control of the primary industries is combined
with private ownership. When they say they are in favor of increasing the
role of the state in the economy, most Russians see no point in banning the
free circulation of foreign currency in the country or in nationalizing the
commercial banks. Political scientists' warnings of future catastrophes, the
threat of civil war and the likelihood of dictatorship run up against the
firm resolve of Russian citizens to hold onto the democratic rights and
freedoms which were won in the late 1980s and early 1990s. More than 71
percent of poll respondents do not support the idea of even a temporary ban
on the activities of political parties, slightly more than 88 percent stand
up for freedom of speech and reject the closure of newspapers which
criticize the authorities, and only 20 percent support even the possibility
of postponing any elections for any period.

Third, 50 percent of the Russian population are firm in their political
allegiances, while the other 50 percent either do not like any of the
current political parties or are not planning to take part in the elections.
The politically active half is divided into four large sectors--communists
and their allies, liberal conservatives, social democrats, and nationalists.
Yet the degree of mobility and loyalty among party supporters varies. Only
the communist electorate will dutifully go out and vote for their candidates
come rain or shine. The core supporters of the liberals, social democrats
and nationalists are surrounded by a large periphery of floating voters with
poorly defined political views. Within one sector, votes may move from one
organization to another, but between sectors there is little exchange. The
only exception to this, perhaps, are those who support radical market
reforms. Their numbers have fallen more than fivefold in the last few years.
They now represent just over than 5 percent of the population, while the
ranks of the nationalists and centrists have swelled.

But while electoral preferences are manifested in familiar socioeconomic
cliches, most Russians rarely think in ideological categories. They define
their attitude either by more general symbols and values or by their
preferences for particular political leaders or parties. There are many
reasons for this. Most Russians, tired of the tribulations of the last
decade, have become nostalgic and anxious, and try to avoid danger and
unpleasantness. People are afraid of poverty, war and crime, and vote for
those who promise to protect them from these woes. In addition, the collapse
of life's familiar landmarks, a result of the ideological battle in the late
1980s and early 1990s, created what is termed a ragged consciousness, wary
of abstract categories.

One feature of the Russian political scene is that within the four large
political sectors there are hundreds of political parties and movements. The
fragmentation of Russia's political forces, including the democratic forces,
is due, first, to the immaturity of political relations, and to the desire
of various political forces to secure a legal foothold from which to fight
for their programs. Second, it is due to the uncritical self-appraisal and
ambition of most leaders. Third, it is due to romanticism left over from the
days of perestroika or to the hope of improving one's own material position.
Fourth, there is the belief, entrenched in society and in some circles of
the political and administrative elite, in the all-defining power of
politics. Many of those involved in politics are convinced that the main
obstacle to successfully implementing economic reforms--which are understood
differently by different politicians and ordinary citizens--is the existing
political system.

However, the fragmentation of electoral blocks and alliances, above all,
seems to be the way a society in transition establishes a system of
self-regulation and self-preservation. Society loses its bearings, is
deprived of its basic support structures, and impulsively and emotionally
puts forward various options for solving the problems which have arisen in
the reform process. These options are represented on a political level by
parties and movements. Eventually, unfeasible ideas and their political
mouthpieces are gradually marginalized and disappear from the political
scene. Only those ideas which correspond to a particular level of economic,
political and cultural development for transitional society survive.

A second feature of the Russian political scene is that the leaders of many
parties and movements persist in trying to monopolize the democratic
political niche, denying the right of their political rivals to call
themselves democrats. It would seem that the word "democrat" may be
attributed to those political forces which are in favor of preserving a
secular, peace-loving, legal, federate state; which support human rights and
democratic procedures in political life, enshrined in the constitution and
legislation; which support a mixed economy and the coexistence of different
forms of ownership, including private ownership of the means of production;
and which favor integration into international political organizations and
economic structures.

In this case, the Russian Communist Party and the Agrarian Party may be
considered democratic, as may the enfant terrible of Russian politics--the
Liberal Democratic Party--as well as Russia is Our Home (ROH) and Yuri
Luzhkov's Fatherland. However, given the fact that Russia's Democratic
Choice, Yabloko and other parties traditionally considered democratic reject
the possibility of a coalition with Gennady Zyuganov or Mikhail Lapshin, who
refuse to disown the 70 years of the Soviet Union, or with the liberal
conservatives or Vladimir Zhirinovsky's traditionalists, the only possible
alliance would be between Russia's Democratic Choice and its allies,
Yabloko, ROH and Fatherland.

Russia's democratic parties and the democratic electorate can be divided
into three groups: "state" democrats--supporters of the "party of power",
who unite around the federal movements of Viktor Chernomyrdin (ROH) and Yuri
Luzhkov (Fatherland); social democrats, who oppose the current regime and
are centered around Grigory Yavlinsky's Yabloko; and the more fragmented
radical liberal democrats whose best-known leaders are Yegor Gaidar, Anatoly
Chubais, Boris Nemtsov and Sergei Kirienko. Creating a single coalition out
of such a varied group of ideological and political forces is extremely
difficult for various reasons.

First, the "personalization" of the political preferences of Russian voters
practically precludes the possibility of "delegating" their vote to some
other political alliance which includes other high-profile politicians
alongside their idol. Russian voters will not let themselves be manipulated
by party leaders who have reached agreements on forming electoral
coalitions, and cannot automatically be numbered among the electorate of a
freshly created union of political parties.

Second, those involved in politics actively try to discredit their
opponents. According to Yabloko, Russia is Our Home is a "bureaucratic
organization," Russia's Democratic Choice and other small democratic
organizations nothing more than "pitiful remnants" whose leaders botched the
reforms. Radical liberal democrats never tire of pointing out the "pink" hue
which colors the views and politics of Yavlinsky's social democrats. Yuri
Luzhkov, the leader of Fatherland, lays the blame for the excesses in the
social, economic and political reforms carried out in Russia since 1991
squarely at the door of the "young reformers."

Third, there is an ideological and psychological incompatibility between the
state democrats and the liberals. Anatoly Chubais and Yegor Gaidar, despite
long periods in power, were never able to win support from the
administrative elites in either the center or the regions. Fourth, the
electorate of the social and liberal democrats concentrated mainly in
Moscow, St. Petersburg, Samara, Nizhny Novgorod and Novosibirsk--with a
tradition of mustering few votes in the provinces. However, the leaders of
these towns and regions have recently been focusing on the Fatherland leader
Yuri Luzhkov, while the degree of influence of regional elites on the
electorate has increased. If Luzhkov's movement takes part in the
parliamentary elections the competition for the democratic vote will be even

In other words, unification can only take place within each of the three
groups--the state democrats, the social democrats and the liberal democrats.
The fate of Russia Is Our Home--whether Viktor Chernomyrdin's movement will
collapse or Vladimir Ryzhkov, the favorite of the movement's parliamentary
faction, will breathe new life into it--should soon be clear. Yuri Luzhkov
is publicly talking about Fatherland's independent participation in all
possible electoral campaigns. The social democrats are united around Grigory
Yavlinsky. In this political niche there is no other figure with the
authority or stature of this Yabloko leader.

The liberal democrats have the greatest need to unite. Movement toward this
began to appear about four years ago. Most of the liberal organizations
united three-and-a-half years ago into Russia's Democratic Choice/United
Democrats. The remainder entered the Center-Right Block. However, these
coalitions were unable to consolidate the liberal vote. It seems that the
liberal democrats' main problem was the absence of an authoritative and
influential leader. This was not a one-off problem; when forming the new
movement "Pravoe Delo"--Right Cause--they again encountered difficulties in
choosing a leader of nationwide stature.

A social and political consensus seems to have been reached in Russia on,
first, the necessity of setting clear, lasting political rules; second, the
need to confirm the legitimacy of the political system on the basis of
defined democratic procedures enshrined in the constitution and the law;
and, third, the unacceptability of the use of force in achieving political
gain. This is one of the most important prerequisites for stability and
predictability in the political system taking shape in Russia. The main
political players do not see any real threat to democracy, and in such
circumstances there is little chance of uniting the democrats under one

But this does not mean that politicians will stop discussing the possibility
of democratic coalitions. The realities of life in Russia make it
possible--by focusing people's attention on the problem of unity among the
democrats--to discipline and mobilize the parties' electorates and to keep a
constant check on the degree of loyalty to the party leaders. This is, in
fact, an important element in building a party system and ensuring that a
party infrastructure appropriate for the current state of Russian society is


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