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Johnson's Russia List


February 19, 1999    
This Date's Issues: 3059  

Johnson's Russia List
19 February 1999

[Note from David Johnson:
1. Reuters: Russia best investment bet over next year-Mobius.
2. Variety: Russian leader set for Oscar party. (Lebed).
3. AFP: Maslyukov sets limits to Russia's sacrifice to secure IMF help.
4. Moscow Tribune: John Helmer, MIKHALKOV -- THE PERFORMANCE FALLACY.
5. Reuters: Call that never came Yeltsin in eclipse.
6. Xan Smiley: Upper Volta with Rockets.
7. Adil Rustomjee: Helmer's note. (Re Sachs and Company).
8. Matt Taibbi: Request. 
9. Keith Darden: Blaming Russia.
10. Sovetskaya Rossiya: Chikin, Prokhanov Decry Move To Fuel 'Zyuganov

11. Reuters: Russia's Gaidar sees failure on economy.
12. Reuters: Pagan pancake fest readies Russia for Lent.
13. Moscow Times: Jeanne Whalen, Russia Gives IMF Details On Use 

14. Moscow Times: Jonas Bernstein, PARTY LINES: Weak Defense Of
FIMACO Crumbles Fast.] 


Russia best investment bet over next year-Mobius

LONDON, Feb 18 (Reuters) - Mark Mobius, head of emerging markets at
Templeton Investment Management, said on Thursday he expected Russia to be
the best performer in emerging markets over the next 12 months. 
Speaking to investors at a conference here, Mobius, in response to a
question over which countries would perform the best in the next year,
said: "You may not like this answer but Russia is at the top of the list." 
Despite the concerns about Russia, Mobius said he believed the
government would make the necessary policy changes to ensure economic
stability and restore investor confidence. 
"In some ways they are ahead of China because they are more
revolutionary and they are willing to risk a lot," he said. 
"I think we are going to see a lot of interesting things happening in
Russia going forward." 
Following Russia, Mobius said his next investment picks would be
Indonesia and South Africa. 


Russian leader set for Oscar party
By Bill Higgins
February 18, 1999

HOLLYWOOD (Variety) - Call Beverly Hills ``Moscow on the Pacific.'' 
Gov. Alexander Lebed of the Siberian region of Krasnoyarsk, who currently
tops Russian opinion polls as the candidate most likely to succeed Russian
President Boris Yeltsin, is scheduled to attend an Oscar night party at the
Beverly Hills Hotel. 
The governor, who once commanded Russia's 14th Army, fought in the Afghan
war and helped settle the Chechen conflict, will be at the eighth annual
``Night of 100 Stars'' Oscar-viewing party, a benefit for Martin Scorsese's
Film Foundation. 
Norby Walters, who is producing the event, said the invitation first went
to Yeltsin, who passed it on to Lebed. 
The governor, who will be on the West Coast for a trade conference, will
be attending the party with a delegation of roughly 50 Russian filmmakers
led by director Andrei Konchalofsky. 


Maslyukov sets limits to Russia's sacrifice to secure IMF help

MOSCOW, Feb 18 (AFP) - Economy chief Yury Maslyukov said Thursday there
were limits to the price Russia was willing to pay to secure aid from the
IMF that Moscow needs to avoid becoming a financial pariah.
"We will do everything within our means to reach a compromise with the
IMF," he wrote in the respected business daily Kommersant.
"But by 'within our means,' I mean that the price of our compromise ...
must be smaller then what we gain back in return -- in other words, the
profit of restructuring our external debts and the keeping of Russias place
within the international financial community.
"We are convinced that our foreign partners are understanding and that
they will constructively cooperate with us," the first deputy prime
minister wrote.
"However, we are fully prepared for any turn of events," Maslyukov added.
Russia and the International Monetary Fund (IMF) have entered marathon
negotiations that Moscow hopes will be concluded favorably before the
summer when massive debt payments to the Fund and other creditors fall due.
Ministers here hope the IMF will release a new loan to cover the
4.5-billion-dollar payment Russia owes to the Fund this year.
Parliament on Wednesday finally approved the government's tight budget
that provides for only a partial payment of its foreign debts. The
government hopes that other creditors will follow suit and restructure
Russia's payments once the IMF makes its move.
But Fund officials have been skeptical about Russia's commitment to
frugal spending and faithful tax and revenue collection, and have raised
eyebrows at the 1999 budget, which now just needs President Boris Yeltsin's
signature to become law.
Maslyukov on Thursday ruled out economists' predictions of run-away
inflation this year and branded all doomsayers as "liberals" who want to
undermine Russia's left-leaning government.
"Whatever irresponsible predictions our political opponents make,
inflation will not grow above levels that are dangerous for making
investments -- even in the worst-case scenario," he said.
He further lashed out at the decisions made by liberal Russian economic
managers in during the country's first years of experimentation with
post-Soviet reform.
"In 1992, our complete opening-up to the world markets made the Russian
economy non-competitive," Maslyukov said.
And he re-iterated earlier promises of pouring state financing into
stalled Soviet-era industries which the Fund has long insisted must be shut
down for good.
"Our manufacturers are lagging behind and need to be modernized. For
this they need support of the government that, in turn, must be strictly
controlled," Maslyukov said.
He said Russia's early liberal governments exercised no such controls
and robbed the state by privatizing massive industries in rigged auctions
to a select group of friends.
Maslyukov has already accused his liberal predecessors of urging their
close allies in the IMF to freeze financial assistance to Russia until the
government is forced out. 


Date: Thu, 18 Feb 1999 
From: (John Helmer)

From The Moscow Tribune, February 19, 1999
John Helmer

What leads fine performers of Bach cello sonatas, Rachmaninov piano
concertos, and Chekhov plays and stories to imagine they can enter
Russian politics as nimbly as they move their fingers over their instruments
and scores?

One answer Rostropovich the cellist, Petrov the pianist, and
Mikhalkov the film-maker have given is that they have the right, and also
the duty, to their country and to their countrymen, to speak the truth to 
power. In the revolutionary times we've been living through, and in a 
democracy, it's not just artists who have this right. Everyone does. 
There are fewer who feel and implement this duty, but artists are hardly 

Just so, when Russian artists speak to power as they do, using their 
reputation as their platform, they are not necessarily better equipped than 
anyone else to know the truth of which they speak. Rostropovich probably
didn't mean to demonstrate how little equipped he was, when, not long ago,
he pronounced President Yeltsin to be in vigorous good-health. 

Of course, if, in order to talk politics to his countrymen, an artist climbs 
on the platform of a reputation made on the stage, he's not exactly 
following a democratic impulse. He could be doing no more than populists and 
demagogues always do, pursuing the sound of applause for its own sake.

Russian voters have been proving for years now how quick they are
at detecting this, and how reluctant they are to put their hands together.

They don't know, and maybe they don't care, that the Russian performing
arts have remained one of the least reformed, least democratic areas of 
Russian life, since the collapse of Communism in 1991. What Russians expect 
from the artists they love most is a line to laugh at, a song to sing, and a 
story in which they can recognize themselves. If the artists can deliver 
those, they can do no harm, audiences think, if they are despots off-stage.

The greatest artists understand more than this. An actor like Yury
Nikulin, the most loved of Russian comics, thought it a joke, and not
a friendly one either, if anyone ever suggested he should take his
popularity, and run with it for election. Nikulin knew everyone who counted 
in Russian politics. He enjoyed the respect they showed him. He liked
making them laugh. But he never wanted to be one of them. That was one
reason that at his death he was mourned by so many people.

As other talented performers and directors have grown older, it can happen 
that their craving for applause remains undiminished, while their capacity to
deserve it shrinks. That's when some of them think the applause they have 
commanded from their stages can be turned into votes. 

About this Mikhalkov the film-maker hasn't minced words. He doesn't claim,
he's been saying in many interviews, to be a democrat, or a socialist,
or a capitalist, or a reformer. Without spelling out what those words and
ideas mean, he's added what he thinks is a fresh one -- "We are without a 
national idea," Mikhalkov said recently he's discovered. 

Since he's not really wanting to go into politics, Mikhalkov has
so far not bothered to fill in that gap, or explain why President
Yeltsin's lengthy commission to do the same thing doesn't suit him.
"I am not seeking power over people," Mikhalkov has claimed. And in response
to an endorsement for his presidential candidacy from Boris Berezovsky,
Mikhalkov has said: "If I feel people really want me as president,
then I would have to think seriously about it."

That's clever script-writing for a political film, but it's missing
something for the real race. Mikhalkov hasn't said which people he
feels most inclined to take seriously, when he makes up his mind
about running for president. Does he mean Berezovsky? Or does he
mean the audiences of potential voters he's trying so hard to
draw into viewing his latest film, "The Barber of Siberia"?

And that leaves every filmgoer in Russia with a predicament. If
every pair of hands that applauds "The Barber of Siberia" could
cast a vote for Mikhalkov, but the only pair of hands Mikhalkov
takes seriously belong to Berezovsky, what should Russians do with
their hands when the film is over, and the credits start to roll?

Is it possible for people Mikhalkov doesn't take seriously to put two hands 
together for the artist, and at the same time turn thumbs down for 
the presidential candidate? 


ANALYSIS-Call that never came Yeltsin in eclipse
By Carol Giacomo

WASHINGTON, Feb 18 (Reuters) - Is Boris Yeltsin now fantasizing about
telephone calls with Bill Clinton? An embarrassing non-exchange over Kosovo
has underscored the Russian president's decreasing importance to U.S.
foreign policy. 
The world has long been aware of Yeltsin's idiosyncrasies, which have
mushroomed with his worsening health problems and the deteriorating Russian
state. But an incident that came to light on Thursday added a new and
somewhat bizarre twist. 
In words that resounded quickly around the world, Yeltsin told reporters
in Moscow he had told Clinton -- by telephone and by letter -- that Russia
would not permit NATO air strikes against Yugoslavia over the Kosovo crisis. 
``We will not let you touch Kosovo,'' was how he described his message. 
He did not say when the two presidents last spoke. 
But coming two days before a deadline set for reaching a peace deal on
Kosovo, and as the United States and its allies threatened air strikes
against recalcitrant Serbs, Yeltsin's remarks seemed a warning to
Washington with some currency. 
The White House replied by saying Russia's opposition to use of force
was well known. But it was confused because Yeltsin had not spoken or
written to Clinton in recent days. 
Yeltsin did, however, speak by telephone with Secretary of State
Madeleine Albright two weeks ago when she was in Moscow. 
Could he have confused that conversation with past exchanges with Clinton? 
Moreover, if Clinton still saw Yeltsin as a major political force, why
has he not contacted him directly in recent weeks to coordinate
down-to-the-wire peace efforts on Kosovo? 
``I don't think people are going to draw huge conclusions (about Yeltsin
from the episode) but sure, everyone took note of it. How could they not,''
one U.S. official said. 
Leon Aron, a Russian expert with the American Enterprise Institute, was
less sanguine. ``Either Yeltsin confused in his mind the conversation he
had with Albright or he may consciously or unconsciously have exaggerated
his access to the American president on that particular issue,'' he told
``Either way it underscores his peculiar mental condition because either
he believed he had spoken to the president or he decided to say it without
calculating the damage, which also shows his mental acuity is in a rather
precarious state.'' 
Yeltsin, who returned to work recently after hospital treatment for a
stomach ulcer, looked well in the session with reporters. 
But for months his medical problems have forced him to distance himself
from the business of governing, ceding day to day control of the country to
Prime Minister Yevgeny Primakov. 
This has led some Americans to conclude that Yeltsin -- once the great
hope of Russian democracy and the centrepiece of U.S. policy toward Moscow
-- is irrelevant or a spent force. 
This seemed to manifest itself last week when German Chancellor Gerhard
Schroeder, on a visit to Washington, declared that he and Clinton agreed
the best way to stabilise Russia was to give strong support to Primakov. 
But there was no mention of Yeltsin. 
In another sign the administration is looking beyond Yeltsin, Albright
on her recent Moscow trip had talks with potential candidates in Russia's
next presidential elections. 
In a searing new analysis in the National Interest magazine, Dimitri
Simes of the Nixon Centre think tank concluded Clinton and his aides were
so keen to boost Yeltsin over the years that they have ``gone well beyond
whitewashing (his) personal transgressions -- including his excessive
drinking and his propensity for grandstanding -- and have consistently
urged him to stay on course with radical reform at almost any cost.'' 
One example: U.S. acquiescence to Yeltsin's moves in 1993 which resulted
in ``his virtual imposition of a new constitution granting the Russian
president almost dictatorial powers.'' 
This remains a Yeltsin advantage. For while Primakov has tightened his
grip on power and the chaotic economy, experts say Yeltsin still has a role
to play. 
``For all his faults and dormancy at this moment, he is still perceived
across the political spectrum ... as a very important stabilising force
because no matter how much they dislike him and rail against the
constitution he wrote in 1993, everybody abides by it,'' Aron said. 
Aron is not yet willing to rule out the possibility of a Yeltsin
``traditional spring revival,'' either. 
Describing Yeltsin as a ``sleeping bear,'' he noted the Russian leader
withdrew from public involvement for three years running, only to burst
back onto the political scene with dramatic gestures in the springs of
1996, 1997 and 1998. 
``If there is no spring revival this time ... then I think that's it.
The Yeltsin era is gone,'' he said. 


Date: Thu, 18 Feb 1999 
From: "Xan Smiley" <> 
Subject: Upper Volta with Rockets

I notice that the phrase "Upper Volta with rockets" has popped up a few
times recently in DJL, with occasional passing discussion as to its
origins. Henry Kissinger, Helmut Schmidt and even Mikhail Gorbachev have
been cited as the phrase's inventor.

Sorry, but it was I who first put it into public print. It was in the
summer of 1987, I think, when I was the correspondent in Moscow (1986-89)
for The Daily Telegraph (London) and The Sunday Telegraph. The phrase
caused some enjoyable offence at the time, and I was castigated for my
"rabid anti-Sovietism" etc in the Soviet press.

In fact, I had previously heard a thought expressed rather similarly by a
non-journalist woman who happened to be a Zimbabwean, and I thought I'd
play with it. Bad luck that the Upper Voltans had actually been calling
their country Burkina Faso for quite some time. But poor Upper Volta had a
more hopeless and comic ring to it.

Anyway, I don't see why the aforementioned bigwigs should get the credit
for it, if credit it is!

yours sincerely
Xan Smiley
Europe Editor
The Economist


Date: Thu, 18 Feb 1999 
From: "Adil Rustomjee" <> 
Subject: Helmer's note 

John Helmer brings out quite well the roles of Sachs and Company on 
Russia et at. Some observations:

The Sachs group more often than not, consisted of some frightened 
graduate students usually at advanced stages of their PhD dissertations. 
They often needed resume building experience and this was a good way to 
get it. Personally, I don't believe that attempts to play one side off 
against the other (Russia, the IMF, "Soros", etc) were deliberate. 
That attributes too much malicious intent to them. They were as muddled 
and confused as everybody else and struggling to assert "influence" - 
the coin of their realm. 

Sachs worked on countries like Poland, Bolivia, Latvia, and Mongolia 
before Russia. These were pleasant interludes compared with the Russian 
Federation. My guess is they got badly mauled in Russia itself, 
together with the IMF et al. Notice that a common feature of all these 
countries is that they were - at that time at least - headed by Finance 
Ministers who had not taken a basic formal course in Economics 101. ( 
(The exception is Bolivia). This was quite common in the countries 
Sachs worked on in those years, and perhaps a source of his influence. 
It didn't take much to influence such people. I believe it was Bob 
Lucas who once said : " Jeffrey Sachs advises the government of 
Mongolia. John Taylor ( a Stanford economist) advises the government of 
the United States. That's about the right division of labor between 
those two !!!!!!"

Payment was often confusing to say the least. There was never one 
source. The High Priest himself earned a regular salary as a tenured 
Harvard professor. The rest of his group got by on various grants. Two 
sources Helmer does not mention are UNDP and WIDER, which stands for 
the World Institute for Development Economics Research in Helsinki. 
Lipton apparently had contacts there.

Lipton and Sachs were the Tweedledum and Tweedledee of socialist 
economy reform. They met at Harvard as PhD students (around the same 
time that Larry Summers of Treasury was there). Sachs took 3 years to 
get his PhD there. Lipton took between 5 and 6 ( among professional 
economists at this level this is looked upon with disapproval, - or so 
I inferred when this nugget was mentioned to me. Actually I think 
they're all the Keystone Kops!!!!!! ). Lipton is, ofcourse, ex IMF 
himself. He left in the late eighties to form Jeffrey D. Sachs and 
Associates, a firm that received grant money from above sources and used 
it to pay Sachs' group in the field. This was subsequently wound up. 
After a stint at the Woodrow Wilson Institute, Lipton subsequently 
joined Treasury, where he rose to its Number 3 slot, just behind Rubin 
and Summers. He has since resigned, en route in all probability, to a 
very lucrative posting on the Street. 

Over a time some sort of division of labor arose between Sachs - who 
dealt mainly with macroeconomic reforms - and Andrei Shleifer, his 
Harvard colleague, who worked on privatization and enterprise level 
stuff. Many people make the error of referring to Sachs' role when 
discussing the Russian privatization program. Actually Sachs had little 
influence on the Russian privatization program. A fair judgment might 
be that he had a marginal to moderate role in Russian macroeconomic 
decisions. Shleifer's influence on the Russian privatization program is 
however pervasive ( and has been documented as such). 


From: "matt taibbi" <>
Subject: request
Date: Fri, 19 Feb 1999 

I have a question which I was hoping your readers might be able to answer
for me. The problem is, I'm looking for a generally-accepted definition of
both slavery and indenture. Do you have human-rights workers and/or
professors who might be able to give a classic definition of either?

I would very much appreciate your help. Any answers can be sent to my
e-mail in MOscow,

Thanks in advance, and hope you're well
Matt Taibbi

Sorry to bother you again, but I was hoping to appeal to your readers'
literary pretensions. I'm currently working on a project, a dictionary of
sports cliches, and was hoping that anyone who had favorites could send
them on to me. 


Date: Thu, 18 Feb 1999 
From: Keith Darden <>
Subject: Blaming Russia

Many American scholars and State Department officials seem to be
blinded by an image of Russia and the newly independent states that
looks something like this: The newly independent states are yearning to
be free of the imperialistic Russians who locked them up in the Soviet
"prison of nations" and prevented them from forming the free-market
democracies towards which they are naturally inclined. The Russians, on
the other hand, are desperately trying to hold on to their former empire
by forcing these poor countries into Russian-dominated institutions and
by punishing them for their moves towards independence or cooperation
with the West. When a gas shipment is shut off for non-payment, an
attempt is made on a president's life, a civil war fails to be resolved,
or an economy collapses, we may safely draw the conclusion that some
evil Kremlin plot has come to fruition. 
This image may not always be off the mark, but it most often is. 
Unfortunately, the problem of empirical inaccuracy seems to have taken
only a minor toll on the popularity and pervasiveness of this type of
thinking in Washington. Take, for example, the editorial written by S.
Frederick Starr on the collapse of the Kyrgyz economy (JRL 3057). Starr
points out what he seems to see as a paradox: The Kyrgyz did everything
that the IMF told them to do, but the country finds itself in a state of
total economic collapse. Starr's explanation for this unhappy outcome
falls squarely within the genre outlined above. He contends that Russia
is using economic sanctions to break the Kyrgyz economy as punishment
for Kyrgyzstan's early entry into the WTO. According to Starr, Russia
felt that Kyrgyzstan was slipping away from its "economic and political
control." It therefore responded to "Kyrgyzstan's [WTO] triumph" by
imposing trade restrictions and by forcing Kyrgyz exporters to pay
Russian VAT at the border. Moreover, Starr notes that "neighboring
Kazakstan, UNDER PRESSURE FROM RUSSIA, has raised its tariffs as well,
inflicting further pain on the struggling Kyrgyz economy."
What's wrong with this picture? Quite a bit. First and
foremost, the
Kyrgyz economic collapse took place before any of the purported changes
in Russian policy. By the most conservative estimate, GDP per capita in
Kyrgyzstan dropped 39.4% between 1991 and 1997, and the primary success
of the Kyrgyz reforms, a stable currency, was wiped out in August along
with the Russian Ruble. The Kyrgyz Som lost 70% of its value last
year. All of this happened BEFORE Kyrgyzstan's December entry into the
WTO and thus cannot logically have resulted from punishment thereafter. 
The argument that Kazakhstan's tariff increases result from
pressure to punish Kyrgyzstan also makes no sense. On Feb. 5 of this
year, Kazakhstan imposed 200% duties on a list of goods coming from both
Kyrgyzstan AND Uzbekistan (a country about as far from WTO entry as is
humanly imaginable). One month earlier, on Jan. 11, Kazakhstan imposed
a full-scale *ban* on the import from RUSSIA of roughly the same list of
goods. This ban is still in effect. Thus, not only has Kyrgyzstan 
not been singled out, but Russia (as a fellow victim) is clearly not
behind the new Kazakh policy. Why is Kazakhstan suddenly building
trade walls against its neighbors? The main reason is that Kazakhstan
refuses to devalue the Tenge (perhaps because less than a month after
rigging his re-election Nazarbaev is worried about political
instability). The relatively strong Tenge has made the products of
neighboring countries particularly cheap and brought a flood of
imports. The new trade restrictions are an attempt to limit these
imports. In short, Kazakhstan is experiencing a major economic crisis
and is taking rather rash anti-liberal actions that punish its neighbors
(Russia included) in order to avoid devaluation. The logical
conclusion: No Russian imperialists at work here either.
Finally, from what Mr. Starr reports, it is not clear that
trade policy towards Kyrgyzstan can be described as discriminatory. 
Starr treats the Russian VAT on exports both as something new and as a
tax imposed solely as a punishment on Kyrgyzstan. Neither the former
nor the latter is the case. Russia applies the VAT on exports to ALL
CIS countries and has done so since the collapse of the Soviet Union. 
There appears to be no change here. 
Starr also states that Russia has imposed a massive increase in
on Kyrgyz goods. To my knowledge, this has not been reported
elsewhere. But even if it is true that new tariffs are being applied to
Kyrgyz imports as a result of the conditions under which it joined the
WTO, this would not come as much of a surprise. For over two years,
Kyrgyzstan has enjoyed especially privileged access to the Russian
market because of its membership in the CIS Customs Union (along with
Belarus, Kazakhstan, Russia, and now Tajikistan). When Kyrgyzstan chose
to join the WTO, however, it "locked in" upper limits on its tariff
schedule that cannot be altered without leaving the WTO. This violates
the core principle of a customs union, which requires that a state
negotiate a common external tariff with the other CU countries. 
Moreover, Kyrgyzstan locked in tariff levels so low that its
participation in a Customs Union with Russia and Kazakhstan is now
impossible. As a result, the CU members may choose to treat Kyrgyzstan
as just another state, which means that Kyrgyz traders may have to pay
tariffs that they were previously exempt from. But there is nothing
sinister in this. Any time a country leaves a customs union it comes to
be treated as a "third party" by the Union's members. By de facto
abandoning the Customs Union, Kyrgyzstan will also have to give up the
privileges that membership accorded to it. It is understandable that
Kyrgyzstan hoped to have its cake (CU privileges) and eat it too (WTO
membership), but there was an inherent contradiction between the two
institutions and the Kyrgyz government made its choice. 
Starr is completely right about one thing, however. Kyrgyzstan
is a
country in desperate need of aid. But the reason it needs aid is NOT
that "imperial forces" in Russia are punishing Kyrgyzstan for moving
towards the West. Kyrgyzstan needs aid because the liberal reforms,
which it followed quite dutifully, have so far done little to improve
the economic situation in the country. That may change over time (and I
am probably more hopeful than others on this list on this point), but
with Kyrgyzstan's main trade partners experiencing severe crises as
well, the short-term prospects are bleak. Some sort of new aid package
is probably called for. Regardless of what course of action is chosen,
it is neither useful nor empirically justifiable to blame Russia for the
economic problems of Kyrgyzstan or the other newly independent states.


Chikin, Prokhanov Decry Move To Fuel 'Zyuganov Case' 

Sovetskaya Rossiya
16 February 1999
[translation for personal use only]
Boxed feature under "From the Patriotic Informburo" rubric signed by
Sovetskaya Rossiya 
Chief Editor V. Chikin and Zavtra Chief Editor A. Prokhanov: "Ridiculous

Ministers Krasheninnikov and Stepashin are "fueling" a "Zyuganov 
case" at the General Prosecutor's Office over the fact that Zyuganov has
been publicly 
stating that Yeltsin is incapable of functioning. The ministers' zeal
generates not 
protest, not scorn, but despondency, because today -- when every time
Yeltsin goes to the 
Kremlin for half an hour this is seen as the "victory of power," and there
are no more than two 
such "victories" a month -- it is obvious to any casual onlooker in Moscow
that the president is 
incapable of functioning. Bypassed, dislodged from political life for a
whole quarter -- is 
he competent? Treating a "nasal septum" in the most terrible days of the
Chechen war unleashed 
by him -- is he competent? Hiding himself away because of the latest bout
of "pneumonia" in last 
August's days of crisis -- is he competent? Prostrating himself on strips
of carpet and 
airplane ramps in view of the whole world -- is he competent? Allowing the
Berezovskiy virtually into women's bedrooms at Barvikha -- is he competent?
Sitting in his 
ceremonial wheelchair, adorned as an emperor's throne, at the center of an
plundered country, where bandits and foreign intelligence agents reign,
where apartment 
blocks burn down and mines explode, where a submissive people is dying out
-- is he competent? 
The ridiculous step being taken by two ministers who were incapable of
establishing order 
in Chechnya, finding the killers of Starovoytova and Listyev, and crushing
the countless 
criminal groupings which like crayfish on a drowned man have sunk their
teeth into the 
lifeless body of the Russian economy, who locked up the "worthless agents"
Kozlenok and 
Bychkov for the "diamond case" while leaving at liberty the "specialists of
the liberal 
reforms" -- this anti-Zyuganov step looks like an attempt to deflect
attention from those who 
are to blame for the Russian catastrophe, who are growing fat with impunity
in their palaces, 
who own banks and television companies, and who are continuing to teach a
dying Russia about 
"reforms" and "liberalism." 
Without standing up in defense of Zyuganov, who does not need any
defense at all, we see 
Krasheninnikov and Stepashin as two subordinate characters in this frenzied
era which will 
inevitably come to an end and at whose finale assessments will be made of
everyone who 
increased and prolonged the people's agony. 
[Signed] Sovetskaya Rossiya Chief Editor V. Chikin 
Zavtra Chief Editor A. Prokhanov 


INTERVIEW-Russia's Gaidar sees failure on economy
By Brian Killen

MOSCOW, Feb 18 (Reuters) - Russia's economic policies are inefficient and
destined to fail, but the International Monetary Fund seems anxious to help
the country avoid a sovereign debt default, former prime minister Yegor
Gaidar said on Thursday. 
"The main feature of the economic policy of the government is extremely
inefficient tax collection," Gaidar told Reuters. 
He said the 1999 budget was unrealistic and its smooth passage on
Wednesday through the Federation Council, the upper chamber of parliament,
had little economic significance. 
"This budget is not an economic document. It is a political document. It
is a political declaration of support for the Primakov government," Gaidar
Gaidar said Prime Minister Yevgeny Primakov's government made a
disastrous start to its economic policies after being appointed last
September in the wake of the August financial crisis. But he said monetary
policies had since been tightened. 
"They started rapidly printing money at the very beginning," he said,
adding that this resulted in month-on-month inflation of 11.6 percent in
"Then they were extremely afraid of the consequences of their own
policies and from January they practically stopped direct credits from the
central bank to the budget. 
"Inflation started to go slowly down and in February it will be
somewhere around 4-5 percent," he said. 
Gaidar, Russia's leading liberal reformer, said the harsh reality of
poor tax collection still had to be confronted. 
"In 1995, 1996 and 1997, federal government revenues were about $3
billion per month. Now they are around $1 billion." 
Gaidar said he saw a danger of Russia defaulting on foreign debt this
year, although he detected willingness on the part of the IMF to reach
agreement on a support package that is a pre-condition for debt
restructuring deals with other creditors. 
"They (the IMF) are very much afraid of a Russian default. They are very
anxious to avoid it, so from this point of view it is evident that they
will be constructive," Gaidar said. 
Russia has already effectively defaulted on its domestic debt and it has
missed payments on foreign debt inherited after the collapse of the Soviet
Union in 1991, but it says it will meet obligations on debt contracted
since then. 
Gaidar said the IMF was not so much interested in the budget document as
in seeing how economic plans are implemented. 
He said the government was beginning to understand better how to deal
with the IMF, which is holding up new credits until a comprehensive policy
programme is adopted. "I hope that some kind of compromise will be found
before April-May," he said. 
"There are limits to the extent to which Russia can finance its
obligations on Russian debt without some kind of IMF assistance," he said,
adding that it was crucial to reach and agreement by June when big debt
payments are due. 
"If there is no agreement the risk that there will be some kind of
default, for instance on the obligations to the IMF and World Bank, with
very bad long-term consequences, is extremely high." 


FEATURE - Pagan pancake fest readies Russia for Lent
By Peter Henderson

MOSCOW, Feb 19 (Reuters) - One is a blin, two are bliny and any of the
famous pancakes cooked by a real Russian grandmother are delicious. 
That becomes clear to millions of Russians this week during pagan
celebrations marking the end of winter, which the Orthodox Church has
accommodated as a week of feasting before Lent. 
The winter snow is unlikely to melt for some weeks in many parts of
Russia, but the celebrations mean seven days of walks through the snow,
visiting relatives and gobbling piles of thin pancakes, usually made by the
family's grandmother, or babushka. 
Bliny are Russian pancakes with a slightly sour taste and the thickness
of a few playing cards, accompanied by caviar or indeed almost any other
filling on hand, from jam to sour cream and salmon. 
The light brown bliny are shaped like small suns, accounting for their
central role in pre-Christian festivals of the end of winter, when the
returning sun brightens the sky. 


Christianity came to Russia near the end of the first Christian
millennium, long after Slav peasants began working the land. 
Paganism took hold in Russia as early as the second century AD and
Maslenitsa, a shortened form of the Russian for ``butter week,'' was first
mentioned in the sixth century, said Larisa Zhigaitsova, a Russian history
teacher at Moscow State University. 
Each of the seven days had a purpose and a name such as Flirting Day,
when couples wooed each other over a warm pancake, and Sweet Tooth, when
mothers-in-law invited daughters-in-law over for bliny, an invitation
reciprocated later in the week. 
The week, which this year finishes on Sunday, ends with more bliny and
the ritual burning of a straw puppet symbolising winter, the ashes of which
are spread on the fields to assure fertility ahead of spring planting. 
Christian missionaries facing such fun had a clever strategy to ween the
Slavs from paganism, Zhigaitsova said. 
``The Church knew that it could not completely destroy those festivals,
and so it made sure many Church holidays fell at the same time as
traditional holidays.'' 
Maslenitsa was traditionally celebrated at the end of March at the
equinox, when the day has finally become equal to the night and peasants
could think about spring planting. 
Now it falls during cheese week, a build-up to Lent's seven weeks of
self-denial before Easter, said Viktor Malyukhin, a spokesman for the
Russian Orthodox Church. 
``Maslenitsa is a folk holiday which falls at the same time on the holy
calendar as cheese week, the last week before Lent when you can eat butter,
eggs, sour cream,'' he said. 
Coincidentally, bliny are made of milk and eggs and are generally
smeared liberally with sour cream. 


Russian popular culture owes a lot to the blin and its sidekick, butter. 
``You cannot spoil porridge with butter,'' a Russian cook might say,
meaning one cannot have too much of a good thing, while she slapped butter
between layers of a stack of bliny. 
``Akh, blin!'' another might cry, using a popular euphemism for a strong
and similar sounding curse, as she took a turn at the frying pan and
watched a lovely pancake degenerate into a half-cooked ball of dough. 
``The first blin is always a mess,'' the cook might respond, as would
any Russian urging another who did not succeed at first to try, try again. 
But the secret to a delicious blin is widely held to be beyond technique
as befits its cultural role. 
``Babushkas probably make better ones because they put their souls into
it. Contemporary chefs are more, well, superficial,'' said Tatyana
Kalashnikova, the 45-year-old cook at St Petersburg's Literaturnoe Kafe
(Literary Cafe) 
Alexander Pushkin, Russia's national poet, reportedly made his last stop
at the cafe before going to a fatal duel in 1837. 
Kalashnikova's bliny have the slightly chewy texture and satisfying heft
one might want for a last meal, though at the time Russia's
Western-oriented capital, St Petersburg, and the cafe itself, probably
snubbed the humble Russian blin. 


Real old fashioned bliny are made with buckwheat flour, which gives the
pancakes a zip, Kalashnikova said. 
``Blini from buckwheat flour are darker -- wheat and buckwheat are
completely different cereals. A blin from buckwheat is a more expressive
blin, more piquant.'' 
She uses buckwheat during Maslenitsa but admits to using, and
preferring, regular flour the rest of the year. 
Here is how she prepares for the crowds: 
``The process -- we take warm milk, then sift some flour. We dissolve
sugar and salt to taste in the warm milk, add an egg, yeast, then mix in
the flour and put aside to rise about 30 minutes. When it has risen, we
start making bliny.'' 
A half litre of milk (two cups), 350 grams of flour (12 ounces or 1-3/4
cups) and one egg make 20 bliny, enough for a hungry family. 
There should be about 1/2 teaspoon each of sugar and salt. Some cooks
separate the eggs and fold beaten egg whites in at the end. 
``Cook in a very hot pan -- we have a special frying pan for bliny and
nothing else, so that the bliny are easy to take out of the pan,''
Kalashnikova says. 
Oil the pan before pouring in batter, swirling it a bit to get a round
shape six to eight inches across. Babushkas oil the pan by dipping half a
peeled potato, stuck on the end of a fork, into some oil and then rubbing
it in the pan. 
Flip the blin when bubbles rise through the batter, as it turns light
brown and becomes easy to separate from the pan. 
Stack on a plate and with butter between layers so they do not stick
together. ``On the side we serve (smoked) fish, caviar, honey, sour cream,
jam, butter -- whatever you want,'' Kalashnikova said. 


Moscow Times
February 19, 1999 
Russia Gives IMF Details On Use of FIMACO 
By Jeanne Whalen
Staff Writer

The Central Bank has provided the International Monetary Fund with details
regarding its use of offshore company Financial Management Co., or FIMACO,
to hide Russia's hard currency reserves between 1993 and 1998, Central Bank
deputy chairman Oleg Mozhaiskov said Thursday. 

After receiving on Wednesday a "please explain" letter from the IMF about
FIMACO, the Central Bank held discussions with the IMF on the matter that
same day, he added. 

The IMF, which had long known that Russia was holding assets offshore,
probably sent the letter to "insure itself" in light of controversial press
reports about FIMACO, agencies quoted Mozhaiskov as saying at a briefing. 

He repeated other bank officials assertions that the IMF had not known
specifically about FIMACO, but that it had been aware that Russia might
place its reserves in offshore institutions. 

Russian officials have been tight-lipped about FIMACO since former
Prosecutor General Yury Skuratov first revealed the offshore company two
weeks ago in a letter to parliament, charging that the Central Bank had
wrongly held $50 billion in hard currency reserves in the Jersey-based
company from 1993 to 1998. 

They have admitted that Russia used the company to hide its reserves from
foreign creditors, and that some IMF money was sent to FIMACO. But reports
about FIMACO have not harmed IMF talks, Mozhaiskov said. 

Mozhaiskov and the chairman of Eurobank, the Paris-based Central Bank
subsidiary that controls FIMACO, attempted to pour cold water on Skuratov's
scandalous allegations on Thursday by maintaining that the amount of money
tied to FIMACO was minor. 

Mozhaiskov said that FIMACO never held more than $1.4 billion. Eurobank
Chairman Andrei Movchan told the news briefing that FIMACO received around
$1.7 million in commissions during the time it managed Central Bank
reserves. Its annual commission was one-sixteenth of a percentage point of
the yearly average of assets under management, he said. 

All other profits from FIMACO's operations, including the principal, were
returned to the Central Bank, Movchan said. The offshore company stopped
handling Central Bank funds in 1996 and the Central Bank's accounts there
were closed last month. 

The commissions FIMACO earned for investing Russia's reserves were lower
than those charged by other banks at the time, he added. Market analysts
have wondered who earned commissions off FIMACO's investments and what
happened to those commissions. Prime-Tass quoted Mozhaiskov as saying some
of the money FIMACO repatriated to Russia was used to buy Finance Ministry
securities that were linked to the delivery of products to Russia's Far
North. There was no elaboration of what exactly that meant. 

Eurobank bought FIMACO in March 1992 from "four lawyers" who had founded
the company in 1990, Movchan said. Earlier, former Central Bank chairman
Sergei Dubinin said Eurobank founded FIMACO in 1990 and that the Central
Bank began sending its reserves there in 1993. 

The Central Bank was firm that FIMACO could invest its reserves only in
first-class securities or banks, Interfax reported Movchan as saying. 


Moscow Times
February 19, 1999 
PARTY LINES: Weak Defense Of FIMACO Crumbles Fast 
By Jonas Bernstein
Staff Writer

The controversy surrounding FIMACO -- the previously unknown Channel
Islands firm which we now know managed billions of dollars of Russia's
hard-currency reserves over five years - has brought about an unprecedented
closing of ranks between former and current Central Bank officials.
Bridging the political "left" and "right," this united front may be the
closest thing to "civil accord" that Russia has at the moment. But the
arguments in defense of FIMACO have been unconvincing. 

FIMACO's "rightist" defenders have applauded "leftist" Viktor Gerashchenko,
the Central Bank's current chief who also headed it from 1992 to 1994, for
using the firm in 1993 to hide more than $1 billion he claimed was
threatened by litigious foreign creditors. And in defending FIMACO,
"liberals" have suddenly wrapped themselves in the flag. Irina Yasina, for
example, who was Sergei Dubinin's press secretary, wrote in these pages
earlier this week that Prosecutor General Yury Skuratov acted "against the
interests of his own country and for the interests of foreign creditors" by
blowing the whistle on FIMACO. 

In a column just this December, Yasina lectured Prime Minister Yevgeny
Primakov's government for its GKO restructuring deal, calling it an "insult
to creditors" that would mean an end to all Western lending. But hiding
creditors' money on the island of Jersey - that was O.K.? 

Then there is Sergei Alexashenko, Dubinin's former deputy, who joined his
former boss last week to defend FIMACO as key to Russia's "economic
national security." In an interview published this week, Alexashenko also
defended Jersey, which he described as being "under the strict control of
the British authorities." No Russians seeking to launder money offshore
"will be doing it in Jersey," he said. 

Really? In 1997, the head of the European Commission's anti-fraud unit said
that "lax regulation combined with offshore status" made the Channel
Islands "ideal places for hiding illegal financial operations." Last
November, London's Daily Telegraph wrote that "Russian gangsters are among
the world's criminals who are alleged to have taken advantage of the banks
and trusts in the Channel Islands." 

Finally, there is Dubinin, who, apparently, also makes distinctions between
good offshore zones and bad ones. In November, after Skuratov announced his
office was investigating the Central Bank, Dubinin called it a political
witch hunt. He also claimed that he had informed the prosecutor general
about a case in which state funds wound up on the Pacific island of Nauru,
as well as "other suspicious deals" involving the transfer of funds to
Cyprus, Barbados and "other exotic places," but that Skuratov failed to
follow up. Given Dubinin's defense of FIMACO, one can only imagine what he
considered "suspicious." 

The defense of FIMACO has actually backfired, and Western officials have
started expressing concern. On Thursday, European Commission officials told
journalists FIMACO would be brought up at talks with Primakov. But what
everyone is really waiting for is a reaction from the International
Monetary Fund. The IMF entrusted the Central Bank - which Stanley Fischer,
the fund's deputy director, once called Russia's "bastion of economic
reform" - with billions of dollars. The ultimate fate of the IMF's already
battered reputation, thus, may hinge on the FIMACO controversy's outcome. 



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