April 28, 1999    
This Date's Issues: 3262• 3263   • 

Johnson's Russia List
#3263
28 April 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Moscow Times: Melissa Akin, Duma Deputy Stands Alone on Yugoslav War. 
(Konstantin Borovoi).
2. Reuters: Russian Duma seen passing IMF-agreed laws by July.
3. The Athens News: John Helmer, PAPANDREOU INTO KREMLIN TURMOIL.
4. RFE/RL: Robert Lyle, World Bank Asks If Economic Transition Has Failed 
Former USSR. (Joseph Stiglitz).
5. The Independent: Anatol Lieven, We Should Not Rule Out a Peaceful
Solution 
for Kosovo.
6. AP: Russia Isolated Due to NATO Stance.
7. Andrei Liakhov: A.Tanner on corruption/3260.
8. Moscow Times: Martin Nesirky, Sergeyev Blasts New NATO Plan.
9. Anne Williamson: Three Comments/JRL #3259-61.
10. Gordon Hahn on Fall 1993 Myatezh.
11. Reuters: EMERGING MARKETS-Time for Russian equities?] 

*******

#1
Moscow Times
April 28, 1999 
Duma Deputy Stands Alone on Yugoslav War 
By Melissa Akin
Staff Writer

State Duma Deputy Konstantin Borovoi last weekend went where no other
Russian politician dared to go: to Washington, for NATO's 50th birthday
party. 

As the only Russian official to make the journey, it was a bit of a lonely
trip. But Borovoi is used to going his own way: He is the only ardent
supporter of the NATO bombing of Yugoslavia in Russia's communist- and
nationalist-dominated lower house of parliament. 

"I enjoyed the atmosphere very much," Borovoi said of the summit in a
telephone interview from the Regal Hotel in Cincinnati, Ohio, where he
traveled for a civil defense seminar with the U.S. National Guard. "It was
completely non-propagandistic, very businesslike and serious." 

"I was just carried away by the unity," he added, switching briefly to
English, "of the NATO allies and their partners." 

That puts Borovoi among the minority of officials who actually professed to
have enjoyed the summit, which featured declarations of solidarity made by
U.S. and European leaders anxious to paper over widening differences over
how to deal with Yugoslavia. 

Moscow officialdom pointedly stayed away from the festivities in protest,
and even Western-minded politicians such as "young reformer" Boris Nemtsov
said they would not dream of turning up in Washington while NATO was bombing
Russia's ally Yugoslavia, above howls of protest from Russian citizens and
politicians alike. 

But Borovoi, never one for populist politics, wangled himself an invitation
and went as a private citizen. 

It was the latest in a line of colorful acts of protest by Borovoi. He and
former dissident Valeria Novodvorskaya, leader of the Democratic Union
political movement, even draped a car in a big U.S. flag, topped it with a
banner reading "NATO, We're With You," and drove slowly in front of the U.S.
Embassy - just minutes after a gunman had jumped out of a vehicle and
strafed the building with automatic-rifle fire. 

And the wealthy entrepreneur and former head of the Moscow Raw Materials and
Commodities exchange, declared a hunger strike on April 1 to protest what he
felt was pro-Serbian coverage of the airstrikes in the Russian media. He
started eating again on April 5, when "some objective information turned up." 

The government "uses television to play with people like toys," Borovoi
said. "That's a crime in a democratic society." 

Borovoi is regularly shouted down by members of the Duma's
communist-nationalist majority, which has been cranking out condemnations of
the "barbaric" NATO bombings since they began in March. 

And when his colleagues fail to shout him down, the speaker of the lower
house, Gennady Seleznyov, just turns off his microphone. 

"We all know what you're going to say, Konstantin Natanovich," Seleznyov
said during a recent hearing. 

********

#2
Russian Duma seen passing IMF-agreed laws by July

MOSCOW, April 28 (Reuters) - Russia's parliament, which must pass key laws
before the International Monetary Fund sends fresh credits, has not
received the bills from the government, but may still pass them by July, a
legislator said on Wednesday. 

Alexander Zhukov, head of the lower house State Duma's budget and banking
committee, told a briefing the government was probably waiting for final
IMF terms to emerge from talks taking place in Washington before drafting
legislation. 

He said it would not be possible for Russia to get fresh cash until at
least the second half of June, but that the Duma could pass crucial
legislation before a summer break on July 1. 

``In theory one and a half months, what is left before vacation, should be
enough for those few bills, although of course they will not pass through
the Duma at all easily,'' he said. The IMF and Russian officials have not
given detailed explanations of what the Fund wants, although it has long
pressed for reform in the banking sector and better bankruptcy laws. 

First Deputy Prime Minister Yuri Maslyukov, speaking in Washington on
Tuesday, said the IMF wanted legislation on both those issues before
sending new funds. 

Zhukov said banking-system reform would be particularly tough to pass,
requiring changes in existing legislation as well as facing resistance from
some commercial banks, although he said he was waiting for final proposals
from the government. 

``As soon as the delegation returns from Washington and the Russian
government finally and clearly understands the demands of the Fund, I think
draft legislation will appear soon enough,'' he said. 

``I think the Duma all the same is ready to cooperate.'' 

Zhukov said the Fund also wanted higher taxes on petrol and alcohol, but
details remained to be settled in Washington. 

********

#3
Date: Tue, 27 Apr 1999 
From: helmer@glasnet.ru (John Helmer) 

>From The Athens News, April 28, 199
PAPANDREOU INTO KREMLIN TURMOIL
>From John Helmer in Moscow

Foreign Minister George Papandreou lands in Moscow today [Wednesday]
amid growing signs that President Boris Yeltsin is about to sack his
prime minister, and Russia's most popular politician, Yevgeny Primakov.

According to Kremlin rumours, after weeks of searching Yeltsin is
considering former prime minister Victor Chernomyrdin, whom Yeltsin
recently sent to Belgrade as his special envoy on the Serbian war;
and Interior Minister Sergei Stepashin, the strongman of the 
regime, who controls the only forces believed to be loyal to Yeltsin
after the Russian army chiefs signalled their support for Primakov, at the
start of the NATO bombing of Serbia.

Primakov himself said on Sunday he now regrets taking the prime
minister's post last September, and is tired of the rumour-mongering,
much of it fostered by Yeltsin's cronies, and by businessmen
threatened by Primakov's anti-corruption drive.

Papandreou is not scheduled to meet Primakov during his two days in
Moscow. 

Instead, he will meet Chernomyrdin; deputy prime minister
Valentina Matviyenko (the former Russian ambassador to Greece); and foreign
minister Igor Ivanov. The United Nations Secretary-General Kofi
Annan will be in Moscow at the same time as the Greek minister,
and the two are likely to meet together Wednesday, and on Thursday
with Russian officials.

It is the first time Papandreou has visited Moscow on a diplomatic 
mission, and it is a tentative one. Papandreou wants to find out what
exactly Chernomyrdin took from Yugoslav President Slobodan Milosevic in
their lengthy meeting in Belgrade several days ago; and what possibilities
exist, in the words of a Greek official, to "marry" that proposal with
the NATO position. 

On several points Greek and Russian policy for settling the Kosovo conflict
are similar. Papandreou and his Russian counterparts can be expected to
call for an end to the bombing campaign, and oppose the start of a fully
fledged ground war. 

Russia is flatly opposed to a NATO attempt to impose
a sea blockade of oil deliveries to Serbia. While Greece isn't in favour,
it was alone on the issue at last week's NATO summit conference in
Washington. Oil from Russian wells, delivered by Russian and Greek transport,
could be a lucrative source of profit for powerful constituents behind
both the Russian and Greek governments.

Russian and Greek troops might be considered acceptable to
Milosevic in an international force for Kosovo, but for the time
being, the Russian view of what this force should accomplish
in policing a repopulated Kosovo is very different from NATO's
strategy. Russian policy remains opposed to partition of
Kosovo; Greek officials believe partition is inevitable.

Papandreou is likely to encounter deep-seated skepticism among Russian
officials about the Greek government's intentions. Earlier this year, the 
Greek decision to redeploy the S-300 missile system in Crete, instead of 
Cyprus, triggered some of the most hostile comments about Greece heard
from Russian officials in years. During the Soviet period, Kremlin
officials were deeply suspicious of the PASOK government's asserted
independence of the United States, and recent Greek moves have
revived these sentiments.

Greek officials, on the other hand, are comparably distrustful of Russian
policy towards Turkey. Chernomyrdin, in particular, before his removal as 
prime minister in March 1998, is believed to have given private undertakings
to Ankara to revoke Russia's pledge to build an oil pipeline through
Bulgaria and Greece, as an alternative to the Turkish pipeline backed
by the US.

Chernomyrdin has made no bones about his ambition to retrieve the prime
ministry, and Yeltsin's willingness to give him the high-profile envoy's
mandate has convinced Russian politicians the Kremlin is
laying the groundwork for Primakov's removal. Russian sources acknowledge
that Chernomyrdin's appointment would trigger intense opposition
in parliament, which rejected his nomination in two votes last August,
before Primakov was nominated. 

Chernomyrdin's ambition has also left his audience frequently unable to 
decipher what he means, as his remarks are typically ungrammatical and 
incomplete. By capturing peak viewing time on television, however,
Chernomyrdin believes he has demonstrated to Yeltsin the capacity to
negotiate Russia's interests in the Serbian war; and also to secure
credits for Russia's empty treasury from the International Monetary
Fund and the World Bank. Support from the Clinton Administration
for Chernomyrdin's manoeuvres suggests, in Moscow at least, a greater
American interest to eliminate Primakov than to promote a 
settlement with Milosevic through Russian mediation.

Hostility in the Duma to Chernomyrdin's return to power has been prompting 
Yeltsin to put out feelers for support from more powerful and
popular figures, like Moscow Mayor Yury Luzhkov, though Yeltsin and
his supporters are afraid of the threat he poses.

This is why a neutral figure like Stepashin has emerged with political
potential. A vigorous promoter of the destructive war against Chechnya,
for which Yeltsin now faces impeachment by parliament, Stepashin is
being promoted as a caretaker, who will be able to rule without
parliamentary confirmation. 

Even if the Kremlin is bluffing about that, the tension generated by Russia's
internal political rivalries is so great, visible in every television 
newscast of the day, it is overshadowing the war in Serbia -- and the 
government's ability to function.

********

#4
The East: World Bank Asks If Economic Transition Has Failed Former USSR
By Robert Lyle

Washington, 27 April 1999 (RFE/RL) -- The World Bank says most of the
countries of the former Soviet Union have seen nothing but decline and
deterioration since the transition began ten years ago.

World Bank Senior Vice President and Chief Economist, Joseph Stiglitz, says
the bank's annual World Development report shows that despite significant
gains in development around the world, the gap between rich and poor is
widening and in many countries income distributions are worsening,
increasing the social pain of economic failure:

Stiglitz said: "Nowhere are these problems more evident than in the states
of the former Soviet Union, where the numbers living in poverty increased
from 14 million in 1989 to 147 million by the middle of the decade, a
ten-fold increase."

Stiglitz told a press conference Monday that it was not just because Russia
had a crisis last year:

Stiglitz said: "More broadly, a decade after the beginning of the transition
to a market economy, most of the countries of the former Soviet Union have a
lower per capita income, worse social conditions, and higher levels of
poverty than they did a decade ago."

So does this mean the transition to market economies has failed? The World
Bank official admits it's a question they are pondering a lot now:

Stiglitz said: "When most economists said the problem in the former Soviet
Union was that they had central planning, no property rights and therefore
inefficiencies, distorted prices. You were going to change all that and it
was supposed to release a burst of energy of entrepreneurship and output was
supposed to increase. Instead output has fallen markedly and poverty has
increased markedly and I think the lesson we've learned is that market
economies are far more complicated than text book models often describe
them. And that issues of governance, issues of legal infrastructures, issues
of institutions are absolutely central." The leader of the team that
assembled the development report, World Bank senior economist Eric Swanson
says one interesting anomaly in Russia is that private personal consumption
has actually remained rather strong:

Swanson said: "What's really disappeared is investment and public
consumption, government consumption. I guess if you're not collecting taxes,
it keeps down your public consumption as well. Essentially we see an economy
that's in chaos right now and itís very hard to measure what's going on
there."

The bank's chief economist Stiglitz says another strange occurrence in
Russia has been that there has been both an increase in the degree of
inequality of incomes while economic growth has gone down:

Stiglitz said: "In a sense, the economies in transition have repealed a
standard law on economics which says there is a trade-off between inequality
and growth. What they showed is that you have negative growth and increasing
inequality, so they've gotten the worst of both worlds. And that is one of
the things we'll have to ponder as we go forward."

The bank's report warns that if present trends persist, there is danger that
the poor may become a permanent underclass far less able to respond to
opportunities when things do turn around.

The people are obviously feeling the pressure too, says the bank, with the
stress showing in declining life expectancy and sharply worsening adult
mortality. It says for example that the probability of a 15-year-old
Ukrainian male surviving until his 60th birthday is a mere 65 percent, down
from 72 percent in 1980. 

The bank's report shows that while the former Soviet Countries have been
sinking for a decade, another former Communist giant -- China -- is moving
strongly ahead in a transition that is working. Joseph Stiglitz:

Stiglitz said: "One of the remarkable contrasts is the success of that
(China's) transition as measured by most indicators including increases in
GDP, living standards and reductions in poverty. The contrast between that
and what has happened in the former Soviet Union are the result of quite
different economic policies being pursued."

That seems to be the key, says Stiglitz -- adopting the reforms and policies
necessary for a functioning market-based economy, including strong social
safety nets to protect the most vulnerable of every society. In the end, he
said, it is not the international institutions like the bank and the IMF
that will save these countries but their own determination:

Stiglitz said: "One of the things we know is that no matter what we do to
these countries, the global marketplace imposes risks. There will be crises
in the future not matter what we do. And what we have to is to try to work
to make sure that institutions are in place so that when there are crises,
the most vulnerable are less effected by that." 

On the week-end, the bank's Vice President for Europe and Central Asia,
Johannes Linn warned that the crisis in the former Soviet Unions, especially
Russia and Ukraine, will only get worse in the next year. 

*******

#5
Date: Tue, 27 Apr 1999 
From: Anatol Lieven <lieven@iiss.org.uk> 
Subject: We Should Not Rule Out a Peaceful Solution for Kosovo

Dear David,
Here's a piece from the Independent that came out today (Tuesday):
The Independent, London, 27/4/99.
For personal use only.

We Should Not Rule Out a Peaceful Solution for Kosovo
by Anatol Lieven,
[of the International Institute for Strategic Studies, London]

If NATO leaders seriously believe that the air campaign to date has
impressed the rest of the world, then they are deceiving themselves. The
price of maintaining alliance unity over Kosovo has been to make the waging
of effective war impossible. Not only is a ground offensive blocked by
several member states and powerful forces in the US; but a mixture of the
terrain and NATO governments' fear of casualties among their pilots has so
far reduced the bombing campaign against Yugoslav forces in Kosovo itself to
a joke. This humiliating failure is undoing many of the positive effects of
the 1991 victory in the Gulf on our potential enemies around the world.

We are therefore being pushed inexorably in the direction of a ground
offensive - probably not by the whole of NATO, but a "coalition of the
willing" involving the US and UK. Despite all its risks, a ground war would
still be better than an air campaign lasting months; not just because of the
effects of such a long drawn-out war on NATO's prestige, but also because of
the effects on Serbia - strange though it may seem to mention these under
the circumstances. Months of bombing would leave an economically ruined,
embittered Serbia as a source of anti-Western terrorism and destabilisation.

For all foreseeable time, Serbia would be a "Rogue State". The West may now
be promising some kind of "Marshall Plan" for the Balkans - but it is highly
unlikely that any conceivable postwar Serbian government would qualify,
given the furious anti-Western feelings it will represent.

However, the dangers of a ground war are by now well known. Attacking from
Albania involves formidable logistical obstacles. An offensive via Macedonia
or Montenegro looks politically impossible at present. Attacking from the
North (assuming that Hungary and/or Bosnia were to agree) is militarily much
simpler, but would involve the occupation of the whole of Serbia, with
everything that would mean for terrorism, partisan warfare, and political
quagmire. 

Before moving towards a ground war, we therefore need to make a serious
attempt to reach a compromise - not with Milosevic, who is by now largely
irrelevant to the real long-term issue, but with the Serbian nation. It is
with this nation that we are now at war, and it is with this nation that we
shall still be dealing when this war is over. 

The mission of Strobe Talbott, the US Deputy Secretary of State, to Moscow
this week gives us the chance to use Russia to achieve such a compromise -
and this would also do something to restore our dangerously shattered
relations with Moscow. However, for this to work, we cannot simply follow US
policy so far, which has essentially been of telling Russia to tell Belgrade
to surrender. If we are going to get the Serbs to agree to a settlement
without defeating them on the ground or bombing them into starvation, then
any settlement will obviously have to be a negotiated one.

To achieve such a settlement first of all means facing facts. The most
important of these is that Albanians and Serbs cannot now live together in a
common state - and indeed this was already apparent ten years ago. A large
number of Albanians cannot possibly be asked to live again under the threat
of Serbian military terror; but equally, a withdrawal of Yugoslav forces
from the whole of Kosovo and their replacement with NATO troops would sooner
or later lead inevitably to the formal separation of the whole of Kosovo and
the flight of its Serbian minority. NATO will not stay there indefinitely to
protect them. 

To achieve such a result, in an area that Serbs regard as of critical
historical and emotional importance, will require their complete military
defeat. To maintain such a settlement against the threat of Serbian revanche
will require a permanent NATO commitment to the region. It would probably
also involve the heavy arming of Albania by NATO - a grotesque proposition
given Albania's record as a failing state.

The only way to get out of this hole is to partition Kosovo. This could
begin with the creation of "safe havens" for the Kosovo Albanians covering
some two thirds of the existing territory of Kosovo and akin to those
established for the Kurds of northern Iraq in 1991.Yugoslav forces would
withdraw behind a line patrolled by UN forces with a NATO component, and
guaranteed by the UN (including Russia) as well as NATO. This would allow
most (though admittedly by no means all) of the refugees and internally
displaced people to return home and would secure their future safety. NATO
would however have to give a formal assurance to Yugoslavia that unless
Yugoslav forces crossed that line, NATO air attacks would not resume. 

This solution would obviously mean the Serbs giving up most of Kosovo. Its
attraction for them however would be that it would involve de facto
partition. This would leave them in control both of the remaining areas of
Serbian population and of the emotionally most significant places: the
battlefield of Kosovo Polje itself and the Serbian monasteries. This would
be achieved by leaving in Serbian hands both a large swathe of territory in
the north, and a small, separate bit in the West, adjacent to Montenegro and
containing Pec (site of the old Serbian Orthodox Patriarchate) and the
monastery of Decane. This division would give the Serbs a great deal more
than their present share of the Kosovo population would justify, but would
be roughly in line with their historical position in recent centuries,
before the higher Albanian birthrate radically changed the local balance. 

Such a solution would obviously be unacceptable to the Albanians. In
particular, leaving Kosovo Polje in Serbian hands means in effect doing the
same for the capital, Pristina, of which it is now a southern suburb.
However, it should be possible to compensate the Kosovo Albanians for this
loss. As it is, a massive postwar programme of Western aid will be needed to
rebuild the Albanian homes destroyed by the Serbs. There is no reason in
principle why this should not be extended to the construction of a new
regional capital at Prizren in the south east - especially since this was in
fact the capital of Kosovo under the Ottoman Empire, the golden age of
Albanian life in the region. If we are prepared to spend billions on bombing
the Serbs, we ought to be able to spend the same sums on rehousing the
Albanians. 

A solution involving "safe havens" and de facto partition obviously
involves NATO giving up some of its existing principles for a settlement,
but it could still just about be presented as a NATO victory. It is
obviously short of a complete victory - but then, are we really prepared to
fight hard for a complete victory, and live with the consequences? 

*******

#6
Russia Isolated Due to NATO Stance
April 28, 1999
By ANGELA CHARLTON

MOSCOW (AP) -- While Moscow berates NATO over Yugoslavia, many of Russia's
former Soviet partners are talking up their ties to the Western alliance.

And the louder Moscow preaches its support for Orthodox Slavic brethren in
Yugoslavia, the more Muslims within and just outside Russia's borders
cringe in fear and warn of internal unrest.

Moscow, deeply aware of its loss of superpower status since the Soviet
collapse, is looking increasingly isolated in its own strategic backyard as
former Soviet satellites look to the West for protection.

Russia's 20 million Muslims, meanwhile, warn that the Kremlin's pro-Slav
rhetoric could ignite internal unrest, raising the specter of Moscow's
1994-96 war against largely Muslim separatists in Chechnya.

A glaring example of Russia's alienation was the guest list at NATO's 50th
anniversary summit in Washington last week -- 13 of the 15 former Soviet
republics were represented. Russia, boycotting the gala because of the war
in Yugoslavia, was not.

Instead, Russia's defense minister marked the anniversary by visiting
Belarus -- the only other former Soviet state not represented at the NATO
summit -- and said Russia was reviewing its defense policies.

The United States has showered aid and diplomatic attention on the
countries that emerged after the 1991 Soviet collapse, especially the
oil-rich Caspian Sea region, Ukraine and the Baltic states.

The policy appears to be bearing fruit.

Even those former Soviet republics that have denounced the NATO bombings
are embracing NATO.

``They feel safer under NATO's wing than under Russia's,'' said Viktor
Kremenyuk, deputy director of Russia's Institute for USA and Canada Studies.

Washington is working with Western oil giants to develop pipeline routes
for the Caspian reserves that bypass Russia. The United States is also
trying to mediate ethnic conflicts in Russia's shrinking sphere of influence.

At the NATO summit, Secretary of State Madeleine Albright discussed
tensions in the Caucasus region -- through which any Caspian oil pipeline
to the West must pass -- with the presidents of Georgia, Armenia and
Azerbaijan, all former Soviet republics.

Ukraine, meanwhile, is walking a precarious line between Russia and the West.

Ukraine is now the third-largest recipient of U.S. aid, after Israel and
Egypt. But no amount of U.S. money can erase Ukraine's dependence on
Russia, its largest trade partner and primary source of energy.

Ukrainian President Leonid Kuchma basked in the attention of Western
leaders at the NATO summit, but he also condemned the bombing of Yugoslavia.

Azerbaijan, one of six largely Muslim former Soviet states, has long been
outspoken against Russia, and the NATO bombings unleashed a new round of
criticism.

``Russia's position has brought severe damage to its democratic image,''
Vafa Guluzade, foreign policy adviser to President Geidar Aliev, told
Russia's Nezavisimaya Gazeta. ``A one-sided, pro-Christian position will
never work in Russia's favor.''

Muslims in Russia echoed Guluzade's comments.

``Muslims are on guard,'' said Fuad Yusupov, head of the Bait-Allah Islamic
Society and a cleric at a Moscow mosque.

``No one has any use for such cheap political words about Orthodox
brethren'' except politicians in Moscow, he said.

The leaders of Russia's Muslim regions have lashed out at a proposed union
of Russia, Belarus and Yugoslavia, and some have said they would seek more
autonomy because of the Kremlin's position.

Orthodox Christianity and Islam in Russia have been at odds over the
centuries, often violently. Moscow has struggled to keep its Muslim regions
in the Russian fold, and launched a botched war to suppress Chechnya's
independence bid.

``What Russia should really worry about is itself. We have plenty of
domestic problems of our own,'' Kremenyuk said.

*******

#7
From: "Liakhov, Andrei" <liakhova@nortonrose.com>
Subject: A.Tanner on corruption/3260
Date: Tue, 27 Apr 1999 

Although I quite agree that in the USSR the bureacrats were afraid and the
corruption was much less pronouced it would be at least not entirely
correect to say that Interior Ministry (MVD) or the General Procurator's
office were entirely corruption free zones. 
MVD had a huge corruption scandal in the early 80ies - the so called
Churbanov case. One of the consequences of that really grandiose case,
which was investigated by military prosecutors (usual prosecutors could not
be trusted as the Government considered it to be too corrupt) more than 25%
of its senior officers (of major to colonel in rank) throughout the USSR
were either retired prematurely or jailed and the cleaning up of corrupt
officers of lesser ranks and non commissioned staff was continuing up to
1991 when this process (which was already moving at the snail's pace anyway)
was halted altogether. 
The General Procurators' office was always considered corrupt even by MVD
standards (see above) and it had its own share of corruption scandals (the
suicide of the General Procurator of Uzbekistan in 1984, Moscow City
Procurator's case in 1986 (who took more $100,000 cash on aggregate!) and
some others). 
It is widely believed and accepted by everyone who was ever
interested/involved in fighting corruption in Russia that the present scale
corruption commenced in the last 2 years of the USSR when KPSS and the KGB
started to (i) hide money abroad through an elaborate system of "trusted"
individuals; and (ii) siphon off their funds into various commercial
projects again through "trusted" individuals and companies which suddenly
had access to huge capital to utilise which they needed to pay their guys
off. This was a very wide spread practice which quickly created a "greasing"
business culture which survives to this day.

Modern and comprehensive laws are fine but the problem is how these are
going to be enforced.............. 

*******

#8
Moscow Times
April 28, 1999 
Sergeyev Blasts New NATO Plan 
By Martin Nesirky
REUTERS

Defense Minister Igor Sergeyev savaged NATO's new strategy and enlargement
plans Tuesday, saying Moscow would now have to reshape its own security
doctrine and review its vast nuclear and conventional forces. 

At a 50th anniversary summit in Washington last week, NATO leaders agreed on
a Strategic Concept that extends the alliance's sphere of operations and may
open the way for action without UN Security Council backing. 

"All this forces Russia to reconsider many provisions for ensuring its own
military security," Sergeyev told reporters in his first major statement on
the summit outcome. 

"This covers conventional forces and strategic nuclear deterrence forces,"
said Sergeyev, who led Russia's nuclear forces before becoming minister two
years ago to speed up military reforms. 

He reiterated criticism of NATO airstrikes on Yugoslavia, saying the whole
post-Cold War security picture was at stake. 

"If no peaceful solution is found in Yugoslavia, the world, in my view, will
look entirely different from the way it looked before," the minister said in
televised comments. 

Sergeyev said Russia would never agree to the Baltic states - Estonia,
Latvia and Lithuania - joining the North Atlantic Treaty Organization. The
three states are former Soviet republics that border Russia. NATO said it
would keep the door open for up to nine potential new members, including the
Baltics. 

"This would be a great threat to Russia," he said. "We will take all
necessary measures to minimize the military threat that would follow from
such a development." 

The Defense Ministry could not confirm news agency reports that Sergeyev
would visit NATO-member Norway next Tuesday for talks with north European
defense ministers. Interfax said he would outline his complaints about NATO
there. 

Izvestia newspaper spelled out on Tuesday what Sergeyev's overall security
review could involve. 

In a front-page report, the daily said President Boris Yeltsin's advisory
Security Council would meet later this week to consider military proposals
to extend the service life of Soviet-era nuclear weapons, aircraft and
submarines. 

"This week, the Security Council will, in all likelihood, have to back these
proposals," Izvestia said. It said among them were plans to keep 10
Soviet-era Kalmar missile-carrying submarines, code-named Delta III by NATO,
up to 2005 instead of retiring them next year. 

The service life of RS-20 intercontinental ballistic missiles, known to NATO
as Satan, would also be extended under the proposals. Long-range bombers
would also be kept on station longer and Moscow may even ask Ukraine to
return some Soviet-era strategic planes. 

The Defense Ministry would not comment directly on the Izvestia story, but a
spokesman said Russia was looking to modernize its nuclear and conventional
forces. 

Sergeyev told the military newspaper Krasnaya Zvezda that the new doctrine
would be completed in three months and presented to Yeltsin for approval. 

It is not clear how Russia, in the depths of an economic crisis, could
afford an overhaul or re-equipping of its forces. The emphasis hitherto has
rather been on trimming and merging. 

Interfax quoted First Deputy Prime Minister Yury Maslyukov as saying Russia
had neither the means nor the need to reassess defense spending. 

******

#9
Date: Tue, 27 Apr 1999 
From: "Anne Williamson" <annewilliamson@email.msn.com> 
Subject: Three Comments/JRL #3259-61

RE: JRL 3261, Item 7, “Economist at Harvard Awarded Prize”

The first building I ever loved was the county courthouse in a Western
state. Built with stone quarried in the county itself and constructed with
the labor and treasure of the county’s early pioneers, the courthouse’s tall
clock tower rose wondrously to pierce the sky at an altitude breathtaking to
my then childs’ eyes. The building rested at the center of lovely grounds
that in summer enjoyed the cool shade of the encircling tall oak trees. And
all around the square stood buildings constructed of the same stone and in
the same style erected by the hands of those same pioneers; the county bank,
the early shopping arcade, the pharmacy, the insurance company, the saddle
and leather shop, the livestock feed store, the hardware, the farmers’ and
ranchers’ grange and the county fair and rodeo grounds administration. On
one corner stood the small stone Catholic Church and across the way on the
other corner, the slightly larger stone Protestant Church. People who lived
there were proud that citizens of the nearby metropolis drove out on Sundays
to picnic with their families and ours.

Many years later on a wild drunken ride from the metropolis, the automobile
of two teenage lovers collided with one of the tall live oaks. The Sherriff
arrested the illegal Mexican driver and put the intoxicated boy into one of
the most usually empty six cells in the courthouse’s basement, ignoring the
unhappy fellow's girlfriends’ shouted threats that she would burn down the
courthouse to free her imprisoned lover. And so she did, and the Sherriff
suffered serious burns that left him hospitalized for months after his
heroic and successful effort to save the boy who remained in a drunken
stupor throughout the conflaguration and his own rescue.

The reconstruction of the courthouse was one of the early efforts to design
and build a public structure by committee. When I first saw the low, squat,
nearly windowless ugly fortress that stood mockingly in the place of the
graceful old stone courthouse, I couldn’t even cry for the shock of it.
County residents were furious and considered legal action. Even today,
tirades against the architects and the self-appointed committee who so
stupidly tore out the county's symbolic heart are not uncommon.

Yet what, after the large picture of the old stone courthouse, are the
first documents to confront a visitor in the entry hall?

Why the awards, of course! The prizes! The ribbons! The medals! The
letters of congratuation from darn near every professional association of
archietects at the city, county, state and national level from across the
land! The American Association This, the National Conference of That, the
Global Silly Bunch of Those Over There, the Township Design Nincompoops
Right Here in River City, all with glowing words for the alleged achievement
of the building’s design, utility and aesthetics that to this day insults
every county resident. I can still hear the low growl of my mother’s
disgusted voice saying, “They did it to protect themselves.”

And so, hearty congratualtions to Professor Andrei Shleiffer on being
awarded the Norman Bates Medal of Economic Achievement!

But, did the Professor really have to ruin a nation with tens of millions of
dollars of other peoples’ money to learn that contracts and legal
protections for investors play a critical role in market economies? Funny,
just several years ago Harvard's fair-haired boy was writing articles for
the World Bank arguing for the efficiencies transition economies gain
through corruption. My, my – what a quick learner is Professor Shleiffer –
and what a very rewarding and very public public education only he and his
sisters and his cousins and his aunts enjoyed!

Re: JRL 3260, Item 10, Paul Backer’s “Comment on Meaningful Lending for
the Russian Federation”

Though Mr. Backer’s conclusion that Russia’s “best hope to save its economy
is sovereign debt default” is quite correct, he repeats a common error. It
was not the Russian Federation that ran “a nation-wide Ponzi scheme (the
GKO)”, but the Federal Reserve (indirectly), the U.S. Treasury (directly)
and the IMF (all hands on deck!). And the whole scheme was initiated by a
former governor of the New York Fed, Gerrald Corrigan, with something known
as the Bank Forum project which was initiated in early 1992
co-temporaneously with then Goldman Sachs Chief Robert Rubin’s successful
conclusion of a contract with the Kremlin for Goldman to manage the RF’s
investments and large privatizations.

“Follow the money” is a cliché of modern journalism, but anyone wanting to
understand the Clinton Administration’s con game that led to the ruin of
Russia must walk all those dollars not only forwards, but BACK – to their
point of origin.

Re: JRL 3259, Item 6, “Emergency Aid to Russian Media”

Some journalists, the U.S. bombs, maims and kills; others, it bribes…………

********

#10
Date: Tue, 27 Apr 1999
From: Gordon Hahn <hahn@hoover.stanford.edu>
Subject: G.M. Hahn on Fall 1993 Myatezh 

I would like to put in my two cents on fall '93. I was in Moscow then and
recall that after a visit to a Moscow monastery in a rather decrepit
working-class district of Moscow on a Sunday afternoon with my wife, we
returned home to find all but one television station knocked off the air by
Makashov's gang. The first discussion of this on JRL ["George Washington
vs. the Raving Nationalists, Neo-Bolsheviks, Fundamentalists, Paranoiacs,
and Thugs: The Russian Political Crises of 1993 According to the New York
Times" [shorter version], Jake Rudnitsky, Russian studies student at
Macalester college in St Paul, Minnesota]failed to note that this event was
preceded by Rutskoi's call for the mob to attach the building of the 'mery'
next door and Luzhkov's deputy weas taken hostage. Several nights prior to
this event Stanislav's Terekhov's goons fired on the CIS Armed Forces
GenShtab killing an innocent on-looker. For over a year, Anpilov's
stalinists were storming police cordons and engaging in anti-semitic,
neo-fascist street politics climaxing in the 1 May 1993 epsiode when
Anpilov once more asked old men and women to attack militia cordons. While
Yeltsin is bad leader for a democratizing state(or any state for that
matter), these characters' rise to power would have meant not merely the
death of Russia's fledgling democracy, but the birth of something quite
nasty, a new Cold War or something much worse, and a likely civil war. The
Communists of Russia faction and several other factions, inclding Rutskoi's
"democratic commusnists" in the Supreme Soviet were alied with the
Makashovs, Terekhovs, and Anpilovs. This group of factions held about a
third of the seats. Barkashov's tried to coopt the myatezh, as Fillipov's
comments suggest. 
Rudnitskiy's comments suggest he does not understand the nature and
development of Civic Union (GS) and opposition politics in 1992-93:

"Starting in '92, the Russian government was locked in a 
constitutional crisis. While virtually all politicians agreed that 
the heavily amended Brezhnev era Constitution needed to be replaced, 
Boris Yeltsin and the majority of parliamentarians, under the umbrella 
of the Civic Union, could not reach a compromise over the nature of a 
new constitution. Yeltsin supported a super-presidential draft and 
the Civic Union backed a draft that would reduce the role of the 
president to a figure head. The Times started covering the story 
when, in late March, Yeltsin declared a period of special presidential 
rule until a referendum, set on April 25, would determine who the 
Russian people backed. He was denied the special powers, but the 
referendum was held and came out conclusively in Yeltsin's favor."
"...A. M. Rosenthal declares that the Parliamentarians are "the enemies of
Russian democracy- the army hold over Communist bureaucrats, the managers
of big government industries, the right wing brutalists who long to
substitute a Russian fascism for a Russian Communism." (Mar. 23) The
author forgets that Parliament was elected in free elections and that the
Civic Union was actually quite moderate. Furthermore, were not Yeltsin and
his advisors former Communists, too?"

The GS in fact split when Rutskoi's radicalization peaked. Rutskoi began
to radicalize earlier, beginning in February 1992 when he addressed the
Congress of National-Patriots also addressed by Pamyat's leader, among
others. Rutskoi's NPSR became estranged from Civic Union's other moderate
members, Arkadii Volskii's Russian Union of Industrialists and
Entreprenuers (or RSPP and the core of Civic Union), and Travkin's DPR in
mid-1993. (Latwr the NPSR itself split between Lipitskii's more moderate
wing and Rutskoi's nationalists.) Yeltsin's replacement of Gaidar with
Chernomyrdin also facilitated this split, as the former coopted the RSPP
and DPR which then benefitted from and whose former members implemented
privatization along with Chubais.(See Gordon M. Hahn, "Opposition Politics
in Russia," Europe-Asia Studies, Vol. 46, No. 2, 1994, pp. 305-335.) They
supported compromise and opposed the violence on both sides (initiated by
the opposition, not the government). 
The struggle of 1993 was as much over property spoils of Yeltsin's
revolution from above, as over constitutional powers. The constitutional
contradictions' role in aggravating the conflict was nevertheless an
important factor, as institutional design is always an important element in
the success or failure of democratization. However, agency should not be
disregarded. There are many means at the disposal of any opposition, and
the choice of means reflects on the character of the agents who choose
them. Alliances with stalinists and fascists, the stockpiling of weapons in
a parliament building, calling on people to attack government buildings and
police are not democratic means. When such violent means are employed by
the opposition first, they usually provoke violent responses by
governments. While Yeltsin's actions were unconstitutional (as many of his
actions and those of the RSFSR CPD and Supreme Soviet had been since 1990),
many of the actions of Rutskoi, Khasbulatov and their allies were that and
much more. While the New York Times coverage may have been one-sided, at
least it got the side right. 

*******

#11
EMERGING MARKETS-Time for Russian equities?
By David Chance

LONDON, April 28 (Reuters) - It is boom time in emerging markets, with
Asian bourses returning to pre-crisis levels and even Russia rising after
last year's bond default. 

Fund managers and analysts caution that few mainstream investors will
consider investing in the country which triggered the world's most recent
large-scale financial crisis. But there are signs of hope from dedicated
emerging market funds, hedge funds and private investors as Russia edges
towards a deal with the International Monetary Fund (IMF). 

``You have seen a revival of interest in Russian Eurobonds in the last two
months, but we have not yet seen that filter through into equities,'' said
Patrick Blum, who manages the IIG Orloff Fund NV, an emerging markets hedge
fund with net assets of $19.3 million. 

Spreads on Russian Eurobonds have narrowed, especially in the wake of news
that Russia would not pay its Soviet era debt obligations and would
concentrate on avoiding default on its Eurobonds, creating a more
predictable investment climate. 

The CSFB ROS index of leading Russian shares has risen 59 percent to 783.90
from 490.40 at the end of 1998, admittedly from a very depressed base, and
on small flows. 

The benchmark Morgan Stanley Capital International Emerging Markets Free
Index has risen to 367.973 from 298.973 at the close of 1998. 

``People are asking what is your downside.. But would I bank all of my
money in Russia? The answer is obviously not,'' Blum said. 

Russia was the best performing stock market in the world in 1997, up more
than 110 percent. But in 1998 it was one of the worst performers and the
stock market fell 50 percent as the country triggered the latest in a round
of emerging market crises. 

Turnover in Russian shares has recovered from its nadir in the wake of the
August 17 crisis. Dan Lubash, head of European emerging markets at Merrill
Lynch said trading levels were around 10 times the level of the fourth
quarter of 1998. 

He upgraded Russian equities to neutral from underweight in January in the
wake of the agreement to restructure GKOs, or domestic debt, which shifted
money into equities, and on the back of rising oil and other commodity
prices. 

``The next step is to look at whether the International Monetary Fund will
step in. Does Russia end up in disorganised default or does it achieve an
organised rescheduling?'' Lubash said. 

The IMF on Tuesday demanded reform as a price for new loans, but Managing
Director Michel Camdessus said the fund was ``not far from an agreement''
with Russia. 

Russia's central bank said that it would need $4.0 billion this year from
the IMF, a figure which is similar to the $4.0-$4.8 billion it owes to the
IMF this year. 

Once Russia gets IMF agreement, that will open the way for funding from
other international financial institutions, and also a restructuring of its
$38 billion in Paris Club debts. 

Russia's approach to the Kosovo crisis is also helping concentrate the
minds of lenders as the western world attempts to keep some semblance of
normal relations with the country which has been deemed ``too nuclear to
fail.'' 

``Kosovo is actually helping Russia in its negotiations,'' said Lubash. 

Then there are also signs of life in the Russian economy. 

March industrial production rose 1.4 percent year-on-year, the first growth
since the August crisis, while seasonally adjusted consumer demand grew
five percent in February. 

The downside was that industrial production in the first quarter declined
two percent from last year and consumer demand was still depressed, down 15
percent from 1997 levels. 

The question now is whether this will translate into an improvement in
government revenue collection, which at 18.2 billion roubles ($745 million)
in March was 79.3 percent of the target level. 

``From investors' perspective, we believe what would matter most for the
rest of the market is whether these improved economic prospects translate
into better fiscal performance,'' Merrill said in a research report. 

*******