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Johnson's Russia List


April 30, 1999    
This Date's Issues: 3265 3266    

Johnson's Russia List
30 April 1999

[Note from David Johnson:
1. AP: Russia Wants Nuclear Arms Upgrade.
3. Argumenty i Fakty: Skuratov Said To Be Able To Incriminate Yeltsin Aides.
4. Fred Weir on pursuit of diplomatic solution.
5. Reuters: IMF Russia cash to repay loans, won't reach Moscow.
6. Reuters: Russian Duma may resist laws sought by IMF - deputy.
7. Itar-Tass: Court of Auditors To Look Into Use of IMF Credit.
8. Interfax: Communists Expect Primakov To Be Fired in Late May.
9. Moscow Times: Jonas Bernstein, PARTY LINES: Yeltsin Carves Away Power

10. Kate MALLINSON: Health Reform in the Former Soviet Union.
11. Carnegie Moscow Center's Briefing Paper: Nikolai Petrov, Russia's
Regions or Regions' Russia? Prospective Realignment of the Nation's Political Subdivisions.

12. Itar-Tass: Gerashchenko Denies Plans to Ban Dollar in Russia. 
13. Itar-Tass: Russia Aims for 'Civilized' Development of Market.
14. Interfax: Russian Foreign Debt Will Cost $10 Billion Annually.
15. Itar-Tass: Russian Domestic Debt Runs at 500,000 Million Rubles.
16. Rep. Curt Weldon: Congressional Delegation Heading to Vienna to Discuss 
Kosovo Situation with Russian Officials.

17. The Economist: A temporary bail-out for Russia. Promises, promises.
18. Reuters: Russian stats agency sees 1999 inflation 40-50 pct.
19. Mayak Radio Network: Interview with Yavlinsky on Yugoslav war.
20. Interfax: Russian Analyst: Russia To Respond to New NATO Concept. 
(Sergei Karaganov)] 


Russia Wants Nuclear Arms Upgrade 
By Nick Wadhams
April 29, 1999

MOSCOW (AP) -- President Boris Yeltsin and the country's top security
officials sought ways today to maintain and upgrade Russia's nuclear
arsenals despite the country's lack of money. 

After Yeltsin's meeting with his Security Council, council secretary
Vladimir Putin said Russia would move ahead ``in the sensitive sphere'' of
testing nuclear arsenals while honoring international agreements. 

Yeltsin told the council that nuclear forces remain the ``key element'' in
Russia's military might, stressing that Russia must keep a sufficient
number of nuclear weapons to guarantee its security. 

With its conventional forces in sharp decline, the country has become
increasingly reliant on its nuclear forces as a deterrent. 

Last fall, Russia carried out a series of five sub-critical nuclear tests
at an Arctic test range, intended to modernize components in its aging
nuclear weapons. 

The tests didn't violate the international Comprehensive Test Ban Treaty
because the amount of radioactive plutonium used was too small to create a
nuclear explosion, officials said. 

Critics, however, contend that even limited tests could encourage other
countries to conduct full-scale nuclear tests. 

Russian officials insist such tests are crucial to ensure safety of
Russia's nuclear weapons and modernize them, replacing some mechanical and
electronic components with more advanced ones. 

Yeltsin didn't mention the START II arms reduction treaty with the United
States in his opening remarks to the council. The U.S. Senate ratified the
treaty in 1996, but the Russian parliament has yet to act. 

The NATO raids against Yugoslavia have drawn the outrage of Russian
legislators, and there is virtually no chance they will take action on the
treaty until after the conflict is settled. 

Meanwhile, one Russian lawmaker said Moscow's nuclear strategy should allow
for the possibility of launching a pre-emptive strike. 

``We must definitely include a provision in our doctrine to the effect that
Russia reserves the right to deliver a first or a pre-emptive nuclear
strike,'' said Roman Popkovich, chairman of the defense committee in
parliament's lower house. 


Date: Fri, 30 Apr 1999
From: Sergei Rogov <>
Subject: Re: Yugoslavia settlement

Dear David,
Here is an article which I sent to the Washington Post, which provides for a
compromise solution, allowing the UN to take charge, while both Clinton and
Miloshevich claim a victory.
I hope this article may be of interest to you and your readers.
Warm regards,
Sergey Rogov

By Sergey Rogov
Sergey Rogov is Director of the Institute of USA and Canada of the Russian
Academy of Sciences

Regrettably, the world has failed to create a new system of international
security on a global and regional level after the end of the Cold War.
Instead of "the end of history," predicted by Fukuyama, we see the
resumption of historic territorial and ethnic conflicts. The situation in
Kosovo is not something extraordinary. Globalization of the world economy
challenged many traditional functions of the state and made it particularly
vulnerable for ethnic separatism. In many places the right for
self-determination clashes with the principle of territorial integrity of a
sovereign state, often leading to ethnic cleansing. This does not justify
what the Yugoslav leadership did in Kosovo. But the United States did not
launch missile attacks against Israel for evicting Palestinians or against
Turkey for crushing the Kurds. The war in Chechnya was not waged by Russia
in white gloves either.

A double standard in dealing with similar situations is inadmissible. The
world community will eventually develop new norms of the international law
in relation with this problem. But such significant changes in the
international legal system cannot be imposed by unilateral use of force.
However, NATO adopted a new strategic concept, which goes beyond its
original collective defense function and makes this military alliance a
self-appointed international policeman. The United States and its allies
concluded that the overwhelming military superiority allows to circumvent
the UN Security Council, and started to act like Bolsheviks, who also
claimed that the aim justifies the means. 

In Yugoslavia the West went beyond the framework of the international law.
The leaders of the US and NATO have made a gross blander. Easy victory did
not happen. The West might decide to escalate the conflict, like in Vietnam. 

The war in Yugoslavia has become a catalyst of the most acute crisis between
Russia and the West since the end of the Cold War. Meanwhile Moscow is at
end of a political cycle that brought little success in transition to market
economy and political democracy. NATO's actions, which produced a strong
anti-Western backlash in Russia, help those who want to return back to the
traditional pattern of authoritarianism and xenophobia. This can lead to a
new protracted geopolitical confrontation.

Can the disaster be avoided? Only if all parties involved can find an
acceptable compromise, allowing them to claim "victory". 

What are the possible terms for the settlement of the conflict in Kosovo?

First, Kosovo should receive a political autonomy within the sovereign

Second, all military actions must be stopped immediately.

Third, Yugoslavian troops (except borderguards and police) must withdraw
from Kosovo.

Fourth, it is necessary to launch an international peace-enforcement

Fifth, all refugees must be allowed to return home.

There are no fundamental differences on these key issues between Russia and
NATO. The situation will change only if the US and its allies recognize
Kosovo's independence or establish "an international protectorate" there.

However, the West demands that NATO should run the international security
force. Neither Yugoslavia nor Russia will accept the substitution of the
United Nations by NATO. Only the Security Council in accordance with the UN
Charter can take "action by air, sea, or land forces as may be necessary to
maintain or restore international peace and security" (Article 42). Thus the
Security Council should adopt a resolution, which, apart from the above
mentioned points, must authorize the permanent members to organize a peace
enforcement operation in the Balkans according to Chapter VII of the UN
Charter. In this way, for the first time in history, the Security Council
will start a peace enforcement operation and not a typical peace keeping
operation, which the UN has been engaged in up till now. 

Political control over this operation must be in the hands of a special body
composed of representatives of P5, as well as the OSCE and the European
Union. The UN Peace Enforcement Unified Command in Balkans shall be under
control of this body. The operation should be conducted in 3 sectors on the
territory of Albania, Yugoslavia (Kosovo), and Macedonia.

The peace enforcement misson on the territory of Kosovo (Sector "A"), with
the permission of the Yugoslavian government, will be implemented by troops
of Russia, Ukraine, Islamic CIS countries, Scandinavian states and other
countries, including some members of NATO (for example, 3 new members of the
alliance, who took no direct participation in the war, maybe Greece, Spain,
Portugal). This group will replace the withdrawing Yugoslavian army, and
should assume responsibility for maintaining peace in Kosovo, while
providing conditions for the return of refugees and preventing harm by
Serbian paramilitary groups to the returning civilians. A Russian
representative could be the commander of this Sector.

The Security Council can agree that NATO is the core of the peace
enforcement in Sector "B" (Albania) and Sector "C" (Macedonia), relying on
NATO troops, already deployed there at the request of the governments of
these states. Command and logistical support of these sectors will remain in
NATO's hands, but under the umbrella of the UN Peace Enforcement Unified
Command. Among their peace enforcement duties will be prevention of armed
units of the KLA from penetrating the Yugoslavian territory. 

Because of the enormous destruction of Kosovo, the immediate return of the
refugees to their homeland is hardly possible and the process of
repatriation will stretch to 6-12 months, until minimal conditions for
civilians are created.

Naturally, implementation of this plan will run into many difficulties,
because peace will not be restored instantly after this bloodshed. But the
only alternative is a horizontal and vertical escalation of the conflict.

Apparently it will be impossible to prevent some terrorist activities in
Kosovo from both sides. But a large-scale war will be prevented, and a new
long-term strife between Russia and the West averted. Thus, we shall enter
the Y2K with an effective international mechanism of peace enforcement,
based on the UN Charter.


Skuratov Said To Be Able To Incriminate Yeltsin Aides 

Argumenty i Fakty, No. 99
April 1999
(signed to press 27 Apr 99)
[translation for personal use only]
unattributed report from 
the "Rumours" column: "Hot Twenty"--passages within slantlines are 
published in boldface] 

One can state with a great degree of confidence 
that [Prosecutor-General] //Yuriy Skuratov// will continue to enjoy the 
support of his namesake //Yuriy Luzhkov//. The point is that, according 
to some sources, the disgraced prosecutor handed over to the mayor a 
political weapon of an unprecedented killing power: documents and other 
materials which allow one to launch straightaway criminal cases against 
//20 former and current comrades-in-arms of Yeltsin//, many of whom dream 
of continuing their political careers. 

If, backed by Luzhkov, Skuratov does what he should do in accordance 
with the law, those 20 officials will have to forget about becoming a 
president or a deputy. 


From: "Fred Weir" <>
Date: Fri, 30 Apr 1999 00:58:06 +0400
Subject: Diplomatic solution to war in Yugoslavia

By Fred Weir
MOSCOW (CP) -- A diplomatic solution to the war in Yugoslavia is
possible with a few compromises on all sides, Canadian Foreign Affairs
Minister Lloyd Axworthy said after meeting his Russian counterpart and
United Nations Secretary General Kofi Annan in Moscow Thursday.
``We'll need to do some shaving at the edges to see how we can match
things up, but we're a whole lot further ahead (on finding a diplomatic
formula to end the war) than we were a week ago,'' Axworthy said.
``Now we're moving into a phase where we need to define what it will
take to make it work. That will take some time''.
Axworthy held a four-way meeting Thursday with Russian Foreign Minister
Igor Ivanov, Greek Foreign Minister George Papandreou and Kofi Annan. Ivanov
briefed them on a new peace plan that Russia is ready to try to convince
Yugoslav leader Slobodan Milosevic to accept.
On Friday Axworthy said he will get down to practical details in a
one-on-one session with Ivanov.
The Russian plan calls for a halt in NATO's five week old bombing
campaign of Yugoslavia and a full withdrawal of Yugoslav forces from Kosovo,
followed by insertion of an international peacekeeping force under U.N.
``There is a very active engagement of the Russian government,''
Axworthy said. ``There is no doubt this is seen by them as a major
initiative and one they are actively committed to trying to make work''.
Moscow reacted to NATO's opening of hostilities with harsh condemnation,
but has since moderated its rhetoric and stressed Russia's credentials as a
mediator that can deal with both sides.
The Kremlin's special envoy on the Balkan crisis, former prime minister
Viktor Chernomyrdin, will be in Belgrade Friday to present the Russian
concept to Milosevic.
Several top NATO diplomats have passed through Moscow in the past week,
and Chernomyrdin has been shuttling between Moscow, several European
capitals and Belgrade.
``There wouldn't be this increased level of diplomatic activity if there
wasn't a sense that there was room for manouver,'' Axworthy said. ``If it
was simply a total blank wall, then we'd just continue our air campaign
(against Yugoslavia) and take it to its end result''.
A key condition for Russia is that the U.N. Security Council -- which
was by-passed by NATO -- be given a leading role in any resolution of the
``The stakes are very high now not only for the Balkans and Europe, but
for the entire world,'' President Boris Yeltsin told Kofi Annan in a Kremlin
meeting Thursday.
``Either law will be restored, or lawlessness and the unlimited force of
one country will rule the world,'' he said in an obvious reference to the
Axworthy said the problems of coordinating a NATO bombing halt with a
pullout of Serbian forces from Kosovo are solvable in principle.
``Quite clearly if you're going to have Serb troops withdrawing in a
substantial way you can't undertake a bombing campaign,'' he said.
The major sticking point remains the nature of the international force
that would go into Kosovo to enforce a negotiated settlement.
The Russians appear to accept the Yugoslav argument that a NATO force
would look too much like a victorious army of occupation. Belgrade has said
it might accept a civilian monitoring force with participation from non-NATO
countries like Russia, India, Algeria and Argentina.
Axworthy said NATO would be willing to accept a broader international
participation in the force, but that it must be armed and have a NATO core.
``There would have to be a pretty high level of security,'' he said.
``Not only to provide stability for within Kosovo for refugees to return to
their homes, but also because there would have to be an effort to disarm the
(Albanian separatist rebel) KLA. It works both ways''.
If the composition of the peacekeeping force can be agreed with Russia,
he said, it would be possible to get the U.N. Security Council to adopt an
enabling resolution.
As a permanent member of the Security Council, Russia could veto any
measure it deemed unacceptable.
``We think there has to be a clear role for the Security Council in
this,'' Axworthy said. ``I don't think it is beyond our ingenuity to come up
with the right model''.
Thursday's meetings were only the ``first round'' in an ongoing
effort to bring the Russians fully into the search for peace, he added.
``No one's going to have a neatly tied up package within 24 hours. But
if we can find some elements of agreement, we can move on from that,'' he


IMF Russia cash to repay loans, won't reach Moscow

WASHINGTON, April 29 (Reuters) - New International Monetary Fund loan
payments to big borrower Russia will go straight to a Russian account at
the IMF so it can be used to repay old debt, according to the unusual terms
of Wednesday's deal.

An IMF spokeswoman said on Thursday that the Russian government would ask
the fund to transfer a payment -- denominated in the fund's Special Drawing
Rights quasi currency -- directly to Russia's own account at the IMF rather
than paying dollars to the Russian Central Bank.

``Since this is the account from which they make all repayments to the IMF,
this will avoid the need to transfer the money to other accounts and
transfer it back again,'' she said.

The unusual agreement seems designed partly to simplify Russia's repayments
to the IMF and partly to ensure that money from the planned $4.5 billion
loan will not be misused.

The loan, if approved, will be the latest in a series of multi-billion
dollar credits to Russia. Previous deals aimed to fund a package of
reforms; this loan will only be used to help repay maturing debt.

``All the external assistance Russia will receive this year -- and forever
-- is intended to finance debt repayments,'' said one monetary source.
``Since these loan amounts are anyway supposed to be repaid to the IMF
itself, there is no need to carry out additional transactions.''

The IMF normally transfers loan disbursements to a recipient's central bank
or to another central bank of the country's choice. The money is paid in
dollars, or another strong and convertible currency.

Russia is due to receive $3 billion from the $4.5 billion loan in the first
12 months after the deal is signed -- helping to repay $4.8 billion Russia
owes the IMF this year.

But the fund is far from setting even a preliminary date for its board to
finalize the deal, and it is waiting for the Russian government to push new
laws through parliament, clarify some fiscal issues and explain the fate of
previous IMF cash.

The IMF has long been worried about reports that the Russian authorities
distributed some IMF money through an offshore company based in Britain's
Channel Islands tax haven. A report from auditors PricewaterhouseCoopers is
due to be released next month. 


Russian Duma may resist laws sought by IMF - deputy

MOSCOW, April 29 (Reuters) - Russia's government faces a tough task winning 
parliamentary approval for laws which the International Monetary Fund wants 
passed as a condition for releasing new loans, a senior parlamentarian said 
on Thursday. 

"I think the government will have to make a colossal effort to persuade 
deputies to increase excises and to give up demands to cut value added tax 
(VAT)," Alexander Zhukov, the head of the lower house of parliament's budget 
committee, said in a television interview. 

The IMF said on Wednesday it would approve the release of a $4.5 billion 
credit only after Russia had approved a number of laws which would boost 
government revenues and help restructure the country's battered banking 

The laws, intended to pour more money into state coffers, include an increase 
in excise duties for petrol and alcohol. 

Zhukov said the law would meet particulalry strong opposition in the 
Communist-led State Duma, the lower house, because a parliamentary election 
is due in December. 

"Such things are highly unpopular in an election year. They are approved with 
much difficulty," he said. 

Zhukov said the government had not yet presented the necessary bills to the 
Duma or decided by how much to raise the excises. 

He said the money resulting from implementation of the laws would be used for 
social spending and to increase the primary budget surplus, which excludes 
debt payments. 

Another bill which the IMF wants approved is a banking law, which Zhukov said 
outlines how the state-owned agency for bank restructuring would manage 
stakes in banks it would help. He said the draft was too complicated to be 
passed quickly. 

The IMF also wants Russia to keep value added tax unchanged at the rate of 20 
percent, at least until January 1. Parliament approved cutting it to 15 
percent from July 1, but President Boris Yeltsin vetoed the move. 


Court of Auditors To Look Into Use of IMF Credit 

MOSCOW, April 28 (Itar-Tass) - At the request of 
the Office of the Russian Procurator-General, the Court of Auditors is 
going to make a more detailed check into the use of part of funds from 
the first tranche of the latest credit of the International Monetary Fund 
(IMF) -- 4.8 billion dollars, on deposits in US banks, Auditor Eleonora 
Mitrofanova told a news conference on Wednesday [28 April]. 

She said the Court of Auditors had already verified the use of the 
credit of 4.8 billion dollars. Part of this sum, one billion, was 
transferred to the Finance Ministry to be used for state needs with the 
IMF permission. The Central Bank used about two billion dollars to shore 
up the rouble in the domestic currency market. 

The remaining funds, around 1.5 billion dollars, were placed on deposits 
in US banks as foreign currency reserves of the Central Bank and invested 
in securities in the United States. 

Mitrofanova said that auditors are now investigating whether these funds have 
been included in the foreign currency reserves of the Central Bank (Bank 
of Russia). 

She said the information circulated by Duma deputy Viktor Ilyukhin about 
the possibility of misusing the credit is "too exaggerated and has 
nothing to do with reality". 


Communists Expect Primakov To Be Fired in Late May 

MOSCOW, April 28 (Interfax) -- The Cabinet 
reshuffle carried out by Russian President Boris Yeltsin on Tuesday may 
continue shortly, and the entire Cabinet Russian Prime Minister Yevgeny 
Primakov could be dismissed, probably by the end of May, Valentin 
Kuptsov, the Communist Party second-in-command, told Interfax Wednesday. 

By promoting Sergei Stepashin to deputy prime minister while retaining 
him as interior minister, and by appointing Federal Security Service 
Director Vladimir Putin to also be secretary of the Russian Security 
Council, Yeltsin "has shown his firm intention to consolidate the 
power-wielding component of the presidential office," he said. This may 
signify "preparations for whatever extraordinary action the president may 
take, in particular the imposition of emergency rule and dismissal of the 
Cabinet," Kuptsov said. 

The very intensive talks Yeltsin held Tuesday with certain ministers and 
governors also suggest this, he said. Yeltsin could have offered the 
position of deputy prime minister in charge of ties with the regions to 
Samara regional Governor Konstantin Titov who "could be very useful in 
this position," Kuptsov said. If this offer was indeed made, Titov 
rejected it "because he had set his eyes on the premiership rather than 
because he wants to focus on the formation of the Voice of Russia bloc," 
he said. Kuptsov does not think that Railway Minister Nikolai Aksyonenko, 
whom Yeltsin also consulted on Tuesday, would be appointed prime minister 
or deputy prime minister. "Rather, the president wanted to know what he 
thought about the activities of the inner Cabinet and will probably 
continue sounding out the Cabinet members loyal to him," he said. 

Kuptsov rejected allegations that Russian Deputy Prime Minister Yuri 
Maslyukov had failed in his talks with the IMF in Washington. Those talks 
are still underway, he said. Maslyukov "is promoting the interests of the 
state rather than his own interests in these talks, but the United States 
and G-7 pursue a different agenda and so are doing their best to keep the 
pace of the talks slow," Kuptsov said. The Communist Party leaders may 
decide to recall Maslyukov from the Cabinet, he said. This will happen 
"if we see that the Cabinet reshuffles are aimed at a radical departure 
from the present pragmatic course of protecting the national interests in 
favor of a resumption of a course of pseudo-democratic reforms," Kuptsov 

If the Primakov Cabinet "is dismissed or forced to resign," former 
Russian Prime Minister Viktor Chernomyrdin, Moscow Mayor Yuri Luzhkov, 
Chairman of the Federation Council Yegor Stroyev and Unified Energy 
Systems CEO Anatoly Chubais, in addition to Stepashin, would be the most 
likely candidates for the post of prime minister, he said. However, 
Luzhkov and Stroyev would most likely reject the offer, the Duma would 
never approve Chernomyrdin or Chubais, and Stepashin's chances are "very 
problematic," Kuptsov said. 


Moscow Times
April 30, 1999 
PARTY LINES: Yeltsin Carves Away Power From Premier 
By Jonas Bernstein 

Salami tactics, death by a thousand cuts Call it what you want, but
Yeltsin's strategy in solving his Primakov problem now seems clear. 

After his defeat at the hands of the Federation Council over the
prosecutor general, Yeltsin, who is not known for taking such
insubordination lightly, could have gone nuclear f meaning everything from
sacking the prime minister or his two leftist deputies to imposing
emergency rule. Instead, he simply sacked that other deputy prime minister,
Vadim Gustov. It seemed a surprisingly moderate move, given that Gustov's
existence, much less his firing, was news to many. 

There was, of course, more to the firing than met the eye: The crafty
Russian head of state put his loyal policeman, Interior Minister Sergei
Stepashin, in Gustov's place. In doing so, Yeltsin positioned himself to
take full advantage of the Russian Federation law on government. This law
states that if a Cabinet head is fired or resigns, the president may name
an acting premier from among the deputy prime ministers, and this acting
premier can serve for two months without the State Duma's confirmation. 

Now Yeltsin can fire either Yury Maslyukov or Gennady Kulik f who
represent the Communist and Agrarian parties, respectively f and hope that
Primakov makes good on his promise to quit if these beloved deputies are
removed. If Primakov obliges, or Yeltsin helps him along, Stepashin can
step in and run the government through mid-summer. When the two months have
passed, Yeltsin can put up either Stepashin or someone else, perhaps
Yabloko leader Grigory Yavlinsky, for confirmation. In the likely event the
Duma rejects this candidate three times, Yeltsin must, constitutionally,
dissolve the Duma and hold new elections three months later, so that a new
legislature can be seated within four months. 

This would mean that Yeltsin could have his man in place through October
or November f that is, within a month or two of the officially scheduled
Duma elections. It would also give him three or four months of blessed
relief from the Duma's insolent bleating about impeachment, as well as time
to figure out what to do next. 

What would be next? If, by this time, Yeltsin has got himself back in the
West's good graces by populating the Cabinet with energetic young reformers
and providing a face-saving exit from the Yugoslav morass for U.S.
President Bill Clinton and other NATO leaders, he might feel confident
enough to consider a radical quid pro quo or two. One might be a finding by
Russia's learned justices that the activities of the Communist Party of
the Russian Federation violate Russia's Constitution, threaten democracy,
et cetera. 

Another possibility is a union with Belarus. While this week's visit by
Alexander Lukashenko did not bring about the bonding the Belarus strongman
longs for, the Kremlin's reticence is probably more tactical than
strategic. Indeed, while Kremlin officials said they envision a looser
confederation between the two states, some stressed that the merger could
deepen later on. "Later" means, perhaps, when Yeltsin is ready to jump from
the Russian presidency to the union leadership, taking with him, as
Slobodan Milosevic did in Yugoslavia, all the real power and authority. 

Yeltsin is often admired for his skills in political gamesmanship. It's
not hard to be good, however, when you've written the rules. 


Date: Thu, 29 Apr 1999
From: (Kate MALLINSON) 
Subject: Health Reform in the Former Soviet Union

I would like to introduce myself as a researcher for Medecins Sans 
Frontieres, based in London. I am researching health reform in the 
Former Soviet Union, focusing on the following three areas: HIV/AIDS; 
TB; Mental Health (including prisons and institutions).

I would like to find out which NGO's and agencies are working in each 
of the above areas and who is financing the operations. I am also 
interested in finding out what reforms have been implemented in the 
above areas and the outcome of these reforms. I would be very 
grateful for any press cuttings or first hand experience.

Please send me any information to the following e-mail address:

Thank you in advance for your help.


Date: Thu, 29 Apr 1999 
From: KatyaSh@CARNEGIE.RU 
Subject: Carnegie Moscow Center's Briefing Paper

Dear David:

Carnegie Moscow Center's new briefing paper "Russia's Regions or Regions'
Russia? Prospective Realignment of the Nation's Political Subdivisions" by
Nikolai Petrov has been posted on the Web at

Katya Shirley
CMC Assistant Director for Communications


Gerashchenko Denies Plans to Ban Dollar in Russia. 

WASHINGTON, April 27 (Itar-Tass) - Chariamn of the 
Central Bank of Russia Viktor Gerashchenko told journalists here that the 
U.S. dollar should and would remain in circulation in Russia. He is 
attending a regular session of senior executives of the International 
Monetary Fund (IMF) and the World Bank. 

According to Gerashchenko, "all those inventions about a possible
of artificially fixed exchange rate, or about buying dollars from the 
population and banning their sale to private individuals, are the result 
of a provocative way of thinking of some of our economists, our present 
or future colleagues." 

The task is entirely different: to draw the dollars kept by the 
population into civilised normal circulation, the Central Bank chairman 
believes. "I understand that this is a matter of time. If one wishes to 
deposit the money in a bank, the problem arises what bank to choose. 
Sberbank is now coping with the problem, but the interest rates, which 
were offered to clients by commercial banks, looked more attractive for 
them," Gerashchenko continued. 

He called attention to the fact that much money is kept abroad. Part of 
it came back to the Russian economy "under the cover or the mask of this 
or that foreign company," he continued. In view of this task, it would be 
just silly to impose restrictions. "This is not our theory, this is not 
our approach," Gerashchenko believes. 


Russia Aims for 'Civilized' Development of Market 

SEOUL, April 27 (Itar-Tass) - The Russian 
government and parliament members target at optimum conditions for a 
civilized development of the market economy, Speaker Gennady Seleznyov of 
the State Duma told South Korean Minister of Foreign Affairs and Foreign 
Trade Hong Sun-yong on Tuesday. 

So far, Russia "has a bazaar economy, not a market one," Seleznyov 
remarked. The biggest problem is corruption, bribe- taking and a high 
crime rate "whose eradication shall be a priority task of the government 
and parliament deputies," he said. "Foreign investors will come to us 
only after they make sure that it is possible to have a civilized 
business with Russia," Seleznyov noted.


Russian Foreign Debt Will Cost $10 Billion Annually 

MOSCOW, April 27 (Interfax-FIA) -- Russia will 
have to pay more than $10 billion annually on its foreign debt in the 
next few years, and payments could reach $15 billion - $17 billion in 
certain years, Vnesheconombank Chairman Andrei Kostin said Tuesday at a 
conference on the restructuring of the financial system. Russia will have 
to pay $212 billion on its $147 billion foreign debt and MinFin bonds by 
the year 2020, he said. "This is the true size of Russia's foreign debt 
with adjustments for the time of payment," Kostin said. The country's 
foreign debt has increased by 52% since Russia assumed the former Soviet 
debt in 1992, he said. This is largely because reliable channels for 
securing direct foreign investment were not created after the Soviet 
Union was dissolved. Kostin said that judging by the current state of the 
balance of payments, poor tax collection, and the fact that actual 
foreign debt payments through Vnesheconombank from 1992 to 1998 were less 
than $6 billion a year, Russia's budget will not be able to cover the 
$17.5 billion due this year, which includes $9.5 billion in Soviet era 
debt. Russia will have to negotiate a global restructuring of Soviet era 
debt to put payments on a level that the Russian economy can 
realistically handle, Kostin said. 


Russian Domestic Debt Runs at 500,000 Million Rubles 

MOSCOW, April 28 (Itar-Tass) - The Russian 
Federation's domestic debt as of now runs at 500,000 million roubles, 
Bella Zlatkis, director of the Russian Finance Ministry's department for 
state domestic debt management, told a PRIME-TASS-organised seminar on a 
"procedure for the holding of foreign-exchange currency auctions and the 
conduct of authorised banks' transactions on accounts of S-type". 

Zlatkis said that, at present, considering the rate of the rouble, the 
external debt amounts to about 138.5 percent of GDP and that "this 
situation is much harder than that concerning the domestic debt". 
According to estimates, PRIME-TASS reports, the domestic debt is to amount to 
about 350,000 million roubles, or 5 percent of GDP, by the end of the 
year 2002. 

However, Zlatkis is of the opinion that "this hardly corresponds to the 
country's macro-economic position" and that "this will not be the case, 
most probably". 


Date: Thu, 29 Apr 1999 
From: "Erin Coyle" <> [Rep. Weldon's office]
Subject: Congress-Duma talks

Congressional Delegation Heading to Vienna to Discuss Kosovo Situation with
Russian Officials

WASHINGTON, DC -- Congressman Curt Weldon will lead a delegation of Members
of Congress departing today for Vienna, Austria to discuss the current
situation in Kosovo with Members of the Russian Duma. The delegation will
discuss possible ways to resolve the Kosovo crisis, as well as the current
state of U.S.-Russian relations.

The Weldon Delegation, authorized by the House Armed Services Committee,
is currently scheduled to depart this evening for Vienna. Congressman
Weldon has a close relationship with many Russian officials and serves as
Co-Chairman of the U.S. Congress-Russian Duma Study Group, an
interparliamentary exchange organization. Weldon also serves as Chairman of
the House Armed Services Committee's Research and Development Subcommittee.

Weldon was approached two weeks ago by Members of the Russian Duma who
requested that he work with them to discuss possible ways to resolve the
crisis in Kosovo that both the United States and Russia could agree to.
Weldon was asked by Russian officials to travel with them last weekend to
Belgrade to meet with Slobodan Milosevic and visit the three American POWs
being held by the Serbs. 

"We need to be engaging Russia on Kosovo," stated Congressman Weldon. "If
we can convince the Russians to put increased pressure on Milosevic to come
to the table and accept NATO demands, we may be able to avoid the loss of
american lives that would result from sending in ground troops. The
Russians are a resource that we need to be taking full advatage of."

Members of Congress who have currently agreed to take part in the delegation
Rep. Curt Weldon (R-PA) Rep. Neil Abercrombie (D-HI)
Rep. Jim Gibbons (R-NV) Rep. Maurice Hinchey (D-NY)
Rep. Jim Saxton (R-NJ) Rep. Dennis Kucinich (D-OH)
Rep. Roscoe Bartlett (R-MD) Rep. Corrine Brown (D-FL)
Rep. Don Sherwood (R-PA) Rep. Bernie Sanders (I-VT)


The Economist
May 1, 1999
[for personal use only]
A temporary bail-out for Russia 
Promises, promises
M O S C O W 

BOTH sides can declare victory, of sorts. Russia has got the IMF to agree
in principle to provide $4.5 billion in new loans ($3 billion of it over
the next 12 months). The agreement, announced on April 28th, may in turn
unlock $3 billion in loans from Japan and the World Bank, and give a basis
for rescheduling other debts. So Russia should not fall further into
bankruptcy before its forthcoming elections (parliamentary in December,
presidential next year). 

The IMF can also claim a success. It has haggled the amount down, to less
than Russia is due to repay the Fund this year. And before any money is
paid out, Russia has agreed to explain what happened to previous credits,
and why it used an odd offshore company to manage the central-bank
reserves. It has also promised a new economic programme, involving changes
in the tax code and tough reform of the banking system. 

Theres the rub: Russian government promises. Cynics at the IMF and
elsewhere can be forgiven a bout of nostalgia. Every IMF programme has
involved earnest commitments to improve public finances; all have, sooner
or later, been breached amid handwringing about huge, unforeseen
difficulties and political problems. 

The big question about this weeks deal is to what extent the outstanding
questions will be fudged in the coming months. It is quite likely that the
explanations of dubious conduct will blandly find no evidence of any
wrongdoing (or, if there is, that the blame lies with the previous
administration); it is also quite possible that Russia's rulers will fail
to push the requisite new laws through parliament, and that any fiscal
targets will be missed. 

In that case, Russias declining reserves and impending spike in debt
payments would give the West a chance to put the heat onif it wanted to.
But on past form that looks unlikelya few presidential decrees and some
much-advertised signs of progress usually do the trick. 

So Russia may well be let off the hook yet againpartly, perhaps, because of
Yugoslavia, and partly because elections are coming. The next lot of
politicians will no doubt be forgiven because they are new, or because
their country has lots of nuclear weapons. In short: business as usual, and
every reason for Russians to disbelieve anything the West tells them about
the need to run their country properly. 


Russian stats agency sees 1999 inflation 40-50 pct

MOSCOW, April 29 (Reuters) - Russia's State Statistics Committee expects 1999 
consumer prices to rise by 40 to 50 percent and to edge up 2.8 to 3.0 percent 
in April, the acting chief of the agency said on Thursday. 

"Based on three weeks of April, it is already clear that inflation will be 
2.8-3.0 percent, and for the first four months, 19.5 percent," Vladimir 
Sokolin told a news conference, adding inflation for the entire year would be 
40-50 percent. 

"We may not know a number of factors of the scenario, such as whether Russia 
will receive the credit from the International Monetary Fund, but, by our 
estimates, that's the level it will be," Sokolin said. 

Prime-Tass news agency had quoted First Deputy Prime Minister Yuri Maslyukov 
predicting last week that April month-on-month inflation would be 4.0-4.2 
percent, against 2.8 percent in March, as the government cleaned up wage and 
pension arrears. 

Annual forecasts vary, with the budget assuming a 30 percent price rise but 
recent forecasts by officials generally closer to 50 percent. Economists 
generally forecast 50-100 percent. 

Pushed by the devaluation of the rouble last August, prices in 1998 shot up 
84.4 percent. 


Yavlinskiy: Blames Milosevic for Crisis 

Mayak Radio Network
28 April 1999
[translation for personal use only]
>From the "Point of View" program 

[Presenter of "Point of View" programme] Grigoriy 
Yavlinskiy: a view of the current situation. Grigoriy Alekseyevich, the 
Duma has approved the idea of a union of Russia and Yugoslavia. 
[Begin Yavlinskiy recording] Given the current circumstances, I would 
describe this as a manifestation of political impetuosity. Everyone knows 
that this is just for show, but for some reason, not everyone is aware 
that constant provocative actions, including in the Duma, could sooner or 
later simply result in a major catastrophe. What is interesting here is 
the absence of any point - there isn't going to be any such union. But it 
also demonstrates very well the level of professionalism, responsibility 
and honesty of those who call themselves today the Communist Party, 
left-wing factions and left-wing parties. There is simply no difference 
whatsoever between them and, say, [Liberal Democratic Party leader 
Vladimir] Zhirinovskiy - a deliberate hothead. These are people who are 
prepared to fight right down to the last Russian soldier. These are 
people who have never personally witnessed the real horrors of war and so 
they don't really understand what war means for others. If they really 
wanted to fight, they could take their rifles and go and fight, but no, 
they send others there. That people can seriously debate today the 
problem of Russia joining an union with a country that is at war is just 
about as absurd as one can get. 
Yabloko is opposed to any manifestations of political impetuosity . Of 
course we unconditionally condemn the NATO bombardment of Yugoslavia. But 
the worst thing that Russia could do now would be to answer lunacy with 
lunacy. The proposal that Yugoslavia join the Union of Belarus and Russia 
not only pushes Russia towards war. For the first time in history it 
opens up the possibility of a real military confrontation between the 
leading nuclear states. 
By stating Yugoslavia's readiness to join the union, President 
Milosevic and the Yugoslav parliament are provoking Russia into a 
confrontation not only with the West, but also with the whole Muslim 
world. The most immediate consequences of that step could be the 
disintegration of the CIS, Russia's complete isolation in the world, and 
ultimately the disintegration of Russia as such. Another consequence of 
the feverish activity to create a new state [union of three states] would 
be Russia's inability to fulfil the role of mediator in settling the 
conflict. Today both sides are, roughly to the same extent, calling on us 
to help, to do something. In the future we won't be able to do that, and 
that would result in the loss of one of our country's most important 
diplomatic advantages. 
I would especially like to say that we reject the practice of 
discussing vitally important political problems under a system of 
political horse-trading. We cannot accept suggestions like dropping the 
impeachment in exchange for a union of Slav states. This kind of 
bargaining style in the dialogue between the branches of power testifies 
to the profound degradation of all state institutions in Russia. We 
believe, on the contrary, that Russia should increase its diplomatic 
activity towards a peaceful settlement of the Balkan conflict and also 
focus its efforts on tackling domestic economic problems. Nobody is going 
to listen to a weak country, no matter what belligerent statements it 
I would also like to say that it is our view that Russia should not be 
drawn into the war. Do we have any proposals on settling the conflict? 
Yes, but they all start with a cessation of the bombardment. A cessation 
of the bombardment can only be achieved if all countries voice the same 
position with regard to Milosevic. The task of our diplomacy is to work 
out how to achieve that. Whether it is going to do this fully [changes 
tack] - if we love Yugoslavia so much, if we love Milosevic so much, then 
we should have drawn up a peace plan. But when things reached the 
critical point, no such peace plan appeared. 
Here we need to explain the facts of the matter. Ten years ago, Milosevic 
deprived Kosovo of autonomy. Of course, depriving Kosovo of autonomy 
resulted in the rise of separatist movements there, striving to separate 
Kosovo from Yugoslavia. Then Milosevic thought up the following: he 
decided simply to expel everyone but to keep the territory. This was the 
case with Bosnia and other territories as well. And the genocide began 
and people, threatened with death, were forced out to live elsewhere. But 
Europe doesn't have any free space. And these people left to live in 
other countries. For example, Germany took in over 400,000 refugees from 
N ow we are talking about 1,000,200 from Kosovo. No country wants to take 
them in. Why don't ordinary people want this? Because they don't want to 
have to share literally everything - work, pay, housing, medicine, food, 
everything - with the refugees from Kosovo. People don't want to do this. 
For 10 years, they tried to persuade Milosevic to stop pursuing this 
policy that was forcing people to go and live in other countries. But he 
continued with increasing toughness to force people out of the country. 
And we have ended up with the bombing. This bombing has resulted in an 
even steeper increase in the number of refugees and a real human 
catastrophe. The bombing has not only not helped, it has made the whole 
situation even worse. That is what is happening there now. [end 
[Presenter] That was Grigoriy Yavlinskiy's point of view on the current 


Russian Analyst: Russia To Respond to New NATO Concept 

MOSCOW, April 28 (Interfax) -- Russia will 
undoubtedly adopt countermeasures in the wake of the NATO adoption of its 
new strategic concept, Chairman of the nongovernmental Council for 
Foreign and Defense Policies Sergei Karaganov said at a press conference 
Wednesday. Russia will have to rework both its foreign policy and 
military doctrine, Karaganov said. Russia may end its partnership 
relations with NATO and resort to deterrence, it may revise its 
arms-trade policy, its attitude toward unions and relations with those 
CIS countries "that in effect chose NATO," he said. 

Deputy Chairman of the Duma Defense Committee Alexei Arbatov said that 
Russia should review the origins of threats to its security. 

"Unfortunately, not only local conflicts on southern borders pose 
threats," participants of the press conference said. Russia must prepare 
to repel attacks against its allies, similar to the attack on Yugoslavia, 
they said. Russia should adjust its concept for the use of its nuclear 
arms, including for deterrence purposes. Russia must also increase its 
defense spending, "or we will not be able to counter NATO," they said. "A 
draft law for raising military spending by 10 billion rubles has been 
submitted, Arbatov said. If the law is passed, the money will finance 
"urgent army needs." Wages would be paid to servicemen, their housing and 
social needs would be met, and scientific, research and design projects 
would be financed, he said. It will rectify the situation in the armed 
forces, he said. 



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