May 6, 1999    
This Date's Issues: 3271 •3272  • 

Johnson's Russia List
#3272
6 May 1999
davidjohnson@erols.com

[Note from David Johnon:
1. Reuters: Russia's Maslyukov sees Duma passing IMF measures.
2. Carnegie Moscow Center: Alan Rousso, The Current Situation in Russia: 
A View from Moscow.
3. Journal of Commerce: John Helmer, RUSSIA'S RAIL TSAR.
4. Rossiyskaya Gazeta: Saratov Governor Ayatskov on State Revival.
5. Moscow Times editorial: Post Panic, A New Test For Ruble.
6. Moscow Times: Igor Semenenko, $5.5Bln Spent Servicing Foreign Debt.
7. Rossiyskaya Gazeta: Russia's Balkan Mediation Provides 'Glimmer of Hope'
8. Reuters: Russia tells E. Europe - remember old friends.
9. Izvestia: Igor Sergeyev Offers Friendship to North European Armies.
10. Jamestown Foundation Monitor: YELTSIN: SPEAKING SOFTLY RATHER THAN 
WIELDING THE BIG STICK? and KREMLIN MAY REINFORCE ITS RANKS WITH YELTSIN 
LOYALISTS. 
11. Reuters: Russia Seen Benefiting As Oil Price Rises.
12. Moscow News: Lebed Rehearsing for Presidency.] 

*******

#1
Russia's Maslyukov sees Duma passing IMF measures

MOSCOW, May 6 (Reuters) - Russia's State Duma lower house of parliament
will probably pass a raft of legislative measures required by the
International Monetary Fund, First Deputy Prime Minister Yuri Maslyukov was
quoted on Thursday as saying. 

"Considering that the government enjoys the support of the Federal Assembly
(parliament), we have a chance of passing such laws," Maslyukov said in an
interview published in Kommersant, Russia's leading business daily. 

Last week, the IMF announced a new agreement to lend Russia $4.5 billion
over 18 months. 

As part of the deal, Russia promised to improve tax collection and
restructure the banking system, but it may prove difficult to secure the
Communist-dominated Duma's approval of other unpopular measures in an
election year. 

The laws, aimed at replenishing state coffers, include an increase in
excise duties for petrol and alcohol. 

Maslyukov, a Communist, said there was no alternative to an agreement with
the IMF. Russia needs this before it can launch official negotiations on
restructuring debts with the Paris and London Clubs of creditors. 

"We intend to show the State Duma and Federation Council (upper chamber)
that this is the right approach," Maslyukov said, adding that the IMF deal
had more pluses than minuses and that the government and parliament could
reach a compromise. 

"The price of the compromise is that we have found a solution to the
country's foreign debt problem for the next 18 months," he said. 

Economy Minister Andrei Shapovalyants, quoted by Interfax news agency, said
that if the government and Duma worked together in May and June, Russia
could receive the first tranche of IMF credits 10 or 12 days after they are
approved by the Fund's executive board. 

The IMF board planned to meet to approve Russia's loan package at the end
of June, Shapovalyants said. 

Both Maslyukov and Shapovalyants said this depended on prior implementation
of certain IMF conditions. 

*******

#2
Date: Wed, 5 May 1999
From: Alan@CARNEGIE.RU 
Subject: The Current Situation in Russia: A View from Moscow

The Current Situation in Russia: A View from Moscow
by Alan Rousso
Director, Carnegie Moscow Center

Though it was hardly recognized in much of the West, Russia has just
recently passed through a narrow strait of political upheaval only barely
averting another systemic crisis. The NATO air campaign in the Balkans has
predictably dominated foreign coverage of this region, leaving just enough
column space in the major Western news outlets for stories on Russian
opposition to the bombing, growing anti-Western sentiment, and the fate of
US-Russian relations. More attentive Russia watchers, particularly those
of us living in the region, have been riveted instead (and with some degree
of trepidation) to the domestic struggle for power among President Yeltsin,
his currently out-of-favor premier Yevgeny Primakov, the embattled head of
the General Prosecutor’s office Yuri Skuratov, and the upper and lower
houses of the Russian Parliament.

For several weeks Moscow has been abuzz with rumors of an impending purge,
extending either to the level of senior left-leaning ministers in the
current cabinet (Vice Premiers Yuri Maslyukov and Gennadi Kulik were most
frequently mentioned) or to Primakov himself. Yeltsin has shuffled his own
deck in the presidential administration with increasing frequency (to the
point where almost no loyalists are left to fill vacant posts), and,
insiders felt, it was only a matter of time before the antsy and relatively
hale Russian president decided to settle once and for all his mounting feud
with the prime minister. Whereas it had first been assumed that Yeltsin
was too weak politically to risk firing Primakov himself, more recent
speculation focused exclusively on that eventuality.

It is fairly well understood here that summarily dismissing the entire
Primakov government - which Yeltsin has the constitutional authority to do
and for which he would need to offer the parliament and the public only the
flimsiest of justifications - would place the administration in direct
confrontation with the lower house of parliament, the communist-controlled
Duma, and would likely result in a decision to dissolve that body as well.
The most likely scenario after such a devastating double-blow would be that
Yeltsin would declare a “state of emergency” and rule the country by decree
until new elections could be called and a new government formed. In the
interim, one of the president’s men (Chernomyrdin or Chubais, most likely)
would be tapped as interim Prime Minister. Yeltsin’s consultations with
the mayor of Moscow and presidential hopeful Yuri Luzhkov, whose support
would be critical in such a situation, as well as meetings with
representatives of the so-called “power ministries,” hinted that he might
be laying the groundwork for such a move. 

A complicating factor that increased the urgency of the situation, at least
from Yeltsin’s point of view, was the looming impeachment debate that was
to have been held on April 15 but that the Duma agreed to postpone until
May 12. At least one of the five counts of impeachment (the one blaming
the president for the protracted war in Chechnya) appeared likely to
receive enough votes to begin hearings. Accordingly, Yeltsin had to either
lobby effectively to assure that the vote would go his way (which seemed an
untenable goal, given his lack of currency with the parliament), or
pre-empt the vote by dissolving the Duma. Once the impeachment process
begins, Yeltsin is constitutionally barred from dissolving the Duma and
attempts to do so could easily erupt into a replay of 1993.

The situation came to a head in the middle of last week when the upper
house - the Federation Council made up of regional leaders - voted, for the
second time, to reject General Prosecutor Skuratov’s resignation. Given
Yeltsin’s considerable efforts to dismiss Skuratov as a result of the
Prosecutor’s probing inquiry into corruption and financial irregularities
inside the Kremlin, the Federation Council’s vote came as a severe blow to
the president. Yeltsin could have felt so threatened and cornered by the
Federation Council’s rebuke that he would react impetuously by dismissing
the Primakov government and dissolving the Duma simultaneously while
introducing a state of emergency. Alternatively, Yeltsin could realize
that he was isolated and that the support he would need from regional heads
(especially mayor Luzhkov, who abandoned him in the Federation Council
vote) to prevent his own impeachment and to keep the country together was
not forthcoming, thereby dictating that he accept a compromise. For a
tense forty-eight hour period, there was no indication which way the
pendulum would swing.

It would appear that the second course has prevailed, at least for now.
Press reports suggest that Federation Council leaders, spearheaded by
Luzhkov, have rallied to Primakov’s cause and insisted that Yeltsin stop
hounding the Prime Minister. In a related compromise, it looks like the
Federation Council will accept Skuratov’s resignation on a third vote and
Gennadi Ponomaryov (a Luzhkov ally) will be appointed in his place. The
“government of public trust” will continue to plod along unremarkably, and
the president will be forced to lick his wounds and reconcile himself to
his scaled-back political dominance. But make no mistake, until Yeltsin
leaves the scene, his capacity for dramatic and indeed irrational behavior
guarantees that the situation in Russia will remain “interesting” in the
most discomfiting sense of the term.

What are the implications of all this? First, this episode clearly
demonstrates how fragile the political balance in Russia remains today.
With the process of election year politicking already begun, and the
notoriously erratic president fighting for his political life against a
mutinous parliament and pesky General Prosecutor, nothing should be taken
for granted. Second, the act of defiance by the Federation Council
underscores the growing significance of the regions in Russian politics and
the ability of regional heads - especially Moscow mayor Luzhkov - to fill
the void left by the oligarchs as the new powerbrokers. Finally, it has
contributed to deepening the current cleavage in US-Russian relations over
Kosovo because the political struggle drives both the incumbent regime and
Russia’s fractious party establishment to take extreme positions. On the
one hand, this could make Russia an unpredictable and potentially
unreliable participant in the negotiations to resolve the conflict; on the
other hand, the possibility that the domestic political situation could
spin out of control (again) means that Kosovo could be trumped by more
pressing matters closer to home. 

******

#3
Date: Wed, 5 May 1999 
From: helmer@glasnet.ru (John Helmer) 

BY JOHN HELMER
JOURNAL OF COMMERCE, coming 
RUSSIA'S RAIL TSAR 
Moscow. Russia's first railroad was an 18-mile commuter run between the
imperial capital of St. Petersburg and Tsarskoye Selo, a village of palaces 
where the Russian tsars and their courts liked to spend their summers.
What that line and today's vast Russian railroad system have in common
is that they both operate at the pleasure of the Kremlin.
Last week, Nikolai Aksenenko, Russia's Minister of Railways, became a
prime contender to run the entire Russian government, following his summons
to the Kremlin for an interview with President Boris Yeltsin.
Their meeting took place as Mr. Yeltsin issued unexpected orders sacking
one first deputy prime minister, and replacing him with another. At the same
time, the president's aides warned publicly that, if Prime Minister Yevgeny
Primakov can't whip Russia's parliamentary opposition into line,
he too will be fired.
According to Mr. Aksenenko, his political prospects weren't the topic of
the discussion with Mr. Yeltsin. But he didn't disclose what was said.
The last time a railways minister is known to have met Mr. Yeltsin for 
discussion, it was Mr. Aksenenko's predecessor, and the topic was how
far the privatization of the state-owned rail system should go. Not too
far, Mr. Yeltsin said at the time, two years ago.
Russian politicians are certain Mr. Yeltsin and Mr. Aksenenko didn't
meet to discuss holding the line on rail tariffs, a point Mr. Aksenenko 
promised Russia's regional governors a few days ago that he will accept, at 
least until July.
Political sources and the Russian press speculate that Mr. Aksenenko has 
connexions with the Yeltsin family financier Boris Berezovsky, and with 
former reform boss Anatoly Chubais. They are believed to have promoted him to 
Mr. Yeltsin, who called Mr. Aksenenko in to take his measure, and also to 
float a trial balloon of his candidacy. 
The president himself has publicly warned Prime Minister Yevgeny Primakov 
that his usefulness is dwindling. This follows Mr. Primakov's rise in the 
polls as the most trusted politician in Russia. Mr. Yeltsin's
hostility towards the prime minister also stems from the latter's
backing for an anti-corruption campaign that has extended its probes
as far as the Kremlin itself, including Mr. Yeltsin's aides and
his family.
Mr. Aksenenko is being considered, not for making Russia's trains run on 
time, but because his railway background makes him so obscure, the Kremlin 
believes he will be totally loyal to the president, and incapable of
challenging or threatening him politically.

********

#4
Saratov Governor Ayatskov on State Revival 

Rossiyskaya Gazeta (Dom i Otechestvo Supplement) 
30 April 1999
[translation for personal use only]
Abbreviated version of speech by Dmitriy Ayatskov, first deputy 
chairman of Russia Is Our Home and governor of Saratov Oblast, at the 
movement's 6th Congress 24 April: "How Are We To Revive the State?" 

Since the collapse of the USSR and the 
establishment of Russia as a sovereign state our whole people have been 
faced and still are faced with a fundamental goal -- reviving the country 
as a great power. 

Despite the collapse of the great empire and the formation of separate 
autonomous states on its basis, Moscow still remained for many years the 
symbol of the great center which had united the peoples of the former Union. 
However, in recent years the significance of Russia as a strong unifying 
geopolitical center has markedly diminished. 

The spiritual, moral, and economic impoverishment of Russian society is 
the prime cause of this. A considerable role has also been played here by 
the pro-American and pro-Western orientation of certain of the country's 
political and state leaders and the political associations headed by 
them, which have pursued the goal of imposing on society a Western way of 
life and thinking and the abandonment of our own national, cultural, and 
spiritual values. 

As a result of this policy we have pro-Western media, a pro-Western 
subculture, and -- most grievously -- a pro-Western policy. As a result 
Russia is in a condition where the idea of the powerful state 
[derzhavnost] has been relegated to the background and the people have 
begun to regard the country's leaders not as real state leaders but as 
mere politicians of various persuasions bent on achieving supreme power 
and short-term gain by any available means, transforming the people 
thereby into an amorphous mass which they remember and talk a lot about 
only during the election campaign. As a result the sensible ideas of 
reform propounded on TV and in the pages of certain organs of the media 
have begun to be regarded by the country's citizens as an unintelligible 
and empty declaration about universal well-being. The sharp social 
demarcation of society also plays a considerable role here. The economic 
crisis of 17 August only exacerbated this situation and undermined the 
basis for the creation of a middle class. The bulk of the population 
began to reject the ideas of such reforms and to adopt the posture of an 
onlooker. Well-off citizens began to stand out even more sharply against 
this background, including by virtue of their pro-Western orientation. 

Whereas society previously regarded this social stratum more or less 
tolerantly or itself sought to attain its level, the stratum now arouses 
acute hostility among the population. 

This has been actively used by the leaders of pro-Communist movements, 
who exploit the revival of the national heritage and cultural and other 
values. Moreover, the threat of a division of the people on national and 
religious lines has appeared in various regions of the country. All this 
is the precondition for the possible final collapse of our state.... 

Throughout the centuries the idea of Russia's revival has united our people 
at the most difficult times in their history. We are faced with a choice 
today -- is Russia to be a powerful monolithic state or not? 

It is now essential to unite the people on the basis of the revival of 
our great country and the idea of a powerful state [derzhavnost] and to 
ensure their tranquillity by means of justice. Property is good when it 
is genuine property. Justice is always immortal. Great goals cannot be 
achieved by devious means, they can be achieved only on the basis of 
honor, good-heartedness, and purity of intent on the part of each citizen 
of the great power. 

The creation of a healthy society based on unity, morality, well-being, 
and monolithic character must be the basis of building. 

This can be achieved only by the logical chain of age-old human values: 
history, culture, science, and economy. Politics must be merely the final 
link in this chain. This is the basis of a powerful state [derzhavnost]. 

The citizens of Russia must seek to grasp the historical values of their 
country from infancy. Genuine pride in their state's flag, emblems, and 
anthem must be the prime foundation here. History is eternal and 
invariable. It must not be rewritten or altered. We must learn to respect 
the history of our own country and draw correct lessons from it. We must 
eschew the practice of indiscriminately mocking the lessons of our own 
history and paths of economic development and of watering them down to 
suit modish trends. History teaches that to achieve one thing you do not 
necessarily have to smear something else, because you can smear all you 
like and achieve nothing. The first law of history is to fear any lie 
whatsoever and then not fear any truth whatsoever. And we must always 
remember this! This is the second postulate of a strong state [derzhavnost]! 
Culture is built on the historical values of the many generations which form 
the identity of the people and the country. This priceless inheritance 
ought to nurture and form the new generation as patriots and true 
proponents of a strong state [derzhavniki]. 

Science, as an integral part of the constantly developing cultural legacy, 
must be the cornerstone in building a strong state and constitutes the 
intellectual wealth of the country on which its might, monolithic nature, 
and greatness will be built. A healthy economic basis for the state can 
be built only through science. 

A developed economy will make it possible not only to strengthen the 
state might and international significance of Russia but also to form a 
new generation of free, healthy, highly intellectual, and successful 
people -- true patriots of Russia! 

Politics must be aimed only at developing and strengthening the monolithic 
nature of society and enhancing the international significance of great 
Russia. Politics must cease to be an instrument for dividing the people 
into opposing groups of various colors and hues. The idea of conservatism 
in the best sense of the term -- conservatism of historicity, morality, 
identity, a strong state [derzhavnost], and patriotism -- must prevail 
within it. 

Russians deserve to live in a state that is strong in every sense, personally 
augmenting its economic might, and to fairly enjoy the fruits of their 
own creation. The new generation of people which has achieved its own 
high level of economic success in recent years -- entrepreneurs, bankers, 
and so forth -- must set the example for this kind of creation. It is 
they first and foremost who must set about recreating the real economic 
basis of the Russian state, investing in it the capital they have built 
up in recent years rather than transferring it to foreign banks. Therein 
lies the essence of the economic conservatism whose foundation was laid 
by the well-to-do strata of Russia in the 18th and 19th centuries. 

Our movement must further the transformation of Russia into a single 
living organism in which every region and every town and village will 
have its fitting significance as part of the vital activity of the whole 
state. For this it is essential to strengthen the integrationist model of 
development of the regions, with each of them having its own clearly 
defined task within the single economic monolith of this organism. We 
must ensure that every component is aware of its own significance in the 
state's strength. But we must also demand and ensure that the state in 
the shape of the federal center knows and remembers that every region is 
an integral part of it and that its economic and social health 
substantially influences the prosperity and vitality of the state as a 
whole. The state's word must be true and its actions resolute. The 
reforms of the economic system must be developed for the good of each 
citizen and for the creation of a strong state [derzhavnost], and once 
begun, they cannot be stopped. Society recognizes and respects only those 
virtues which have actually been demonstrated. 

Russia always has been and will be a great power. 

*****

#5
Moscow Times
May 6, 1999 
EDITORIAL: Post Panic, A New Test For Ruble 

Yevgeny Primakov often looks out of his depth when he talks about the 
economy. Brought in amid a collapse of the national financial system, he 
surrounded himself with Soviet-trained economic managers of dubious talent. 
This team has few successes to point to, and won't offer many soon. 

But it seems likely that Russia will end up owing a debt of gratitude to 
Primakov for at least one economic legacy - and that is the ruble. 

Primakov's team, born and bred in the U.S.S.R., never embraced the market. 
But in the wake of August's meltdown their suspicion was well-timed. As the 
ruble slipped in a matter of weeks from 6 to the dollar to 9.5 to 12 to 20, 
they interceded with government regulation. No more free trade in the ruble, 
they decreed. 

Today, only people who truly need to exchange money to do business - in other 
words, mostly importers and exporters - can buy and sell rubles. They do so 
almost exclusively with the Central Bank, in tightly restricted trading 
sessions on the Moscow Interbank Currency Exchange that herd the 
dollar-sellers (exporters) into a morning session and the dollar-buyers 
(importers) into an afternoon session. 

The ruble steadied - even though the price of oil and gas, which bring in 
Russia's every second dollar, remained depressed. 

Defying market forces through dint of sheer will and obstinacy will only take 
a nation so far. As evidence, there is the Soviet Union: Not so long ago the 
ruble was at 1 to 1 against the dollar, but at 40 to 1 on the black market. 
Or for a more contemporary comparison, look at Belarus, where collective 
farmer-turned-dictator Alexander Lukashenko has the currency in chains - and 
just had to introduce a humiliating 1 million ruble note. 

But in the short term, putting the market on a leash and jerking back hard 
works. That's why, for example, Wall Street in the wake of the 1987 crash 
built automatic trading halts into its computer systems that kick in when the 
market melts down too quickly - which works to prevent short-term panic, if 
not long-term trends. 

Primakov's team has headed off the short-term panic. And now that world oil 
prices are climbing, the long-term trend may take care of itself. 

In fact, a new concern might be an oil-fattened strong ruble - the old 1-to-1 
Soviet fetish, or the 6-to-1 obsession of recent years. Now that we've all 
had a taste of a weaker ruble, a new test for Russia's future economic 
managers - whoever they may be - will be to remember its advantages in 
kick-starting investment in the real economy. 

*******

#6
Moscow Times
May 6, 1999 
$5.5Bln Spent Servicing Foreign Debt 
By Igor Semenenko
Staff Writer

The Central Bank spent $5.5 billion on servicing Russia's foreign debts since 
mid-August last year, first deputy chairwoman of the Central Bank Tatyana 
Paramonova said Wednesday. 

However, government and Central Bank officials continued their policy of 
giving out as few details as possible regarding debt payments and the Central 
Bank's actions on the forex markets. 

Some of the $5.5 billion can be explained by the $1.6 billion reduction in 
Central Bank reserves since last September, but the precise source for much 
of the funds it used to pay off Russia's debts remains unclear. 

Meanwhile, Central Bank chairman Viktor Gerashchenko said last week that 
Russia's international reserves would exceed their January level by the end 
of this year. In January Russia's hard currency reserves totaled $12.2 
billion, down from $12.5 billion in September. They have since continued to 
decline, slumping to a low of $10.6 billion in mid-April. They inched up to 
$10.9 billion at the start of this month. 

However, analysts said Wednesday that the lack of anything even approaching 
transparency regarding Russia's markets and economic figures meant that they 
could only make educated guesses as to the accuracy of such claims. 

"In January-February purchases of currency on the Moscow Interbank Currency 
Exchange were equal to the figures for imports," said Sergei Prudnik, 
macroeconomic adviser to Troika Dialog. This means that the Central Bank had 
nowhere to go to tap hard currency on the domestic market. 

"It might be that the Central Bank taps some unknown sources buying hard 
currency," said Prudnik. "The other possibility is that the reported $5.5 
billion paid for debt service is slightly exaggerated." 

Last fall the Central Bank introduced multiple exchange rates, allowing it to 
keep control over the foreign exchange market. "The Central Bank introduced 
administrative restrictions which allow to convert at least part of Russia's 
trade surplus into foreign exchange reserves," said Andrei Abramov, 
macroeconomic analyst with brokerage NIKoil. 

"Rough estimates show that the Central Bank purchases $1 billion on the 
foreign exchange market on a quarterly basis," Abramov added. 

The picture was further muddied by the Russian government's decision not to 
provide exact information breaking down its foreign obligations by categories 
of lenders and maturity dates. 

"They could have renegotiated their debts in private and included that figure 
in the amount reported as being paid after the August crash," said Prudnik. 

The Finance Ministry has refused to give details on foreign debt servicing. 

"Nobody knows exactly how Russia pays its debts," said Prudnik. 

*******

#7
Russia's Balkan Mediation Provides 'Glimmer of Hope' 

Rossiyskaya Gazeta
5 May 1999
[translation for personal use only]
Article by Vladimir Lapskiy under "Balkan Knot" rubric: "Road to 
Peace Is Via Moscow" 

The NATO capitals are increasingly clearly coming 
to realize that without Russia's mediation it will be difficult, indeed, 
almost impossible, to extricate themselves from the Yugoslav adventure. 

The uncompromising attitude of Slobodan Milosevic and the Serbs' 
determination and inflexibility have upset all the calculations of NATO 
strategists. The Balkan crisis is out of control. 

High-level and top-level Western diplomats visited Moscow last week, and 
Viktor 
Chernomyrdin, the Russian president's special representative in the 
Balkans, departed for the United States at the beginning of this week. In 
Washington he met with Bill Clinton and handed him a message from the 
Russian head of state. Secretary of State Madeleine Albright and 
Presidential National Security Assistant Samuel Berger were present at 
the meeting in the White House. After the meeting a U.S. Government 
spokesman stated that "the Russians' position is now closer to the U.S. 
position than to the position of Milosevic, whom Moscow is trying to 
persuade of the need to reconsider his view." 

Viktor Chernomyrdin set out to the Americans the views of the FRY [Federal 
Republic of Yugoslavia] president, with whom he had met the previous day 
in Belgrade. For his part Bill Clinton confirmed that he is prepared to 
discuss the possibility of halting the bombing and also the composition 
of international security forces for Kosovo, but overall his demands to 
Belgrade remained the same. 

The main difference between positions concerns the nature of 
international peacekeeping forces. The United States believes that many 
countries, Russia included, can take part in them, but they must be based 
on NATO troops. Only in this case, it is claimed, will these forces be 
able to operate effectively, provide protection not only to the refugees 
who will begin to return home, but also to all residents of the province, 
and disarm the "Kosovo Liberation Army." This, it is argued, will allow 
Milosevic to avoid his own Afghanistan and will ensure security in the 
region. The United States and NATO are demanding that Milosevic accept a 
specific timetable for the withdrawal of Serb troops from the province. 

For its part Belgrade is continuing to insist that peacekeeping forces 
be introduced into Kosovo under the auspices of the United Nations, the 
OSCE, or Russia, seeing NATO only as occupiers. The Serbs' emotions can 
be understood: The NATO propaganda thesis that the air war is being waged 
against Milosevic alone now sounds ridiculous and cynical -- Yugoslavia's 
vital centers are being destroyed and hundreds and maybe thousands of 
peaceful inhabitants are dying. 

In the quest for a way out of the impasse the West is asking Moscow to 
find a compromise formula. Time is against NATO -- everybody now realizes 
this. The Russian initiatives and mediation have provided a glimmer of 
hope that peace will be established in the long-suffering Balkans. 

*******

#8
Russia tells E. Europe - remember old friends
By Elizabeth Piper
May 5, 1999

MOSCOW (Reuters) - Russia's emergencies minister Wednesday told eastern and 
central European countries not to forget their old friends and to help, not 
hinder, Moscow's efforts to send aid to the war-torn Balkan region. 

Sergei Shoigu said he hoped a Russian cargo plane with humanitarian aid for 
Macedonia and Yugoslavia would not experience any further hold-ups in 
Bulgaria after it was delayed by 24 hours of wrangling to get landing 
permission. 

``We hope that similar situations will not happen, but today there are many 
changes in the political structure of states,'' Shoigu told a news 
conference. ``I would put it this way: while winning new friends, one should 
not forget about older, proven friends.'' 

Bulgaria was once Moscow's closest ally in the now-defunct Warsaw Pact 
military alliance. Its pro-Western government is now seeking membership of 
NATO and the European Union. 

Another former Warsaw Pact country, Hungary, held up a similar aid convoy for 
two days on its border with Ukraine last month amid suspicion that Moscow was 
sending diesel fuel to Yugoslavia that might help Belgrade's war effort. 

Bulgaria allowed an AN-124 cargo plane, carrying tons of food, clothing and 
medical supplies, to land and unload at Sofia Monday. 

But it temporarily withheld permission for the same plane to return with a 
second cargo of humanitarian aid. 

``These 72 hours do seem pretty strange ... but finally the plane set off on 
its second flight and will return to Moscow this evening,'' Shoigu said, 
showing reporters a copy of what he said was an agreement signed in February 
for Russian planes to land in Bulgaria. 

Sofia so far has given the green light only for aid to be sent to Macedonia 
via its territory while Russia also wants to send cargoes to Yugoslavia. 

Bulgaria has shut its border with Yugoslavia to clamp down on fuel supplies 
getting to the Serbs in contravention of a new NATO- and European 
Union-imposed oil embargo. 

``We have not seen any kind of serious or solid reason (for Bulgaria's 
decision),'' Shoigu said. 

The convoy is part of the second stage of Russia's aid program for the 
Balkans and has been coordinated with Switzerland and Greece. 

Shoigu said the package, worth more than $2.5 million, included a mobile 
hospital and medical staff. 

``The accent (of the program) is on the people of Kosovo,'' he said, adding 
that aid would be sent wherever it was required by either Serbs or ethnic 
Albanian refugees. 

*******

#9
Izvestia
May 5, 1999
Igor Sergeyev Offers Friendship to North European Armies 
By Vladimir Yermolin 

The NATO military action in Yugoslavia may make Russia revise some of its
international commitments, including those made under the Treaty on
Conventional Armed Forces in Europe, said Russia's Defense Minister Igor
Sergeyev during his visit to Norway on May 3 and 4. He again warned the
NATO countries that, if the strikes at Yugoslavia continued military
complications between Russia and the NATO countries would become
inevitable. Russia will have to freeze its military and technical
cooperation with the member-states of the North Atlantic alliance, he
warned. Commenting on his visit, IZVESTIA writes that these statements made
by Sergeyev are consonant with the conclusions made recently at the meeting
of Russia's Security Council held under the chairmanship of President Boris
Yeltsin and are meant to show that Russia is morally prepared for military
confrontation with the West. 
The tone of anti-NATO statements made by the Russian Defense Minister is
becoming increasingly tough. Speaking on May 4 before the Defense Ministers
of Northern Europe, he told them that "NATO, ignoring the commonly
recognized principles of international relations, has assumed the right to
solve with the force of arms 'humanitarian problems' arising in Europe," as
a result of which "Europe is faced with the threat of a military
conflagration, for the first time since World War II, which may spread to
the whole of the continent." 
There is every reason to believe that the Russian Defense Minister was
listed with great attention, as in the past few years Russia has
unilaterally made substantial reductions in its military presence in the
north-western direction, the paper writes. It has reduced two armies, one
corps, six divisions, eight brigades and one squadron. As a result, 52
percent of servicemen have been reduced in the Leningrad Military District,
57 percent in the Kaliningrad Special Military Region, and 19 and 29
percent in the Northern and Baltic Fleets respectfully. 
Sergeyev said the reduction of the infrastructure facilities in those
areas rule out a return of the troops to the places of their previous
stationing. 
In this way, the main direction of Russia's military diplomacy has been
outlined -- guaranteed peace and security for the countries that take no
part in the NATO operations in the Balkans, on the one hand, and a threat
of "conflagration" to the countries taking part in those operations. 
Another paper, SEGODNYA [05/05/99, p. 2], writes that Sergeyev evidently
made these statements on the Kremlin's instructions. At the same time he
made some pragmatic statements during his stay in Norway. He admitted the
that it was impossible to solve the Kosovo conflict at its present stage
without international military presence there. He said at the same time
that the "aggressor countries have no moral right to act as peacemakers."
Peace in Yugoslavia can be ensured by military contingents from North
European countries, with the exception of Norway which was involved in the
strikes at Yugoslavia, Sergeyev said. Russia, too, intends to take part in
a peacemaking operation, he added. 

*******

#10
Jamestown Foundation Monitor
May 5, 1999

YELTSIN: SPEAKING SOFTLY RATHER THAN WIELDING THE BIG STICK? Has the Kremlin
suddenly decided to switch to a softer line vis-a-vis the cabinet of Prime
Minister Yevgeny Primakov and the opposition-dominated State Duma? President
Boris Yeltsin and his inner circle--who had been considering radical
responses to the Duma's planned impeachment vote, expected to take place
later this month--have possibly decided to eschew such measures as firing
Primakov and/or his deputies and dissolving the lower house. 

The account reporting this, one known for having good sources on the inside,
has it that the Kremlin's new strategy is twofold. First, simply to make
sure that Primakov knows that "the Communist project in Russia is doomed."
Second, to keep Primakov on as premier in a "liberal government, where his
authority and circumspection are also needed." The motive for this change in
strategy is that if the Kremlin fires the leftist members of the cabinet, it
will not win Duma support for laws implementing various conditions laid out
by the International Monetary Fund for receiving more than US$4 billion in
new credits (these conditions include sharply increasing gasoline and
alcohol excises and putting off a reduction in the value-added tax).

The report suggests that rather than firing Deputy Prime Minister Yuri
Maslyukov, a communist economist in charge of economic policy, Yeltsin may
promote Nikolai Aksenenko, Russia's railroads minister and a member of
Yeltsin's inner circle, to the post of deputy prime minister as a step to
"help" Maslyukov (see the Monitor, April 30). The paper also reported that
the Kremlin has been trying to convince Samara Governor Konstantin Titov,
who recent formed the Voice of Russia electoral bloc, to join the
cabinet--so far unsuccessfully (Argumenty i fakty, No. 18, May 1999).

KREMLIN MAY REINFORCE ITS RANKS WITH YELTSIN LOYALISTS. The Kremlin is said
to have established a "situations staff" to formulate responses to the
Duma's impeachment initiative. Its members reportedly include Tatyana
Dyachenko (Yeltsin's daughter and "image adviser"), Kremlin administration
chief Aleksandr Voloshin and his first deputy, Oleg Sysuev, Federal Security
Service director and Security Council secretary Vladimir Putin, and Interior
Minister Sergei Stepashin (who recently replaced Vadim Gustov as first
deputy prime minister). In addition, Sergei Zverev, a former deputy board
chairman of the Gazprom natural gas monopoly and a former key player in
Vladimir Gusinsky's MOST media empire, is reportedly set to be named a
deputy head of the Kremlin administration in charge of political issues. He
may be joined by Mikhail Lesin, first deputy chairman of VGTRK, the
state-owned company which runs the RTR and Kultura television channels,
Radio Russia and various regional television 
and radio stations. Lesin founded the powerful Video International
advertising company, which played a major role in Yeltsin's 1996 electoral
campaign, and he reportedly remains close to Dyachenko and Valentin
Yumashev, the former Kremlin chief of staff and ghostwriter of Yeltsin's
memoirs, who reportedly remains a key insider. Anatoly Chubais, who now
heads United Energy Systems, Russia's power grid, apparently still plays a
key "political consulting" role for the Kremlin (Argumenty i fakty, No. 18,
May 1999).

Zverev and Lesin being elevated to Kremlin posts would suggest that the
Kremlin is gearing up for a media campaign in the walk-up to this year's
parliamentary elections. Chubais' input here would be relevant as well,
given that he was in charge of Yeltsin's 1996 campaign.

The Kremlin's new soft line in relation to Primakov, meanwhile, could be
interpreted not only as a strategy designed to ensure that IMF
conditionalities are met, but as a sign that Yeltsin and his inner circle
suddenly feel less threatened by the Primakov government and the leftist
opposition. This, in turn, suggests that the Kremlin may be planning in
earnest to use something like integration with Belarus to prolong Yeltsin's
political life. It is interesting to note that U.S. ambassador to Belarus
Daniel Speckhard was reported to have said yesterday that the United States
does not object to plans for a Russia-Belarus union but that any integration
processes should be in line with democratic principles (Russian agencies,
May 4). The U.S. statement, along with those by Vladimir Putin over the
weekend--that the Russian president will head the union and the Belarus
president will be its vice-president--suggests that unification is becoming
a real possibility.

******

#11
Russia Seen Benefiting As Oil Price Rises 

MOSCOW, May. 06, 1999 -- (Reuters) Firmer crude oil prices are giving a
welcome boost to Russia's crisis-laden economy but will not lead to an
extra short-term rise in crude exports above their already high levels,
analysts and officials said on Wednesday. 

"Plans which were drawn up for oil exports in the second quarter have not
been changed. So far no increase is being considered. The price spike may
be short-lived," Oleg Rumyantsev, spokesman to Energy Minister Sergei
Generalov, said. 

But ministry data on Wednesday showed crude exports outside the
Commonwealth of Independent States in the first four months of 1999 are
already 12.7 percent higher than in the same period in 1998 at 2.49 million
barrels per day from 2.21 million. 

Benchmark front month Brent crude futures on London's International
Petroleum Exchange closed at $16.93 per barrel on Tuesday, the highest
since December 1997. 

Although Brent, against which Russia's main export blend, Urals, is traded,
fell on Wednesday to $16.59 per barrel at around 1400 GMT, the price is
still over $7.00 per barrel higher than the recent low of $9.55 set late
last year. 

Russia, the world's third largest oil producer, typically depends on oil
and gas exports for up to half its hard currency export earnings, although
the percentage varies as prices move. 

Analyst Eugene Khartukov of Moscow consultancy GAPMER agreed that Russia
would not boost exports in the short term because it lacks the
infrastructure to do so, but said in the medium term increasing exports was
the key plank in Russia's oil strategy. 

"As usual, exports will be regulated by the diameter of the export
pipelines," he said, pointing out that Russia already exports as much as it
can. 

He said the price rise, though welcome, made no difference to Russian
policy, which was to export as much as possible. 

"Russia has to sit and wait and accept the price as it is. It is not a
price maker, it's a price taker. It will export whatever is available." 

But while Russia has little room for maneuver now, it is forging ahead with
plans to boost export infrastructure in the medium term. 

On Wednesday the Federal Energy Commission said it had introduced a
supplementary export tariff on crude oil of $1.43 per tonne, to provide
crude pipeline monopoly Transneft with $100 million this year to build a
new Baltic Pipeline System. 

This will link a number of new oil fields in northern Russia to a new
terminal to be built in the Gulf of Finland, allowing Russia both to
increase exports and to bypass ports in independent Baltic states. 

Next week work will begin on a new oil port at Russia's main oil export
terminal, Novorossiisk, in the Black Sea. 

Although it is being built to handle exports from the Tengiz field in
Kazakhstan, it will eventually add 1.3 million barrels per day (bpd) to
exports through Russia. 

Generalov was reported by Interfax news agency recently as speaking of
other plans to boost exports, including de-bottlenecking a line carrying
crude to the Ukrainian port of Odessa, increasing throughput by 4 million
tonnes in the last nine months of this year. 

He also said adding storage capacity to Novorossiisk would lift throughput
by 5 million tonnes per year (100,000 bpd). 

Russia exported 117.9 million tonnes (2.37 million barrels per day) of
crude oil last year to destinations outside the Commonwealth of Independent
States. 

GAPMER'S Khartukov said if Russia managed to remove all bottlenecks and
export constraints and introduce top-class management at every level, its
notional non-CIS export capacity would be 140 million tonnes. 

"I guess that this year we will manage to export up to 125 million tonnes
but no more," he added, saying "exports will follow the pace of expansion
of oil infrastructure." 

Russia agreed last year to cut oil exports by 100,000 barrels per day as
part of a move by members and non-members of the Organization of the
Petroleum Exporting Countries to cut supplies to boost prices, and repeated
its pledge this year. 

The cut by the large international group is the reason for the surge in oil
prices this year. But while Russia is clearly a beneficiary of the price
rise, there is scant evidence that it is honoring its pledge to cut exports. 

The International Energy Agency in its end-March report forecast total
exports from the Former Soviet Union at 3.1 million barrels per day in
1999, up from 3.0 million in 1998, itself the highest level since the
break-up of the Soviet Union. 

*******

#12
Lebed Rehearsing for Presidency 

Moscow News
April 28, 1999
[translation for personal use only]
Article by Aleksandr Makarov: "The Government Deals With the Usual Matters" 

Aleksandr Lebed is reorganizing the administration 
system of the Krasnoyarsk region. In late March, by the governor's order, an 
expert group was set up to create an administration system for the 
region. The main objective that the planners set to themselves is to 
reestablish a vertical power structure, said Nikolay Numerov, the 
group's leader. A small apparatus will remain subordinated to the governor. 

Its task will be to provide the head of the region with everything 
necessary to carry out representative functions, to direct the 
region's domestic and foreign policy, as well as to coordinate the 
activities of all governing bodies in the region's territory. The 
first deputy governor will conduct immediate economic and social 
management. He will supervise the committees and administration 
boards dealing with finance and investments, the region's industrial 
and agrarian complexes, natural resources, and ecology. 

During the election campaign Lebed did not object to setting 
up a regional government. Some leaders of the local Communist 
organization helped him in the second round of the elections, in 
exchange for some promised ministerial portfolios. After his 
victory, Lebed happily "forgot" to create a government, taking his 
followers aback. In the opinion of many experts, the governor was 
wrong to dismiss this idea. Because you can always blame a 
government for inevitable mistakes and make it resign. 

Possibly, in the beginning Lebed still hoped to cope with 
things on his own. But the young managers invited by the governor 
from Moscow turned out not to be as all-powerful as it had seemed. A 
quarrel with Anatoliy Bukov, chairman of the board of the 
Krasnoyarsk aluminum factory, deprived the new governor of 
consultations by qualified experts who knew the specific local 
conditions. As a result, in a not even a full year of Aleksandr 
Lebed's leadership the arrears in wages payments increased twofold. 

However, the overall debt of the regional budget now amounts to 
about 6 billion rubles. Not one single dollar of the multimillion 
investments promised in the heat of the preelection battles has come 
to the region. The legislative assembly passed the most rigid 
variant of the bill "On the Government of the Krasnodar Region." 

This bill takes away from the governor all his plenary powers of 
authority, but does not relieve him of personal responsibility for 
everything that goes on in the region. 

Then Aleksandr Lebed turned for support to the association of 
people from Krasnoyarsk in Moscow. This includes mainly former party 
leaders and economic managers from the region who have moved to the 
capital. These people joined Nikolay Numerov's expert team. 

Obviously they will also become the founders of Aleksandr Lebed's 
little presidential republic. 

In fact, everything is ready for this in the region. Within 
the administration, an apparatus has been created which not only 
fulfills the governor's personal assignments, but also controls the 
work of the other subdivisions, albeit secretly until now. A 
security council is working, which unites the leaders of all the 
law-protecting authorities. 

The governor leads it in person. The idea of creating a 
unified Department of Internal Affairs for the Krasnoyarsk region, 
Evenkia, and Taymyr is being actively advanced. There exists the 
governor's own Ministry of Finance--a fund for the governor's 
programs subordinated only to the head of the region and not 
accountable to anybody. Only a trifle remains--to expand the 
governor's plenary powers, at the same time relieving him of the 
duty of managing the economy. 

After accepting the new administration system, the Krasnoyarsk 
governor's hands will be untied, and according to the opinion of his 
administration employees, he will devote himself to political work. 

*******