May 20, 1999    
This Date's Issues: 3294 •3295 • 3296

Johnson's Russia List
#3295
20 May 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: Foreigners Entering Russia Must Have Medical Insurance.
2. Bloomberg: Russian Parliament's Budget Committee Rejects IMF Laws.
3. AP: Russia Wants IMF Demands Endorsed.
4. Bloomberg: Majority of Russians Willing to Pay Taxes, Poll Shows.
5. Bloomberg: Russia's Yavlinsky on Government Appointments.
6. Reuters: Stepashin tastes first problems forming govt.
7. Washington Post: Robert Kaiser, A Sour Look at the 'American Century.'
(Views of Gorbachev).
8. Reuters: ANALYSIS-No radicalism seen from new Russia govt.
9. Interfax: Lebed: Stepashin Government Will Work Until 2000.
10. AP: Russia Rejects Western Nuke Claims.
11. Kontrapunkt Russian Literary Magazine in America.
12. Tan Wee Cheng: New travel list.
13. Itar-Tass: 'Text' of Stepashin Address 17 May to Federation Council.
14. Items from Polit.ru May 20.
15. Itar-Tass: Duma Defines Powers of Common Courts.
16. Reuters: Russian PM creates new govt economic council.]

*******

#1
Foreigners Entering Russia Must Have Medical Insurance.

MOSCOW, May 20 (Itar-Tass) - Foreigners entering Russia are now required to 
have a medical insurance policy. This follows from a report of the Russian 
Foreign Ministry faxed to Itar-Tass on Wednesday. 

Under the Russian government's decree, "On Medical Insurance of Foreign 
Citizens Staying Temporarily in Russia and of Russian Citizens Leaving 
Russia," there is an additional requirement, on a basis of reciprocity, of a 
medical insurance policy, supplementing the request for a Russian visa, for 
citizens of foreign countries that had earlier made this procedure obligatory 
for Russian citizens entering their territories. 

The Foreign Ministry report says that this rule will apply to Estonian 
citizens as of June 1, 1999. The new procedure will spread from July 1, 1999 
to the states of the Schengen group (Austria, Belgium, Germany, Holland, 
Spain, Italy, Luxembourg, Portugal, and France), Israel and Finland, whose 
citizens, on a basis of reciprocity, should produce a medical insurance 
policy or appropriate guarantees of Russian natural or legal persons inviting 
them, when receiving a Russian visa. 

*******

#2
Russian Parliament's Budget Committee Rejects IMF Laws

Moscow, May 20 (Bloomberg) -- The Russian parliament's budget committee
recommended the full house reject a majority of the government's proposed
bills required to meet conditions for a $4.5 billion International Monetary
Fund loan. 

The committee said the lower house, the Duma, should reject three of four
laws proposed by the government at the IMF's recommendation. It recommended
passage of a law that sets conditions for rescuing insolvent banks. Two of
the rejected laws introduced new taxes and the third allowed the central
bank to sell bonds. 

``There was one simple agreement that as soon as the package of laws is put
into affect, then the board of directors will be ready to consider,''
releasing money, said Deputy Finance Minister Oleg Vyugin. ``If the laws
aren't passed . . . of course that could delay'' the IMF's release of the
money. 

The government promised the IMF it would raise revenue by about 50 billion
rubles ($2 billion) above the 473 billion rubles currently budgeted and the
tax bills were intended to help it meet that target. 

The committee recommended the Duma reject a new tax on gasoline stations,
which the government says would bring in 3 billion rubles by year-end,
saying it would lead to higher gas prices. The committee also will ask Duma
deputies to reject a law taxing expensive cars. 

``There is nothing bad'' in the package of laws, said Vyugin. ``Only that
you'll now have to pay to own a Mercedes, but you can always swap it for a
Zhiguli,'' a Russian-made car ``and not have to pay.'' 

All of the laws must pass the full Duma in three readings, then be approved
by the upper house and signed into law by the president. Deputies were
scheduled to work in their regions next week, but may decide to stay in
Moscow to consider those and other pending bills. 

The committee also recommended deputies reject the law allowing the central
bank to sell its own bonds. Some deputies said the central bank should not
have the right to register its own bonds. 

Though deputies criticized the law on bank restructuring, saying it
contradicted current laws, they said they would work to improve it before
it becomes law. 

``This law is essential for restructuring of banks,'' said Alexander
Turbanov, managing director of ARKO, the government's Agency for Bank
Restructuring, during the budget committee's debate. ``It has been lying
around for in various committees for a year and if we don't recommend it,
it will lie around for another six months.'' 

*******

#3
Russia Wants IMF Demands Endorsed
May 20, 1999
By ANNA DOLGOV

MOSCOW (AP) -- The Russian economy may collapse again if parliament doesn't
approve economic reforms international lenders want, a top official said
today.

Russia's industrial production has been growing steadily in the past few
months and was 16 percent higher in March than in September, shortly after
the economic crisis hit, acting Economics Minister Andrei Shapovalyants said.

He said Russia could expect a $25 billion trade surplus this year,
according to the Interfax news agency.

The boost in industrial output and the trade surplus is mostly explained by
the ruble's devaluation in August. The currency's tumble led to a sharp
reduction of imports, and those that kept coming in became far too
expensive for many Russians.

``We are far from asserting that the economic crisis is over. The situation
is still difficult, but we mustn't miss the opportunity to improve the
situation,'' Shapovalyants said.

However, he warned that failure to meet demands set by the International
Monetary Fund for new loans would again send inflation soaring and foreign
investors fleeing.

Inflation could reach 60 percent next year, instead of the predicted 25
percent to 30 percent, if parliament fails to approve economic reforms
demanded by the IMF, Shapovalyants told a Cabinet meeting today. Foreign
investment, already reduced, would drop again, he said.

The Communist-dominated lower house of parliament, the State Duma, is to
start debating the first of the IMF-mandated bills on Friday.

The Duma usually opposes the IMF policies, but lawmakers have been humbled
by their recent failure to impeach President Boris Yeltsin and may not be
looking for a fight.

New Prime Minister Sergei Stepashin warned that if lawmakers refuse to
endorse the IMF bills he will demand a confidence vote in his Cabinet --
which lawmakers want to avoid because it could lead to the dissolution of
the Duma.

*******

#4
Majority of Russians Willing to Pay Taxes, Poll Shows

Moscow, May 20 (Bloomberg)
-- As many as 72 percent of Russians say they intend to pay their taxes 
while about 21 percent say they prefer to avoid tax payments, according to an 
opinion poll of 1,600 citizens conducted by the Russian Center of Public 
Opinion in April, Russian news agency Interfax reported. A similar poll 
conducted last year showed 60 percent in favor of paying taxes and 27 percent 
against. The poll found that non-taxpayers are typically under 40 and male, 
while people intending to pay tax are typically pensioners, or women, living 
in rural areas. 

More than half of all Canadians are considering hiding income from the 
government to avoid paying taxes. 

*******

#5
Russia's Yavlinsky on Government Appointments: Comment

Moscow, May 20 (Bloomberg)
-- Grigory Yavlinsky, a member of the Russian parliament, and a leader 
of the Yabloko Party, which advocates free-market policies, said on NTV 
Television his party will not take part in the new government of Prime 
Minister Sergei Stepashin, because Yabloko does not agree with the way 
cabinet ministers are being chosen and doubts the new government's 
effectiveness. 

``Government is being formed by a small group of people in corridors, as part 
of an internal Kremlin intrigue, and this is why we are concerned. We don't 
see space for serious work in this government and therefore no place for 
us.'' 

******

#6
Stepashin tastes first problems forming govt
By Timothy Heritage

MOSCOW, May 20 (Reuters) - Russia's new prime minister, Sergei Stepashin, ran 
straight into problems on Thursday when he started trying to form a 
government. 

Centrist economist Alexander Zhukov rejected an offer to become a deputy 
premier, just one day after Stepashin was appointed, and the liberal 
opposition Yabloko party again said it would not be lured into the cabinet. 

Stepashin faces economic crisis and political instability. 

Russian media say he also has a tough task satisfying the requirements of 
President Boris Yeltsin, who has the final say on the government line-up, and 
fending off rival political and business groups who are lobbying for places 
in the team. 

``The work (on forming the government) is going on in corridors, under the 
carpet and based on internal Kremlin intrigues,'' Yabloko leader Grigory 
Yavlinsky told reporters. ``There's nothing you can do about it. It's all 
futile.'' 

Although Yabloko member Mikhail Zadornov is widely expected to retain his 
post as finance minister, Yavlinsky made clear his party as a whole wanted to 
distance itself from the government. 

Zhukov, head of the lower house of parliament's budget committee, said he 
would accept a place in the cabinet only if he had the more influential rank 
of a first deputy prime minister and there was a real chance of unity. 

``I repeat that a team of like-minded people must be formed, which can agree 
on a programme and bring the country out of crisis,'' Zhukov said. 

Yeltsin, 68, kept out of sight as the horse-trading began. He missed a 
meeting on Tuesday with Spain's prime minister and television pictures of him 
meeting Stepashin on Wednesday carried no sound, although aides deny rumours 
that he is ill. 

Stepashin was confirmed in office by a comfortable margin on Wednesday by the 
lower house, the State Duma. 

The vote averted a standoff in which the Duma could have been dissolved and 
ended a tense week in which the president sacked the cautious Yevgeny 
Primakov as premier and a bid by the chamber to start impeachment proceedings 
against Yeltsin failed. 

Stepashin has up to 10 days to form a government. He has not named any 
members yet but has made clear his team and its policies will not differ much 
from Primakov's. 

He chaired a meeting of outgoing ministers on Wednesday and said a government 
committee would be formed to improve planning. 

``Let's stop flying by the seat of our pants,'' Itar-Tass news agency quoted 
him as saying. 

Russian newspapers said Stepashin faced a problem asserting any independence 
from Yeltsin. The daily Vremya said: ``It is possible the premier's first 
disappointment will be the feeling of limited independence.'' 

Some newspapers said Stepashin had already been given ``a cold shower'' in 
Wednesday's talks with Yeltsin, suggesting the president had just told him 
who he wanted in the new government. 

Other media said two rivals, businessman Boris Berezovsky and liberal 
economist Anatoly Chubais, were battling for influence behind the scenes and 
the victor would be determined by which of their favoured candidates were in 
the new cabinet. 

Government sources say Nikolai Aksyonenko, a former railways minister, is 
likely to be a first deputy premier responsible for most financial and 
economic policy. 

Interfax news agency quoted financial sources as saying reform-minded Pyotr 
Aven, head of Alfa Bank, could be named as a special presidential 
representative for relations with the International Monetary Fund and other 
financial institutions. 

*******

#7
Washington Post
20 May 1999
[for personal use only]
A Sour Look at the 'American Century'
By Robert G. Kaiser
The writer is an assistant editor of The Post. 

MOSCOW—After the 1996 presidential election in Russia, Mikhail S. Gorbachev 
looked about as dead as Elvis Presley. He had insisted on running that year, 
though many warned him that this was fruitless. He was rewarded with the 
votes of 0.51 percent of the electorate. His future was behind him. 
Foreigners continued to show him respect, but his countrymen paid him no heed.

No longer. Russian television filled his office with lights and cameras last 
Thursday for an extended interview. Earlier in the week he appeared on the 
popular Echo Moscow radio station. A long interview appeared last month in 
the weekly Argumenty I Facti. "The situation has changed here, thank God," he 
told this visitor, who followed the TV interviewers into his office at the 
Gorbachev Foundation on Leningrad Prospekt. "I can talk here now." He was 
clearly delighted to again have a Russian audience, even if, as he seems to 
believe, his political career is over.

But this man who did so much to end both the Cold War and Soviet communism is 
far from delighted with the state of the world. "Politics is being conducted 
in a terribly clumsy way everywhere," he complained -- no leadership, no 
creativity. He was especially upset with the United States, a country he now 
visits regularly (usually to make speeches for money -- money he needs to 
maintain the Gorbachev Foundation).

"One serious disease is the inferiority complex. In Russian we call it a 
lousy condition. And there's also a victor's complex. I think that our 
much-respected United States finds itself a victim of this complex at the 
moment." The proof of this, Gorbachev said, was America's decision to revert 
to bombs to try to resolve the crisis in Kosovo.

"Tell me," he said impatiently, his intense brown eyes burrowing in on his 
guest, "is Kosovo really such a big conflict that it required that all the 
power of NATO -- which now commands two-thirds of the world's military forces 
-- should be aimed at it?" Gorbachev thought the policy was doomed to fail -- 
indeed, had already failed. The bombing hadn't forced Slobodan Milosevic to 
accept NATO's terms and hadn't in any way helped the Kosovars -- quite the 
contrary.

He interpreted the bombing campaign as the result of a decision by NATO to 
"take on the job of ruling the world, including even the functions of the 
gendarme. This is how it was perceived. . . . Europe was humiliated. Russia 
was humiliated. And China." To Gorbachev, a war made no sense.

"If the president got so nervous -- if he is so vulnerable to psychological 
moods and depression -- then he should submit his resignation," Gorbachev 
said of President Clinton. "You can't lose your nerve" and be a president, he 
said, recalling his own time of trial when a group of Communists tried to 
oust him in a failed coup attempt in 1991. (That coup attempt "was not like 
Monica-gate," he observed.)

The issue behind the crisis in Yugoslavia, Gorbachev said, is how to 
accommodate the desires of many ethnic groups for self-determination when 
they live in recognized states dominated by some other group. He called it 
the question of "how to reconcile self-determination, political independence 
and the territorial issue -- the state." 

"This question hasn't been solved yet," Gorbachev said, noting many examples 
of ethnic minorities trying to assert self-determination or independence from 
established governments -- from Chechens in Russia to Kurds in Turkey and 
Palestinians in Israel. "All the more reason why methods like this [bombing] 
shouldn't be used."

Gorbachev offered no defense of Milosevic and sharply criticized the 
governments of Europe for letting the crisis in Yugoslavia drag on for 10 
years. At the same time, he said that other cases of strife between ethnic 
groups within one nation often took many years to resolve. The Middle East 
was a case in point. "Yasser Arafat used to be identified as the leader of a 
terrorist organization, and now he is a Nobel [peace prize] laureate," 
Gorbachev (also a Nobel laureate) observed. "This is what the world is like," 
he said. "The way out [of such situations] is not as simple as they wanted it 
to be in Washington."

Gorbachev heard Bill Clinton give a speech last year in which Clinton 
expressed the hope that the 21st century, like the 20th, would be "an 
American century."

"Then where should Russia go?" Gorbachev asked. "To Mars? Or where? What 
about China? If you translate this goal into policy, it becomes obvious at 
once that it's a dangerous policy." 

Gorbachev said American policy resembled the policies of his forebears among 
Soviet leaders. The idea of a world dominated by America "would be a 
repetition of our Communist utopia, when we tried, through a global Communist 
revolution, to make everybody happy -- with consequences familiar to all of 
us."

The end of the Cold War opened the way to a safer, saner world, Gorbachev 
said, exuding pride in his own part in that process. But he believes the 
world's political leaders have been unable to exploit that opening. "Frankly 
speaking, I am deeply worried by what is going on," he said. 

*******

#8
ANALYSIS-No radicalism seen from new Russia govt
By Patrick Lannin

MOSCOW, May 20 (Reuters) - New Russian Prime Minister Sergei Stepashin is 
unlikely to launch radical economic change and will have to work on the same 
immediate tasks of winning IMF cash and debt talks as his predecessor, 
analysts said on Thursday. 

Political realities also cut Stepashin's room for initiative as the prospect 
of elections to the State Duma lower house of parliament at the end of the 
year seriously reduce his room for manoeuvre and the desire of members of 
parliament for a diet of radical reform. 

"It is essentially going to be a continuation of the muddle through. I would 
not have high expectations and one still has to have the strategic view that 
the next elections are crucial," said CitiBank Russia analyst Niclas 
Sundstrom. 

Analysts said initial impressions of Stepashin were mildly positive, given 
talk of the need for reforms and the chance the government change would open 
the way to liberal policy-makers. 

Such impressions were tempered by the knowledge that implementing policy 
initiatives needs the cooperation of the fractious, Communist-dominated Duma. 

"He (Stepashin) is talking the talk but walking the walk will be beyond 
almost any government at this point and particularly the Stepashin government 
leading up to the elections," said Roland Nash, economist at MFK Renaissance. 

Alexei Zabotkine, fixed income analyst at United Financial Group, said one of 
Stepashin's key economic tasks would be to pass a set of laws needed to win 
approval from the International Monetary Fund for a loan of $4.5 billion over 
18 months. 

A package of laws has already been sent to the Duma and Stepashin has said he 
wants to stick to the deal between the Fund and sacked prime minister, 
Yevgeny Primakov. 

However, getting the laws passed would have been tough even for Primakov, who 
enjoyed relatively wide support in the Duma, analysts said. 

The fact that centrist member Alexander Zhukov, the head of the Duma's budget 
committee and respected at home and abroad, now seems to have turned down a 
government post would increase the difficulty of getting the Duma to 
cooperate, analysts said. 

Talks on easing Russia's mountain of debt were also another key task that the 
previous government had passed to Stepashin and one that needed a strong 
financial figure in the cabinet. 

The main economic policy maker is to be First Deputy Prime Minister Nikolai 
Aksyonenko, unknown at home, never mind abroad. 

Analysts said this was a reason behind talk of resurrecting the post of a 
special presidential representative for relations with international 
financial organisations. 

The last holder, Anatoly Chubais, was sacked when the government of former 
Prime Minister Sergei Kiriyenko was dismissed in the wake of a financial 
crash in August 1998. 

A front runner for the new post seems to be top banker Pyotr Aven, well-known 
in Western financial circles. 

Zabotkine said getting the laws passed for the IMF loan would take at least 
until August, leaving only four months before the Duma elections. 

Sundstrom said any policy to create growth and attract substantial foreign 
investment could only be put in place once the political landscape had been 
changed by the Duma elections and after presidential elections, scheduled for 
summer 2000. 

Hopes are that these two events would create a government that had 
parliament's backing and provide a presidency that had popular support. 
President Boris Yeltsin's rating in opinion polls is currently at around two 
or three percent. 

*******

#9
Lebed: Stepashin Government Will Work Until 2000 

MOSCOW, May 17 (Interfax) - Russia's acting Prime 
Minister Sergei Stepashin will likely represent the party in power in the 
2000 presidential election, governor of the Krasnoyarsk territory 
Alexander Lebed told Interfax on Monday after Stepashin's speech in the 
Federation Council, the upper house of parliament. He also said that 
Stepashin's nomination for prime minister will probably be approved by 
the State Duma in the first attempt. "There are simply no reasons for 
rejecting his nomination. He is not the worst variant," Lebed said. He 
said the government led by Stepashin will work until the 2000 
presidential election. "The country will just not be able to handle 
another government dismissal," said Lebed. "Now that the country is faced 
with so many problems, only satiated idlers having no responsibilities 
can aggravate tensions," Lebed said. 

*******

#10
Russia Rejects Western Nuke Claims
May 20, 1999

MOSCOW (AP) -- Russia on Thursday rejected Western claims that its nuclear 
materials are poorly guarded, asserting that security measures meet and even 
exceed international standards.

The Russian Atomic Energy Ministry said the Western reports were totally 
unjustified, the ITAR-Tass news agency reported. American experts who have 
visited Russian nuclear facilities were satisfied with safety, the ministry 
was reported as saying.

``During their visits to Russia the U.S. experts have more than once been 
convinced that the nuclear materials there were safely protected,'' ministry 
spokesman Yuri Bespalko was quoted as saying.

Claims that Russian plutonium and enriched uranium could easily be stolen by 
terrorist groups were ``an attempt to deprive Russia of its nuclear power 
status,'' he said.

The ministry's statement came as Russia's legislature passed a law Thursday 
aimed at making the maintenance and disposal of nuclear weapons safer. The 
law establishes more definite legal accountability for nuclear accidents and 
requires that all nuclear weapons facilities be under federal control.

Security protecting Russia's nuclear materials is even worse than had been 
estimated previously, the U.S. National Research Council said in a report 
this week. The council, an arm of the U.S. National Academy of Science, urged 
the United States to work with the Russians for at least another decade on 
improving the protection of nuclear items.

Nuclear materials are stored atore locations in Russia than were originally 
identified in a joint U.S.-Russian review in 1997, the U.S. report said.

Some Russian institutions lack the money to pay salaries or to insure that 
proper security precautions are taken, the council said. Russia's economic 
problems have caused financial hardship for government officials and nuclear 
specialists, it said, increasing the incentive to steal materials and sell 
them illegally.

*******

#11
Date: Thu, 20 May 1999
From: MV <editor@k-punkt.com>
Subject: Kontrapunkt Russian Literary Magazine in America

The third issue of Kontrapunkt Literary Magazine will be coming off the
presses in
one week. We hope you will find it worthy of your attention and enclude
this short
summary of its contents. More information is available on our web site:
www.k-punkt.com

“Our Publications” column includes an interview by Thanassis Lallas with a
famous
Serbian author Milorad Pavich as well as Pavich's new essay "Epithaph to
the XX
Century" which was never published in Russian.
By choosing to publish the selection about and by Pavich, who has been
described
as “the best-known writer of the most hated nation in the world,” and as “the
first writer of the 21st century” we state the opinion of this journal on the
Balkan situation.

Three pieces are combined under the rubric “Two centuries with Pushkin”.
Andrei
Bitov reminisces about his friend and artist Rezo Gabriadze with whom he
collaborated on several books about Alexander Pushkin. A new play by Bitov
which
appears here was created especially for Gabriadze Pupper Theater. Andrei
Chernov’s
article “Progulki po Pushkinskomu Domu” (Through Pushkin's Archives) talks
about
unprintable verses of Alexander Pushkin. An article by Alla Gelikh “Tolstye i
Pushkin” (Tolstoys and Pushkin) weaves a tale about three members of Tolstoi
family and their links with Russia's genius poet.

In his new essay “Mesto Zimovki” (The Winter Sleep) the best known Russian
contemporary writer Victor Pelevin reflects on cultural and linguistic
idiomatic
idiocyncrasies of life in Russia.

“Commentaries to the Past” – is the name of the documentary prose, written by
Russia’s most famous science fiction writer Boris Strugatsky. In this issue
readers will find a humorous story about the creation of one of the most
successful novels “Piknik na Obochine” (Picnic at a roadside) and the
biography of
the Strugatsky brothers.

Three short stories by Genrikh Sapgir “Rimskie rasskazy” (Short stories
from Rome)
share the impressions of a popular avant-guard writer after his visit to
Italy.

Vyazcheslav Leikin from St. Petersburg is known better as a founder of a
poetry
school and a teacher of young talented poets than for his own poetry. With
this
collections of verses “Postizhenie t’my” (Delving into darkness) he is boldly
entering into the upper echelons of modern Russian poetry.

In spite of Veniamin Blazhenny's age, he is now around 80, fame arrived
only a few
years ago upon the most recent publication of his work. His first book of
verses
was published in 1990. Blazhenny was a student of Boris Pasternak and is
now one
of the most respected representatives of classical poetry style in Russian
language.

Anatoly Golovkov’s short story “Vrata” (The Gates) is styled in a rare
genre of
"black folklore" and acquaints us with morays and customs of Russian police.

In addition to the above, this issue contains reviews of new books and Russian
cultural events.

******

#12
Date: Thu, 20 May 1999 
From: Tan Wee Cheng <tanwc@yahoo.com>
Subject: New travel list

Dear David,

I used to be a subscriber of your list. I have just
set up a discussion mailing list devoted to travel in
the Russian Federation and the surrounding regions. Is it
possible to publicise this on your CDI Russian Weekly
List ?

The description of this mailing list is:
The travel discussion list for people interested in
travel within the Russian Federation, as well as 
surrounding areas such as Mongolia, Belarus & Moldova,
which are not already covered by other mailing lists. 

This list is strictly devoted to travel in the above 
defined region. Advertisements and political
discussions are strictly forbidden.

You can join this list by sending a blank email to :
RussiaTravel-subscribe@onelist.com

OR by going to this website: 
http://www.onelist.com/subscribe.cgi/RussiaTravel

Thank you and with regards,

Wee-Cheng
List Owner
Singapore/London 

******

#13
'Text' of Stepashin Address 17 May 

Moscow ITAR-TASS World Service 

Moscow, 17th May: Acting Russian Prime Minister 
Sergey Stepashin today addressed an extraordinary session of the 
Federation Council [upper house of parliament] on the current situation 
in the country as a result of the government's dismissal. 

First of all the acting prime minister presented upper house members with 
a brief report on measures being taken at present by the government which 
continues to carry out its duties. Then Sergey Stepashin moved on to the 
main subject of the Federation Council session: There follows the text of 
his address: 

"I am sincerely grateful to you for inviting me to address this session 
today. Esteemed senators, I have known the majority of you for a long 
time as a result of specific issues which we have had to resolve together 
during my work in the power structures. 

We have also spoken to a lot of people over recent days. I had two 
meetings in a row, on Saturday and Sunday. I met with just about all of 
you. We discussed how the authorities should work to bring Russia, 
finally, out of this most difficult economic situation and create a basis 
for the consolidation of society. 

I will say right away that I am not presenting the government 
programme here. I think you will be understanding. As is usual, I am 
preparing for a speech to the State Duma and I will try to answer the 
questions you raised during our meetings. This is why I am very keen for 
us to share our ideas today about how the future cabinet should organize 
its work. 

I am convinced that Russia's interests lie first and foremost in the 
sum of regional interests. This is why I believe it is necessary to base 
the programme the federal government will follow if I am confirmed [in 
this post] on your suggestions, on the suggestions from the parts of the 
Russian Federation. 

The regions have accumulated colossal economic experience. Many of you 
have implemented your own regional economic programmes which have shown 
themselves to be effective. As they say, if you have something good, you 
ought not to look for something better, therefore I believe the 
government is obliged to accept and use this rich experience. 

I must state firmly that as regards the government's strategy the 
drive towards economic and political stability will be maintained and not 
only maintained. The previous government kept the Russian economy from 
falling apart, as it were, but our task now is to move from the defence 
to attack. Moreover, we cannot take our time getting used to things - the 
next three months will be decisive. That's when the country embarks on 
its election campaign so we have to put this huge Russian economy of ours 
in order before that starts. 

I am very much counting here on the State Duma deputies adopting the 
draft laws that have already been submitted and on which financial 
stabilization in Russia, including the extension of credits, depends to a 
great extent. And of course, I hope, Senators, that you will give these 
laws your support. 

Joint work by the legislature and executive must aim for the speedy 
restoration of the real economy, the normal functioning of the tax and 
banking system and, in the final analysis, to bring funds into the 
treasury. There is no way here that we can get away without setting up a 
financial mechanism corresponding to the country's federative structure 
and the task of ensuring the equal economic development of its 
territories. 

Over the past couple of days I received many specific proposals from you, 
esteemed members of the Federation Council. Many of those proposals 
should be implemented as soon as possible. As far as all the proposals 
put forward at our meetings - altogether about 150 - I shall issue 
specific instructions for all the ministers and the government apparatus 
tomorrow [18th May]. The documents will be summed up, and each of you 
will receive a proper answer. I believe that this first system of 
interaction that all of us need so badly today will become the first step 
in the government's and the Federation Council's specific and 
constructive joint work. 

But there are strategic initiatives among those proposals, too - for 
instance, to set up an economic council under the government so that 
regions may really voice their opinions. 

Reduction in the numbers of federal officials in the regions has long been 
overdue. As far as I remember, we have been talking about it at least for 
more than five years, but nothing has yet happened. By the way, I was 
shocked yesterday by the example given by Kursk Region governor Aleksandr 
Rutskoy. He said that there were 19,000 civil servants per 1,300,000 
people who live in Kursk Region. I remember Soviet time when the 
government of Nikolay Ivanovich Ryzhkov was criticized for the same 
amount of civil servants - 19,000 bureaucrats - and now the same amount 
is working just in Kursk Region alone. 

Of course, the work of the government will be based on a number of 
achievements by the previous cabinet. Some work is already in hand. The 
pace of inflation has been successfully lowered, the number of 
loss-making enterprises has been reduced, wage debt and payment debt has 
been lowered substantially and measures are being taken to ensure regular 
payments. In brief, the foundation is there. But for something to grow, 
much and difficult work must still be done. 

I fully acknowledge that people's living standards are continuing to 
fall. Foreign investors are leaving our market. And many domestic 
enterprises are unable to pick themselves up. This has caused the growth 
in social tension and it is a threatening sign. Given the impoverished 
population, this tension may take very dangerous forms. 

In order to prevent events from developing in this way, we must act 
clearly, effectively and with urgency. Neither compromises nor half 
measures can be permitted. A upsurge is needed and this needs to happen 
primarily using domestic resources. In the situation which has developed, 
Russia needs to gather its strength in order not only to survive but to 
stand firmly on its own feet and it needs to mobilize its own resources 
and bring in resources not yet used to govern the situation. 

I see the situation, first and foremost, as comprising of the 
following: 

Firstly, to ensure by all possible means that the revenue part of the budget 
is filled without fail. Whatever is owed should be collected, retained 
and used rationally. Dodging taxes and other obligations and payments, 
including customs dues, I regard as not just a criminal offence but as a 
crime against one's own country. Those who violate the law will be given 
no quarter. 

Secondly, it is essential to widen the range of funds entering the budget by 
assisting domestic producers of goods and services. The logic is simple. 
The more prosperous and profitable enterprises there are in Russia, the 
richer you and I will be, and the richer the citizens of our huge country 
will be. 

In his annual address, the president cited competitiveness as Russia's 
strategic priority in the third millennium. And this is a task on which 
the state bodies and all the country's political forces have to work. We 
must make Russia perceived abroad not only as a political heavyweight, 
but as a mighty economic power. After all, Russia continues to possess 
unique technology in the most diverse spheres, and the Russian people 
continue to possess unique industriousness and tolerance. 

Naturally, the volume of payments and money collected should not be 
excessive. 

The state should provide incentives to production, create conditions for 
investment, encourage any kind of investment which can yield benefits. In 
doing this, it is extremely important to check that the capital does not 
go into the shadow economy, or even more so, that it does not ebb away 
abroad, as has been happening all these years and unfortunately is still 
going on to this day. The measures that have been taken to stop this are 
still not sufficient and the hundreds of billions of dollars already 
exported are being supplemented daily with hundreds of thousands more. 
But we do have the necessary arsenal of means in reserve to stay this 
tide and channel it back into the Russian economy. In this I am reckoning 
on your backing, respected members of the Federation Council. 

First as interior minister and now as acting prime minister, I ask you in 
the very near future to approve the bill on various options for returning 
to Russia capital which has been taken out, sometimes by illegal means. 
This bill was rejected by you but adopted virtually unanimously by the 
State Duma. Work involving the colossal sums involved will be organized 
by a special commission which has already been set up on instructions 
from the government and by an interdepartmental centre under the Russian 
Interior Ministry. 

I cannot [but] talk about the criminalization of Russian business, 
both at the state level and at the private level. Theft is the main 
factor holding back our development. Crime and corruption reduce the best 
ventures to nothing. Let me give you just one very fresh example. In 
April last year R60m went into the budget of Krasnoyarsk Territory [where 
Aleksandr Lebed is governor]. After the Interior Ministry, the tax police 
and other law-enforcement bodies had spent four months carrying out a 
range of "cleansing" measures, as it were, R501m went into the 
Territory's budget this April. Let me repeat, 60m and 501m. 

The same may be said about the funds that reached our public-sector 
employees in Krasnodar Territory once the port of Novorossiysk had been 
"purged" of criminals and bribetakers. 

I think that of course it's understandable why the government is 
making it a priority to put the so-called shadow economy back on a 
civilized footing. We have to enter the 21st century with a transparent, 
open and honest economic system. It's only at first sight that this task 
seems insoluble. My experiences of work in the power structures suggests 
that we can do it. And we have a specific plan of resolute action in this 
sphere. And moreover, it is already being put into effect. 

I shall touch on one more very important issue. I mean coordinating 
the activities of the government with the constituent parts of the 
federation. It's not so long ago that I was appointed first deputy prime 
minister for regional policy. From what I know it's so hard for the 
governors to get the government's attention by ringing up, by hammering 
on doors or by simply shouting that, if you think it necessary, I'm 
willing to handle this most important area of work myself if, of course, 
I am appointed. 

Let me say a few words about personnel. I think it is premature to talk 
about who will be appointed to the government when my nomination has not 
yet been endorsed by the State Duma. Of course, I have a list. Many of 
the names on it were in the previous government. But far more important, 
it seems to me, than discussing individual candidates at the moment, is 
to fix the principles by which the Cabinet will work. 

The government must not be under the sway of political opportunism. It 
must have specialists working in it, specialists of the highest 
qualifications who are not dependent on party allegiance. This government 
must be aware of its independence in its day-to-day work. We will work 
with anybody. But we cannot allow the government to be pressurized. 

I thank you yet again for the opportunity to speak from this rostrum. 

I hope I will meet you not just within these walls, but within the walls 
of the government headquarters. Thank you very much for your attention 
and for your support, which I received yesterday and the day before 
yesterday. Thank you." 

******

#14
>From Polit.ru
May 20
http://www.polit.ru

10:58 The main theme of today's newspapers, just as yesterday, remains the
theme of Berezovsky, who through "his" presidential administration is
trying to form the government of Stepashin. In this way Berezovsky, in the
opinion of Kommersant-Daily and Vremya MN newspapers, wants to compensate
for his setback with Aksyonenko, whom he had intended to get appointed
Premier. In the path of Berezovsky's plans, according to the press, stands
Anatoly Chubais, who is believed to have had a decisive role at the
last-minute replacement of Aksyonenko's candidacy by Stepashin. Among
Berezovsky's allies, Kommersant mentions Lev Chyorny and his TWG. The main
indicators of the unfolding struggle will be the appointments of an
interior minister (Berezovsky's candidate - Rushailo is on the list of
aspirants to the post), as well as of a second first deputy prime minister
(Berezovsky has in mind "his" Voloshin for this post). 

11:43 The refusal by Alexander Zhukov to join the government against a
background of talk about Berezovsky's struggle for power in the government
is becoming the main news of the day. Interfax government sources claim
that Stepashin has not abandoned his plans to have Zhukov in. "There's no
change in the premier's stand on this score," they say. According to the
sources, Yevgeny Savchenko, head of the Belgorod regional administration is
a likely replacement for Kulik (you will recall that speaking to the
Federation Council, Stepashin actually farmed out the agricultural
vice-premiership to the senators). Talking to a Polit.Ru correspondent,
Zhukov's press secretary, Alexandra Sokolova confirmed today's Ekho Moskvy
report that Zhukov had refused to join the government. (Note that Zhukov
said the post he had been offered was not a first, but just a vice-premier,
meaning that he would not have been able to directly contact the premier or
the president). At noon Zhukov promised to tell journalists about the
reasons he had so decided. Sokolova declined to confirm or deny the
information that the attitudes of the Yeltsin administration and Stepashin
on Zhukov's appointment had differed. We offer a biography of Zhukov, who
so far has not become the economic vice-premier of the Stepashin government. 

13:03 The Economics Ministry, almost daily presenting results of its own
macroeconomic studies recently, offered a short-term forecast at today's
Cabinet meeting. Speaking in the government, Shapovalyants said that the
ministry expects the economy to grow annually at the rate of five to 7
percent from the beginning of 2002. Output in 2000 is projected to rise by
3.5 percent, while GDP promises to increase by 3 percent. Shapovalyants
hopes that incomes of the population in 2000 will be restored to the level
of July-August 1998. The ministry's most cheery inflation forecast for 2000
is between 18-20 percent. If, however, the Duma refuses to pass the laws
agreed with the IMF, inflation might rise to 60 percent against the
projected realistic 25-30 percent. Unless IMF and World Bank credits are
extended, foreign investment will be sharply reduced, and in this situation
the Economics Ministry intends to suggest measures to boost control of
currency movement, in particular - to other countries. 

14:33 Vyacheslav Nikonov, president of the Politika Foundation, said that
under today's conditions the calling off of presidential elections was very
likely. If the ratings of the Kremlin's favorites - Sergei Stepashin,
Nikolai Aksyonenko and Viktor Chernomyrdin - "do not instill optimism in
Boris Yeltsin, there certainly will be no elections," he said at a news
conference in Moscow. Nikonov, who is one of Otechestvo's leading analysts,
believes that "Yeltsin's interests today differ sharply with those of
Russia," and therefore there can be no talk whatsoever of boosting
democratic institutions, Interfax reported. 

17:01 Yavlinsky said at a news conference in St. Petersburg that Yabloko
had suggested to the leader of the Otechestvo movement, Mayor of Moscow
Yuri Luzhkov a "plan of joint action" in the upcoming elections to the
State Duma. "Otechestvo is the main partner and the main opponent of
Yabloko simultaneously," and therefore, in order that "neither communists
nor fascists" may win the elections, a special plan will be offered to the
Luzhkov movement for "dividing the 120 federal constituencies on a parity
basis" - Yabloko candidates to run in 60 single-mandate constituencies and
those of Otechestvo - in the other 60, with "mutual support in these
constituencies that would secure the passage of our candidates." 

******

#15
Duma Defines Powers of Common Courts.

MOSCOW, May 20 (Itar-Tass) - The State Duma lower house of Russian parliament 
on Thursday had the first reading of the bill "On Powers of Common Courts in 
the Russian Federation to Ensure that Normative Legal Acts Conform to Federal 
Laws". As many as 368 deputies voted for the bill, and one deputy abstained. 

The need to pass this federal constitutional law stems from the fact that, as 
experience shows, government authorities, local self-government bodies and 
officials in the Russian Federation adopt a large number of normative legal 
acts that run counter to federal laws. As a result the rights of citizens and 
organisations are infringed, the competence of other bodies of state 
authorities, local self-government bodies and officials is interfered with 
and there is a danger that legality in Russia will be upset. 

During the operation of the new Constitution, common courts found that a 
large number of normative acts of local self- government bodies, federal 
ministries and other agencies run counter to law. Common courts' decisions 
prevented mass violations that could have resulted from the application of 
given acts. Legality in Russia was consolidated. 

It is planned to define the powers of common courts investigating whether 
normative legal acts below the federal level are in keeping with federal 
constitutional laws. 

******

#16
Russian PM creates new govt economic council
By Julie Tolkacheva

MOSCOW, May 20 (Reuters) - Russian Prime Minister Sergei Stepashin said on 
Thursday a new government economic council would be created to improve 
forward planning and head off emergencies. 

Stepashin, chairing his first government meeting since being confirmed in his 
post by the State Duma lower house of parliament on Wednesday, called for 
next year's draft budget to be submitted to the Duma by August for early 
approval. 

"Why is it that every year we hold emergency discussions on paying holiday 
money to public sector employees or on rivers freezing over? Let's stop 
flying by the seat of our pants," Itar-Tass news agency quoted Stepashin as 
saying. 

The new economic council would comprise economists and regional governors, 
said the former interior minister, appointed by President Boris Yeltsin to 
inject dynamism into reforms. 

Stepashin said Russia could not count on significant foreign investment 
before a presidential election due in mid-2000, Tass reported. 

Conditions agreed with the International Monetary Fund for new loans could be 
met with difficulty, he said. But Acting Economy Minister Andrei 
Shapovalyants told the government meeting that there was a good chance of 
meeting conditions. 

If revenue-raising laws agreed with the IMF were rejected, inflation could 
quicken to 60 percent this year, Shapovalyants said. 

Russia's 1999 budget estimated annual inflation at 30 percent but officials 
have since raised forecasts to about 50 percent. Stepashin wanted next year's 
budget approved before a parliamentary election due in December. 

The government should start working actively with the Duma, "so that when we 
send it to the Duma in August, there are no conflicts," Interfax news agency 
quoted Stepashin as saying. 

Interfax quoted Shapovalyants as saying the Russian economy was showing the 
first signs of revival. 

"We are far from thinking that the crisis in the Russian economy is over, but 
positive trends in the economy are evident," he said, adding that the trade 
surplus could amount to $25 billion in 1999. 

Prime-Tass news agency quoted parliamentarian Alexander Shokhin as estimating 
the 1999 trade surplus at $30 billion. 

Russia posted a $5.8 billion trade surplus in the first quarter of 1999, 
compared with $4.0 billion a year ago. Russia's 1998 trade surplus was $14.4 
billion. 

Shokhin said the surplus would help the rouble hold steady. 

Central Bank Chairman Viktor Gerashchenko, speaking at the government 
session, was quoted by news agencies as saying the currency should hold 
steady at 24-25 roubles at least until the fourth quarter of this year. 

Shapovalyants said a higher trade surplus would also help the government in 
negotiations on foreign debt restructuring. 

Acting Finance Minister Mikhail Zadornov told the meeting the Paris and 
London Clubs of creditors holding Soviet-era debt were prepared to reach a 
solution but were waiting on the IMF and World Bank to take a final decision 
on support for Russia. 

******