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Johnson's Russia List


June 10, 1999    
This Date's Issues: 3334 • •

Johnson's Russia List
10 June 1999

[Note from David Johnson:
HELP! I need someone to bring a video tape from Moscow to
Washington by early July.
1. Reuters: Former Russian PM hints at political comeback. (Primakov)
2. AFP: US Soros blasts Russian tycoon Berezovsky as example of "robber 
3. Newsday: Dimitri Simes, U.S. Shouldn't Be Betting on Yeltsin.
4. Itar-Tass: Kremlin Objects to Meddling with Life of Citizens.
5. John Danzer: Revolution Delayed.
6. AP: Russia Army Opposes Kosovo Deal.
7. Moscow Times: Pavel Felgenhauer, DEFENSE DOSSIER: Serbs Sold Down the 

8. AP: Russia Rehabilitates Dead Royals.
9. New book: Anatol Lieven, Ukraine and Russia: A Fraternal Rivalry.
10. Gordon Humphrey: The Russia Society seeks Web site designer.
11. Andrei Liakhov: Berezovsky Saga.
12. St. Petersburg Times: Anna Shcherbakova, Survey Bodes Well for 
Local Products.

13. Komsomolskaya Pravda: Sergey Chugayev, Are Chubays and BAB Once 
Again on the Same Team? (Berezovskiy, Chubays Share Common Goals).

14. Jerry Hough: Alexander Gerschenkron etc.
15. the eXile editorial: Hazards Await New PM.
16. Reuters: Tuberculosis Cases Balloon in Russia, Could Spread.] 


Former Russian PM hints at political comeback

MOSCOW, June 9 (Reuters) - Russia's former prime minister Yevgeny Primakov, 
sacked by President Boris Yeltsin last month for slow reforms, said on 
Wednesday he had not ruled out a return to active political life. 

``The future will show. I do not exclude anything,'' the cautious Primakov 
told Itar-Tass news agency in his first public comments about his plans since 
being sacked. 

He was speaking as he headed to Switzerland to receive treatment for back 
problems which dogged his last days in office. He was also due to give a 
lecture to an international conference there on Russia's role in the 
post-Cold War world. 

Primakov, 69, has kept a low profile since leaving office, but several 
political parties have shown themselves eager to put him on their election 
lists for the next parliamentary poll due in December. 

His popularity ratings are still higher than those of most party leaders. 
Many political analysts say his popularity was the real reason he was sacked 
by Yeltsin, known for jealously guarding his power. 

The centrist Fatherland movement, led by powerful Moscow Mayor Yuri Luzhkov, 
has openly said it wants Primakov to take part in its parliamentary election 

Regional leaders from another centrist grouping have also tried to lure 
Primakov, a former foreign minister and spymaster. 

Politicians across the spectrum praise Primakov for having steered Russia 
away from a possible social explosion following last summer's financial 
crash. He also assiduously courted the different parties in the State Duma 
lower house of parliament. 

Primakov was replaced as prime minister by Sergei Stepashin, a loyal Yeltsin 
ally who served as interior minister in the previous cabinet. 


US Soros blasts Russian tycoon Berezovsky as example of "robber capitalism"

MOSCOW, June 9 (AFP) - US billionaire financier George Soros lashed out at 
Russian tycoon Boris Berezovsky, calling him an "evil genius" who was a 
typical example of what's wrong with capitalism in Russia, the newspaper 
Kommersant reported Wednesday.

"I think that he is the most evil genius, a typical representative of robber 
capitalism," in which "owners of capital unfortunately have strong political 
influence that they would not need to have in normal conditions," Soros told 
the respected business daily.

"I am forced to note that he (Berezovsky) profits from having too great an 
influence in your country. This makes me quite unhappy," the US billionaire 

Berezovsky, a controversial and powerful businessman with ties to the 
presidential family, is widely portrayed as an eminence grise who played a 
major role in forming premier Sergei Stepashin's new government.

In the wide-ranging interview, Soros decried the sorry state of Russia's 
economy, including the shabby way foreign investors are treated, its weak 
government and the control exercised over the media by powerful financial 

"In Russia such a situation has been created where it's unprofitable for 
foreign capital to come into the country. All this has come to pass because 
property rights and real estate unfortunately are not sufficiently respected 
in this country," Soros said.

The Russian government's clashes with British Petroleum after the oil giant 
tried to save the troubled holding company Sidanko from bankruptcy is just 
one example of problems foreign investors have had in Russia, Soros said.

When asked why he invested his own money in Russia, Soros replied that he 
invested in telecoms giant Svyazinvest at a time when he believed robber 
capitalism was on its way out in Russia.

"Unfortunately for me such an auction served as grounds to re-evaluate the 
situation," he said.

Soros invested 980 million dollars to a winning bid of 1.875 billion dollars 
for a 25-percent stake in the Svyazinvest in July 1997, but the government 
was heavily criticized by rival bidders for favoring Oneximbank in the sale.

The US billionaire also criticized Russia's oligarchs for having too much 
control over the mass media.

"When the mass media falls under the influence of financial interests, this 
is already not a very healthy climate," he said although he added that at 
least the opinions of different oligarchs were expressed in various media.

Soros said his trip to Moscow was to check up on his investments and his 
various projects in health and education in which he plans to donate 100 
million dollars this year. 


9 June 1999
[for personal use only]
U.S. Shouldn't Be Betting on Yeltsin
By Dimitri K. Simes. Dimitri K. Simes is president of The Nixon
Center and the author of "After the Collapse: Russia Seeks Its Place
as a Great Power." 

THE MONTH since the May 12 dismissal of Prime Minister Yevgeny
Primakov has demonstrated the pitiful state of Russia's virtual
democracy-and the Russian president's contempt for his country's still
weak democratic institutions.
Primakov was popular among not only the Communist-oriented
parliamentary majority, but also the Russian people. At the time of his
firing, Primakov's approval rating was 68 percent-a sharp contrast with
President Boris Yeltsin's 2 percent support. In one survey, 81 percent
of Russians have since expressed regret over his ouster. A broad group
within Russia's political elite has also denounced Primakov's dismissal,
including all of Russia's major presidential candidates.
But none of this matters in today's Russia, where the opinions of
the legislature, political parties and the electorate count less than
the whims of the constitutionally powerful but physically and mentally
feeble Yeltsin. His control of the military and security services is
much more important to the continuation of his rule than the machinery
of democratic politics.
In this context, the appointment of Sergei Stepashin-a former
interior minister and Yeltsin loyalist-as prime minister was initially
perceived as a further step toward guaranteeing Yeltsin's personal
power. However, Stepashin quickly declared that he was his own man and
that he would essentially continue Primakov's stabilizing policies,
uphold the constitution, consult with the Duma (the lower house of
parliament), and-most important-assure that Russia's forthcoming
parliamentary and presidential elections would take place as scheduled.
These statements triggered a split with Yeltsin's inner circle. As a
result, Stepashin is not quite in charge of his own government. At the
same time, the forceful conduct of First Deputy Prime Minister Nikolai
Aksyonenko, an obscure former railways minister widely suspected of
corruption, has encouraged speculation that Aksyonenko has strong
support from the Yeltsin family and its financial backers.
Stepashin selected two other first deputy prime ministers, Aleksandr
Zhukov (chairman of the Duma's Budget Committee) and Mikhail Zadornov (a
former finance minister), but each was blocked by Yeltsin's entourage.
Eventually, the new prime minister was able to appoint several reputable
economists to key positions.
However, their jobs were reportedly secured by another group of
tycoons close to Yeltsin. Accordingly, the formation of the cabinet
looked like a messy division of the spoils among competing clans within
the Yeltsin camp.
Although Yeltsin justified sacking Primakov by arguing that new
energy was necessary to turn Russia's economy around, the Stepashin
government is unlikely to achieve much of substance. While the
parliament confirmed the new prime minister with a commanding majority,
its vote was hardly a vote of confidence; rather, it was a reflection of
the perception that Stepashin was a "lesser evil" in comparison with
other nominees Yeltsin could have chosen.
More important, many Duma deputies were disinclined to risk
parliament's dissolution as it could deprive them of perks helpful in
campaigning in the December elections. This same fear of being dissolved
may help the government to persuade the Duma to approve a package of tax
increases and other measures requested by the International Monetary
Fund as a prerequisite for a $4.5-billion debt-restructuring deal. Even
in this case, however, the Duma is likely to insist on amendments that
would protect its members from charges that they increased taxes on
orders from the IMF.
Many share strong suspicions that Yeltsin-and, perhaps more relevant
given his growing incoherence, the people around him-will seek to
postpone the elections and introduce some kind of emergency rule. Should
this happen, the opposition's current relative complacency is likely to
come to a quick end. Similarly, if -as some Yeltsin associates have
hinted-he attempts to "pull a Milosevic" (that is, expedite the
unification of Russia and Belarus in order to create for himself a
powerful position as president of the new union), most Russian political
parties will join forces to block him.
In contrast to the vocal but nearly impotent Duma, Moscow Mayor Yuri
Luzhkov and Russia's other regional leaders have real cards to play;
they control numerous local security detachments and have ties to
military units dependent upon them for food, housing, and power.
The Clinton administration faces a dilemma: An inept Yeltsin
government desperately dependent on western aid is easy to push
around-as has been demonstrated in Yugoslavia-but there is a downside.
The risk of unpredictable crises in a country with thousands of nuclear
Another disturbing possibility is a nationalist avalanche in Russia
directed against Yeltsin and the United States as his patron. Under the
circumstances, giving the Russian president the impression that he can
once again count on the administration's support in disregarding the
constitution would be a dangerous gamble. The famous patience of the
Russian people cannot last indefinitely-and betting on Yeltsin and his
corrupt inner circle could cost the United States dearly.


Kremlin Objects to Meddling with Life of Citizens.

MOSCOW, June 9 (Itar-Tass) - The Federation Council (Upper House) is expected 
to debate on Wednesday a bill "On the Prevention of Legalisation (Laundering) 
of Illegally Derived Incomes". 

Having passed through the State Duma and the upper house's conciliation 
commission, the document, authored by the Interior Ministry and tabled by the 
government and a group of Duma members, ended up by differing substantially 
from the original version. Precisely this, Itar-Tass has learned from 
trustworthy sources within the presidential administration, explains the 
Kremlin's negative attitude to the bill in its present form. 

The point is that the implementation of the current version will draw all the 
organisations without exception into the mechanism of total spying on each 
other, and also on rank-and-file citizens, the presidential administration 
believes. Moreover, the document is of a purely decorative character, Kremlin 
experts insist, and will not help return the unlawfully derived money to the 
state. "We back the measures to combat corruption, but this law may engender 
abuses of quite another kind," members of the presidential administration 

"The law," Kremlin experts point out, "contains a rather lengthy list of 
financial or property transactions that are subject to compulsory control." 
Moreover, the law envisages some norms that directly violate human rights. 
For instance, it makes it incumbent on organisations, effecting financial or 
property transactions, to furnish documents, containing information on 
citizens engaged in such business operations. In other words, it envisages 
the keeping of records on all the citizens of the country. 

Such a concept of the law may lead to "the state's all-embracing and 
unconstitutional meddling with the affairs of the parties to civil law 
relationships", the presidential administration believe, stressing that the 
president is categorically opposed to it. 


Date: Wed, 9 Jun 1999 
From: (John Danzer)
Subject: Revolution Delayed

It has been several months since I have contributed anything to
JRL. The Nato assault on the Serbs has been very distracting. I am 
somewhat of a doom and gloom one-trick pony. My non-expert, opinion has not 
changed. I only open my mouth occasionally to voice that opinion. So here I 
go again. 

The reports continue on the deteriorating conditions in Russia. So, where's 
the Revolution? Some say it's the innate patience of the Russian people that 
has prevented a revolution. Others, mostly those optimistic about their 
Russian investments, cheer on the great progress that Western reporters 
ignore. My preferred theory, is that the biggest factor is Yeltsin's 
horrible health. That's what has prevented the overthrow of the present 
regime and the establishment of authoritarian control. Those who would like 
to take control of Russia keep thinking that Yeltsin is going to die any day. 
Why go through all the trouble of trying to organize a revolution when 
Yeltsin could die tomorrow. The vigil has gone on for four years. Yeltsin is 
not a SURVIVOR. He's just taking a long time to die.

The fact that Yeltsin could die tomorrow is the single factor that must be 
considered in all equations predicting Russia's immediate future. Does anyone 
really believe that sound minds will take charge and guarantee that elections 
will take place as scheduled? When Yeltsin dies the flood gates will open. 
Who will emerge as leader. It is inevitable that a power struggle will take 
place between the center and the regions. A new center will have to be 
formed from this struggle. Will the victor be Luzkhov the
BUILDER/MAYOR or Lebed the DESTROYER/GENERAL? There aren't too many 
candidates for dictator. Dictatorship is not a choice that will be made at 
the polls.

Ten years ago progress could have been made without the need of a dictator. 
But all that time has been squandered and a game of catch-up has to begin. 
That game will be played by a bunch of regional dictators who will rebuild 
their unique economies and one Super-Dictator who will rebuild the military 
and restore their collective influence on the world stage. 

Some on this list have said that it will take a generation for Russia to turn 
around. Yes, that's by ordinary means. Some criticize Simes and Cohen for 
always talking about the Russian Nukes. Sooner or later that core of 
military strength will be called into use if only as a tool of World 
blackmail. In fact, right now, Russia is taken seriously for no other 
reason. Expect a dictator who will buy time and space by playing the nuclear 
card a little more often. 

My pessimism continues.

John Danzer
Ordinary Observer


Russia Army Opposes Kosovo Deal
June 9, 1999

MOSCOW (AP) - When Russia's special envoy for Kosovo returned home last week 
after brokering a peace plan, a stone-faced Russian general stood at his 
shoulder and openly assailed the deal as a sellout to the West.

``Each of us should answer this question in his own soul - have we betrayed 
Yugoslavia or not?'' said Gen. Leonid Ivashov, who accompanied envoy Viktor 
Chernomyrdin, and represented Russia's Defense Ministry at the peace talks.

Now that Russia has agreed to the Kosovo peace plan, the military's 
opposition to the terms of the deal and their support for Yugoslav President 
Slobodan Milosevic points to potential problems in implementing a 
peacekeeping operation.

Russia and the seven leading industrialized nations, known together as the 
Group of Eight, agreed Tuedsay to a draft U.N. resolution to end the Kosovo 
crisis. But while NATO says it will be in charge of the peacekeeping force, 
Russia says the full command structure still has to be negotiated.

Russia is considering sending up to 10,000 troops for a proposed force of 
50,000. But Ivashov and other military officials have insisted Russian troops 
will not serve under NATO command and their stance has become Russia's 
official view.

``The president still determines the foreign policy, but he and his 
pro-Western inner circle have become increasingly isolated,'' said Pavel 
Felgenhauer, an independent military analyst. ``It's a struggle between two 
groups, one of which favors a quick agreement with the West while another 
stands for siding with the Serbs.''

Russian leaders have been unanimous in their condemnation of NATO raids on 
Yugoslavia, but there have been differences on what the response should be.

While President Boris Yeltsin said from the start that Moscow wouldn't be 
drawn into the war militarily, the military brass spoke of sending military 
advisers - and even weapons - to Yugoslavia.

``They can fire a general, but they can't fire all of them,'' Felgenhauer 
said. ``Ivashov expresses a broad opinion of the military elite. He's smart 
enough to realize that once the current government is gone, his patriotic 
statements will be fondly remembered.''

In any case, Yeltsin has not publicly censured Ivashov for his outspoken 
remark. When he met with the assertive general a day later, there was no 
indication that Yeltsin rebuked him.

Broad anti-Western sentiments among the Russian elite and a large segment of 
the public make it hard for Yeltsin to censure Ivashov and other hawks 
without further eroding his low popularity.

The Russian military has always been suspicious of NATO, and after a period 
of improved relations in the first part of this decade, the military grew 
wary as the alliance announced plans to expand. Then in March, three eastern 
European nations joined NATO and the alliance began bombing Yugoslavia.

``There is a feeling that Russia will be the next victim after it had failed 
to stop NATO in the Balkans,'' Felgenhauer said.

Yeltsin can't afford to be too critical of the military, because the Kremlin 
has long used the same anti-NATO stance.

While highlighting a split in the Russian leadership, the hawkish statements 
from Ivashov and other generals don't mean the nation's armed forces are on 
the verge of open mutiny, most analysts say.

``The military opposition isn't structured, it's far from becoming an 
independent political force,'' said Sergei Oznobishchev, the director of the 
Institute for Strategic Assessment, an independent think-tank.


Moscow Times
June 10, 1999 
DEFENSE DOSSIER: Serbs Sold Down the River 
By Pavel Felgenhauer 

The war over Kosovo has sharply split Russian society into two groups. A 
small but highly influential pro-Western clique of corrupt oligarchs that 
controls the Kremlin supports NATO aggression and the occupation of Kosovo. 
The rest of the country, including its professional military and diplomats 
supports the Serbs. 

Recent polls say that 98 percent of Russians disapprove of NATO actions in 
Yugoslavia, while less than 2 percent approve. Similarly high numbers believe 
that the Albanians are more to blame for the hostilities in the Balkans than 
the Serbs. Such public opinions cannot be written off as the result of some 
brainwash. Today Russia's major TV channels are owned by the pro-Western 
oligarchs so their coverage of the war in the Balkans is distinctively 

However, the vast majority of Russians have no say whatsoever in the running 
of the country or its foreign policy. 

Everything is controlled by President Boris Yeltsin, or by those shadowy 
figures near Yeltsin who control the president. It makes little difference 
who actually controls whom in the Kremlin. The end result is the same: a 
regime that does not represent Russia, that is hated by almost everyone but 
is at the same time highly approved of by Western rulers, especially by U.S. 
President Bill Clinton's administration. 

Many Russians see NATO's action against Yugoslavia as a terrifying forecast 
of what may happen to our own country if NATO continues to expand in the same 
aggressive fashion. 

Many Russians, including Alexander Solzhenitsyn, see parallels between the 
situation in Europe now and the situation before World War II, when Axis 
warplanes bombed Spanish towns in the first trial of strength to impose a new 
order in Europe. 

When NATO began to bomb Yugoslavia in March, every Russian, including those 
few with pro-Western sympathies, was outraged. But as soon as Washington 
offered a price that seemed good, the pro-Western Kremlin clique promptly 
sold the Serbs down the river. 

It is rumored in Moscow that at the coming G-8 summit on June 18 Russia will 
be rewarded by a new aid package for being "constructive" in solving the 
Kosovo problem and helping Clinton avoid the agonizing decision to send 
ground troops in an all-out offensive against Yugoslavia. 

Many people have accused Viktor Chernomyrdin of selling out to the West. But 
Chernomyrdin was obviously just doing what he was told to do. Yeltsin and the 
oligarchs have used Chernomyrdin and the Foreign Ministry to organize a 
speedy surrender while Yeltsin was publicly lambasting the West for 
"aggression." As has happened many times before Yeltsin's ministers are 
providing their chief with an alibi, if the Kosovo peace goes wrong. 

The NATO-imposed peace will probably be another public relations disaster. 
Russian officials say that a 5,000 to 10,000-strong Russian military force 
will be sent to Kosovo, and that it will be "independent of NATO command." 
This is totally impossible. 

The defense budget in 1999 is planned to be $7 billion. In reality, the 
military will be lucky to get the equivalent of $4 billion by the end of the 

To equip and maintain 10,000 men for one year with heavy armaments in 
war-torn Kosovo will cost up to a billion dollars. Only if NATO pays Russian 
bills and provides logistical support can a sizable Russian contingent be 
posted in Kosovo. But if NATO pays and supports it, it will also be fully in 
control. Russian troops will be Western-paid proxies like their political 
masters in the Kremlin. 

While parading peace NATO is prepared to cleanse Kosovo of Serb and other 
non-Albanian civilians. Pentagon spokesman Kenneth Bacon has already said, 
"Kosovo is not going to be a very happy place for Serbs" and that they will 
leave. Of course, Bacon added that "if people want to leave, they'll be 
allowed, they will not be forced out." But ethnic cleansers always use that 
phrase. Any Russian "cooperating" with NATO in Kosovo will be seen as an ally 
of ethnic cleansers by many back home. 

The Kremlin clique may indeed get some more Western credit as the price of 
capitulation. But like last summer, the new billions will soon evaporate and 
the regime will collapse. 

Almost all Russians, especially the Russian military, increasingly believe 
that Yeltsin's continued presence in the Kremlin is a terrible liability, a 
handicap for Russia. The country and its military may simply not wait for 
elections to get Yeltsin out. 

Pavel Felgenhauer is chief defense correspondent of Segodnya


Russia Rehabilitates Dead Royals
June 9, 1999

MOSCOW (AP) - The Russian prosecutor general's office officially 
rehabilitated Wednesday four members of the royal Romanov family who were 
executed by the Bolsheviks after the Russian revolution.

The posthumous rehabilitation was extended to Grand Prince Pavel 
Alexandrovich, a son of Czar Alexander II, and grand princes Nikolai 
Mikhailovich, Georgy Mikhailovich and Dmitry Konstantinovich, nephews of the 

The princes were declared enemies of the state and executed in the Peter and 
Paul Fortress in St. Petersburg on Jan. 24, 1919, Russian news agencies 

A document on their rehabilitation will be handed over to Leonida 
Georgiyevna, the wife of Grand Prince Vladimir Kirillovich Romanov, ITAR-Tass 
reported, citing prosecutor's office spokeswoman Tatyana Bobyleva.

Following the 1917 Russian revolution, the Bolsheviks went to great lengths 
to wipe out all descendants of the royal family.

Czar Nicholas II, his wife Alexandra and their five children were killed by a 
firing squad on July 17, 1918 in the Siberian city of Yekaterinburg. Most of 
the bodies were burned, doused with acid, and thrown into a pit outside the 

The remains were exhumed in 1991, after the Soviet collapse. After years of 
genetic tests and disputes about their authenticity, the remains were buried 
last summer in St. Petersburg.


Date: Wed, 9 Jun 1999 
From: Peter Pavilionis <> 
Subject: Ukraine and Russia: A Fraternal Rivalry

Hi, David:

Just wanted to let you and JRL readers know of a recent release from the
U.S. Institute of Peace Press: Anatol Lieven's "Ukraine and Russia: A
Fraternal Rivalry," 208 pp., $19.95 (paper), ISBN: 1-878379-87-9.

Lieven here explores the complex ethnic and political relationship of
Ukraine and Russia. Based on extensive interviews, the author provides a
fascinating portrait of the diversity that is contemporary Ukraine and of
its efforts to forge a national identity after three centuries of Russian
rule. Lieven's journeys take him into ethnic Russian enclaves in Crimea and
eastern Ukraine and to the western bastions of Ukrainian nationalism. But
they also reveal an intermingling (and intermarriage) of both ethnic groups
throughout much of the country. 
With trenchant observations and an eye for the telling detail, Lieven
examines the policy implications of Eastern Europe's new political
geography. Will ethnic coexistence endure in the face of economic hardship
and the divisive issues left over from the Soviet era? Is it wise for the
West to force the issue of Ukraine's membership in Western
institutions--NATO first and foremost among them? 
Orders to: U.S. Institute of Peace Press, P.O. Box 605, Herndon, VA 20172;
tel. (U.S. toll-free) 1-800-868-8064, or 703-661-1501, (fax) 703-661-1501.
Include $3.50 for shipping/handling. For more information on this title, you
may also visit our web site:


Date: Wed, 9 Jun 1999 
From: "Gordon Humphrey" <> 
Subject: The Russia Society

The Russia Society seeks Web site designer. If you know a truly top-notch
site designer who sincerely cares about Russia and U.S.-Russian relations,
please share his/her name with us. Contact Gordon Humphrey at


Date: Wed, 9 Jun 1999 
From: "Andrei Liakhov" <> 
Subject: Berezovsky Saga

Berezovsky Saga

I have spent some time in Moscow very recently (in fact I'm writing sitting
in our office in Moscow, but am departing to the airport very soon) and
received an update on the "Aeroflot" case. 

Contrary to various reports in the press the case is very much alive and the
investigative procurator (Mr.Volkov if my memory is correct) has obtained
documents from Mrs. Ponti's office linking Mr.Berezovsky to the Swiss
company to which the majority of free Aeroflot cash was directed by order
of the then Deputy Head of Aeroflot Mr.Glushkov (not to mix with a long time
Deputy Minister of Civil Aviation of the USSR Mr.Glushko - no relation). The
documents are deeds of trust with what appears to be signatures of Glushkov
and Berezovsky executed in favour of a Swiss Secretarial/Management company
appointing the latter nominal holder of certain shareholding stakes in that
Swiss company on behalf of these two gentlemen.

Mr.Berezovsky status vis-avis the investigation has not changed and he is
still a suspect alongside Mr.Glushkov and certain other current and former
officials of Aeroflot. It appears that Mr.Berezovsky has been formally asked
not to leave Moscow (podpiska o nevuezde) long before the arrest warrant has
been issued. Furthermore from the information I was given it would seem
that his breach of that undertaking (not to leave Moscow) has caused (at
least formally) the General Procurator's office to issue the famous arrest
The above is a good food for analytical thought and at least sheds a
slightly different light on the scope of influence BAB is widely percieved
to be able to exercise in Moscow nowadays. 


St. Petersburg Times
June 8, 1999
Survey Bodes Well for Local Products 
By Anna Shcherbakova

St. Petersburgers don't believe that Western products are necessarily better 
than Russian ones.

That is the result of a study recently completed by the St. Petersburg branch 
of the Stockholm School of Economics.

The study questioned 9,000 people over the first three months of the year and 
measured their product loyalty and satisfaction with various types of 
consumer goods, said Dr. Jan Eklöf, dean of the school.

Eklöf said his study developed a "satisfaction index" - comprised of a 
producer's image, consumer expectations of the product, and a price/quality 
ratio - that "shows how happy buyer's are" with a given product. The index 
does not indicate sales volumes or market share, he said. It only indicates 
consumer preferences and future purchase intentions.

Categories in the study included foods, home appliances, clothes, 
communications and entertainment. For each entry in each category, about 250 
consumers who had previously tried or heard of a given product, were 

In the beer category, for example, beers made by local producers Baltika, 
Stepan Razin and Vena finished ahead of imported beers in terms of loyalty; 
but imported beers finished first in terms of satisfaction. According to the 
study, Stepan Razin has the highest loyalty index - 83 percent - compared to 
71 percent for imports. The high loyalty indicates the "high possibility" of 
consumers of imported beers switching to local beers, especially if the price 
of imported goods continues to grow, the study said.

Overall, "the general satisfaction level of available beers" in St. 
Petersburg is rated at 76 percent, while the same study in Sweden found that 
Swedes only have a 67 percent satisfaction rating for beers available there. 

Eklöf said the results indicate that local goods - like meat products from 
the Parnas meat factory - have the potential to improve their market share. 
The satisfaction index puts Parnas sausages, for example, only one percent 
lower than imported sausages, while ranking above imports in loyalty. Each 
percent of the index is worth a significant investment, he said. 

The study also examined consumer preferences in buying clothes. Although 
small retail stores selling brand name clothing earned the highest 
satisfaction score, street markets earned the highest loyalty rating for 
selling products more cheaply. Economically, department stores in the suburbs 
are in the most dangerous position because they have the lowest loyalty 
rating - meaning even a small price rise could be disastrous by driving 
customers away, the survey said.

The biggest discrepancy between domestic and imported products is found in 
the home appliance category, where Western firms dominate. Electric irons 
produced by Philips, for example, earned the highest satisfaction mark, 80 
percent, and the highest loyalty level, 72 percent. Russian-made electric 
irons, by contrast, finished last in both loyalty, 51 percent, and 
satisfaction, with 57 percent. 

Eklöf believes that this kind of survey will be a boon to local producers 
trying to retain and expand their market share. 

Others agree. 

Ilya Gamov, marketing director of Aleko, which specializes in wholesale and 
retail home appliances, said the information in the survey would be valuable 
to companies trying to compete in Russia's shrinking market. 

"[The survey illustrates that] introducing locally produced brands would be a 
successful strategy," he said. 


Berezovskiy, Chubays Share Common Goals 

Komsomolskaya Pravda
3 June 1999
[translation for personal use only]
Article by Sergey Chugayev: "Are Chubays and BAB Once Again on 
the Same Team?" 

The scandals surrounding the formation of the government 
have possibly become a cover for the creation of a pre-election staff in 
the Kremlin The more insistently the various mass information media tell us 
about the terrible conflicts which exist in the immediate milieu of the 
president and about the battle of the clans for influence over the 
"Family," the more strongly we suspect: is the broad Russian public not 
falling victim to a well prepared propaganda bluff? It is enough to 
look at the names of those who, as they are trying to convince us, are 
thrashing each other in order to lead their people into a new 
government, and in the end, get their own aims. Berezovskiy, Chubays, 
Yumashs. Here they are -- the figures on a somewhat lesser scale -- 
Malashenko, Lesin, Shabdurasulov.... 

Doesn't this remind you of something? Well, of course! This is 
practically, in a new make-up, the Yeltsin organization staff of the 
1996 elections. It would seem that the struggle between Berezovskiy 
(Abramovich) and Chubays, with the brilliance yet again playing out 
before our eyes, was actually ridiculous. It goes without saying, the 
conflicts between two oligarchs are enough. They probably don't really 
like each other very much. But they have a common strategic goal. They 
are both vitally interested in preserving the present regime. The 
Kremlin needs both of them. And therefore, it is logically necessary 
for both of them, as in 1996, to work as a team. 

If this suspicion is true, everything fits into place. There is 
no bedlam in the Kremlin. On the contrary, they have, in good time, 
created a pre-election presidential staff which includes the best 
specialists with respect to organization, financing and the 
propagandistic support of the campaign. Tatyana Dyachenko, it appears, 
is not a capricious princess, subject to just any influence, but the 
coordinator of this staff. She does her work with the sanction of the 
president. The government is not tearing itself apart with clan 
conflicts, but is fulfilling the task set for it by the staff. And the 
only thing left for the Kremlin to do now is to make the Central Bank 
its subordinate. 

The assumption is also confirmed by the first actions taken by the 
staff. Its main task right now is to gather as much money as possible 
for the campaign. Anonymous letters are already going around Moscow, 
which say that the activity of Yuriy Skuratov led to a blockade in 
Switzerland of the accounts of members of the president's close circle, 
accounts which have $40 billion dollars in them. Because of which the 
Procurator-General has become enemy number one. The presidential team 
has, as a result, found itself virtually penniless on the eve of the 
pre-election campaign. For that reason it has begun to drum funds out 
of the domestic oligarchs. 

We don't know if this is true or not. But it is obvious that a 
"taking of valuables" is in progress. The financial flows which 
oligarchs of varied caliber were only recently permitted to use at their 
own discretion, in their own interests, are being transferred by the 
government to the control of the Kremlin. And the oligarchs, it goes 
without saying, are not running this themselves. Hence -- the 
stepping-up of the mass information media attacks on the president, his 
milieu and the members of the "Family." But this can't go on for very 
long. Just as in 1996, the oligarchs are doomed to stand up in command 
formation and strive to achieve the common goals. 

This goal, it would seem, is obvious: to keep Boris Yeltsin in 
power. At least, if the president's state of health does not prevent 
this -- to ensure the succession of power. To all appearances, they are 
preparing Sergey Stepashin as a successor. In so doing, they are making 
use of the classic method of "good cop -- bad cop." 

Chosen for the role of the bad one is Nikolay Aksenenko, who, 
thanks to his own personal qualities, for numbered days, managed to 
become the main target of the press. Rumors have it that the first 
vice-premier is so sincerely confident that: it is he who will become 
the next president -- he has already ordered the image-makers to 
organize his own pre-election campaign. But it would appear that a 
harsh disappointment awaits Aksenenko. Since his predestination is to 
exceed Stepashin's ratings. Which he, without wanting to, will succeed 
in doing. The tactics of the presidential staff are calculated. The next 
task is to minimize the presence, in the future Duma, of the communists 
and the supporters of Yuriy Luzhkov. They are the ones who are the main 
political enemies of the Kremlin. Their forces in the Duma elections of 
the staff will most likely move in three columns. Under the banners of 
the NDR {Russia Is Our Home], the Right Cause and the LDPR 
[Liberal-Democratic Party of Russia]. 

The further development of the scenario will depend on the 
president's physical condition. If all goes well with the president's 
health, we can expect a referendum on unification with Belarus. If all 
is not well -- we can expect a campaign of "Stepashin -- Our President." 


Date: Wed, 9 Jun 1999
From: "Jerry F. Hough" <> 
Subject: Alexander Gerschenkron etc.

These are astonishing times. One wonders what will happen in 
Russian politics when it is realized that their president has 
negotiated--demanded?--the unconditional surrender of Serbia and the ethnic
cleansing of all Serbs from Kosovo. But most astonishing of all is the
total lack of concern in the US Administration and media and the willingness 
to gloat about Russia's humiliation. Russia is too ill to matter as if the 
economic reform it chose had nothing to do with its illness. As I 
understood the letter on JRL from ABC in Russia, Dmitrii Simes is to be 
severely reprimanded because he thinks there is some small danger of 
events in Russia getting out of control. Without question, someone is 
out of touch, and perhaps it is people like Dmitrii and I.

Ah well. We have had nearly one year of high tariffs (that is 
what such a reduction in the exchange rate means). Oil prices are way 
up, the dollar is down against the yen and European currencies (so oil 
gets more yens and euros). With all this help, Russian GDP may even have 
stabilized and stopped falling. One would have thought it would be 
doing wonderfully. There are, of course, reports that reported unemployment
is up to 15 percent, consumption is down 20 to 30 percent, and the last I 
heard people were worrying about the harvest. 

As I check footnotes on my book manuscript, I relooked at 
Alexander Gerschenkron. The great tragedy of Russian reform is that his 
work on economic backwardness did not become the Bible for economic 
reform in the Russia he studied so deeply in comparison with European 
economic development. (No doubt, most of my errors come from having 
taking his course on the Russian economy as an undergraduate.)

Russia will have a new general secretary within the year, and I 
suspect sooner rather than later. New general secretaries always change 
policies, and I would hope that the advisers of the new one will have 
read Gerschenkron. Let me quote a bit:

"The role of the state distingusihes rather clearly the type of 
Russian industrialization from its German or Austrian counterpart. 
Emancipation of the peasants, despite its manifest deficiencies, was an 
absolute prerequisite for industrialization ... Similarly, the great 
judicial and administrative reforms of the sixties were in the nature of 
creating a suitable framework for industrial development rather than 
promoting it directly.

"The main point of interest here is that, unlike the case of 
Western Europe, actions of this sort did not per se lead to an upsurge of 
individual activities in the country; and for almost a quarter of a 
century after the emancipation the rate of industrial growth remained 
relatively low. [Then] from the middle of the eighties on ..[through] 
railroad building ... preferential orders to domestic producers of railroad 
materials, high prices, subsidies, credits, and profit guarantees to new 
industrial enterprises, the government succeeded in maintaining a high 
and, in fact, increasingly rate of growth until the end of the century ...

"The scarcity of capital in Russia was such that no banking 
system could conceivably succeed in attracting sufficient funds to 
finance a large-scale industrialization; the standards of honesty in 
business were so diastrously low, the general distrust of the public so 
great, that no bank could have hoped to attract even such small capital 
funds as were available, and no bank could have successfully engaged in 
long-term credit policies in an economy where fraudulent bankruptcy had 
been almost elevated to the rank of a general business practice. Supply 
of capital for the needs of industrialization required the compulsory 
machinery of the government ... The government as an agens movens of 
industrialization discharged its role in a far less than perfecftly 
efficient manner. Incompetence and corruption of bureaucracy were 
great. The amnount of waste that accompanied the process was 
formidable. But, when all is said and done, the great success of the 
poliicies pursued under Vyshnegradski and Witte is undeniable.

"[During the] high rate of industrial growth in the years 
1907-1914, the character of the industrialization processes had changed 
greatly. ... In that last period of industrialization under a 
prerevolutionary government, the significance of the state was very 
greatly reduced ... The retrechnment of government activities led not to 
stagnation but to a continuation of industrial growth. Russian industry 
had reached a stage where it could throw away the crutches ofr government 
support and begin to walk independently--and, yet, very much less 
independently than industry in contemporananeous Germany, for at least to 
some estent the role of the retreating government was taken over by the 

"In short, after the economic backwardness of Russia had been 
reduced by state-sponsored industrialization processes, use of a 
different instrument of industrialization processes, use of a different 
instrument of industrialization, suitable to the new `stage of 
backwardness,' became applicable."

This Russian model was introduced in Asia and became known as the 
Asian model. Let us hope that Russia will eventually readopt the 
Russian model. Let us hope that it will not take a quarter of century 
of stagnation before this happens, and let us remember that it begins 
with agricultural reform.


the eXile
June 3 - 17, 1999 
Hazards Await New PM

President Boris Yeltsin's recent firing of whoever the fuck the Prime 
Minister was and subsequent installment of whoever the fuck the Prime 
Minister now is signals a sea change in whatever the fuck his policy was to 
whatever the fuck it will be.

With this new government firmly in place, there is now every reason to expect 
that whatever form of aggressive leadership and wise governance our readers 
are lately hoping for will be quickly and easily achieved, so long as the new 
Prime Minister follows the obvious path left open to him in the wake of this 
recent unfolding of interesting events.

The road he travels, however, will not be without its hazards. If the new 
Premier pursues a course of action different from the one now expected of 
him, his government's policies will almost certainly bring about unexpected 
results. Furthermore, if he reverts back to his old form, the government he 
now heads will fail to achieve anything in the way of appreciable change.

Although the performance of his previous cabinet choices has given little 
cause for optimism, President Yeltsin and his new government should be given 
the benefit of the doubt and supported fully so long as they remain in 
office. The reason for this is that failure to support the government in its 
new inititatives may ultimately result in its inability to bring about those 
changes which it has not yet achieved, for want of a broad popular mandate. 
For if the population does not stand squarely behind it, the Prime Minister's 
program cannot succeed-- unless, that is, he can convincingly claim that he 
is only acting out the desires of the populace. For in these matters, it is 
the people who must ultimately decide. Will the new government have a real 
impact? Will real change finally take place? This is a question that ordinary 
Russians, no less than their leaders, have a say in answering.

Whatever the hell it is that we're talking about, we're confident that our 
point is being made. One need only continue this sentence all the way to the 
end in order to reach its ultimate completion.

Reform is not a box of chocolates. It has to be worked for. Opportunities are 
few and far between. Solid plans must be made. Secretaries must be laid. And 
in all this, the government must make sure all along the way to strike while 
the iron is a dead horse. After all, a walk's as good as a hit. In fact, 
according to recent statistics, something quantifies not just something, but 
something else. And that's nothing to sneeze at.

Still, whether or not the new government pursues policies that will be 
ultimately beneficial to the West is a question that remains to be answered. 
But whether or not this latest change in government turns out to be a good or 
a bad thing, one thing is still certain: time will tell.


Tuberculosis Cases Balloon in Russia, Could Spread

MOSCOW, June 9 (Reuters) - Cases of tuberculosis are increasing in Russia and 
the rise has prompted fears that the disease could spread worldwide, Russian 
and international health officials said on Wednesday. 

Russian health ministry statistics obtained by Reuters showed that Russian 
infection rates were double to quadruple central European levels and said 
tuberculosis cases rose about three percent in 1998 compared with 1997. 

David Heymann, the World Health Organisation's executive director for 
communicable diseases, said humans could easily carry the disease around the 

"It is clear that human beings, like mosquitoes, can be vectors of disease," 
he told a news conference. 

Statistics said nearly 25,000 died of tuberculosis last year among Russia's 
population of 147 million. 

Prison populations, especially people who are held in pretrial units, were 
especially susceptible to infection, he said. Russian jails hold about 1.1 
million convicts and persons waiting for trial. 

Russia's small but growing population of people with HIV (the human 
immunodeficiency virus) were also susceptible, he said. 

Statistics, which included prisoners, said 76 in every 100,000 Russians were 
diagnosed with tuberculosis last year, up from 73.9 new cases per 100,000 in 

Figures, not including prisoners, migrants and others, showed 56.8 new cases 
per 100,000 in 1998, against 54.1 a year earlier. 


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