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Johnson's Russia List


July 17, 1999    
This Date's Issues: 3396 3397  


Johnson's Russia List
17 July 1999

[Note from David Johnson:
2. AFP: US says NATO membership for Baltics nearly inevitable.
4. Financial Times letter from Padma Desai, RUSSIA: Firm but feasible 

5. Komsomolskaya Pravda: Primakov on 'Fatherland', Duma Elections.
6. Financial Times: John Thornhill, Primakov seen as election winner.
7. Interfax: Results of Poll on Primakov, Luzhkov.
8. Interfax: Luzhkov Refutes Rumors of Joint Platform With Primakov.
9. Stratfor commentary: Russia’s Economy Introverts.
10. Moskovskiy Komsomolets: Mikhail Rostovskiy, Speculation About Premier's 
Endurance. Stepashin Decides To Charm Aksenenko and Oligarchs.

11. St. Petersburg Times: Fyodor Gavrilov, Western Press Sees Only the Bad 
in Russia.

12. Moscow Tribune: Gaidar: Write Off Soviet Era Debt.
13. Interfax: Further on Grounds For Banning Russian Communists.
14. New York Times: Serge Schmemann, As Time Goes By, Russians Savor 
the Soviet Era.

15. Judith Shapiro: Re:3395-Hough's economics.]



KAZAN, July 16 (Itar-Tass) -- Only one percent of Russians pay taxes 
honestly. Other individuals and legal entities either evade or do not 
pay taxes in full, Vyacheslav Soltaganov, head of the Federal Tax 
Police Service, told Itar-Tass on Friday. 
He attended a conference of tax inspectors of the 12 districts of the 
Volga region. 
The tax police have uncovered 6,000 tax crimes in the first six months 
in 1999, Soltaganov said, admitting his agency's work was far from 
being satisfactory. Soltaganov believes the tax police must be five or 
six times more efficient. "We need to develop a tax culture which 
nobody wants to recognize, " Soltaganov stressed. 
Kazan, the capital of the Russian Autonomous Republic of Tatarstan, has 
been selected the venue for the regional tax conference because of its 
vast experience in combat against illegal alcohol trade and production. 
Moscow officials, including the tax and interior ministers, have paid 
several visits to Tatarstan which established the state monopoly on the 
production and sales of alcohol more than two years ago. But, no steps 
have been taken by the federal centre to apply this positive 
Soltaganov said it would be premature to introduce a spending tax, like 
the one already existing in Bashkortostan, because there was no 
"material basis" for it. 


US says NATO membership for Baltics nearly inevitable
WASHINGTON, July 16 (AFP) - The entry of Estonia,
Lithuania and Latvia into NATO is a near inevitability despite Russia's
strident opposition to enlarging the alliance, a senior US official said

"I would stop just short of saying it's inevitable," Deputy Secretary of
State Strobe Talbott told reporters on the last day of the US-Baltic
partnership commission's second annual meeting.

"It is desirable and I think there is considerable reason for optimism that
it will occur because of the extraordinary progress these three countries
have made," he said.

He acknowleged that Moscow was vehemently opposed to any enlargement of the
North Atlantic Treaty Organization, particularly into the Baltic region.

Russia has "expressed specific concerns and opposition with regards to the
Baltics regards ... Obviously this is an issue of very intense
disagreement," said Talbott, but he seemed to dismiss Russia's opposition
as unlikely to prevent the three nations from joining the alliance.

Talbott noted that NATO had already expanded this year, adding the Czech
Republic, Hunagry and Poland to its rolls, despite Russian opposition and
that the alliance had gone ahead with air strikes against Yugoslavia in the
face of Moscow's anger.

"The challenge for many years to come is going to be to manage the
disagreements and maintain total clarity about the (alliance's) driving
principles, one of which is that no sovereign state can be declared
ineligible for NATO membership because of geography."

Officials from the three countries vowed that each would complete the
necessary requirements for NATO entry, in particular boosting defense
spending to the recommended level.

"For Estonia, NATO is a primary foreign policy priority," said Estonian
Foreign Minister Toomas Hedrik, promising that Tallinn would fulfull its
membership obligations.

"Our commitment is very strong," said Lithuanian Foreign Minister Algiurdas
Saudargas, who was echoed by Latvia's Deputy Secretary of State, Maris

All three visiting officials, who met Secretary of State Madeleine Albright
on Thursday, and Talbott said the Kosovo conflict had soldified NATO's
relevance for the coming century and had underscored the importance of
multi-ethnic democracies for stability.

"One of the principle lessons to come out of the Kosovo experience ... is
that security and stability of southern Europe will depend on exactly the
kind of integration, institution building and democratization that are
already so far advanced in norther Europe specifically in the Baltic
region," Talbott said.

The second meeting of partnership commission, established in January 1998,
had been postponed since May because of the Kosovo crisis. 


MOSCOW, July 16 (Itar-Tass) - Two Russian media tycoons, Boris 
Berezovsky and Vladimir Gusinsky, launched an information war for 
election money, while an oil tycoon warned the fight may finally kill 
the national economy, Russian media said on Friday. 
The primary task for the Kremlin at present is to create "favourable 
information conditions" on the eve of elections, the Izvestia newspaper 
said adding that Berezovsky is working to create "an information 
monopoly" for that. 
"An alien thing to such a monopoly is the powerful "Most" media holding 
which cannot conceal its sympathies to /Yabloko/ leader/ Grigory 
Yavlinsky and Moscow mayor Yuri Luzhkov, an old enemy of Boris 
Abramovich /Berezovsky/", Izvestia said. 
"It is clear that an information war has been launched against 
Media-Most by TV channels and printed publications of Boris 
Berezovsky", Oleg Dobrodeyev, the Director General of NTV channel, 
which makes part of the Most empire, told the Kommersant daily. 
Various media outlets said that tax and law enforcement agencies had 
been ordered to target personally Gusinsky and his editors-in-chief. 
The Rosbiznesconsulting agency said the initiative comes from Kremlin 
chief of staff Alexander Voloshin. There was no response from the 
Kremlin so far. 
"Tensions at the top and information wars show that a serious fight has 
begun for the last important financial resource - the money which 
appeared in the Russian industry", head of YUKOS oil company Mikhail 
Khodorkovsky commented in Izvestia adding that all methods and means 
will be used in the fight, including law enforcement agencies. 
Khodorkovsky said that the "cynical rouble devaluation at the expense 
of the people" in August 1998 at the same time gave to the national 
economy a "chance to breath and make a step forward". However, "the 
political war pushes the interests of the industry to the background", 
he said. 
"Listen guys, leave the industry in peace. In trying to determine who 
of you will become the next president you have no right to risk losing 
our last chance", Khodorkovsky called. 


Financial Times
July 15, 1999
RUSSIA: Firm but feasible regime 
>From Prof Padma Desai. 


In "Short memories, long odds" (July 9) John Thornhill correctly emphasises
the need for structural reforms in Russia for converting the faint pulse of
economic revival into a sustained, long-term recovery. While structural
reforms are important and necessary, the critical signals of immediate
relevance conveyed by the August 1998 financial meltdown to Russia's
policymakers and international financial institutions are three.

First, the old model of Russian reform, according to which the
international financial institutions negotiated the policy details with
successive reformist governments, which in turn sought to implement them
via presidential decrees and government resolutions, to the neglect of the
legislative watchdogs in the Duma belongs to history. On the other hand,
the cohabitation-with-the-Communists-in-the-Duma model of Yevgeny Primakov,
the former prime minister, threatened to consign market-oriented policies
to deep freeze. Crafting a consensus with the Duma that (unlike in the
Primakov version) manages, even so, to keep reforms going requires that the
policy proposals be realistic.

Thus, for example, the Russian economy cannot be expected to reach the
nirvana of a single-digit inflation rate with a consolidated budget deficit
of less than 3 per cent of gross domestic product in the near future: the
monumental evidence of the recent past provides a stark lesson in that
regard. A credible policy agenda marking low double-digit inflation rates
with corresponding targets of monetary growth rates and budget deficits
over a period of three to five years will more likely create greater
confidence about implementation and hence produce stable outcomes than the
unrealistically ambitious targets of the past. With respect to
macroeconomic management, the lessons of the recent past are writ large:
Russia resembles an obese patient whose weight loss can be guaranteed only
with a gradual but firm and feasible diet programme under meticulous
monitoring. From that perspective, the 1999 budget numbers worked up by the
Russian government and approved by the International Monetary Fund
constitute an old ritual with slight chances of their fulfilment.

Second, gradual but decisive inflation control still remains the top reform
priority. In pursuit of that goal, the IMF insistence that the Duma pass
legislation on streamlining the tax arrangements and restructuring the
banking system, before it can release the promised $4.5bn, is correct. But
should reform of the bankruptcy law of 1998 (which superseded the law of
1994) be thrown in the legislative hopper as well, as the IMF has done for
releasing its funding?

The law may be reshaped but is unlikely to be implemented in an economy
that has already shrunk by half as the required bankruptcies would be
intolerably large in number. In their conditionality and monitoring
activities, the international financial institutions need to distinguish
between items on the policy agenda that are urgent and feasible and those
that are long term and politically unmanageable.

Finally, the forthcoming elections raise the frightening prospect of the
disappearance from the policy stage of Russia's market reformers and their
replacement by pseudo reformers. The former, promoted and protected by
Boris Yeltsin, thought clearly but talked arrogantly and acted hastily. The
latter, in the entourage of a new president, will probably be equally
brazen but muddled in their grasp of the nuances of market-oriented
policies. Boris Fyodorov, former finance minister, famous for giddy
pronouncements, once declared that six people understood markets in Russia.
>From that day, the number of biznesmeni has skyrocketed but clear thinkers
on policy issues are still few and far between. For no other reason than
this, the IMF and the World Bank should remain engaged in Russia for
keeping market reforms on track.

Padma Desai ( 
Harriman Professor, 
dept of economics, 
Columbia University, 
420 West 118th Street, 
New York, 
NY 10027, 


Primakov on 'Fatherland', Duma Elections 

Komsomolskaya Pravda
July 14, 1999
[translation for personal use only]
Interview with Yevgeniy Maksimovich Primakov, former prime minister, 
by Komsomolskaya Pravda correspondent Yelena Ovcharenko; date and place 
not given: "Yevgeniy Primakov: I Am for the Unification of All Sound Forces!" 

Will the former prime minister return to politics? 
Currently, this question is of interest to many people. In general, 
Yevgeniy Maksimovich is still keeping quiet about his plans for the 
future and about his assessment of the current situation. He has 
made the only exception for Komsomolskaya Pravda. Here are his 
responses to our correspondent's questions: 
[Ovcharenko] In the last few days, much has been said and 
written in the mass media about the possibility of the unification 
of Fatherland with All Russia. What do you think about this idea? 
[Primakov] Very favorably. These two organizations, neither 
one of which can be ignored, are inclined toward specific matters, 
which is especially important and valuable in our time. Their 
unification would benefit all of Russia. 
[Ovcharenko] Are you ready to participate in the elections for 
State Duma deputy? [Primakov] The decision will depend on a number of 
circumstances. The main one is whether or not a practical base will 
be established all the same for the unification of the sound centrist forces. 
[Ovcharenko] Do you not believe that the unification of 
Fatherland and All Russia will be an antipode for those who are to 
the left and to the right of the center? 
[Primakov] I do not believe this and I would not want this. I 
think that it is necessary to look for rapprochement with all those 
who are interested in strengthening the country and in developing 
democracy and actual reforms which serve to improve the population's 
life and to fight crime and corruption. In general, the greater the 
positive potential of the forces participating in the elections, the 
better it will be for society. 
[Ovcharenko] And what do you think about the structure of 
power after the State Duma elections? 
[Primakov] In my view, the insertion of additions into the 
existing constitution should be considered. The future president 
should transfer part of his powers to the government. Obviously, the 
position of vice president should be introduced. I do not want to 
talk about this in more detail, since this is a subject for careful study. 


Financial Times
July 16, 1999
[for personal use only]
RUSSIA: Primakov seen as election winner 
By John Thornhill in Moscow

Yevgeny Primakov, Russia's former prime minister, is contemplating a return
to politics knowing his intervention could prove decisive in parliamentary
elections in December.

Since returning from Switzerland, where he had successful back surgery, Mr
Primakov has been the subject of intense speculation and has been
approached by several parties for his support.

After long denying any presidential ambitions, the respected 69-year-old
former premier says he is not ruling out any possibility about his
political future. But for the moment Mr Primakov remains an unemployed
ex-apparatchik lacking a political party and any financial or media support.

"At present he is nowhere but everyone assumes he could be everywhere,"
said Boris Makarenko, deputy director of the Centre for Political
Technologies, a Moscow-based think-tank. "Any political party without
Primakov will remain fairly small. But any political party with Primakov
becomes a real winner."

Mr Primakov was a "man for all ages" who appealed to the mass public and
the political lite having made few mistakes during his nine months in
office, Mr Makarenko said.

The Communist party, which tops the opinion polls, has been openly wooing
Mr Primakov, saying it might back him as its preferred candidate in next
year's presidential elections.

Russia's regional leaders also have been keen to enlist Mr Primakov's
support and are offering him a prominent position in their Vsya Rossiya
(All Russia) movement.

But the most likely home for Mr Primakov would appear to be the Otechestvo
(Fatherland) party headed by Yuri Luzhkov, mayor of Moscow. Otechestvo has
been publicly toying with the idea of asking Mr Primakov to head its list
of parliamentary candidates for the elections.

The main stumbling block would be who would then run as Otechestvo's
presidential candidate.

At present Mr Luzhkov would appear to be the leading contender for the
presidency. But if the Kremlin maintains its attack on Mr Luzhkov, it is
possible he might step aside for Mr Primakov and content himself with the
prime ministership.

"Luzhkov might try to hide behind Primakov's back if the Kremlin pressure
becomes too great," said Mr Makarenko.

Mr Primakov yesterday called for constitutional reform, transferring more
presidential powers to the government and recreating a post of
vice-president - perhaps with Mr Luzhkov in mind.


Results of Poll on Primakov, Luzhkov 

MOSCOW. July 14 (Interfax) - Twenty-five percent 
of Russians would like to see former Prime Minister Yevgeny Primakov 
outside of the political arena. Nearly the same number of those polled, 
23%, would like to see him as Russia's president. Twenty-two percent 
would like to see him as the head of the government. The poll was 
conducted by the All-Russia Public Opinion Study Center, whose 
sociologists polled 1,800 people in the country's major cities on July 
10-11. Nine percent of respondents said that Primakov should be chairman 
of the State Duma, and about the same number said he should be a party 
leader. One percent of those polled want him in jail. Eleven percent of 
those polled were at a loss when asked about Primakov's future. According 
to the results of a poll on the future of Moscow Mayor Yuri Luzhkov, the 
majority of those interviewed, 21%, envision him as a party chief, 19% 
see him as a private person removed from politics, 17% feel he should be 
Russia's president, 14% - prime minister, and 7% - Duma speaker. Three 
percent of the respondents want Luzhkov to be in jail. Nineteen percent 
were at a loss in answering the question about whom they would like 
Luzhkov to be. Asked about President Boris Yeltsin's attitude to Moscow's 
Mayor, 35% said that the president would not like to see Luzhkov as the 
head of state, 34% said that Yeltsin is wary of the Mayor's growing 
influence, 10% regard him as their ally, and 5% see him as their heir. 
Sixteen percent were uncertain about what to answer. [De


Luzhkov Refutes Rumors of Joint Platform With Primakov 

MOSCOW. July 15 (Interfax) - Moscow Mayor Yuri 
Luzhkov on Thursday [15 July] denied reports that former Russian Prime 
Minister Yevgeny Primakov has been invited to top the Fatherland party's 
parliamentary election ticket. "I categorically refuse to confirm" these 
reports, Luzhkov, Fatherland leader, told a news conference in Moscow. 
"If such agreements materialize they will be announced." "We would like 
Yevgeny Maximovich [Primakov] to be friendly toward our movement and we 
can expect that such friendliness will become reality," the mayor said. 

"I cannot imagine that Fatherland's platform can be rejected by normal 
people," he said. Luzhkov said he feels a "deep and constant liking" for 
Primakov. The mayor went on to say that Fatherland is involved in talks 
and "intensive consultations" with all kinds of political groups, 
including the communists, the right wing and the All Russia coalition. 
This is a "natural condition for a political system that does not isolate 
itself, but wants to correct the trajectory of its movement," Luzhkov said.


Stratfor commentary 
1225 GMT 990716 – Russia’s Economy Introverts

The Russian Statistics Agency announced July 15 that Russia’s industrial 
output was up 3.1 percent in the first six months of 1999 as compared to the 
same period the previous year. Officials said that the fall of the ruble made 
Russian goods cheaper to manufacture and more competitive in the domestic 
market, where imports have become too expensive for most Russians. At the 
same time, Russia’s GDP fell 2.9 percent year-on-year in the first six months 
of 1999, and currently stands at approximately $22 million. Russia’s 
ITAR-TASS news agency has reported that, due to government debts, Russia’s 
gold and currency reserves plummeted by $300 million during the week of July 
9, to $11.8 billion.

Russia’s economy is turning inward, reverting to the de facto protectionism 
of noncompetitiveness experienced in the Comecon years. Russia’s industrial 
output is rising, not to compete abroad, but only to serve domestic demand 
that cannot afford imports. With its companies largely unable to compete in 
the international market and therefore unable to bring in foreign currency, 
Russia has been forced to draw down its gold and currency reserves to meet 
foreign debt obligations. Meanwhile, Russian exports have been surging in one 
area in which Russia can compete – arms sales.

The Soviet Union survived economically, despite its vast inefficiencies, 
because it did not attempt to compete in the global market. The Comecon bloc 
was an island of inefficiency, where shoddy farm machinery could be exchanged 
for substandard electronics. Its companies and products could not compete 
globally, but they could provide a stable social base, with employment and 
amenities – albeit poor ones – for all.

Despite foreign investment and a halfhearted and frequently misdirected 
attempt at economic restructuring, the Russian economy has been unable to 
recover from its Soviet heritage. Russia’s GDP has fallen 40 percent since 
the collapse of the Soviet Union in 1991, posting only one gain during that 
period – 0.8 percent in 1997. Slowly, and with little sign of struggle, 
Russia’s economy is once again introverting. If a few more satellite states 
join it, Russia may just be able to build a stable and sustainable economy 
despite its apparent collapse.


Stepashin: 'Consultations With Oligarchs' 

Moskovskiy Komsomolets
15 July 1999
[translation for personal use only]
Article by Mikhail Rostovskiy: "Speculation About Premier's 
Endurance. Stepashin Decides To Charm Aksenenko and Oligarchs" 

In the past, when a new premier was approaching the 
end of his 100-day "honeymoon," everyone used to prepare rods to beat him 
with, but people seem now to be thinking of coffins to bury him in. This 
week the corridors of power saw the return of a wave of rumors alleging 
that, following his return from vacation, Yeltsin intends to make some 
grand gesture, and that Stepashin has virtually no chance of lasting out 
until 1 October. True, as Moskovskiy Komsomolets has learned, Sergey 
Vadimovich [Stepashin] has also prepared a few surprises.... 

The two-month "anniversary" of the dismissal of Primakov -- the power 
departments' darling -- was marked in the White House by the first public 
speech by a new contender for power in our arms complex -- Vice Premier 
Ilya Klebanov. His debut was pretty sensational. Klebanov not only stated 
unequivocally that he will strive to get an audit conducted at the 
fabulously rich Rosvooruzheniye company. In the middle of his 
conversation with journalists, Ilya Iosifovich said something that seems 
quite fantastic these days. 

He said that it would take at least a few years to implement his plans 
to reform the military-industrial complex. Either Klebanov, a young 
newcomer from St. Petersburg, has not yet cottoned on to the local ways, 
or else he was not very sincere at the official briefing. After all, the 
lifetime of top White House leaders is now measured not in years but in 
months or even weeks. 

New Health Minister Yuriy Shevchenko agreed to take the job only on 
condition that he retained his old post as head of the St. Petersburg 
Medical Academy. According to White House rumors, two of Stepashin's 
closest associates have had a fierce argument about how long their boss 
will last. One said until the end of the summer; the other -- until 
mid-fall. And a vice premier renowned for his staying power tells his 
colleagues openly that everything could end literally at any moment. 

Equally ominous signals are emanating from the Kremlin. As Moskovskiy 
Komsomolets was told by a senior state functionary, Boris Nikolayevich 
[Yeltsin] is "at best indifferent" to Stepashin. As for the "family's" 
attitude to the premier, it is better not to say anything about it at 
all. True, some "family" members occasionally appear at the White House. 
But only in order to lobby for appointments that benefit them. 

As for Sergey Vadimovich's allies close to the president, such as 
Voloshin, chief of the Presidential Staff, they do not inspire much hope. 
Voloshin almost lost his own post in May. And now the Presidential Staff 
corridors are again teeming with rumors that "Stalyevich [Voloshin] is 
hanging by a thread." In short, almost nobody in the corridors of power 
now believes in the premier's "longevity." With one possible exception -- 
Sergey Vadimovich himself. It seems very much that the White House has 
elaborated a whole plan to rescue the drowning premier. 

The first part of the plan is to give Stepashin a positive image in the 
eyes of virtually all political players. Probably no other premier has 
ever made such an effort to ensure that he is liked. 

Sweeteners are being handed out to virtually everyone. To Stepashin's 
predecessors: Probably for the first time in history, bosses in a 
previous government -- Maslyukov and Bulgak -- have been given offices in 
the White House. To journalists: The premier has put Andrey Chernenko, 
leader of the entire Government Apparatus, in personal charge of the 
press men. To governors, of course. A conference on the problems of 
border regions was held for them recently, and lots of other "tasty 
morsels" have already been planned. It has even been decided to 
charm...Nikolay Aksenenko. According to senior White House denizens, 
Stepashin has begun to spend a very great deal of time with him and to 
try to persuade him that they are both in the same boat. 

But the most interesting things are going on behind closed doors, of 
course. According to Moskovskiy Komsomolets's information, Stepashin has 
recently been holding secret consultations with surviving oligarchs. Not 
only with friendly ones but also with others, such as Berezovskiy and 
Abramovich, who belong to an overtly hostile camp. Neither the details 
nor the results of these numerous meetings are known. But the premier's 
retinue believes that, in the end, Sergey Vadimovich's readiness to 
engage in dialogue cannot fail to bear fruit. The White House also 
recognizes that Stepashin intends to play his own game during the Duma 
election campaign. And all his current evasive statements are linked to 
the fact that the premier does not intend to rush into "giving the 
go-ahead" prematurely. 

There are signs that major battles are currently unfolding on the economic 
front too. Most of the population is already confident that things are 
now going fine as regards the IMF credit and that it only remains to 
complete the formalities. Judging by hints from White House denizens, 
however, the real picture is not nearly so rosy. We will definitely be 
given something. But how much and when? And will we not find ourselves 
with the same problem by October or the winter? Another factor to be 
considered is the frankly bad harvest, which will force us to make mass 
agricultural purchases abroad. So Stepashin's coming visit to Washington 
will definitely not be concerned merely with protocol. And the premier's 
retainers realize this fully: They intend to "bamboozle" the Americans 
across the entire range of issues. 

But in the end it is not they who will decide Stepashin's fate. So 
Sergey Vadimovich can only trust to good fortune and Russian luck. 


St. Petersburg Times
July 16, 1999
Western Press Sees Only the Bad in Russia 
By Fyodor Gavrilov

"A specter haunts Europe, the specter of communism," Karl Marx once wrote. 
Since then, 150 years have passed, and the specter's habitat has dwindled to 
North Korea and Cuba. But the specter of the past is still powerful - today 
it haunts the pages of American and European newspapers:

"[The 'dezhurnye' in the hotel] collect and dispense room keys and hand-tally 
long-distance phone charges ... Prostitutes are everywhere, from hotel 
doorways to the lush park that lines the riverfront. So are short skirts, 
shorter than anything America saw in the '70s - or since ... High-priced 
apartment houses and restaurants have sprung up across the country, but the 
economy now is so sick that half the apartments remain unsold, and the 
expensive eateries are half-empty."

You might imagine that I've taken this quotation from an old Pravda article 
about Latin America, but you'd be wrong: It's an excerpt from an article by 
Larry Tye, staff writer for the respected Boston Globe. The time is now; the 
place is the large mining city of Dnepropetrovsk, Ukraine.

"Of course, lots of things have changed in the decade since the Soviet Empire 
collapsed, thanks in part to a seemingly endless flow of U.S. aid. But the 
changes are not always for the better," Mr. Tye naturally concludes. 
Nevertheless, he grits his teeth and highlights a few things that have 
improved: Long lines have vanished; Coke's for sale; you can get a telephone 
"in a matter of days." Thanks, Larry!

This little article in the Boston Globe - or rather, the approach it takes to 
events in the former Soviet Union - is quite typical of western journalism 
(including The St. Petersburg Times). The western mass media eagerly churn 
out one "objective" account after another of starving pensioners, women 
terrorized by despotic husbands, our drunk and easily manipulated president, 
epidemics of drug addiction and AIDS and Muscovites who kill each other for a 
drink of cold water during the current heatwave. Those of us who live at "the 
scene of the crime" are bound to feel irritated when we read these tales.

What did you expect to find in Dnepropetrovsk? Are there no prostitutes or 
car accidents in Boston (London, New York, etc.)? Is corruption in 
officialdom unheard of there? Yet the good things - the absence of bread 
lines; the achievements of the free market; the hundreds of social 
obligations that the new post-Soviet states fulfill, albeit with difficulty - 
are discussed in passing, unwillingly as it were. And our still-vibrant 
cultural life is painted as nothing more than a bright patch on the gray, 
threadbare suit of our society.

These are the hard facts of our new reality. Yes, the former Soviet Union has 
developed the same social ulcers that exist in any western country. Or 
rather, these ulcers were always there. The only difference is that now no 
one is employed to conceal them from the eyes of western journalists. The 
visibility of these problems is an indispensable attribute of a liberated 
society, a society that has no one but itself to look to for help. Doesn't it 
seem to you that by concentrating solely on the shortcomings of our newfound 
freedom you're helping to reconstruct the iron curtain that our politicians 

Fyodor Gavrilov is the editor of Kariera-Kapital 


Moscow Tribune
July 16, 1999 
Gaidar: Write Off Soviet Era Debt 

When Yegor Gaidar headed the reformist Russian government in July 1992, he
was ready to apply western models of reform to Russia's ailing economy.
Seven years later, the architect of liberal reforms doesn't seem as
enthusiastic over the west's recommendations. 

In an interview with The Moscow Tribune, Gaidar said that the government
should create and adhere to its own economic plan, adding that Russia
should default on part of its foreign debt inherited from the Soviet Union. 

Gaidar says that the reforms the west is trying to force do not take into
consideration Russia's national climate. "The International Monetary Fund
should realize that the Russian government, in many cases, can't follow its
instructions," Gaidar said. 

Gaidar, widely known as a pro-western politician, also said that the
Kremlin should reconsider its position regarding the so-called Soviet
debts. "In the current situation, the government is unable to pay the
foreign debt. But at the same time, it is not in the foreign creditors'
best interest for Russia to default. So, it's a good opportunity for the
government to restructure the debt and try to write-off part of the
Communist era loans," Gaidar said. 

According to Gaidar, the cabinet has a choice between a flexible monetary
strategy which doesn't exclude continued devaluation of the ruble, and the
so-called "tough" variant, which will put Russia's finances under the
control of the currency board. 

He said, however, that the government's plan to print money to pay back
delayed pensions and salaries by September should be rejected. 

"The situation will become uncontrollable very quickly," Gaidar said,
adding that if no more money is printed, the ruble may stabilize at its
current level. 

According to Gaidar, the free market has finally stabilized in Russia.
"Even the 'negative' results of the upcoming elections would not reverse
the development of the free market in Russia," Gaidar said, referring to
the possible failure of the democratic forces in the December 1999 Duma
elections and next year's presidential polls. 

According to Gaidar, "the main lesson of (former Prime Minister Yevgeny)
Primakov's rule is that the Russian market cannot be reversed." 

On the other side, Russia currently needs the same structural economic
reforms it required in 1996 after Boris Yeltsin was re-elected president.
"Since 1996, the economic reforms in Russia have stagnated. And it's highly
unlikely that any reforms will take place before the 2000 presidential
elections," Gaidar said. 

Gaidar described the current economic system in Russia as "bureaucratic
capitalism" saying that the two completely different sectors currently
co-exist in this country. 

"In the so-called state-related sector, a company's results depend on its
relations with the authorities. Our major oil companies provide a good
example of such a scheme," Gaidar said. "The other side is represented by
the market sector which operates in accordance with free market laws. This
model is well-established at the small and medium enterprise level." 

Gaidar believes that economic factors will play a key role in the results
of the upcoming polls. According to a recent study carried out by the
Institute of the Economy in the Transitional Period which is headed by
Gaidar, the current political preferences of Russian voters shouldn't be
seriously considered. 

"According to our study, it doesn't matter that much how a person voted
before or what is his political profile. The decisive factor will be how
much money he is owed in delayed wages or pensions," Gaidar said. 


Further on Grounds For Banning Russian Communists 

By Interfax observers Igor Denisov and Boris Grigoriev 

MOSCOW. July 14 (Interfax) - There are formal 
grounds for starting the procedure of banning the Communist Party, 
Interfax was told Wednesday [14 July] at the Russian Ministry of Justice. 

A spokesman of the Justice Ministry said that the inspection of the 
Communist and some other political parties has shown "certain breaches of 
the present law." For example, facts were found of setting up party 
groups at some enterprises and organizations, which is against Russia's 
law. The Justice Ministry's experts say that at least theoretically the 
breaches are sufficient for court cases of liquidation of the guilty 
parties and movements. Now their future wholly rests with one man, and he 
is President Yeltsin. The anti-Communist views of the President are well 
known. Moreover, Interfax's sources in his administration make no secret 
that Boris Yeltsin, due to step down as President in the year 2000, would 
like to go down in history as a man who toppled communism in Russia. 

At the same time the President and his team see quite clearly that it is 
practically impossible to ban the Communist Party in the pre-election 
year. Therefore, while criticizing the Justice Ministry for slack 
activity in following his instruction for inspecting the Communist 
Party's compliance with the Russian Constitution and other laws, he added 
that there was no talk of banning the party. Sources in the President's 
administration say that Yeltsin knows only too well from his own 
experience how the Russian heart warms to the persecuted, and therefore, 
understands that a ban on the Communist Party may boost its popularity. 

This view is shared by Yeltsin's aides. The situation is seen in a 
similar light at the Justice Ministry. Interfax sources in that 
department, which recently obtained the status of an armed department, 
warn that banning Communists may actually increase their public appeal 
and, having a wide network of grass-roots regional structures, they will 
survive in any situation or even gain points for "suffering at the hands 
of the regime." Interfax sources said that the Ministry promptly drew 
conclusions from the President's public criticism. "From now on regular 
inspections of activities by public associations, including the Communist 
Party, will be more rigorous and detailed," the sources told Interfax. 

It was made clear both at the President's administration and the Ministry of 
Justice that they are not going to stand by and calmly observe the 
opposition leaders of Communist trends, who openly proclaim the 
overturning of the Russian constitutional system as their aim and use all 
the advantages of their deputies's mandates. "It's one thing to wage an 
election campaign at the expense of tax-payers using the state apparatus 
and taking it easy in a Duma office in Okhotny Ryad, and quite a 
different matter to rent a one-room apartment in a Moscow suburb as an 
election headquarters," said one of the sources. What can the authorities 
do in this situation if we assume apriori that a ban on the Communist 
Party is out of the question? The answer to that is not at all clear. 

Interfax sources in the power structures have said that the key role 
belongs to the Justice Ministry which should toughen its control over the 
Communists's declarations and actions "on the verge of a foul." The 
sources say that the Justice Ministry should take the anti-Semitic 
escapades of General Albert Makashov and the "revolutionary calls" of 
Victor Ilyukhin and similar excesses as "a signal to action." The 
Ministry could use its right to give them stern warnings and then sue 
them and raise the issue of liquidating the party of such an extremist 
nature. Other variants are also possible, for instance, the removal of 
Lenin's body from the Mausoleum which is sure to be followed by protests 
from "the left" (who will hardly find a mass support, judging by the 
opinion polls). The conflict might also lead to banning the Communists, 
but that needs careful assessment. One thing is clear now; the state 
authorities have found arguments against the Communist Party that can be 
used by the President if necessary at any moment.


New York Times
July 16, 1999
[for personal use only]
As Time Goes By, Russians Savor the Soviet Era

MOSCOW -- Russians may be divided sharply on whether the Soviet era was
the "good old days." But it is the time when most of them were young. 

So, like it or not, a patina of nostalgia, or at least kitsch, has spread
over that gray world of communal apartments, chronic shortages, propaganda
slogans, controlled newspapers and political taboos. 

The door to Petrovich, a popular club in the basement of a nondescript
building off Mesnitskaya Street, has five clumsy doorbells, just as the old
communal apartments had. The membership card is a Communist Party ticket.
Inside, window sills and walls are packed with junky memorabilia from the
Soviet Union, which collapsed in 1991. 

Outside the toilets hangs a glossy black-and-white photograph of a large
group of men in ill-fitting suits and women with beehive hairdos under a
statue of Leonid Brezhnev, the Soviet leader who died in 1982. The caption
identifies them as an "all-Union conference of psychiatrists" held in 1977
in Brezhnev's native city, Dneprodzerzhinsk. 

On the menu, a pancake with caviar is called "No to Racism!" -- after a
typical slogan of a May Day parade. And tongue with horseradish is labeled
Gensec, the Soviet contraction for the general secretary of the Communist
Party and the title by which all the leaders, from Stalin to Mikhail
Gorbachev, were formally known. 

This is stuff any Russian who remembers the world before 1991 would
appreciate, as they would the patched accordion their grandfather kept on a
shelf, the washed-out postcards perched in the glass bookcase, the old taxi
meter that never worked, the cheery girl on the cover of Soviet Peasant or
the volume titled "Book of Useful Advice," much of it contributed by clients. 

"The idea was to re-create the forgotten years; the communal apartment, the
Soviet 'middle class,' the herring, the pickles, the postcards," said
Yekaterina Razgovora, a manager of Petrovich. "People feel at ease here.
They feel at home. This is an era they all remember, a youth they can

Interest in Soviet memorabilia is hardly new, at least among tourists. Many
of the trappings of the old Bolshevik empire -- military caps, Red Army
belt buckles, old medals, Kremlin phones and anything with Lenin on it --
went on sale as soon as the Soviet Union went under. 

The tourist trade marches on unabated today in places like the pedestrian
mall of the Old Arbat, where Soviet coins, flags and other trinkets are
displayed alongside the mandatory T-shirts of "McLenin," with the founder
of the Soviet state chomping into a Big Mac. 

There is also a considerable minority of Russians who openly and actively
bemoan that December day in 1991 when the red flag went down over the
Kremlin. In an irony that probably eludes them, many have taken their
fervor to the Internet, where they vent their frustrations on sites ranging
from Pravda to one dedicated to preserving Lenin's mausoleum. 

On the site, Lenin's niece, Olga Ulianova, argues that "it is absolutely
clear that reburying him might provoke the most unpredictable consequences
for our fatherland." She offers no hint what they may be. 

Olga Ulianova may not feel comfortable in Petrovich. But those Russians who
couldn't dump their Soviet junk fast enough when the old order collapsed
are those who now find themselves attracted to echoes from the past. 

Even in the glittering shopping mall under the Manezh Square, whose three
underground floors of shops are unabashedly aimed at Moscow's nouveaux
riches, one of the stands in the food court is called Dining Room No. 14,
as it might have been in the Soviet days, when most shops and eateries were
identified only by a naked number. 

You find it on television, too. A commercial for a brand of Indian tea that
used to be in great demand, and was in great shortage, in the Soviet Union
starts with black-and-white images of a man proudly bringing the familiar
package with an elephant on it home to an admiring family. The package
acquires color and a voice intones, "The tea you remember." 

Foreign companies have not failed to recognize the draw of the past.
Dannon, the yogurt maker, markets a "classic kefir," made to taste like the
yogurt-like dairy product Russians grew up on. 

One of the more popular shows on television, "Old Apartment," draws huge
audiences on Sundays focusing on something from the past and finding people
who remember to discuss it. Grigory Gurvich, the host, says the discussions
often get emotional. 

"Of course, those who remember the past seriously remember a hell, a
nightmare, especially the communal apartments," Gurvich said. "But as
Yevgeny Yevtushenko said when he was on recently, it was a horror, but
that's how we grew up. We were young." 

Besides, Gurvich noted, few Russians today still remember the horror of the
Gulag and the repression. For most, their memories of the Soviet Union are
of the "Period of Stagnation" under Brezhnev and his aging successors, when
repression gave way to enforced mediocrity, boredom and shortages of
virtually everything but propaganda. It was a time when the focus of life
shifted to steamy kitchens, the search for goods, and treasured glimpses of
the glittering West in movies, television shows and books. 

It is this world that Petrovich tries to re-create -- in a mushroom
julienne named "Petrovich's dream of Paris, where he has not yet been," or
in the black-and-white movies about the triumphs of a young Bolshevik in
agriculture that play constantly over the bar. 

"Sometimes I wonder if my kids will ever believe what it was like," said a
businessman in his 30s, whose wife works for a Western car company. "I try
to tell them about the lines, about living in a two-room apartment with
their grandparents, about how nervous we were if we met a foreigner. 

"They just look at me as if I'm describing an alien land. I am." 


Date: Fri, 16 Jul 1999 
Subject: Re:3395-Hough

Jerry Hough writes on the steel import quota question, essentially this:
it is
"modern capitalism" that the governments of powerful, rich countries can
successfully impose their policies on weaker ones, therefore it is just "moral
outrage" to be upset, and really, this is a jejeune and passe sentiment.

This is pretty crude as political philosophy, not to mention that Hough's
economics is pretty primitive too. On the latter, it is actually hard to take
seriously the notion that Russian steel should stay in Russia, US steel in the
US, as Hough writes. At times like this, I think, "he only does it to annoy,
because he thinks it teases" (Carroll).

On the economics, I just suggest he try to read some good, accessible,
self-advertisting web-site economist like Krugman, before the family Hough
decides to retreat to baking its own bread, growing its own tomatoes and
generating its own electricity. This doesn't mean that one should be
indifferent about the impact on Americans or any other people of chill winds,
just that there are good and bad ways to cushion blows. There will always
be an
interest group keen to sell the general public and their well-lobbied
representatives the idea that their patch should be protected. The US
representatives may or may not protect Chiquita Banana more than the EU
the firms with interests in its former banana islands (often not even
republics), but the well-informed American would do well to ask each time: cui
bono? Its not that often us, you know. The same for "our" steel. (For a more
informed view on the banana wars and all that, see Brigitte Granville,
The World Today (Chatham House).

If Hough's economics is not serious, or meant for heartland consumption as TV
soundbites, I think Hough does mean the dime-store anti-moral philosophy he
espouses, however, as it is consistent with all his previous writing, the 
slant he gave to "How Russia is Ruled," and the rest. It is the celebration of
might. In the end, it may be harmful even for the mighty. 

This is, to be sure, very much the American Idea up with which I, and I assume
Hough, were brought up on in mid-century America: when a bully on the "monkey
bars" of my Bronx playground, wanted to swing his feet in my face and
push me
off, he would sneer at my pleas for tolerance, "Its a free country." 

There is, at present, as Hough does know, a lot of protectionism for the rich,
and "free trade" for the poor. Hough seems to be preaching that all that is
is moral. Certainly, it can be cloaked in moral garb. One example fellow
readers may vaguely recall: when the Russian government had the idea in
to introduce a simple, easily collectible tax, a $10 tax on each border
crossing, the EU used the full power of its economic and moral authority to
that this "interferene in the free movement of people" was not put in place
(paid your airport taxes lately?). A reason for this barrier to helping close
the fiscal gap? Maybe it helps to know that some 10 million Finns, the recent
EU accession then, visit Russia every year (rather more than the population of
Finland. That is truck drivers, who do not want to pay this $10. Whenever the
Russian federal authorities wanted to get control of the Russian alcohol
the simplest measures were denounced as some return to communism. People
ask how many American states still have a state monopoliy of alcohol.

Jerry Hough's world view says, well, they are powerful, they can get away with
this, so therefore Russia should adapt -- on steel, on alcohol, on even
temporary, moderate tariffs. It certainly isn't good for Russians. It is
amazing what a little backbone might do, as the Russian negotiators learned at
the Paris Club about when you are in trouble, and when your bank is in
It is isn't good for most Americans either. These quotas are no help to really
improving the lot of American workers (I'll leave out comments on that, as
appropriate for Ivanov's American List.) 

The just-published UNDP Human Development Report has some brilliant things to
say on "winners and losers " in the trends we call globalization, and what
to do
to benefit the losers and even help many relative winners. Jerry Hough offers
instead a worship of the accomplished, unsatisfactory, fact. I suggest JRL
readers not just wade in with supporting or conflicting prejudices, but
give it
some careful thinking. Have you ever noticed that we (I include myself) allow
ourselves so much license to be self-indulgent than most Russian colleagues
live in Russia? (Compare this piece, or Hough's, with the thoughts of
Piontkovsky in MT, in the same JRL). Isn't it time that those for whom
Russia-watching is part of the entertainment industry found a more
lucrative and
less dangerous sport to enter?)


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