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Johnson's Russia List
30 July 1999
[Note from David Johnson:
1. AP: Russian Population Declines Sharply.
2. AP: Yeltsin Seeks Closer Ties With West.
3. Christian Science Monitor: Daniel Schorr, Russia: no lights,
a lotta bombs.
4. Moscow Times: EDITORIAL: Did'ya Hear The One About ...
5. Itar-Tass: Russian Diaspora in the USA May Help Revive Russia.
6. Moskovskiy Komsomolets: Melor Sturua, Premier Is Against AIDS.
Sergey Stepashin Meets With the Russian Community in America and Calls
Upon it To Support the Russian Economy.
7. The Times (UK): Alice Lagnado, Muscovites told they may keep their
8. Moskovskiy Komsomolets: Rumors Abound on Russian Political Scene.
9. Reuters: Julie Tolkacheva, IMF gives Russia lifeline, but no panacea.
10. New York Times: Celestine Bohlen, Secrecy at Russian Bank Raises
a Host of Eyebrows.
11. Itar-Tass: NATO Action in Yugo Put off Start-2 Ratification-Russian Mp.]
Russian Population Declines Sharply
July 30, 1999
MOSCOW (AP) - Russia's population fell during the first five months of the
year, dropping by 346,700 people to about 146 million, the government said
The drop was much larger than in the same period last year, when the
Russian population shrank by 191,600, the Statistics Agency said.
The increased decline was attributed to a rising death rate and a falling
birth rate, as well as slumping immigration and increased emigration,
according to the agency.
Deaths actually outstripped births by 396,000 people, the agency said.
Russia's population has been falling throughout this decade, an extremely
rare development for an industrialized country not at war. Worsening
economic conditions and alcoholism have been key factors, leading to a
drastic drop in life expectancy for men.
The drop would be far greater if not for a steady flow of immigrants,
mostly ethnic Russians leaving other former Soviet republics, over the past
Though a census has not been done in several years, Russia's population is
now estimated at about 146 million.
Yeltsin Seeks Closer Ties With West
July 30, 1999
MOSCOW (AP) - Russia must rebuild close relations with the West that were
hurt by the Yugoslav crisis, President Boris Yeltsin said today.
``It's a strategic, global task ... to restore friendly relations with the
United States, Germany, France and other nations that we had before,''
Yeltsin told reporters before a working meeting in the Kremlin.
Russia strongly opposed NATO's air campaign against Yugoslavia, but helped
negotiate a peaceful settlement and sent its peacekeepers to take part in
the NATO-led peacekeeping mission in Kosovo.
Meanwhile, Prime Minister Sergei Stepashin left for a summit today in
Sarajevo, Bosnia, which is to discuss development and security in the Balkans.
The conference, attended by leaders of nearly 40 nations, is intended to
underscore the isolation of Serbia as long as President Slobodan Milosevic
The United States and other Western nations have said they will only
provide limited humanitarian assistance to Yugoslavia as long as Milosevic
remains at power. Moscow, meanwhile, is pushing for a broader aid package
to include Serbia.
``There are 10 million people living in very hard conditions who face a
threat of humanitarian disaster in the fall and winter,'' Stepashin said
before leaving for Sarajevo.
Russia has promised to supply Yugoslavia with $150 million worth of goods
``I personally don't sympathize with Milosevic,'' Stepashin said, according
to the ITAR-Tass news agency. ``I have been saying, and I repeat, that
Milosevic is among those who are responsible for what happened in
Christian Science Monitor
30 July 1999
Russia: no lights, a lotta bombs
By DANIEL SCHORR
I was reminded the other day of a joke that went the rounds in Moscow in
1957. The Soviet Union, although dreadfully short of consumer goods, had
managed to leap ahead of America in space by launching the first two
orbiting satellites, one with a dog on board. Communist Chief Nikita
Khrushchev boasted that America now lay defenseless before superior Soviet
As the joke had it, Khrushchev called a secret meeting of his war council
to plan a knockout blow against the United States. Fifty tourists would be
sent to America with suitcases containing miniaturized hydrogen bombs and
would spread out to strategic locations. The bombs would be simultaneously
detonated by an electronic command from Moscow.
Khrushchev asked his ministers whether anyone saw anything wrong with the
plan. Most said the plan was technically feasible.
Finally, one minister spoke up. "But, Comrade Khrushchev, where do we find
What brought this joke back to mind was reading that Russia has recently
staged its biggest military exercise, called West '99. Its premise was an
invasion of Russia from the West, with demoralized Russian conventional
forces unable to offer successful resistance. Finally nuclear weapons are
A hint to NATO that Russia is still a nuclear power and not to be taken
At one point in the crisis over Kosovo, President Yeltsin issued an
incomprehensible warning that a NATO-Russian confrontation over Kosovo
could lead to nuclear war.
That took me back to the 1950s, when Secretary of State John Foster Dulles
enunciated a doctrine of possible nuclear response to Soviet aggression in
Europe by immensely superior conventional forces. "A bigger bang for the
buck," we called the Dulles doctrine. The Yeltsin doctrine could be called,
"A bigger rumble for the ruble."
But then came a report that Russia's nuclear missile forces near the
Chinese border were left without power for a time. Garrisons went dark.
Pumps stopped pumping. The reason for the blackout was that the electricity
bill had not been paid by the money-strapped armed forces and the power
company got tired of waiting. It was at least the third time this had
happened. And the same thing happened at a nuclear submarine base.
It was downright embarrassing for a government that had spent two weeks in
exercises, had sent bombers into air space near Norway and Iceland to show
its military muscle, but couldn't be sure of its electricity.
Yes, comrade, but where do you get 50 suitcases?
July 30, 1999
EDITORIAL: Did'ya Hear The One About ...
When Viktor Chernomyrdin was prime minister, he was remembered for his
malapropisms. There was his memorable cry that Russia would not be
importing any Western grain from mad cows; there was his oft-quoted lament
that "we wanted the best but it turned out like always."
Now Prime Minister Sergei Stepashin is carving out a similar court jester's
role. Not every country can count on its prime ministers for comic relief.
But then again, not every country is Russia.
Stepashin's comic career began with his nomination, when this former head
of the FSB, the KGB-successor agency, kidded around by saying that
legislators who had voted yes to his candidacy would not be killed. Ha ha.
Then there was the one about how ministers ought to be forbidden to bring
mobile phones to Cabinet meetings because this might lead to them bringing
bombs. Ha ha.
Then there was the screamingly funny decision to bring Primorye region
Governor Yevgeny Nazdratenko along on a trip to Seattle to drum up
investment in Russia. "I love you all," Stepashin told those
less-than-impressed American businesspeople. Well, love is a
many-splendored thing. Maybe he even meant it - who knows.
Later that same trip, Stepashin reportedly told an old Soviet chestnut to
an audience at the U.S. National Press Club: An American and a Soviet are
chatting; the American points to a Zaporozhets - a car so improbable that
it is the butt of much Russian humor - and asks how much that "amazing" car
costs - to which the Soviet citizen replies: "Yes, but in your country,
you lynch blacks!"
Kommersant newspaper reports that this joke left the press club in stunned
silence. That's a shame because this might be the only funny joke Stepashin
has ever told.
This is a joke and it has two punchlines: 1) The Zaporozhets is such a
national embarrassment that for an American to even bring it up innocently
amounts to a vicious insult, and 2) the only way the indignant Soviet can
counter is to repeat Cold War Soviet propaganda about America's racial
problems. See? It's funny!
Some might nevertheless be appalled that the prime minister would indulge
in an off-color joke for a foreign audience.
Perhaps such people would like to have Chernomyrdin back. Then again,
Chernomyrdin was on NTV last week telling a seldom-noted joke of his own.
Asked about the "media wars" between Vladimir Gusinsky-controlled NTV and
Boris Berezovsky-controlled ORT television, Chernomyrdin's dour assessment
was, "two Jews get into a fight, and the whole country has to watch."
Maybe Stepashin's not so bad after all.
Russian Diaspora in the USA May Help Revive Russia-Opinion.
NEW YORK, July 30 (Itar-Tass) - A meeting on Monday between visiting
Russian Prime Minister Sergei Stepashin and renowned representatives of the
Russian diaspora in the USA demonstrated its potential in reviving Russia's
"Russian prime minister's meeting with representatives of the
intelligentsia, living in America, was a very important step towards using
the potential which Russia has so far ignored," Professor of the Fordham
and New York universities Vladimir Kvint told Itar-Tass on Thursday.
According to Kvint, "Russian-speaking Americans are still part of Russia,
despite being divided from it by the Atlantic of Pacific oceans. We have
been all brought up on Russian culture. Even those who were born here."
He said he was confident that the Russian diaspora could make a sizable
contribution in reviving Russia's economy and culture.
He said several directions were possible there. "First, it may take
American companies to Russia. Russia needs cooperation with the West,
including with America."
"It is difficult to count on success or at least a quick success without
cooperation with the USA," the professor stressed. "Russia needs an active
presence of leading US insurance companies, investment and commercial
banks," he added.
The Russian diaspora could also help Russian companies gain the American
market. "It is important for Russia to set up enterprises whose shares will
be sold at the New York Stock Exchange, at the NASDAQ electronic exchange,"
he said. "Thus, Russia will come to local share markets, while the American
capital will go to Russia," Kvint stressed.
Stepashin Meets Russian Emigres in States
28 July 1999
[translation for personal use only]
Article by Melor Sturua: "Premier Is Against AIDS. Sergey Stepashin
Meets With the Russian Community in America and Calls Upon it To Support
the Russian Economy"
Many years ago, when the great chansonnier
Aleksandr Vertinskiy returned home after long exile, he decided to bring
his old friends together to celebrate. And the fragments of the empire,
as it were, assembled: Former czarist generals and the holy fathers and
secular luminaries of prerevolutionary Russia who had miraculously
avoided the Lubyanka ax. Vertinskiy's colleagues from those times -- the
legendary cabaret artists Kurikhin and Smirnov-Sokolskiy -- also came.
When all the guests had assembled there was a long, agonizing pause.
Someone timidly enquired: "But whom are we waiting for?"
Smirnov-Sokolskiy immediately replied: "The Czar!"
This witticism involuntarily came to my mind at the Russian Embassy
Monday. In a splendid hall, around a large table, were seated Prince
Grigoriy Gagarin; Prince Vladimir Golitsyn; Dmitriy Grigoryev, honorary
dean of the Cathedral of St. Nicholas in America; Bishop Vasiliy
Rodzyanko of Washington, San Francisco, and the Southern States of
America.... Admittedly, they were waiting not for the czar but the prime
minister of Russia, Sergey Stepashin. This was the first meeting on the
Russian premier's itinerary in the American capital. The people waiting
for the visitor could be described as prominent representatives of the
Russian community in the United States, more notable than influential,
more influential than rich.
I think that readers would find it interesting to get to know all the
participants in this unique meeting. It would be simultaneously
interesting and instructive. For example, in addition to the princes of
the church and the princes period, there was the movie actress Natalya
Andreychenko; Vitaliy Vaynberg, the publisher of Novoe Russkoye Slovo;
the sculptor Ernst Neizvestnyy; Mikhail Pogorelskiy, chairman of the
Baltimore Association of Veterans of the Great Patriotic War; Academician
Roald Sagdeyev, currently a professor at Maryland; the hockey player
Vyacheslav Fetisov; the artist Mikhail Shemyakin; and, finally, your
obedient servant, who was present as chairman of the Board of Directors
of the American-Russian Foundation for Progress and Cooperation.
People talk about what concerns them. Ernst Neizvestnyy urged the premier
to save Russian culture. The princes of the church and the princes plain
and simple urged him to save Russian spiritual values. Slava Fetisov
urged him to save Russian sport. Natalya Andreychenko urged him to save
Russia from AIDS. The ecstatic Natasha sought to persuade the premier
that if urgent measures were not taken then by the time Russia does get
back on a firm economic footing it could find itself completely
"devastated by AIDS." So support for the country's producers clearly has
to start with the large-scale issuing of condoms.
More business-minded participants in the meeting proposed setting up
various structures which could "organize" the diaspora to help the new
Russia. For example, Professor Vladimir Kvint proposed that a Council of
Economic Experts be founded in New York, while this writer urged that we
finally set about forming a Russian lobby in the United States. Today all
states, even the tiny ones, have their own legislatively registered lobby
in Washington, and it is only the Russians who still engage in ad hoc
approaches. For all its confused and improvised nature, the meeting was very
interesting, and at times even touching. Sergey Stepashin listened
carefully to all the moans and groans, noted it all down, and was even
late as a consequence for his meeting with representatives of US business
circles at the Willard Inter-Continental, where it was no longer emotion
but specific investments which were at stake....
The Times (UK)
July 30 1999
[for personal use only]
Muscovites told they may keep their stolen cars
Overburdened traffic police find novel approach to the problem of theft,
writes Alice Lagnado
MUSCOVITES can drive a stolen Mercedes or Rolls-Royce without fear of
reprisal, according to a new decree. At least half a million stolen foreign
cars, including vehicles from Britain, will be allowed to stay in Russia,
Moscow's traffic police announced this week.
All drivers have to do is obtain a piece of paper certifying that the car is
on Interpol's wanted list. According to Russian newspapers, the notice must
be put in the car and reads: Wanted by Interpol. The new owners will be able
to re-sell the cars after a year.
The move is an attempt to ease the burden of the traffic police, who are
spending ever more time stopping and checking for stolen cars. The number of
stolen vehicles in the city rose from 18,000 last October to 480,000 by the
end of the year, according to the police.
Where to park the impounded cars is another problem for the police. There is
not enough space in the city, and the cars are usually stripped of spare
parts by thieves or corrupt police.
According to police statistics, the stolen vehicles, a third of which come
from Europe, are almost never returned to their rightful owners.
Stealing foreign cars and reselling them has become big business since last
autumn when the prices of Russian cars fell because of the financial crisis,
making them less appealing to thieves.
Since the traffic police are notorious for accepting bribes, the scheme is
bound to include kickbacks for them. The piece of paper that states that the
car is stolen is unlikely to come free of charge, especially to foreign
motorists. A spokeswoman for the Moscow police said she thought the document
would be free, but could not confirm that.
The police can make drivers' lives hell by demanding fines for imaginary
violations. Those who refuse to pay often face long waits before they are
allowed to drive on.
Some Muscovites invest in police detectors, which start beeping when a patrol
car is in the vicinity. Government cars, however, seem exempt from the rules,
and on the busy Novy Arbat enjoy a middle lane reserved for them alone.
In February, put-upon motorists formed the Society for the Protection of
Drivers, which employs lawyers to strike back at corrupt officers.
The numerous traffic police have not, however, announced any campaigns to
improve the safety of Moscow's roads, which claim thousands of lives each
Rumors Abound on Russian Political Scene
26 July 1999
[translation for personal use only]
Feature prepared by Mariya Fedorina "with the participation of
Mariya Markina": "Rumors Rating"
Election Rumors. Primakov Will Face Age Barrier
It seems that the Kremlin has found a way of ridding itself of the most
dangerous presidential candidate in the 2000 election- Yevgeniy Primakov.
According to rumors, a plan has been hatched in the quiet of the offices
on Staraya Ploshchad [Presidential Staff] according to which the Law on
Elections should be changed so that only citizens below pensionable age
are allowed to become Russian president. According to the draft law, a
man who has reached 65 (and a woman who has reached 60) would be deprived
of the right to be elected to the presidency. Of course, to hope that
this law would get through the communist Duma would actually be
laughable; therefore, it is proposed to hold a nationwide referendum on
the subject during the Duma elections. Again according to rumors, voters
will be offered three versions of age restrictions: not older than 65,
not older than 70, and not older than 80. Obviously Kremlin analysts
believe that, even if the law is not passed, the very discussion of it
will remind all voters of Primakov's age -- which, of course, would
reduce his prospects. Incidentally, another candidate whom the Kremlin
does not like, Yuriy Luzhkov, is also on the threshold of the age
restrictions, so that, it would appear, two birds could be killed with
one stone. In addition, the proposed candidates from the party of power
(Stepashin, Aksenenko) are far younger. However, the idea will hardly be
to the taste of the Russian electorate: Power has for too long been
associated with old age, illness, and senility. A young, energetic
president of sound mind would be too difficult an ordeal for Russians. At
least an old and sick president does not attract envy....
Kremlin Rumors. Yeltsin Is More Sick Than Well
When the president, on the pretext of the smokiness of the surrounding
forests, unexpectedly left Zavidovo and settled down in Gorki-9, the
meager remnants of the political beau monde (it is the vacation season,
after all) began to stir, expecting the worst. With a hint at cadre
reshuffles. The published schedule of the president's meetings, in which
the names of Chernomyrdin and Stepashin featured, added grist to the
rumor mill. Everyone made preparations: Chernomyrdin revised the
timetable for the out-of-town session of the NDR [Russia Is Our Home]
political council, and Stepashin pottered away at the report of his trip
to Ukraine. Chernomyrdin was somehow simply forgotten, and on the day of
his scheduled meeting with the premier Yeltsin unexpectedly dashed off
for a "scheduled" examination in the Central Clinical Hospital. Rumors
responded immediately that Yeltsin was ill again. The president's
cheerful statement, read out by Yakushkin, with its calls for certain
political figures to "refrain from statements that inflame political
passions," confirmed rather than refuted the diagnosis: These "certain"
political figures had spoken out a long time before, and a healthy
president should either have continued to remain above the fray or
reacted less sluggishly. In short, it is the same old story: A period of
prolonged remission has passed, and the president is again starting to
work on documents.
However, he did actually meet with Stepashin. Thanks, it is said, to a new
doctor whom, according to rumors, the family found for him recently. This
doctor, they say, has developed a unique method with the aid of which the
president, even at the least favorable moments, can maintain something
resembling a working regime. Although even this did not help: The rumor
is actively going round the regions that Yeltsin is already dead. And of
course, people believe it -- without, however, going into much detail.
National Rumors. Lebed Would Not Allow Shumeyko to Become Chief Evenk
"The most important thing for me is to rehabilitate my political name,"
Vladimir Shumeyko stated. How his name is doing is not known, but his
political career is not only past rehabilitation but even, it would
appear, past resuscitation. According to rumors, the fateful role was
played by none other than the odious Aleksandr Lebed, whom people have
somehow started to forget in recent times (the regional level is not the
same as the Kremlin, with its feuds). However, according to the official
version, everything was entirely proper and lawful: a violation, bribery
of the voters (vodka plus a tidbit), and -- as a consequence -- the end
of the election race before it had even begun. According to rumors,
Aleksandr Lebed decided to use the saga of the latest "interloper" to
remind people in the wider world of his existence once again. Well, he
did not take kindly to the fact that "they have dragged down here from
somewhere or other the jug-eared Shumeyko and are trying to make him into
the chief Evenk." And who could take kindly to this: Fewer than 400
inhabitants, and they are trying to get their man into the Federation
Council. According to the same rumors, Lebed has long had his eye on the
independent component of Evenkia and has long been making plans to
swallow it. Again, who could be pleased in a period of election agitation
by an ambitious Moscow politician who mentions, with or without good
reason, his connections in the Kremlin, on Staraya Ploshchad, and on
Bolshaya Dmitrovka [Federation Council]! The Evenks themselves, despite
the rebuffed Shumeyko's frightening forecasts, will only gain from the
change of candidates: If everyone coughs up for "humanitarian aid" in
this way, the 400 aborigines have a real chance of laying in stocks of
vodka before the next elections.
Oligarch Rumors. The President Will Again Become a Peacekeeper
At the end of last week people began to say that that our president has
decided yet again to play the part of peacekeeper. The target of his
reconciliation efforts are to be the Montagues and Capulets of today's
media war -- Boris Berezovskiy and Vladimir Gusinskiy. According to
certain information, Sergey Stepashin has already made attempts to bring
the leadership of ORT and NTV to their senses, appealing to their sense
of responsibility, and apparently even achieved some sort of
understanding; but on the very same evening the sham reconciliation was
treacherously breached: NTV carried a report on a rally of AVVa investors
outside LogoVAZ accompanied by slogans like "Berezovskiy Is a Thief!" and
"Voloshin [chief of the Presidential Staff], Return Our Money!," with the
ritual dismemberment of a "people's automobile"; at the end of the
reportage, anticipating a retaliatory strike, Tatyana Miktkova announced
that Aleksandr Voloshin has given instructions to "put pressure on
Gusinskiy." Meanwhile, in ORT's reportage this same rally looked like a
well-organized spectacle, at the end of which the babushkas who took part
in it candidly confessed that they had earned good money for their
participation, and "would that there were more such rallies!" Which in
turn sent his opponent into a rage.
For the Kremlin, this was the last straw, and Boris Nikolayevich
[Yeltsin] urgently began making preparations to issue an invitation to
both oligarchs; what happens next is obvious: a reproof for the TV
magnates, repentant speeches by the guilty parties, and finally, the most
impressive concluding gesture -- the president stops the media war and
returns the people's television to the people! Watch to your heart's content!
Presidential Rumors. Stepashin Rehearses His Election Program
It is very difficult to be a politician in an election year. Any
gesture, any word, is looked at through the prism of the election
process. A step to the left or a step to the right is a defection to the
Take Sergey Stepashin, for example: His plane had not managed to lift its
undercarriage off its home runway when rumors started to fly: The premier
was not simply making a planned tour of the country and foreign parts, he
was making an election visit. For specialists, the signal was Stepashin's
informal meeting with Yeltsin before his departure. And especially Sergey
Vadimovich's remark in an interview with Newsweek that the next president
"should not be a person of pensionable age," while he himself is "46, and
I do not intend to leave politics."
At the same time one must give him his due: Stepashin was relaxed,
witty, and charming. Which was not slow to have an impact on his
television ratings. With such a rating it is not shameful to appear
before Gore himself. It turns out that the current candidate for the U.S.
presidency is meeting with not just anyone but again a candidate for the
Russian presidency (as has already happened with Chernomyrdin, Kiriyenko,
and so on down the list): It is no bad idea to give such a person credit
as well, since, according to other rumors, Stepashin will not be able to
hang on even as premier.
It would be interesting to know what he will quote to Gore....
Prosecutor's Office Rumors. Skuratov's Office Has Found a New Tenant
The meandering intrigue around the general prosecutor who resembles
Yuriy Skuratov has finally received a new impetus. Everything started
with acting General Prosecutor Yuriy Chayka's unexpectedly going on
leave. Everyone who needed to understand understood right away: In our
times people in such "hot seats" do not simply go on leave just like
that. According to rumors, Chayka will not be returning to the
"unpleasant" position, and a new post has been prepared for him as deputy
secretary of the Security Council. A new man will take Chayka's place --
Vladimir Ustinov, deputy general prosecutor for the North Caucasus.
Stubborn rumors are going round that Stepashin himself, who highly rated
Ustinov's work in his previous post and recommended him for this post. It
is surprising but true that the probable appointment of Ustinov, it would
appear, is not meeting with censure from anyone. So that it is
conceivable that the new appointee has a chance in the future of ridding
himself of the not-so-easy-to-read prefix to his post [i.e. "acting"
But this is provided that the skills that he acquired in the Caucasus
are suitable for the capital, where the methods of waging war, as is well
known, are quite different. The Rumor Laboratory [subhead]
In recent times politicians have simply been striving to outdo one
another in extravagance. [Kemerovo Oblast Governor Aman] Tuleyev, for
example, first launched rumors that he had adopted Christianity. Then
that the Shari'ah court had condemned him to death for this. And finally
the hero denies everything and intends to take everyone to court. Or take
[Ingushetia President Ruslan] Aushev. Polygyny is a topic that agitates
not just the Muslim world. Summer, the season of vacations, hot weather,
naked, suntanned bodies -- you could not invent a better time for
discussing the law on the legitimacy of living with four women at the
same time. Naturally, the question cannot be resolved unequivocally. The
mufti, of course, are in favor, [Justice Minister] Krasheninnikov is
against. Ingushetia, by the way, has not left the Russian Federation,
which means either all the laws must be rewritten and the Constitution
amended, or the practice must not be allowed at all. Both of these
courses are difficult: The ball is already in play. Rumors are already
circulating that if it is allowed for the Ingush, it cannot be forbidden
for others. Especially since the law already has many followers. Women,
many of whom are already completely emancipated, are of course indignant,
but at the same time they are starting to talk about polyandry.... In
short, the process is under way in some form or other.
True, it is not clear what originally lay behind the desire to legalize
polygyny -- anxious concern for the women of the East, or banal
self-advertisement -- and how many women does the average man, for
example, the politician, need for a fulfilled existence?
Our experts comment on the situation.
Vladimir Semago, State Duma deputy, Russia's Regions group:
"Why can the Ingushetian president talk about polygyny, referring to his
people's long centuries of tradition, but, let us say, a female governor
cannot decide to introduce polyandry in her province? Or a homosexual
governor allow same-sex marriages? What sort of distortions and tricks
are these? All this bears the hallmarks of a feeble, ill-considered game.
If one man has four wives, and another has none at all, the amount of
infidelity will inevitably increase. These statements should not be taken
Vladimir Nikitin, State Duma deputy, People's Power group:
"There was a draft law on polygyny in the State Duma, submitted by the LDPR
[Liberal Democratic Party of Russia], and I think that it did not even
set any limitation on the number of wives, but it did not meet with
support. I think that Aushev's statement will backfire on Ingushetia.
Several large-scale federal programs, including the transposition of the
capital, are taking place on the republic's territory. Now they will say
that this money is going toward housing wives. After all, under Islamic
law each wife must live in her own house. As soon as this proposal
acquires the features of a legislative initiative, the people will suffer."
Nikolay Khramov, coordinator of the Transnational Radical Party:
"Aushev has simply decided to show off. He is not even talking of a law
adopted by the Ingushetia parliament, only of a presidential edict. It is
a populist, unconstitutional statement aimed at weakening the already
shaky situation in the country and eroding the single legal area. Russian
laws have priority over regional laws, and there cannot be two opinions
ANALYSIS-IMF gives Russia lifeline, but no panacea
By Julie Tolkacheva
MOSCOW, July 30 (Reuters) - The International Monetary Fund has thrown
Russia a lifeline by resuming lending suspended since last year's crisis,
but the economy could still sink if reforms are not implemented, analysts
said on Friday.
``The IMF credit and the start of official restructuring negotiations with
both clubs (of creditors) help Russia to avoid the worst scenario in the
economy and later in politics,'' Gintaras Shlyzhius, head of research at
Raiffeisen Bank, said.
The IMF on Wednesday approved a $4.5 billion loan to Russia, to be released
over 18 months, with the first $640 million tranche to be disbursed
The government wasted no time in starting negotiations on restructuring its
crushing Soviet-era debts. Talks with the Paris Club of official creditors
on restructuring $9 billion, out of $38 billion Russia owes, started on
Negotiations with the London Club of commercial creditors are scheduled for
The new IMF credit, which will go towards paying debts to the IMF itself,
saved Russia from defaulting and provided some breathing space to implement
post-crisis recovery measures.
Russia's economy has shown few signs of recovery despite billions of
dollars in IMF help over the past seven years and the Fund has repeatedly
complained about poor tax collection, mounting payment arrears and sluggish
progress on reforms.
Analysts said the IMF cash in itself was not as significant as the knock-on
effect it would have.
``This credit is virtual money, it will not even reach Moscow. What is
more important is that it creates a good background for talks with the
clubs,'' Konstantin Chernyshov, head of research at NIK NIKoil, said.
He said the credit would ease pressure on central bank reserves, which fell
by more than $1 billion in less than a month, making it more difficult to
defend the rouble.
The central bank has been using reserves not only to support the national
currency but to service government foreign debt.
Chernyshov said Russia was due to pay $520 million to the IMF in August and
$1.141 billion to the Paris Club.
The government hopes to restructure overdue 1998 and 1999 and coming 1999
and 2000 payments to the Paris Club.
``The credit allows the government to solve short-term budget problems and
in the longer-term allows for an agreement with other creditors,'' Dmitry
Druzhinin, chief economist at IK Prospekt, said.
But economists said economic recovery depended on reforms being
implemented. ``Most problems Russia had before the crisis remain and most
are structural problems,'' Shlyzhius said.
The country is still choking on a web of non-payments and tax revenue
shortfalls. The government also needs to improve corporate governance,
streamline bankruptcy procedures and shake up inefficient Soviet-style
management of enterprises.
``The IMF credit should not be seen as an ambulance for the economy. It is
not money that can be used for structural reforms in industry or solving
global economic problems,'' Druzhinin said.
Shlyzhius said Russia's economic policy programme, which the IMF approved
before releasing the credit, consisted only of a set of measures to keep
the country afloat before elections and to prepare the basis for further
reforms after them.
``Both the IMF and, indirectly, the government acknowledge one simple
thing: any serious reforms are unlikely in the light of coming elections,''
Russia is due to hold a parliamentary election in December and a
presidential poll in mid-2000.
The country posted impressive three percent growth in the first half of
this year, and the government forecasts a 1.5 percent rise in year-on-year
terms by the end of the year.
But economists say the rise looked impressive only because of the 1998
crisis and devaluation of the rouble which made better-quality imported
goods less affordable.
``The road (to real economic growth) will not be as short as some people
might think,'' Shlyzhuis said.
New York Times
July 30, 1999
[for personal use only]
Secrecy at Russian Bank Raises a Host of Eyebrows
By CELESTINE BOHLEN
MOSCOW -- From its 19th century headquarters in Moscow, the central bank
commands an empire that stretches across Russia and beyond. It employs
100,000 people and owns a rich selection of properties, like holiday spas,
apartment buildings and stables, as well as branch offices, valued in 1997
at $1 billion.
It has a controlling interest in two Russian banks and five foreign
commercial banks -- a curious legacy slotfrom Soviet days -- and
indirectly, a mysterious but handy offshore investment company based on the
Channel island of Jersey.
That Jersey company, known as Fimaco, has for months been the center of a
controversy that has tantalized the bank's many critics, inside and outside
of Russia. Although recent investigations by Russian prosecutors and
international auditors have found no criminal violations in the central
bank's dealings with Fimaco, many experts say the operations definitely
skirted the edge of normal central bank rules and ethics and effectively
deceived the I.M.F.
Most attention has focused on Fimaco's 1996 operations, when the central
bank used it as a back-door conduit to invest in Russia's giddy market in
short-term treasury bills, known as G.K.O.'s, which were at the time just
becoming available to foreigners.
According to an internal central bank document obtained by Nikolai N.
Gonchar, a crusading Russian legislator, at least $855 million was shifted
through Fimaco from the bank's hard-currency reserves onto the market for
the treasury bills from February to October 1996.
When Gonchar first made these charges, bank officials past and present
denied them. This month they offered a new explanation: the central bank
did shift money through Fimaco -- a subsidiary of Eurobank, a French bank
in which the Russian central bank owns 78 percent -- but only to test the
entry of foreign investors on the G.K.O. market.
But this latest explanation has also fallen flat. "You don't need hundreds
of millions of dollars to test that kind of mechanism," said Tom Adshead,
senior analyst for Troika Dialogue, a Moscow-based investment bank. "It is
very peculiar for a central bank to set up a hidden structure to conduct
such procedures. Why test it, when they built it?"
Gonchar, a dogged parliamentary deputy from Moscow, is also not satisfied.
"The main question," he said recently, "is where are the profits from these
>From its start in 1991, Fimaco's operations have been highly secretive.
By 1993, the year the Jersey-based investment company was acquired by
Eurobank, a directive had been issued by a central bank official ordering
that Fimaco operations be kept off the books.
No transactions involving Fimaco were ever put before the central bank's
board of directors, said Aleksandr A. Khandruyev, vice chancellor of the
Academy of National Economy who, as deputy chairman of the central bank,
served on its board from 1992 to 1998.
Central banks -- including the Federal Reserve -- commonly invest in their
home securities market, but only as buyers on secondary markets. In Russia,
the central bank and its affiliate Sberbank were known to dominate 50
percent of the G.K.O. market.
But what troubles Khandruyev most are signs that the bank was not just
playing the G.K.O. market but pumping it up with the help of national
currency reserves. "According to unwritten laws practiced by central banks,
central banks do not buy their own securities with their official currency
reserves," he said.
Central bank officials have said that they first began to use Fimaco in the
early 1990's to shelter Russian reserves from creditors looking to retrieve
their Soviet debt. Its existence was camouflaged behind Eurobank, the
Paris-based bank that like its sister banks supported by the Russian
central bank survived the collapse of the Soviet banking system with a
healthy dose of credits from Moscow.
The Russian central bank, born of Soviet Communism, has historically
cloaked its operations in a secrecy that goes beyond even the reticence
typical of central banks.
"The central bank is the biggest and most powerful financial oligarch in
Russia," said Andrei Illarionov of the Institute of Economic Analysis, a
harsh critic of the bank. "Its leadership is virtually independent. There
is no transparency. In many countries, central banks are independent but in
Russia's case, the central bank does not report to anyone."
This month, at various news conferences, past and present bank officials
announced that a three-month audit of the bank's relationship with Fimaco
had found no "substantial" violations of normal procedure.
They also produced a letter from the Russian prosecutor general's office --
which first made the public charges involving Fimaco last February --
saying that no evidence of "embezzlement or misappropriation" had been found.
The full audit of Fimaco's operations by PricewaterhouseCoopers, the
central bank's preferred auditing firm, is being released by the
International Monetary Fund, which says that the central bank used Fimaco
to inflate its foreign currency reserves, thereby deceiving lenders.
[On Wednesday, the I.M.F.
approved another $4.5 billion financial package for Russia, with strings
that insure the money will not actually leave Washington, while preventing
Russia from defaulting on its outstanding debt.]
So far, no one has been willing or able to explain why the central bank of
Russia acted as it did. Why did the bank transfer part of its hard currency
reserves, via a complicated chain of intertwined financial institutions
onto a highly speculative domestic debt market, against private advice from
both the I.M.F. and the bank's own auditing firm? According to Gonchar, the
central bank from 1993 to 1996 channeled an average of $2.7 billion a year
to Fimaco, money that eventually was recycled back into the bank's coffers
in Moscow. Central bank officials have defended this operation, noting that
many central banks invest money abroad. However, it is traditional to use
established investment firms, typically chosen on the basis of tenders.
Fimaco's 1996 transactions, described in an Oct. 4, 1996, document signed
by the deputy director of foreign operations for the central bank, were
The money was returned to Russia, via Eurobank, Fimaco's parent company,
and then through Evrofinance, the first Moscow-based foreign bank licensed
to buy G.K.O.'s on behalf of foreigners and which listed as its parent
companies Fimaco and Eurobank.
According to Eurobank's 1996 annual report, Evrofinance's presence in
Moscow "enabled Eurobank to place more than $3.4 billion in G.K.O.'s on
behalf of foreign investors -- that is 40 percent of total foreign
investment in this financial product in 1996."
According to the central bank document, the central bank directed $855
million on to the G.K.O. market via Fimaco in 1996. Fimaco, in turn, having
bought G.K.O.'s, then deposited an equal sum in Eurobank, where it earned
interest at around 5.5 percent a year.
According to Gonchar, these amounts were returned to the central bank. What
he insists is not accounted for are the profits earned on the lucrative
G.K.O. market. At the time, yields on G.K.O.'s hovered around 200 percent.
"These were incredibly profitable operations," Gonchar said. "The bank
received money from the International Monetary Fund, from the World Bank,
very cheaply. The money was invested in G.K.O.'s, which in 1996 were
earning 180 to 240 percent. Imagine the kind of profits. Where are they?"
Some suspect that the real purpose of this operation in 1996 was to
generate money for the Russian Government, then caught in a web of election
year promises given by President Boris N. Yeltsin. To general relief in the
West, Yeltsin won a second term.
Others have guessed that like any elaborate plumbing system, this one was
bound -- maybe even designed -- to leak, in the form of commissions, risk
margins and other profits collected along the way.
There may have been other reasons, such as avoiding taxes or simply a
chance to test unorthodox financing mechanisms required by Russia's shallow
and fragile debt market.
"The central bank of Russia was more creative than others," said a Russian
banker familiar with the central bank's operations. "There were a lot of
young people working there, with very good brains." In those years, he
said, the central bank's main goal was not to generate profit for itself,
but to control a shaky G.K.O. market, and bring down the dizzying rise in
But in so doing, critics argue, the central bank assumed conflicting roles
on the G.K.O. market.
"Part of the problem is the conflict within the central bank, which on one
hand is supposed to be the regulator of commercial banks, and on the other
hand, was their competitor on the G.K.O. market," said Dmitri Vasilyev, the
chairman of Russia's Federal Securities Commission and an outspoken critic
of the central bank.
This month, the bank's chairman, Viktor Gerashchenko -- a formidable
veteran of the old Soviet banking system -- used the PricewaterhouseCoopers
audit's findings to try to put the Fimaco matter to rest, promising to
correct accounting practices by January 2000 to prevent inflation of
Over all, Gerashchenko insisted -- again -- that the audit showed nothing
essentially wrong with Fimaco, only what he termed "a certain deviation
from traditional instructions."
The next day, Sergei Dubinin, the central bank chairman from 1994 to 1998,
proclaimed at a news conference, "All slanders that were loudly proclaimed
have been refuted."
Dubinin then made his first attempt to explain away the "artificial"
scandal, saying that the transfer of central bank money to the G.K.O.
markets was done in 1996 to test the mechanism by which foreign investors
could invest in the G.K.O. markets.
"Naturally, it was necessary not only to allow" foreigners to enter the
G.K.O. market, Dubinin said, "but also to show certain techniques how it
had to be done. Eurobank showed it, and by so doing, it opened the road for
other investors. This is its role. There was nothing else behind it."
NATO Action in Yugo Put off Start-2 Ratification-Russian Mp.
MOSCOW, July 30 (Itar-Tass) - NATO's action against Yugoslavia has put off
ratification by the Russian State Duma lower house of the START-2 treaty, a
Duma official said on Friday.
"I often meet people from NATO countries and see how much their intentions
and rhetoric are changing," said Nikolai Stolyarov, deputy chairman of the
house committee for international affairs.
"The NATO-centrist model continues to prevail in their plans," Stolyarov
"The situation in Kosovo has seriously complicated our relations with the
West, where forces are still available which are unwilling to speak with
Russia on equal grounds," he said.
Under these circumstances, "it is, at least, difficult for MPs to speak
about START-2 ratification," according to him.
Another factor that may influence MPs' mood is the approaching campaign in
the run-up to a Duma election scheduled for December.
"It (the campaign) has virtually kicked off, and any candidate that just
mentions the necessity to ratify START-2 will be ostracised by his rivals.
"The candidate will be accused of 'lack of patriotism' and 'undermining the
nation's defence capability'. I know that most current MPs are going to run
again," he said.
There is no political or state logic in this mood, but "it will have strong
impact on voters," according to him.
The treaty "should have been ratified long ago due to a series of political
and other reasons, and there is an objective necessity to do so," he said.
"If the government submits it to the Duma now, it is unlikely to receive
support from a majority of current MPs," he said.