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Johnson's Russia List
 

 

December 30, 1999    
This Date's Issues:3714  3715 





Johnson's Russia List
#3715
30 December 1999
davidjohnson@erols.com


[Note from David Johnson:
1. Reuters: Yeltsin to miss Kremlin party, Clinton trip mulled.
2. Reuters: Putin defends war against ``impudent'' Chechens.
3. Vremya MN: Yelena Boldyreva, JUST ANOTHER YEAR. (poll)
4. Michael Intriligator: RUSSIA AND THE INFORMATION REVOLUTION.
5. AFP: Eyeing presidency, Putin offers a millennial vision for Russia.
6. RFE/RL: Andrew Tully, Corruption Issue Fades.
7. Baltimore Sun: Will Englund, A glint of hope in Russia's gold rush.
Magadan: Once involved in the Soviet Union's dreaded gulag system, a Far 
East region is returning to mining to pull it out of poverty.

8. Nezavisimaya Gazeta: Marina Volkova and Nikolai Ulyanov, 
PUTIN UNVEILS HIS PROGRAM.

9. Moscow Times: Igor Semenenko and Andrew McChesney, Optimism For 2000 
Fueled by Strong '99.]



******


#1
Yeltsin to miss Kremlin party, Clinton trip mulled
By Irina Demchenko

MOSCOW, Dec 30 (Reuters) - President Boris Yeltsin plans to skip a pre-New 
Year reception in the Kremlin on Thursday evening and a speech he had been 
expected to make will be given by Prime Minister Vladimir Putin instead, 
Russian news agencies said. 


The reports of Yeltsin's sudden decision to miss the event came as a 
government source with access to Putin said U.S. President Bill Clinton had 
expressed an interest in visiting Russia next year. It would be Clinton's 
first visit to Moscow since a worsening in ties over the Kosovo crisis and 
Chechnya. 


The agencies quoted Kremlin spokesman Dmitry Yakushkin as saying Yeltsin had 
a busy day ahead on Friday and gave no other reason for the president's 
decision to miss his own reception. 


But sudden absences from planned events often raise questions about the 
health of the 68-year-old leader, who has been sidelined from work for much 
of this year by illness. 


Moscow's Mayor Yuri Luzhkov traditionally hosts the pre-New Year reception in 
the Kremlin but Yeltsin had been billed to lead this year's celebrations, the 
last of his presidency, with a speech about Russia's role in the new 
millennium. 


Putin is Yeltsin's own favoured candidate for next summer's presidential poll 
and has been called upon before to stand in for the Kremlin chief. 


"The president has quite a heavy work agenda (on Friday)," RIA news agency 
quoted Yakushkin as saying. He added that his schedule would include a 
meeting with Putin. 


Putin has become Russia's most popular politician for leading an offensive 
against rebels in breakaway Chechnya. 


His position was strengthened after an election to the State Duma lower house 
of parliament 11 days ago when parties which he backed did much better than 
expected. 


WESTERN GOVERNMENTS SAID KEEN TO WOO PUTIN 


The Russian government source said many Western countries had significantly 
changed their view of Putin after the success of parties linked to him in the 
vote and that he had been invited to visit several Western countries, 
including Germany. 


The source said Clinton's visit had not been definitely arranged, although he 
said sharp public rhetoric by Western officials over the Chechnya campaign 
contrasted with a more understanding tone in private conversations with 
Putin. 


White House National Security Council spokesman Jim Fallin told Reuters in 
Washington he knew of no planned trip. 


Western criticism of the Chechnya offensive, in which Moscow has fought 
Moslem rebels for more than three months, further soured relations with the 
West which had already been badly strained by NATO's bombing of Yugoslavia in 
the Kosovo crisis. 


Russia was infuriated by the air strikes against a country it regards as a 
fellow Slav, Orthodox Christian state. 


A spring visit by Clinton would be the first since the air strikes against 
Yugoslavia ended in June. 


The two presidents last met in November at a European summit in Istanbul when 
their warm personal relations seemed to be confirmed by Yeltsin giving 
Clinton a bearhug. 


But later in China, Yeltsin, angered by Clinton's Chechnya criticism, angrily 
accused the U.S. leader of momentarily forgetting Russia had a huge nuclear 
arsenal. 


Yeltsin, whose history of poor health was marked by a recent bout of 
pneumonia, is also preparing for a trip to the Holy Land on January 5 to mark 
Orthodox Christmas in Bethlehem, Christ's birthplace. 


Yakushkin said Yeltsin, 68, would hold talks during the three-day trip with 
Israel's President Ezer Weizman, Palestinian President Yasser Arafat and 
senior church officials. 


******


#2
Putin defends war against ``impudent'' Chechens


MOSCOW, Dec 30 (Reuters) - Russian Prime Minister Vladimir Putin hailed the 
Kremlin's war in Chechnya on Thursday as a justified restoration of order 
against ``brazen and impudent'' bandits. 


Putin said Moscow had been absolutely right to launch the offensive in 
Chechnya, although it has been criticised in the West over civilian deaths 
and the plight of around 200,000 refugees who have fled the fighting. 


``Unfortunately, the bandits threw us a brazen and impudent challenge. They 
invaded Dagestan. We we were duty-bound to restore order in the North 
Caucasus,'' Putin was quoted by Interfax news agency as saying in a speech at 
a Kremlin reception. 


``Not everyone in Western nations understood this. We shall not allow the 
national pride of Russians to be trod upon.'' 


Russia launched the campaign against Moslem rebels in Chechnya after they 
invaded the neighbouring region of Dagestan. It also accused them of setting 
off bombs in Russian towns, although the rebels denied this. 


He made the speech at a pre-New Year reception after President Boris Yeltsin 
pulled out just hours earlier. A Kremlin spokesman gave no reason for 
Yeltsin's decision, saying only that he would have a busy Friday. 


Putin, Russia's most popular politician for leading the war in Chechnya, 
hailed the fact that Russia had remained intact despite popular predictions 
that it might break up after the collapse of the Soviet Union. 


``It did not collapse or split into separate principalities, did not become 
anyone's purveyor of natural resources...We are sure of the power and 
prosperity of our country,'' he said. 


******


#3
Vremya MN
December 27, 1999
[translation from RIA Novosti for personal use only]
JUST ANOTHER YEAR
By Yelena BOLDYREVA

The majority of Russians (59 percent) regard the outgoing
year as being a normal, successful and even a happy year. This is
according to the results of an opinion poll conducted by the
Agency of Regional Political Studies, or ARPI, a few days ago.
So, Russians are not inclined to regard the last year of the 20th
century as something special, despite it being rich in all kinds
of events. This could mean that ordinary Russians are so
preoccupied with their own day-to-day problems that they have not
taken close to their hearts government reshuffling, the
elections, airstrikes against Yugoslavia and the new Chechen
campaign. This to a certain degree is confirmed by monitoring
conducted by the All Russia Public Opinion Research Centre, or
VTsIOM. Its experts did not notice any serious vacillations in
the sentiments of Russians in 1999. Throughout the year upwards
of 40 percent of respondents said that they were in a good mood
and about as many that they felt tension and irritation.
Many sociologists explain the rather optimistic attitude of
Russians to life by the ability to separate their own day-to-day
life from the political and military cataclysm, on the one hand,
and the fact that there has been no event this year comparable
with the August 1998 crisis. The collapse of the ruble affected
every section of society, and sociologists say that the tragic
sentiment was universal. However, the feeling of a coming
catastrophe proved to be false, the worst forecasts have not come
true and the sentiments of Russians have been gradually changing
for the better. Stabilisation, or, at least its illusion, as
manifested in a more or less even dollar-to-ruble exchange rate,
an improving situation with the payment of wages, pensions and
allowances and manifestations of firmness and resolve in
government circles - all this became a reliable counterweight to
inevitable outbreaks of negative emotions.
According to ARPI sociologists, even the elections have
exercised a positive influence on the sentiments of Russians.
Though the election campaign abounded in scandals, many Russians
regarded the information warfare as a kind of entertainment. Even
the promises of candidates each of whom pledged to make life in
Russia better very quickly created a certain positive mood.
As a matter of fact, few sociologists are able to say how
Russians will remember the year 1999. The answers to the
questions "How was the year?" and "What is your mood?" do not
give ground for serious conclusions, because, as Doctor of
Sociology Nikolai Popov says, they concern such a mysterious
sphere of psychology as self-awareness. To come any close to the
truth it would be necessary to make a list of a hundred of
questions against each of which respondents were to put either a
plus or a minus. When asking such a question in a general form,
it is difficult to understand how a respondent has lived this
year. It is especially difficult with our countrymen who have a
rather peculiar view of life.

-------------------------------------------------------
Generally speaking, how would you characterise
the outgoing year for yourself and your family?
-------------------------------------------------------
1. Normal, average ............. 45 percent
2. So-so ....................... 28 percent
3. Successful .................. 10 percent
4. Unhappy ..................... 7 percent
5. Happy ....................... 4 percent
6. Difficulty to answer ........ 6 percent


-------------------------------------------------------
APRI's representative opinion poll was conducted among
3,000 Russians living in 200 towns and villages of 52
constituent territories of the Russian Federation
on December 20-22, 1999.
-------------------------------------------------------

---------------------------------------------------------------
Have you personally and your family become adjusted
to the changes that have occurred in the country in the
past ten years?
--------------------------------------------------------
Time of poll 23-26 20-23 17-20 15-18 12-15 11-14
in 1999 July Aug Sept Oct Nov Dec
--------------------------------------------------------
Adjusted 32 29 32 35 37 42
--------------------------------------------------------
Will soon
be adjusted 16 23 20 22 22 21
--------------------------------------------------------
Will never 
be adjusted 45 42 41 38 36 33
--------------------------------------------------------
Difficult
to answer 7 7 7 6 6 5
--------------------------------------------------------
VTsIOM's representative opinion poll was conducted
among 1,600 Russians in 83 cities, townships and villages 
of 31 regions of Russia on December 11-14, 1999.
--------------------------------------------------------

******


#4
Date: Wed, 29 Dec 1999 
From: "Michael D. Intriligator" <intriligator@econ.ucla.edu>
Subject: RUSSIA AND THE INFORMATION REVOLUTION 



David:
Here is my article, RUSSIA AND THE INFORMATION REVOLUTION, that
appears in the current, November 1999, issue of the Milken Institute Review
and that may be of interest to JRL readers. I'd very much welcome their
comments and reactions.
Please note that I am now a Senior Fellow of the Milken Institute as
well as Professor of Economics, Political Science, and Policy Studies at
UCLA and Senior Fellow of the Gorbachev Foundation of North America.
All the best, Mike Intriligator <intriligator@econ.ucla.edu>
-------------------------------
RUSSIA AND THE INFORMATION REVOLUTION
By Michael D. Intriligator
Senior Fellow, the Milken Institute 


The Soviet Union was famous for its economic contradictions. On the
one hand, its creaky industrial sector was apparently incapable of producing
shoes that fit or TVs that didn't start fires. On the other,its formidable
science establishment made the country a leader in technologies ranging from
metallurgy to computer software. 
Yet in the climate of pessimism engendered by the Yeltsin
Administration's erratic efforts to introduce free-market capitalism,
pundits have focussed a great deal of attention on the former and largely
ignored the latter. I would argue that knowledge-based development in
general and information technology in particular could lead to the revival
of the Russian economy and accelerate its integration into the world
economy. Indeed, with proper internal policies and external support, I
believe that Russia has a chance to become one of the fastest growing
emerging markets in the world.
Russia has experienced frightening declines in output and living
standards since the dissolution of the Soviet Union. Lacking the will and
perhaps the means to halt the downward spiral, it was forced to abandon the
peg on the ruble and to default on its foreign debt in August 1998. 
Further economic trauma in Russia could have serious consequences
not only for Russia, but also for the world as a whole. There is another
reason, though, to care about Russia's economic fate: The west as a whole -
not to mention private investors - could benefit enormously from the
commercialization of its research and development capacities.
To date, post-Soviet Russia's only seriously exploited assets have
been its natural resources. Energy dominates Russia's exports, generating
one-third of the world's natural gas and about one-tenth of its oil. In
addition, Russia accounts for 12 percent of world production of platinum, as
well as 5 percent of the world's gold and copper.
In contrast, Russia's other great asset, the human capital embodied
in it scientists and engineers, and the research institutes that
occasionally pay their salaries, have been left largely untouched. A new
approach to helping Russia - one that focuses on its scientific and
technological potential - could turn that situation around.
The goal would be to exploit Russia's competitive edge in a variety
of areas - notably supercomputer design, "expert system' software, automated
pattern recognition, lasers and nuclear fusion. Some Western firms are
already collaborating with Russian institutes in those fields. But more is
possible.
There is precedent for such collaboration. In the last decade, India
has evolved from a backwater to a major center for computer software
development. These days, when you call a technical support number, there's a
good chance the expert on the other end of the line is sitting in front of a
computer terminal in Bangalore. 
One path for the exploitation of Russian science is collaboration
with Israel. Many Israeli firms already rely on Russian émigrés. And these
companies might engage in additional strategic alliances with Russian
enterprises and institutes.
Given the uncertainties of utilizing Russian expertise, a modest
start clearly makes sense: Russia could begin where it already has a
comparative advantage. For example, Russia is a pioneer in methods for the
incineration of industrial and municipal wastes using garbage as fuel. The
technique, superadiabatic combustion, has been perfected at the Institute of
Chemical Physics of the Russian Academy of Sciences and has been put into
pilot operation in both Russia and Finland.
Or consider another area of expertise: new techniques for earthquake
prediction and the identification of mineral deposits that use pattern
recognition algorithms developed by Russian mathematicians. This approach
has been put into practice by the International Institute for Earthquake
Prediction Theory and Mathematical Geophysics in Moscow.
The main missing pieces to using this knowledge - management
know-how and marketing skills - could be provided by foreigners. It will
also be necessary, of course, to press Russia to build the basic
institutions of free markets - protection of shareholder rights, accounting
transparency, legal due process and the like. 
Technical assistance could be provided through strategic alliances
with Western firms. But Russia needs independent access to capital and
financing mechanisms. New approaches to financing such development possibly
include joint ventures with foreign firms or support from the European
Union's ongoing program of technical assistance to the Commonwealth of
Independent States.
Will any of this be easy? Hardly. But it would be tragic to waste
Russia's unique potential to be a leader in knowledge-intensive industries.
And in light of the likely consequences of letting the Russian economy drift
further downward, the West really doesn't have much choice.


******


#5
Eyeing presidency, Putin offers a millennial vision for Russia


MOSCOW, Dec 30 (AFP) - 
What has become of Russia? What should become of it? Can this country with 
its proud and dark past stay "great" in the future? Should it even try?


Vladimir Putin, Russia's enigmatic new prime minister, says he has some 
answers to these questions. More importantly though, it is he who is asking 
them six months prior to presidential elections.


"Russia was and will remain a great country," Putin wrote in a 14-page essay 
entitled "Russia on the Threshold of a New Millenium" published this week on 
the government's Internet web site.


The message, at once an outline of policy objectives and a philosophical 
expose, was striking both in its relaxed tone and a novel content that mixed 
Western democratic and market ideals with traditional Russian mores.


"Russia is never going to be another USA or England, where liberal values 
have deep historic roots," Putin asserted.


"It is a fact that in Russia the attraction to a collective way of life has 
always been stronger than the desire for individualism."


At the same time, though, the country and its people understand better than 
many the dangers that a government -- particularly an executive branch -- 
endowed with excessive power can pose to people's freedom, he said.


"The global experience prompts the conclusion that the main threat to human 
rights and freedoms, to democracy as such, emanates from the executive 
authority," Putin wrote.


"The state must be where and as needed; freedom must be where and as 
required."


Putin, not known as man of many words, went out of his way to offer at least 
a little something for everyone across the political spectrum in Russia, and 
experts regarded his article as a first step in a presidential campaign.


"It's obvious that he has begun campaiging for the presidency," explained 
Nikolai Petrov, analyst for the Carnegie Endowment, a respected Moscow-based 
political think-tank.


Petrov said publication of the article on the Internet, combined with its 
user-friendly style and general ideas, were sophisticated moves that marked a 
distinct departure from politicking-as-usual in Moscow.


"This was unusual and, yes, I think it was very smart," Petrov said. "An 
article on the Internet will get around ... with a click people can study 
this rhetoric."


In addition to laying foundations for a presidential bid, the Putin essay put 
some flesh on the bones of Russia's new pro-Kremlin Unity party, which made a 
strong showing in recent legislative elections after getting Putin's blessing.


Those gains were attributed by most experts to the Putin endorsement as the 
party, founded just last September, has published almost nothing resembling a 
platform.


In his essay, "Putin formulates things in such a way that no one can argue 
too much" with his thesis, Petrov said.


Despite its polish, the article had flaws, Petrov noted, citing in particular 
figures cited by Putin to document Russia's economic decline over the past 10 
years.


******


#6
Russia: Corruption Issue Fades
By Andrew F. Tully


Corruption in Russia is an old story. What was new during the past year was 
the suspected laundering of Russian money through a U.S. bank and a criminal 
probe that included Russian President Boris Yeltsin. RFE/RL economics 
correspondent Andrew Tully looks at these two developments.


Washington, 30 December 1999 (RFE/RL) -- When the scandal surrounding 
suspected Russian money-laundering broke in August, the Western world took 
notice. 


Because the revelations involved the Bank of New York, the U.S. Congress 
decided to investigate. Committees heard from senior U.S. government 
officials, members of the Russian Duma and experts. But since late October, 
the subject seems to have been forgotten. 


The scandal came to public notice on August 19 when The New York Times 
reported that about $4.2 billion was "laundered" through the Bank of New York 
from October 1998 through March 1999. Since then, the amount has been widely 
estimated at between $10 billion and $15 billion. 


There is even suspicion that money loaned to Russia's Central Bank was stolen 
and laundered. But there is yet no evidence of this. It also remains unclear 
how much money was actually laundered, and how much was only transferred to 
avoid payment of taxes in Russia. That is different than money laundering, 
which is the criminal transfer of illegally earned funds through many bank 
accounts until its source appears legitimate. 


Yeltsin himself is not directly implicated in any suspected money-laundering, 
but is suspected of unrelated financial wrongdoing. Prosecutors in 
Switzerland are investigating whether he received about $1 million from the 
Swiss construction company Mabetex, which won a rich contract to renovate the 
Kremlin and other government buildings. One of his daughters, Tatyana 
Dyachenko, and her husband also have been mentioned in the investigation. 
Yeltsin has denounced the reports as being generated by political opponents. 


The growing interest in corruption in Russia has put the administration of 
U.S. President Bill Clinton on the defensive. Clinton has sought to take the 
positive approach of "engagement" with Russia. 


The issue is particularly sensitive for U.S. Vice President Al Gore, who is 
campaigning to be elected president in 2000. Gore has been closely involved 
in developing U.S.-Russia policy and is a co-chairmen of the U.S.-Russia 
Bilateral Commission. His political opponents accuse the vice president of 
ignoring the corruption issue. 


Strobe Talbott is the U.S. State Department's leading authority on Russian 
affairs. In September, he told a hearing of the U.S. Senate's Foreign 
Relations Committee that the administration is not ignoring corruption, and 
he advocated further engagement with Moscow. 


"The issue of corruption has been very much on the agenda of U.S.-Russian 
relations at all levels, including at the level of President Clinton with 
President Yeltsin, and certainly [former Russian Prime Minister Viktor] 
Chernomyrdin, for quite a number of years." 


The chairman of the committee, Senator Jesse Helms, an outspoken critic of 
the president, spoke out at another hearing where Talbott appeared. Helms, a 
member of the Republican Party, accused the administration of distorting the 
options of how to help Russia. 


"The administration's defense is [that the] alternative to looking the other 
way was to abandon our policy of engagement with Russia. I contend that the 
opposite is true. By not pressuring Russia's leaders to expunge corruption, 
the United States has led the Russian people to lose faith in market 
economies and democracy." 


The debates raged, but abruptly vanished by late October. Perhaps the 
attention of Congress was diverted by the effort to draft a budget, or by 
Russia's military campaign against Chechnya. 


Or perhaps the issue of Russian corruption had exhausted itself. Since 
mid-September, there has been little new information on the subject. Until 
new details emerge, interest in corruption likely will remain dormant, at 
least in the U.S. 


But Robert Dunn, a professor of economics at George Washington University in 
Washington, says the topic will remain important where it matters most -- in 
Russia itself. And he says the U.S. Congress is not the body where the issue 
should be investigated. 


"No, I don't think it's the correct one. I would hope that the executive 
boards of the IMF and the World Bank would be where you would start. And 
you'd do this quietly and inside; you don't do it in public and embarrass a 
lot of people, some of whom may in fact turn out to be innocent." 


Dunn says it is up to the IMF and World Bank to carefully monitor the money 
they loan to Russia. Such loans must be paid back eventually, whether the 
money is used properly or stolen. Therefore the real losers, he says, will be 
the Russian people themselves. 


The current manifestations of corruption in Russia was the subject of 
testimony by Fritz Ermarth, a former official of the U.S. Central 
Intelligence Agency who also has served on the White House's National 
Security Council. He testified in early October before the Banking Committee 
of the U.S. House of Representatives. 


"What we call economic reform in Russia has really not created the market 
economy or capitalism that most hoped for. Rather, it created a kind of crony 
capitalism without much capitalism, or I'd call it 'phony crony capitalism,' 
where insider privatization in alliance with corrupt officialdom has produced 
a system dominated by a few powerful individuals or entities who strip wealth 
out of the country and send it abroad, rather than investing to create wealth 
and prosperity at home." 


Ermarth is far from alone in holding the view that corruption in Russia is 
prevalent. Many analysts are arguing that this is turn is damaging both 
Russia's economy and its young democracy. 


******


#7
Baltimore Sun
30 December 1999
[for personal use only]
A glint of hope in Russia's gold rush
Magadan: Once involved in the Soviet Union's dreaded gulag system, a Far East 
region is returning to mining to pull it out of poverty.
By Will Englund


RUDNIK MATROSOVA, Russia -- Throughout a factory filled with the din of 
machines grinding rocks, female guards tote rifles and shotguns, like a small 
militia of Annie Oakleys.


Surveying the vast room, one might conclude that this factory, which lies in 
the subarctic taiga 250 miles north of the Pacific port city of Magadan, 
exists only to create mud. Tons of rocks are pulverized every day and flushed 
through a series of ridged basins, where the heavier sediment sinks.


But in that sediment swirl glints of something more valuable: gold.


Magadan is the name of a city and a vast region whose gold and silver mines 
-- once part of the Soviet Union's dreaded Kolyma Gulag system -- were opened 
in the 1930s by Josef Stalin's slave laborers.


In recent years, Magadan has won a new notoriety, as destitute villages turn 
into ghost towns and regional capital residents go without indoor heating 
while the outdoor temperature drops to minus-50 degrees.


In the midst of another brutal winter, Magadan's leadership is hoping that 
gold and silver, along with a little creative administration, will reverse 
the decline into poverty and isolation.


After all, Magadan Oblast, like other mineral-rich but struggling regions in 
the Russian Far East, sits on enormous potential wealth.


"There are the three richest [gold] deposits in the world here," says 
Vladislav Feoktistov, general director of the ultra-modern new Kolyma Gold 
Refinery, which allows Magadan to process its precious metals to world 
standards. "Foreigners know all about this. But they won't invest."


There are reasons for that. Some investors hold back for fear of Russia's 
corruption and lack of respect for the rule of law.


And gold has conspired against Magadan lately. Its price on the world market 
has fallen from a high of $375 a troy ounce in 1996 to $255 in the summer, a 
loss of $200 million a year in revenues for the Russian-Canadian venture 
Omolon Mining Co., said its Canadian general director, Bill Fotheringham. 
(The price was back up to $286 this week.)


Seventy percent of the Magadan region's industrial output lies in the 
extraction and processing of raw materials.


The economic base is so narrow that it is unusually vulnerable to zigzags of 
world gold and silver trading.


"Forty percent of the tax base of the Oblast comes from my company alone," 
says Fotheringham. "It just shows you how desperate the area is for 
development."


Convicts began arriving in the Magadan region in 1932, and the city of 
Magadan was founded 60 years ago.


It spent the year trumpeting the anniversary as a celebration of hopes for 
the future. In the summer, the Russian federal government approved a plan to 
create a free economic zone in the city of Magadan, allowing it to import 
equipment and other goods duty-free. The city administration immediately 
expanded its borders to extend the benefits to an enormous swath of 
surrounding territory.


The zone has brought in an additional 11 million rubles ($400,000) in 
registration fees as companies enter the market, Vice Gov. Antonina Lukina 
says. Twenty-seven trading companies have signed contracts to do business in 
Magadan. Prices of some consumer goods have dropped by 58 percent.


"We now actively import construction materials, industrial equipment, small 
boats, furniture, cars and food from all over the world," Lukina says.


Rudnik Matrosova, however, lies outside the free economic zone, and such talk 
stirs little excitement.


Olga Zhidenko, 24, is a schoolteacher who often goes unpaid, so on the side 
she runs a small shop out of a shipping container.


The shelves are sparsely lined with potato chips, candy bars, Korean noodles, 
and bottles of vodka and beer. Her husband works in the mines, and they 
barely survive on their wages. "We have been married for three years, and we 
barely even have enough money for food," Zhidenko says.


She says that Magadan's free economic zone may cause food prices to rise in 
Rudnik Matrosova.


Goods, including food, go through customs at a "border post" 50 miles from 
Magadan. "You'll have to `import' things from the zone, and you'll have to 
pay customs and taxes," she says.


Until 10 years ago, most of the gold in Magadan Oblast was mined from placer 
deposits, says Ilya Rosenblum, Omolon's board chairman.


These alluvial deposits were easy to get at, and the production cost was low.


In the early 1990s, a crisis hit Magadan mining. Privatization threw the 
stagnant state mining industries into turmoil, even as the easy deposits were 
exhausted. The main options were the more expensive rock-crushing procedures, 
such as those at the gulag-era Rudnik Matrosova, or distant arctic mines in 
the permafrost.


Omolon mines one such deposit deep in the tundra, in a place so remote that 
the company trucks in a year's worth of food, supplies and fuel every 
December, when the operation is accessible over the frozen ground. (During 
the brief summer, the tundra melts into a mosquito-infested bog.) The mine 
has 400 employees, and unlike the aging Rudnik Matrosova, is run with Western 
technology.


Evidence of changes in the economy is starting to appear, some Magadan 
residents say. An American named Frank Edgerly started a company that makes 
Frank's Siberian Supreme Ice Cream -- a treat that has become a strange hit 
with sweet-toothed residents of this frozen land. The company produces 20 
tons of ice cream a year -- despite the efforts of some corrupt officials who 
took bribes from competitors and tried to pull Frank's out of local stores.


Alexei Rekunov, a Frank's executive, is upbeat about Russia's future. As the 
economy slowly grows, he says, power is decentralized. Once bureaucrats 
ruled, but as businessmen are becoming wealthier, they can fight back.


"Another inspector was acting like she was my boss," says Rekunov. "I said, 
`What is this? [As a taxpayer], I pay your salary.' "


Rudnik Matrosova, which has 1,000 employees, has what Chief Engineer Valentin 
Golub says is the largest gold deposit in Russia -- an estimated 700 tons of 
gold, 200 of which can be extracted from an open cut, another 500 from rock. 
Since 1993, the company has been searching for an investor, a goal that has 
been complicated by Russia's 1998 economic crisis.


The region is so remote and the winters are so long that boredom takes a 
toll. Golub says he keeps his sanity during the dark months by hunting. 
Others find less healthy outlets. Many of the mine workers in their 30s and 
40s have malarial-yellow eyes, the result of cirrhosis of the liver.


"Those who don't have any hobbies start drinking," Golub says, "and usually 
when they start drinking, they die."


******


#8
Nezavisimaya Gazeta
December 30, 1999
[translation from RIA Novosti for personal use only]
PUTIN UNVEILS HIS PROGRAM
By Marina VOLKOVA and Nikolai ULYANOV

The Russian Federation's Prime Minister Vladimir Putin
believes that this country, which needs a strong state power,
must have it.

On December 29 Russian Premier Vladimir Putin used a
relatively new method, e.g. the Russian Cabinet's Internet web
site, for contacting the masses. By the way, this
public-relations option has never been used on a wide scale
before. The afore-said web site was opened in a solemn setting
December 28, with Putin using that site for publishing his
policy article entitled "Russia At the Turn Of The
Millennium".

* The Daily Review editorial office intends to publish
the full text of Putin's article in Daily Review's January 1
issue.

It goes without saying that Vladimir Putin's article
constitutes his reply to various accusations now being
spearheaded against the Prime Minister. In other words, some
people say that Premier Putin, who enjoys great popularity and
impressive presidential ratings is, in essence, unknown to the
public at large. No one seems to know much about Putin's
opinion of a future Russia, about his ideological guidelines
and economic principles. As a matter of fact, these issues are
now over-shadowed by the present-day Chechen campaign,
relegating them to the background. By the way, Putin's
performance is being assessed within the framework of that
campaign. However, a prospective president should be more open
to the public eye. Such rather justified questions have
already been posed by Yury Luzhkov and Yevgeny Primakov, as
well as by numerous Russian and particularly Western analysts
and journalists. The above-mentioned article provides
fundamental answers to these questions for the first time
ever, also raising that veil of secrecy over Putin's world
outlook. Tentatively speaking, this article can be sub-divided
into two sections, i.e. the Prime Minister's political and
economic concepts, just because these two concepts are closely
inter-twined with one another.
Let's discuss his political concepts, for openers. First
of all, Putin states expressly that Russia has no other
alternative but to develop society's democratic model still
further. According to the Prime Minister, the current national
situation implies that Russia can't constitute a second
"edition" of the United States or Great Britain, which boast
deeply-rooted liberal values, after that 70-year-long
erroneous development along Communist patterns. In this
connection, Putin notes that Russian society has traditionally
been dominated by the ideals of a mighty state, which cares
about its citizens. The people of Russia have always regarded
the social-solidarity idea as more important than
individualist principles. Consequently, we must take this into
account, while formulating the appropriate nationwide strategy
of Russia's revival, Putin stressed.
According to the Prime Minister, various notions capable
of consolidating society must serve as that strategy's
corner-stones; otherwise any national salvation would seem
impossible. The list of such notions includes patriotism, the
great-power concept, statism and social solidarity. It ought
to be mentioned in this connection that such principles
already constitute a feature of present-day Russian politics.
They are preached by Yury Luzhkov and many others. However,
Putin's opinion of such principles is seen as an entirely new
aspect. Putin believes that the patriotic idea must be
cleansed of national haughtiness and imperial ambitions. The
great-power concept should not be perceived in the context of
military might alone. On the contrary, it should denote our
country's ability to lead the world in terms of
state-of-the-art technologies, living standards and the
ability to defend its national interests on the international
scene. Besides, statism must have nothing in common with
totalitarianism. In a nutshell, Putin believes that the
national idea constitutes a blend of traditional Russian
concepts, which must be filled with new and modern content.
The entire article implies that Russia, which needs a
strong state power, must obtain it. A mighty state alone would
be able to save Russia from all sorts of revolutions and
upheavals, all the more so as Russia has already had its share
of such revolutions and upheavals in the 20-th century. One
doesn't necessarily have to amend the Constitution for the
sake of acquiring such a government; all of us must
unfailingly abide by its provisions. In this connection, the
Prime Minister emphasizes various problems now bedevilling the
executive-power branch and the Government at a time when their
respective normative acts often contradict the Constitution.
This seems to be something extremely dangerous. According to
Putin, there exists only one way out. The executive-power
branch and civil society must streamline their partner-like
relations, also doing their best to expand the latter's
institutions. Putin also cited the relevant mighty-government
formula, e.g. a democratic, rule-of-law and efficient federal
state.
The Premier's political sympathies are here for everyone
to see. In other words, Putin is a liberal advocate of the
great-power concept. Strange as this combination may seem, but
it doesn't constitute some entirely alien breed. The United
States has a similar ideology, which is not regarded as
something strange by everyone. Lack of liberal freedoms would
entail social degradation; apart from that, lack of a mighty
state would cause the country to fall apart.
As a rule, economic issues are more involved than
political ones. Putin's article merely states the existence of
various economic problems, nonetheless failing to offer any
trouble-shooting options whatsoever.
Much has been borrowed from the programs of Vladimir
Putin's predecessors. Well, this is hardly surprising.
According to the Premier, Russia has started groping for its
own road only for the last 1-2 years. Judging by this logic,
the continuation of that specific line, which had been chosen
after that August 17, 1998 economic-and-financial melt-down,
constitutes an objective necessity. Besides, it's pretty hard
to conceive any new economic concepts. The problems remain
unchanged, as time goes by; however, various trouble-shooting
options, especially within the framework of the selected line,
can be counted on the fingers of one's hand.
However, the economic aspects of Vladimir Putin's article
don't amount to his economic program. As distinct from his
predecessors, they didn't compel Putin to publish his economic
program posthaste. This program contains a number of general
provisions making it possible to implement just about any
economic-reform scenario (perhaps with only one exception).
Putin writes that Russia has already had its share of
political and socio-economic upheavals, cataclysms and radical
transformations. This rather promising statement had long been
expected both in Russia and the West. That rather tough
Chechen operation had been automatically projected on the
Premier's possible achievements, including those in the
economic field. Putin's article discards painful reforms,
which had been implemented by quite a few Russian governments
(the so-called young reformists in particular). Such a refusal
seriously impairs the Premier's actions. At the same time,
Putin's statement, which promises stability, can't but
captivate his supporters and opponents alike.
This article outlines the Prime Minister's views well
enough. Nonetheless, Putin doesn't specify any mechanisms for
building such a mighty state. Quite possibly, this can be
explained by the fact that any newspaper-and-magazine article
is not large enough to dwell on this subject. Perhaps the
Premier is just trying to conceive such mechanisms, lacking a
full-fledged program for overhauling the Russian state. The
latter explanation seems to be more plausible. Putin's
activities still mostly aim to respond to current challenges;
besides, the Prime Minister apparently doesn't implement
specific provisions of his program. One finds it hard to blame
Putin for this because of his rather uncertain status, all the
more so as Russian premiers come and go all the time. Apart
from that, one should keep in mind that Putin now has to
tackle a number of formidable problems, such as an all-out war
and society's political split. By all looks, Vladimir Putin
will first have to become Russia's president, subsequently
moving to repair the Russian-statehood building.

******


#9
Moscow Times
December 30, 1999 
Optimism For 2000 Fueled by Strong '99 
By Igor Semenenko and Andrew McChesney
Staff Writer


Statistics released this week show that the national economy performed better 
in 1999 than had been expected, even as public opinion polls have been 
tracking a cautious optimism among Muscovites that 2000 will be their year. 


Less than 18 months after the devastating August 1998 ruble devaluation, a 
weekend poll found some 42 percent of Muscovites expect their family's 
economic condition will improve next year. 


It's not a majority, but it is a jump from last year's 27 percent, and beats 
the previous high of 30 percent in 1996. 


In the poll of 1,552 Moscow residents conducted last weekend by the Mnenie 
Poll Service, 30 percent thought there would be no change in their economic 
prospects in 2000, while 7 percent said they would worsen. 


Russians outside of the rich national capital are less sanguine. A Dec. 17 to 
Dec. 20 survey of 1,600 people conducted by the VTsIOM public opinion agency 
found that only 6 percent thought the year 2000 would be better than this 
year. Five percent said conditions would worsen, while 17 percent said 2000 
would be no worse than 1999. 


And in 1999 the economy did better than had been expected. In January, many 
predicted 100 percent inflationand a contraction in the gross domestic 
product on the order of 5 percent to 8 percent. 


Instead, GDP grew in 1999 - for only the second time in the post-Soviet era - 
and industrial output was up 7.5 percent to 8 percent, according to 
government figures. In 1998, GDP fell 4.6 percent and industrial output 
dropped 5.2 percent. 


The ruble sank 31 percent for the year, which was both an improvement on its 
75 percent slide in 1999 and on predictions that it would slump as low as 35 
or 40 to the dollar, instead of the 27 to the dollar it ended the year at. 


Meanwhile, the stock market almost tripled in value, from an admittedly low 
base and with volumes well below those posted in the banner year of 1997. 


There was also good news on the fiscal front, where the budget was executed 
in full, "for the first time in the past eight to nine years," according to 
Finance Minister Mikhail Kasyanov. 


In total, the government collected 380 billion rubles of taxes, 185.6 billion 
rubles in export/import duties and 1.8 billion from management of state 
property. Other federal government revenues came from the Finance Ministry, 
bringing the total paycheck to 598.4 billion rubles. 


Interestingly, Mnenie's poll of Muscovites also found that a new high of 29 
percent of Muscovites felt the economic situation in Russia would improve 
next year. Previous years had seen the figure fluctuate from a previous high 
of 23 percent in 1993 to a low of 16 percent in 1994. This year, a third said 
there would be no change in the economy in 2000 and 12 percent thought the 
economic would get worse. 


"These are very important figures because this is the first time since 1991 
that our respondents predict a better situation in the economy and [also] for 
their family budgets," said Grigory Pashkov, director of the Mnenie Poll 
Service. 


Pashkov said the rise in optimism was probably linked to a combination of the 
belief that conditions cannot get worse and the "Putin phenomena." Many 
Russians are hoping Prime Minister Vladimir Putin will win the presidential 
elections next June and lead the nation along a smoother path. 


The driving forces behind the Russian economy this year have been booming oil 
prices and the stimulatory effects of the 1998 devaluation, which gave 
formerly uncompetitive domestic industries an enormous shot in the arm. 


After slipping below $10 a barrel early this year, oil prices shot up to 
above $25 a barrel in the wake of a March meeting of the Organization of 
Petroleum Exporting Countries where the cartel agreed to rein in production. 


With much of this year's strong performance being driven by external factors, 
Western economists are far from optimistic that 2000 will witness a major 
turnaround in Russia's economic fortunes. 


Too much of this year's revival was down to temporary factors which are 
currently on the decline, economists said. 


"The situation of private households drastically deteriorated, while the 
financial standing of companies improved in the wake of devaluation and 
growth of industrial output," the Kiel Institute of World Economics wrote in 
its December report on Russia. "The competitiveness of Russian companies has 
not been re-established through value-building efforts." 


Deutsche Bank issued at the start of the month a World Outlook for 2000, 
predicting that Russia would continue to lag in its performance despite 
progress on inflation and improved trade balance. 


Economic recovery, reflecting import substitution, "will taper off, with 
economic growth unlikely to exceed 1 percent in 2000," the report says. 


Finance Minister Kasyanov conceded Tuesday that economic growth was not 
sustainable, and said that government support for the economy was needed. 


Deutsche Bank estimates show that private consumption fell 10 percent this 
year, while government consumption slumped 7 percent. 


While imports contracted 30 percent, next year they will grow 15 percent and 
another 5 percent in the year2001, the report says. The current account 
surplus will decline from 11 percent of GDP to 4.8 percent in two years, the 
bank said, adding that such a trend is already underway and any fall of oil 
prices will further shrink the trade surplus. 


Despite the dismal predictions of some economists, however, the mood was 
mostly optimistic Wednesday on the streets of Moscow. 


"Russia is growing up, so things will be better next year," said Dasha 
Vokhmyakova, a student at Moscow State University. "This year was better than 
the last and next year will probably be filled with more happiness and luck." 


"This year was better - my income was more stable, the economy was more 
stable," said a pensioner who refused to give his name. "If the government 
doesn't steal from us next year, I think 2000 will be even better." 


But Konstantin Petrov, an engraver at the GUM shopping center, said 1999 was 
not worth talking about and the presidential elections next year would not 
bring any changes to Russia. 


"Any new president would be the same [as President Boris Yeltsin]," he said. 
"All politicians say the same things and then do whatever they want to do. 
... Those who have power use it at the expense of the people." 


Anastasia Smironova, a pensioner rummaging through garbage cans for bottles 
in downtown Moscow, felt otherwise. 


"With Putin we will kill the Chechens and everything will be better next 
year," she said, clutching a reporter's arm. "The Chechens have been taking 
our oil and gas and money." 


Putin will help Russia improve in 2000 by strengthening its ties with the 
United States, Europe and Japan, she said. 


"We need to be friends," Smironova added. "We don't have very many." 


******



 

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