February 18, 2000    
This Date's Issues: 4116 4117 4118

Johnson's Russia List
#4118
18 February 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Vremya MN: Irina Yasina, TEN YEARS OF REFORM: IT COULD HAVE BEEN WORSE.
2. February 17 PRESS CONFERENCE WITH CPRF LEADER GENNADY ZYUGANOV, DEPUTY STATE DUMA CHAIRMAN PYOTR ROMANOV, CHAIRMAN OF THE COMMITTEE FOR ECONOMIC POLICY AND ENTREPRENEURSHIP SERGEI GLAZYEV AND MEMBER OF THE CPRF CENTRAL COMMITTEE ACADEMICIAN VIKTOR VEDMANOV on "the real state of affairs in the Russian economy and prospects for its social and economic development this year."]

*******

#1
Vremya MN
February 17, 2000
[translation from RIA Novosti for personal use only]
TEN YEARS OF REFORM: IT COULD HAVE BEEN WORSE
Economists Warn That It Is Time for Russia Remove 
Its Dependence on Oil Pipelines
By Irina YASINA

The international centre of social and economic studies in
St. Petersburg, which is also called the Leontiev centre (after
Nobel prize winner in the field of economics Vassily Leontiev who
was born in the Russian northern capital) hosted a conference
whose participants summed up the economic results of the past
decade since the launch of economic reforms in Russia. 
Our society has largely recognised the reforms as extremely
unsuccessful. Naturally, most supporters of the opposite
viewpoint can be found either among the people who have prospered
over these years (however, they prefer to keep silent on this
topic) or among the ideologists of economic reform. 
In the opinion of the economists who gathered in the
Leontiev centre, first of all, it could have been worse and,
secondly, Russia is not alone in its painful transition to a
market economy. Neither fact is comforting. However, economist
Anders Oslund assures that the reduction of the GDP volume is a
general trend in post-socialist countries. On average, across the
CIS, the reduction of GDP reaches 56% of the pre-reform level and
in the Baltic states it has dropped by 44%. Russia is not unique
by the level of corruption either. The research carried out by
the European Bank of Reconstruction and Development (to reveal,
which percentage of revenues enterprises use for bribes in one
form or another) produced a striking result. It turned out that
the Czech Republic is more corrupted than Russia where about 4%
of corporate revenues are used for bribes! Of course, the scope
there is not as large as in Russia but the surveyed percentage is
higher. In Georgia the figure is 8% and in Estonia - 1%. All the
other countries are in between. The general conclusion is not
new: the stronger interference of the state in the economy, the
larger scale of corruption. 
Most participants in the conference agreed that our troubles
come from wild disproportions inherited from Communism and, of
course, from incomplete reforms. They argued when the reforms had
come to an end: either in the late period of Gaidar or the early
period of Chernomyrdin. They came to the conclusion that
structural reforms have not begun at all. Precisely these reforms
determine whether or not the Russian economy will continue to
depend on the oil pipeline and stumble down at every new fall of
oil prices. As of today, director of the analytical group called
the Centre of Development Sergei Aleksashenko believes, there
exists in Russia an economy "open for exit and closed for entry."
Russia is being pushed onto the margin of the world economic
life. 
The world will be able to live without Russia which produces
exclusively oil; however, Russia will not be able to live without
the rest of the world. If Russia suddenly decides to stop the
export of oil or our oil pipelines get out of order, OPEC
countries will simply raise the volumes of their oil exports and
the world will simply begin to forget about us. 
To avoid this scenario, reforms have to be continued.
Apparently, it is worth while stopping to further discuss how
successful the reforms were. It is good that they did take place
in our country. 

******

#2
TITLE: PRESS CONFERENCE WITH CPRF LEADER GENNADY ZYUGANOV, DEPUTY 
STATE DUMA CHAIRMAN PYOTR ROMANOV, CHAIRMAN OF THE 
COMMITTEE FOR ECONOMIC POLICY AND ENTREPRENEURSHIP SERGEI 
GLAZYEV AND MEMBER OF THE CPRF CENTRAL COMMITTEE 
ACADEMICIAN VIKTOR VEDMANOV
(STATE DUMA, 12:10, FEBRUARY 17, 2000)
SOURCE: FEDERAL NEWS SERVICE

Moderator: Good day, dear colleagues, our press conference
with the faction of the Communist Party of the Russian Federation
is devoted to the real state of affairs in the Russian economy and
prospects for its social and economic development this year.

Participating in our press conference are the leader of the
Communist Party faction, Gennady Andreyevich Zyuganov, deputy State
Duma chairman Pyotr Vasilyevich Romanov, chairman of the Committee
for Economic Policy and Entrepreneurship Sergei Yuryevich Glazyev,
and a member of the CPRF Central Committee, Academician Viktor
Mikhailovich Vedmanov.

You will be able to ask your question after introductory
remarks. Please, use microphones and identify yourself. We will
take questions only from accredited journalists.

Zyuganov: Good day, estimated participants in the press
conference. You all see that the social and economic policy carried
out in the last few years has not only led us to a deadlock, but
actually caused the collapse of the entire economic and social life
in the country.

Citizens realize that it will be impossible to get out of the
situation without changing this policy. They all understand very
well that it is not possible to improve the situation without
improving our life. Today one half of our citizens, that is almost
80 million people, live in poverty, they are poor or jobless or
refugees or orphans.

A new economic policy is an imperative of time. We proposed it
in the summer of last year. Our program was published and subjected
to broad discussion during the Duma elections. We received a number
of concrete proposals and suggestions. Our group has finalized the
program and now it will come out not as a draft, but as a real
program of rescuing the country from its crisis.

The main condition for this is the support for the real sector
of the economy and a fast pace of economic development. When the
Primakov-Maslyukov government came to power, such a pace was
achieved within 7-8 months after the August 1998 crisis. However,
economic stagnation that began last summer has deepened since then.
In January inflation was about 3 percent.

Although there was economic growth last year, living standards
and incomes of our people fell. This is why we believe it necessary
to carry out a qualitatively new economic policy which would be
based on the following principles.

First, ensuring sharp industrial growth by supporting the real
sector of the economy. Second, putting an end to theft, to any
theft, price or tax, theft by racketeers or the state which is
currently carrying out an anti-popular policy. Third, improving the
life of people and taking urgent measures to guarantee every person
a wage or pension of at least 1,000 rubles a month, and 3,000
rubles for teachers, medics and the military, and restoring
elementary management of the economy and public life.

Our program is ready and Sergei Yuryevich Glazyev will now
present its main points. 

Glazyev: Ladies and gentlemen, at first I would like to
comment on the real result of our social and economic development
last year and our prospects for the next year. The press has spread
an optimistic assessment of high economic growth last year which
reached 8 percent in industry and 3.2 percent in gross domestic
product.

However, it is important to understand what contributed to
this positive trend. Gennady Andreyevich said that practically the
entire positive effect last year was achieved in the first half of
the year. This is proved by statistics. Here are official data on
economic development in 1999. This chart is based on the data
provided by the State Statistics Committee and it clearly shows
that rapid economic growth in October through May 1999, that is
from October 1998 through May 1999, when industrial production
increased by more than 3 percent a month starting from last summer,
gave way to depression.

There has been no economic since last summer. According to the
Center for Economic Studies of the Institute of Economic Forecasts,
average monthly growth rates have been declining from quarter to
quarter. The rate of growth in industry has dropped six-fold, the
growth of the gross domestic product decreased from the average
monthly rate of 2 percent in the first quarter to minus 1 percent
in the fourth quarter.

Therefore, practically the entire industrial and economic
growth in 1999 was achieved in the first half of the year.
Unfortunately, economic growth stopped when there were good
conditions for further progress. Had our economy developed at the
pace that existed in the first quarter until the end of the year,
industrial growth would have been not 8 percent but 47 percent.

Of course, such a quick pace of economic development can be
ensured only by a proper economic policy. Economic growth stopped
when we had every possibility to continue it. Our industry
operated, is operating at one-third of its capacity. Investments
hover at one-fourth of our savings potential.

Seven million people are unemployed, our scientific and
technical potential has not been used, that is, there are
tremendous reserves for growth, but there has been none since last
summer. Why did it stop? It happened because we recoiled to the
previous policy of passive adaptation to depression, to the policy
which calls for the state's self-withdrawal from economic
regulation, to the policy that benefits international financial
structures.

Let's be specific. Under the pressure from oligarchic clans,
energy prices skyrocketed in May of last year. Under the pressure
from the IMF, the Central Bank dismantled currency control
mechanisms put in place before. As a result, loans became very
expensive and this gagged economic growth.

The rapid economic growth in the first half of the year -- on
the whole it reached 25 percent in industry in October through May
-- was sustained by three measures which are stated in our economic
program. These are state regulation of energy prices set by natural
monopolies, encouraging investments in industry by inventorying
bills of exchange issued by industrial enterprises, tough measures
to ensure currency regulation and control in order to reduce
capital flight by three times, planned, but not implemented,
measures to devise special development mechanisms, such as the Bank
for Development.

However, the demolition of the mechanisms last summer plunged
our economy into depression. What is in store for us? I would like
to draw your attention to our warnings. The problem is that we are
living through a transitional period in our economic development.
Either we support economic growth and go back to the policy of
encouraging economic growth that was begun by the
Primakov-Maslyukov government and then we will be able to reach
sustainable development, or we lose time and opportunity, and in
2-3 years our industrial capacities will start falling apart amass
and the industrial potential of our economy will shrink by about
two times. As a result, we will be relegated to the status of a raw
materials supplier for the world for a long time.

Our program is a program of real economic growth. We believe
it possible -- and estimated made by the Academy of Sciences
confirm this -- to reach a rate of economic growth of not less than
6 percent a year. Our program offers concrete mechanisms for
achieving sustainable development with at least 10 percent growth
a year in terms of GDP and not less than 20 percent a year in terms
of real wages.

This can be achieved by doubling investments, reorienting our
monetary and credit policy toward reviving industry, by putting an
end to illegal capital flight, by mobilizing budget revenues which
belonged to the state but which have so far been used by private
structures. These include first of all the Central Bank's profit,
excise taxes on alcohol and tobacco sales, etc. So, we identify
concrete powerful resources which still exist in our economy and
which have not been used by the existing economic mechanism.
Proceeding from the existing production potential our program will
make it possible to achieve within a single year stable annual
growth rates of not less than 10 percent. As to the government
forecast for next year, it provides actually for only a half of
this -- a growth of GDP of only 1.5-3 percent and industrial growth
of up to 4 percent.

In other words, according to government's plans the economy is
entering a period of depression again and this perpetuates the
extremely low standards of living in the country. After the
15-percent drop of the population's real incomes last year, a
30-percent drop over the past two years, and this is really a
catastrophic drop, we are now in a situation when labor
remuneration is five times less than what it should be. And
government intends to leave the population's real incomes and real
wages on the existing level.

For this reason we cannot accept such a passive attitude of
government to economic policy. It is impermissible to let slip this
chance of going over to stable economic growth. We are offering a
realistic program of overcoming the crisis. This program has been
published in the press and the latest addition today is again being
offered to society.

After the press conference you will be provided with a
detailed analytical material on these matters. 

Zyuganov: Thank you, Sergei Yuryevich. I am giving the floor
to Pyotr Vasilyevich Romanov for a brief statement.

Romanov: In recent years we see increased use of the term
"effective proprietor" when questions pertaining to production are
discussed. Indeed, today we really have two proprietors in
production -- there is private property and government property.
But the results are equal to zero.

That is why we are introducing a new term, from the term
effective proprietor we are moving to the term effective management
and explain what this means.

Effective management, the way we see it, means the creation of
a production process that will guarantee highly liquid and
competitive output. And in order to make profits, to pay worthy
wages, to pay all taxes and to repay all credits it is most
important to reinvest in production.

And we are saying that effective management will help solve
all the problems that the Russian state now faces. What is the
present situation with effective management, in fact simply with
the management of Russia's economy? There are two sides to this.
First, managers are prospering in conditions when enterprises
produce commodities that it is hard to sell, when enterprises do
not pay wages and are neck-deep in debts. Second, there are
enterprises that produce competitive commodities and cope with all
their tasks. But when this happens something takes place that
reminds us of the old Russian saying that "only the horse that
copes is loaded". In other words, efficiency is being punished
financially.

What we are saying is that we need a new legislative framework
in order to switch to effective management of Russia's economy. We
are also saying that taxes must be reduced. Most important, in the
event of bankruptcy it is not the work collective that should be
punished but the people who brought this enterprise of this or that
form of ownership to bankruptcy.

That is why, we believe, one of the main tasks now facing the
Party is to work out such a system, such an effective system of
management that will ensure growth of production in the Russian
Federation. 

Zyuganov: Thank you. Now the floor goes to Viktor
Mikhailovich. 

Vedmanov: Agriculture, to be more correct, the agro-industrial
sector, constitutes one of the main directions of our country's
economic development. The party of Communists, the Communist Party
of the Russian Federation, has a clear-cut program of improving the
situation in this sector. The present situation in agriculture can
be described by one word -- catastrophic.

Some statistics. Grain is paramount in agricultural
production. In 1998 we got 47 million tons, last year -- 54 million
tons. But to develop normally our economy needs 135 million tons.
In Soviet times Russia had almost attained this figure.

Well, the absence of grain makes it impossible to normally
develop livestock farming. The head of cattle, poultry and the
output of livestock farming has dropped 50 percent. The country now
has to buy more than 50 percent of the food it needs. Food security
has been totally lost. 

The year 2000 budget adopted by the State Duma and the
regional budgets indicate that we cannot expect any improvements
this year.

What key problems do we intend to solve by our program? First
of all, investments in agriculture. As a man who has worked in this
field for more than 20 years I can tell you that no investments are
now being made in agriculture. In Soviet times investments in
agriculture amounted to some 65 billion dollars annually. In Russia
alone. But today our entire federal budget, the one adopted by the
State Duma, amounts to a mere 25-26 billion dollars. This is the
essence of the first question.

The second question -- parity of prices. Today virtually every
branch of agriculture is operating at a loss. And all our efforts
have produced no effect. That is why the question of subsidies and
price parity must be solved immediately. Naturally, this question
is reflected in our program.

And the third question of fundamental importance. The wear and
tear of fixed assets in agriculture has reached the critical point.
I will give you a few figures. Some 12,000-13,000 tractors were
produced in 1998 and 1999. In Soviet times we produced 220,000
tractors. Now we produced 1,000-1,200 grain harvesters as against
70,000-75,000 in Soviet times. In other words, tomorrow we will
have nothing with which to plow, plant and harvest.

The recent conference in Krasnodar attended by Acting
President Putin did not provide an answer to not a single question.
They have nothing to say. But our program reflects all these
issues. We are ready to implement our program in earnest. As to the
sources, Sergei Yuryevich has told you about them.

Zyuganov: Thank you. We will take questions now.

Q: Slovo Radio. My first question is to Sergei Yuryevich.
Alexander Nikolayevich Shokhin, Chairman of the State Duma
Committee on Credit Organizations, has announced parliamentary
hearings to discuss money laundering and the unlawful activities of
the Bank of New York. What is the position of your faction on this?
Does the Committee for Economy and Entrepreneurship intend to take
part in these parliamentary hearings? 

Now a question to Gennady Andreyevich. You issued an appeal
yesterday on the redivision of property. The reaction to it is
known. Are you planning to take any further steps? The newspaper
Izvestia has published an appeal to Putin from scientists in
St.Petersburg. What do you think about it, what will be his
reaction to it?

Glazyev: Well, in the Duma Mr. Shokhin is feverishly casting
about in the Duma for something to do in order to indulge his
ambitions, but in this case, unlike his attempts to control our
Central Bank, the inquiry into the Bank of New York is a very
important and useful thing. I am sure we will support this
initiative because the Bank of New York is implicated not only in
some shady money laundering deals, it has played a very serious
role in the conspiracy to seize control of RAO UES by illegal
means.

Using the shares illegally owned by the Bank of New York Mr.
Chubais managed to put into the RAO UES Charter an illegal
amendment that guarantees for him immunity from criticism by other
shareholders. That is, the Bank of New York played a very serious
role in the export of capital and an extremely negative role in the
developments involving RAO UES. We know that the Bank of New York
issued a huge number of depository receipts for the shares of
Russian enterprises, all this was done in breach of the Russian
legislation. The Court of Auditors repeatedly drew attention to
this, so we will support Mr. Shokhin's initiative and my committee
will take an active part in the parliamentary hearings.

Zyuganov: I sent an open letter to the Federation Council, the
Duma, the government and the trade unions on the criminal
redivision of property and the seizure of many work collectives by
criminal groups. I was approached some time ago by the Leningrad
Metal Plant where a new director came along with his team and the
first thing he did was to destroy the very heart of the plant, the
workshop that manufactured the key component of all the turbines.

Today about 80 percent of power turbines are out of order in
the country. There are only three firms in the world that produce
such turbines, one Russian, one German and one American. This was
the main who set himself the task of removing our enterprise from
the market.

I paid a special visit there and met with the employees. The
employees chased away the director, elected a new one and during
the past year the enterprise has been pulling itself up by its boot
straps.

At about the same time I asked the government to stop this
criminal practice of criminal groups seizing state-owned and
joint-stock companies. There was no reaction. Then you saw what
happened in Vyborg and then in Achinsk and then in Novokuznetsk
where two complexes - a metallurgical and an aluminum one -- were
also urgently privatized by a group; then there was the Lomonosov
plan which has a great history because even its museum exhibits
cost tens of millions of dollars. Or take the Semashko association
which produces medicines here in Moscow. They called me at 5 a.m.
and asked me to come urgently. What happened there was outrageous.
It was a 100-percent government-owned enterprise. It performs
splendidly. It invested 21 million dollars in the development of
production during the last four years. Good wages, they never
delayed payment of wages or dodged taxes. A director was appointed,
one Anton Parkansky who had previously made two other enterprises
bankrupt. Together with an armed band which he hired he stormed the
enterprise at 5 a.m. beating up some women. It was an act of
brigandage.

I had to summon representatives of the ministry, two deputy
ministers and they quickly fired him. But no criminal proceedings
were instituted and all these facts are being assiduously hushed
up. I appeal to the mass media to support the workers of these
enterprises. The embers of civil war are smoldering in these
enterprises. Television recently showed a similar fact in
Kaliningrad where they are trying to seize an ice-cream factory.
What we witness is a third -- criminal -- redivision of property
which is taking place not in the interests of the state, but in the
interests of criminals.

Now about property in general. Here in the USSR the state
owned 96 percent of the property, now it varies between 10 and 20
percent depending on the region. No state in the world owns such a
tiny proportion of property in the country. So, the state has
become a bankrupt. It is unable to pay normal pensions, allowances
or wages. In any case, measures will be taken to make the state a
major owner of property. It will own the mineral and natural
resources, above all.

At present, about 80 billion dollars worth of our resources
are mined every year. If half of that money goes into the
Treasury, the budget will be at least 50 billion and not 20
billion. Wages and benefits could be doubled and trebled. Minimum
wages and benefits could be increased by 1,000 rubles and teachers,
doctors, and servicemen would be paid 3,000 rubles. That's a total
of about 500 million dollars a month. As it is, 1.5 billion dollars
flee the country every month. That situation can be quickly
rectified. The state can be the owner and we will announce a
monopoly on tobacco and vodka, above all ethyl alcohol. It will
sell to private kiosks and to commercial shops and to state
enterprises, but the state will be an effective owner.

As for the appeal of scientists, it has been published in
Sovetskaya Rossia and I would like you to read it. Major
scientists, doctors of sciences and professors, more than 40 people
from St.Petersburg officially addressed Putin and asked him to
answer 7 very concrete questions including the course pursued by
Yeltsin on property, including support of science and education
and many privileges illegally conferred on the Yeltsin inner circle
and a whole number of other issues.

I can identify myself with these concerns of scientists. I am
sure that Vladimir Vladimirovich will have to answer these
questions.

Q: Viktor Khokhlov. I have a question to you personally. I
read all your statements and appeals, and recently the appeals made
by you as presidential candidate, and the programmatic statement of
your electoral bloc For Victory. Why is it that all these
documents, all your numerous books which I have and study
thoroughly, omit the key question: on preventing the main kind of
intervention, linguistic foreign intervention because when we are
forced to speak a strange language we naturally become powerless,
helpless and even rightless. Why is it not in your documents?

Zyuganov: That is not true. Our electoral platform in the Duma
elections wrote in black and white: we will submit a draft law on
protecting the Russian language, our spiritual values and national
culture. Moreover, our specialists have completed monitoring a
number of state television programs. On certain days 90-95 percent
of all the products shown on television is foreign made. This is
inadmissible. We have prepared corresponding proposals and they
will be submitted to the State Duma.

Q: Argumenty i Fakty. Could you comment on the arrival in
Russia of the new NATO Secretary General, the results of his talks
with the Russian government and how will the results of these talks
tell on the fate of START-2, its ratification in the Duma?

Zyuganov: I think NATO continues its aggressive course with
regard to Russia. Major exercises have been scheduled for next
summer in Ukraine in which nearly 40 countries will take part.
There is no need for such large exercises and show of muscle. The
only aim is to show again the place of Russia and Ukraine and
friends and allies in the modern world.

As for the Russian government, it does not have a clear-cut
policy on NATO, START-2 or with regard to our close friends and
allies. The most lamentable fact is that we don't have a clear-cut
and valid program of strengthening national security. National
security has hit rock bottom. NATO is interested in pursuing the
course that would strengthen its position and its drive to expand.
So far, the Russian Federation has rather been fulfilling the will
of NATO than implementing its own decisions aimed at protecting its
own interests.

The last time the relations with NATO took a turn for the
worse, the main reason was that NATO and the European countries,
first of all the United States of America, totally ignored Russia's
will and opinion when they unleashed an unprecedented aggression in
the Balkans and actually destroyed Yugoslavia as a single state.
Their present occupation of Kosovo is yielding very tragic fruit.
And I am speaking not only about the aggression and the occupation
of that region. Look at what is now happening on the Danube, the
discharges that happened in Romania. People are speaking about them
today. But prior to that bombings turned the entire zone into a
zone of ecological catastrophe, and many Greens and the press in
Europe wrote about this in great detail.

Q: I have a question to you Gennady Andreyevich, since you
know Eastern Siberia well, and to Pyotr Vasilyevich. As a
presidential candidate, tell me, will you be able to preserve Lake
Baikal as our national wealth or will it become private property
just as Mr. Chubais is now taking control over the power industry
in Irkutsk region?

Zyuganov: It is good that you mentioned Mr. Chubais. He is not
only taking over the power industry but also very energetically
destroying it. We are now completing work on materials on the state
of the country's energy system, on the plans that Chubais had let
slip his tongue when he was in London and elsewhere abroad, plans
in accordance with which the choicest chunk will be pocketed by his
close associates and the money will go into their pocket and not
the pocket of the state, this money will not be spent in the
interests of tax payers and the citizens of the country. Other
state property has been dealt with similarly recently.

Three variants have been prepared. The Sayano-Shushenskaya
Hydropower Station is to be merged under a plausible pretext. The
same is now happening in Samara. And shortly a powerful offensive
will be launched on Volgograd and the Volgograd Hydropower Station.

I was amazed when I learned from recent foreign press
publications that even American investors in RAO UES are indignant
at these decisions because they make the energy system less
effective and damage it as an integrated system.

As to the Baikal, you know that a law on the protection of the
Baikal has been adopted. We very vigorously insist that the
necessary measures be taken. I am sure that we will support your
proposals. We had a meeting with you yesterday and had a very
interesting discussion of the problems that agitate the people of
Irkutsk and the whole of Eastern Siberia. I intend to travel there
and to discuss these problems again on the spot. 

Romanov: Speaking of effective management I must say that RAO
UES is virtually the only big company in our country that was a
dismal failure last year. This year RAO UES is being saved by the
mild winter. If we had frosts of minus 47 degrees Celsius like in
Krasnoyarsk, the situation would have been terrible. If we had such
frosts in Russia as a whole Chubais's management of such a huge
system as RAO UES would have been patently demonstrated.

Supplementing Gennady Andreyevich's answer I want to say that
we are drafting a document on this matter that we are going to send
to the Acting President of the Russian Federation. We will tell you
in more detail about this next week.

Q: Gennady Andreyevich, does the Central Election Commission
have any critical remarks to make about your election campaign? How
big is the danger to you and what measures are you taking?

Zyuganov: The Central Election Commission does not have any
particularly critical remarks to make. It has accused a number of
newspapers that published my election platform. I am a registered
candidate and I have every right to conduct a full-scale election
campaign.

As to publications and any television channel, that is their
internal matter. We do not interfere and we cannot interfere. True,
today they decided to fault us and reprimanded us. When hundreds of
thousands of votes are stolen in Tatarstan and all this has been
proved, they have nothing to say. They also did not see anything
criminal in the flagrant violations of election legislation by
several government television and radio stations.

More than that, after my registration... Channel One is
present here, I want you to report my official clarification. As a
candidate I demand this in respect of my declaration of income.
Your coverage from the Central Election Commission was 300 percent
false. You have all the materials, they were sent to you and they
include everything that concerns my income. It was announced that
I have two apartments, including one in Kemerovo. A pensioner was
dying, a man who got everything from the Soviet government. He not
just loved but adored the Soviet system of government. And the
Communist Party was an embodiment of the Soviet system for him. He
wrote in his will: "I bequeath to Zyuganov, to the Communist Party
my one-room apartment and all my small savings..."

I was informed of this, I thanked him and through our lawyers
I suggested that this apartment be inherited by our local
organization or that it be handed over to a veteran or that it be
used as a hostel. All the documents have been filled out. But your
people in Channel One lied although they saw all these documents. 

My wife, like many, lost her job. She worked at the Watch
Factory No. 2. Like all working people she invested her vouchers in
production in the hope that the factory will work further.
Throughout all these years she never got a kopeck. The four
vouchers have turned her into a big investor although she has not
been working all these recent years and not earning anything. And
there are only lies on government television. This is
unprecedented.

You have seen there all my statements. You know that I have
transferred to kindergartens and orphanages all the money that I
earned for my articles, books and lectures. All the addresses are
stated there. 180,000 rubles. But you did not say a word about
this. My daughter has never driven a car and does not know how to.
She married. Her husband happens to own a German Volkswagen. Prior
to that he had another old car but he sold it long ago.

And now Channel One puts out its false story proceeding from
materials it got from the Central Election Commission. I insist
that Channel One should officially inform me how it lied to the
voters. This is absolutely unacceptable behavior in an election
campaign.

Q: Patriot. In continuation of this question. Foreign
observers accredited at the parliamentary elections say that three
parties, Yabloko, Union of Right Forces and the LDPR, did not clear
the 5-percent barrier. By the way, these figures were published in
Sovetskaya Rossia. You know, this is indirectly confirmed by the
Central Election Commission which has not published the results of
the vote in the districts and on party lists. Two months have
passed since those elections. You said that you would launch
investigations of violations in various regions. Have you had any
progress?

Zyuganov: Thank you. I subscribe to your view that the Duma
elections have been largely rigged. For instance, we got much
support in the single-mandate districts. In fact, the Communist
Party's movement For Victory won in a third of the districts. This
means that in any given district we got about a third of the votes.

But it turns out that we got 8 percent less votes than that on
the party list. At present we are checking facts of flagrant
irregularities in Tatarstan. We have about 500 of such facts. They
all are of a criminal nature. In two districts, it has been found,
we had more than 200,000 votes stolen from us and about 100,000
from another election association.

When I received my certificate at the Central Electoral
Commission I renewed my call to them to set up a special panel and
inspect all the zones where elections were rigged. These areas are
well known -- Tatarstan, Bashkiria, Samara, Saratov, Dagestan,
Kursk. We insist on such a check being held. The Duma has set up a
special panel and we will see that check through. Those who have
violated the law will go to jail.

We have made a check in the Tver region. Court hearings will
be held in the coming days. Obviously, the governor there is
occupying his seat illegally. But they hastened to inaugurate him
because they understand that if the court decision is implemented,
he will never become governor. But we will see that court case
through.

I appeal to you to do more to form groups to monitor the
course of the elections. We are all interested in its being
democratic and fair election.

Q: Political news service. How did you react to the decision
of Tuleyev who is No. 4 in your bloc to run for president? And how
did you come to the parting of the ways? A question for Romanov.
Doesn't it seem to you that the time has come to balance the
privatization law with a law on nationalization? And if so, what
should this law be like? And a question for Glazyev. Do you know
who is preparing Putin's economic program and what can be expected
from these people?

Zyuganov: Well, there are always more people wishing to become
president than is necessary. As for the initiative of Aman Tuleyev
to run for president, you should address this question to him.
There are objective criteria to determine who can run and who can
count on success. Real success in this country in the current
conditions can only be achieved by our movement For Victory of
which the heart is the Communist Party, and the "party of power".
All the rest needn't bother.

And if we look at our opportunities, they are objective.
Throughout the years we have been the only political organization
effectively challenging the party of power. We have won the
elections from Our Home is Russia, Our Home is Russia has vanished.
It was a party of power. We won the elections from Unity which
grabbed all the resources in the course of the Duma elections. And
in the last presidential election we were neck and neck. Ballot
stuffing and fraud, blackmail and intimidation played the decisive
role. Our movement has a chance of winning this election.

As for electoral technologies, they are well known. Just like
Rutskoi in his time played the role of a companion piece to Yeltsin
in order to win, just like Lebed played the part of a pseudopatriot
in the course of the previous election, so today they are looking
for candidates to the left of us and to the right of us who would
declare war on the leadership of the CPRF and woo the electorate.
On the one hand, this role will be played by Podberyozkin, and on
the other side, it will be played by Tuleyev.

By the way, the people are well aware of this and they won't
swallow that bait so easily. Yakovlev has already opposed us when
he said that we were the most dangerous in the Central Committee of
the Communist Party of the RSFSR. You remember? I responded with an
article entitled "An Architect Contemplating Ruins". Yeltsin fought
us by banning us, shooting at us and humiliating us. And others
fought us. I would just advise you not to follow that lead because
there is a real chance of combining efforts and bringing to power
a government of popular trust and a patriotic president. Then
things can be put to rights.

By the way, there is no one else in Russia who can rectify the
situation. We have historical experience, we have a team and we
have a real program. In 10 years we have never once deceived our
voters. There is nothing the nation can reproach us of. For ten
years various people have tried to break our backs, bribe us and
ban us -- and nothing came out of it. Now they are going to tell
lies and to try to steal votes form us by fielding a whole group of
candidates for president who will then help the party of power to
win the presidency. 

One should be attentive and very vigilant.

Romanov: I would like to say that both privatization and
nationalization are words referring to the same thing. In either
case we are talking about redistributing property. Our democratic
community shrinks in horror from the word "nationalization"
although they have implemented privatization to demonstrate how
ineffectively our production can be run.

So, I think we should use both elements of treating property.
And to be quite straightforward the question of nationalization,
that is, change in the form of property is long outstanding.
Especially when the proprietor assumes the investment's obligations
and does not invest anything in production. And on that the state
should long ago taken a stand and make sure that if proprietors
assume any obligations, they should, above all, deal effectively
with production. In the previous State Duma we worked very actively
to change privatization legislation and adopt new laws that would
allow certain nationalization. But to our great regret, we did not
succeed. However, I am sure that we will resolve these two issues
in the present Duma so that this question not only existed in our
minds but also bore fruit, primarily in terms of efficient
management of property.

Zyuganov: There was one more question. Sergei Yuryevich,
please.

Glazyev: It concerned the completion of the work on the
economic program for the Acting President. As far as I know, this
work is supervised by Mr. Yasin who was the Minister of Economics
in the Chernomyrdin government and his team had one peculiarity.
Each year it predicted slow depression but said that the situation
would improve in two years. Then these two years passed and they
said again that unfortunately their projections had proven wrong,
but that things would be much better in 2-3 years.

It was an endless process: we wanted to make things better,
but they turned out as usual. And this can give you some idea about
the work of these economists who have been invited, as far as I
understand, to work at the strategy center. I personally do not
expect any serious results from this center.

On the other hand, we have a finished economic program which
can bring about sustainable economic growth. This is not only our
program. We drafted it together with the Russian Academy of
Sciences, Department of the Economy, and leading economic
institutes. It is substantiated. Proposals contained in it were put
forth by our scientists and producers.

This program has been approved by the Coordinating Council of
Russian producers. In November our program was submitted to Mr.
Putin on behalf of all domestic producers. This is a real program
and its exists. This is why these intellectual exercises by a group
of bankrupt economists evoke only feelings of pity for the wasted
time and money.

Zyuganov: I can tell you one secret. They have already
prepared the first version of their program. It turned out to be
much more liberal and much worse than the programs of Gaidar and
Chubais combined. Its chief objective is to sell and pocket the
remaining property and then leave everything to the mercy of fate. 

Let's have the last two short questions and then we will call
it a day.

Q: People's Weekly World. Stroyev has said fuel prices will go
up to 12 rubles. What is your position and what will you do about
this ahead of the upcoming spring sowing season? And the second
question. The government and the Family are trying to save
commercial banks, when it is known that their authorized capital,
a good deal of which comes from the Soviet State Bank -- what do
you think about this?

Zyuganov: Thank you. Next please.

Q: I have a question for Sergei Glazyev. Radio Russia. The
globalization of the world economy has caused a controversial
reaction in the world. Does this process pose any threat to Russia?

Zyuganov: Let's have the last question, please and then we
will wind up our work.

Q: Gennady Andreyevich, you have appealed to mass media and
television many times to cover your intentions objectively. I
wonder how much more can the Russian people tolerate this taunting.
Every day, every week we see new entertainment programs and it's as
if everybody were happy and had nothing to do, but have fun. Are
there forces that can put an end to this?

Zyuganov: Thank you. As regards fuel, I am categorically
against raising its price. Fuel, gas and electricity prices have
strangled the industry. I have recently met with the leader of one
very good enterprise which is located close to a city and a major
road. And he said to me, I get almost 6,000 liters of milk from
each cow. But the latest price rise devoured all my profits.
Tomorrow I will be broke. 

We insist that fuel and energy prices should be regulated and
cut by almost two times. But in order to do this, it will be
necessary to carry out a different economic policy.

As for the globalization, it has affected the whole planet and
you can't avoid it. We have to remember that a commodity in our
country costs much more than in Europe or the US. We will support
our producers by tax breaks, normal transportation and power
tariffs, or else our products will everywhere and always be
non-competitive.

Glazyev: Firstly, I would like to note that the work of the
Russian anti-monopoly agencies, especially the Ministry for
Anti-Monopoly Policy, has been raising eye-brows during the past
year. The Anti-Monopoly Ministry, after the change of government in
May, began by creating an oil cartel. The result was a leap in
energy prices, that is, no anti-monopoly policy is being pursued.

So, today we see that the prices are driven up by energy
people and the metallurgical industry. Profitability in the
monopolized extractive industries has grown by 2-3 times, and the
processing industry is in dire straits financially. Even such a
successful enterprise as GAZ which produces motor vehicles has zero
profitability because the prices in the highly monopolized sectors
of the economy have been whipped up.

The Anti-Monopoly Ministry does not control prices in these
sectors, it does not monitor the formation of illegal cartels and,
indeed, by its passivity it contributes to the creation of such
cartels which cause colossal damage tot he manufacturing industry.
It does not control the processes of monopolization in the economy.

Today, for example, the aluminum industry has been monopolized
by a single group which sent aluminum prices sky high. Aluminum is
the leader in the price race, so we witness an inflation of costs
which in the past year amounted to 5-6 percent in the market of
means of production, and the leaders there are monopolists with the
blanket connivance of the Anti-Monopoly Ministry.

Our program envisages concrete measures to ensure effective
state control of price dynamics. We see that the prices for energy
and the services of natural monopolies are inflated by several
times compared with the real costs, and we envisage concrete
measures to eliminate price imbalances and shape a price policy
that would ensure sustained economic growth. By the way, we will
soon submit a corresponding law. It is among our priorities.

As for the banking sector, our program envisages a system of
measures to restructure the banking sphere to create channels that
would bring money to production. 'Russian banks, unlike normal
banks in a market economy, fail to perform their main functions.
They do not invest, they do anything: they build financial
pyramids, launder money, export capital abroad, but they do not
invest. All the investments are made by the enterprises themselves.

We propose a concrete program of measures to restructure the
banking system to regear it to work with the real sector in the
economy. That program is based on the formation of major
state-controlled financial structures designed to work with
concrete enterprises, the introduction of the swap of the bills of
exchange of industrial enterprises by the Central Bank and the
creation of a mechanism to refinance commercial banks on condition
that they would expand their activities in the production sphere.

Of course, we think it is necessary to create a Development
Bank, to strengthen state control over the work of Sberbank which,
even though it is state-owned is practically out of control and we
propose to the government to change its position on the
restructuring of the banking system and to assume control of it in
order to turn the flow of money towards the production sphere.

Because the banks are the blood vessels in a market economy we
cannot tolerate foreign control of that system. If we want to
preserve economic security and sovereignty, the Russian banking
system should work in the national interests and under effective
state control.

Now about the process of globalization. I would like to say
that this is of course an objective process. Our program includes
concrete measures to make the Russian economy more competitive, it
offers priorities for upgrading the technical standard of the
economy, increase investments in priority areas by up to 40 percent
a year in such areas as biotechnology, electronics and computers.
Our program is a program aimed at dramatically improving the
technical standards of the Russian economy to enable our
enterprises to obtain profits in the form of intellectual rent by
working effectively in the world market. Our program therefore is
a program of bringing Russia into the world market as a leading
scientific and industrial power. Unfortunately, what the government
offers now is a scenario based on inertia, a passive adaptation to
the processes, the degradation of industry and consolidation of
Russia's role on the periphery of the world economy as a raw
materials appendage which would mean zero growth, stagnation of
living standards, in short, the perpetuation of the situation when
half of the population has no means of livelihood and perpetuation
of degradation of industry and the social sphere. In other words,
there are different ways of adjusting to globalization.

Our program of becoming integrated into global processes is
premised on the leading role of scientific and technical progress
in economic development while the government's program is still
groping its way in the grip of a primitive monetarist scheme.

Zyuganov: Our next meeting on energy problems will be held
next week. Thank you for joining us. Good-bye.

*********

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