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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

March 14, 2000    
This Date's Issues: 4166 4167 4168

 

Johnson's Russia List
#4167
14 March 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Gorbachev Says Putin Leans toward Authoritarianism.
2. AP: Ex Russian PM Wants Chechnya Halt. (Stepashin)
3. Itar-Tass: No Legal Basis for Direct Presidential Rule in Chechnya-View.
4. Itar-Tass: Start-3 Does Not Jeopardise RUSSIA'S National Security. 
5. Novaya Gazeta: There Is Little Difference Between Putin And Zyuganov. AN INTERVIEW WITH GRIGORY YAVLINSKY.
6. Argumenty i Fakty: Tatyana KOROSTIKOVA, POOR PEOPLE LIVE IN A POOR COUNTRY.
7. MOSCOW TRIBUNE: Stanislav Menshikov, PUTIN WILL NOT TELL. Expect Another Round of Poking in the Fog?
8. Trud: Vitaly GOLOVACHEV, WANT SAUSAGE QUEUES AGAIN?
9. New book: Troubled Lands: The Legacy of Soviet Environmental Destruction.
10. Robert Devane: Re: JRL 4162/Tavernise - Russian banks lending.
11. Brendan Howley: three author queries.
12. Ekonomika i Zhizn: FACTS AND FIGURES. (DJ: Interesting!)
13. Reuters: Central power in Russia's genes, Putin says.
14. Interfax: PUTIN DENIES HAVING "SPECIAL RELATIONS" WITH YELTSIN INNER CIRCLE.
15. Interfax: PUTIN BOOK CAN BE READ ON INTERNET.
16. APN: Russians do not support prolongation of Russian President’s authority.
17. RFE/RL: Paul Goble, The Internet And National Integration.]

********

#1
Gorbachev Says Putin Leans toward Authoritarianism
March 13, 2000

MOSCOW (Reuters) - Mikhail Gorbachev, the last Soviet leader, said Monday he 
believed Acting Russian President Vladimir Putin was leaning in the right 
political direction but had a worrying authoritarian streak. 

"He is inclined toward the principles of social democracy but doesn't 
understand his position as a statesman. Is a strong state something like 
dictatorship or authoritarianism? No!" Gorbachev told a television 
interviewer. 

"A strong state is strong insofar as all its various institutions of 
authority function. I think it would be a mistake if he again takes upon 
himself the role of trying to please us all. So we still have to sort out his 
position." 

Putin, an ex-KGB spy, became Russia's acting president when Boris Yeltsin 
stepped down on New Year's Eve and is overwhelmingly favored to be confirmed 
in the job for a four-year term at an election in two weeks. 

Gorbachev has played only a marginal role in Russian politics since leaving 
power when the Soviet Union broke up at the end of 1991. A 1996 presidential 
bid was a flop, earning him only about one percent of the popular vote. 

He has tried to stage a less ambitious comeback over the past few years and 
this week held the founding congress of his Social Democratic Party. 

Gorbachev was the first Kremlin leader to hold the title "president" -- he 
took the title in 1990 to replace the leadership role of the Communist Party 
general secretary. He said he believed the president's powers should be 
reduced. 

"The president should be a guarantor and lobbyist not only for those forces 
that brought him to power, but for the entire country," he said. "We should 
separate the functions of head of state from executive power, so the 
president can deal with these main questions. 

"This should be a person with a statesman's mentality, undoubtedly a 
democrat, a person who stands for freedom and a person who, in general, has 
these moral qualities." 

*******

#2
Ex Russian PM Wants Chechnya Halt
March 13, 2000
By BARRY SCHWEID

WASHINGTON (AP) - A former Russian prime minister demanded Monday that acting 
president Vladimir Putin stop the Russian army's fierce military campaign in 
Chechnya. 

Speaking at a Harvard seminar, Sergei Stepashin, fired by Boris Yeltsin last 
year to make way for Putin after only three months as prime minister, 
endorsed his successor's goal to combat terrorism in the republic. 

But Stepashin said the campaign has not yet begun. But in the meantime, 
military forces are hammering the mostly elderly population that remained in 
Chechnya after masses of other residents evacuated. 

``We have to stop these military actions,'' Stepashin said, ``and we have to 
proceed with combating terrorism.'' 

Stepashin, a member of parliament, head of an anti-corruption committee and a 
member of the liberal Yabloko party, described Putin as a liberal and a 
patriot, authoritative but not an authoritarian. 

``We have to show understanding for patriots and not get into another spiral 
in the Cold War,'' he told his American audience. 

Stepashin himself took a tough line on rebels in the republic, saying many 
are bandits and terrorists. 

The toughest issue confronting Moscow now, he said, was creating a new 
government in Chechnya. He suggested federal control of the republic in the 
interim. 

``A large number of people who left are willing to return,'' Stepashin said. 

With Russia's national elections due to begin on March 26, he said, a clear 
Putin majority in the first round would not be surprising. 

``He's an able politician, a tough decision-maker and a tough enforcer,'' 
Stepashin said. ``And those are assets he brought to the presidency.'' 

******

#3
No Legal Basis for Direct Presidential Rule in Chechnya-View.

MOSCOW, March 13 (Itar-Tass) - Ingush President Ruslan Aushev said direct 
presidential rule in Chechnya should not be introduced "without a proper 
legislative basis" and called for talks between federal authorities and 
Chechen President Aslan Maskhadov. 

Aushev was sceptical of Russian Acting President and Prime Minister Vladimir 
Putin's statement on direct presidential rule in Chechnya, made in his 
interview with the business daily Kommersant. 

"There are no laws in Russia for that", he explained. Aushev believes that 
"there is more federal rule in Chechnya than one can think of.... It's even 
more than that. Basically it is military rule". 

"There are no local authorities there, martial law is virtually in effect, 
and everything is controlled by roadblocks and commandant's offices," he 
added. 

The Ingush president warned that an introduction of direct presidential rule 
will "weaken the situation in terms of managing the republic" and will fail 
to bring "us closer to the settlement in Chechnya, even by a step". 

Aushev predicts that hostilities in Chechnya will continue "for years". 

"I assess the situation realistically", he said, adding that "there is no 
military solution to the conflict". 

"It is necessary to reach agreement with Maskhadov. Any other candidacy from 
the Chechen side will be outside the law", he said. 

Aushev believes it was a mistake to put Maskhadov on the federal wanted list. 
"This does not facilitate political dialogue, although Maskhadov is still 
prepared to conduct it," he said. 

******

#4
Start-3 Does Not Jeopardise RUSSIA'S National Security. .

MOSCOW, March 13 (Itar-Tass) - Russia can reduce its nuclear armaments to the 
START-3-stipulated level without jeopardising the national security, 
prominent Russian nuclear weapons expert, Major-General Vladimir Belous told 
Itar-Tass on Monday. 

The containment potential of nuclear weapons, he believes, would not be 
weakened if Russia had from 1,000 to 1,500 warheads. This is almost four-fold 
more than needed to inflict irreparable damage to the enemy. Approaching this 
problem from the military-strategic view of view, it should be admitted, the 
expert noted, that the present-day nuclear arsenals of Russia and the United 
States are over-excessive. They are leftovers of the cold war. Military 
necessity does not warrant such a huge number of nuclear warheads, Belous is 
convinced. 

In the general's opinion, the only rational function of nuclear weapons is 
containment, although so-called untraditional types of armaments are now 
emerging to replace them. "I attended a scientific-technological conference 
in July 1998, where I met Robert McNamara, who headed the American 
delegation. His first question was: What balance of forces is needed today? 
He himself believes that from 400 to 500 megaton-class warheads have to be 
delivered to the enemy's territory to destroy about thirty per cent of the 
population and up to seventy per cent of the industrial potential. In my 
opinion, even "McNamara's criterium" is excessive. And, as a matter of fact, 
he shared this view later in the course of our conversation," the scientist 
stressed. 

Asked about the financial problem of maintaining Russia's strategic nuclear 
forces, the general noted that these spending accounted for almost twenty per 
cent of the defence budget. "Such expenditures are much too heavy for the 
federal budget and unwarranted from the military point of view. It is 
expedient to determine the optimal level of our strategic nuclear forces, 
which should be within the limits of the START-3 treaty that is now in the 
making. This should be taken into account during the upcoming parliamentary 
hearings on the reduction of nuclear weapons. Moreover, our lawmakers must 
grasp the crux of the problem and should not engage in political battles as 
it happened before," the general said. 

*******

#5
Russia Today press summaries
Novaya Gazeta
March 13, 2000 
There Is Little Difference Between Putin And Zyuganov
AN INTERVIEW WITH GRIGORY YAVLINSKY
Summary

Mr. Yavlinsky answered the questions of a “Novaya Gazeta” journalist. 
Following are excepts from the interview.

“Although I’m running independently, I have a very powerful ally – Vladimir 
Putin’s administration. Even though they try to help, its members are 
actually working against him. Plus, SPS (Union of Right Forces) and OVR 
(Fatherland – All Russia) aren’t participating in the marathon, and Unity, 
having allied with Communists, betrayed most of those who voted for it in 
December, which gives me many more votes.”

“Putin will not be able to win over my electorate. My electorate is made up 
of independent, smart, well-educated people. It’s difficult to scare or win 
them over.”

“The system that Yeltsin developed became so powerful that when time came for 
it to extend its term, it was able to overcome Yeltsin’s ambitions and bring 
Putin forward. Putin is fully a construction of [Yeltsin’s] system. If it 
continues to gain strength, it will destroy our country. Putin will speak 
about the necessity of strengthening the state and increasing military roles 
in the government, while everything heads for destruction. This is why he is 
so dangerous, just like Zyuganov. There is not much difference between the 
two. Their ideas, views and approaches are similar in many ways. It is the 
same with many of the people who worked in the system where Vladimir Putin 
“grew up”. That system is very conservative.”

“It’s possible that in the case of Putin’s victory, the country will fall 
into a harsh totalitarian reality. Even if happens for a short time, it will 
be enough for us. For our country, in the state that it’s in, an attempt to 
establish totalitarianism could be very tragic. Today’s campaign is not a 
competition of programs, of who will lower taxes more – by 7 or 15%. It’s a 
question of whether a country such as Russia will continue to exist. There 
are too many problems, and the existing system is too rapacious and greedy to 
solve them. Which is why fighting this system is not a question of taste or 
political views – it is a question of life or death.”

******

#6
Argumenty i Fakty No. 10
[translation from RIA Novosti for personal use only]
POOR PEOPLE LIVE IN A POOR COUNTRY
By Tatyana KOROSTIKOVA

The purchasing power of the population is a vivid 
illustration of the standard of living. Whereas before the 1997 
crisis the average per capita income could buy two consumption 
baskets of minimum necessities, it could buy 1.5 baskets in 
1999.
However, not all Russians could afford even that, as the 
incomes of 54% were below the subsistence level (according to 
the all-Russia living standards research centre, or VTsUZh).
The following Table illustrates the state of Russian 
society (in percentages).
------------------------------------------------------------
Social Russia Moscow St. Petersburg
cross-section 1998 1999 1998 1999 1998 1999
------------------------------------------------------------
Poor 47.8 54.7 16.5 24.8 36.4 46.0
------------------------------------------------------------
Low-incomed 30.3 26.6 25.4 24.2 39.5 35.1
------------------------------------------------------------
Mid-incomed 17.7 14.4 32.9 27.2 21.4 16.3
------------------------------------------------------------
High-incomed
and rich 4.2 4.3 25.2 23.82 2.85 2.6
------------------------------------------------------------
To get a clearer idea of social stratification let us 
consider the differences in the number of subsistence wages 
which representatives of these cross-sections have. It is from 
2 to 2.5 in the case of the low-incomed, which makes up what is 
called the minimum consumption budget. Such an income ensures 
survival but nothing more. While the consumption basket of 
minimum necessities includes seven services (public utilities, 
transport), the minimum consumption budget means 33 services 
and stipulates holiday-making expenditures once in a while.
The mid-incomed have from 3 to 5 subsistence wages. These 
are the people who have suffered more than others because of 
the crisis.
The budget of the high-incomed constitutes from 6 to 7 
subsistence wages. These people can afford any food and any 
service they like, including recreation, new housing and 
considerable savings.
Differences in incomes are only natural. But they become 
dangerous when the gap is too wide and the level of poverty is 
impermissibly low. Alas, such is precisely the situation in 
Russia today. The incomes of the rich are 40 times higher than 
the incomes of the poor (according to the Institute of Economic 
Forecasting of the Russian Academy of Sciences). A growing 
proportion of capital is being concentrated in the hands of the 
well-to-do people. The 20% of the country's richest people 
possess 60% of all incomes. 
According to VTsUZh director Vyacheslav Bobkov, the worst 
thing is that the incomes of the majority depend very little on 
how they work. Where to work is more important. The majority of 
the poor are employees living on wages, especially in the 
public sector. Pensioners and those who live on stipends or 
allowances have incomes below the poverty line. Small 
entrepreneurs - "shuttle traders", vendors and those engaged in 
the services sector - have the least chance to become poor. 
However, their incomes are not very great and rather unstable, 
either.
People working outside of the public sector have a better 
chance to earn a living. The salary of a doctor working in a 
private clinic is several times higher than that of his 
colleague in a state-owned clinic. It also matters in which 
sphere you are employed. The average wage in some spheres is 
ten times higher than in others. The employees of the oil and 
gas industries have the highest wages - 5,284 rubles, on 
average, those working in non-ferrous metallurgy receive 4,057 
rubles, and in power engineering - 3,207. The lowest wages are 
in education, health care and culture.
Even the place of abode is evidence of the living 
standards of the majority. The purchasing capacity of some 
Russian regions is 12 times higher than that of others. The 
Aginsky Buryat autonomous area is the pole of poverty: the 
average per capita income of local population is only 44% of 
the subsistence wage.
Forty-two of Russia's 89 constituent territories have average 
incomes below the poverty line. On the other hand, living in 
Moscow or the Yamal-Nenets autonomous area saves you from 
falling below that line.
In the first years of reforms many of those who found 
themselves below poverty line entertained a hope for the better.
Alas, unrelieved poverty has been growing, which means that 
people in dire poverty have no chance to overcome it ever. 
These are the families living on a pension or a wage which 
usually have many dependents - children, sick and old members.

According to Goskomstat, the rich spend 2 times more 
money on bread, 2.3 time more on potatoes, 3.5 times more on 
vegetables and gourds, 5.5 times more on fruit and berries, 5.6 
times more on sugar and confectionary, 4 times more on meat and 
fish, 3 times more on milk and dairy products, 2 times more on 
eggs, 2.2 times more on vegetable oil, margarine and fats, 3.4 
times more on salt, pepper, mushrooms and other food products, 
4.8 times more on coffee, tea, cocoa, juices, and etc., 10 
times more on eating out. By and large, they spend 3.5 times 
more money to buy food and 8.8 times more to buy alcoholic 
beverages.

It seems clear what is to be done about all this: to 
increase wages by several-fold. The present real wage is only 
40% of the 1991 level. This is one of the reasons for economic 
stagnation: there is no one for whom to manufacture more goods.
Those who are against wage hikes say that the present low wage 
corresponds with our labour efficiency level and if people 
first start working better, they will have money. No stimulus, 
no work is the argument they hear in response.
This is similar to the argument what was first - the hen 
or the egg. But the aftermaths of poverty already present a 
serious threat to our national security, says Yevgeny 
Gontmakher who heads the social development department in the 
office of the Russian government. This threat is manifested in 
growing death-rates, deteriorating health, a catastrophic 
growth of alcoholism and drug use and the growing number of 
homeless children.

*******

#7
Date: Mon, 13 Mar 2000 
From: "stanislav menshikov" <menschivok@globalxs.nl> 
Subject: PUTIN WILL NOT TELL

"MOSCOW TRIBUNE", 14 March 2000
PUTIN WILL NOT TELL
Expect Another Round of Poking in the Fog?
By Stanislav Menshikov

When faced with a straightforward question about his policies after March
26, Mr. Putin in a recent interview said bluntly: "I will not tell you".
One could easily consider this a joke, except that he is really not eager
to tell anything specific at all, except perhaps about his plans in and for
Chechnya. But what if he simply does not know?

This reminds me of Mikhail Gorbachev when he suddenly became Number One in
the Soviet Union. Did he know what exactly he was up to? Not even in
general terms. His years in power, all the way to his forced resignation,
were a sad story of "poking in the fog". He had plenty of controversial
projects stashed in his safe, but did not know where to start and how to
make them work together if at all. The result is known. No wonder that Mr.
Gorbachev mentioned the other day that while he was not sure what Putin had
on his mind, he "kinda liked him". As the Russian saying goes, "two boots
make a pair".

Take, for instance, economic policy. At a meeting of sympathisers, Putin
was asked point blank: "When are we going to wet the oligarchs?" The term
"wet" in Russian Mafia parlance means "destroy", and the acting president
has been known to use it on occasion. His response is typical: "All
oligarchs have to be kept equidistant from the government". But
equidistant could mean both "very close" or "far away". The audience was
led to believe that Putin favoured "far away". But was it his true meaning?

At least, half the whole country watches NTV where he is depicted in
company with shady oligarchic and godfather types. Why not give a plain
answer that would clear up the atmosphere and deny any special relationship
with these gentlemen?

In Surgut Putin was present at a clash between his Energy Minister and two
oligarchs, Viakhirev and Chubais. Each side accused the other of
wrongdoing. There are serious problems in the sector. More oil and gas is
burned or sold abroad every year than added to proven reserves. Electric
power is being regularly turned off in scores of cities and villages.
Profits from record dollar revenues are being squandered, and taxes not
paid on time. But Putin refrains from making a judgement. Instead he orders
a report on Energy policy to be prepared... by September.

On a more macroeconomic issue he says Russia must increase its GDP at least
ten times in order to survive. Echoed by German Gref, his yes-man in
strategic planning, he claims that 10 per cent annual growth is needed. The
most optimistic forecasts suggested by professional economists are 5-7 per
cent. Putin is repeating exactly what Zyuganov is claiming to achieve, but
neither is explaining how he intends to do it. Gref seems to imply that if
China could do it, then why not Russia? But China has maintained that tempo
because it used central planning combined with $200 billion of foreign
direct investment. Russia has no access to outside investment of that
magnitude, and Mr. Putin is not about to reinstall a fully-empowered
Gosplan. Or is he? He won't tell.

"Parameters below these (i.e. Chinese) are impermissible for Russia", says
Mr. Gref. This reminds me of Comrade Stalin. At the start of
industrialisation, Stalin insisted on growth rates of 20 per cent and more.
Experts who, incidentally used macroeconomic models long before it was done
in the West, explained why that was not possible. Stalin called them
"limitationists" ("predelschiki"), and put them to "better use". He claimed
that there were "no fortresses that Bolsheviks could not capture". Growth
in the 1930s was fast, but never as fast as Stalin wanted. Even Bolsheviks
could not jump above their ears. 

Simple economic logic shows that the long-term growth rate of any country
equals its share of capital investment in GDP times marginal productivity
of capital. In Russia today net capital investment is negative, i.e. more
capital is consumed than added every year. One reason is that the oil, gas,
aluminium, electricity and other oligarchs are not spending their profits
on capital investment but transferring them abroad and getting extra-rich
in the process. When the oil tycoons recently bought aluminium shares from
Mr. Chernoy, they simply sent a few hundred million dollars abroad, to
where that person resides. Money was taken out of oil, but not added to
aluminium. The marginal productivity of that investment was negative as far
as the Russian economy was concerned.

Asked about that deal, Mr. Putin side-tracked it to the Anti-Monopoly
ministry though he added that this was not a case of excessive
concentration but a simple change in ownership. He may be technically
right. But how is he and Mr. Grief going to make the economy grow at all,
let alone at Chinese rates, if they put up with capital flight,
asset-stripping, negative net investment and negative marginal
productivity?

They can't have it both ways. If they want the economy to grow fast, they
should not maintain "equidistance" from serious economic problems.

*******

#8
Trud
March 10, 2000
[translation from RIA Novosti for personal use only]
WANT SAUSAGE QUEUES AGAIN?
By Vitaly GOLOVACHEV

Over 30 million of Russian people earn 200 to 1,000 
roubles per capita a month, which is lower than the average 
national subsistence wage. We have not eradicated the acute 
problem of large-scale poverty since the beginning of the 
reforms, despite certain positive changes in the social sphere. 
The greatest and most dangerous threat to Russia now is the 
continued fall in the living standards of the bulk of the 
population. The aggravation of these negative trends can 
distort social development. 
Judging by sociological polls, the patience of many people 
has run out. When you have to daily think only about survival 
and finding the money for feeding your hungry children, the 
high words about freedom and the new market economy can 
engender only irritation and rage. This is probably why so many 
people would like to return (with a few conditions) to the old, 
pre-reform times, even the notorious ration cards, which these 
same people denounced only a short while ago.
In July 1991, two-thirds of the Soviet population told 
VTsIOM sociologists that they would support the transition to a 
market economy. At that time, even the barest of necessities 
(butter and vegetable oil, flour, cereals, meat, sausage, milk 
and eggs) were a problem. A half of the respondents said then 
that they had not seen any of these items freely sold in shops.
Their only hope was the ration cards. But even then, they had 
problems with getting foods. Here are the results of the VTsIOM 
poll held in July 1991:

CAN YOU FREELY, AT ANY TIME OF THE DAY GET FOODS ON THE BASIS 
OF RATION CARDS? (The answers were given in percentage of the 
total number of the respondents.) 
--------------------------------------------------------- 
This is true only for a part of cards 34 
This difficult with any cards 36
I can freely get products from all cards 11 
There are no cards where I live 8
Difficult to say 11
--------------------------------------------------------- 
As you see, 70% of the respondents said they could buy 
only a part of foods on the basis of cards or that they had to 
"hunt" for foods for a long time. Seemingly, this suffering 
should have long become a safely buried past. But 20% of the 
people now (the exact amount of the poor) would be happy to 
have cards now. The ranks of the supporters of the ration card 
system doubled in the past three years. It is the massive, long 
poverty that is provoking harsh anti-market sentiments in the 
country. 
One of the latest VTsIOM polls shows that a half of the 
population calls on the state to establish firm prices of the 
bulk of commodities, including the output of private companies.
Few of them think that this would plunge us back into the era 
of total deficit. 

WHAT IS THE WORST THING ABOUT FOOD PRICES NOW? (The VTsIOM poll 
held on February 25-28, 2000 as compared to 1997; the answers 
are given in percentage of the total number of the respondents)
----------------------------------------------------- 1997 2000
----------------------------------------------------- 
Set fixed prices of foods and organise 12 22 
their sale by cards
Set free prices and pay money allowances 66 64 
and 
compensations to low-income families Difficult to say 23 14

******

#9
Date: Sun, 12 Mar 2000 
From: DJ Peterson <djp@rand.org>
Organization: RAND
To: David Johnson <davidjohnson@erols.com>
Subject: Book :Troubled Lands" Available on the Web

http://www.rand.org/centers/cre/troubledlands/

I am pleased to report that the RAND Center for Russia and Eurasia has
published
my book__Troubled Lands: The Legacy of Soviet Environmental Destruction__ on
the web (in PDF format) at the address above. The book covers a range of
environmental conditions as well as environmental politics and policy at the
time of the demise of the USSR. While much has changed since Troubled Lands
first
came out in hard copy in 1993, I believe it still serves as a useful lens for
understanding the state of the Soviet Union at its endpoint, and as a
benchmark
for measuring progress (or the lack thereof) in environmental protection and
natural resources management in Russia and the NIS since then.

******

#10
From: "Robert Devane" <robertdevane@transts.ru>
Subject: Re: JRL 4162/Tavernise - Russian banks lending
Date: Mon, 13 Mar 2000 

A few comments on Sabrina Tavernise's article in Business Week. It's great
that Russian entrepreneur Andrei Sakharov got a loan for his bakery and cafe
business, but I think that extrapolating this story to describe the state of
affairs in Russian credit markets is highly misleading. Sabrina didn't say
what type of loan this was, but it looked like one of those loans extended
pursuant to an EBRD small business financing program, of which if memory
doesn't fail me Probusinessbank is part. Under this program, the EBRD lends
certain funds to Russian banks at very attractive rates, which the banks
must re-lend to small businesses at almost equally attractive rates. Great
program, but I think all will agree that the scope of the program isn't such
that it would affect the Russian economy on a macro level. The program is
really there to teach Russian banks how to lend.

As far as the discussion about lending rates and inflation, several points
ought to be made. First, the yield at which the Finance Ministry have
recently floated new GKOs are hardly indicative. ask anyone in the market
and they will tell you that the low yields were achieved through concerted
support from the Central Bank, Sberbank, and other banks "close to the
government". Apparently the finance Ministry got its desired PR effect since
Business Week believes that 20% is an equilibrium ruble borrowing rate for
the Russian government. In February consumer prices grew by 1.0%, down from
1.3% in December. According to the Economics Ministry consumer price growth
in Q1 2000 will come to 5.5-6.0%. In January the CPI grew by 2.3%, a
significant increase from the range of monthly increase of 1.2-1.5% for the
August-December 1999 period. Simple extrapolation shows that 5.5-6% for Q1
2000 extrapolates to 22-24% for the year. Thus, the government appears to be
borrowing at a negative real rate of interest. Do you believe that? Even if
you assume that the government will be able to close 2000 with annual
inflation of 18% (which in itself is a bit of a stretch), then the Russian
government is borrowing at a real rate of interest of 2% -- better than the
US Treasury. Convinced? Here's an even better one. Along with the GKO Series
21139 (which matures on May 31st and was sold to yield 20%) on February 23rd
the Finance Ministry also sold GKOs Series 21138, which mature on September
6th (six-month paper). Remarkably enough those bonds were sold at an average
price of 100.29 to yield -0.54% -- a negative ruble yield.

Getting back to bank lending, there are two important issues. First, banks
are still highly reluctant to lend to the real sector. They currently hold
the equivalent in rubles of about US$2.2 billion in correspondent accounts
at the Central Bank. Total correspondent account balances have grown from
32.16 billion rubles at the beginning of 1999 (US$1.56 billion equivalent)
to 64.13 billion rubles (US$2.25 billion equivalent) on March 13th, 2000.
That money is basically doing nothing, and has been a constant source of
pressure on the currency rate expectations.

Sberbank may indeed be an exception, though not in the way that the Business
Week article seems to imply. According to former Finance Minister Mikhail
Zadornov (Feb 23rd speech at MGU), Sberbank's loan portfolio has gone from
55 billion rubles on January 1st, 1999 (equivalent of US$2.75 billion) to
165 billion on January 1st, 2000 (equivalent of US$5.79 billion). Does that
mean that Sberbank has lent US$3 billion worth to the real sector in 1999?
Hardly. as part of the restructuring of the banking system, after the August
1998 financial crisis, Sberbank took on a large chunk of Russian commercial
banks' deposit obligations. In return for this "favor" Sberbank got to pick
out the best assets of the banks that transferred deposit accounts to
Sberbank. That allowed Sberbank to say that at the end of 1999
non-performing loans accounted for only 4.7% of its loan portfolio, compared
to 20% a year earlier.

I think that it's fairly evident that the state of affairs in the Russian
economy and its banking system is a mixed bag of tricks. In our opinion, the
much touted recovery in Russia is a bubble... But that's beyond the scope of
this comment.

*******

#11
Date: Mon, 13 Mar 2000 
From: Brendan Howley <momaid@orc.ca> 
Subject: three author queries

Three queries for a work-in-progress:

1/ Is there any evidence that IG Farben did business with the Soviet
government from 1933-41? I have heard from a German journalist
colleague that indeed there was evidence led at Nuremberg pointing in
this direction, but squelched by the Soviet trial team. I am
particularly interested in possible Nazi-Soviet petroleum or
petrochemical deals involving Farben or its ersatz oil/lubricant
products.

2/ I have been told by a former Red Air Force officer the Soviets had
a chemical warfare capability prior to 1939, stemming from Lenin's
fascination with this form of combat in the first years of the
Bolshevik regime. Is there any English-language academic work in this
area? Russian?

3/ Is there any evidence Polish Jews sought asylum 1939-41 on Soviet
territory or that Stalin offered them asylum? If so, any speculations
as to his motivation?

******

#12
Ekonomika i Zhizn No. 10
[translation from RIA Novosti for personal use only]
FACTS AND FIGURES

* Many problems in the real economy sector were provoked 
by our model of privatisation, which resulted in the appearance 
of a whole army of irresponsible businessmen and corrupt 
officials who care nothing for the morrow. The national 
property worth a trillion dollars and invaluable natural 
resources were sold for only 5 billion dollars. 
Privatised enterprises live on the volcano of fierce 
conflicts between owners, managers and the staff.

* The redistribution of property is still in full swing, 
with roughly a third of property annually changing hands as a 
result of bankruptcies and criminal settlements; bankruptcy has 
become a reliable means of personal enrichment. 
As a result, the total number of bankruptcy cases nearly 
doubled in 1999 on the preceding year. There were nearly 10,000 
personal bankruptcy cases. Puppet companies are widely used by 
irresponsible owners to ruin their enterprises and steal their 
remaining liquid assets. 

* While Russia wonders if this year's federal budget will 
get 12 billion dollars from the sale of crude oil, China 
annually earns 18 billion dollars from soft toy exports. 

* The volume of sales of science-intensive commodities on 
the world markets reached 2 trillion dollars, but Russia, which 
has 13% of the world's scientists, gets only 0.3% of this sum.

* The credit indebtedness of the agrarian sector reached 
nearly 180 billion roubles, or 60% more than the revenues from 
the possible sale of agricultural products a year. 

* Private farms, which were granted major assistance funds 
in the early 1990s, did not survive in most regions of Russia.
They produce 28 times less products than farmers do at their 
household plots. 

* Industrial output dropped so low in Russia that it moved 
from the group of the world's top ten countries to a place 
below 60. In a three to four years, Russia will sustain major 
losses from the mass failure of obsolete production assets, 
unless investments are ensured into the sphere.

* The spending of resources grew in 1999 on 1998 by 0.2% 
(to 21%), including by 2.5% in the fuel and energy sector and 
by 21% in the production of ferrous metals.

* The volume of investments into fixed capital dropped to 
20% in 1999 as compared to 1990. The greatest fall was 
registered in investments into the production of novel 
commodities. A total of 45% of investments on equipment are 
spent on individual sets, some 15% on technological lines, and 
less than 5% on sets of equipment for the production of novel 
commodities. This investment structure not simply paralyses 
industrial development, but results in the destruction of the 
country's industrial-technical potential. 

* The hidden forms of payment, which are not registered in 
financial reports and hence avoid taxation, reached 11.9% of 
the GDP, or over 52 billion roubles, in 1999.

* The most realistic source of investments is internal 
savings. Some experts think they can provide roughly 
three-fourths of funds needed for the revival of the Russian 
economy. Personal foreign currency savings in cash amount to 
some 40-50 billion dollars, or as much as in cash circulation 
in the USA.

* The level of use of technological equipment is a 
recognised indicator of business activity. In Russia, it has 
dropped to below the critical level of 50%.

* The autumn 1998 crisis did great damage to the 
development of small businesses, actually pushing it five or 
four years back.
The crisis also showed that the state has not ensured the 
conditions for their stable operation and high economic and 
social results. Experts say that 30-50% of the Russian small 
businesses temporarily curtailed their operation or were closed 
down as a result of the 1998 crisis. 

(Compiled by M. Panova and B. Rachkov)

*******

#13
Central power in Russia's genes, Putin says
By Oleg Shchedrov

MOSCOW, March 13 (Reuters) - Acting President Vladimir Putin regards the 
instinct for a highly centralised state as an unchangeable part of the 
Russian nature and thinks it might even lead some day to a revival of the 
monarchy. 

Putin's musings, available to reporters on Monday even though their sale in 
book form was blocked, offer the most detailed look so far at the political 
thinking of former KGB spy who is runaway favourite in the March 26 
presidential election. 

``In general, Russia has from the very start developed as a super-centralised 
state,'' he told two Russian journalists who prepared ``From the First 
Person: Interviews with Vladimir Putin.'' 

``It is part of its genetic code, its tradition, the mentality of its 
people.'' 

Putin, who has built his campaign on promises to restore a strong state, said 
a return to monarchy seemed improbable but said Russia had undergone many 
unforeseen changes. 

``You know, many things look unimaginable and impossible, and then - boom! 
Something happened to the Soviet Union. Who could have imagined it would 
collapse?'' he said. ``But in general...in certain times...in certain 
places... under certain circumstances ...the monarchy has previously played a 
positive role. 

KINGS NOT ``DISTRACTED BY TRIFLES'' 

``The sovereign does not have to think whether he will be re-elected. He can 
think about the destiny of his people without being distracted by trifles.'' 

The 1917 Bolshevik revolution ended the rule of Russian monarchs and Tsar 
Nicholas II and his family were executed months later. Many tsarist symbols 
have been restored in post-Soviet Russia. 

The eagerly awaited book is based on 24 hours of interviews over six days. 
Excerpts were printed in Russian newspapers last week but the electoral 
commission ruled on Monday that the book was political propaganda and cannot 
be sold by the publisher until after voting day. 

It can still be distributed by Putin's campaign, but the number of copies is 
limited by caps on campaign spending. 

Putin, 47-year-old former head of the FSB domestic security service, was 
appointed prime minister last August and named by President Boris Yeltsin as 
his preferred successor three months before Yeltsin's surprise New Year's Eve 
resignation. 

Russia's military drive through separatist Chechnya, widely criticised in the 
West, has made Putin enormously popular. Opinion polls credit him with up to 
60 percent support. 

But puzzlement about Putin's inner political views and his 16 years of 
service with the Soviet KGB intelligence service have let Russian liberals to 
fear that he might lead the country towards authoritarian rule. 

Mikhail Gorbachev, the last Soviet leader, told a television interviewer on 
Monday he believed Putin was leaning in the right political direction but had 
a worrying authoritarian streak. 

In the book, Putin dismissed such fears. 

``I fancy another wording -- an effective rather than strong state,'' he 
said. 

PUTIN SAYS HE IS NO REBEL 

Unlike Yeltsin, who rose to power by rebelling against the Communist system, 
Putin was never a dissenter. 

He said he had found it painful to leave the KGB after the failure of an 
August 1991 hardliners' coup against Soviet leader Mikhail Gorbachev. He 
spoke sympathetically of the officials who rebelled against Gorbachev's 
cautious perestroika reforms. 

``In principle, their cause was noble as they saw it -- to keep the Soviet 
Union from disintegrating,'' Putin said. ``But the means they chose only 
pushed the country to disintegration.'' 

Putin said he favoured restoring Russia to greatness by improving the economy 
and raising living standards. 

It was even more important to revive the national spirit and shape new 
morals, he said, citing French President Charles de Gaulle and German Economy 
Minister, later Chancellor, Ludwig Erhard. 

``It was he who built a new post-War Germany,'' Putin said of Erhard. ``All 
his concept of rebuilding the country started from defining new moral 
principles of society.'' 

******

#14
PUTIN DENIES HAVING "SPECIAL RELATIONS" WITH YELTSIN INNER CIRCLE

MOSCOW. March 13 (Interfax) - Acting Russian President Vladimir
Putin maintains that he never had any "special relations" with the
people close to Russia's former president Boris Yeltsin.
Commenting on the view in some circles that the so-called Yeltsin
family elevated him to power and that he is gratefully "extinguishing"
the passions surrounding the Kremlin, he said that "it is quite risky to
ask a little-known person to 'extinguish' anything."
This phrase was used by journalists who interviewed Putin in a
just-released book about him entitled "In the First Person.
Conversations with Vladimir Putin."
Putin said that he trusts current Security Council Secretary Sergei
Ivanov. He said that they have known one another for a long time,
although they have never been close friends, and that Ivanov had begun
his career at the KGB's Leningrad department. "We had many friends in
common. General information about him--positive information--came from
different sides. He has a good command of several languages. I think he
is fit for his post." Putin said.
Putin said that when he deals with Ivanov he has the feeling of
mutual support, adding that the same feeling is there when he works with
head of the Federal Security Service Nikolai Patrushev and the head of
his campaign staff Dmitri Medvedev.
He said that he also trusts Alexei Kudrin, Russia's first deputy
finance minister, and described him as a "good guy and a professional."
"We worked together with Sobchak, and both of us were Sobchak's
deputies," said Putin.
On the subject of his attitude to presidential Chief of Staff
Alexander Voloshin, Putin said, "Voloshin is opposed by part of the
establishment, not by the public." "A negative attitude to Voloshin has
arisen at the level of conflicting groups and clans," he said. "I don't
see this as a reason to fire a person. For the moment, I'm quite
satisfied with his work."
Putin also highly appraised his former colleague in the St.
Petersburg government, Anatoly Chubais. "Chubais, by the way, is a very
good manager. He easily grasps the most important things and, to quote
Vladimir Ilyich Lenin, then reconstruct the entire chain." But, of
course, he is a "stubborn Bolshevik," Putin joked. "Regretfully, he has
a poor credit record_I mean the credit of the population's trust," he
said.

******

#15
PUTIN BOOK CAN BE READ ON INTERNET

MOSCOW. March 13 (Interfax) - A just-released book about acting
Russian President Vladimir Putin entitled "In the first person.
Conversations with Vladimir Putin" can be read on the Internet at the
following address: http://www.vagrius.com, a director at the Vagrius
publishing house that publishes the book told Interfax on Monday.
Kommersant daily journalists Natalia Gevorkian and Andrei
Kolesnikov, along with deputy head of the Kremlin press center Natalya
Timakova, authored the book, publisher Gleb Uspensky said.

******

#16
APN
10 March 2000
Russians do not support prolongation of Russian President’s authority

As is well known, recently a group of governors came out with an offer to 
make amendments to the Russian constitution to prolong Russian Presidential 
authority from 4 to 7 years. Gennady Burbulis is considered to be the actual 
author of this suggestion - in the past he was close with first Russia’s 
president Boris Yeltsin. It is also known that the most popular politician of 
contemporary Russia acting Russian President Vladimir Putin spoke positively 
of this initiative. But the idea of the presidential «seven years of power» 
wasn’t too popular with the Russians.

It can be seen from the results of the poll held by ROMIR independent 
research center on March 4-5. It was an all-Russian representative poll held 
among 2000 respondents in 115 settlements of Russia (200 polling stations, 40 
RF subjects). In course of this poll Russians were asked the question: «Do 
you support prolongation of term of President’s of Russia being in power up 
to 7 years?»

Only 15,1 % of the respondents definitely support this initiative, another 
15,3 % are hesitant but they would rather support this suggestion. «I don’t 
care» - such was the answer of 14,6 % of the respondents. 22,7 % are hesitant 
but they wouldn’t support this initiative, and 26,1 % of the respondents 
definitely are against it. 6,2 % of the respondents had difficulty giving an 
answer.

According to 19,6 % of the respondents think that prolongation of 
presidential powers up to 7 years «would help stabilize Russian democracy». 
20,2 % on the contrary think that «if such a decision is taken the basis for 
Russian democracy would be undermined». 42,4 % of the Russians expressed an 
opinion that prolongation of the president’s being in power wouldn’t change 
anything. 17,8 % of the respondents had difficulty giving an answer.

This information looks rather unexpected, if to take into consideration 
traditionalism of the Russians, popularity of social-paternal, «naively 
monarchic» outlook and Vladimir Putin’s terrific popularity. Probably this 
situation can be explained by the fact that the Russian society has a vast 
negative experience of an old, staying too long head of the state: from 
Leonid Brezhnev to Boris Yeltsin.

******

#17
Russia: Analysis From Washington -- The Internet And National Integration
By Paul Goble

Prague, 13 March 2000 (RFE/RL) -- Residents of Siberia and the Russian Far 
East now go online at far higher rates than do Russians living anywhere else, 
a pattern which could have a profound impact on the future integration of the 
Russian Federation.

According to polling data released at a Moscow Internet conference on Friday, 
one-quarter of the regular Russian users of the Internet live in Siberia and 
the Russian Far East, even though that region accounts for significantly less 
than 10 percent of the country's population.

On the one hand, this statistic should come as no surprise. People living in 
isolated areas around the world increasingly are turning to the Internet both 
for entertainment and to keep in contact with the larger world.

But on the other hand, it is striking because it is at variance with the 
typical pattern of technological diffusion in Russia and also because these 
numbers could increasingly represent a serious obstacle to Moscow's efforts 
to reintegrate the country.

Up to now, most Western and Russian observers have assumed that Moscow and, 
to a lesser extent, St. Petersburg, do and will dominate the Internet market 
just as these two cities dominate many other aspects of Russian life.

But in fact, speakers at the Friday conference suggested, there are no more 
regular Internet users in the two capitals than there are in Siberia and the 
Far East, even though there are now far more people living in these two 
cities than in that enormous region.

Moreover, the poll on Internet use conducted by ExactData Research found that 
55 percent of Russia's Internet users live in cities with fewer than one 
million people, that a significant number live in small towns or rural areas, 
and that many of these are located beyond the Urals.

Because the Internet offers its users the opportunity to transcend geography, 
to link themselves with people or groups who live far away from where they 
do, this new technology may either help to promote national integration or 
make it far more difficult.

Indeed, many of those who now go online in Siberia and the Russian Far East 
may find that experience tying them ever closer to Moscow in particular and 
the Russian Federation as a whole, particularly if they visit Moscow web 
sites such as those featuring central newspapers.

But the Internet may also have just the opposite effect precisely because it 
shows so little respect for traditional state boundaries and identities. And 
there is at least some evidence that the Internet may be playing that kind of 
role in parts of Siberia and the Russian Far East.

Perhaps the clearest indication of this comes from Sakha-Yakutia, a republic 
the size of most of Western Europe located in the north of the Russian Far 
East.

In January, the government there made English a compulsory subject in the 
schools and one of the working languages for official government functions. 
Sakha President Mikhail Nikolayev said on Jan. 6 that such a step was 
necessary "given the intensification of planetary interstate communication, 
broad adoption in the international practice of high information 
technologies, and given the quest of Yakutia for integration into the world 
economic community."

English has been the predominant language on the Internet up to now. That is 
beginning to change. But to the extent that Sakha residents learn English and 
use the Internet, they are ever more likely to identify themselves with the 
nearby Pacific rim states than with far-away Moscow.

None of this means that Sakha is about to secede, but it does mean something 
perhaps equally important. The people of that republic may increasingly be 
drawn into a wider world not dominated by Moscow. And as a result, they are 
likely to demand that Moscow take that into account.

Moreover, if the central Russian government tries to ignore this new focus of 
identity, Moscow may provoke the very kind of nationalism that it hopes to 
avoid. In that case, the Internet will have once again demonstrated its 
ability to upend traditional political arrangements. 

*******

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