April 11, 2000    
This Date's Issues: 4239 • 4240 • 4241

Johnson's Russia List
#4240
11 April 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: Fewer Russians Want Children as Baby Mortality Rate Grows. 
2. The Guardian (UK): Ian Traynor and Ewen MacAskill, Putin visit to London claimed as No 10 coup. Protests as Downing St calls for 'engagement, not isolation'
3. Laura Belin: program on electoral fraud.
4. Moscow Times: Catherine Belton, Foreign Investment Will Remain Low, Executives Say.
5. Bloomberg: US Treasury's Summers on Russia's Economic Future.
6. Bloomberg: Putin Annuls Exporters' Special Exemptions From Currency Laws.
7. AP: Russia Considering Start II Treaty.
8. Segodnya: Oleg ODNOKOLENKO and Andrei SMIRNOV, GREETINGS TO ARMS.
The Kremlin Stole the National Idea from Generals. 
9. St. Petersburg Times: Yevgenia Borisova, Land Ownership Remains Russian Privatization's Final Frontier.
10. Boston Globe: David Filipov, At theme eatery, Soviet fare.] 

*******

#1
Fewer Russians Want Children as Baby Mortality Rate Grows. 

MOSCOW, April 11 (Itar-Tass) -- The number of families planning to have 
children is decreasing. The number of new-born babies over the past ten years 
decreased by more than six million as compared to the preceding decade. More, 
every fifth married couple is infertile. 

This information was made public at a sessign of the college of the Russian 
Health Ministry on Tuesday. The session was attended by representatives of 
the Labour Ministry and the Ministry of Education. 

Medics are worried by the worsening of the demographic situation, 
particularly since the number of normal birth amounts to less than 30 percent 
of their total number, and to less than 20 percent in some constituent parts 
of the Russian Federation. The mortality rate of mothers in Russia is more 
than 2.5 times higher than Europe's average: 44 in each 100,000 mothers die 
in child birth. 

Deputy Health Minister Olga Sharapova said in her report that the situation 
is somewhat better with infantile mortality rate, which has been decreasing 
over the past few years, although it is still quite high: sixteen in each 
1,000 new-born babies die mainly of diseases which occur during the course of 
pregnancy or in the first week after birth. 

Abortion is the most frequently encountered cause of the worsening of health 
condition in women. In Russia seven out of every ten pregnancies end in 
abortion which can result in infertility or chronic diseases. Damage to 
health is also done by the increasing incidence of oncological diseases, 
particularly the cancer of the mammarY glands. 

According to Olga Sharapova, the working cknditions are the most important 
health factor. In Russia, 1.5 million women work in unfavourable working 
conditions and occupational diseases are diagnosed in more than 2,000 womEn 
every year. 

Specialists of the Health Ministry, the Labour Ministry and a Ministry of 
Education of the Russian Federation have worked out a joint concept of 
protection of human reproduction health for the period from the year 2000 to 
2004. The concept, which is an independent interdepartmental document, 
contains specific provisions for the improvement of the legislative 
framework, medical assistance and information support of reproductive health. 

******

#2
The Guardian (UK)
11 April 2000
[for personal use only]
Putin visit to London claimed as No 10 coup 
Protests as Downing St calls for 'engagement, not isolation'
Ian Traynor in Moscow and Ewen MacAskill

The president-elect of Russia, Vladimir Putin, is to arrive in London on 
Sunday for talks with the prime minister and to be received at Buckingham 
Palace, in his first foray to the West since succeeding Boris Yeltsin on New 
Year's Eve. 

Downing Street billed it as a diplomatic coup that Mr Putin should make 
Britain his first port of call. Tony Blair and the foreign secretary, Robin 
Cook, have been working hard to establish a rapport with Mr Putin, a former 
KGB career officer. 

But the visit will be controversial. The Council of Europe, of which Britain 
is a member, has begun a process of suspending Russia because of its 
involvement in Chechnya. 

The Liberal Democrat foreign affairs spokesman, Menzies Campbell, who sits on 
a joint cabinet committee with Mr Blair, said there should be no question of 
a visit until Mr Putin's words about respect for human rights were matched by 
deeds in Chechnya. 

Downing Street said the two leaders will discuss Chechnya as well as the 
Russian economy, the Balkans, crime and drugs. Mr Blair's spokesman said the 
visit would cement a "new strategic relationship" between the two countries . 

The 24-hour visit - arriving in London on Sunday evening and leaving the 
following evening - followed an invitation from Mr Blair when he met Mr Putin 
in St Petersburg last month, a fortnight before Mr Putin's sweeping victory 
in presidential elections. 

The St Petersburg trip left the prime minister open to charges that he was 
taking sides in Russian politics and also strongly suggested that Mr Putin's 
brutal prosecution of the war in Chechnya would be no bar to developing 
closer relations with the West. 

That view was further confirmed last week when European Union envoys met Mr 
Putin in Moscow and stated afterwards that their "basic message was that we 
don't want to make of this issue [Chechnya] a global confrontation with 
Russia. We want a strategic partnership with Russia". 

A Downing Street source said yesterday: "It is important to send a strong 
signal to Russia about our concerns over Chechnya but the prime minister 
thinks the best way to get a response is through engagement, not isolation." 

After a year of estrangement between Russia and the West because of Chechnya, 
the Kosovo war and Nato expansion into eastern Europe, the British are 
spearheading a rapprochement. In addition to the Putin visit, Russian 
officials said leading Blair advisers from Downing Street's policy unit are 
soon to visit Moscow as well as a Treasury team. 

Apart from meeting Mr Blair and having talks with Mr Cook, Mr Putin is to be 
received by the Queen at Buckingham Palace and is also to have a dinner in 
the City with leading British industrial figures. The signs are that Mr Putin 
is inaugurating a drive to attract foreign investment, though he has yet to 
name a government or unveil any coherent economic policies. 

In coming to London before he is even sworn in as president, Mr Putin is 
ignoring constitutional niceties. Until after May 7, his inauguration day, Mr 
Putin is simultaneously Russia's president-elect and prime minister. The 
Russian constitution prescribes that either the president or the prime 
minister have to be in the country if the other is absent. 

*******

#3
Date: Mon, 10 Apr 2000
From: Laura Belin <laurabelin@excite.com>
Subject: program on electoral fraud

JRL readers who are interested in the subject of electoral fraud might be
interested in a program broadcast on RFE/RL's Russian Service last Saturday
(April 8). It's an interview with Aleksandr Salii, the Communist Party's
main expert on electoral fraud, and Viktor Sheinis, the former Yabloko Duma
deputy who was one of the main authors of Russia's electoral laws.

One thing I learned from Sheinis is that the official number of registered
voters for the presidential election was more than 109 million, which is
roughly 1 million more than the official number of registered voters for the
State Duma election, which took place just three months earlier. As JRL
readers know, Russia's population is not experiencing rapid growth. Sheinis
expressed concern that the higher number of registered voters could make
certain "maneuvers" with the election results easier. Although he said he
did not suspect that the Central Electoral Commission itself was conducting
fraud, he said the commission could be receiving false results from
regional-level commissions. 

A transcript of the program (in Russian) can be found at:
http://www.svoboda.org/archive/elections2000/0400/ll.040800-2.shtml

******

#4
Moscow Times
April 11, 2000 
Foreign Investment Will Remain Low, Executives Say 
By Catherine Belton
Staff Writer

A senior executive at the world's fourth-largest investment bank said Monday 
he expected foreign direct investment in the Russian economy to remain at its 
current miserable levels for the short to medium term. 

"Investors have seen too much arbitrariness in the way Russian laws are 
applied. There are too many serious shortcomings in the transparency of 
regulations," said Augusto Lopez-Claros, executive director at Lehman 
Brothers investment bank. 

Russia could receive the same FDI levels as countries like Hungary and 
Estonia - where foreign investment has reached levels as high as 10 percent 
of Gross Domestic Product - only if it improved the investment climate to the 
same standards, said Lopez-Claros, who was a senior representative of the 
International Monetary Fund's delegation in Moscow from 1992 to 1995. 

In 1999, Russia attracted just $4.26 billion in foreign direct investment, up 
26 percent from the previous period. The Economics Ministry is hoping for a 
further 17.4 percent rise to $5 billion for 2000, though even that level 
would be short of the 1996 foreign direct investment figures. 

"[Given an improved investment climate] Russia could attract $20 billion in 
foreign investments per year," Lopez-Claros told a conference at the High 
School of Economics in Moscow. 

"Russia is not only a large country, but is also at the center of a market 
that serves 300 million people," he said. "But foreign investment is going to 
remain low for the next two to three years - that is unless the new 
government really does take drastic measures to reform." 

This means economic growth would be limited to around 2 to 3 percent per 
year, instead of a possible 7 to 10 percent, he said. 

Lopez-Claros said Russia had become a standing joke in investment circles 
during the past two years because of the political instability caused by the 
rapid turnover of five prime ministers in just 18 months. 

Even though Russia now faces a unique window of opportunity thanks to both 
the fresh legitimacy gained by President-elect Vladimir Putin at the polls 
and benign external market factors such as high commodity prices, Russia has 
much hard work ahead to bring its investment climate up to scratch. 

He said the government would have to maintain a stable exchange rate and keep 
prices stable for a more sustained period to overcome investor wariness. It 
also has to open itself up to public scrutiny and create a perception that 
the rule of law has become entrenched. 

Other conference participants Monday were similarly pessimistic. 

Ilkka Salonen, president of the management board at International Moscow 
Bank, said after the conference that he had little hope that Russia would 
soon enforce greater transparency. 

He said that corruption in the civil service was too entrenched, meaning that 
the only way to get ahead in Russia was to act on insider information. 

International Moscow Bank has had to make use of loopholes in legislation to 
break through the bureaucracy, he said. 

"If there are loopholes in the law, then we find them. But it's our principle 
never to break the law," he told the High School students at the conference 
during a speech chiefly devoted to ways of maintaining an open and honest 
relationship with business partners. 

There was at least one student who was taking his words to heart. 

"I would like to become a business consultant. I would advise clients on how 
to make use of loopholes in laws and avoid taxes by channeling money through 
offshores and the ZATO [former closed cities that have considerable tax 
breaks]," said Irina Matveeva, 26. 

******

#5
US Treasury's Summers on Russia's Economic Future: Comment

Washington, April 10 (Bloomberg)
-- The following are comments by U.S. Treasury Secretary Lawrence 
Summers on Russia's economic opportunities and prospects for new 
International Monetary Fund loans following the recent election of Vladimir 
Putin as president. Summers spoke at the Council on Competitiveness in 
Washington. 

``Russia now has the opportunity to define its future. There's now a 
political environment in place that allows for it to make a definitive 
improvement.'' 

``With a global economic environment that is at this point favorable to 
Russia, and with a clear commitment to the rule of law, with determined 
efforts to resist corruption and with the very substantial opportunity that 
is available for catch-up that is created with the mismanagement of the past, 
the next several years could be quite bright ones for Russia, at least in 
terms of improvement economically.'' 

The U.S. needs to be ``prepared to be constructive in any way we can, as 
Russia seeks to define its future.'' 

On the possibility of renewed IMF lending: 

``The key step now is for the newly elected Russian government to formulate 
and present the kind of economic program it wants to go forward with. It has 
placed great stress on the development of its own economic program, and 
that's something we're going to look forward to.'' 

*******

#6
Putin Annuls Exporters' Special Exemptions From Currency Laws

Moscow, April 11 (Bloomberg)
-- Russian President-Elect Vladimir Putin eliminated dozens of 
exemptions granted since 1991 to government restrictions on exporting foreign 
currency, promising to limit capital flight and make the laws more fair. 

The 40 exemptions granted by former President Boris Yeltsin to companies such 
as RAO Norilsk Nickel, the main exporter of platinum and palladium, as well 
as some oil and gas companies and government agencies. 

Exporters must sell up to 75 percent of foreign currency earnings on local 
exchanges, a requirement introduced in 1998 after Russia defaulted on its 
Treasury debt and the ruble began its 78 percent slide against the dollar. 
Putin left in place an exemption that allows companies with foreign currency 
debts to sell only 50 percent of foreign currency earnings. 

``It is clearing up loopholes in capital controls,'' said Roland Nash, chief 
economist at Renaissance Capital in Moscow. ``It consolidates the capital 
controls that actually exist, it makes them less complicated.'' 

Last year, central bank officials said they estimated that capital flight 
exceeded $10 billion per year. Since 1998, the bank has introduced a number 
of foreign currency controls - over the objections of the International 
Monetary Fund - intended to limit the exodus of cash. In the wake of the 
collapse of stock, bond and currency markets as well as numerous bank 
failures, in 1998, the restrictions had little impact, according to some 
analysts. 

Central Bank Appeal 

The central bank called for more controls last year, faced with rising 
capital outflows and forced to spend its foreign currency reserves to service 
Russia's foreign debt. The government refused to require exports to sell 100 
percent of foreign currency earnings, saying it would just encourage more 
cheating. Many companies, meanwhile, found ways around the existing 
restrictions, and that's not likely to change, even as Putin tries to close 
loopholes. 

``This is more symbolic than anything else,'' said Nina Pautola, economist at 
the Russian European Centre for Economic Policy. 

Norilsk and OAO Lukoil Holding, Russia's biggest oil producer, said they 
weren't aware of having any special exemptions from the foreign currency 
restrictions. If they do, they haven't used them for years, they said. 

In the last quarter of last year and the first quarter of 2000, capital 
flight already has begun to slow as stock and bond markets have been rising. 
Most of the money coming from Cyprus and other offshore tax havens for 
investment in Russian securities is from Russian investors, analysts said. 

Investment Climate 

Now, Putin must continue to improve the investment climate before he can 
eliminate existing currency controls. Tightening restriction risks scaring 
away investors just as they return. 

``It will depend on how quickly they can build an environment where the 
capital doesn't leave the country as quickly as it has in recent years,'' 
Nash said. ``It makes sense to get rid of these loopholes, but it would be 
better if they decreased the capital controls per se.'' 

The central bank is pushing for more currency controls to be able to keep the 
ruble stable and accumulate more foreign currency reserves. The government 
said it will have to borrow from the central bank this year to help meet 
foreign debt payments, in the absence of foreign financing. 

The decree isn't likely to result in a stronger currency, traders said. 

``I don't think these new rules will have a big effect on the ruble,'' said 
Sergei Babayan, head of fixed income at Troika Dialog brokerage in Moscow. 

The ruble rose to 28.59 per U.S. dollar in Moscow trading from 28.63 rubles 
per dollar yesterday. 

The capital outflows are about equal Russia's total foreign debt payments 
this year. 

*******

#7
Russia Considering Start II Treaty
April 11, 2000
By VLADIMIR ISACHENKOV

MOSCOW (AP) - At the urging of President Vladimir Putin, the lower house of 
Russia's parliament decided today to debate the long-delayed ratification of 
the START II nuclear arms reduction treaty.

The Duma's agenda council set the debate for Friday, and lawmakers said 
chances were good for quick approval of the treaty, which would halve each 
side's U.S. and Russian nuclear arsenals to about 3,000-3,5000 warheads. The 
U.S. Senate ratified the treaty in 1996.

The treaty's prospects have jumped since a new Russian parliament was elected 
in December. Communists and nationalists who had blocked ratification lost 
their dominance in the elections.

Putin has urged lawmakers to ratify the treaty, saying that reducing nuclear 
arsenals does not mean becoming weaker. Government officials said that aging 
missiles must be soon dismantled anyway, and the treaty would allow Russia to 
preserve a nuclear balance while freeing substantial sums of money now spent 
on maintaining the weapons.

Foreign Minister Igor Ivanov is to travel to the United States at the end of 
April to discuss arms control issues, and the government hopes to have the 
treaty ratified before his trip.

Ultranationalist Vladimir Zhirinovsky opposes the treaty, but predicted it 
would be quickly endorsed by lawmakers. ``Many will vote on command without 
thinking of their historical responsibility,'' he said.

Ratification could help clear the way for a compromise with the United States 
over the Anti-Ballistic Missile Treaty. Washington wants to amend the treaty 
to allow for the construction of a limited missile-defense system to protect 
against nuclear attacks by so-called ``rogue states.''

Russia has strongly objected, saying that such a defense could unravel all 
nuclear arms control treaties with Washington.

******

#8
Segodnya
April 11, 2000
[translation from RIA Novosti for personal use only]
GREETINGS TO ARMS
The Kremlin Stole the National Idea from Generals 
Oleg ODNOKOLENKO, Andrei SMIRNOV

If you want to know what goes on in the Kremlin, watch 
Vladimir Zhirinovsky. Yesterday morning the vice-speaker of the 
State Duma assured the public of the benefits of ratifying 
START-2. "We will benefit by getting rid of rusty missiles," he 
said. By afternoon, his position was diametrically opposite. He 
said he would vote against ratifying the treaty on Friday. 
"This is the firm stand of our faction," he said. "The LDPR has 
always stood up for the interests of the army." The Liberals 
assumed this "firm stand" immediately after Vladimir Putin 
voiced his instructions at yesterday's enlarged session of the 
Security Council in the Kremlin. According to him, problems 
related to Russia's security and the fulfilment of its 
international obligations should be addressed "proactively." 
The head of state believes that "we have the possibilities for 
that." In other words, Moscow plans to talk with the world 
about Chechnya and disarmament problems from positions of 
strength. 
Theoretically, the executive power and the chief executive 
should have explained to the deputies that they must no longer 
postpone the ratification of START-2, which has been gathering 
dust in the Duma for six years now. The national missile shield 
is growing old and obsolete and will have to be reduced anyway, 
with the ratified treaty or without it. But the Duma leaders 
did not hear any "defeatist" arguments. 
Vladimir Putin hinted in his opening address to the 
Security Council session that the national security concept and 
the development programme of the armed forces would now be the 
guiding documents of Russia's foreign policy. It appears that 
this merry note will put a full stop to the protracted search 
for the national idea. From now on, the nuclear missile might 
will become the national wealth and the guiding light, and the 
directives of the General Staff, the universal regulations for 
all state institutions. 
On the other hand, Putin's words about the "proactive 
stand" and the "possibilities" of the defence complex should 
not be regarded as the instructions not to ratify START-2. In 
fact, the ministers of the power block assured the parliament 
leaders at the Security Council session that they should ratify 
the long-suffering treaty. The faction leaders were told that 
the 1997 New York agreements on non-strategic ABM systems suit 
Russia and that the USA would be convinced not to bury the 1972 
ABM Treaty.
However, Vladimir Zhirinovsky and subsequently Gennady 
Zyuganov stated yesterday that their factions would vote 
against ratifying START-2 on Friday. There can be only one 
explanation of this disloyal attitude to the new Kremlin boss. 
Vladimir Putin needs an instrument for pressurising the West on 
the eve of his foreign policy debut as the new head of the 
Russian state (especially after the recent scandal over 
Chechnya at the PACE session in Strasbourg). 
To be able to do this, he needs to keep START-2 in the air 
for some time yet, at least until the end of this week, when 
Putin, according to information leaked from the Kremlin, will 
visit Britain. So, it was not surprising that Security Council 
Secretary Sergei Ivanov told journalists after three hours of 
brainwashing the deputies in the Kremlin that he personally was 
not convinced the State Duma would ratify the treaty this time. 

******

#9
St. Petersburg Times
April 11, 2000
Land Ownership Remains Russian Privatization's Final Frontier
By Yevgenia Borisova

THE issue of whether or not Russia should allow the sale of agricultural land 
has been the focus of numerous political battles throughout the post-Soviet 
period. Sales of urban land are a reality in several cities, including St. 
Petersburg and the Mos cow region, although not in Moscow itself.

However, every time market-oriented politicians have pushed for agricultural 
land privatization - arguing that reviving the nation's impoverished 
agricultural complex is impossible without proper land turnover - the 
Communist Party has successfully mobilized popular fears that land 
privatization would be as inequitable as other Russian privatizations.

But since last year's Duma elections left the Communists and their agrarian 
allies with a shade less than a majority in the lower house of parliament, 
the once-impossible dream of a law to allow land sales has inched closer to 
reality. A further nudge in that direction came during the recent 
presidential campaign, when Putin raised - in very circumspect fashion - the 
possibility of privatization.

"If the land were to get a real khozyain [master], there would be order and 
wealth [in Russia]," he told a meeting of the Agrarian Party central 
committee March 14. Putin declined to define what he meant by the word 
khozyain - whether a rightful owner able to sell or mortgage his or her land, 
a lessee, or simply an effective manager.

Now, with the need for election-campaign caution gone, Putin could push 
through the Duma a law to allow land sales if he were so to choose. Whether 
or not he will so choose is another matter - the one certainty is that the 
nation's agricultural sector is a giant mess in desperate need of some sort 
of solution.

Barren Ground

Russia's agricultural sector is indeed on its knees: Billions of rubles of 
state aid each year disappear into the black hole of the agricultural credits 
program; some 80 percent of farms are said to be insolvent; agricultural 
producers' total debts have reached 180 billion rubles ($6.3 billion) - or 
some 28.9 percent of the agricultural sector's total output in 1999, 
according to the Russian Statistics Agency - of which 120 billion rubles' 
worth is overdue. Russia, a food exporter before 1917, has applied for food 
aid from the United States for the second year running.

While some experts see agricultural land sales as a way to boost the rural 
economy, many of those who work on the land are horrified. Many peasants 
believe that if free sales of land were to become available, their land would 
be bought up on the cheap by New Russians or foreigners, turning them back 
into landless serfs. Eager to maintain their hold on the peasant vote, the 
Communist and Agrarian parties have worked hard to stoke such fears.

So sensitive is the issue that Putin postponed hearings on the Land Code that 
had been scheduled for the State Duma in mid-March until after the 
presidential election. A week after the polls closed, no date had been set 
for the Duma to return to consideration of the code , which parliamentarians 
have been debating off-and-on for four years.

Duma Deputy Mikhail Lapshin, who heads the Agrarian Party, demanded right 
after the presidential polls that Putin reveal his position regarding sales 
of agricultural land.

"This is most important: Almost 40 million of Russia's rural residents want 
to get a clear answer from the new president about his attitude to the land 
question," Lapshin told Interfax.

Self Starters

While the politicians do their best to avoid even discussing the matter, an 
infant land market already exists.

A de facto market for agricultural land exists, though it is miserably small. 
In 1998, some 126.5 million hectares of agricultural land - or 28 percent of 
the total 455 million hectares - had been privatized.

Of this land, a mere 40,945 hectares changed hands between organizations and 
individuals, and municipal governments sold a further 3,450 hectares to firms 
and farmers. Statistics for 1999 were not available as of Monday.

The state leases most of its agricultural land - 319.5 million hectares of 
the 328.5 million hectares in state hands are held under life-term, long-term 
or short-term leases. Privatized land includes 28.2 million hectares 
belonging to individuals and 98.2 million hectares owned by organizations.

However, of the 126.5 million hectares of privatized land, some 117 million 
hectares belongs to 11.9 million individuals who are former members of 
privatized state and collective farms. Most of these people are in fact only 
theoretical owners of their land, because their shares have never been 
specifically separated out. They are still held in common by former 
collective or state-owned farms that became joint-stock companies during the 
early-1990s privatization process, but mostly retained the same Soviet 
mentality, leadership, and operating methods as before.

First Time Unlucky

Those land holdings represent a first, failed attempt at privatization.

The program to grant peasants shares in the joint-stock companies were from 
collective and state farms was supposed to have been accompanied by the 
creation of financial institutions that would have provided agricultural 
loans to finance farmers who wanted to break away from the collective farms, 
Sergei Sai, the head of the State Land Committee, said in an interview with 
The St. Petersburg Times.

"Unfortunately, only the first part of the project was fulfilled, the formal 
one," Sai said. "Peasants received their mythical rights to land, but no 
financial institutions were set up."

Land banks - a system well-developed in Russia before the 1917 revolution - 
now exist only in the form of rough paperwork or lofty conceptions, officials 
say. The draft for a federal law on agricultural land mortgages is being 
prepared. No date has been scheduled for a first Duma hearing.

"As the land market is not developed in our country, there is no transfer of 
land from ineffective users to effective users - only about 20 percent of 
Russian farms have adapted to the new market conditions," said Professor 
Vasily Uzun, chief consultant of the All-Russia Agrarian Institute, in a 
recent interview.

Land-share holders must have their land parcels separated out and be given a 
choice to choose what to do with their land plots - rent them to effective 
agricultural producers, become farmers themselves, or sell out, Uzun said.

Uzun said that there is no reason to fear that agricultural land will be sold 
for peanuts by peasants.

"Those politicians who think that people are stupid and do not know how to 
deal with their land are not right. Why do they think their electorate are 
idiots?"

Who Will Buy?

Even if the Land Code allows sales of agricultural land, not many people will 
purchase it because rent costs and land tax are very low, Uzun said. In some 
regions, rent is only a few rubles per hectare a year, while average land tax 
varies from 3 rubles to 22 rubles (11 cents to 77 cents) per hectare of land 
per year.

Thus, an owner of a 200-hectare land plot in Novgorod has to shell out only 
2,800 rubles ($100) a year in rent and land-tax payments. In Saratov, a 
similar plot would cost the owner about 2,400 rubles a year.

However, in Saratov - one of the few regions with full legal support for 
agricultural land sales - buyers at auctions held in 1999 paid 300 rubles per 
hectare, which comes to 60,000 rubles ($2,200) for a 200-hectare lot.

Saratov started to sell land in 1998, but sold only 43 agricultural lots in 
1998 and 25 in 1999, according to the State Land Committee. The lots were 
priced at 780 rubles per hectare and 300 rubles per hectare, respectively.

Contrary to populist fears, neither rich Russians nor foreigners bought up 
the land on offer in Saratov, said Oleg Zakovryagin, deputy head of the 
Saratov Land Committee, in a telephone interview from his Saratov office.

"I would like some rich people, including foreigners, to buy our land and to 
invest in it. This is the biggest problem, that those who know how to till 
land have no money to invest into it and the land is getting worse and 
worse," he said.

About 30 million hectares of agricultural land are left essentially abandoned 
and are overgrown with weeds, according to Vladimir Plotnikov, an Agrarian 
Party deputy who heads the Duma's agriculture committee.

The Tangled Web

In its report for 1998, the State Land Committee calls the existing land 
legislation in Russia "a set of documents not logically connected with one 
another that are isolated from other branches of legislation."

In the absence of a coherent Land Code, a "shadow" market for land has 
developed, according to the committee's report.

The shadow market began to develop in the early 90s after a presidential 
decree made it possible to buy and sell garden and dacha land plots.

This decree helped boost the explosion of dacha plot sales - and the soaring 
output from those plots that has helped keep Russia fed even as official 
agricultural output declined. In the absence of any laws setting out standard 
assessment procedures, dacha plots have been registered with local 
registration chambers at minimal values, keeping taxes low and allowing the 
dacha section of Russian agriculture to bloom to such an astonishing extent 
that dacha plots supply more than 90 percent of the nation's potatoes and 
more than 75 percent of its fresh vegetables, according to the Russian 
Statistics Agency.

Thus, a sotka - a 100-square-meter block of land - in the prestigious areas 
of the Moscow region would likely cost from $500 to $1,000. However, as 
officially registered with the State Land Committee, Moscow region plots of 
that size went for between 3,600 rubles ($180) and 4,100 rubles ($205) last 
year.

Mighty Midgets

Meanwhile, dacha owners produce a truly incredible amount from their tiny 
plots. For many of the millions of Russians whose salaries and/or pensions 
have either evaporated or have shrunk to being almost worthless, their garden 
plots are what allow them to both feed themselves and generate enough income 
to survive, or even occasionally prosper.

Most of these dacha and garden land plots are only between 600 square meters 
and 1,000 square meters. In a reverse of the Western trend toward giant 
agribusinesses, these relatively tiny plots are phenomenally productive.

Uzun said that, according to investigations conducted at his institute, 64 
percent of all produce grown in Russia is harvested from these private land 
plots. A major reason for this is that almost all of this produce goes 
untaxed.

But this phenomenon is not without its downside, according to economist 
Alexei Sheftel.

Writing in Nezavisimaya Gazeta, Sheftel said that this large volume of 
effectively non-commodity production hampers the effectiveness of agrarian 
producers. Dacha farmers do not pay taxes and care little for the 
introduction of new technologies, but they compete effectively against larger 
farms.

"This substantially reduces the monetary demand for agricultural production," 
which in turn helps bankrupt farms that therefore cannot generate sufficient 
revenues to meet production costs, Sheftel wrote.

However, others see the dacha owners as a positive example of what could be 
achieved.

While the private plots do benefit from the absence of taxation, their 
productivity shows the huge potential that private farms could unlock, Uzun 
said.

Mikhail Yurevich, board director at the Chelyabinsk-based Makfa holding - one 
of the biggest pasta producers in Russia - is of a similar mind.

"I know many heads of collective farms. Many of them are very decent people 
and have a strong sense of property," Yurevich said in an interview in 
Chelyabinsk late last year.

"If they buy some machinery, they treat it as if it is their own. They will 
even keep it in their own garden so that it stays in one piece and is always 
ready to work. They treat the land the same way.

"I am sure that the Land Code would dramatically change the situation in our 
agriculture - those farms where people steal would quickly become bankrupt 
and the neighbors would buy their land.

"I believe that such farms will quickly get rid of their own drunks and 
develop labor discipline and ways to implement agricultural technologies."

But Which Land Code?

The State Duma's version of the Land Code has been debated in parliament on 
several occasions over the past four years. It has twice been passed by both 
the Duma and the Federation Council only to be vetoed by then President Boris 
Yeltsin because it did not allow for the sale of agricultural land.

In its current form, the bill states that those who wish to become farmers 
may receive land title only after leasing it first for a 10-year period. It 
also limits the size of private plots according to the average plot for the 
regional norm. But to receive a land lease in the first place, would-be 
farmers must be able to provide evidence of agricultural experience or 
education and then pass a qualification exam.

The 200-page draft law is full of limitations and conditions, making it a 
bureaucrat's dream and a liberal's nightmare. However, the existing bill may 
be replaced by a new version of the Land Code that has been proposed this 
year.

A group of deputies from the Union of Right Forces, or SPS, has prepared an 
alternative Land Code. The Duma faction aims to enable and encourage sales of 
agricultural land. The authors' main restriction is that the plots must go on 
being used for agricultural purposes.

"If the bill being pushed by the Communists and the Agrarians is passed, that 
would mean that agriculture in our country will not develop over the next 10 
to 20 years," Vladimir Golovlyov, SPS faction member and one of the authors 
of the new draft, said in a recent telephone interview.

But while SPS is insisting that its bill is the best solution, in the short 
term then bill can only advance if the current one is rejected, said Sai, 
head of the State Land Committee. In a best-case scenario, the SPS code would 
take a year to get past the Duma, he added.

That being the case, Sai recommends dealing with the Duma's existing Land 
Code. As that version of the code has already cleared two readings, it can 
now only be amended by the president.

"I think the most reasonable is if the president, who still has the right to 
insert amendments, inserts the best ideas developed in the SPS version into 
the Duma's code. Then, a [workable] Land Code could be passed soon," Sai said.

"The code may have some limitations [on sales of agricultural land] that 
would take into consideration the interests of the public and the state, but 
it should not block land turnover," he added.

Instead, the controversial statute to regulate turnover of agricultural lands 
could be removed and covered by a separate law, on the peculiarities of 
turnover of agricultural land, Sai suggested.

One Step Beyond

"The country has no clear legal base for dealing with land, it has no 
well-thought-out land policy strategy," Vla di mir Shcherbak, deputy prime 
minister in charge of the agricultural sector, said in February.

Even if a Land Code were passed, Russia would be a long way short of creating 
such a strategy, officials said.

According to the State Land Committee, at least 20 laws must be passed in 
addition to the Land Code before agricultural land sales can be placed on a 
sound legal footing. Among the laws required are ones to strictly 
differentiate federal, regional and municipal lands, to regulate land deals, 
to regulate the land register and land assessment, on the prevention of 
speculation with land plots and on mortgaging land, according to the State 
Land Committee. Draft versions of most of these laws have already been 
prepared, but they are being held up by the absence of a new Land Code.

Meanwhile, the head of Samara's Land Resources Committee, Alexander Vlasov, 
said the first law that needs to be changed once the Land Code is passed is 
the federal Law on Mortgages, because Article 63 of that law specifically 
bans the mortgaging of "federal and municipal land, as well as agricultural 
land owned by agricultural organizations, farms and garden plots."

Unseeded Investment

The capacity to mortgage agricultural land is vital because of the drastic 
need for investment in the agricultural sector. That need can only be 
answered if farmers are able to use their land as collateral to raise credits 
- and that requires mortgages. Without mortgages, most banks will go on 
ignoring the agricultural sector.

And the only banks that will take an interest will be those using state funds 
targeted for the agricultural sector - funds that have invariably been 
misused over the past decade.

The year 2000 is no different from its predecessors in terms of panic over 
the lack of funds to finance agriculture. The only difference this year is 
that low-interest loans will be provided not to regional administrations but 
to producers, and that there are no plans to use SBS-Agro.

In 1998, SBS-Agro, the main bank used to funnel money to farms, embezzled 
more than 300 million rubles of state cash, the Moscow Tax Inspectorate said 
recently.

As of two weeks ago, some 1.16 billion rubles of the 12 billion rubles 
budgeted for 2000 had been provided to farmers, even though a governmental 
decree urged that 50 percent of this cash be disbursed before the end of 
April in order to assist planting.

The Federation Council's agrarian policies committee noted last week that the 
situation with fuel and machinery in rural areas was critical and that this 
year's sowing campaign may be disrupted, Interfax reported. Low-income loans 
were being delayed indefinitely by a lack of the appropriate application 
forms, Interfax reported last Sunday.

"Not a single article of the government's decree, on urgent measures for 
carrying out sowing and harvesting for 2000, has been fulfilled," the 
committee said in a statement quoted by Interfax.

This "battle for the harvest" happens every year - and it will go on doing so 
as long as agriculture remains a state concern, critics say.

"We really need land legislation that would allow land to be sold and used as 
collateral for mortgages," said Viktor Stepovoi, head of the Put Lenina farm 
in the Chelyabinsk region.

"Then we will not be begging with outstretched hands for seed and fuel from 
the administrations. We will give the land to the banks and take loans. It 
may happen that we will not be able to repay the loan - well, then we will 
not get back our land.

"But, I am sure we will become masters of our land and will hire only those 
who really work," Stepovoi said.

Samara's Vlasov had a similar view.

Private land is the only workable solution, but it will only happen when 
mortgages can happen - and that means not just the legal right to mortgage 
land but also the creation and financing of banks that will grant loans in 
return for land mortgages, Vlasov said.

"Straightening out mortgage laws and the creation of banks to offer land 
mortgages is crucial. If the government does not resolve this issue at the 
federal level, no single region will be able to revive agriculture.

"Until these issues are resolved, no single sane investor will put money into 
land here," Vlasov said.

Social Problems

However, many agricultural experts question whether the drive to privatize 
will bring only rewards. Many warn that the social problems that have dogged 
urban privatization will be brought on by the development of a private 
agricultural sector. Who will take care of those left without work, and how 
will infrastructure issues be resolved in rural areas?

In the past, everything was clear: Drunkards were forced to work and state or 
collective farms took care of roads, schools and hospitals.

"What will people do if we sack them from our farm?" Pyotr Teikhrib, head of 
the Komsomolskoye farm in the Orenburg region, asked rhetorically. He said 
that desperate people who have no work and nowhere to go will just steal from 
the farms that fired them. His farm has already suffered thefts at the hands 
of people who have been fired by neighboring farms - or even from fired Kazak 
agricultural laborers - Teikhrib said.

"Also, we have a farm nearby - they lease our machinery and our lands. But 
their children go to our school, which we fund and repair, to our hospital, 
and their cars drive along the roads that we fix."

Even as he admitted that such problems were likely to raise their ugly heads, 
Zakovryagin of Saratov's Land Committee refused to back down on his calls for 
the enactment of a Land Code that provides for agricultural privatization. 
Such a code simply needs to be complemented by regional laws created to set 
local limitations on sales and to attack social problems.

"We have very different regions in Russia, and you can't just extend our law 
to Sakha to Russia's southern regions," Zakovryagin said.

Sai at the State Land Committee agreed.

"We must understand that our country is huge, and that people's mentalities, 
habits and climate conditions differ widely. Tuva and Kuban [Krasnodar 
region] cannot be compared.

"To sell land, say, in Dagestan, is simply dangerous now. But it is different 
for the lands of Ivanovo or Kostroma, where they are deserted because no one 
is tilling them," Sai said.

******

#10
Boston Globe
11 April 2000
[for personal use only]
At theme eatery, Soviet fare 
By David Filipov, Globe Staff

MOSCOW - The sprawling, grim apartment block across the river from the 
Kremlin, once home to Communist Party elites, seems like an odd locale for a 
Soviet nostalgia trip.

During Josef Stalin's purges of the 1930s, the building, known as the House 
on the Embankment, was an epicenter of foreboding, the starting point of many 
one-way journeys to Siberia, a grim monument to a repressive regime that 
devoured its most ardent believers.

But a new theme restaurant that serves Soviet soul food in the basement of 
these infamous premises has taken a softer look at a time and place that 
Americans associate with shortages and terror. The new eatery is part of a 
broader trend in Russian society, if not to whitewash the abuses and 
inequities of the Soviet era, then at least to cull from Russia's recent past 
a sense of what was good, and amusing, about the old days.

The place is called Special Snack Bar No. 7, and to the Russian ear, the name 
alone is evocative of the exclusive eateries of the Soviet ruling class.

Dining out was not a privilege available to everyone in Communist times. But 
a walk down the stairs past Special Snack Bar No. 7's surly, slightly 
suspicious doorman in his gray, quasi-military uniform, leads to a scene that 
re-creates how Communist Party officials, Red Army generals, scientists, and 
writers favored by the regime might have enjoyed a meal back in the 1930s.

The decor is painstakingly created from such period objects as shaded green 
lamps, heavy wooden chairs, modernist re-creations of Soviet-era posters, and 
an old phonograph that cranks out popular Soviet songs. The smallest details 
- teacup holders, vodka shot glasses, silverware, the lace aprons worn by the 
silent waitresses over their short, gray skirts - recall the spirit of the 
era.

''These are objects from a time that has gone, but for which many people have 
a soft spot in their hearts,'' said manager Alexandra Zotova. ''We have tried 
to re-create that atmosphere.''

We would like to show you a picture, but photography on the premises, perhaps 
in a nod to Soviet society's preoccupation with secrecy and paranoia, is 
strictly prohibited.

The fare, too, is reminiscent of the old days. This is Soviet homestyle 
cooking, hearty, economically priced dishes with names that gently send up 
the propaganda of the Communist era. Modern Russian diners may snicker at 
entries titled ''Lenin's Testament'' (a thick vegetable soup), ''Beat the 
Bourgeois'' (a fried pork cutlet) or ''Red Poultry Farmer Woman,'' (an egg 
buried under a beet salad with mayonnaise), but the dishes are as 
quintessentially Russian as burger and fries are American.

''We named our meals to remind our younger clients how people lived back 
then,'' Zotova said. ''For many people, this is the food they grew up with.''

Zotova said the idea for Special Snack Bar No.7 came from a former club, for 
residents of the House on the Embankment only, that had a similarly clunky 
name: Special Cafeteria Distributor.

''It was the best food in town,'' said Emilia Nikolayevna, 62, a longtime 
resident of the House on the Embankment. Nikolayevna barely remembers the 
1930s, but her parents told her it was a time when the Party officials 
partied all night as they waited for secret police to knock on their doors. 
Some 600 residents of the House were victims of the purges.

''It was a strange time,'' she said.

Today, the complex is just another piece of prestigious real estate. Many of 
the old elites moved out long ago. Wealthy Russians, drawn by the spacious 
apartments, central location, and a Western-style supermarket on the street 
level, have moved in. A small museum tucked away in a courtyard is the only 
reminder of the complex's grim history.

The owners of Special Snack Bar No.7 steer clear of that theme. That this 
place even exists is a sign of how much Russia has changed. The Special 
Cafeteria Distributor was open into the 1990s, the lean, early days of 
post-Communist Russia when the special restaurants and stores for the 
privileged elite were still a sore point with ordinary Russians.

''It took time for people to see this era as a joke,'' Zotova said.

Time has allowed the bitterness to pass. At Josef's, a retro roadside cafe in 
Yelets, 300 miles south of Moscow, Stalin is again the heroic figure he was 
in the '30s, '40s, and '50s. The cafe is a treasure trove of Stalin 
memorabilia - plates, vases, and portraits bearing the dictator's mustachioed 
likeness, and one of the few Stalin busts still standing in Russia, all 
preserved with a reverence that the ghosts of the House on the Embankment 
might have trouble appreciating.

Perhaps in keeping with the old Bolshevik motto, ''Don't Blab,'' no one at 
the cafe wanted to talk to an American reporter.

Not all retro is so reverent. Many Russians like to reminisce about the old 
days, but that does not mean they actually want to go back to them. Andrei 
Bilzho, a well-known cartoonist and the owner of Petrovich, a popular Moscow 
club, says people remember the Soviet days first of all as the time when they 
were young.

Petrovich re-creates a later era, the 1960s and 1970s, and a different part 
of society: the communal apartment world of the Soviet ''middle class.'' The 
decor, which Bilzho describes as ''Soviet rococo,'' is also created from 
period objects: the exaggeratedly crooked water pipes, clunky television 
sets, and faded magazines that cluttered Soviet apartments. Menus are served 
in the lopsided folders where bureaucrats, engineers, and students kept their 
papers. 

''These are things from our youth,'' Bilzho said. ''They give us a warm 
feeling. People see the old radio from their grandma's house, or an old pack 
of the Soyuz-Apollo cigarettes, and they understand that there is something 
about a lot of the old things that, like them or not, they are what you are 
all about.''

The humor here is light satire of the kitschy propaganda of the day, irony of 
the sort that used to be common at Soviet kitchen tables, often the only 
place where people could speak their minds safely.

''Petrovich's dream of Paris, where he has never been,'' is the name of a 
mushroom julienne. ''No to Racism'' is an entry of pancakes and caviar. A 
salad bar is stuffed with traditional Soviet favorites like ''Herring in a 
Fur Coat,'' an incongruous concoction of fish, beets, and mayonnaise. 
Throughout the restaurant are pictures of Bilzho's famous cartoon character, 
Petrovich, a sort of post-Soviet Dilbert, a Russian Everyman coping with his 
mixed-up world.

Although Bilzho insists his restaurant's message is apolitical, there is 
meaning in the collection of Soviet-era junk he has assembled.

''This is an action against the introduction of American things,'' he said. 
''Many of the old things are gone and all replaced by plastic. We risk 
turning into this eternal McDonalds. I want to stop it.''

******


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