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Johnson's Russia List


April 27, 2000    
This Date's Issues:  4271  4272  

Johnson's Russia List
27 April 2000

[Note from David Johnson:
1. Reuters: Russian Producer Poll Shows Optimism on Growth.
3. Moscow Times: Catherine Belton, Putin's Adviser Extols Ayn Rand. 
(Andrei Illarionov)
4. Itar-Tass: Over 6,000 Russian Families Ready to Adopt Orphans.
5. Itar-Tass: Russian Security Council Chief to Hold Internet Conference.
6. APN: The Kremlin is disappointed in its enemies.
7. THE EXPATRIATE’S RUSSIA: the eXile at CSIS in Washington May 4. 
(DJ: A once-in-a-lifetime opportunity to meet Mark Ames and Matt Taibbi 
in the flesh. Not to be missed! Brass-knuckles will be checked at the 
8. May 2 Conference in Washington: Is a US - Russia Joint ABM Defense Possible?
9. Russia: Friend or Foe?: Internet chat with Brookings expert Clifford 
Gaddy April 28.
10. RFE/RL: Sophie Lambroschini, Government Seeks Solution To Prison Overpopulation.
11. Ekonomika i Zhizn: FIGURES WITHOUT COMMENTS...(DJ: Interesting!)
12. New book on “From Shock to therapy. The Political Economy of Postsocialist Transformation” by Grzegorz W. Kolodko.
13. Mikhail Bunchuk: A Russian-language resource about high-tech business and innovation in Russia.
14. Moscow Times: Yevgenia Albats, Literate, But Not Necessarily Well-Educated.
15. Vremya Novostei: Leonid Grigoryev, ASSESSING RUSSIAN ECONOMIC REFORMS.
16. US State Department: U.S. Response to Human Rights Commission Resolution on Chechnya.] 


Russian Producer Poll Shows Optimism on Growth

MOSCOW, Apr 26, 2000 -- (Reuters) A growing minority of Russian managers sees 
recent fast industrial growth slowing, though producers on the whole are 
still optimistic sales will rise, a business tendency survey for April showed 
on Wednesday.

"On the one hand, the growth rate of demand from customers able to pay in 
cash has increased while barter payments continue to decline," the Institute 
for the Economy in Transition said in a poll of managers of 1,037 Russian 
companies this month.

"On the other hand, output growth is distinctly slowing and stocks shortages 
are decreasing. The period of relatively fast industrial growth may be near 
the end.

"However, expectations of sales growth on the whole still prevail," the April 
research from the institute said.

The Russian economy has been growing strongly for most of this year, with 
March industrial output up 9.6 percent year-on-year versus 1.4 percent a year 
ago, although this had slowed from 13.7 percent in February.

The poll showed 13 percent of managers expected their companies to cut output 
in the next three months.

The last time such a high level was recorded was April 1999, and researchers 
said the trend could be connected to seasonal pessimism ahead of long May 

In March, only nine percent of 1,023 managers said production at their 
factories would decrease in three months.

The poll showed electricity and light industries would see absolute decreases 
in output.

In general, the growth rate in demand from clients who paid in cash in April 
was highest since the survey was launched in 1992.

Lack of working capital remained a major brake for further development, 
although this year only 62 percent of polled managers mentioned the factor, 
versus 66-70 percent last year.

But they mentioned the lack of raw materials and workers more often this year 
than in 1999.


RFE/RL NEWSLINE Vol. 4, No. 82, Part I, 26 April 2000

QUESTION. On a visit to Orel Oblast on 25 April, President-
elect Vladimir Putin called for the passage of a basic law
establishing the right to own land while the degree of
freedom to pursue this right is determined by each region
individually, Interfax reported. He added that at the local
level "residents and the leadership are more familiar with
the conditions of agricultural production." He noted that in
Orel Oblast, "an individual can be a landowner but the right
to dispose of the land is limited." Putin also praised Orel
for being "an example for reform--reform in the necessary
direction, carefully, cautiously, and in the direction of the
market." Last month, Putin had his presidential
representative to the State Duma, Aleksandr Kotenkov,
postpone discussion of the draft Land Code so that
legislators and the government could continue working on it.

diplomatic sources told Interfax on 25 April that U.S. and
Russian officials expressed significant disagreements during
consultations held last week on START-III in Geneva. Russia
insisted not only on a more drastic reduction in the number
of both sides' nuclear warheads but also that a provision be
included in the treaty requiring a reduction of submarine-
based cruise missiles and limiting the U.S. anti-submarine
activity in areas neighboring Russian territorial waters. At
the same time, the U.S. expressed its desire to re-equip
submarine-based ballistic missiles so that they turn into
non-nuclear weapons, while retaining the right to restore
their capability to bear nuclear warheads, which Russia
opposes. "Itogi" (no. 16) reported that some experts believe
that if START-III is not concluded "by 2007, when the last
Russian heavy missiles are removed from active service, the
U.S.'s numerical superiority in warheads will turn into a
quantitative advantage." JAC


Moscow Times
April 26, 2000 
Putin's Adviser Extols Ayn Rand 
By Catherine Belton
Staff Writer

Newly appointed presidential economics adviser Andrei Illarionov showed his 
economic colors Tuesday as he vociferously supported the ideas of one of the 
most influential shapers of Western thought on free markets - Ayn Rand. 

"Every import tariff and every limit on foreign-exchange transactions is a 
blow to our consciousness. Every tax acts against our freedom," he said at a 
news conference Tuesday dedicated to the launch of Rand's work in the Russian 
language. Rand gained acclaim in the 1940s for her theory of "objectivism," 
which forwards laissez-faire capitalism as the only system to protect 
individual freedom. 

Illarionov called for hauling back state interference in the economy and said 
it was a myth to claim that liberal reforms had taken place in Russia over 
the last eight years. 

He added that for Russia to experience the "economic miracles" enjoyed by 
countries like Taiwan and Japan, state spending would have to be slashed. 

"If we really want fast economic growth, than sooner or later we have to cut 
down state spending to no more than 20 percent of GDP and cut back the tax 
base to the same level," he said. 

President-elect Vladimir Putin has called for Russia to escalate economic 
growth to 10 percent per year to catch up "fast" to the rest of the world. 
But Illarionov would not say Tuesday whether his views on chopping back the 
state to achieve that growth had found favor with his new boss. 

"Mr. Putin listens attentively to all economic views and proposals and then 
makes his decision," was all that Illarionov would say. 

However, Illarionov said he's hoping the rest of Russia will fall under 
Rand's spell. Dmitry Kostygin and Yaroslav Remenchuk, the publishers and 
translators of her works, said Tuesday they want to persuade the Education 
Ministry to make Rand compulsory reading in schools. 

Putin meanwhile has a copy of "Atlas Shrugged" in his personal library, 
Illarionov said, though he did not say whether the book had been read or 
appreciated by the president-elect. 

Illarionov cited opinion polls in the United States as placing "Atlas 
Shrugged" as the second most influential book after the Bible, and singled 
out Rand's influence on Alan Greenspan, the chairman of the U.S. Federal 

"Greenspan's been acclaimed many times over as the genius behind America's 
'New Economics' and the economic boom of the '90s. He was a personal friend 
of Rand," Illarionov said. "If people here are likewise influenced by her 
work, than I will be very glad." 

But while saying state regulation was a blow to individual freedom, 
Illarionov cited Chile's economic plan under the dictatorship of General 
Augusto Pinochet as an ideal example of good economic programming. 

He also criticized Putin's economic think tank for planning to write a 
300-page economic program. 

"It's better for programs to be short. One of the best examples is the 
program produced by Chile. It was 15 pages long and simply laid out 
principles and the basis for the state's relationship with society," he said. 
"1975 to 1990 was the golden period of Chilean economic reform, during which 
time Chile overtook the rest of Latin America." 

Illarionov compared the Central Bank issuing monetary emissions that are not 
backed up by reserves to a citizen printing fake money in his own backyard. 


Over 6,000 Russian Families Ready to Adopt Orphans.

MOSCOW, April 26 (Itar-Tass) - Over 6,000 Russian families wish to adopt 
orphans. This was announced at the plenary meeting of the State Duma on 
Wednesday by Zoya Vorontsova, the deputy chairperson of the Committee for 
women's, family and youth affairs. She presented at the plenary meeting for 
the first reading the bill On the state databank on children left without 
parental care. 

She said that the Russian government recommends to the lower house to pass 
this document which stipulates the procedure of forming and using the state 
databank on orphans to count them and assist in their being adopted by 
families of Russian citizens. 

Vorontsova explained that the state databank on children without parental 
care is an information system at the federal level and the level of subjects 
of the Federation meant to ensure the collection, processing, accumulation, 
storage and retrieval of information about children who can be offered for 
adoption to families. 

The bill defines the state status of the databank, determines the basic 
principles of the regulation of its activity and formulates the tasks of 
authorised executive bodies responsible for the forming and use of the 
databanks. The bill stipulates the mechanism ensuring citizens' right to 
information about orphans. 

During debating on the law that was virtually unanimously passed in the first 
reading it was noted that the bill will enable citizens to exercise their 
right to adopt a child without parental care to be raised in the family and 
will enable children deprived of parental care to exercise their right to 
find a new family. 


Russian Security Council Chief to Hold Internet Conference.

MOSCOW, April 25 (Itar-Tass) - Russian Security Council Chairman Sergei 
Ivanov will hold an Internet news conference on the Security Council's 
wesbsite ( from April 25 to May 9, a spokesman for the 
Russian Security Council told Itar-Tass on Tuesday. 

The subject will be the recently adopted Russia's new military doctrine. 
Responses to the most interesting questions will be published on the site in 
the first half of May. 


26 April, 2000
The Kremlin is disappointed in its enemies

The Kremlin concideres a pro-Kremlin alliance in a medium-term prospective to 
be mistaken, a presidential APN source reported.

As is well known deputy head of the presidential administration Vladislav 
Surkov is considered an author of current configuration of the State Duma. 
Till recently this structure seemed to be convenient for the Kremlin: Gennady 
Seleznyov who is loyal to the executive power in his heart became speaker, 
and presidential administration got a chance to ram any decision through the 
Duma using Unity – CPRF alliance or Unity – right factions union.

According to the APN source, however, Vladimir Putin has not considered this 
model effective any more. First, the President is rather annoyed with speaker 
Seleznyov and some his deputies. Second, presidential elections demonstrated 
that the Communists enjoy a wide people`s support that means it is impossible 
to regard them as week and dependent partners. After the March 26 elections 
when Zyuganov received 30% of the vote the Kremlin had to find a complete 
CPRF`s crash was still a long way off.

At present, within presidential structures, a number of alternative models 
has been working out to fragment CPRF faction into small deputy groups. 
According to the source, Putin`s dissatisfaction with the Duma structure 
might be associated with the fact that the State Duma has not been under 
personal presidential control yet. It is Vladislav Surkov (whose proteges 
hold key offices in the Duma) who manipulates the lower house in the Russian 
parliament. There are rumours circulated around the administration that it 
happens often that Surkov phones during state Duma session right to the 
presidium and gives instructions to first vice-speaker Lyubov Slizka. The 
state head can not consider such a structure reliable.


Date: Tue, 25 Apr 2000 
From: "Keith Bush" <KBush@CSIS.ORG> 
Subject: the eXile at CSIS in Washington May 4

Center for Strategic and International Studies
Russia and Eurasian Program
Corporate Briefing Series

Thursday, May 4, 3:305:00 PM, at CSIS

Matt Taibbi and Mark Ames
Editors of the eXile

Dear Colleague,

And now for something completely different! Matt Taibbi and Mark Ames have
the editors of the exile, a biweekly Moscow-based satirical and political
magazine, since 1997. They have also just published The exile: Sex, Drugs, and
Libel in the New Russia. At 3:30 PM on Thursday, May 4, they will be
speaking on
the record at CSIS about their experiences editing a satirical magazine in
Moscow. They will also discuss the failures of the so-called “reform” movement
in the Yeltsin era, the outlook for press freedoms under the Putin regime, and
the problems with Western press coverage of Russia. 

We look forward to seeing you on May 4.

PLEASE RSVP BY FAX (202)775-3132 OR TELEPHONE (202)775-3240


Date: Wed, 26 Apr 2000 
From: (Edward Lozansky)
Subject: May 2 Conference "Is a US - Russia Joint ABM Defense Possible?"

"Is a US - Russia Joint ABM Defense Possible?"

Planning for U.S. - Russia Cooperation in the Putin Era

Join members of the US Congress, Russian State Duma, and military and 
business experts to discuss the new possibilities for US-Russia cooperation 
at a one day seminar:

Tuesday, May 2, 2000 
9.30 am - 3.30 pm 
US Senate
Room 216 Hart Senate Office Building.

The event is organized by the Free Congress Foundation, the American 
University in Moscow and the US - Russia Business Council.

9.30 am - 12.00 noon: military and security cooperation issues. 
Chair: Jim Woolsey, former CIA Director. 

1.30 pm - 3.30 pm: cooperation in business, science, culture & education. 
Chair: Gene Lawson, President, US - Russia Business Council.

Confirmed participants from the U.S. Congress include Sen. Conrad Burns 
(R-MT), Sen. Chuck Grassley (R-IA), Sen. Jon Kyl (R-AZ), Sen. Jeff Sessions 
(R-AL), Sen. Gordon Smith (R-OR), Sen. Fred Thompson (R-TN), Sen. John Warner 
(R-VA), House Majority Whip Tom DeLay (R-TX), Rep. Doug Bereuter (R-NE), Rep. 
Mike Castle (R-DE), Rep. John Cooksey (R-LA), Rep. Virgil Goode (I-VA), Rep. 
Ralph Hall (D-TX), Rep. Joe Pitts (R-PA), Rep. Jim Traficant (D-OH), and Rep. 
Curt Weldon (R-PA). Other Members of Congress are expected to join this list 
which is being updated daily. 

The Russian delegation will include Vladimir Ryzhkov, Coordinator of 
Russian-American Parliamentary relations; Konstantin Kosachev, Deputy 
Chairman of the Duma's Foreign Relations Committee; Alexander Shabanov, 
Deputy Chairman, Foreign Relations Committee; Arkady Murashev, Foreign Policy 
coordinator for the Union of Right Wing Forces, and others. In addition, a 
delegation of Russian political, military and business experts is expected to 
join the discussion. 

To register, send an e-mail with your name and affiliation to For additional information, please contact Edward 
Lozansky at 202-986-6010.


Date: Wed, 26 Apr 2000 
From: "Frederick Dews" <> 
Subject: Russia: Friend or Foe?: chat with Brookings expert....

I invite you to participate in the next Brookings Institution chat by
e-mailing, on the topic described below. Your expert
opinion and insight would benefit the discussion greatly.

Thank you,
Fred Dews
Website Editor
The Brookings Institution
Washington, D.C.

A Live Internet Chat with Clifford Gaddy
Fellow in Foreign Policy Studies at the Brookings Institution
April 28, 2000, 2:00pm-3:00pm (EDT) 

Does the election of Vladimir Putin to the presidency of Russia signal a
new resurgence of Russian strength and nationalism? How cautiously, or
firmly, should the United States and its allies treat the post-Yeltsin
Russia? How will Putin deal with the smoldering crisis in Chechnya, and
should the West attempt to negotiate a settlement? 

Should the Clinton administration, as it decides whether to pursue
deployment of a missile defense system, strike a deal with Putin on arms
control? Will Russia assert its position as Eastern Europe's traditional
power over potential rivals Poland and Ukraine? And what does Russia's
internal situation with respect to its social and economic development
affect western policy toward this vital country? 

Pose your own question or explore these ideas in a live internet chat with
Brookings fellow Clifford Gaddy. Submit questions ahead of time or during
the chat hour by e-mailing to and return to the page on
Friday to see the exchange happen live.


Russia: Government Seeks Solution To Prison Overpopulation
By Sophie Lambroschini

Russia's overcrowded and tuberculosis-infested prison system has won the 
attention of President-elect Vladimir Putin's government. Russia has the 
highest incarceration rate in the world -- more than 10 times average 
European levels -- and the Justice Ministry is pushing for a reform aimed at 
reducing the prison population by one-third. But the Duma, which was due to 
consider a bill on the issue this week, has again delayed consideration until 
next month. RFE/RL correspondent Sophie Lambroschini reports from Moscow that 
laws alone won't be enough to change the deeply ingrained idea that every 
thief should be behind bars. 

Moscow, 26 April 2000 (RFE/RL) -- The average inmate in Russia's jails has a 
living space smaller than the size of a coffin -- about 60 square 
centimeters. Prisoners take turns lying or sitting on bunks. The overcrowding 
has helped fuel a tuberculosis epidemic touching every tenth prisoner in 
Russia. But some die before their lungs waste away. In St. Petersburg's 
Kresty jail last year, 56 inmates died of asphyxiation in packed, stuffy 

Of the 1 million people currently incarcerated, almost one-third are 
defendants still waiting for their trial. 

The Justice Ministry has been pushing for a reform of the criminal justice 
system to reduce the number of crimes punishable by jail terms. Under current 
laws, a person can serve jail time for petty offenses such as petty theft.

Prison reform has been an issue for Putin since last October, when as prime 
minister he put the topic under his personal control. Visiting the old Kresty 
prison, a decrepit 19th century building that houses 10 times more inmates 
than the two-per-cell ratio under the czars, Putin commented: "You don't even 
have this kind of crush in China."

A reform project was hammered out jointly by the Justice Ministry and the 
non-governmental Society for Prison Reform. It was due to be considered by 
the State Duma this week, but deputies, citing legislative backlog and 
upcoming holidays, put off the first reading until later next month.

Society for Prison Reform Director Valery Abramkin argues that Russia needs a 
prison reform, just like the United States. But since Russia can't afford to 
spend billions of dollars building new jails, it must find another way -- 
reducing the number of inmates. 

The bill before the Duma is intended to reduce the prison population by 
one-third, says Aleksandr Zubkov, head of the Justice Ministry department for 
overseeing prisons. He says that a prison term should be an "extreme measure" 
for only serious crimes. 

Duma deputy Viktor Pokhmelkin is also lobbying a similar legal reform. He 
told RFE/RL the current system is too harsh.

"I think the problem is that our penal policy, our policy regarding 
punishment, hasn't seriously changed since Soviet times. A jail sentence is 
still considered the paramount and effective way of combating crime, and 
that's why it's used a lot in practice even when it's not necessary."

He also says that the reform should focus on reducing pre-trial detention. 
Right now, those accused of crimes sometimes spend several years in jail 
before their case even comes to trial. 

"Pre-trial detention is often used as wrongly without any justification but 
with the aim to squeeze evidence out of the accused or the suspect." 

In a typical example, one young man has been in jail 18 months awaiting his 
trial for running a scam involving dice at a local market. He has already 
caught tuberculosis. 

Society for Prison Reform Director Abramkin told RFE/RL that Russia's laws 
condemn small-time thieves to stays in prison that will only turn them into 
hardened criminals. He says that about half of Russia's inmates are charged 
with burglary. And most of these thieves were caught stealing small amounts 
of food -- a sack of potatoes out of a basement or a chicken out of a barn. 
In poverty-stricken Russia, he says, anyone could potentially end up in jail. 

The Justice Ministry's reform provides for fines and property confiscation 
instead of prison terms for petty theft. It also puts a one-year limit on 
pre-trial detention.

However, as Abramkin points out, it is an uphill task to win support for 
reform -- not only from the general public but also from legal professionals. 

Duma deputy Pokhmelkin agrees that changing attitudes among judges and 
prosecutors will be the hardest task of reform. 

"[The Justice Ministry's] project doesn't solve all the problems. Of course 
we can and have to amend the penal legislation and improve the inmates' 
conditions. But the most important thing is to bring about a change, a 
revolution in the professional conscience of judges, prosecution employees, 
of all those who bring to life [Russia's] penal policy."

Some Russian legal scholars say the judges are too strict. One study showed 
that only 8 percent of murder trials resulted in an acquittal. 

One of Russia's most prominent judges and an author of the judicial reform 
plan, Sergei Pashin, has written extensively on the problem of the harshness 
of Russian judges. Pashin says the Russian justice system operates like a 
coin toss. Heads is a conviction with a jail term. Tails is a conviction 
without a jail term. So when does the judge acquit? Only if the coin lands on 
its edge, Pashin remarks wryly. 

And to counter those odds, the judicial system needs more than a few 


Ekonomika i Zhizn
No. 16
[translation from RIA Novosti for personal use only]

* In 1999, 112 audits were conducted in 44 federal 
ministries and departments and 78 constituent members of the 
Russian Federation. Facts of improper use of funds amounting to 
some 5.9 billion roubles and 468 million dollars were revealed; 
76.5 million roubles were returned to the budgets of all 
levels. Following the audits, 25 heads of federal and regional 
bodies of executive authority and local self-government were 
released from their posts; 48 officials were called to 
disciplinary account, and 15 criminal investigations were 

* Nearly 80 percent of criminal groupings registered in 
the files of the Federal Security Service have some kind of 
contacts with state officials.

* There are illegitimate tax benefits and customs duty 
exemptions, as a result of which the federal budget looses 5 to 
6 billion roubles a month.

* In 1999, the security department of the State Customs 
Committee revealed 122 facts of customs officers' participation 
in entrepreneurial activities and 60 facts of abuse of office 
to help commercial structures; as a result, 186 customs 
officers were dismissed.

* Last year, 179 criminal proceedings were initiated 
against customs officers, including 12 against employees of the 
central apparatus. Only one case of curbing their illegal 
activities helped the state to avert losses to the amount of 
some 15 million dollars.

* Transportation of foreign trade cargoes by the domestic 
fleet declined from 96 percent in 1994 to 2 percent in 1998.
In 1999, foreign shipowners took out over 92 percent of export 
cargoes through Russian ports; they were paid 1.8 billion 
dollars by Russian producers. Some 3.9 billion dollars were 
paid for chartering foreign vessels transporting imported 

* Total wage arrears in organisations financed from 
regional and local budgets exceeded 14 billion roubles, to make 
a third of their annual labour remuneration fund. Only in 9 
constituent members of the Russian Federation, teachers' wages 
were paid in full. In some regions, wage payment delays are 
from 5 to 9 months.

* According to the Russian Economics Ministry, the volume 
of alcohol consumption in the country reached 230 million 
decalitres, of which 140 million decalitres, or 61 percent, are 
produced illegally. This results in annual losses of up to 25 
billion roubles of budget funds. At the same time, there is no 
body of executive authority which is responsible for state 
regulation of the alcohol market.

* Agricultural producers are supplied with farm machinery 
and equipment up to 57 percent of their needs (tractors), 54 
percent (grain harvesters), and 66 percent (fodder harvesters). 
The coefficient of renewing farm machinery does not exceed 1 
percent, while wear and tear has reached 70 percent. 

* According to experts, the real number of people taking 
narcotics and other psychotropic substances exceeds 2 million 
people. Non-medical use of narcotics has surged by 20 times 
over the past 10 years and continues to increase.

* Over the 1996-1998 period, the total number of crimes 
registered by the Interior Ministry bodies increased from 
108,900 to 190,100.


Date: Tue, 25 Apr 2000 20:56:22 -0700
From: Grzegorz Kolodko <>
Subject: Kolodko's OUP book on transition

The new book on “From Shock to therapy. The Political Economy of 
Postsocialist Transformation” (Oxford University Press, 2000, New York and 
Oxford, UK, pp. xii+458), written by Professor Grzegorz W. Kolodko, has 
just been published. The book can be required in UK through Ms. Jacqueline 
Sells ( and in the USA through Mr. Mike Groseth 
Below certain opinions and assessments of the book are quoted:

Vito Tanzi, International Monetary Fund:
In “From Shock to Therapy”, Grzegorz W. Kolodko has given us his 
highly original and personal interpretation of the decade of transition. 
His background, as a first-rate economist, and his policy experience, as a 
former Minister of Finance and Deputy Prime Minister during a particularly 
sensitive period, has given him a unique background for interpreting what 
happened and for drawing conclusions and lessons. Not all readers will 
agree with his interpretation of what happened and with his conclusions but 
all will benefit from this very valuable and informative book. From Shock 
to Therapy should become essential reading for all those genuinely 
interested in the experiences of economies in transition.

Gur Ofer, Hebrew University, Jerusalem:
This book is a Tour de Force on the neglect but utmost importance 
of institutional buildup as part of the requirement of the transition 
process. It is written by a long-term advocate of gradual reform that 
emphasizes institutional building, along side with taking care of the 
“fundamentals” as included under the so called “old Washington consensus,” 
that, as a finance minister and deputy prime minister of Poland during the 
mid-1990s. He had a chance also to implement his ideas as actual policies, 
and with a large measure of success. The book carefully discusses 
strategies and policies regarding market-oriented institutions, reforming 
the government and the financial sector, the informal sector, and the 
creation of a political-economic growth lobby.

Vladimir Popov, Russian Academy of Sciences and Carleton University, Ottawa:
This book is written by a good researcher and good economic 
policymaker a fortunate and rare combination in general and in 
post-communist countries in particular. The author presents the most 
powerful critique of and the most convincing alternative to the 
“conventional wisdom” policies based on the Washington consensus. His 
analysis is always provocative and controversial, his presentation is 
anything but boring.
This is a must reading for everyone who studies transition. Even those who 
do not share the views of the author will not be able to ignore the book on 
one simple reason, if not anything else: neither before, nor after the 
period that Grzegorz W. Kolodko was in charge of economic policy (1994-97) 
had the Polish economic performance been so strong.

Alexander Nekipielov, Institute for World Economic and Political Studies, 
Fundamental research by Professor G. Kolodko is a powerful 
intellectual challenge to the advocates of “simple decisions” to the 
problems of post-socialist transformation. Convincing character of 
theoretical reasoning is further strengthened by the author’s practical 
experience of elaborating and implementing Polish economic policy in 
1994-97, which brought him fully merited worldwide recognition.

Michael S. Bernstam, Hoover Institution, Stanford University:
Grzegorz Kolodko explains the only economic success story in the 
post-communist world northwest of China - Poland - which moved from 
depression to growth under his stewardship. He furthermore shows the 
theoretical inconsistencies and practical failures across countries of the 
conventional approach to transitions, the so-called Washington 
consensus. He offers broadly useful policy proposals based on the true 
economic reasoning: improvements of people’s well-being, not reforms for 
the sake of social engineering, should measure success and guide 
policymakers. This book is bound to become a classic, like Kolodko’s 
practical work before it.

Tadeusz Kowalik, Polish Academy of Sciences:
His hard work, his rich experience in managing the economy during 
a period of great change, and his openness to new ideas for the economy 
have resulted in a profound understanding of the transformations occurring 
throughout the entire post-communist world. A bit of luck placed Kolodko 
in the fortress of mainstream orthodoxy at the very moment when its 
supporting theses were being revised. Thus he could not only observe, but 
even contribute to what has become known as the post-Washington consensus.
Kolodko's criticism of the shock programs of the IMF and the World 
Bank is excellent. I hope that when he returns to his country he will find 
that therapy is not only about institution building, but that it is also a 
time of cooperation with the patient. It is therefore closer to group 
therapy than to a treatment for poisoning.

Janine Wedel, George Washington University, Washington, D.C.
“From Shock to Therapy” is one of the most important books written 
on the economic ‘transition’ away from communism. Grzegorz W. Kolodko’s 
rare combination of experience as Poland’s Minister of Finance and First 
Deputy Prime Minister, as a Western-trained economist, and as a visiting 
scholar with the Bretton Woods institutions uniquely qualifies him to 
debunk pervasive mythology about the economic orthodoxies and ‘reforms’ 
offered up by the West to the post-communist countries. “From Shock to 
Therapy” should be required reading for everyone curious about the true 
story of economic transition in the former communist countries.

Professor Grzegorz W. Kolodko
Department of Economics
8283 Bunche Hall
Box 951477
Los Angeles, CA 90095-1477
Tel: (310) 206 1375
Fax: (310) 825 9528


Date: Tue, 25 Apr 2000 
From: "Mikhail Bunchuk" <> 
Subject: A Russian-language resource about high-tech
business and innovation in Russia

I would like to bring to your attention a Web resource covering
high-tech business and innovation in Russia: the Web-server
"Technology Business in Russia":

This server is developed by the Experts & Consultants Intergroup and
supported by the Eurasia Foundation.

The Web-server currently includes the following sections:
- News feed on technology business (updated weekly);
- Internet-based magazine "Technology Business" (published on a quarterly
- A collection of links to Web resources on technology business and
innovation and Russia;
- Web conference for technology business professionals;
- Hot-line consulting support for Russian high-tech businesses.

All materials on the server are currently in Russian language only.

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Moscow Times
April 27, 2000 
POWER PLAY: Literate, But Not Necessarily Well-Educated 
By Yevgenia Albats 

At a presser devoted to the first publication in Russian of books by the 
Russian-born American philosopher and writer Ayn Rand, a young reporter 
asked, "Why publish Rand if American individualism results in constant 
shooting in schools; do you want the same in Russia?" The person giving the 
answer - Andrei Illarionov, newly appointed economic adviser of Vladimir 
Putin and a great adherent of Rand's philosophy - looked obviously stunned. 

This situation was redolent of other such instances during the years when 
Soviet reporters used to start their stories from the United States by 
saying: "The people of America are starving," and never bothered to picture 
anything but Harlem's slums. Illarionov started his answer by saying: "Why? 
Just to know. You see, we lived behind the Iron Curtain for so long that a 
great part of culture that existed in the world outside simply passed us by; 
we know nothing about it. And even now we live in a sort of glass cocoon; 
judging by your question, we still are not that eager to learn." 

That presser reminded us once again about a great myth that has existed about 
Russia and its people. It is the myth of the high level of education of the 
average citizen, which, along with other such myths (like the level of 
industrialization and urbanization), led many to believe the country has all 
the necessary variables to become a Western-type democracy almost overnight. 
Just get rid of the Communist Party, introduce private property and freedom 
of speech, and Russia will rush into the newly opened world without 

The Bank of New York scandal was the first cool shower to rain on many 
miracle-believers in the West. And the overwhelming support of the bloody war 
in Chechnya by all strata of society brought up an unsolved puzzle. "I cannot 
believe that the country of Dostoevsky and Tolstoy is not concerned about 
what happened to Grozny," wrote one of my fellow correspondents. When I hear 
statements like that, I usually set aside any tact and respond: It's not a 
question of belief; it's a question of knowledge. 

Unfortunately, the truth is much more murky. Machiavelli's "The Discourses" 
(the Italian philosopher's major work) did not appear in Russian until the 
mid-1990s. Hobbes was first censored back in tsarist Russia, and was 
published in full only lately. The academic edition of Plato's writings was 
thoroughly edited and censored and was not available in its original version 
until a couple of years ago. Ninety-nine percent of all major studies in 
political science and sociology are still unknown to those who account for 
the intellectual elite of the country. You won't find books on the theory of 
bureaucracy in university libraries. The latest discussions on the reform of 
public service in the Center for Strategic Planning showed that few 
participants knew about the study of public service don e in the last decade. 

When I was writing my diploma at MGU on the history of Russian 
Constructivism, almost all the books I needed were not available on the open 
shelves of the Lenin Library; they could be read in "Department 13," access 
to which was gained through special permission from the faculty dean. Most 
writings of Bulgakov, Zoshchenko, Akhmatova and Babel, as well as hundreds of 
others, were locked in the special archives, unknown by my generation, much 
less the generation of our fathers. 

Yes, the literacy rate in the Soviet Union was very high. But what people had 
to read - Soviet propaganda literature - they just as well should never have 
read; and what they had to read, they never could. Thus, the conception of 
freedom, personal choice and personal responsibility for that choice, the 
value of human life and rights, are still lying somewhat fallow in Russian 
society; the seeds of those liberal trees are just being planted, but the 
fruits won't appear soon. 

Yevgenia Albats is an independent journalist based in Moscow. 


Vremya Novostei
April 25, 2000
[translation from RIA Novosti for personal use only]
Leonid GRIGORYEV, director-general, Economic Survey Bureau

Economists have, at long last, summed up the results of a 
debate about whether Russia had implemented market reforms, or 
not. They have opted for a compromise, noting that the first, 
10-year, stage has ended, spelling numerous losses and 
setbacks. In a bid to assess the new stage's prospects, Russian 
and foreign economists gathered for their conference dealing 
with a new economic-transformation stage on April 24.
This conference was organized by the Economic Survey Bureau and 
subsequently opened by that bureau's chief Yevgeny Yasin.
We have the very same Russia, as well as the very same 
problems, Yasin noted, thus making it clear that there don't 
seem to be any numerous choices during the elaboration of 
subsequent strategies.
However, Russia has started harboring hopes once again.
Some more optimistic socio-political moods are currently being 
voiced here. Well, this is seen as a purely economic factor, 
researchers say, nonetheless warning that Russia won't become 
an economic power in the near future (that is, in the accepted 
sense of the term).
The protracted transitional-period economic crisis has 
left Russia behind most other countries of the world (in terms 
of economic-performance parameters and other ratings). The 
press and politicians alike keep actively discussing various 
parameters in the context of two aspects. First of all, they 
want to find out all about the results of Russian reforms.
Second, they would like to predict subsequent economic indices 
by the year 2010 in line with projected growth rates. Those, 
who continue to juggle with Russia's global positions (in terms 
of any particular indicator), have, in fact, learned a new 
vocation. However, this country's real-life positions in this 
world, rather than formal ratings, seem to be the most 
important thing. As a matter of fact, any country's great-power 
status is determined by the attitude of other countries toward 
it, as well as by the attitude of its own population toward 
this fact. At present Russia should combine its great-power 
status with its sharply curtailed global economic role. This 
seems to be a rather serious problem.

Dreaming of Past Grandeur

That well-known competition between the two systems, e.g.
socialism and capitalism, had taught the people of Russia to 
think in line with specific categories enabling them to compare 
Russia with leading industrial countries. Nonetheless, the USSR 
had never attained those rather impressive Western social 
standards, with the exception of all-out literacy and a 
ramified health-care system, not to speak of living standards.
A study of our society's state shows clearly that the 
Russian elite, as well as wide population strata, perceive the 
issue of Russia's dignity as something very important. Nearly 
70 percent of all Russians reaffirm their desire to see their 
country as a great power. Despite the USSR's disintegration, 
the people of Russia perceive their country as a great state, 
with many persons thus reacting less painfully to the 
transitional period's psychological injuries.
Russia's global status is, first of all, determined by its 
positions inside international organizations, as well as by its 
military might. Incidentally, Russia's armed forces are still 
superior to those of any other country, except the United 
States. Meanwhile other Russian parameters closely match those 
of Brazil. Technically speaking, Russia is a weak great power. 
This is proved by the fact that Russia's per-capita GDP is four 
times less than that of leading industrial nations. Besides, 
any great power must be more or less free in decision-making. 
However, Russia now faces such a serious restricting factor as 
sky-high external debts at a time when its own currency 
reserves are not very impressive.
Consequently, Russia must, first of all, settle the debt issue, 
also ensuring a stable rouble. Meanwhile any "great leap" aimed 
at ensuring a sizeable GDP increment seems to be less important 
at this stage.

Competing With the Third World

As far as the entire combination of socio-economic 
parameters is concerned, Russia lags far behind the world's 
leading countries. The Russian economy still differs completely 
from that of the most industrialized states, 
transitional-economy countries and developing nations. In other 
words, Russia's economy is notorious for its rather 
unimpressive monetization levels and the banking system's 
openly sluggish role in loaning money for economic-development 
At the same time, Russia still manages to outpace most 
developing countries in terms of human-capital indicators.
This is linked with two circumstances, which should be taken 
into account, as we define Russia's place in this world.
First of all, Russia, as well as the Soviet Union, had 
never matched industrial nations in terms of their living 
standards and other parameters. Russia is no longer able to 
subsidize its education system and science within the framework 
of a walled-in political system that had artificially scaled 
down researchers' incomes. Consequently, old-time quantitative 
human-capital reproduction has become well-nigh impossible. 
That's why Russia's current global positions (as far as 
socio-economic indicators are concerned) can't be lost quickly 
enough. But it's also well-nigh impossible to quickly improve 
such positions.
The second factor is linked with the assertion of 
big-league business in developing countries (that is, on the 
base of trans-national corporations and on the base of national 
capital alike). More impressive education levels (as regards 
specific population categories, which are, nonetheless, smaller 
than the overall Russian population) imply that the world 
market keeps offering tens of millions of specialists, e.g. 
underpaid, albeit educated, personnel.
Therefore Russia is beginning to compete with developing 
countries, rather than industrial nations, on 
processing-industry markets. By all looks, each large 
developing country can now establish one or two export-oriented 
hi-tech sectors, which would be more competitive in comparison 
with Russian enterprises. The fast-paced development of India's 
data-exchange technologies is a case in point. As of today, 
India ranks as the world's second largest computer-software 
exporter, which provides jobs to 250,000 people. 
In this particular case, the main conclusion is linked 
with the Russian income policy. More substantial incomes should 
hinge on greater production efficiency and more impressive 
labor productivity. Any attempts to preserve the Russian 
population's social security would eventually cause this 
country to lose the race against new large educated, albeit 
modest, foreign population strata.

A Time of Moral Values

Economists should look for ways of maintaining Russia's 
desired great-power status that would entail minimal outlays in 
the context of tackling pressing social problems or the 
economic-growth context. The conflict between Russia's economy, 
some of whose important parameters make it similar to 
Third-World economies, and status factors is a drain on the 
national financial system. It's important that the public 
mentality or the state policy should not revert to old-time 
great-power concepts in line with WWI and WWII concepts. To cut 
a long story short, Russia should not be perceived as a power, 
which decides the destinies of other nations, or which imposes 
its own ideology on them. All this would entail attempts to 
reinstate status-project appropriations, as well as that 
exorbitant military might, which doesn't match Russia's 
real-life requirements. The national-prestige concept's 
definition as Russia's international responsibility can serve 
as additional grounds for turning the next few decades into a 
period of forging a civil society replete with advanced morals 
and a cost-effective economy. In other words, we face a rather 
simple choice. Russia would either try to ensure its own 
inertial development in line with an imperfect institutional 
basis, gradually losing all grounds for its leading role inside 
the modern world, or it would opt for self-organization, 
subsequently using this concept in order to restore the economy 
and to ensure society's progress. In the latter case, economic 
growth should be viewed as a source of investment into the 
modern world's status values, e.g. the safety of citizens, as 
well as efforts to scale down national corruption that would 
serve as a foundation for struggling for specific moral values.
Traditional notions have it that a great power is supposed 
to smelt a lot of steel, maintaining a large army or wielding 
an atomic bomb. Given Russia's limited resources and projected 
short-term GDP volumes, all this hardly makes any sense. State 
grandeur is no longer defined as a mere projection of military 
might. A great power would be expected to guarantee democracy 
and worthy living standards to its citizens, also defending 
universal human values. It goes without saying that any 
long-term status will be maintained with the help of various 
modernization programs, economic growth, as well as with the 
help of investment into science, education, public health and 
culture. However, all great powers must also spend certain sums 
of money on peace-keeping operations, the defense of moral 
values and environmental protection outside their own borders. 
The great-power concept is seen as tremendous responsibility, 
rather than a perennial guarantee for national pride or 


US State Department
26 April 2000 
Text: U.S. Response to Human Rights Commission Resolution on Chechnya 
(Statement issued by Harold Hongju Koh and Nancy Rubin in Geneva)

Harold Hongju Koh, assistant secretary of state for democracy, human
rights and labor, and Nancy Rubin, U.S. ambassador to the UN
Commission on Human Rights, issued a statement in response to the
decision of the Commission April 26 in Geneva to adopt a resolution on
the situation in Chechnya.

The statement said the United States concurs with the UN High
Commissioner's call for Russia "to engage with an independent,
broad-based, national commission of inquiry to investigate promptly
all allegations of violations of human rights according to
international standards" and also supports the call for Russia to
engage with the relevant U.N. special rapporteurs, special
representatives, and working groups.

Following is the text of the statement:

(begin text)

U.S. Department of State
Washington, D.C.
Office of the Spokesman
April 26, 2000

Statement by James P. Rubin, Spokesman


The following statement was issued by Harold Hongju Koh, Assistant
Secretary of State for Democracy, Human Rights, and Labor, and Nancy
Rubin, U.S. Ambassador to the UN Commission on Human Rights, at the
Commission in Geneva, in response to the decision of the Commission
today to adopt a resolution on the situation in Chechnya.

"Today's passage of a resolution by United Nations Commission on Human
Rights reflects the worldwide concern about the current situation in
Chechnya. We call on the Government of the Russian Federation to act
swiftly to facilitate and implement the Commission's recommendations.
Although we take no satisfaction in the need for such a resolution,
the United States co-sponsored this resolution because we remain
gravely concerned by the human rights situation in Chechnya.

"As Secretary Albright noted in her March 24th speech to the
Commission, "We cannot ignore the fact that thousands of Chechen
civilians have died and more than 200,000 have been driven from their
homes." Together with other delegations, we have expressed our alarm
at the persistent, credible reports of human rights violations by
Russian forces in Chechnya, including extrajudicial killings. There
are also reports that Chechen separatists have committed abuses,
including the killing of civilians and prisoners.

"Our consistent criticism of Russia's policy in the North Caucasus
should not be interpreted as a defense of Chechen insurgent groups. We
have never questioned Russia's responsibility to defend its
territorial integrity or to combat terrorism and lawlessness. But that
does not begin to justify the Russian Government's decision to use
such massive force against civilians inside Chechnya.

"The war in Chechnya has greatly damaged Russia's international
standing and is isolating Russia from the international community.
Russia's work to repair that damage, both at home and abroad, or its
choice to risk further isolating itself, is the most immediate and
momentous challenge that Russia faces.

"We welcomed Russia's appointment of a Presidential Representative for
Human Rights in Chechnya, and appreciate his engagement with the
international community. The Russian Government has made it possible
for many groups to visit the North Caucasus region, including a
delegation led by the High Commissioner for Human Rights. But
reporting and visits alone are not substitutes for holding those
accountable who have committed violations of human rights or
international humanitarian law. For that reason, it is important that
Russia conduct immediate, transparent, impartial and independent
investigations of all credible allegations of human rights violations,
including those associated with Alkhan-Yurt, Staropromoslovsky and
Aldi. We welcomed the strong statement by Acting President Putin that
allegations of human rights violations would not be disregarded, that
violations of Russian law would be prosecuted, and that those guilty
would be brought to justice.

"To facilitate an impartial investigation, we concur with the High
Commissioner's call for Russia to engage with an independent,
broad-based, national commission of inquiry to investigate promptly
all allegations of violations of human rights according to
international standards. We also support the call for Russia to engage
with the relevant existing U.N. special rapporteurs, special
representatives, and working groups. Unless the Russian Government
moves swiftly on these proposals, the skepticism of the international
community and supporters of human rights inside Russia can only mount.

"We share Russia's goal of a stable and secure Chechnya within the
Russian Federation. We remain convinced that political means alone
will achieve this goal."


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