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CDI Library > Johnson's
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May 4, 2000
Johnson's Russia List #4283 4 May 2000 davidjohnson@erols.com
[Note from David Johnson: ******
10% of Richest Russians Hold 1/3 of POPULATION'S Income.
MOSCOW, May 3 (Itar-Tass) - Ten percent of Russia's richest citizens received 33.7 percent of the population's income in cash in the first quarter of the year, while 10 percent of their poorest fellow citizens received only 2.4 percent, according to a preliminary report released by the State Statistics Committee on Wednesday. In the first three months of this year, 10 percent of the richest Russians accounted for 40.7 percent of overall income, while the share of the 10 percent of the poorest citizens was 2.7 percent.
The number of people whose per capita income exceeds 2,000 roubles a month grew from 13.2 percent in the first quarters of 1999 to 27.4 percent in the first quarter of this year, while the number of people with monthly per capita income of less than 400 roubles dropped from 6.9 percent to 4 percent respectively.
Per capita income in Russia in March was 1,876 roubles, 8.6 percent up from February 2000 and 39.8 percent up from March 1999.
Real income increased in the first quarter of 2000 by 7.4 percent from the same period last year but shrank by 17.5 percent from the fourth quarter of 1999.
Average monthly calculated nominal wage in Russia in March 2000 increased by 184 roubles (about 10 percent) compared to the previous month to 2,023 roubles, 51.5 percent up from March of last year.
Real average monthly wage in March increased by 9.3 percent from February 2000 and by 23.7 percent from March of 1999.
Average pension in Russia in March was 612.7 roubles, a 1 percent increase from February 2000 and a 52 percent increase from March 1999.
The real size of pensions in March was 0.6 percent smaller than in February of this year and 24.1 percent bigger than in March 1999.
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Russian Journalists Launch Campaign Against Bureaucrats.
MOSCOW, May 3 (Itar-Tass) - Secretary general of the Union of Russian Journalists Igor Yakovenko has declared a new project launched by the Union of Russian journalists preliminarily titled "Enemies of the Russian press" with the aim to disclose names of politicians and state officials who impede journalists' activities. The final "disclosures" are planned to be made by January 13 when Day of the Russian press is celebrated.
This project is an analogue of an action staged by the US Committee for defence of journalists which for many years already makes public its own world list of "enemies of the press" on the World Day of the free press celebrated on May 3.
Candidates for the "black" list will be decided by the journalists community, Yakovenko said. A final decision rests with the jury numbering 33, which will include experts and journalists. None of the leaders of the Union of Russian Journalists will be in the jury, Yakovenko assured.
Intermediate results of the planned action will be summed up every month. Thus, the first results of the campaign against "enemies of the press" might be made public already in May, Yakovensko said. Several "candidatures" to the black list are already known, he added. In his opinion, these "candidatures" might include heads of several federal ministries and some Duma deputies who came out and voted for annulment of taxation privileges to the mass media, regional leaders of the Saratov region who unilaterally used censorship against a publication in the Izvestia daily and someone else.
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Russia Plans to Increase Kremlin's Authority, Kommersant Says
Moscow, May 3 (Bloomberg) -- Russia plans to change the presidential administration to expand its authority in Moscow and the regions, the Kommersant daily reported, citing a draft document from the Kremlin. The proposal calls for increasing the number of posts that would report directly to the president and for making the country's Security Council a part of the administration. The program also calls for having the Federal Security Service, the successor organization to the KGB, work together with the administration, the paper said.
President-Elect Vladimir Putin will choose a prime minister after his inauguration next week, which parliament must then approve.
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The Russia Journal May 1-7, 2000 Putin looking for proper opposition By VERA KUZNETSOVA / Special to The Russia Journal Not so long ago, President-elect Vladimir Putin told a small circle that he would like to see a stable party system in Russia that would provide a solid political foundation for power.
Putin didnÆt say which stable parties he had in mind and how many of them there should be, but officials hastened to draw their own conclusions, and talk immediately turned to a two-party system. Traditionally, that means left and right, conservatives and liberals, or, in the Russian version, Communists and Democrats.
ItÆs still too early to speculate on potential union between democrats, liberals and other representatives of the right. The Communists, however, are a different matter. They already have a serious party, though lately, the KPRF has been looking a little stranded on the margins as it is cut off from large assets and financial resources.
The party is fully aware of this. That probably explains why representatives of the old red nomenklatura ¡ Gennady Seleznyov, Yury Maslyukov, Nikolai Ryzhkov and Anatoly Lukyanov, are set on party reform. TheyÆre not talking about a split in the KPRF; rather, as experienced politicians, they have come up with a more skilful maneuver ¡ create a broader left front that would swallow the KPRF.
Most likely, a founding congress will soon be held of a new patriotic movement ¡ the Union of Peoples of Russia, which will be led by the aforementioned Communists. The KPRF will become just one component of the new union and its leader, Gennady Zyuganov, will find himself in the shadows. Essentially, itÆs like Perestroika Part II.
The Kremlin is paying close attention to this new initiative from the left. So far, the Kremlin has always been happy enough with the KPRF and with Zyuganov, who acted as a channel for the discontented populace to let out its steam without being too dangerous a rival.
Western politicians could envy Putin having such a convenient, inexperienced and malleable opposition. There are no popular uprisings to worry about, no riots, strikes or sit-ins on railway lines. The oligarchs donÆt pay ¡ Zyuganov doesnÆt play any nasty tricks, doesnÆt topple the young reformers with the help of striking workers.
But the Kremlin also needs an active political life that will draw the publicÆs attention away from thoughts on division of assets or on the new authorities themselves. Party-building is a perfect way to keep public opinion busy ¡ there they are, the "evil Communists" who are getting in the way of progressive reforms on the left.
While the left fights with itself, the Kremlin strategists will reap the fruits, killing two birds with one stone ¡ creating an opportunist and hence dependent movement, and blowing up an accompanying political scandal. Oligarch politician Boris Berezovsky, it is said, has already given the order to his propaganda people to revive the "communist threat" in the media.
Berezovsky obviously isnÆt content to have just created Yedinstvo (Unity), which has no clear ideology except to support the president. Now he wants to create a party on the left that he could fashion into a "proper opposition." It wouldnÆt look quite right, after all, not to have an opposition.
Unlike Berezovsky, Kremlin officials insist that they will not actively intervene in the battle for power on the left, though they donÆt hide the fact that they will support the initiative, if needed. Who has the courage, reaps the rewards. Seleznyov has already beaten a path to PutinÆs office, so he can expect support right from the top. And since the political elite has already lined up behind Putin, itÆs a matter of duty to put their political capital in the right place.
No one will condemn Ryzhkov, Maslyukov and their comrades ¡ theyÆre fighting for power, after all, and unlike Zyuganov, for real power. TheyÆre trying to win some government jobs for themselves and their colleagues. Maslyukov could get his desire, too, and be put in charge of, say, industry. But some Kremlin officials think itÆs too much to pay for an active political life with government jobs. What is needed, these officials say, is a more or less homogenous government of pragmatic people who will carry out specific tasks. These include, as Putin has put it, "debureaucratizing" the economy ¡ that is, drawing up the legislation that would enable market reforms to be seen through and also carrying out legal and constitutional reform.
The whole Kremlin administration is working on plans for these reforms at the moment. It would be a useful thing, when the time comes, to push all this through the Duma, to have a "constructive opposition" that would understand the need for these changes.
To push through changes to the constitution, the Kremlin would need to get a two thirds majority in the Duma. So, there are good reasons to play at party-building and perhaps to even hand out some government portfolios.
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gazeta.ru May 3, 2000 Symbolism Plagues Inauguration Organizers By Trofim Lobachov The ice-hockey championship in St. Petersburg and the upcoming victory day parade would alone be sufficient to keep the Kremlin Property Manager busy, but currently his main worry is the presidential inauguration ceremony on May 7th. Gazeta.Ru can reveal several details about the rush in the KremlinÆs corridors to prepare for the inauguration. Only a prophane may think that the inauguration is just a speech, an oath and congratulations from all those invited. For insiders, the reality is that inauguration is a means of self-positioning and establishing themselves in the new regime, therefore, the particularities of protocol, meaningless to an outsider, are the cause of passionate conflicts.
Although the Kremlin administration has already drawn up basic plans for the inauguration ceremony, drastic changes are still possible. The ceremony itself will take place not in the Palace of Congresses, a relatively new building built in the Khrushev era and the venue for Boris YeltsinÆs inauguration in 1991 and his reinauguration in 1996, but in the freshly restored halls of the Grand Kremlin Palace. The palaceÆs restoration was overseen by the former head of the Presidential Property Management, Pavel Borodin, and is the subject of an ongoing embezzlement scandal involving, amongst others, the latter and the Swiss company Mabetex, and is currently being investigated by the Swiss authorities. Incidentally, Putin served under Borodin before being appointed chairman of the Federal Security Service (FSB), formerly the KGB.
Secondly, it is highly probable that the so-called æFirst President of RussiaÆ Boris Yeltsin will play a role in the inauguration ceremony. According to our sources, Valentin Yumashev, former head of YeltsinÆs presidential administration, strongly lobbied Yeltsin`s role and has personally written Yeltsin`s part in the scenario. This suggests that, contrary to common belief, Yumashev`s influence on the æInner CircleÆ, Putin included, is still strong. It is extremely important for the so-called æFamilyÆ (Yeltsin`s relatives and confidants) to emphasize the handing down of Power in Russia.
But reportedly Putin`s team have large reservations about the role planned for Yeltsin. They fear that it would amount to admitting that Vladimir Putin has in actual fact inherited his power from Yeltsin. The scenario planned by Yumashev is that Yeltsin personally hands Putin the æsecondÆ presidential mandate.
One can recall that the last handing down of Power was even more irritating; Gorbachev, to put it mildly, did not like Yeltsin, thus the main figures of the inauguration were the head of the Electoral Commission Nikolai Ryabov and the chairman of the Council of the Federation Yegor Stroyev.
But this time around Aleksander Veshniakov (the present head of the Central Electoral Commission) and the same Yegor Stroyev will get their seats in the first row, but nothing more. This maybe the main reason behind Putin`s visit to the Orel region; by visiting his home region Putin was trying to console Stroyev.
The Patriarch will not receive the leading role, as some people in the administration had wanted, but nether the less a major role, more appropriate for a secular state. At some moment of the show, Putin and Yeltsin will be on the stage together, bringing the idea of inheritance to its culmination point. After that, two presidents will appear before the common people on the Krasnye Kryltso steps on the KremlinÆs Sobor Square. For this act several variations are being considered; the showÆs directors assessing whether or not Yeltsin would be physically capable of ascending the steps and whether the contrast between him and his fit, young successor would be too harsh, even indecent.
The Russian political elite is now busy guessing who will get an invitation to the feast of ômanipulative democracyö on May 7th and who will be left out. This time around the competition is much stronger as the Grand Kremlin Palace is way smaller than the Kremlin Palace of Congresses. Another contentious aspect is that the ceremony will take place in three halls, but in two of them the guests will only be able to watch the proceedings on monitors. This makes the major hall of the Grand Palace, the Alekseevsky hall¡ the priority destination for the guests.
Another challenge for the showÆs organizers is the imposing sight of the freshly restored throne of the Tsars in the major hall. It must somehow be draped so as not to appear on TV screens as an ironic reminder of inherited Power.
Back in 1996 Kremlin officials were faced with a similar task, though the undesirable object of prominence was of a very different nature; they were working out how to decorate the main hall of the Palace of Congresses so as to eliminate the dominating presence of a statue of Lenin, short of destroying it. Bizarre changes are taking place in Russia, but paradoxically, at the same time nothing has changed at all.
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Russia: Analysis From Washington -- Idel-Ural And The Future Of Russia By Paul Goble
Washington, 3 May 2000 (RFE/RL) -- Turkic and Finno-Ugric activists in the region between the Volga and the Urals are reviving an old idea which threatens to undermine Moscow's ongoing efforts to reestablish control over Russia's farflung regions.
They seek to create Idel-Ural, the historic name for a confederation of the peoples of Tatarstan, Bashkortostan, Chuvashia, Mordvinia, Mari El and Udmurtia and thereby establish an economically and politically powerful entity between European Russia and Siberia.
The peoples of this region have tried to do so before. Indeed, their efforts are noted by inclusion in the U.S. Captive Nations Week resolution. But precisely because such an entity would be so threatening to Russia's territorial integrity, Moscow repeatedly has taken steps to block any such move and likely will do so once again.
The latest effort was launched at a conference of non-governmental activists on April 24 in Ioshkar-Ola, the capital of Mari El. There, these groups unanimously backed the proposals of the moderate nationalist Tatar Public Center to set up an Idel-Ural Fund to push the idea via its own newspaper and to hold two more conferences later this year.
Participants in the meeting told RFE/RL's Tatar-Bashkir Service that they had taken this decision now because they and the people they represent are concerned by the intensification of Russian government surveillance of organizations like theirs which represent ethnic minorities inside the Russian Federation.
They are also undoubtedly worried by what even Russian scholars now refer to as the growing Islamophobia among Russians in the course of the fighting in Chechnya. According to polls, the number of Russians who view Islam as a "bad thing" has grown from 17 percent in 1992 to 80 percent now.
Indeed and in support of such concerns, the U.S. Commission on International Religious Freedom on Monday said that Russia is manipulating intolerance against Muslims to fuel public support for its war effort against Chechnya.
So far, the activists who met in Ioshkar-Ola last week do not enjoy even the public support of the governments in the regions from which they come. Most of these regimes have been far more cautious in their expression of concern about Moscow's approach and even have sought to make the best deals they can with President-elect Vladimir Putin.
But the Ioshkar-Ola meeting and especially its decision to resuscitate the emotionally powerful term Idel-Ural nonetheless contain messages to three key audiences. First, its call for the establishment of Idel-Ural serves notice to the governments in this region that their populations may be far more radical than are the officials. On the one hand, the decision at the Ioshkar-Ola meeting may radicalize these regimes, leading them to take a tougher stand against Moscow in the expectation that such a move will win them support. And on the other hand, it may cause them to become more dependent on Moscow, thereby reducing their authority and making authoritarianism and instability more likely in the future.
Second, the Ioshkar-Ola meeting calls into question the assumptions of those in the Russian government who believe they can either attack Islamic groups with impunity or coopt the majority of them.
The Russian government has used anti-Islamic rhetoric during its Chechen campaign that has offended even those Muslims within the Russian Federation who agreed with Moscow's overall approach in Chechnya.
But more important, the decisions at Ioshkar-Ola suggest that Moscow will not be able to coopt the so-called "moderate Russian Muslims" as he and his aides have suggested. The Tatars who have been celebrated for their "moderation" in dealings with Moscow are clearly sending a message that Moscow's current approach may leave them moderate no more.
And third, the Ioshkar-Ola decisions also call into question the assumptions of many Western governments that Putin's presidency is likely to lead to more stability, even at the cost of increasing authoritarianism. In fact, moves by Putin thus far may generate their own nemesis just as Soviet leader Mikhail Gorbachev's moves to recoup Moscow's power in 1990-91 led even those who had never thought about secession to decide to move in that direction.
The Ioshkar-Ola meeting is likely to mark yet another turning point in the development of the post-Soviet space, one that could trigger precisely the kind of instability that leaders there and elsewhere say they want to avoid.
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Irish Times 3 May 2000 FIDDLING ALL OVER THE WORLD - IRISH TRADITIONAL MUSIC IS SUCH A CRAZE IN MOSCOW THAT THERE HAS ALREADY BEEN A SCHISM BETWEEN THE 'PROGRESSIVES' AND THE 'TRADITIONALISTS', AND IRISH CLASSES ARE PACKED. SEAMUS MARTIN LOOKED ON IN WONDER
It was not unlike the beginning of a spy novel. In the course of the St Patrick's Society's Emerald Ball in one of Moscow's plusher hotels a young man called Yuri approached me. 'A group of people will meet,' he told me, 'at 6.30 on Sunday at the centre of the circle-line hall in Taganskaya metro station. You will find it interesting for your newspaper.'
Getting there was no problem. Taganskaya used to be my local metro station. The circle-line hall I remembered was adorned with porcelain busts of soldiers from the old Red Army. Under each bust was a suitable exhortation: 'Glory to the heroes of the Parachute division,' 'Glory to the heroes of the Artillery' or 'Glory to the heroes of the Red Cavalry,' as the case might be.
Nothing had changed. In a small knot of people, I recognised Yuri. We waited until the group numbered more than a dozen and then set off through what was once, for me, familiar territory. We passed down Goncharny Lane where the guild of potters once had its headquarters.
On the left loomed a vast apartment block from the Stalin era, on the right the little 17th century Church of the Assumption at the Potters, with golden stars glistening on its blue onion domes. A small group of the faithful stood in front of its celebrated icon of the Virgin with Three Hands in its glass case on the west wall.
Dusk was falling rapidly. We entered a maze of tiny lanes and courtyards of which I had no previous knowledge. The journey was downhill, and towards its end I got my bearings from a short-lived glimpse of the Kettlemakers Embankment at the Moskva River. Things began to happen quickly. We reached a low door in a hidden corner of a courtyard. It opened automatically on our arrival. A flight of stairs led down to a basement room in which desks were set out in classroom format. The group seated itself quickly. A young woman appeared at the blackboard and addressed the group briefly in Russian.
She took a piece of chalk in her hand and wrote 'Ceacht a cuig'. Then, in Russian again, she asked the class to intone the golden rule of spelling: 'Leathan le leathan agus caol le caol,' came the chorus in reply.
I had started on a journey during which, for instance, I would become acquainted with a young Don Cossack who plays the bodhran and has changed his name from Sergei Marchukov to Master O'Toole.
The bug of celtomania has bitten hard in Moscow, but nowhere harder than in the Irish classes given by Anna Alexandrovna Korostolyova. Each Sunday evening the students are put through two strenuous hours with the Christian Brothers, grammar and Urchursa Ghaeilge as the main text books. All of them are in their 20s; two thirds are women.
Anna, the teacher, is a graduate of the Philology department of Moscow State University where there is a thriving Celtic department. Last autumn she studied in Trinity College Dublin under Prof Eoin Mac Carthaigh and spent some time in the Gaeltacht at Ventry in Co Kerry.
Her students came to the Irish language by various routes. One young woman called Katya had been impressed by Scarlet O'Hara in Gone with the Wind. Isabel, a Spaniard who had been living in Russia for five years, was learning the language in order to have one up on her friends in Ireland where, paradoxically, she had learned English. It was Andrei, however, who spoke for the majority when he explained his interest in the language had grown out of the music. 'The Irish people are the most powerful suppliers of ethnic music in the world and language is always linked to music'.
For me the link between the music and the language was Yuri, the man who started me off on my journey. Yuri Andreichuk plays the Uzbek doira, an instrument indistinguishable from the bodhran, in Slua Si, Moscow's most popular traditional Irish group. It all started, he told me, back in the 1980s with a group called Puck and Piper. After that, the 'traditionalists' and the 'progressive' adherents of Celtic Rock went their separate directions.
Slua Si, or Voinstvo Sidov, as they style themselves in Russian, is now the foremost group among the traditionalists, and its equivalent on the progressive side is Sidhe Mhor. I caught up with the progressives in a club across the river from the Kremlin called Vermel which in its promotional literature boasts the most stunning view in all Moscow. In fact, it occupies a totally windowless cellar. Here the young people dance to souped-up reels and hornpipes with their hands placed firmly behind their backs. Vladimir Lazerson, who plays the Scottish warpipes, was overwhelmed when he heard I was from Ireland. 'You come,' he told me, 'from the country of the world's greatest entertainer . . . Christy Moore.'
Four members of Slua Si gathered for interview at Silver's Irish Pub at the bottom of Tverskaya Street, about 250 metres from Red Square. Yuri Andreichuk had brought his doira. He also spoke of his role as a seanchai, telling Irish stories in Russian on the very popular Ekho Moskvy radio station as well as his role as the group's manager and its main vocalist. As a graduate of the Celtic section of Moscow State University's philology department, he does a neat version of An bhfaca tu mo Sheamaisin.
Alexei Bachurin explained that he had been playing the violin since he was five and spoke with some knowledge of traditional musicians Michael Coleman and James Morrison. He now prefers the Kerry style.
Perhaps the most distinguished member of the group is Anatoly Isaev, a professional musician with the orchestra of Russia's Pyatnitsky Choir. He plays the whistle and the Scottish pipes but is best known as a flute-player of real distinction. The 'traverso' flute he uses in the group was made for him by one of Russia's most celebrated instrument makers, Fyodor Nekrasov.
As often happens in situations like this, the interview faded into the background and the musicians began to play. Anatoly Isayev gave a soulful solo rendition of the slow air, Cailin na Gruaige Doinne. an.
The Russians in the pub applauded strongly after every round of tunes. But it all came to an abrupt end when, at the request of a group of young Irish expatriates, the traditional music was drowned by blaring hip-hop from the pub's sound system. Pointing disdainfully at Slua Si, one of the Irish lads said: 'We came here to Russia to get away from all that.'
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Yabloko's St. Petersburg Ambitions Viewed Rossiyskaya Gazeta 28 April 2000 [translation for personal use only] Article by Dmitriy Reytblat: "One Beaten Man Can Be Used To Beat Another"
Unity does not want to be called the "party of power," but it is not averse to being called the ruling party. No matter what Yabloko leader Yavlinskiy may say, everyone understands that Yabloko is trying to occupy the main position against the party of power (sorry, the ruling party) - and become its eternal "counterbalance." That is the only path of development for such parties and movements, which were created to feed off the mistakes of the powers that be.
Having "lost" Yeltsin, the Yabloko movement at first also lost the point of its existence. The opposition movement was geared to him, having gathered under its banners quite a large number of people who were displeased with the authorities. Putin's arrival threw Yavlinskiy into confusion. All the main "cast-iron arguments" against the authorities were lost. Maybe the voters have decided, albeit not very consciously, to trust the new authorities in advance, and Yabloko, deprived of their support, has been left with nothing. Yabloko is faced with the urgent task of determining whom they will "oppose" from now on.
The gubernatorial election in St. Petersburg is the first signal heralding the idea that Yabloko appears to have found a new target to work on. Nominating its candidate for the gubernatorial post in as dramatic and sensational a way as possible has been of fundamental importance for Yabloko. An election in Russia's second most important and influential city means revenge for previous public humiliations in the Duma elections and the presidential election. But it is far more important for Yabloko in the prevailing situation to establish a bridgehead in St. Petersburg for opposing the current authorities. To "shine" in the native city of the president, who supports the present governor, means to begin a new confrontation between the authorities and the liberal democrats. Which in fact is necessary for the democrats to be able to rise from the ashes. Having obtained an objective for political trading, Yabloko can in real terms influence Putin and his entourage.
But to start off with, you have to win the actual main battle -- literally "win" St. Petersburg. Without this trophy, the undertaking in many respects becomes pointless. St. Petersburg is not one of many, it is a bonanza of political and financial opportunities. You can only build the edifice of anti-Putin opposition on such a mighty foundation. Yabloko understands this and is operating very energetically. Yabloko member Artemyev's election campaign is being conducted in an aggressive and tough manner, and most sensational and dirty political advertising is being added to the arsenal. The "anti-Yakovlev youth coalition," born within the democratic camp, is stirring up the St. Petersburgers with public "dancing on Yakovlev's bones." The democratic publication called "My Capital" has been shocking the St. Petersburg intelligentsia with its pornographic caricatures, publishing on its pages an image of a stylized Russian eagle (and simultaneously the governor) with enormous genitals. These are the "liberal techniques" that are being foisted upon the cultural capital of Russia and the democratic intelligentsia by Yabloko!
Another innovation for the Russian political scene, tested out a long time ago in the West, is conducting preliminary elections (primaries). Since only "democratic" candidates are on the lists at these primaries, and a Yabloko member is in the lead, this measure should first and foremost "highlight" Artemyev against the favorable backdrop of weaker democratic rivals. Another ploy is to declare right now the idea of unifying all the democratic forces (first and foremost Yabloko and the Union of Right-Wing Forces [SPS]). At the moment Yabloko's usual uncooperativeness is extremely disadvantageous to it -- voters are sick to death of the internecine squabbles in the democratic camp, and Yavlinskiy wants to show that he is sometimes prepared to listen to someone else's opinion for the sake of a big cause.
Meanwhile, there is very little time left: Strong methods of some kind are required to wrest votes from the democratic brethren in the remaining time. Yabloko's backup man Shelishch has already withdrawn his candidacy and SPS candidate Rybakov is going to withdraw his candidacy in Artemyev's favor, but that is not enough. The idea is that Yabloko will now go for broke and think up something extraordinary. Otherwise the whole undertaking of forming a bastion of anti-Putin opposition in the city on the Neva will come tumbling down and bury the remains of Yabloko.
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Excerpt United Nations Economic Commission for Europe Spring Seminar, 2 May 2000 "From Plan to Market: the transition process after ten years"
THE SOCIAL COSTS AND CONSEQUENCES OF THE TRANSFORMATION PROCESS By Michael Ellman Professor of Economics, Faculty of Economics and Econometrics, Amsterdam University. ellman@fee.uva.nl
1. Introduction
In the decade 1989-1999 the Soviet empire collapsed, a number of states in central and eastern Europe disintegrated and new ones were formed, and the political-economic system throughout the region was transformed. During this transformation there have been sweeping social changes, frequently for the worse. The purpose of this paper is to survey these adverse phenomena, to the extent that the available data makes this possible, paying particular attention to the question of whether they were caused by the transformation, or by other factors, and whether existing accounts of these phenomena offer a fair picture. The main issues considered are: What were the costs? Who paid them? Why has there been so little political protest? How does the present system change in the region compare with the previous one?....
4. Why has there been so little political protest?
Given the magnitude of the social costs of the transformation, one might have expected widespread political protest, with riots, strikes, political upheavals and economic policy reversals commonplace. In fact, with the exception of Albania in 1997, popular upheavals have been conspicuous by their absence. This in spite of the fact that the neoliberals have frequently warned of the populist dangers, and their opponents have frequently warned of the political dangers of the neoliberal policies. What explains this stability?
This question has been investigated by Greskovits. He stressed certain structural legacies of the old regime (absence of large inequalities, the initial absence of significant long-term poverty, provision of welfare services, absence of large shantytowns, compromised trade unions, tradition of cooperation between trade unions and management) which distinguished the situation in eastern Europe from that in Latin America. He also pointed to the structural and instititional consequences of the implemented neoliberal measures, such as the growth in unemployment, the decline in union membership, the growth of the private sector, the increase in employment insecurity, and the opportunity to protest by voting the government out, which have all contributed to political stability.
Greskovits also drew attention to the fact that an important reason for political stability is that neoliberalism has enhanced the possibilities for, and the gains from, expressing discontent by means of æexitÆ rather than ævoiceÆ (to use HirschmanÆs well- known distinction). The two main means of exit have been informalization, that is earning money in the informal sector, and emigration. In many countries the informal sector is large and provides an important part of the answer to the question as to why policies which have had such adverse effects on activities in the formal sector have given rise to such little organized opposition. Similarly, emigration is important throughout the region.
Both informalization and emigration can be considered economic pathologies resulting from the policies pursued. Informalization reduces fiscal income and undermines the financing of public services (and in the form of subsistence agriculture and petty retail trade is very inefficient). Emigration leads to the loss of large numbers of young, and often well qualified, potential workers. On the other hand, where informalization generates incomes that could not be generated in the formal sector (because of the grabbing hand, taxes, or inadequate incomes) it must be considered a positive phenomenon. Similarly, remittances from emigrants (as in Albania) or the return to their home country of those who have temporarily worked abroad, as in the Baltic states and Poland, can be a useful addition to a countryÆs human capital. Furthermore, emigration may benefit the migrants themselves, even if it represents a loss for the their country of origin.
Other factors strengthening the political viability of the measures adopted have been their international support (from the international financial institutions, the EU, and the international business community) and the gains from them to the elite (opportunities for looting, increased consumption, acquisition of overseas assets).
Greskovits concluded that eastern Europe exhibits a low-level equilibrium, with incomplete democracy and an imperfect market economy, and this is likely to be quite stable. While not a first best solution, it is viable and is a second best one.
In addition, there is an important factor not considered by Greskovits. The transformation has brought not only social costs but also social benefits. For example, the increased availability and variety of consumer goods resulting from price and trade liberalization has had many positive consequences. These range from the reduction in unwanted pregnancies resulting from the increased availability of contraceptives (most of which are imported), via the increased mobility resulting from the spread of car ownership (except in those capital cities where increased congestion has led to a decline in average speeds), to the cultural, recreational and economic (shuttle trade) benefits from increased foreign travel. Furthermore, the interest and variety of the media has frequently increased. Moreover, the possibilities for legal self-employment and entrepreneurship have greatly increased and have been seized by millions of people. In addition, the political changes have brought many social benefits, ranging from independent trade unions, schools/universities and churches, to the greater freedom of nations which formerly lived under an imposed and unwelcome political-social-economic system. These social gains, and their positive evaluations by the populations concerned (or at any rate those within them that have benefited from them) are also part of the explanation of the lack of political protests.
5. How does the present system change compare with the previous one?
a) The collapse of the Russian empire and the transition to socialism: Russia 1917-22
It is important to realise that the current transformation in eastern Europe is not an ordinary type of economic policy but a change of the socio-politico-economic system. This means that when thinking about its costs, it is appropriate to compare it not with, for example, conventional macroeconomic policies in OECD countries, but with the previous system change in the area. For the CIS countries, that was the collapse of the Russian Empire and the transition to socialism in 1917-1922, in the three Baltic countries the expansion of the Soviet empire and the transition to socialism in 1940-1941 and 1944-1949, and in the rest of the former eastern Europe the expansion of the Soviet empire and transition to socialism in 1945-1949. These systemic changes were also marked by substantial social costs. In the former Russian empire there was a long and bloody civil war, a variety of national wars (Finland, Poland, the Baltic and Central Asia), a major famine (in 1917-22, first in Central Asia, then in the Russian cities, and then along the Volga) and substantial emigration. In 1918-22, civil war, disease and famine seem to have caused about 12.5 million excess deaths. Emigration seems to have been about another 2-3.5 million. These events constituted a demographic disaster (although less than that of World War II). In this period there was also a huge decline in output and hyperinflation. Writing about the 1990s in ôthe former Soviet blocö, a recent UNDP report argued that: ôThe extent of the collapse in output and the skyrocketing nature of inflation have been historically unprecedented.ö This erroneous statement shows a complete ignorance of what happened during the previous system change in the FSU area.
b) The expansion of the Soviet empire and the transition to socialism: eastern Europe 1945-49
The number of victims of the expansion of the Soviet empire and transition to socialism in eastern Europe was much smaller than those of the collapse and system change in the former Russian empire, but not insignificant. The small-scale civil war in Poland in 1944-1947 seems to have cost about 20,000 lives. The deportation of Ukrainians from south-east Poland to the former German territories seems to have involved about 140,000 people. On the other hand, in the second half of 1952, at the height of Stalinism, there were only (according to official statistics) 49,500 political prisoners in Poland. The number of political prisoners seems to have been greater in Czechoslovakia, despite its smaller population.
The largest social cost of this period was probably the expulsion and flight of Germans from Poland, Czechoslovakia, Hungary and Yugoslavia, which seem to have involved about 9.5 million people. This major social cost can perhaps be treated more as a cost of World War II than of the change in the socio-political-economic system in the countries concerned.
6. Conclusions
(1) The transformation was a change of system that had serious adverse social consequences for much of the population. These consequences, however, were in general less than the costs of previous change of system in the region.
(2) These consequences included widespread impoverishment, a decline in employment, growth in unemployment, increased inequality, decline in publicly provided services, social exclusion, and in some countries a worsening of the health of the population.
(3) Some of the negative social phenomena observed during the transformation, and sometimes ascribed to the transformation, were not in fact caused by it. For example, although there were almost six million missing Russian men in 1994, it is not true that this was a consequence of transformation. Nor is it true that transformation directly followed a period of successful economic policy during which living standards rose.
(4) In Russia there was a sharp increase in mortality in 1988-1994 and in 1999, and there were analogous developments in other CIS countries (e.g. Kazakhstan). The main proximate causes of the increase in mortality in Russia in 1988-1994 seems to have been an increase in alcohol consumption and in stress. The main ultimate causes of the increases in Russian mortality seem to have been state collapse and state failure. The high levels of mortality in some CIS countries, notably Russia and Kazakhstan, which particularly affect adult males, are major socio-economic problems for those countries.
(5) It is not true that the declining population of Russia and some other countries are a sign that they are the victims of genocide. Some EU countries (Italy, Germany, Sweden) also have an excess of deaths over births. The long-term decline in the birthrate throughout Europe is a result of deep-rooted pan-European social trends. On the other hand, some sharp short-term fluctuations, such as the dramatic decline in the birthrate in the former GDR in the early 1990s, clearly did result from the transformation. The high level of mortality in Russia did worsen during the transformation, but the break with pan-European trends goes back to the mid 1960s.
(6) The transformation has led to the growth of a variety of socio-economic pathologies, such as corruption, criminalization, informalization, alcoholism, and tobacco and drug addiction.
(7) There are sharp differences between transformation countries. Whereas some are already (with respect to such indicators as health and corruption levels) Europeanized, others lag a long way behind EU levels. In place of the former homogenous socialist camp, a sharp polarization has developed between countries. Unfortunately, the majority of the population of the region live in the relatively unsuccessful countries.
(8) The absence of widespread political opposition to neoliberal policies is not necessarily a sign that these policies have widespread support. It is partly a sign that the inheritance from the old regime, and the structural and institutional consequences of the measures adopted, particularly the enhanced opportunities for exit, together with the international support for the measures, and the gains to the elite from them, have combined to make them feasible, and for some people attractive, despite their social costs.
(9) The transformation has brought not only social costs but also many social benefits (such as easier access to modern contraception, increased foreign travel, more interesting media, greater possibilities for legal self-employment and entrepreneurship, in some cases a reduction in national oppression, etc).
In the twentieth century the unfortunate people of the CIS were the victims of two imperial collapses and two abortive transitions (to an attractive socialism and to a civilized market economy) separated by only about seventy years.
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Excerpt US State Department 02 May 2000 Text: Patterns of Global Terrorism 1999 -- Eurasia Overview (State Department issues annual report May 1) (1,830)
Following is the text of the Eurasia Overview of the State Department's "Patterns of Global Terrorism: 1999" report:
(begin text)
PATTERNS OF GLOBAL TERRORISM: 1999 EURASIA OVERVIEW
[Armenia, Azerbaijan, Georgia, Kyrgyzstan, Russia, Tajikistan, Uzbekistan]
Five gunmen attacked Armenia's Parliament in October, killing eight members, including the Prime Minister and National Assembly Speaker. Later in the year a grenade was thrown at the Russian Embassy, damaging several cars but causing no injuries.
A major Central Asian regional crisis erupted in Kyrgyzstan when members of the Islamic Movement of Uzbekistan (IMU) twice crossed the border from Tajikistan and took hostages. Among the several dozen hostages taken in the second incident were four Japanese geologists, who eventually were released after several nations intervened; ransom was rumored to have been paid.
Russian cities, including Moscow, were subjected to several bomb attacks, which killed and injured hundreds of persons. Police accused the attackers of belonging to Chechen and Dagestan insurgent groups with ties to Usama Bin Ladin and foreign mujahidin but presented no evidence linking Chechen separatists to the bombings. The attacks prompted Russia to send military forces into Chechnya to eliminate "foreign terrorists." Neighboring Caucasus states within the Russian Federation as well as surrounding countries feared Russia's military campaign in Chechnya would increase radicalization of Islamic internal populations and encourage violence and the spread of instability throughout the region. The Russian campaign into Chechnya also raised fears in Azerbaijan and Georgia, as well as Russia, that the Chechen insurgents increasingly would use those countries for financial and logistic support.
Uzbekistan experienced several major attacks by IMU insurgents seeking to overthrow the government. In February five coordinated car bombs exploded, killing 16 persons, in what the government labeled an attempt on the President's life. In September the IMU declared a jihad against the Uzbekistani Government. In November the IMU was blamed for a violent encounter outside the capital city of Tashkent that killed 10 Uzbekistani Government officials and 15 insurgents....
Russia
In the fall a series of bombings in Russian cities claimed hundreds of victims and raised concern about terrorism in the Russian Federation. On 4 September a truck bomb exploded in front of an apartment complex at a Russian military base in Buynaksk, Dagestan, killing 62 persons and wounding 174. Authorities discovered a second bomb on the base the same day and disarmed it before it caused further casualties. On 8 and 13 September powerful explosions demolished two Moscow apartment buildings, killing more than 200 persons and wounding 200 others. The two Moscow incidents were similar, with explosive materials placed in rented facilities on the ground floor of each building and detonated by timing devices in the early morning. The string of bomb attacks continued when a car bomb exploded in the southern Russian city of Volgodonsk on 16 September, killing 17 persons and wounding more than 500 others.
A caller to Russian authorities claimed responsibility for the Moscow bombings on behalf of the previously unknown "Dagestan Liberation Army," but no claims were made for the incidents in Buynaksk and Volgodonsk. Russian police suspected insurgent groups from Chechnya and Dagestan conducted the bombings at the behest of Chechen rebel leader Shamil Basayev and the mujahidin leader known as Ibn al-Khattab, although Russian authorities did not release evidence to confirm their suspicions. Russian authorities arrested eight individuals and issued warrants for nine others believed to be hiding in Chechnya but presented no evidence linking Chechen separatists to the bombings.
In response to the apartment building bombings and to an armed incursion by Basayev and Khattab into Dagestan from Chechnya, Russian troops entered Chechnya in October in a campaign to eliminate "foreign terrorists" from the North Caucasus. The forces fighting the Russian army were mostly ethnic Chechens and supporters from other regions of Russia. They received some support from foreign mujahidin with extensive links to Middle Eastern, South Asian, and Central Asian Islamist extremists, as well as to Usama Bin Ladin. At yearend, Chechen militant activity had been localized in the North Caucasus region, but Russia and Chechnya's neighboring states feared increased radicalization of Islamist populations would encourage violence and spread instability elsewhere in Russia and beyond.
There were few violent political acts against the United States in Russia during the year. Anti-NATO sentiment during the Kosovo campaign sparked an attack on the US Embassy in Moscow in late March when a protester unsuccessfully attempted to launch a rocket-propelled grenade (RPG) at the facility. The perpetrator sprayed the front of the building with machinegun fire after he failed to launch the RPG. At yearend no progress had been made in identifying or apprehending the assailant.
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Web page for CDI Russia Weekly: http://www.cdi.org/russia
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