October 20, 2000    
This Date's Issues: 4590 • 4591 • 

Johnson's Russia List
#4591
20 October 2000
davidjohnson@erols.com


[Note from David Johnson:
1. UPI: Ariel Cohen, Russian economy plagued by unaddressed problems.
2. Bloomberg: Russia's Gref on Economy, Monopolies, UES, Banks.
3. Stanislav Menshikov: DO NOT LIBERALISE CAPITAL EXPORTS.
Beware of New Coalition of EBRD and Oligarchs.
4. Fred Weir: New books. 
5. Trud: MILITARY DEADLOCK. Not even the contours of the military reform 
have been outlined yet. (Interview with General Andrei NIKOLAYEV, chairman 
of the Duma defence committee)
6. The Guardian (UK): Amelia Gentleman, Russian crusaders take to the 
railways. Orthodox church battles influx of western missionaries by 
launching prayer train to take its faith to remote areas.
7. Financial Times (UK): Andrew Jack, Higher pay seen as vital for reform.
8. Itar-Tass: Moscow mission sells best of British education.
9. Marian Dent: Business Schools.
10. John Dabbar: RE: Do Americans Need to Know Russian?
11. HERO OF THE DAY NTV PROGRAM: INTERVIEW WITH BORIS BEREZOVSKY.
12. Bloomberg: Russian Population Shrinks Record 500,000 to Aug, 
Agency Says.
13. Reuters: Russia Duma passes '01 budget draft in 2nd reading.]
******


#1
UPI
Analysis: Russian economy plagued by unaddressed problems 
By ARIEL COHEN
(Ariel Cohen, PhD., is Research Fellow at the Heritage Foundation.)


WASHINGTON, Oct. 19 (UPI) -- The Russian economy may have topped out and
is on the way to decline, Russian and Western investors and analysts warned
recently at a top-level investment symposium.


At first sight, the prediction made at the U.S.-Russian Investment
Symposium, organized by Harvard University's Kennedy School of Government,
seems unlikely. The September 2000 industrial production figures announced
in Moscow on Oct. 18 were 7.2 percent higher than in September 1999.


However, the figures showed the second-slowest growth since the Russian
economy started to bounce back in June last year.


The reason for pessimism is an unfortunate confluence of macroeconomic and
structural factors. The stronger ruble, projected budget deficits (albeit
small), anticipated decline of oil prices -- as well as vast, expensive and
unfriendly government apparatus -- all contribute to analysts' gloom and
doom.


Rapacious bureaucracy is seen as one of the costly evils.


According to Michael Khodorkovsky, the chairman of Yukos, Russia's
second-largest oil company, uncontrolled and rapacious bureaucracy is the
most serious problem of contemporary Russia's business.


The costs of government bureaucracy in post-communist Russia have more
than quintupled, from 1.8 percent of Gross Domestic Product in 1990 to 10
percent in 2000. Not counting recent unanticipated revenue from high oil
prices, these costs may be as much as 30 percent of the GDP, a real
budgetary "black hole," he said.


The number of central government bureaucrats has doubled. And in a recent
World Bank Institute survey, 32 percent of the businesses in Russia report
that high levels of bribes are necessary to maintain operations.


Khodorkovsky warned that without investment in Russia's once-impressive
education system, Russia risks becoming a Third-World style economic
backwater. The country is also lagging in development of foreign economic
ties and in democratic development necessary to keep younger,
college-educated Russians at home.


"People are mobile. Without democracy, they will not want to live in
Russia," he told the Boston conference, as the Kremlin's head of business
affairs, Vladimir Kozhin, and Economic Development and Trade Minister German
Gref listened attentively.


Murky corporate governance is another evil. Investors do not know who owns
what, who the insiders are, and how exactly the shareholder value is
managed, experts told the conference.


George Soros, the famed American investor, attacked the lack of
transparency and accepted standards of corporate governance in major Russian
"blue chip" companies such as RAO UES, the majority state-owned electric
monopoly, and the Gazprom natural gas giant.


RAO UES, headed by the former First Deputy Prime Minister and Finance
Minister Anatoly Chubais, accounts for 50 percent of capitalization of the
Russian stock market and 90 percent of daily activity in Russian stocks.


"These situations need to be sorted out, and until such time as that
happens, the (Russian) market will be skittish," Soros said.


Jim Nail, director of the Moscow-based financial research company ATON,
said corporate governance remains murky and prevents Russian and foreign
financiers from investing in the country.


The Russian Central Bank is part of the problem, not of the solution, Nail
said. Since the financial collapse of 1998, the Russian private banking
system has not been restructured by the central bank, which itself is
repeatedly accused of major corruption and mismanagement. Russian commercial
banks today are awash with cash, but they are afraid to lend -- there are no
property rights protection and no legal recourse to recover investment if a
deal goes awry.


"The Russian financial sector is not performing its role of an
intermediary," added David Lingelbach of the Institute for SME Finance,
also based in Moscow.


The Russian central bank is headed by Victor Gerashchenko, a communist-era
financial operator and the former head of the notorious USSR Narodny Bank in
London and Beirut, Lebanon. The bank, the Soviet international financial
arm, was accused of supporting international terrorist activities in the
1960s and 1970s.


Gerashchenko used to support printing money to keep the Soviet industrial
behemoths afloat and has been accused by senior Duma members and former
cabinet ministers of siphoning off billions of dollars in IMF loans to
offshore straw companies. From 1992 to 1994 he reportedly forwarded
hundreds of millions of dollars from central bank credits to the Communist
Party and the entities it controlled.


Nail said that if oil and other commodity prices decline and the ruble
becomes stronger, the energy-driven cash flow will subside, domestic
export-substitution manufacturing will wither, and the recovery will go out
with a whimper.


Many prominent business leaders at the conference agreed that Russia will
be doomed to ride the boom-and-bust cycle of the commodity price
roller-coaster for years without the introduction of shareholder rights,
financial and managerial transparency, and Western accounting practices.


******


#2
Russia's Gref on Economy, Monopolies, UES, Banks: Comment

Moscow, Oct. 20 (Bloomberg)
-- Russian Economy Minister German Gref made the following comments on 
the government's planned reforms of state-controlled electricity monopoly RAO 
Unified Energy Systems, the state railways and the banking system. 


Gref spoke in an interview published by Russian daily Kommersant. 


On reforms of electricity, railways monopolies: 


``I don't think this has been stalled. In each of those industries there are 
very complex processes happening. 


``Reforming the electricity industry involves very complex tasks, such as 
setting up and functioning of the wholesale electricity market.'' 


On minority shareholders in UES, some of whom had objected to a management 
reorganization proposal: 


``The protests have eased off. The shareholders understood that the state 
will protect their rights and interests. 


``I think we will be able to solve this problem, though honestly speaking in 
all countries where there was restructuring of large monopoly companies, 
there always were problems with minority shareholders.'' 


On Sberbank, Russia's state-savings bank: 


``In our (economic policy) program we have a point on ending state guarantees 
of deposits in Sberbank and moving to a system where we would guarantee 
private deposits up to certain sum in all commercial banks. 


``This will definitely help end monopolization of that market and when 
Western banks enter the market the problem will disappear. Unfortunately, 
foreign banks are not in a hurry to get in here.'' 


******


#3
From: "stanislav menshikov" <menschivok@globalxs.nl>
Subject: DO NOT LIBERALISE CAPITAL EXPORTS
Date: Fri, 20 Oct 2000 


"MOSCOW TRIBUNE", 19 October 2000
DO NOT LIBERALISE CAPITAL EXPORTS
Beware of New Coalition of EBRD and Oligarchs 
By Stanislav Menshikov


So far, we heard precious little from the European Bank for Reconstruction
and Development (EBRD) in London except that it was a business-like
financial institution that did not meddle in political issues but went
routinely about its main function, I.e. extending loans to Russian
industrial and infrastructure projects. In the course of the last decade,
it managed to become one of this country's leading foreign investors.
Disputes around domestic economic policies (and accompanying scandals) were
left to the IMF, and for good reason. EBRD was careful about preserving its
good name. Not any more.


The Bank has just published a critical review of Russian economic strategy.
It claims that the recent macro-economic improvement is almost entirely due
to two "fickle factors": the devaluation of the rouble and the soaring
world price of oil. What is needed now, claims the Bank, is to promote a
whole range of long-overdue economic and legal reforms to revive the
shattered confidence of investors. "Without demonstrable progress in these
areas, Russia's impressive recovery is not sustainable." Among the
necessary reforms mentioned is "a clear and enforceable bankruptcy law;
taxation of profits, not turnover, curbing the unfettered power of the
financial oligarchs and national monopolies". 


It is remarkable how writers of reports from different international
financial institutions manage to reproduce each other's primitive arguments
and shallow conclusions. It is by now clearly demonstrated that the role of
high oil prices and rouble devaluation as factors of Russian economic
growth is grossly exaggerated. Yet, most writers keep parroting that same
tune without giving it a second thought. They also don't seem to realise
that the need for bankruptcies is minimal when businesses are booming, that
the turnover tax in Russia as the principal means of guaranteeing a steady
flow of government revenues has long been discontinued and that the profit
tax is now the leading source of federal revenues. On all these points, the
EBRD report reads like last year's weather forecast. Its recommendations
are either late or devoid of utility. But it is worth while paying special
attention to the Bank's advice to curb the power of oligarchs. The reason
is paradoxical.


EBRD president Jean Lemierre recently met premier Kasyanov and raised
concerns over the policies of the Bank of Russia and its chairman Viktor
Geraschenko. The latter has allegedly been too slow in introducing
international accounting standards to the Russian banking system. More
importantly, he has developed staunch resistance to demands that
restrictions on capital exports be lifted. Only the day before, the premier
had met a group of oligarchs who claimed that capital channelled from
Russia to offshore banks was "of vital importance for the economy" and
should therefore be freed. Rumours were that Mr. Kasyanov expressed
sympathy with this idea and that a strong anti-Gerashchenko coalition was
in the making. 


One can understand the desire of neoliberals in the government to get rid
of the independent central banker and appoint their own man to that key
job. Attacks on Mr. Geraschenko have a long history. One can also
understand the desire of the EBRD and its president to play an active role
at the Putin-Kasyanov court. To gain influence they are even prepared to
join ranks with the very same oligarchs whose power they are allegedly
eager to curb. But it is impossible either to understand or accept
liberalising capital export (or rather, flight) from Russia.


In recent years, annual capital drain has amounted to $15-20 billion. This
is 5-7 percent of the country's GDP, or a third to half of domestic capital
investment. It is also a few times larger than capital inflow from abroad.
Russian big business is complaining about high taxes, while stashing
superprofits abroad instead of reinvesting at home. As a result, industry
is eating up its stock of fixed capital and threatening the economy with
physical stagnation in the next few years.


Even the IMF has finally admitted the presence of this black hole in the
Russian economy and joined those who have been urging it be closed all
along. But now the EBRD together with our oligarchs wants it to be made
permanent. By the way, their attitude shows that the capital fleeing the
country is not necessarily or primarily Mafia money but largely funds
originating in the richest branches of industry. Domestic capital
investment this year has grown by 17 percent, but investment in oil and gas
has fallen by 10 percent.


One can understand those Russian businessmen who, particularly after 1998,
do not want to use unstable domestic banks and prefer the more reliable
foreign-based institutions. But it is hard to believe that the $15-20
billion annually exported abroad are simply "resting" on offshore accounts
and not taking part in the multitrillion migration of short-term capital
that is today the core of international financial profits. So far, Russia
gets no benefits from these transactions and will get even less if the
oligarchs have a free hand in that business.


Neoliberalism is clearly not the way to save the Russian economy from
capital-bleeding.


******


#4
From: "Fred Weir" <fweir@online.ru>
Subject: new books
Date: Fri, 20 Oct 2000 


Please find below a list of new books, some in Russian, some in English,
about Russia and world relations, by several leading scholars. They include,
I admit, my mother-in-law. Since the publisher is not a better-known one,
some readers of JRL may not hear about some of these publications otherwise.
Trim as you find necessary. Cheers, Fred.


FORTHCOMING TITLES:


The Great Russian Historian M.Rostovtsev: the Years in Exile. By
G.M.Bongard-Levin. (in Russian)
0-7734-3226-4 496 p. $109.95 regular price, $49.95 subscription price


Problems of Historical Geography of Eastern Europe (Antiquity and the Early
Middle Ages). By A.V.Podossinov (in Russian)
0-7734-3187-x 396 p. $99.95 regular price, $49.95 subscription price


Old German Cosmology: Language and Myth. By T.V.Toporova (in Russian)
0-7734-3212-4 168 p. $79.95 regular price, $49.95 subscription price


Old Rus Through the Eyes of Medieval Icelanders. By T.N.Jackson (in
Russian)
0-7734-3185-3 412 p. $109.95 regular price, $49.95 subscription price


Russia and the Balkans: From Cathrine the Great till World War 1. By
V.N.Vinogradov
0-7734-3218-3 400 p. $99.95 regular price, $49.95 subscription price


Children of Russian-African Marriages. Destinies. Culture. Future. By
N.L.Krylova
0-7734-3183-7 400 p. $99.95 regular price, $49.95 subscription price


South Asia in the Contemporary World. A Viewpoint From Moscow. By
V.Y.Belokrenitskii, V.N.Moscalenko, T.L.Shaumian
0-7734-3177-2 400 p. $99.95 regular price, $49.955 subscription price


"My India: the Light of Holiness" (Ancient Indian Civilization - View From
Russia). By G.M.Bongard-Levin
0-7734-3217-7 400 p. $99.95 regular price, $49.95 subscription price


Europe in the 20th Century: History and Perspectives. By
A.Chubaryan
0-7734-3172 -1 400 p/ $99.95 regular price, $49.95 subscription price


Federalism in Russia: Lessons of History. By G.Marchenko
0-7734-3370-8 400 p. $99.95 regular price, $49.95 subscription price


Russia and China: 400 Years of Interstate Relations. By V.Myasnikov
0-7734-3199-3 400 p. $99.95 regular price, $49.95 subscription price


The Soviet Union at War 1941-1945: A View From Russia. By O.A.Rzhevsky
0-7734-3179-9 400 p. $99.95 regular price, $49.95 subscription price


Ancient Hadramawt. Recent Discoveries by the Russian Expedition. By A.Sedov
0-7734-3400-3 400 p. $99.95 regular price, $49.95 subscription price


Tibet: Russia in the "Great Game". By T.L.Shaumian
0-7734-3361-9 400 p. $99.95 regular price, $49.95 subscription price.
MELLEN
An International Scholarly Publisher of Advanced Research
2000
Scholarly Monographs in the Russian Language


The Edwin Mellen Press
415 Ridge St./P.O. Box 450
Lewiston, NY 14092-0450
Phone: (716)754-8279


The Edwin Mellen Press
P.O.Box 67
Queenston, Ontario
Canada LOS 1 LO


Mellen House
17 Llambed Ind. Est.
Lampeter, Ceredigton
Wales SA 48 8LT
United Kingdom
Phone:(01570)423-356
FAX (01570)423-775


US and Canada
Orders/Customer Service:
(716)754-2788
FAX (716)754-1860
e-mail for customer service:
cs@wzrdd.com


UK and Continent
Orders/Customer Service:
(01570) 423-356
FAX (01570)423-775
Emp@mellen.demon.co.uk
www.mellenpress.com


******


#5
Trud
October 20, 2000
[translation from RIA Novosti for personal use only]
MILITARY DEADLOCK
Not even the contours of the military reform have been 
outlined yet, General Andrei NIKOLAYEV, chairman of the Duma 
defence committee, told Trud military correspondent Sergei 
ISHCHENKO

Question: The largest recent achievement of the State Duma 
was the approval of the 2001 budget in the first reading.
Spending on national defence is up by 66 billion roubles (from 
140 to 206 billion roubles). But the military say this would 
not suffice for restoring even a semblance of order in the 
sphere of national defences. Do you agree?
Answer: Indeed, next year's defence spending will grow 
considerably in absolute figures, but this is only a part of 
the truth. The other part is that military spending will go 
down from 2.63% of the GDP this year to 2.4% next year. Let's 
face the truth and admit that we will not be able to resolve 
major problems in the military sphere. 
However, the greatest drawback of the item "National 
Defence" is the 30:70 proportion, deadly for the armed forces, 
of spending on the provision of weapons and military hardware 
(30) and on maintenance (70). Maintenance is what the army 
"eats," figuratively speaking. It includes money allowances, 
military medicine, food and clothing allowances. Hardly any 
money will remain for the improvement of weapons and other 
material base of defence. The situation was diametrically 
opposite in Soviet times, which is why we slept well at night. 
We are told that the priority in the next year's military 
spending will be a certain stabilisation of what we already 
have. But this is a way into nowhere in modern Russian 
conditions. 

Question: And what about the military reform?
Answer: There is no military reform, and judging by 
everything, nobody intends to carry it out. Any reform begins 
with the allocation of additional and considerable funds. Not 
with saving money, but with a considerable increase in 
allocations. Next, a careful and effective spending of these 
additional funds can ensure the reduction of military expenses 
at a fundamentally new level. 
Regrettably, the new budget does not provide for this. I 
think Putin as the Supreme Commander understands this logic and 
hence questions the project that the Defence Ministry and the 
General Staff presented to him in the guise of military reform.
This is probably why he called off a session of the Security 
Council, which was to discuss this question in late September, 
and decided to hold a simple conference instead. The trouble is 
that the question was not ready for discussion.
According to my information, at that conference the 
president asked those who are responsible for this to answer 
the following key questions: What kind of war can happen in the 
future? And proceeding from this, what kind of army we should 
have and what we should prepare the country for? There are no 
answers to these questions today, which means that requisite 
decisions cannot be made. 
We have stated that the armed forces would be reduced by 
350,000 in the next few years. Is this an element of the 
military reform? I don't think so. Simply, Russia has become 
aware of the bitter fact that it cannot properly maintain the 
current number of men and officers and hence decided to 
mechanically reduce its defence potential. But the most 
important decisions are not made, decisions on scrapping this, 
developing that, and giving priority attention to some other 
element, investing money into it and subsequently creating 
modern and effective military mechanisms.
Instead, we say: "We'll take a little from you and a little 
from him. Your structures will survive - but lose their combat 
readiness." This is a deadlock. 
So, we cannot seriously regard the idea of Chief of the 
General Staff Anatoly Kvashnin, who says: "Let's liquidate the 
Strategic Missile Force, creating in its place additional four 
divisions for the Land Force." What did General Kvashnin think 
two years ago, when he decided to liquidate the main command of 
the Land Force? Should we restore the main command now? We are 
not playing games here; these are questions of vital importance 
to the state. 
I don't think Putin's decision on the aforementioned 
reduction of the armed forces was final. True, it has been 
included in the budget, yet I think it can be reviewed if we 
revise our attitude to the military reform. Unlike Boris 
Yeltsin, Vladimir Putin has his doubts and gives the generals 
and politicians time to think twice, which testifies to a high 
measure of responsibility. This is a chance [for the army]. 

Question: Let's get back to the defence budget, because 
money is the main thing, after all. Is the 2001 budget better, 
even if slightly, than the previous defence budgets?
Answer: Yes, I think that certain progress has been made.
Judging by everything, the final wording of the budget will 
transform the credit indebtedness of the Defence Ministry 
(50-60 billion roubles) into the internal debt of the state. As 
Kudrin said, the government was prepared to do this. Otherwise, 
the actual 2001 defence budget would have amounted to barely 
146, and not 206, billion roubles. 
Our second achievement is the allocation of additional 
12.6 billion roubles on expenses that had not been included in 
the "National Defence" item before, but were financed by other 
sectors, such as international activities or the maintenance of 
the federal railway troops. Kudrin admitted that the requisite 
sum would be taken from additional revenues in time for the 
second reading.
Third, the deputies forced the government to admit that 
the problem of the monetary maintenance of servicemen must be 
tackled immediately, beginning in 2001. Under the law, military 
service is a special type of state service. However, the salary 
of bureaucrats is 2.3 times higher than the money allowance of 
the corresponding groups of officers and generals, even with 
due consideration for their privileges. The government will not 
be able to quickly level off their salaries, of course, but it 
can approve a programme for moving towards this goal. 
And lastly, our fourth achievement is that a considerable 
part of additional expenses will go to the army next year. A 
total of 16% of these allocations will be spent on improving 
the servicemen's money allowances, while 20% will be spent on 
defence research and the creation and purchase of weapons and 
hardware. 

Question: You say priorities must be clearly outlined in 
defence spending. What are these priorities?
Answer: Take weapons. We have more than enough of them. We 
have so many tanks that we can supply everyone with them. You 
say new tanks will cost too much? We can do without them now. 
But we must modernise the old ones, spend a little money on 
raising their standards to the level requisite for the next 
five years.
And spend additional revenues on fundamental science, the 
elements base, on R&D. 
If we want to remain a leading world power, we must create 
novel materials, novel weapons and novel equipment now. Bring 
them to the stage of pre-batch production and stop there. 
Russia has enough money for that. And when the economy grows 
healthier, we will only have to order the production of these 
materials, weapons and equipment and quickly rearm the armed 
forces. 
If we do not set ourselves these priority tasks, the 
Russian army will be doomed to an ever increasing lag.

******


#6
The Guardian (UK)
20 October 2000
Russian crusaders take to the railways 
Orthodox church battles influx of western missionaries by launching prayer 
train to take its faith to remote areas
Amelia Gentleman in Moscow 


An extravagantly gilded church on wheels drew out from one of Moscow's 
central railway stations late last night, embarking on the first stage of an 
unusual evangelical crusade to some of Russia's most impoverished regions. 
This mobile church is the latest weapon in an ongoing battle being waged by 
the Russian Orthodox church to win back believers in remote areas - many of 
them already being wooed by zealous missionaries from abroad. 


The night train arriving in Archangel this morning will be carrying two 
newly-built church carriages, staffed by six priests and a team of 12 singing 
trainee clerics. 


Moscow railway workers have spent the past six months ripping the plastic 
brown bunks and floors from redundant train compartments, replacing them with 
every thing needed to create a Russian Orthodox church: a golden pulpit and 
altar, a collection of richly-painted icons and bells hanging from the 
ceiling. 


A specialist carriage refitting factory - famous during Soviet times for the 
luxurious train compartments it built for travelling Politburo members - was 
contracted to fit out the interior. 


Stained glass windows have been fitted in place of the grime-encrusted 
originals. The gloomy brown and green of the state railway fleet have been 
stripped away and replaced with gold leaf. The second compartment has been 
converted into a travelling monastery for up to 20 priests, complete with a 
small library. 


Beggars and drunks were removed from the freshly-scoured platforms at 
Moscow's Kievsky station for the consecration ceremony on Wednesday - when 
Patriarch Alexei II sprinkled holy water on to the train. He was joined by 
the railways minister, Nikolai Aksenenko (a former prime minister and 
one-time associate of the entrepreneur Boris Berezovsky) whose department 
paid an undisclosed sum for the project. 


"This is the most expensive carriage in all Russia," the deputy head of the 
train factory revealed. "The gold leaf alone cost 2m roubles [£50,000]." 


Over the next few weeks the carriages will travel by night to isolated parts 
of the frozen northern Archangel region, stopping at distant villages which 
have tiny railway stations but no church. 


During the day the priests will carry out an intensive programme of weddings, 
funerals and christenings and conduct prayer services for the locals. The 
trainee clerics will sing from the in-built choir section of the church 
carriage. 


Father Sergei Popov, the train's senior priest, said they would be travelling 
primarily to regions where there were high levels of unemployment, poverty 
and alcoholism. 


"Most of the village churches were destroyed after the revolution. People 
like these are in 17desperate need of spiritual support," he said. 


He said his mission was also to ensure that this spiritual support was not 
provided by representatives from the Jehovah's Witnesses movement, the 
Mormons or any of the international sects which have been recruiting huge 
numbers of followers in Russia since religious freedom returned. 


"We want to bring these lost and neglected people back to the Russian 
Orthodox faith," Father Popov said. 


This is Russia's second church on wheels. Tsar Nicholas II ordered the first 
to be built in 1896 to take the state religion to the heathen heartland of 
Siberia. 


******


#7
Financial Times (UK)
October 20, 2000
Higher pay seen as vital for reform RUSSIAN CORRUPTION: 
By ANDREW JACK


Russian judges and civil servants would be less corrupt if they were paid
more - up to 20 times more - according to one of the country's deputy prime
ministers. 


In an interview yesterday Viktor Khristenko said he thought the top 2,000
federal civil servants should receive 15- to 20-fold pay increases, which
would raise their salaries to about Dollars 3,000 a month. 


"One of the most important aspects of reforming the state is that jobs have
to be secure and well paid," he said. 


"Reform of the courts requires raising wages to a level sufficient to make
them independent. Without that it will be impossible to imagine efficient
implementation of our reforms." 


However, Mr Khristenko stressed that he was speaking in his personal
capacity, and that his arguments for wage increases had been rejected in
the most recent cabinet discussions for the 2001 budget. 


The budget is set to receive its second reading in the Duma, the lower
Russian parliament, today. 


Mr Khristenko acknowledged that concerns about corruption were raised by
"almost everyone including foreign investors", while stressing that wage
increases for the public sector would be politically difficult for Russian
voters to accept. 


He said that the government was on track with the implementation of its
economic reform programme, including the swift parliamentary approval of a
balanced budget and changes to the country's tax code. 


The most important steps for reform over the coming months concerned the
restructuring of the country's natural monopolies, including the gas group
Gazprom, the electricity utility UES and the railways. 


The primary focus of reforms to Gazprom would be to ensure transparency in
its transactions, the end of barter payments, and freer access to the gas
pipeline system for the company's competitors, he said. 


The deputy premier added that efforts were being made to reduce the sharp
difference in price between Gazprom's shares traded in New York and in the
domestic market. 


He avoided suggestions that the government would break up the group, saying
that "you can cut a loaf of bread into little pieces, but no one can make
bread from the crumbs". 


Ahead of a meeting with President Vladimir Putin, Anatoly Chubais, head of
UES, and Rem Vyakhirev, head of Gazprom, today, Mr Khristenko said that the
government fully supported Mr Chubais' plans to cut off electricity
customers who did not pay their bills during the coming winter months. 


He said he thought that legislation and decrees necessary to implement
Russia's new energy production sharing agreements and 30-year tax regimes
for oil and gas exploitation should be completed by May next year. 


******


#8
Russia: Moscow mission sells best of British education 
ITAR-TASS news agency 


Moscow, 20th October: Elite schools from the United Kingdom's private
education system are in the Russian capital this weekend [21st-22nd
October] to promote the best of British schooling among potential students
from Russia - and to challenge Russian scholars at football at the Moscow
Dynamo soccer stadium. 


Representatives of academic institutions that have been a world-famous part
of British culture for centuries flew in to stage an exhibition promoting
the academic excellence of 16 leading fee-paying schools. Their mission is
to chase big-money business among the brainy-bright sons and daughters of
rich Russian mums and dads. 


The schools' goals are the fat wallets of doting parents seeking
prestigious education for their offspring. Their targets are parents
wealthy enough to lash out fees that can drain their pockets of 15,000
British pounds a year for full-time board, lodging and tuition. 


Their sales pitch is an academic environment that's bred an elite in
British society, provided the backdrop for countless novels, films and
plays about these unique and sometimes eccentric British institutions, and
nurtured the children of privileged parents from countries around the world. 


Russian scholars are said to be substantial money-earners these days for
British boarding schools aiming to make themselves "global villages" where
many nationalities and cultures combine. 


According to the British Council, the education and culture section of the
British embassy in Moscow, young Russians are studying in increasing
numbers at British boarding schools. Eighty per cent of all those going to
such schools abroad choose Britain as their destination, a Council
spokesman told ITAR-TASS. They number today around 500, compared with just
20 four years ago. 


While the schools' Moscow mission was principally on the scholarly side,
there was yet another goal aimed at bringing British and Russian pupils
together. Six national soccer teams from British and Russian independent
schools are to be on the football pitch at Dynamo on Saturday, in a match
to be kicked-off by Britain's ambassador to Moscow, Sir Roderic Lyne. 


A friendly knock-out is to feature players from Millfield School, from
Street, in Somerset, once attended by a grandson of former Russian
President Boris Yeltsin, Buckswood School, from Uckfield in Sussex,
attended by Russian pop star's son Rodion Gazmanov, and Llandrillo College,
in North Wales. 


Their opponents are teams from Russia's Gazprom education centre, Moscow
School of Economics and the private school, Premier. 


******


#9
From: "Marian Dent" <mdent@pericles.ru>
Subject: Business Schools
Date: Fri, 20 Oct 2000 


Regarding the article from the Independent on Kingston Business School, your
readers might be interested to know that this is far from the first Western
MBA program in Russia. In Moscow alone there are several MBA programs for
Russian students, the most well known being AIBEc (American Institute of
Business & Economics) run by list subscribers Edwin & Kitty Dolan, Cal State
Hayward, and Moscow University Touro/Dowling. There are also some others
that offer MBA's by correspondence (e.g. Britain's Open University). The
MBA degree has recently gained official state recognition, and therefore
Russian business colleges (the Higher School of Economics for example) are
also beginning to offer the degree. Merlin-Falcon, a British listing
service of international MBA programs, lists 13 different MBA's in
Russia--including programs in St. Petersburg, Novosibirsk and the Russian
Far East. There are many more, of course, who have not joined this listing
service. The degree has gotten so well established that Dengi does a rating
service of Russian MBA's and in Moscow that there is an annual contest for
MBA student case-studies in which 5 or 6 different schools participate to
see whose students can present the best cases in Russian and in English.


Our training center prepares Russian students to take Western MBAs, and we
can say definitively that hundreds of Russian students have already taken
MBAs at top Western universities and returned to Russia to work. So the MBA
talent pool in Russia is not nearly as slim as it once was. Most programs
offered in Russia are evening programs because they attract the students who
want to stay in Russia so that they can work and study at the same time.


While Russian MBA's are not really our specialty, (as our students are
mainly preparing to get into Western programs) if anyone would like to know
anything more about MBA programs in Russia we would be happy to provide any
information we have.


Marian Dent
ANO Pericles
ABLE (American Business & Legal Education) Project
Tverskaya Ul 10, Suite 319
Moscow 103009 Russia
7-095-292-5188/6463
mdent@pericles.ru


*******


#10
From: "John Dabbar" <Dabbar@CPC.Ru>
Subject: RE: Do Americans Need to Know Russian?
Date: Fri, 20 Oct 2000 


I would like to add my comments to the debate on language. Although the
thread is a bit stale, the issue is timeless:


The points raised by several writers recently give rise to a concept I feel
is vital for any person living (not merely visiting) in a foreign country:
learn the language. If one limits their experiences in Russia to
English-speaking Russians, a huge segment of the population and their
culture will be missed. In fact, I would assert that English-speaking
nationals, by the nature of knowing the second language and therefore
interacting with its native speakers, begin to acquire a shade of cultural
identity which correlates with the second language. My data on this is not
analytical, but is based on my experience living and working in Russia,
Egypt, Japan, and Germany over the years. 


At the same time, it is the rare person who is talented/committed enough to
learn a foreign language prior to vacationing in a country where the
language is spoken. And my experience is that many years of successful work
can be accomplished with a combination of tourist-level Russian and a
dedicated translator. I have been fortunate during my time in Russia to work
with several very talented translators, who are able to get the point across
in negotiations and contract language, and without whom my work would have
been impossible. Conversely, I have watched negotiations fall apart when the
translator couldn't get across the essence of the position. My second point
of advice: Don't cut corners on translation services.


But one needs to differentiate between results and relationships. I have
found that many of my Russian business contacts will tell me things
one-on-one that they would not say if the words needed to go through a
translator. To restate the painfully obvious, this is why many of the most
successful American business people in Russia are Russian-Americans that
grew up speaking the language.


Having said that, I can appreciate Rowell's experiences. I arrived in Russia
with two (albeit useful) words in my vocabulary: "Vodka" and "da". Although
I quickly learned that these two words provided an almost unlimited
opportunity to meet and interact with Russians, business results fell a bit
short.


******


#11
TITLE: INTERVIEW WITH BORIS BEREZOVSKY
(HERO OF THE DAY NTV PROGRAM, 19:30, OCTOBER 17, 2000)
SOURCE: FEDERAL NEWS SERVICE


Anchor: Hello and welcome to Hero of the Day program. I am
Andrei Norkin. Prominent Russian businessman Boris Berezovsky was
today summoned to the Prosecutor General's Office to be
interrogated as a witness in the so-called Aeroflot case. No
sensations occurred and Boris Berezovsky is in our studio. Good
evening, Boris Abramovich.


Berezovsky: Good evening.


Q: Immediately after the interrogation you said that
everything passed off calmly and the investigator's behavior was
civil. Didn't you get any unpleasant sensations? After all, the
Prosecutor General's Office is not the most comfortable place to
be.


A: My sensations is a special topic. You can't help having
unpleasant sensations when you go for interrogation to the
Prosecutor's Office, especially if it happens to be the Prosecutor
General's Office. So, the sensations were not simply unpleasant,
but wretched. Especially since it has been dragging on for two
years with the same underlying idea. And the idea is that each time
the authorities, no matter who represents them, feel uncomfortable
in connection with my actions it is reopened in the most primitive
way by inviting me to the Prosecutor General's Office and making
things miserable for me. It happened under Yevgeny Maximovich
Primakov who issued orders to open a criminal case against me in
violation of the Criminal Code of the Russian Federation. He was
the Prime Minister at the time and he had no right to interfere in
the work of the Prosecutor General's Office under the Constitution
of the Russian Federation.
Shortly afterwards Yevgeny Maximovich was somehow deflated and
the case, too, was deflated. And then the new President was
inflated, Vladimir Vladimirovich Putin, and he embarked on the same
well-trodden path. You may have noticed that there is a clear
pattern. Actually nobody cares about it except myself, but there is
a clear pattern as to when the case begins to grow and then die
down. It is connected with the fits experienced by those at the
top. And now we heard Vladimir Vladimirovich Putin who expressed
his displeasure with the way ORT covered the Kursk submarine
tragedy speaking in New York. He said quite distinctly that in
general Berezovsky should be careful because he was still
implicated in the Aeroflot case. And he said that while today he is
a witness tomorrow he may become an accused.


Q: Investigator Filin today said that he cleared up a range of
issues that interested him. But you, on the contrary, said that the
aim of the interrogation and of your summons to the Prosecutor
General's Office is still unclear to you.


A: Well, because Filin is a new man, you know that there was
Volkov before him, naturally, everything I said to Filin was new to
him. So, I don't think one should be surprised that he has found
out something new for himself. I have learnt nothing new during
this --


Q: As far as I understand --


A: This was not the first time I was interrogated on the same
case.


Q: I see. I would like you to speak now in more detail about
your press conference yesterday. Because I think there are some
loose ends. I would like you to comment on them. Let us start with
the constructive opposition which you have proclaimed. In my view,
it is still an abstract notion. You speak about elites which could
oppose the actions of the authorities, but for some reason you
don't mention names. Can you name these prominent individuals who
support you and share your views? Do they exist?


A: Of course you know that there are a lot of such people. The
problem is that those who are more sensitive to the nature of the
times than others, those who are most aware of the danger of the
course on which the new administration has embarked, most of these
people are afraid because the administration has chosen a fail-safe
instrument of influence -- fear.


Q: And how can they support you if they are so afraid that
they even don't want their names to be mentioned.


A: Well, not all of them are afraid. I would like to tell you
about a parallel event, I mean the meeting yesterday of the people
who have assumed the civic and political responsibility of managing
the shares of ORT. Obviously, this was a political decision. It is
not an economic decision. These people won't derive any economic
benefits, they will suffer economic losses.
And the names are totally new. I am not suggesting that they
have signed up for the constructive opposition at the same time.


Q: But as far as I remember, there are no politicians among
these 14 people.


A: We are talking about a party, or a movement, to be more
precise, because initially only a movement can be formed. So, we
are not talking about politicians, we are talking about citizens
who may or may not be politicians, but who share this position and
have a sense of civic responsibility. I think there are a lot of
such people in Russia.
Indeed, when this idea was announced a little over two months
ago, the idea of creating a constructive opposition, I received
many letters and calls and offers of meetings. Just today I had a
meeting in a totally new dimension, so to speak. Workers came to
me. And they reproached me and said, Boris Abramovich, why do you
think it is only an idea that can appeal to representatives of the
intellectual elite, the intelligentsia? Why have you left out the
conscious citizens who are ordinary workers? Those who also want --


Q: Could you be more specific? Where did they come from?


A: They came from Siberia, more precisely, from Kuzbass. They
are coal miners. Of course you know that Moscow is Moscow. Although
I travel a lot in Russia, quite a lot, I still couldn't help
feeling a little ashamed today, ashamed that I don't understand the
other part of society, the part of society which is prepared to
risk much more than those who have got some benefits already. These
people have nothing to lose. You know, as they used to say, they
have nothing to lose but their chains. And I would describe their
mood as one of wisdom and despair if you can combine these two
words. This is not a despair and a sense of futility, it is despair
coupled with reflections on how to get out of this complex
situation in which not only the intelligentsia, but also the common
people have found themselves.


Q: In your latest article in Washington Post, your latest
interview, you said that the only social class that can save
democracy in Russia are the people whom you describe as Russian
capitalists, the class created by Yeltsin. I think this is what the
Washington Post wrote.


A: Yes.


Q: And how do you account for the fact that we all see, that
most of these people, capitalists, support the administration?


A: Actually, this is not so. They support those who help them
to survive. This is not just wholesale support of the authorities,
there was a conscious choice in 1996 when it seemed that power was
no longer in Yeltsin's hands, but in the hands of the Communists.
Yeltsin had formal power and actual power was gradually flowing
into the hands of the Communists. And business made its choice, a
choice in favor of democratic development in Russia. 
This is not to do with the ideals of democracy, it is a
rational choice when you need to survive, so that you could develop
and be independent, which is the most important thing.


Q: Talking about rationalism one can find it not only among
business people. Our right-wing politicians say that we can forgive
the President some of his authoritarian actions because he is
committed to building a strong state through encouraging a liberal
economy.


A: This is precisely what I objected to in the actions of the
right, the Union of Right Forces and Yabloko, when they backed
Putin's laws in the Duma on the concentration of power in Russia.
And I would like to draw your attention and the attention of those
who are listening to us today to the fact that the right was
absolutely inconsistent in this matter. Under Yeltsin, Yavlinsky
and the right said that the President had too much power and that
it should be diminished, power was concentrated in the hands of one
man. I have always thought that in a revolutionary period, and
Yeltsin was carrying out a revolution, power should be concentrated
in the hands of one man. And it was in the hands of a reformer
President.
After the revolutionary stage power can be diversified and its
concentration can be diminished. And the right behaved in a totally
inconsistent manner. They voted for still greater concentration of
power in the hands of the President. So, the logic of the political
right is flawed.
And let me say that I don't question their goals, they are
absolutely correct, their goal is building a democratic state. But
their actions are inconsistent.


Q: Another topic that has gained prominence is foreign policy.
Why do you think Russia has been left out of the attempts to settle
the new conflict in the Middle East?


A: I am not a foreign policy specialist, but, being involved
in Russia politics, I give some thought to external factors and the
place of Russia in the new world after the breakup of the Soviet
Union. And I have pondered over this situation too. I think I have
an answer to it. The whole point is that although there existed the
Soviet Union and the system the Soviet Union engendered was
absolutely evil even for the country itself, there were some
ostensible achievements that the external world recognized. One was
the friendship of the peoples, even the Soviet anthem glorified the
friendship of great and united peoples and so on.
And the world, including the Muslim world and the Christian
world realized that a vast country was preaching officially the
idea of the unity of peoples with various religions and of various
nationalities. Actually this was not so, there was discrimination.
But it looked attractive on the face of it. So Russia and the
Soviet Union was a powerful factor in the Middle East where the
interests of Christians, Muslims and Judaists clashed. 
Today Russia, by its position and its internal policy with
regard to Chechnya, has demonstrated its disdain, whatever the
rhetoric may be, its disdain, including of the spiritual values of
the Muslims. Thereby it greatly undermined its image in the Muslim
world. Russia is no longer an authority for the Muslim world
because you can't make war in Chechnya, in effect make war not only
against Chechens because it is wrong to say that we are fighting
Chechens because it is not an ethnic problem, it is at once an
ethnic and a religious problem. So, what happened today is
absolutely natural. Russia no longer matters as a factor of force
-- that is, Russia is still a factor of force, but it is no longer
a factor of justice. That is far more important.


Q: And the final question. It's a topic that has recently been
a talking point. I mean the suggestion that the anthem of the
Soviet Union, the music should be revived. You are categorically
against it, but why? Should one read political meaning into it? Why
does it have symbolic significance, as you have said?


A: There are two aspects to it. One is logical and I tried to
put it into words. It's neglect of what has been happening over the
past 10 years. But still more it is contempt for the memory of
those who lived through those horrible years. There are some words
in the anthem, I can't remember them now. But there is something
much more than logic. It's the mentality. Mentality is the music of
the soul. There are these two words, "music" and "soul". Music is
about sounds. It is not only the notes, but it is also Stalin and
Lenin.
You remember there are the words in the anthem which say that
we were brought up by Stalin to be faithful to our people. Faithful
to the people.


Q: But that's the old version of the anthem.


A: I belong to the generation, I am not yet a very old man,
but I have already said that mentality is the music of the soul. It
is something unconscious. And when I hear the music of the anthem,
I can't help hearing the word Stalin behind the music. After 1961
the words were replaced, but the word Stalin still lingers, just
like for millions and tens of millions of others.
And this is like a trumpet that calls people to return to the
past. It is a signal that will keep dragging us backward. And the
choice that the Russian President is making -- let us face it, it
is he who is making this choice, this choice stresses the Russian
President's preference of the old over the new. But there were high
hopes that he is a man of the new generation.


Anchor: Thank you, Boris Abramovich, for taking part in our
program. Good night.


*******


#12
Russian Population Shrinks Record 500,000 to Aug, Agency Says

Moscow, Oct. 20 (Bloomberg) -- Russia's population decreased by 507,400
people, or 0.3 percent, from January through August this year, a bigger
decline than for the whole of last year, Interfax reported, citing the
State Statistics Committee. 


The country's population totaled 145.1 million as of Sept. 1, after the
population shrank by 521,000 in 1999, the agency said. While the number of
births rose to 845,500 in the first eight months from 827,600 in the same
period last year, the death rate also rose to 1.49 million deaths from,
1.42 million in 1999. 


Russia's population shrank every year since the 1991 collapse of the Soviet
Union, amid declining living standards. 


******


#13
Russia Duma passes '01 budget draft in 2nd reading

MOSCOW, Oct 20 (Reuters) - Russia's State Duma, the lower house of
parliament, passed the 2001 draft budget in a second reading on Friday,
handing another victory to the government and President Vladimir Putin. 


Deputies, many of whom welcomed a proposed redistribution of spending,
voted for the bill by 303 to 129, with one abstention, making it likely
that the Kremlin will meet its goal of having the blueprint clear the
legislature by the end of the year. 


"This seems set to become the first year in the history of post-Soviet
Russia that the government's project budget has been adopted with the least
possible changes and without any delay," Troika Dialog said in a research
note before the vote. 


The budget must go through four readings in the Duma. It also requires
approval from the Federation Council upper house before Putin signs it into
law. 


The draft calls for revenues and spending of 1.194 trillion roubles ($39.8
billion at the projected average exchange rate of 30 roubles per dollar). 


******