This Date's Issues: 4627
Johnson's Russia List
8 November 2000
Johnson's Russia List
8 November 2000
[Note from David Johnson:
1. Reuters: Reforms raise risks for eastern bloc
2. AFP: Russia ready to do business with new US president.
3. Interfax: Most Russian politicians unperturbed by Bush
4. Time.com: Andrew Meier, 'Russia: Monica Nostalgia and a
Independent Election Monitors'
5. BBC Monitoring: Bush victory would mean USA-Russia
relations have to
start from scratch.
6. BBC Monitoring: US ambassador expects no big changes in
7. St. Petersburg Times: Boris Kagarlitsky, Middle Class
Stands To Lose
Most in a Police State.
8. Moscow Times: Maxim Trudolyubov, Reconciliation
Comes When We Face
9. Christian Caryl on Lucas-Lieven.
10. Bloomberg: IMF, World Bank Reforms Leave Poor Behind,
11. Bloomberg: EBRD's Lemierre on the Economies of Eastern
12. St. Petersburg Times: Barnaby Thompson, Exhibition
of Soviet Society.
13. Wall Street Journal: Andrew Higgins, IMF Prepares New
Reschedule Russian Debt.
14. Reuters: IMF mission starts talks with Russian FinM.
15. Financial Times (UK): Andrew Jack and Arkady Ostrovsky, Lukoil's
leap marks dawning of new era.]
Reforms raise risks for eastern bloc youth-UNICEF
GENEVA, Nov 8 (Reuters) - The collapse of communism in former eastern bloc
countries has brought some young people the cars and jobs they dreamed of,
but for many the risk of disease and unemployment is higher, a report
A study of 15 to 24-year-olds in 27 east European and former Soviet
by the United Nations Children's Fund (UNICEF) found freedoms won in 10
of transition to market economies had also raised hazards like drug abuse
"Young people are clearly benefiting from an array of social and
reforms that were scarcely imaginable little more than a decade ago,"
UNICEF's Executive Director Carol Bellamy told a news conference at the
United Nations in Geneva.
"But we are concerned about the young people who are slipping through
cracks -- the drug addicts, street children, young prostitutes, long-term
unemployed and those who are HIV positve. Their numbers of growing."
The report, which UNICEF says is the first to test the impact of
post-communist reforms on young people, is based on stastistics and
interviews compiled across a region stretching from the borders of the
European Union to central Asia.
Bellamy said too few countries were giving adequate recognition to young
people as an invaluable resource, despite their increasing involvement in
region's new private sector and their wider pursuit of higher education.
But opportunities for the third of 15 to 24-year-olds with jobs are
than before and the income gap with adults is narrower than in many west
European economies, she said, though average monthly wages in ex-Soviet
states hover around $50.
The main concern is for young people's health, Bellamy said. Abortion
in Russia, still the highest in Europe, are down -- as are youth mortality
and suicide rates in central Europe and the Baltic States, though they are
in Russia and Ukraine.
But tobacco, alcohol and drug use have increased in the decade since the
Berlin Wall was breached and countries which until then had barely been
affected by AIDS are now facing a possible crisis as levels of HIV
Experts in Russia have warned of an impending AIDS epidemic, with a sharp
spike in the number of HIV cases closely linked to rising drug use.
Crime, which has doubled in the past decade among young people, and
unemployment, which dogs the lives of a third of the region's youth, are
major concerns, Bellamy said.
Further details from the report, compiled by the UNICEF Innocenti Research
Centre based in the Italian city of Florence, are available on the
Russia ready to do business with new US president
MOSCOW, Nov 8 (AFP) -
Russia on Wednesday said it was ready to do business with the new US
administration, amid confusion over whether Republican George W. Bush or
Democrat Al Gore would scoop the cliff-hanger presidential election.
President Vladimir Putin's chief foreign policy advisor, Sergei Prikhodko,
said Moscow was "determined to pursue an active dialogue with the new
administration," without specifying if he meant Democratic or
cited by ITAR-TASS.
"It assumes that there will be no pause," he said, adding Russia
hoped for "a
continuity in the policy of cooperation with Russia."
Moscow wanted to see an "equal and mutually beneficial" dialogue
Washington on all issues, Prikhodko said, stressing that the two countries
played a key role in safeguarding global stability.
Earlier, shortly after US television networks reported that Bush was the
winner after capturing the key state of Florida, the Russian government
office said the election of a Republican president would not affect ties.
Bilateral relations "will continue to develop on a long-term and
beneficial basis using our positive experience accumulated under both
Democratic and Republican administrations," the press office told
During US President Bill Clinton's visit to Moscow earlier this year,
said Moscow would work equally with either a Democratic or Republican
Analysts here commented that strained ties between Washington and Moscow
would not improve under either Gore or the more hawkish Bush.
The two nations remain at odds over almost every question that Clinton had
optimistically set out to solve by offering seemingly unequivocal support
the bumpy post-Communist reforms launched by Boris Yeltsin.
Whether nuclear arms, regional geopolitics linked to oil and gas
or the fate of foreign investments and economic aid, lawmakers in both
capitals are more and more frequently reverting to Cold War era
Former Soviet leader Mikhail Gorbachev predicted that under a Bush
US-Russian relations would become more problematic.
"I don't think there will be any radical change in our relations, but
they will become more clear-cut. They will be pragmatic and more clearly
defined, and therefore more difficult," he told Echo Moscow radio.
The Communist speaker of the State Duma lower house of parliament, Gennady
Seleznyov, though pointed out that in the past Republican occupants of the
White House had often achieved "breakthroughs" in relation to
Under Richard Nixon, the two rival superpowers signed the landmark 1972
Anti-Ballistic Missile (ABM) treaty, and later Ronald Reagan's presidency
"significantly strengthened and deepened" US-Soviet ties, he
Other Russian politicians, including the leader of the pro-government
Party Boris Gryzlov, congratulated the Republican candidate over his
However, Bush's win was in doubt Wednesday after an automatic recount was
triggered in Florida because of his tiny lead -- prompting Gore to retract
message made accepting defeat in the US presidential race.
Most Russian politicians unperturbed by Bush election win
Moscow, 8th November: The victory of Republican George Bush Jr in the US
presidential election would hardly lead to any fundamental changes in
Russian-American relations, the leader of the Communist Party faction in
Russian State Duma, Gennadiy Zyuganov, told Interfax on Wednesday [8th
November]. He said that there are no serious differences between the
Republican and Democratic parties and that their leaders "have always
rigorously and consistently defended the interests of the United States in
He noted, however, that Democrats Bill Clinton and Al Gore had
patronizing policy with regard to Russia, and their unconditional support
ex-President Boris Yeltsin and the so-called reformers brought suffering
poverty to millions of Russian citizens".
"The USA set itself the task of establishing control over the world's
financial, information and energy flows. This goal will be consistently
pursued by all US presidents, irrespective of the party they
He said that George Bush Jr would "interfere in Russia's internal
much less than his predecessors, but is likely to defend American
more toughly". This policy is aimed at "destroying our
complex, pushing us out of the world arms markets and deploying an
missile defence system", Zyuganov said.
Leader of the Union of Right Forces faction Boris Nemtsov told Interfax
"George Bush Jr is an inexperienced politician and is not
informed about the situation, particularly on the international
He said that statements made by George Bush Jr during the election
suggest that "he has a very tough stance regarding Russia". But
statements betray little, as there is a difference between election
and real politics, Nemtsov said.
He said that under the new president no hostile moves should be expected
the USA in relation to Russia. George Bush Jr's administration would try
pursue a more rigorous financial policy with regard to Russia. But if the
main American oil companies say that investments should be made in Russia,
George Bush Jr "will follow this advice".
Concerning military-strategic relations, he said that both George Bush Jr
Al Gore, if he wins the presidential elections, would want to reconsider
1972 ABM Treaty and deploy a National Missile Defence system.
State Duma Deputy Chairman Vladimir Lukin of the Yabloko faction has said
believes that Republican George Bush Jr's victory in the US presidential
elections would mean that "a team of more pragmatically-minded people
come to power" in that country.
He told Interfax that he is personally acquainted with many members of the
Republican Party and that "among them there are many sober-minded and
rational politicians who will undoubtedly play a great role".
"The Republicans are less adventure-minded in the world arena (than
Democrats)," Lukin said. "Perhaps some people in this country
preferred the Democrats to win, as it is more habitual to deal with them.
this does not mean that it would definitely be better (to work with the
Democrats)," Lukin said.
He admitted that the Republicans have a tougher stance on the deployment
the National Missile Defence. "But their humanitarian aid policy is
liberal. The Republicans are trying not to mix up two things: humanitarian
intervention and the implementation of American foreign policy
November 9, 2000
Why Bush Has the Global Edge on Gore
A snap phone survey of a sample of TIME's foreign correspondents revealed
some surprising preferences for the U.S. presidency
'Russia: Monica Nostalgia and a Call for Independent Election Monitors'
Moscow Correspondent Andrew Meier:
"Russians are particularly fascinated that this election is so close.
sober-minded political scientists are talking about the need to have
transparency in the vote count, so as to avoid cheating. The Communists
week even bought a resolution into the Duma calling for independent vote
monitors to scrutinize the count.
"From Putin's aides on down, nobody's really clear on which candidate
be better for Moscow. Some have argued that it's better to have the
because they're more liberal and believe more in engagement. But then
was a counter argument in the political establishment here that
would be better because they're not bound by the same ideological cobwebs
the Democrats, and because they're pragmatic. But in the last few days,
seen the same pundits reverse themselves and say a Bush victory would be
worse for Putin because he'll be more strict on arms and technology sales,
and debt repayment.
"There's no great love of Gore, but a lot of Russians have a lot of
for Clinton, especially post-Monica Clinton. But for them Gore still a
character, and Bush all the more so. The one thing Russians can't fathom
about the process is the electoral college. They're as stumped by that one
Bush victory would mean USA-Russia relations have to start from scratch
Nov 8, 2000
Text of report by Russian news agency Ekho Moskvy
[No dateline as received] Victory for George Bush in the US presidential
election would mean "an end to the preferential period Russia had as
of democratic reforms, at first in the Gorbachev years and then in the
Yeltsin years", former Russian foreign minister Andrey Kozyrev told
Moskvy radio in an interview.
"We sought equality in relations and we will get it. This will help
us up. We will understand that we cannot count on Uncle Sam and that we
have to bid for a fresh relationship with America, unfortunately starting
from scratch", he said.
"One must understand that relations on equal terms will be tough.
be no preferential loans, no humanitarian aid", he said. "As
soon as the
favourable period with oil prices and prices for other resources ends,
it definitely will in 2001, Russia will face a new American administration
talking tough on all issues, from trade to credit terms."
US ambassador expects no big changes in relations with Russia
Source: Russian Public TV, Moscow, in Russian 0900 gmt 8 Nov 00
[Presenter] The vote-counting in the USA has been closely followed by the
embassy in Moscow, where journalists and politicians have gathered today.
Here is our correspondent Yelena Shapovalova live on air...
[Correspondent] We have recorded several interviews with Russian and US
representatives. I would like you to see some of them.
[James Collins, US ambassador to Russia, in English with Russian
over] I don't think that I can tell you something different from what I
already said. Probably some kind of re-evalution will happen, but the
interests will be paramount. The problem of relations with Russia remains
critically important, the most important issue for the USA, and I think
no big changes will happen...
St. Petersburg Times
November 7, 2000
Middle Class Stands To Lose Most in a Police State
By Boris Kagarlitsky
MUCH has been written recently about the idea that freedom is only useful
enemies of the people. Commentators have told us that plotting oligarchs
resisting the imposition of law and order by citing violations of
freedoms, invariably adding something like, "although the police in
countries wield much more power than their Russian counterparts do and it
high time we followed their example."
Such analysts always create an opposition between the "people"
and (to quote
one recent article) "a unified pro-presidential power" on one
oligarchs on the other. These oligarchs are always trying to convince the
masses that an attack on them is an attack on rights and freedoms
However, have there really been any attacks on the oligarchs? The
main demand is that the results of privatization be considered
In this regard, President Putin and his team are in total agreement. In
general, a police state is necessary to protect the power of property
The propagandists rely on the age-old myth of a doting tsar and his
nation who are in complete harmony if only no one comes between them. In
model, anyone in the middle: foreigners, students, intellectuals, etc.,
However, those who are pushing this line face a real problem. The majority
the population has lost much during a decade of "democratic
having more formal democratic rights today, people feel more repressed
ever. Even freedom to travel is a fiction, as two-thirds of the population
can't afford tickets anywhere.
Democratic reforms have really only reached the new middle class, and it
against them that the present assault on civil rights is directed. Those
reforms created enormous possibilities to live a Western lifestyle for the
middle class, and they were not concerned with the fact that two-thirds of
the nation has been shut out from these hopes. The new middle class
into an unspoken strategic alliance with the oligarchs.
This alliance shifted with the 1998 crisis, when the middle class realized
that its position is much more vulnerable than that of the oligarchs.
The propagandists of the police state are using this rupture. The result
be that the middle class will have as few real rights as the downtrodden
masses have always had. Strengthening the police state will merely push
intelligentsia to the left. Within a short time, critically minded
will be transformed into radicals and revolutionaries.
Boris Kagarlitsky is a Moscow-based sociologist. He contributed this
to The St. Petersburg Times.
November 8, 2000
Reconciliation Comes When We Face the Past
By Maxim Trudolyubov
Maxim Trudolyubov is a journalist for Vedomosti. He contributed this
to The Moscow Times.
By presidential decree, Nov. 7, formerly the anniversary of the Great
Socialist Revolution, has been magically transformed into the Day of
Reconciliation and Accord. It seems like a good idea, an inspired example
"rebranding" that allows the people to keep their familiar day
dedicating it to a cause that is worthy of commemoration.
However, the idea of a national day of reconciliation is off to a bad
For one thing, very few Russians are even aware of the change, and the
has done little to impress the idea on the nation's consciousness.
This clear lack of commitment, however, may be a symptom of a far more
daunting problem. Unfortunately, the fact is that the kind of
that the holiday's new name implies has never taken place in Russia. The
Soviet past has never been properly remembered or evaluated and,
it continues to haunt Russia in numerous unpredictable ways. Even the
of the Kursk submarine was considerably complicated by many manifestations
Russia's clearly unreconciled past.
There can be no denying that contemporary Russia is in its very essence a
product of the Soviet legacy. Our whole life is still shaped by Soviet
and Soviet-style expectations. We are still governed by Soviet-reared
We live in towns designed by Soviet architects. Moscow's skyline is
by Stalinist skyscrapers, not f as in the past f church belfries. Even our
tiny kitchens and inconvenient bathrooms are products of this era and the
people it created. There is no way for us to escape this past, and there
no excuse for us to ignore it.
Some superficial attempts at passing through the process of reconciliation
have been based on an unrealistic idealization of our tsarist past. In
ways, these misguided efforts are even more counterproductive than
the problem. For instance, Moscow spent tremendous resources and effort to
rebuild the Cathedral of Christ the Savior, which was leveled by the
Bolsheviks in 1931. Although many intellectuals criticized this expensive
fake, politicians more interested in symbolism than substance proceeded.
my mind, the coincidence of the cathedral's pompous consecration and the
solemnity of the Kursk tragedy proved the critics right. The cathedral
suddenly seemed not only unnecessary, but somehow even offensive.
I think that, to a lesser but still significant extent, some recent
in popular culture also reflect the problem of Russia's unreconciled past.
Oscar-winning film director Nikita Mikhalkov, whose "Burnt by the
to mark real progress toward confronting the past, followed up with
Barber of Siberia," a thin, superficial effort that has been widely
criticized for seeming like a Potemkin village. Russia's best-seller list
been dominated for months by a series of readable but simple-minded
novels by Boris Akunin, all set in tsarist times and seeming to reflect a
longing for a lost past.
But looking back through the past 80 years to pre-revolutionary Russia
ignores the country's dreadful 20th-century experiences that form the core
what the nation is today. Those who criticize the oligarchs, generals and
president who rule the country should look in the mirror. Boris Berezovsky
may be no beauty, but he is the authentic face of Russia, a country that
produced almost nothing new f either materially or spiritually f in over a
decade. Russia today, caught on a treadmill of redistributing old property
and old ideas, seems to have nothing in common with the achievements of
past f with its traditional architecture, great literature, culture of
philanthropic merchants, etc.
Although there was much talk in the early 1990s about the subject of
reconciliation with the past, nothing has been done. And although the
of reconciliation will no doubt entail considerable cost, we are now
instead the cost of a new kind of stagnation that is theresult of trying
ignore our past.
Many other nations have faced the same problem that Russia is yet to
confront, and the only lesson to be derived from their experiences is that
there are no easy, ready-made solutions. Germany went through a fairly
intense process of de-Nazification, but nonetheless continues to
repercussions of its past. Although German society is periodically shaken
neo-Nazi demonstrations, these are clearly only a fading echo. Recently,
German government and its business community took another important step
toward reconciliation by setting up a 10 billion Deutsche mark ($4.4
compensation fund for persons who served as forced laborers under the Nazi
When one considers the experiences of Central European countries, one is
struck by the notion that coping with the past is easier if a country is a
victim of foreign aggression rather than the source of historical evil.
of Russia's neighbors to the west have used a controversial procedure of
background checks for candidates for public office. Those found with
ties to state security organs may be disqualified from running for office.
In East Germany, which had the largest and most sophisticated police state
the former Soviet bloc, the process has been led by the Gauck Commission,
named after the Reverend Joachim Gauck, a former dissident. This panel
manages the files of the former Stasi secret police and screens people in
public service, including even teachers and police officers. About 1.7
million people have been screened so far, and an astounding 95,000 former
collaborators have been exposed.
A similar body was established recently in Poland. The National
Institute, headed by law professor Leon Kieres, will begin opening secret
police files to the public next year. Just like the Gauck Commission, the
Remembrance Institute will have the right to initiate prosecutions and the
obligation to educate the public on communist and Nazi-era crimes.
South Africa represents a controversial example of finding a middle path
confronting a difficult past. In 1994, after the election of Nelson
the Truth and Reconciliation Commission was formed under the guidance of
Archbishop Desmond Tutu. This commission heard testimonies from more than
20,000 victims of apartheid and confessions from thousands of
But since the process was dominated by the ideas of repentance and
forgiveness and included only token material compensation for victims, it
been severely criticized. Many who suffered under apartheid feel cheated
the very process intended to promote reconciliation and accord.
In Russia, however, no such commission or process exists at all. There is
clear arbiter of such a process here, analogous to Tutu or Gauck. The
Orthodox Church, unfortunately, lacks the moral authority to play this
in the eyes of many because of it own controversial Soviet past.
Another problem is presented by an inborn Russian tendency toward
The idea of finding a compromise or middle road is alien to Russian
It will be difficult, perhaps impossible for Russia to carry out a
reconciliation process without it devolving into either a farce or a
witchhunt. But until the nation faces up to this potentially unsolvable
problem, it will continue to be mired in its present stagnation.
Date: Wed, 8 Nov 2000
From: Christian Caryl <CCaryl@compuserve.com>
Subject: Christian Caryl on Lucas-Lieven
Here's my own modest contribution to the Lucas-Lieven debate - a bit
perhaps, because I was travelling.
Newsweek Moscow Bureau
In his October 17 note to JRL, Anatol Lieven takes Edward Lucas to task
making the following observation in a piece in the Economist about the
Islamic Movement of Uzbekistan (IMU):
"Russia may be using still dodgier tactics elsewhere. Uzbekistan, an
autocratically run and independent-minded country in Central Asia, is
facing a mysterious Islamic insurgency. Its president, Islam Karimov, said
crossly this week that Russia was exaggerating the threat, and was trying
to intimidate his country into accepting Russian bases."
Lieven's critique runs as follows: He accuses Lucas of "trying to
that Russia is behind the revolt of Namangani and the IMU, as his loaded
use of the adjective 'mysterious' seems clearly intended to suggest"
dismisses this view as "counter-intuitive," and goes on to argue
Russia obviously opposes Namangani because he and his group represent the
forces of radical political Islam that Russia is so rationally and
consistently fighting in Chechnya and elsewhere. Lieven also accuses Lucas
of implying that Karimov "somehow represents a force of sanity and
moderation in his response to Islamic radicalism in the region while
is automatically a force for ruthless suppression. In Tajikistan, in the
past at least it has been the other way around."
Much of what Lieven says sounds eminently balanced and reasonable - until
you get down to the particulars, where everything turns out to be wrong.
says that his analysis "is too complicated for the journalist in
(i.e., Lucas) - yet having just returned from my most recent of several
extended trips to the region in question, I would venture to say that the
simplicity is all on Lucas' side. First of all, I detect a willful
misreading of Edward's remarks. I just don't see that passage quoted
implies that the Russians have been sponsoring the IMU threat - in fact it
explicitly quotes Karimov as saying that Russia is "exaggerating
is manifestly true. During his recent visit to Central Asia, Marshal
Sergeeyev gave a much higher estimate of the forces under Namangani's
command than almost any of the experts.) Nor do I see an attempt to
whitewash Karimov's motives. The Economist does, after all, describe
Karimov's regime as "autocratic." That is certainly quite
anyone who has been to Uzbekistan knows - so what's the problem? Nor,
incidentally, is there anything wrong with describing the IMU as
"mysterious." The precise intentions of its leadership remain
obscure, and wherever I went in the region I met people feverishly trading
dozens of often contradictory takes on the IMU's aims - in stark contrast
to the crystal-clear picture from Massachusetts Avenue.
As for the idea that Russia would be only too happy to benefit from an
IMU-catalyzed destabilization of Central Asia, this is not a matter of
War conspiracy theory projected into the present. There's one big fat
example of the principle in action, and it's called Tajikistan. Today the
country is a Russian protectorate, run by a weak coalition of Rakhmonov's
neo-Communists and a bunch of former Islamist boeviki who seem to be
perfectly palatable to Moscow now that they've taken the bait of
participation in the government. There are 25,000 Russian troops in the
country now, and I met very few Tajiks who were as thrilled about it as
Lieven seems to be. Tajiks are happy that they're at peace, but they don't
give Russia much of the credit. (Most of the ones I met attributed the
peace settlement to "pressure from the international community"
- just the
sort of thing that Lieven seems to regard as irrelevant when it comes to
Chechnya.) Nor should this lack of pro-Russian euphoria come as much of a
surprise, considering that opponents of the Russian-backed Rakhmonov can
expect to be killed or driven into exile just as fast as any of Karimov's
enemies - "ruthless suppression" strikes me as a pretty adequate
description for both regimes. By the same token, during my travels in
Kyrgyzstan I met no one, whether in the government or opposed to it, who
really wanted large numbers of Russian soldiers around. To the contrary,
the Kyrgyz are quite pleased that they ushered the last Russian border
troops off their soil just a few years ago. So I can only look askance at
Lieven's extraordinary throwaway line to the effect that "Kirghizstan
Tajikistan actually welcome a continued Russian presence" - perhaps
could produce some poll data on the subject. Most of the Central Asians I
met (with the possible and numerically insignificant exception of
Rahkmonov's bunch) would have been quite startled to hear him accepting
Russia's status as a regional powerbroker on their behalf.
Incidentally, well-informed diplomatic sources in Dushanbe told me that
Juma Namangani, leader of the IMU, regularly passes back and forth across
the Tajik-Afghan border with the full knowledge and tacit approval of the
Russian border guards. And surely the 201st Motor Rifle Division could
easily send over a few choppers to flatten Namangani's camps in the
Karategin Valley if Moscow and its Dushanbe allies really wanted this to
happen. But the Tajiks think that the IMU offers a handy way of keeping
their historical Uzbek rivals off balance, and Moscow, in its turn, is
happy to use Namangani to hamstring that uppity Karimov - particularly
they know that the IMU are even less capable of asserting total control
over their target country than their Tajik counterparts were. This is not
to say that the IMU isn't a serious threat; I happen to think that it is
perfectly capable of plunging the whole region into chaos. But it is na´ve
to think that Russia's political class is genuinely appalled by the
prospect of "regional instability" that actually offers Moscow
realistic chance of keeping a hand in.
So what does Lieven's simplification in this particular case say about his
larger argument? Lieven, I presume, would contend that he is striving to
penetrate the sentimental veil of Lucasian moral indignation in order to
reach a cool analysis of the actual relations between states. But the test
of such analyses is how well they help to us to understand facts on the
ground, and if Lieven's approach is only going to produce this sort of
schematicism, then it's certainly not going to help me figure out the
three-dimensional chess game in Central Asia, much less Russian policy as
whole. Though his comparative approach yields plenty of stimulating
insights, I think Lieven tends to underestimate the extent to which this
approach itself becomes a confining ideology. It's always a danger sign,
any case, when you have to resort to distorting your opponents' views in
order to make your case. I agree that it is important that our analyses of
Russian policy at home and abroad should not be clouded by bigotry - but I
have yet to see this in The Economist.
IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds
Washington, Nov. 7 (Bloomberg)
-- The poor in developing countries are often better off when
their governments ignore the policy advice of the International Monetary
and World Bank, according to a study by a World Bank economist.
That conclusion by William Easterly, who in the past has co- written
with IMF Deputy Managing Director Stanley Fischer and U.S. Treasury
Lawrence Summers, calls into question one of the main objectives of the
global lenders -- fighting poverty.
China, India and other countries that don't follow IMF and World Bank
economic programs have seen more of their people lifted out of poverty in
times of economic growth than have nations that take the advice of the
Washington-based lenders, according to the research, to be presented at an
IMF conference later this week.
``A lot of the countries that have gotten a lot of lending from the IMF
World Bank are worse off,'' Easterly said in an interview, citing Zambia
the Philippines. ``I don't think the record is real encouraging.''
To be certain, when developing nations see their economies shrink, the
are often cushioned by IMF and bank loans, he found.
Advocates for the poor have long complained that IMF and World Bank advice
countries to cut government payrolls, lower trade barriers and raise
rates benefits rich residents of those countries and foreign investors,
hurting the poor.
That criticism turned increasingly harsh, and even violent, in the last
with the IMF and World Bank meetings in Washington in April and Prague in
September disrupted by protesters.
That has prompted the lenders to repeatedly underline their concern about
poverty, with bank President James Wolfensohn and IMF chief Horst Koehler
calling on rich nations to open their markets and forgive
The bank -- whose Washington headquarters is inscribed with the words ``a
world free of poverty'' -- has also redoubled its efforts to research the
effect of its lending on the poor. Easterly's work is part of that effort.
``This is not the most convenient finding from the point of view of the
Bank's image,'' Easterly said.
He said the poor don't have the skills to benefit from the new businesses,
the cheaper imports and the high-technology jobs that often come with
IMF-backed economic overhauls.
``The World Bank and IMF affect the modern, formal economy, but the poor
not in the modern, formal sector,'' Easterly said. ``The poor live on the
The two lenders often work together in lending to poor and transitional
economies such as Kenya, Russia and Indonesia. They have lent to about
the world's nations, attaching conditions such as deficit-reduction
or the sale of state-owned assets.
IMF and World Bank policy-makers say their reforms often generate
short-term pain for long-term gain.
Selling the state-owned brewery in Tanzania, for example, meant workers
jobs and citizens complained about foreign ownership of a national
Yet Tanzania Breweries Ltd. now produces export-quality beer -- and has
shifted from a drain on the state treasury to the impoverished nation's
World Bank economist David Dollar said Easterly overstates the influence
World Bank and IMF conditions, and so finds negative effects where there's
really little impact.
``I don't think we have that much effect on policy,'' Dollar said.
Still, Dollar said Easterly's findings point to the best way to rework the
``Originally, these things were meant for attacking short- term shocks,''
that is the way they have been successful, Dollar said. ``The proper role
these programs is short-term.''
Easterly's study looked at business cycles of about three years, comparing
the numbers of people with incomes of $2 a day in countries that had IMF
lending programs with those that did not.
During times of economic growth, the poor didn't gain as much in countries
which the IMF lent money as they did those in places with no programs,
although they weren't hurt as badly in recessions, according to the study.
``Expansion under (IMF, World Bank) adjustment lending is less pro-poor,
while contraction under adjustment lending is less anti-poor,'' Easterly
Easterly dismissed the charge that he's focusing on the short- term pain
recipient countries that are merely headed for long- term economic gains.
cited countries such as the Philippines and Tanzania that borrow for
The Philippines, which has been borrowing from the IMF for almost 40
last month withdrew plans to borrow $314 million from after the fund
to allow the government to raise its budget-deficit target.
The next week, Markus Rodlauer, the IMF's chief for the Philippines, said
``you can never say never'' about a resumption of the program.
EBRD's Lemierre on the Economies of Eastern Europe: Comment
Vienna, Nov. 7 (Bloomberg)
-- Following are comments by Jean Lemierre, president of the European
Bank for Reconstruction and Development. Lemierre was speaking at a
conference held by the Austrian National Bank and the Joint Vienna
On recent developments in Eastern Europe:
``Eleven years after the fall of the Berlin Wall, practically all the
governments in the region have been elected in free -- or almost free -
``The election in September of this year of a new president in the Federal
Republic in Yugoslavia marked the end of the last autocratic regime in
Eastern Europe. There have been substantial advances in price and trade
liberalization and in privatization. In 20 of the 26 countries, the
sector accounts for over half of total output.
``Southeastern Europe has been considerably held back by the prolonged
conflict in former Yugoslavia. With the new dawn of democracy and economic
reform breaking in Serbia, the hope is that this region may finally put
instability of the past decade behind it.''
On the accession of countries in the region to the European Union:
``EU accession will necessitate enormous investment in public
In the areas of the environment and transport systems alone investment
are expected to reach 2 to 3 percent of (gross domestic product) annually
over the next decade.''
On Russia and Ukraine:
``In many ways, the transition process in Russia and Ukraine over the past
decade has been slower than expected, despite the two countries'
natural resource and export potential.
``Let us be clear about the causes of the present recovery. Real exchange
rate depreciation and high oil prices (in the case of Russia) have
cushion for corporate and public finances alsike. And there is some
that these additional resources are now being reinvested productively.
However, the backlog of restructuring remains enormous.''
St. Petersburg Times
November 7, 2000
Exhibition Reveals Fabric of Soviet Society
By Barnaby Thompson
It used to be the case that the Great October Socialist Revolution was the
cue for the unfurling of a mass of red banners and flags. But on the eve
what is now the Day of Harmony and Reconciliation, St. Petersburg was
to an exhibition of fabrics of another kind: Soviet underwear.
The opening of "Memory of the Body: Underwear of the Soviet era"
was the main
attraction for city residents enjoying a day off at the St. Peter and Paul
Fortress on Monday, as they caught a glimpse of the past "from
below," as the
organizers put it.
The brainchild of the Goethe Institute and the Pro Arte Foundation in St.
Petersburg, this excellent exhibit details the types and styles of
undergarments that were worn in the Soviet Union from its very beginning
its ultimate collapse in 1991. "[We do not want] to air the dirty
the U.S.S.R.," say the words on an introductory wallboard, "but
[to look] at
the intimate, human side of its day-to-day existence."
Divided into three parts, the exhibit shows how the most intimate clothes
the Soviet drawer changed throughout the century, passing from the
mindset of War Communism to the sporting ideal of the 1930s, the poverty
World War II, the thirst for inner privacy of the '60s and the depressed
economy of the late Soviet era.
"I think that people who come here start telling their own
Yelena Kolovskaya, chairwoman of the Pro Arte Foundation, after the
ceremony on Monday. "I myself was a serious swimmer [during the
era], and went to sports camps at which we were allowed to wear our
only, and nothing else!"
And strange though it may seem, the exhibit is highly ... well, revealing:
When you've seen what people wear right up close to the flesh, you find
quite a bit about them.
The collection of underwear was culled from various museums and two
collections, including that of Yulia Demidenko, who was at the exhibit on
Monday. "Some of the items I just had by chance, from [members of my
family]," Demidenko said. "There wasn't much in the museums, and
in any case,
things you find in museums often come straight from the factory - they are
an ideal [condition], but they're not real things."
Those who supplied clothes also supplied personal underwear stories,
up on the walls of the exhibition. Some of these are hilarious, but also
remarkable insights into Soviet life.
One contributor (all are anonymous) recalled her great surprise at seeing
grandmother doing the housework in her father's underwear - and his total
horror upon discovering the same thing. This, however, apparently
the straightforwardly unisex attitude to life and work the old lady had
adopted as a result of the hardships and privations of the early days of
Communism. The emancipated and bra-burning females of the West in the
had no counterparts in the Soviet Union, simply because the bra had ceased
become a major symbol of womanhood.
As well as items of men's and women's underwear, pajamas and corsets -
of which must have been excruciatingly uncomfortable - the exhibit
the recent work of a number of Moscow-based photographers, who have come
with portraits that veer from being contemporary and artistic to the kind
pictures that used to titillate the Victorians. There are also posters
advocating the healthy life in the Socialist Realist style, sketches,
- such as "How I Spent My Summer," directed by Dmitry Gutov, who
spent much of it pointing a camera up ladies' skirts - and even a film
"Memory of the Body: Undergarments of the Soviet Era" is on
until Jan. 31,
2001, at the Museum of the History of St. Petersburg located inside the
Peter and Paul Fortress. Admission costs 10 rubles, and the exhibit is
from 11 a.m. to 5:30 p.m.
Wall Street Journal
November 8, 2000
[for personal use only]
IMF Prepares New Agreement To Reschedule Russian Debt
By ANDREW HIGGINS
Staff Reporter of THE WALL STREET JOURNAL
MOSCOW -- A year after freezing a $4.5 billion (5.23 billion euros) loan
package for Russia, the International Monetary Fund is preparing a new
agreement with Moscow that won't bring fresh infusions of money but could
help Russia reschedule around $40 billion in Soviet-era debt.
An IMF team of economists arrived in Moscow Tuesday to lay the groundwork
a so-called precautionary standby agreement, a mechanism that signals a
departure in the IMF's often fraught relations with Russia.
Instead of pumping in billions of dollars as in the past, the IMF, say
familiar with the negotiations, is seeking a cash-free program under which
Russia would agree to a raft of reforms and economic targets in return for
green light from the IMF on restructuring talks with the Paris Club of
Russia has in the past relied on IMF loans to help fill its gaping budget
deficit, but a robust economic rebound fueled in part by high world oil
prices has calmed Moscow's craving for foreign cash. The IMF, meanwhile,
wants to break what critics say has been Russia's costly and crippling
A recent study by the General Accounting Office, the investigating agency
the U.S. Congress, said aid to Russia since the collapse of the Soviet
in 1991 had had only limited success in easing the country's transition
a command to free-market economy. It said the IMF, World Bank and other
agencies had poured in around $66 billion, through September 1998, making
Russia by far the biggest recipient of financial aid.
The U.S. presidential election has also added impetus for a review of IMF
policy toward Russia. While the Clinton administration frequently lobbied
hard on Russia's behalf, Republican candidate George W. Bush has been
critical of further IMF funding for Russia.
The IMF last gave money to Moscow in the summer of last year, when it
disbursed $640 million, the first part of a $4.5 billion package that was
then put on ice amid complaints that Russia had lied in the past to the
stashed central bank funds offshore and failed to meet various reform
The new deal now under discussion would give Russia a theoretical right to
draw fresh IMF loans but Russia would pledge not to exercise this. This
arrangement would allow Russia to start formal debt restructuring talks
Paris Club creditors, the biggest of which is Germany.
In many ways, Russia no longer really needs IMF money. Its economy is
expected to grow by at least 5% this year and its trade balance and
foreign-currency reserves have never looked healthier. Its government
for next year -- the first attempt at balanced books in a decade --
about $5 billion in debt relief and IMF assistance. But much of this would
come from a hoped-for deal with the Paris Club.
Senior IMF officials responsible for Russia are due in Moscow over the
weekend to try and finalize a new program that could be approved by the
board in Washington early next year.
Russia approved a bold economic blueprint over the summer that meets many
the IMF's demands. A possible stumbling block, however, is its failure to
restructure a banking system blitzed by the country's August 1998
debacle. A confidential report prepared by IMF and World Bank economists
the summer said Russian banks "retain all the deficiencies that had
determined the bank failure in 1998" and warned of another crisis
Russia has also stalled on IMF demands that the central bank sell five
affiliated offshore banks, one of which was used to deceive the IMF on the
state of Russia's reserves in 1996.
IMF mission starts talks with Russian FinMin
MOSCOW, Nov 8 (Reuters) - An International Monetary Fund mission started
talks with Russian Finance Ministry officials on Wednesday which the
government hopes will lead to approval of economic reforms and renewed
access to IMF loans.
A ministry spokeswoman said the mission was scheduled to discuss Russia's
state debt and tax system with Deputy Finance Ministers Bella Zlatkis and
Mikhail Motorin. "These are working meetings," she said without
details. Gerard Belanger, deputy head of the IMF's Second European
Department, was due to join the mission, which arrived in Moscow on
Tuesday, next Monday, she added.
The Fund stopped a $4.5 billion loan to Russia last year, saying the
government had not implemented structural reforms.
Russia, enjoying strong economic growth and a healthy trade surplus, has
been making regular debt payments to the IMF, to which it owed about $12
billion as of the end of August.
Russian Trade and Economic Development Minister German Gref told Reuters
last week that the government would discuss implementation of its reform
plans with the IMF mission and prospects for new loans.
"In principle, we need a credit that could be allocated in the event
Russia facing an unfavourable economic situation," he said. "So
far we are
getting by without foreign credits."
Russian news agencies have reported that a two-year cooperation programme
will be discussed with the IMF. The IMF says a new programme could be
supported by "a precautionary standby arrangement."
Gref said the IMF's backing was important both for winning a foreign debt
restructuring agreement with the Paris Club of creditor nations and for
improving Russia's investment rating.
He said Russia wanted a partial writeoff and restructuring of the $42
billion ex-Soviet Paris Club debt.
Financial Times (UK)
8 November 2000
Lukoil's US leap marks dawning of new era
By Andrew Jack and Arkady Ostrovsky in Moscow
It may have been a small step for the US market, but it was a giant leap
Lukoil last week when Russia's largest oil company paid $71m for Getty
Petroleum Marketing, a network of petrol stations in the north-eastern and
While foreign companies still hesitate to purchase companies within
Lukoil's acquisition seemed to spell a new era of domestic corporate
confidence after the August 1998 financial crisis. It was a gesture which
some analysts suggested smacked of bravado rather than business logic.
Yet Vagit Alekperov, Lukoil's low-profile chief executive, defended the
purchase in a rare interview in his Moscow office.
Acquiring the 15-year leases on Getty's 1,300 petrol stations meant for
first time that Lukoil has "gained access to the global market for
Russia never had".
The fact that Mr Alekperov, a professional oilman, became the first to
into the US market is hardly surprising.
Behind his soft voice and gentle manners hides one of the most ambitious
tough businessmen in Russia. He once famously said of the western oil
"The seven sisters should look out, because in ten years they will
An astute Azeri, Mr Alekperov has risen to the top of the Russian oil
business from the ranks of Soviet-era red directors by building up Lukoil,
the country's largest and only fully vertically integrated oil company.
Lukoil still sets the pace for the Russian oil industry and is one of the
Russian companies with international recognition.
After Lukoil's previous disappointing experiment with a joint venture for
supermarket forecourt petrol stations in the US, launched in 1997, Mr
Alekperov tries to appear modest in his ambitions in North America,
that "the US market is new to us, and our first task is to integrate
Yet Mr Alekperov says the acquisition of Getty is simply a first step into
the US market.
Asked if Lukoil had plans to buy a US oil production company, Mr Alekperov
said with a smile: "We have never lost this desire."
He also acknowledges the publicity value of the Getty purchase, saying
rebranded as Lukoil-Getty - "hopefully our shareholders who see our
take more kindly to our shares".
And while critics say Lukoil will be able to bring little added value into
intensely competitive US market, he stressed that by cutting out
intermediaries, the company could add 18-20 per cent to its profit margins
selling its products through the Getty petrol stations.
Mr Alekperov, who is soft-spoken and publicity-shy, appeared awkward, and
seemed keen to quickly terminate the interview once subjects including
financial transparency and the size of his own personal stake in the
But he expressed hopes that the privatisation of the Russian government's
remaining stake in Lukoil - in the form of an issue of American Depository
Shares on the New York stock exchange which has been delayed at least
late next year - would go ahead.
He claimed that the company's substantial investments in exploration and
acquisitions, including the purchase earlier this year of the Russian oil
company Komitek, explained why Lukoil's reported profits even under
accounting standards were significantly lower than many of its
Much of Lukoil's energy of late has been invested in exploration in the
Caspian Sea. In a blow to advocates of the planned Baku-Ceyhan pipeline
supported by the US, he said that oil from the region should instead be
shipped by existing pipelines through Russia.
He argued that he was under no Russian government pressure, simply
economic logic, given the lower cost and enough surplus capacity to handle
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