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11 June 1998
[Note from David Johnson:
1. Matt Taibbi: Further on the eXile offer.
2. Moscow Times: Konstantin Zuyev, Russian Science in Peril.
3. Financial Times (UK): John Thornhill and Chrystia Freeland,
Russia 'borrows $200m in secret from western banks.'
4. Sovetskaya Rossiya: Opposition Editors Urge Duma Action To Stop
5. Reuters: Russian oil and gas workers say prepared to strike.
6. Interfax: Miners' Leader Opposed To Use Of Protests By Political Groups.
7. Moskovskiye Novosti:Vyacheslav Kostikov, "Yeltsin Will Be Helpless
8. IntellectualCapital.com: Richard Pipes, Lebed: Russia's Rising Star?
9. Japan's National Institute of Defense Studies: Analysis of Russian
10. Jamestown Foundation Monitor: REGIONAL GOVERNORS REACT WITH FURY
AT CENTER'S ATTEMPT TO CONTROL THEIR FINANCES.
11. AP: Mitchell Landsberg, IMF Said to Demand Russia Cuts.
12. The Times (UK): Fireworks launch Kazakhs' new capital city.
13. Reuters: Russia may sell state stake in Gazprom.]
Date: Wed, 10 Jun 1998
From: "matt" <firstname.lastname@example.org>
To the readers of the JRL:
Thank you for your incredible response to our subscription offer. Those of
you who have written have been added to a subscription list. Please write
to me if you do not receive the next issue of the eXile.
My distributor informs me that there is one catch to this announcement:
those of you who live in Russia outside of Moscow and St. Petersburg will
not be able to subscribe, due to the unreliable mail system. In St. Pete,
subscriptions will be limited to those who have post boxes at Post
Sorry for the misunderstanding. All other subscribers, including those in
the U.S. and Europe, will receive their newspapers in the mail as usual.
Thank you and please write to me at email@example.com if you have
questions or concerns.
For more articles from The Moscow Times, check out their website at
June 11, 1998
Russian Science in Peril
By Konstantin Zuyev
Konstantin Zuyev is a senior researcher at the Academy of Sciences
Institute of Philosophy. He contributed this comment to The Moscow
A country that spends less than 0.5 percent of GDP on science has no
prospects for competing on the world market in the next century.
Science and higher education's place in the country's social life as
well as the political elite's and news media's relation to them will
decisively determine Russia's place in the world order and its economic
prospects for the 21st century. The transition period has brought
substantial damage to Russia's scientific complexes. The scale and depth
of the crisis in this sector is more serious than the country's economic
decline on the whole. The level of research and development has
decreased sharply; the number of occupations in science is half of 1991
levels and investment in scientific equipment and technology has been
reduced drastically as well. Many large scientific centers use old
equipment that renders high-qualifications useless and undermines key
trends in research.
The money Russia is now spending on increasing its scientific potential
is not only insufficient but dangerous for the future of the country.
Science, like other spheres of culture, is an activity for which decline
can become irreversible. Restoring it becomes all the more difficult,
requiring huge resources and much time. A country that spends less than
0.5 percent of gross domestic product on science has few prospects for
competing successfully in the next century with economically and
technologically developed countries. Research and development in these
countries is no less than 2.5 percent.
Essentially, the role of science in the country depends on traditions
and the level of government support. It also depends on the level of
awareness of the political elite and population with regard to the
possibilities for applying scientific and technological activities to
solve social and economic problems and improve working and living
One of the most important achievements of the Soviet period was the
creation in the country of rather powerful scientific complexes. In
several spheres of research, particularly in the fundamental sciences,
Soviet scientists took leading positions in the world.
Soviet science had, however, very serious flaws . These include the
extreme militarization of science; the large number of secret
"mailboxes" -- scientific institutions about which only the address was
known to the public; the weak ties between scientific research and the
real economy, especially the consumer part of it; and the high level of
ideology, which deformed the social sciences and the humanities and
hindered their development. The unnecessary level of bureaucracy meant
that smooth administrative methods were not used, especially in applied
research and development. The ideas of accelerating the development of
science and technological progress that were put forward during the
initial perestroika period were, in principle, correct. But they
remained just declarations and did not bring any concrete results,
except in the social sciences and humanities, which benefited from the
announced principles of openness and pluralism. The Chernobyl
catastrophe dealt a heavy blow to the prestige of science as did
information about other accidents and serious ecological problems, for
which people blamed science and scientists.
The post-Soviet period, which has not solved the former problems with
Russian science, has given rise to new ones. State financing of science
began to decrease quickly: from 1.85 percent of GDP in 1991 to 0.5
percent in 1996. The prestige of scientific activities has also
declined, which has led to a decrease in the flow of qualified young
people into scientific fields. In 1988, the largest age group of
scientific workers was between 30 and 39 years. In 1994, it was between
40 and 49. The level of wages in the sciences takes only ninth place
among the 15 major branches of employment. The president's decrees and
government programs aimed at solving the problems of science have
practically not been carried out.
In these conditions, the brain drain of highly qualified and young
prospective scientists from Russia is entirely understandable. The
threat of a collapse of the Russian scientific community should not be
underestimated. Science is undergoing extremely difficult times. It is
not only a question of reform but of survival.
The main problem today is that, unfortunately, science and new domestic
technologies are hardly in demand either by large industries, state
institutions or small and medium business. Now rather detailed answers
must be found to a number of key questions: What are Russia's objective
scientific needs concerning its national interests and prospects for
development; which research projects should be a priority; and how
should the management of scientific complexes be reorganized?
If such policies are not worked out , then the risk increases that
Russia will turn into a dependent and divided country living mainly on
the sale of raw materials and imported goods, equipment and technology.
The current low level of demand in the country for scientific knowledge
and new technologies should not be taken as proof that the period during
which Russia was one of the world's leaders in science is over for good.
On the contrary, all the main tasks that society and the government face
-- promoting a competitive economy and improving the people's well-being
-- can only be dealt with effectively if science is once again made a
Financial Times (UK)
11 June 1998
[for personal use only]
Russia 'borrows $200m in secret from western banks'
By John Thornhill and Chrystia Freeland in Moscow
The Russian government has surreptitiously borrowed at least $200m from
western commercial banks over the past week to support its financial
stabilisation programme, according to bankers.
The short-term bank borrowing appears designed to ease the pressure on
the government to borrow through the domestic debt market as it tries to
restore confidence in the country's battered financial system.
The Russian finance ministry said yesterday it could not confirm the
loans, which follow a $1.25bn sovereign eurobond issue on June 3.
There was particularly low demand for Russian treasury bills at
yesterday's regular debt auction, with the average annualised yield
climbing to 53 per cent. Yields on Russian domestic debt are among the
highest in the world.
Last Thursday, the Russian government received a one-year $200m
rouble-denominated loan from Chase Manhattan, the US bank, at a rate
below prevailing Russian Treasury-bill yields. It raised a similar loan
from Lehman Brothers, the US investment bank, earlier this spring. Both
companies declined to comment on their lending programmes.
Bankers said the International Monetary Fund was aware of the latest
loans. But the IMF has been publicly warning the government against
excessive foreign borrowings at a time of financial turbulence.
The precise terms of the latest borrowings have not been disclosed but
they are understood to include provisions to protect the lenders from
currency risk by linking the coupon to the rouble exchange rate.
Several western banks have submitted plans to the Russian government to
help it raise additional private capital to cover its short-term
financing needs. But government ministers have previously refused to
contemplate hedging any such loans to protect lenders from the risk of a
Philip Poole, east European economist at ING Barings, the international
bank, said: "The Russian government perceives their problem to be a
short term issue linked to their high refinancing requirements (in the
"You can safely assume that any foreign bank linked to Russia has
proposals to help solve this problem by raising cheaper external loans."
In the past, the Russian government has successfully raised emergency
loans from foreign lenders to cover critical financing needs.
Last summer, the government borrowed several hundred million dollars
from George Soros, the US financier, to meet a deadline for paying back
wages to federal employees. But this six-day loan was repaid in full
before the end of the finance ministry's monthly reporting period and
was, therefore, not publicly disclosed at the time.
Russian markets were jittery yesterday following a further bout of
financial uncertainty in Asia. The RTS index of leading Russian shares
closed down 6.2 per cent. Investors were further unnerved by the lack of
concrete financial support for Russia following yesterday's meeting of
G7 deputy finance ministers in Paris.
Opposition Editors Urge Duma Action To Stop Foreign Loans
9 June 1998
[translation for personal use only]
Message "From the Patriotic News Bureau" signed by Sovetskaya
Rossiya Chief Editor Valentin Chikin and Zavtra Chief Editor
Aleksandr Prokhanov: "Persistent Requests for Credit"
By the efforts of the "democrats"-cum- monetarists an economy has been
created in Russia which has bled the country dry, is destroying all the
potential for development, and has turned the state into a bankrupt. The
treasury is empty, industry is dead, foreign borrowings have reached
astronomical levels, and domestic debt in the form of the population's
wages is not being paid, which is leading to mass hunger and death. There
is no hope of improvement. Disintegration, thieving, and the bleak shocks
of social explosions. Yeltsin, who promised an end to foreign borrowings
and the beginning of economic growth, is sending "young reformers" abroad
in a panic to drum up cash and coax out handouts in order to somehow plug
the holes in his sinking ship. Like a fire victim, he is now going to Kohl
to badger him for money. But you can be sure that the emergency
"stabilization credit" of $6.5 billion that foreigners have promised will
not reach the starving children, teachers, and servicemen, but will be
spent on redeeming state bonds and will fill the pockets of Russian bankers
and U.S. financial institutions. Against this "rescue" credit foreigners
will gain ownership of the gems of the Soviet economy: Gazprom, Transneft,
diamond fields, and chunks of territory.
We appeal to all honest State Duma deputies: Outlaw these borrowings.
Remind the mendicant regime, which is saving itself with injections of
capital from foreign banks, that the law demands that any international
loan in excess of $100 million needs to be ratified by the State Duma!
Tell world creditors that money borrowed without the State Duma's approval
is illegitimate and is not liable to repayment, just as all Chubays's
privatization is illegitimate and subject to review!
Such a statement by the State Duma would sever the line of credit
sustaining the incompetent regime, speed up Yeltsin's dismissal, close the
gold mine to thieves and insatiable bankers and deliver subsequent
generations of Russians from their slavish dependence on creditor
Sovetskaya Rossiya Chief Editor Valentin Chikin
Zavtra Chief Editor Aleksandr Prokhanov
Russian oil and gas workers say prepared to strike
By Aleksandras Budrys
MOSCOW, June 10 (Reuters) - Russia is facing the prospect of a major strike in
the oil and gas sector towards the end of June, just weeks after action by
coal miners paralysed the country.
An extraordinary conference of the main oil and gas workers' trade union
adopted a resolution on Wednesday calling for ``mass protests including a
national strike'' if the government failed to meet its demands within two
These included cutting electricity, rail and oil pipeline tariffs, freezing
the sector's debts to the budget, a six month moratorium on tax payments and a
general overhaul to the national tax regime.
``The imperfect legislative base which regulates the fuel and energy sector,
as well as the present tax, price and credit policy and the absence of a
mechanism to attract investments has caused output cuts and led to a critical
financial position for oil and gas enterprises,'' the resolution said.
``The impossibility of paying taxes in full due to falling oil prices makes
the federal budget unreal,'' it added.
``The market crisis in south-east Asia and the collapse in oil prices have
weakened the oil companies,'' the union's leader, Lev Mironov, said after the
conference. ``Now even big companies are unable to pay workers' wages in
At the end of May Russian coal miners, desperate over unpaid wages,
cut the country in two by blocking various railways including the Trans-
``Our intentions are serious,'' Mironov said.
The proposed strike would coincide with the June 24 meeting of the
Organization of the Petroleum Exporting Countries in Vienna, at which oil
output cuts aimed at boosting prices will be discussed.
Russian Fuel and Energy Minister Sergei Generalov, who was present at the
union meeting, said he would oppose Russian production cuts at the OPEC
meeting, which Russia will attend as an observer.
``Personally, I am categorically against cuts as they will increase the
of social tension,'' he said.
And he added that he supported ``up to 70 percent of the workers'
``I will personally defend within the government most of the programme
up by the extraordinary conference),'' he said.
He also said that some of the demands, especially those concerning
the tax regime, were expected to be included in an anti-crisis programme which
Prime Minister Sergei Kiriyenko would present to President Boris Yeltsin in
Asked about the likely impact of industrial action by oil workers, Vladimir
Medvedev, chairman of Russia's Oil and Gas Producers' Union, said: ``It would
mean a catastrophe. It would mean the country's economy ground to a halt.''
But he said he expected the government to react in such a way as to avoid
International oil prices have been in a downward spiral since the end of
year, causing severe problems to countries such as Russia which are heavily
dependent on export revenues from oil and gas.
Front month benchmark Brent crude futures fell again on Wednesday after a
hefty 75 cent per barrel slump on Tuesday. Brent is now worth around $13.50
per barrel, some $6 a barrel below last year's average $19.30 per barrel.
Russia's largest oil company LUKoil said recently the price fall had
to cut around $325 million from its 1998 budget.
And last month the second biggest oil company YUKOS said it had trimmed
production by two percent so far this year and costs by 15 percent in response
to the low price.
However, these steps were not accompanied by mass lay-offs in the oil
``That means that (the oil companies) have a great sense of
he told journalists on Wednesday.
Miners' Leader Opposed To Use Of Protests By Political Groups
MOSCOW, June 11 (Interfax) - Chairman of the Russian Independent Coal
Miners' Union Alexander Sergeyev is categorically opposed to the use of the
miners' protests by any political groups.
In a Thursday interview with Interfax he said he did not have any
contacts with the leader of the opposition movement in support of the army
and Duma deputy *Lev Rokhlin* who backed the protesters coming from the
mining town of Vorkuta to Moscow.
"The procession along the main streets of the capital and the following
three-day picket of the government house were decided upon by employees and
trade unions of the Pechora coal basin and we will not let anyone get in
with miners," Sergeyev said referring to Rokhlin's statements.
"We will stay away from these figures as we did in the days of the war
on the railways," he said.
The Moscow authorities permitted the action that will begin at noon on
Thursday, Sergeyev said. "The only thing we failed to agree on is the
organization of a tent township on the Krasnopresnenskaya embankment (near
the government house)," he said. "We have been told to spend the night
outside Moscow and even offered transportation for the miners but I don't
know what the protesters will think of such an option," he said.
Lebed's Strategy After Krasnoyarsk Win
Moskovskiye Novosti, No 20
25-31 May 1998
[translation for personal use only]
Article by Vyacheslav Kostikov, under the "Politics.
Prediction" heading: "Yeltsin Will Be Helpless Against Lebed"
Yeltsin returned from the meeting of the "Big Seven" to a
country that in fact no longer belongs to him and does not submit to
him. And not because it has become obvious once again that the
Russian President, like Gorbachev in his time, feels so much better
abroad than in his own fatherland. Yeltsin has ended because Lebed
Of course, taking advantage of the rights granted to him by
the Russian Constitution, which were cut to his measure, Yeltsin
could still perform a few of the "unpredictabilities" that are so
characteristic of him, could for 10 days, a month, half a year,
"shake the world" with some extravagant political trick. But he
cannot do anything substantive. He cannot even resort to the
prescriptions of his former bodyguards.
Russia no longer loves its President. It now has a new
enchanter, and, perhaps, a new unhappiness. But the fear of possible
misfortune is cut off by something else--something that for Russia
is almost sacred--hope, a new fairy tale. The results of the
elections in Krasnoyarsk have shown that millions of Russians are
ready to put their faith in a new fairy tale and in a new "father of
I t was not Zubov who lost and Lebed who won in Krasnoyarsk.
What won was the new hope and the despair that feeds this hope. And
if Lebed is able to keep this hope up until the presidential
elections, then he will go into the Kremlin, pushing aside on his
way all of the rated contenders to the post of president.
It is not at all important whether he does well in Krasnoyarsk
Kray or not. Lebed will be measured with different yardsticks and
will be weighed on different scales. The supposition to which
Governor Ayatskov has given voice, that Lebed will be bogged down in
Siberia's economic and social quagmires, is strikingly naive.
If the general extracts the correct lessons from the mistakes
of others--former and current contenders--and in addition learns to
speak with people and with the country not through compressed lips
and without the artificial roaring, then he will enter into the
Kremlin, whatever barriers are put up in his way.
These lessons are very simple and have most likely already
been learned by the general.
Lebed will not try to create any Siberian republics, like
Rossel. He will not clash with Moscow, like Nazdratenko. He will not
accede to power, like Tuleyev. He will not become a brawler, like
Zhirinovskiy. He will not put our minds out with declarations about
the return of Sevastopol and Crimea, like Luzhkov. He will not go
around in white trousers and go to dubious bathhouses. Nor will he
rush to write books. He will not order any pedigreed heifers from
France and get himself new, buxom wives and mistresses. Lebed's only
mistake in Krasnoyarsk was the arrival of Alain Delon. But he will
not repeat it. Having guaranteed himself serious chances for victory
at the presidential elections, he will not jet about to foreign
lands and ingratiatingly put his arm around "Friend Kohl," or
Lebed has already clarified his intentions with his one and
only mistress. He says that her name is Russia. It is possible not
to believe him. It is even necessary not to believe him. But with or
without talent, he will stubbornly play that role. And as his
friends he has already chosen and calculatingly will continue to
choose, not foreign presidents, but all the "insulted and injured,"
from Kaliningrad to Nakhodka. There are so many of them, and they
have been driven to such a blinding aversion for the authorities and
for Yeltsin himself, that they will not be prevented from voting for
the out-of-favor general, or to be more precise, against any protege
of the authorities, especially any supported by Yeltsin, by any
field headquarters, any electoral techniques, or any landing forces
of singing or dancing celebrities. Neither Dorenko's "minutes of
hate" nor Kiselev's sophistication will help, nor will the
mobilization capabilities of the CPRF nor the intellectual horror of
the Moscow elite, nor the gubernatorial jealousy of the Federation
Council nor the money of the Moscow bankers.
The most helpless in that skirmish will be President Yeltsin.
Yeltsin's entourage has already absconded in spirit. For one can be
a servant, an under-tutor, even a private fool to a sovereign, but
it is nauseating to be a private fool to a buffoon. As for the
enforcement structures and the Army, upon which, essentially,
Yeltsin has relied starting from 1993, they, while maintaining
outward loyalty, will now synchronize every action of theirs with
Lebed's step. The generals will go about with stars that were placed
on their chests by Yeltsin, but they will serve with one eye on
Of course, Lebed's opponents will set up mantraps and wolf-
pits over the entire Siberian tract between Krasnoyarsk and Moscow.
But first of all, judging by everything, in many echelons of power,
including in the Kremlin, Lebed has his own "fifth column." Second,
the tactics of his opponents are rather predictable. They will write
that Lebed has no program, no ideology. They will suggest that he
could not care less about Russia, that he is striving to get into
the Kremlin for the sake of power. They will say that generals are a
dictatorship. They will assert that Lebed is fascism. An attempt
will be undertaken to financially sabotage Lebed's economic moves.
All the sophistication of compromising materials will be brought
Lebed's responses, incidentally, will be just as
He will say that Russia is tired of ideology, and that the
Communists' "ideological decade of the 1970s" led the country into a
historical blind alley. An economic, political, and social program
will hastily be written for Lebed. It will be no worse and no better
than those under which we have been living these past 10 years. Most
likely, it will be a rather popular eclecticism. When the "Marshall
plan for Russia" turns out to be unimplementable, they will write
another program for Lebed. And the country will live and scramble
out of the pit not in accordance with the program, but according to
the unhasty logic of history and the laws of economics. There are no
miracles in them.
On the subject of the general's love for power, his staff will
parry that history has known not a single important figure who was
not seized with a thirst for power.
The mandate of confidence that the Krasnoyarsk governor will
receive in the event of his victory at the presidential elections
will force one to accept his dictatorship as well. Lebed will say
that his government will be a dictatorship of a particular kind--a
dictatorship of law, conscience, and order. Who in the beggared
hinterlands of Russia will object to this?
On the subject of fascism. No one has yet proven that Russia
fears fascism. Famous Russian thinkers, first and foremost the
"nationally oriented" ones, have long prescribed such a
philosophical base. The foundations of a tolerance for measured
dosages of fascism were laid down under Yeltsin, and the
corresponding structures look upon the "Russian thugs" with secret
adoration. The State Duma openly sabotages antifascist legislation.
As for the inoculations against fascism that the people supposedly
got after the Great Patriotic War, this inoculation is a very
dangerous myth. Those who lived during Communism cannot be
frightened by fascism. To make a fascist bogeyman of Lebed is a
senseless waste of time.
Now about money.
They say that Lebed's victory in Krasnoyarsk cost a fantastic
amount of money. And that, supposedly, if the "oligarchs" come to
their senses and circle their wagons, then the general will not have
enough funding for a ticket to Moscow. But it is reasonable to note
this: If they gave voluntarily for a "Krasnoyarsk Lebed," proceeding
from a certain calculation many moves ahead (a very erroneous one,
probably), then they will give for a "Muscovite Lebed." Only this
time not voluntarily. And without any guarantees of gratitude. So in
the event of further Lebed victories, one of the chapters of the
future of Russian history, it appears, will be called, "Oligarchs in
the General's Servant Quarters." The chapter will be copied from
German history. What is Russian will be the degree of degradation
and disgraceful goings-on.
Something new in the imminent political battle will be the
fact that the "war of compromising materials," which has laid out no
small number of significant figures recently, is completely
inapplicable to Lebed. Over the course of several years, with a
minimum of precautions, he will, like Yeltsin in his time, have a
"popular immunity" against any real or imagined accusations.
Lebed, it seems, is fated to victory, unless, as happened to
Masherov in Belarus, a "chance dump-truck" comes out at him.
Lebed: Russia's Rising Star?
by Richard Pipes
June 11, 1998
In several of my previous columns, I have had occasion to refer to
retired Gen. Alexander Lebed as a potential successor to President Boris
Yeltsin. With his recent victory in the contest for the governorship of the
Siberian Krasnoyarak province, this prospect has acquired reality. It has
made Lebed one of the three or four leading contenders in the presidential
election scheduled for 2000.
Moving toward 2000
Lebed's gubernatorial victory is significant for several reasons. He
defeated a popular and effective incumbent backed by Yeltsin as well as
Iurii Luzkhov, the mayor of Moscow, another prominent candidate for the
presidency. The immense province of Kraskoyarsk is regarded as
representative of Russia as a whole. It is also one of Russia's richest
regions, the largest producer of nickel and aluminum. The new post thus
provides Lebed with an excellent base from which to pursue his presidential
Although Russia's political polls are notoriously unreliable, there is
no doubt that Lebed enjoys great popularity. It is due not so much to his
program which is vague and filled with slogans rather than concrete
solutions, as to his personality. An ex-paratrooper, he exudes
self-confidence. Because of the country's weakly developed social structure
and lack of experience with self-government, Russians have always admired
strong leaders. They expect government to rule by decree rather than by
consent, because consent is unattainable, and they are prepared to hear the
consequences of arbitrariness as preferable to the anarchy that in their
experience accompanies democracy.
Lebed has succeeded in appealing to the broad spectrum of public
opinion. He despises communism and communists as having brought nothing but
misery to Russia. He believes in private property: His mission, he said, is
to make Russia "rich and fat." This wins him the sympathy of two-thirds of
the electorate that is anti-communist.
At the same time Lebed is a nationalist who rejects western values as
inapplicable to Russia and a threat to its traditions. He wants Russia to
be great and strong as well as affluent. This wins him the support of a
considerable part of the so-called brown-red (fascist-communist)
constituency dismayed by Russia's decline to the status of a second-rate
Interpreting his message
The very vagueness of Lebed's political and economic program is an asset
because a more concrete platform might alienate one group or another. He is
fond of platitudes, such as the following from his autobiography, My Life
and My Country:
"We have to stop fighting and start living. People are not trash, they
are not fertilizer for the fields. Human blood is not water. It has a price."
Who can disagree with such sentiments?
Ultimately, Lebed's message is: "Trust me. I will resolve the problems
created by communism and aggravated by democracy. Under my leadership,
Russia will once again be proud and prosperous."
Such a message carries obvious dangers in a country beset by immense
problems of its own making and populated by a nation that seeks shortcuts
to world status and wealth. For although Lebed says he would like to reduce
the powers of the presidency in favor of parliament, nothing either in his
personality or program suggests that if elected he will be anything else
than a willful ruler.
Richard Pipes is a professor of history and has previously served as
director of Russian studies at Harvard University. He is a contributing
editor of IntellectualCapital.com.
Japan: NIDS View of Russian Military Woes
Tokyo Asagumo in Japanese
21 May 1998
[translation for personal use only]
Article by Shigeo Kikuchi, assistant researcher, Second Research
Office, Second Research Department, National Institute of Defense Studies.
Fourth article of "Russia at the Crossroads" subseries within series
"Reading the World: The Strategic Environment in the 21st Century"
[Description of Source: Tokyo Asagumo in Japanese--weekly
newspaper on defense issues]
In the preceding article, I pointed out that the Communist
Party"s general secretary in the era of the Soviet Union could not but
give consideration to the interests of the bureaucratic organizations,
including the military, because his power base was not quite firm. However,
such a situation has been changing. At present, the president"s status
and authority are guaranteed by the Constitution, and he will never be
kicked out of his position during his term of office unless he is impeached
by the parliament. In addition, the impeachment itself is a very difficult
process legally. Moreover, he has the competence to appoint and dismiss key
members of the state organs, including the prime minister, and also holds
the virtual lawmaking power through the presidential decrees; and these
strong powers are guaranteed by the Constitution. Therefore, the
president"s status will in no case get endangered because he has
infringed on the interests of the bureaucratic organizations. In this
context, the president"s authority has become structurally stronger
than the Soviet general secretary"s in overcoming the resistance of
the bureaucratic organizations, including the military.
Moreover, a look at the distribution of the budget will reveal the
rule that, in the present Russia, the prime minister, who is under the
command and supervision of the president, carries out the budget
compilation, while the parliament is responsible for the final adoption of
the budget. That is, the budget appropriation proceedings are expressly
stipulated in a statutory form, and this places the president-centered
political leadership in a more advantageous position. Actually, the amount
of the defense budget approved in the parliament is insufficient, and the
military complains that the Finance Ministry refuses and fails to outlay
even this insufficient budget in full. As this indicates, the leadership
lays restraints one upon another on the military"s requests.
During the Gorbachev era, civilian experts on security belonging to
the Academy of Sciences began to interfere in the fields of armament
control and military strategies. And this trend has been continuing and
further expanding through the subsequent era of Russia as well. To be sure,
the Defense Ministry is basically made up of professional soldiers, and, in
this respect, the participation by civilian experts is limited compared
with other advanced countries. However, for example, during their terms of
office, former Prime Minister Chernomyrdin and former First Deputy Prime
Minister Chubays were, respectively, appointed chairmen of two military
reform-related committees—the Military Power Maintenance Committee
and the Military Reform and Finance Committee. In addition, experts of the
Academy of Sciences, etc., have been joining in the work of drafting
documents related to security or defense policies at the Security Council
set up in 1991 and the Defense Council installed in 1996 (absorbed in the
Security Council in March this year).
Changes have occurred not only in the relationship between the
political leadership and the military. The whole Russian society has also
changed: It is getting intolerant of harsh military service. The post-World
War II Soviet society and Russian society saw stepped-up trends toward
urbanization, enhancement of educational standards, and families with small
number of children as other advanced countries did. Human resources kept
diminishing, while expenses to be defrayed until one grows up and stands on
one"s own feet went up. The weight of each person in the society and
in the family has thus increased.
Even in the Soviet era when the control of information was tight, the
culture of the West infiltrated into the Soviet society, intensifying the
trend toward avoiding pains and burdens attendant on conscription among
young people. Moreover, as a result of the opening of information to the
public in the Soviet society after perestroyka, people became aware of the
shabby treatment of low-grade soldiers within the military and of the
wretched experiences in Afghanistan. Recently, tragic scenes in the Chechen
conflict were reported on television as those in the Vietnam war were
reported in the United States. This further intensified the tendency to
abhor military service. People are using various ways to evade
conscription, making it difficult to replenish military personnel. The
inclination to shun conscription is conspicuous among highly educated
people in particular. This further fetters the effort to maintain military
power these days when highly qualified military personnel are required for
promoting the introduction of high technology into the military.
In the present Russia as described in the above, it is impossible to
use the method of mobilizing material and human resources compulsorily as
in the former Soviet Union. Therefore, to maintain military forces capable
of coping with the strategic environment of the 21st century, Russia needs
to first present a rational appealing-to-the-people image of the future
military and put forth efforts to win popular support for the military.
Such efforts are indispensable to the defense of a democratic country and
at the same time necessary for the survival of the military itself. And it
is a desirable thing for the international society as well that Russia
would meet these needs.
Jamestown Foundation Monitor
11 June 1998
REGIONAL GOVERNORS REACT WITH FURY AT CENTER'S ATTEMPT TO CONTROL THEIR
FINANCES. Russia's increasingly autonomous regional leaders protested loudly
yesterday at rumors of a plan by Deputy Prime Minister Boris Nemtsov to
assert federal control over borrowing by the regions. (Itar-Tass, ORT, June
10) Details leaked out of a draft presidential decree requiring regional
governments to seek permission from the federal Finance Ministry before
raising loans on either domestic or foreign markets. Nemstov justified the
move by reference to the current instability on world capital markets. He
said continuing to allow the regions to be a law unto themselves would be
dangerous in light of Russia' financial crisis. He said the government's
proposed restrictions on regional borrowing would operate only until the
crisis was over. The government was alarmed, he added, that not all regions
were repaying their debts on schedule. He did not identify these regions,
but said they were tarnishing the reputation of the country as a whole and
making it harder for the federal government to raise money on international
An unidentified Russian government spokesman said that the decree will, in
the future, require regions to coordinate their loan activity with the
federal Finance Ministry. This coordination entails providing full
information about the sums to be borrowed, from whom they are to be borrowed
and the schedule for repayment. "Since the federal budget bears sole
responsibility for paying off the regions' debts, it is not surprising that
they should be coordinated with the federal authorities," the official
claimed. (Itar-Tass, June 10)
The governors see things differently. Moscow Mayor Yuri Luzhkov led the
chorus of discontent, though he said he trusted Moscow would be treated as
an exception. Luzhkov was backed by Krasnoyarsk Governor Aleksandr Lebed:
"The center has been dead for a long time," he said. "It has nothing to
give. There will be a huge row and no good will come of it." Saratov
Governor Dmitri Ayatskov was phlegmatic: "There's a way out of all tight
places," he said. "We look for the escape hole and we find it." He claimed
he had already gotten President's Yeltsin's agreement for Saratov Oblast to
get special treatment. (NTV, June 9) In other words, Russia's assertive
regional governors intend to treat this latest attempt to bring them to heel
with no more respect than they have shown for previous efforts.
IMF Said to Demand Russia Cuts
By Mitchell Landsberg
June 11, 1998
MOSCOW (AP) -- The International Monetary Fund has demanded that Russia
slash its budget deficit and reform its tax system to qualify for billions
of dollars in new loans, a top Western banking official said today.
Both actions are already goals of the Russian government, although
perhaps not to the extent envisioned by the IMF.
The official, speaking on condition of anonymity, confirmed a report in
The New York Times saying the IMF has told Russia it must cut its budget
deficit to 2.5 percent of its gross domestic product and reform its tax
The deficit foreseen by the government this year is 4.5 percent.
However, Prime Minister Sergei Kiriyenko's new government has been moving
in recent weeks to cut spending in an effort to further reduce the deficit.
It also is pushing a tax reform package, but that is stuck in the State
Duma, the Communist-dominated lower house of parliament.
According to The Times, the IMF wants that measure passed before the
Duma recesses next month, and also wants a new code on budgetary procedure
In addition, the newspaper said, citing unidentified Kremlin aides, the
IMF called for Russia's Central Bank to be more open about its activities
and statistics, and for a breakup of Gazprom, the huge national energy
company, into separate pipeline and gas extraction operations.
Since Russia's financial markets collapsed late last month, there has
been growing speculation that the country is seeking additional $5 billion
to $10 billion in loans from the IMF or the Group of Eight leading
The Russian stock market perked up last week on rumors of an emergency
bailout plan. It has since slumped again, but trading has mostly been light
as investors wait to see what Western bankers will do.
The Times (UK)
11 June 1998
[for personal use only]
Fireworks launch Kazakhs' new capital city
Astana, Kazakhstan: President Nazarbayev formally opened Kazakhstan's
new capital city yesterday in a symbolic act to affirm the Central Asian
state's independence. He told the official opening ceremony: "From
today, the name of Astana will become known to the whole world."
The President, who has led the former Soviet state since independence in
1991 after decades of often brutal communist rule, moved the capital
from Alma Ata late last year. Alma Ata lies 750 miles to the south.
The name of the new political centre was abruptly changed from Akmola
after the President said he was fed up with people translating it as
"white tomb" instead of the official version of "white plenty". Astana
is the Kazakh word for capital.
Concerts have been held night and day around the city centre, and
thousands of people have filled the streets to join in the festivities
and view the stunning fireworks displays.
Mr Nazarbayev said that moving to Astana was a strategic decision to
place the capital at the heart of his vast country, five times the size
However, unofficial explanations for the costly relocation include Mr
Nazarbayev's desire to neutralise the high percentage of Russians living
in the north and his wish to distance the seat of power from China.
Russia may sell state stake in Gazprom
MOSCOW, June 11 (Reuters) - Russia's state property ministry said on
Thursday it plans to produce a draft decree to unfreeze a five percent
government stake in Russian natural gas monopoly Gazprom (quote from Yahoo!
UK & Ireland: GAZPq.L) for sale shortly.
``The first step towards selling such a stake will be ready in a few
weeks,'' First Deputy Property Minister Alexander Braverman told a news
He said the ministry would launch a road show for the sale of a 75
percent stake in state oil firm Rosneft (PFGS.RTS) in the United States and
Britain on June 12.
The ministry was also considering auctioning the remaining stake in
Rosneft (PFGS.RTS) to ordinary Russians. Rosneft is Russia's last major oil
asset still in state hands, but an attempt to auction a stake in it failed
last month when no bids were received.
Braverman also said the ministry would decide the terms of a sale of a
19.36 percent stake in oil company Slavneft (MFGS.RTS) by June 18, adding
that he favoured selling it by auction, where the highest bidder wins. He
said potential bidders in Slavneft would face a minimal investment
The proposed sale of a stake in Gazprom, of which the state owns 40
percent, follows a proposal by company head Rem Vyakhirev earlier in the
week that the state should sell two to three percent of the company for
around $1 billion to a strategic partner.
Gazprom already has strategic partnerships in place with
Anglo-DutchRoyal Dutch/Shell (RD.AS)(quote from Yahoo! UK & Ireland:
SHEL.L), signed last November, and with Italian ENI (ENI.MI), signed in