December 2, 1999    
This Date's Issues: 3656 • 3657  • 3658

Johnson's Russia List
#3657
2 December 1999
davidjohnson@erols.com


[Note from David Johnson:
1. Murray Feshbach: Re Piper in JRL3654 on the HIV/AIDS threat to Russia.
2. Interfax: PRESIDENT SAYS RUSSIA POTENTIAL MILITARY THREAT TO LATVIA.
3. Reuters: Russian Duma bans eating pets.
4. Moscow Times: Yevgenia Albats, Tale of Russian Politics Is Told In
Prison Slang.
5. Itar-Tass: Yavlinsky Says Army Should Win Over Chechen Population.
6. Kimberly Kriger: RE: 3654-Schmidt/Loans for Shares Part 2.
7. Voice of America: Ed Warner on International Foundation for Election 
Systems and upcoming election.
8. Itar-Tass: US to Support Russia in Fight Against Terrorism- Cohen.
(DJ: Any information on US DOD assistance to Russian military on PR work?)
9. RFE/RL: Michael Lelyveld, Chechnya War May Continue Till Elections.
(Harvard conference).
10. Novye Izvestiya: Planned Fatherland. NUMBER FOUR IN THE LIST MIGHT TURN 
OUT THE FIRST AND ONLY ONE IN THE DUMA. 
11. AP: Russia Moves To Expand Security.
12. Stratfor Commentary: Chechens Fight to Maintain Corridor to Grozny.
13. Grzegorz Kolodko: Re 3653-Dunne/Stiglitz (Washington concensus).
14. International Herald Tribune: Donald Blinken, Look, NATO Enlargement 
Works.
15. Gordon Hahn: Per Devane 3644.
16. Segodnya: Will Tomorrow Come For The Bears? SHOIGU'S BLOC IS SUPPORTED 
BY ALEKSANDER PROKHANOV'S NEWSPAPER.
17. Itar-Tass: SHOIGU'S Bloc Seeks to Create Pro-Putin Majority in New Duma.
18. Moscow Times: Yevgenia Borisova, Duma Committee Critical Of
Privatization 
Program.
19. Itar-Tass: Chubais Says Situation with Power, Fuel Supplies "Complex".
DJ: Can anyone give me some good reasons why Chubais should NOT be regarded
as 
a craftsman of the latest rescue operation for the Yeltsin regime as he was 
in 1996?] 


*******


#1
Date: Wed, 01 Dec 1999 
From: "Murray FESHBACH" <FESHBACH@gunet.georgetown.edu> 
Subject: A small, but I hope important comment


Comment on Reuters' story by Elizabeth Piper in JRL3654 on the HIV/AIDS
threat to Russia


I fully agree with her depiction of the threat of loss of life from this
illness as being greater than that from the Chechnya military operation.


To make certain that her basic point does not get lost in the tremendous
amount of material which the Johnson List contains, I want to highlight
some of the figures which she related. At a news conference by Vadim
Pokrovskiy, head of the Center for HIV/AIDS Research, Pokrovskiy forecast
that in 2005 some 10 percent of the population could be infected with HIV
(a figure of roughly 13-14 million persons), and "in 10 years time," he is
cited as saying, that by 2010 many of these mostly young people will have
died as they become victims of AIDS.


As I noted earlier in my dire population prediction, the impact of the
deaths from HIV/AIDS as well as tuberculosis will be to change the
structure of the causes of death in that benighted country unless something
is done; if new instant cures are not found; if enough money is not found
in the budget; and other less likely scenarios. However, I more and more
believe that Pokrovskiy is correct and it may be too late for them. These
illnesses and subsequent mortality will then become a major threat to the
domestic society as well as a serious threat to other countries as well if
they are transmitted beyond the borders of the region. 


*******


#2
PRESIDENT SAYS RUSSIA POTENTIAL MILITARY THREAT TO LATVIA


STOCKHOLM. Dec 1 (Interfax) - Latvia's President Vaira Vike-
Freiberga said on Wednesday the current war in Chechnya was evidence
that Russia still possessed powerful armed forces and posed a "potential
threat" to Latvia.
"When one sees what is happening in Chechnya, one should make the
conclusion that Russia has a high level of military readiness and poses
a potential threat to Latvia," Vike-Freiberga said during a visit to
Stockholm.
"What is happening is alarming, but fortunately Russia is
concentrating its activity there and not in any other place."
The president said Latvia sought to join NATO "as soon as
possible."


*******


#3
Russian Duma bans eating pets

MOSCOW, Dec 1 (Reuters) - Russia's State Duma, the lower house of parliament, 
passed an animal rights bill on Wednesday explicitly prohibiting people from 
eating their pets. 


The bill, 22 pages long with amendments, forbids a whole range of activities 
considered cruel to animals, including using ``animal companions'' -- 
household pets -- for ``meat or fur.'' 


Among other practices banned are performing operations on pets without a 
medical reason, or deliberately wounding them to photograph them for films or 
television programmes. 


Pet owners are required to prevent unwanted offspring by sterilising their 
pets or providing contraceptives, practices less common in Russia than in 
most Western countries. 


Owning pets is serious business in Russia, and visitors to the country are 
often surprised by the number of exotic breeds of dogs that parade down even 
the poorest streets. 


Canned and dry pet food has only been recently introduced, and most Russian 
pet owners regularly buy fresh food in markets to cook for their pets. 


The animal cruelty bill also bans certain hunting practices, such as using 
electric currents to catch fish or killing female animals that care for 
unprotected young. 


The bill, which passed by 273 votes to one, awaits President Boris Yeltsin's 
signature to become law. 


******


#4
Moscow Times
December 2, 1999 
POWER PLAY: Tale of Russian Politics Is Told In Prison Slang 
By Yevgenia Albats 
Yevgenia Albats is an independent, Moscow-based political analyst and 
journalist. 


You can bet your life that the framers of Western foreign policy have never 
heard such key Russian words as tufta and khalyava. 


But within these words lies the key to understanding Russian political and 
social behavior - including the population's alienation from the state and 
its craving for a strong hand; the tolerance of extraordinary bureaucratic 
corruption and lawlessness; the fear of brutal violence, but the ease with 
which they let it be visited on others. In a nutshell, these words are the 
framework for the Russian-Soviet Art of Survival. Its significance has been 
lost on all foreign policies toward Russia, and the oversight has doomed 
every one of them to failure. 


Tufta, in Russian prison and labor camp slang, means "counterfeit" or "a 
swindle involving selling poor-quality goods." Khalyava, in the same jargon, 
means "satisfying demands on someone else's account." 


The sense of tufta is as follows: In Soviet camps there was a daily work 
quota that prisoners had to fulfill to get their ration of bread and soup. 
The sizes of the rations varied over the years, but they were never 
proportionate to the physical output of the prisoners, who cut wood, dug 
trenches or worked in uranium mines. When a prisoner didn't do the work he 
should have, his ration was reduced or taken away. In order to survive, a 
prisoner had to be able to produce the appearance of work so that, on paper, 
it came out that he had cut down 10 trees, for instance, when he'd really 
only cut down three. Getting food for this unfinished work was said to be 
"getting khalyava." 


"Only those who thoroughly mastered the science of tufta and khalyava 
survived the camps," Lev Razgon, the famous Russian writer who spent 17 years 
in the Stalinist gulag, told me. 


Tufta and khalyava could not have survived in the Stalinist gulag without a 
social contract between the prisoners and the camp commanders. The prisoners 
bribed the commanders, who in their turn bribed their superiors. The gulag 
thus was the place where a virtual Soviet planned economy - based on bribes 
and cooked figures - was built. In post Stalinist years, the system evolved 
into what was expressed by the truism: "The authorities pretend to pay us, 
and we pretend to work." 


Millions of Soviet people who outlived the camps brought the gulag science 
back to society. Its rules made up the Art of Soviet Survival, which was 
passed from generation to generation with mother's milk. This art was 
absolutely necessary for survival in the Soviet police state. 


The fall of the Soviet Union was marked by the closing of the political camps 
and the declaration of political freedoms. But reform's hardships only 
increased the need for the Art of Survival. Those who may have an alternative 
to this system have only just been born. This Soviet survival instinct is 
responsible for the quick attitude shifts of various politicians and also 
explains the lighting-fast rise of the "firm-handed" Prime Minister Putin. It 
also explains the overwhelming support for the brutal and violent war in 
Chechnya. In short, the only way for reform to happen in Russia in a legal 
and timely fashion is to send all of us Soviet people to the moon. Why the 
West can't understand this will be the theme of next week's column. 


******


#5
Yavlinsky Says Army Should Win Over Chechen Population.


BARNAUL, December 1 (Itar-Tass) - Yabloko leader Grigory Yavlinsky called for 
"destroying bandits and protecting normal people" in Chechnya. 


He said there are 300,000 residents in Chechnya, 30,000 of whom are 
terrorists. "We can defeat the terrorists only if 270,000 residents support 
our efforts," he said. 


As an example he cited Dagestan, where "people supported our military and we 
destroyed the bandits". 


"In order to destroy the bandits, it is necessary to win over the peaceful 
population. We have to protect Russians, Dagestanis, Ingushis and Chechens 
who do not want to live under bandits. We have to find more allies and create 
a protective sanitary cordon, while looking for a common language with the 
people who live there", he said. 


Yavlinsky stressed the need to "begin negotiations, including with (Chechen 
President Aslan) Maskhadov who controls one third of militants. If this one 
third does not shoot our soldiers in the back, because Maskhadov will urge 
them to get rid of bandits, it will help us". 


******


#6
Date: Wed, 01 Dec 1999 
From: Kimberly Kriger <kimberly-kriger@KEKST.COM> 
Subject: RE: 3654-Schmidt/Loans for Shares Part 2


In addition to what appeared in issue #3654, by Jack Schmidt from The Russia
Journal ("The Rape of Russia: The Sequel"), readers might also consider that
the same people who are trying to buy out the Russian government's 49.8%
stake of Tyumen Oil Company (TNK) at a fire sale price just bought at a
rigged auction the key assets of TNK's competitor, oil producer OAO Sidanko.
Chernogorneft's operations are adjacent to the TNK operations in the
Samotlar field. 


TNK's flagrant asset stripping was accomplished despite a court injunction
banning the sale of the subsidiary and in the face of serious opposition
from investors that include Russia's biggest foreign direct investor, BP
Amoco, as well as Boris Jordan's Sputnik Group of funds. The latter
includes various funds managed by Soros Fund Management and Harvard
Management, which is the principal investment advisor to Harvard's Endowment
Fund. 


In fact, the Sputnik Group was kept out of the bidding process illegally and
the reason TNK was able to control the creditor's committee and thus the
bankruptcy proceedings, was because it made illegal preferential payments to
two of Cherno's largest creditors, The United States' Export-Import Bank and
the EBRD. The EBRD has expressed its concern from day one that the
bankruptcy was not being conducted in a proper or transparent manner.
However, Mr. Schmidt is right --- it is outrageous that the Ex-Im Bank is
further abetting this process by continuing to support TNK with preliminary
approval of about $500 million in loan guarantees (US taxpayer money). But
until the loan guarantees are given final approval from the Ex-Im Board,
there is still hope. 


*******


#7
Voice of America
DATE=12/1/1999
TITLE=RUSSIAN ELECTIONS
BYLINE=ED WARNER
DATELINE=WASHINGTON


INTRO: On December 19th, Russians will vote for 
members of the Duma, the lower house of parliament. 
The election is important because the legislature is 
expected to assume more power in the years ahead. The 
vote will also be a preview of next year's 
presidential election. To help assure an honest, 
effective tally, an American organization has been 
working with Russian election officials. 
Correspondent Ed Warner reports some of the Americans' 
observations about the upcoming election. 


TEXT: Voting can be fun in Russia, says Paul 
DeGregorio of the International Foundation for 
Election Systems, or IFES: 
// DEGREGORIO ACT //
Go to a polling station, and there is loud music 
to welcome you to the station. There is food 
for sale at discounted prices. So you feel good 
as you are coming in. Some places there might 
be vodka and other things for sale. There are 
flowers. I mean it really looks nice. 
// END ACT //


This cheerful welcome dates back to Soviet times when 
people had to be encouraged to come to the polls since 
their vote was meaningless. Only one party appeared 
on the ballot. It would win whether they voted or 
not. 


Today in post-Communist Russia, people have to get 
used to the idea their vote can count. To help with 
the change, an International Foundation for Election 
Systems' team has analyzed the election process in 
great detail. The foundation team has offered some 
advice as Russians prepare to vote for the Duma, or 
lower house, on December 19th.


Mr. DeGregorio, who first studied elections in his 
home state of Missouri, has just returned from 
consultations in Russia and is optimistic about the 
vote. He expects a big turnout and minimal fraud, 
though observers are essential:
// DEGREGORIO ACT //
They have a very professional election 
commission now, and I think they are serious 
about trying to improve the process, and to show 
to Europeans and the west they can have good 
elections. A lot depends on who is appointed 
and the professional attitude they take and the 
managerial skills that they have on the job. 
// END ACT //


The election has produced one unpleasant surprise, 
says Mr. DeGregorio. It has attracted some unsavory 
candidates to run for office for self-serving reasons:
// DEGREGORIO ACT //
A lot of businessmen are buying their way on 
these party lists to get to the top so they get 
elected. So they more or less have technical 
and real immunity from prosecution, and they 
wield their political power. We are seeing more 
of that - paying big sums of money over the 
table and under the table. 
// END ACT //


Lewis Madanick, a program officer of the foundation, 
cites another problem: the influence of a highly 
partisan media. Newspapers and television stations 
are owned by the state or by big businesses with close 
ties to government. 


Mr. Madanick says they tend to pursue their special 
agendas rather than inform the public. He insists 
that the foundation sticks to technicalities and stays 
out of politics, but he discerns a moderate trend in 
Russia that should enhance the power of the Duma:
// MADANICK ACT //
We are finding the parties are homogenizing more 
around the center, as opposed to a strong 
diametrically opposed democratization versus 
Communist, which I think is healthy. We are 
also finding less parties, which show less of a 
spectrum. Of course, there are radical fringe 
groups -- nationalist groups, far-left groups, 
far right groups- but they seem to be 
marginalized.
// END ACT //


Mr. Madanick says a successful December election will 
be another solid step in building an enduring Russian 
democracy. 


******


#8
US to Support Russia in Fight Against Terrorism- Cohen.


BERLIN, December 1 (Itar-Tass) - The United States will support Russia in its 
fight against terrorism, visiting U.S. Defence Secretary William Cohen said 
on Wednesday. 


According to German reports, the U.S. defence secretary did not elaborate. 


Such threats as nationalism and ethnic hatred, the irresponsible 
proliferation of weapons of mass destruction and terrorism should be 
eliminated, Cohen said. 


*******


#9
Russia: Chechnya War May Continue Till Elections
By Michael Lelyveld


Boston, 1 December 1999 (RFE/RL) -- Experts at Harvard University are worried 
that the Russian government may continue the war in Chechnya for another six 
months to reap the political benefits in the presidential election next June.


Russia analysts meeting Monday at Harvard to preview the December 19 election 
for the State Duma voiced concerns that Prime Minister Vladimir Putin is 
riding a wave of popularity because of the war. Some believe that the Kremlin 
will not end the fighting as long as it pays electoral dividends.


On Sunday, Russia's Romir Institute released a poll showing that Putin's 
approval rating has jumped from 30 percent to 42 percent in just the past two 
weeks. Michael McFaul, a senior associate at the Carnegie Endowment for 
International Peace, said the dynamic is very different from the last 
Chechnya war, when President Boris Yeltsin faced public criticism during his 
re-election campaign.


"Yeltsin had to end the war in 1996 to win," McFaul told RFE/RL in an 
interview. "Now the electoral pressure is the opposite. The pressure is to 
keep it going as long as possible."


Speakers at the conference agreed that Chechnya has blurred the differences 
between the 28 parties in the race for the Duma because support for the war 
is so broad.


"I would say the war in Chechnya has transformed the Russian electoral cycle, 
at least at this point," said Graham Allison, director of the Belfer Center 
for Science and International Affairs at Harvard's Kennedy School of 
Government.


The war has also displaced the economy and corruption as critical issues, 
marking a major change from past Russian elections.


"It's virtually impossible to find a cleavage issue," said McFaul. "It 
doesn't seem to be a campaign about issues." The conference was organized 
jointly by Harvard's Davis Center for Russian Studies and the Belfer Center.


One consequence of the war is that it has allowed the Kremlin to dominate the 
Duma election without relying on a party, although Putin endorsed the 
Yedinstvo, or Unity, bloc this week.


Speakers saw the late support as a far cry from the Kremlin's more active 
strategies in previous elections of working through "parties of power," such 
as Our Home is Russia. The party of former Prime Minister Viktor Chernomyrdin 
failed to prevent the rise of the Communist Party and may not be able to draw 
the necessary 5 percent vote this time to win representation in the Duma.


Recent polls show that the war and Putin's soaring popularity have drawn 
support from all other major contenders in next year's presidential election, 
scheduled for June 4, the analysts said. The trend seems to have undercut 
former Prime Minister Yevgeny Primakov of the Fatherland-All Russia party, 
who was considered a favorite three months ago to succeed Yeltsin as 
president.


"The bloom seems to be off the rose for Fatherland-All Russia, and it's not 
completely clear why," said Timothy Colton, director of the Davis Center. It 
appears that Primakov and the party started too early and peaked too early 
before Putin's star started to rise, said Colton. Clearly, the attacks by 
Sergei Dorenko of ORT television against the party's co-founder, Moscow Mayor 
Yuri Luzhkov, have been damaging as well.


Experts are concerned that if the war does continue into the presidential 
election that the Kremlin will choose popularity over economic health and its 
relations with the West.


So far, higher oil prices and improved tax revenues have allowed Russia to 
spend freely on the war, even without loans from the International Monetary 
Fund. But in previous elections, the Russian government has also increased 
spending in an effort to win votes. That trend has already started with the 
announcement that pension payments are being increased.


Traditionally, campaign spending has had a delayed effect on the economy with 
increased inflationary pressures. Russia could start to feel the effects 
before the presidential vote in June. At the same time, it will come under 
pressure to make its quarterly payments to the IMF for past loans, whether or 
not new loans are made, said the Belfer Center's Graham Allison.


The costs of the war, campaign spending and loan payments could all come 
together at the same time. In that case, the Russian government would be 
faced with the choice of continuing a popular war or defaulting on its IMF 
loans. While the consequences of a default would be disastrous, the political 
benefits of defying the IMF could "look pretty good" to the Kremlin, Allison 
said. 


*******


#10
Russia Today press summaries
Novye Izvestiya 
December 1, 1999
Planned Fatherland
NUMBER FOUR IN THE LIST MIGHT TURN OUT THE FIRST AND ONLY ONE IN THE DUMA. 
WHAT DOES THAT MEAN FOR US?
Summary
When you look at the faces of the leaders of the Fatherland ­ All Russia 
(OVR) bloc, you associate them with cards ­ one is an Ace (Primakov), two are 
Kings (Luzhkov and Yakovlev), and number four is a Queen (Ekaterina Lakhova). 
And it seems that after December 19, the bloc will make some interesting 
moves. The two kings will not go to the Duma at all ­ they have already 
announced that decision, the Ace may go ­ but only for a short time, because 
ahead of him will be a new, more exciting game. Which means that after the 
first three cards are “discarded”, number four is left, and the Queen, 
Lakhova, will head the bloc in the Duma.


But what does this mean for us? Ekaterina Lakhova has already worked in a 
number of different positions ­ she has headed the Women of Russia bloc and 
worked in Duma committees: for Women, Family and Youth; the Regulations 
Committee. She is a versatile woman. And she has some strong principles that 
she always protects. She protects the rights of a woman to have an abortion, 
she is for the “contraceptive revolution” and sex education in schools. And 
for some reason she is very fond of the idea of sterilization.


The first time Lakhova mentioned mandatory sterilization as means of fighting 
the growing number of orphans and many other demographic and social problems 
was in 1991. She continued to advertise sterilization in 1996 when she was 
persuading her colleagues in the Duma to pass a law called “On reproductive 
rights of citizens”. The law wasn’t passed.


Now Lakhova hopes for the new Duma. The questions of reproduction, 
contraception and family planning are included in OVR’s program. And having 
headed the “Planned Fatherland” bloc, Queen Lakhova will have more chances to 
bring her ideas to life. Especially since the Queen also has Jacks, tens, 
sixes…


******


#11
Russia Moves To Expand Security
1 December 1999

MOSCOW (AP) - The lower house of Russia's parliament on Wednesday unanimously 
approved a bill that would expand the powers of the national security service 
in fighting terrorists and preventing mass disturbances. 


The move comes while Russian forces are waging a largely popular military 
campaign in breakaway Chechnya that the military says is aimed at wiping out 
terrorists. 


The State Duma voted 356-0 for the bill, the ITAR-Tass news agency reported. 
To become law, the bill must be approved by the upper house of parliament and 
signed by President Boris Yeltsin. 


The bill would allow the Federal Security Service - the main successor to the 
Soviet-era KGB - to seal off entire regions or facilities if necessary to 
prevent terrorist acts or mass disturbances. 


The same may be done during searches for wanted criminals, or during 
investigations of cases under the jurisdiction of the security service, known 
as the FSB, the ITAR-Tass news agency reported. 


The FSB also would be allowed to restrict or ban travel through specific 
areas, and to order people to leave or stay in these areas if necessary to 
protect their lives, health or property, the report said. 


The FSB already enjoys fairly broad powers, and the proposed changes would 
not drastically expand its authority. 


Russian officials tend to use the term ``terrorism'' loosely, and it was 
unclear who would decide whether a situation was serious enough to warrant 
application of the FSB's expanded powers. 


It also was unclear how the bill, if passed, would affect the military 
campaign in Chechnya. 


Russian troops moved into the republic in September, after Chechnya-based 
militants twice invaded the neighboring Russian republic of Dagestan. The 
militants are also blamed for recent apartment bombings that killed about 300 
people in Moscow and two other cities. 


******


#12
Stratfor Commentary
December 1, 1999
Chechens Fight to Maintain Corridor to Grozny


Over the past several days, Islamic militants have engaged in a new phase in 
their fight against the Russian forces in Chechnya. Reports have 
characterized the fighting as some of the worst since the ground war began on 
Oct. 1, largely due to increased Chechen resistance. Despite a comparative 
shortage of resources, the Chechens are utilizing guerrilla tactics and 
familiarity with the terrain in an attempt to interrupt Russia' offensive by 
causing a high amount of casualties.


The Chechens have far fewer men and weapons than the Russian forces. The 
estimated 10,000-strong Chechen force has the ability to muster 30,000 
supporters, reported the Glasgow Herald. Russian troops are reportedly 
estimated at 100,000. 


Russia now controls most territory surrounding Grozny, but the rebels will 
fight fiercely for a remaining stretch of land, strategically more important 
than the rest of the land around Grozny. Russia has control of roughly 80 
percent of a circle surrounding Grozny, with 20 percent opening a corridor to 
the south that serves as a rebel supply line and escape route. It also 
contains the rebel command headquarters in Vedeno, according to a Nov. 29 
Russian television report. 


As the Russians moved south to their current positions, finally threatening 
rebel supply routes, they were met with strong resistance. The rebels could 
have been waiting while Russia captured the northern 80 percent, all the 
while preparing to defend the vital corridor between Grozny and the southern 
mountains leading into Georgia. Or, Russian troops closing in may have forced 
them into a final stand. In either case, Russia will be unable to continue 
without casualties in its fight for the southern corridor out of Grozny.


Using only few men, the rebels can force Russian troops to spread themselves 
thinly over the entire region, instead of holding a concentrated front line. 
The Chechens cannot defeat the Russians in direct combat, so they are trying 
to exhaust them by engaging in combat along the front and then attacking 
territory behind Russian lines. This tactic forces Russia to use more troops 
to protect their rear supply lines, thus depleting the supply of men 
available for battle. As the Russians recently reached Urus-Martan on the 
west of the corridor and Novogroznensky on the east, they met with strong 
rebel resistance. 


The war has reached a new point -- one in which the rebels will launch a 
concerted campaign to defend their southern corridor. However, Russia wants 
to avoid confrontation by sealing off Grozny and starving out the Chechens. 
As each side tries to encircle the other, the battle progresses further 
toward the mountainous Georgian border. The Chechens have been preparing for 
this stage of the battle, and their renewed resistance will force the next 
Russian move. If Russia intends to destroy the Chechen militants, it will 
have to go through Georgia and sweep north, sealing the rebels in Grozny


*******


#13
Date: Wed, 01 Dec 1999
From: "Grzegorz Kolodko" <grze@troi.cc.rochester.edu> 
Subject: Re 3653-Dunne/Stiglitz (Washington concensus)


Some of my research papers can be downloaded at:
http://papers.ssrn.com/sol3/search.taf


Nancy Dunne ("Financial Times", November 25th, "Knives out in Washington
for a free spirit") is right in her comments on the positive role Professor
Stiglitz had played as the Chief Economist of the World Bank. Especially it
must be stressed that his criticism of the ways the post-Communist
transition to a market economy has been managed (or one should rather say"
- "mismanaged) is quite justified. While working together with him on "the
post-Washington consensus" -- yet this consensus is hardly coming what may
be seen also from the fact of his resignation from the position in the
World Bank - I shared my experience from Polish government in 1994-97. 
Against this experience indeed it is difficult to argue that we are wrong.
No, we are right that post-communist transition in Poland and in Russia --
as well as in another over two dozen countries from Central Europe to
Eastern Asia - is much more about long lasting and gradual institutional
building than about fast liberalization, it is much more about competition
policy and sound corporate governance than about privatization, it is much
more about the new role of the state than about the government withdrawal
from the economy. 


Ten years ago, when the post-communist transition to market economy and
democracy begun, so-called 'Washington consensus' was thought to represent
the received wisdom on the proper way to step from stabilization to growth.
According to this belief a tough financial policy, accompanied by
deregulation and trade liberalization, would be enough to eliminate
stagnation and launch economic expansion. The proposals for reform based on
this reasoning were used to address structural crises in various regions,
despite the fact that they had been developed mostly as solutions to
problems in Latin America. This orientation in policy reform have had an
important impact on the course of the post-communist transition, too. 
The policies of the Washington consensus were not drafted in order to solve
the crisis in post-communist countries entering a period of transition
toward a market economy. The early consensus was actually aimed at
distorted market economies. For this reason, nations facing other
challenges have never found satisfactory answers to their most pressing
questions in the Washington-backed policy. Its interpretation vis-a-vis the
post-communist countries suggests that it would be sufficient to liberalize
prices and trade and then fix the financial fundamentals, and - of course -
privatize the state assets. The faster and more, the better. Subsequently,
growth should occur and be sustainable. Unfortunately, it has not been the
case. 


Such approach has partially failed with respect to the transition economies
because it has neglected the significance of institution building even when
the other fundamentals are by and large in order. This oversight explains
why so many Western scholars did not at first properly understand the true
nature of the challenge. Institutions can be changed only gradually, and
they exert a very strong influence on economic performance. It was quite
naive to expect robust economic growth so soon after the fundamentals (but
not the institutions) were in place. In fact, in the real economic affairs,
it is not possible to sustain fundamentals if they are not backed by solid
institutions. 


Rapid growth was anticipated because it was assumed that market
institutions, if they did not appear out of thin air, would rise up quite
spontaneously the 'day after' liberalization and stabilization. However,
the 'day after' liberalization and stabilization was even more depressing
than the 'day before'. Because of the neither plan, nor market systemic
vacuum, productive capacity was being employed even less; savings and
investment were declining, and instead of rapid growth there was rapid
recession. The lack of appropriate institutions turned out to be the key
element missing from the transition policies counseled by the Washington
consensus. Liberalization and privatization, unsupported by well-organized
market structures, generated not sustained growth, but a lengthy period of
contraction. This was not an inherited problem; it was the result of poor
policy.


Under some circumstances, the reasoning of the Washington consensus may be
relevant in dealing with the challenges faced by distorted, less-developed
market economies. However, in these economies, market organizations have
already been in place for years. The post-communist economies possessed no
basic market organizations, since such organizations had not existed under
the centrally planned regime. Therefore, because the absence of these
organizations had apparently gone unnoticed until after the beginning of
the transition, the market had no place to set roots and grow. Especially
if the liberalization was rapid and the privatization radical, but in other
cases, too, there could be no adequate and timely positive supply response.
The misallocation of resources and of investments merely continued,
although now for different reasons. This has been the main cause of the
great transitional depression, lasting so long (even the whole decade in
Russia and Ukraine) in several post-communist countries.
The economic policy orientation based upon neoliberal monetary orthodoxy
had a tremendous influence on the course of changes in Eastern Europe and
the former Soviet republics, as well as in the Asian socialist economies,
but from the results it appears as though these nations did not all draw
the same policy conclusions. A number of less-developed and transition
economies realized quickly that there can be no sustained growth without
sound institutional arrangements. Especially Poland was able to move from
ill-advised early „shock without therapy" to therapy without shock in
1994-97, when this country GDP grew by 28 percent under the well-known
program „Strategy for Poland", in which the implemented policy not always
had followed the IMF orthodoxy. An attempt to return to it after 1997 has
slowed down the growth again and caused growing social tensions. As the
consequence, the economic situation in Poland is deteriorating again
rapidly. 


Yet lessons are learned and since the mid-1990s the IMF and the World Bank
have been paying more attention to the way market structures are organized
and to both institutional and behavioral aspects of market performance. Now
they know that liberalization and institutional organization are both
required for the market and economic growth. Because of the bitter
experience of transitional contraction it has become clear that there will
be no sustained growth unless the sound fundamentals - a balanced budget,
balance in the current account, low inflation, a stable currency,
liberalized trade, and a vast private sector - are supported by appropriate
institutions. Indeed, they do matter even more than stabilization. 


I do hope that there is emerging consensus that the Washington consensus
ought to be reconsidered, revised, and adjusted to reflect the lessons
learned under real conditions. Both the Russian malaise and the Polish
success prove that such revision is necessary. 

Professor Grzegorz W. Kolodko
University of Rochester
Department of Political Science
Harkness Hall 315
Rochester, NY 14627 
USA
Tel (716) 275 78 55
Fax (716) 271 16 16
E-mail: grze@troi.cc.rochester.edu


********


#14
International Herald Tribune
2 December 1999
[for personal use only]
Look, NATO Enlargement Works
By Donald Blinken 
The writer was U.S. ambassador to Hungary from 1994 to 1997. He contributed 
this comment to the International Herald Tribune.


NEW YORK - Observe an omission in Boris Yeltsin and Vladimir Putin's ardent 
defense of Russia's military campaign in Chechnya. NATO was not mentioned 
once by Mr. Putin and only in passing by Mr. Yeltsin.


While Russia clearly will not tolerate outside advice or intervention in 
Chechnya, the Russian leaders tacitly acknowledge that Russia's problems do 
not include the enlarged NATO to its west.


Facing terrorist bombings in Moscow and real or threatened violence on its 
southern and eastern borders, while at the same time trying to introduce the 
rule of law within its troubled society, Russia craves most of all the peace 
and predictability it enjoys to its west, provided and guaranteed by NATO's 
expanded presence.


Nine months after Poland, Hungary and the Czech Republic were admitted to 
NATO and six months after NATO's successful conclusion of the fighting in 
Kosovo, the principal argument opposing NATO enlargement (Don't upset Russia) 
now seems greatly exaggerated.


Russia's possible negative reaction was the most serious argument voiced 
against NATO expansion. It is clearly in the West's interest to establish a 
long-term relationship with this tumultuous country based on mutual respect 
and a sharing of fundamental interests and values, sentiments with which Mr. 
Yeltsin and Mr. Putin agree.


Yes, some feelings in Russia were hurt by NATO enlargement. But the reality 
is that Poland, Hungary and the Czech Republic's NATO accession is in 
Russia's interest because NATO's eastward growth has brought the rule of law 
and the peaceful resolution of conflict closer to Russia's borders.


At the same time, the peace in Kosovo, partially brokered by Moscow, 
demonstrated again that Russia, if given a serious role to play, can and will 
contribute to European security, even to the extent of working with NATO as 
it has in Bosnia since early 1996.


Russia may dislike having NATO on its doorstep for reasons of prestige, but 
its willingness to work with NATO in conflict resolution and peacekeeping 
indicates that it sees NATO's post-Cold War mission as not to threaten it but 
to advance mutual security throughout Europe.


One indication of this is Russia's decision last summer to return to the 
Permanent Joint Council, the place where NATO and Russia meet, consult and 
ultimately cooperate.


NATO enlargement was also opposed by some Americans on the grounds that it 
would dilute NATO's ability to act decisively; new members would be takers, 
not providers of common security. But the fighting in Kosovo demonstrated 
sooner than anyone had expected that the new members add to rather than 
subtract from NATO's military effectiveness.


Hungary stopped a Russian convoy headed toward Belgrade with military 
supplies, opened its airspace to NATO air forces and turned over an air base 
to NATO combat aircraft. Poland and the Czech Republic offered humanitarian 
aid and logistical support.


Nor is there any evidence that the addition of the three new members in any 
way complicated life for Brussels or any of the major NATO partners. The key 
military decisions continued to be made by the principal NATO partners. The 
new members were neither a drag nor a diversion.


So enlargement has neither provoked the Russians nor diluted NATO's 
effectiveness. It has already paid dividends in extending peace, enhancing 
stability to Russia's west and broadening the number of European nations 
prepared to share common values.


*******


#15
Date: Wed, 01 Dec 1999 
From: Gordon Hahn <hahn@hoover.stanford.edu> 
Subject: Hahn Per Devane 3644


Mr. Devane backs off his claim of genocide and concentration camps by
arguing in essence that words do not matter -- "whatever we want to call
it". But words are important and are often used by the over-emotional and
propagandists to present an inaccurate picture. This is why I criticized
use of the word 'genocide'. The state of Russian-American relations is bad
enough without irresponsible accusations flying back and forth. 
Unfortunately, Devane then moves on to attack other positions -- whether
he is assuming I hold them I do not know -- in order to try to argue
against his own apparent retraction. I have never anywhere written or said
that Russia should not be criticized for its careless bombing campaign and
pressed to be careful in both prosecuting the war and on how it cares for
refugees. At this time, I think it is still premature to hold back IMF aide
or the like.
I find it curious that those (I do not necessairly here mean Mr. Devane)
that criticize Russia for its Chechen poicy did not criticize Turkish
actions against Kurds which have been just about as brutal. The genocide
issue is a ticklish one here -- do civilian casualties in bombing during
the course of prosecuting a war always, and if not then when - under what
circumstances do they become reach a critical mass we would call genocide?
Did the United States' bombing of Vietnam during the Vietnam war -- which
undoubtedly killed tens of thousands of Vietnamese -- constitute genocide?
Which wars -- other than the Kosovo war -- have reached the level of
brutality found in Chechnya? How many were branded as genocide?


*******


#16
Russia Today press summaries
Segodnya
1 December 1999
Will Tomorrow Come For The Bears?
SHOIGU'S BLOC IS SUPPORTED BY ALEKSANDER PROKHANOV'S NEWSPAPER
Summary
The pro-Kremlin election bloc Unity, or Bears, headed by the Minister of 
Emergencies Shoigu, has supporters from the newspaper "Zavtra" (tomorrow), 
the main publication of the nationalist and Communist opposition. This is 
most strange as premier Putin recently announced his support for Bears 
himself.


Zavtra wrote that the "most important thing is that the majority of Unity 
members are people of Russian nationality or other indigenous people’s of 
Russia". Zavtra also said that the Kremlin does not like Unity because it is 
such "a respectable patriotic project".


The newspaper has made every possible effort to persuade its readers to vote 
for Unity. And this audience generally does not like Boris Yeltsin, the West 
or Jews. Traditionally, Zavtra supports the Communists in elections, but this 
time it decided to make an exception.


The most interesting fact is that the Communist paper hates premier Putin. 
They wrote that Putin's rating was false among other negative items. The 
reason why Communist editors cannot support Putin is that he was associated 
with Chubais, Sobchak and other "fathers of liberal reforms".


On the contrary, Shoigu has the image of tough guy, and not at all of an 
oligarch.


*******


#17
SHOIGU'S Bloc Seeks to Create Pro-Putin Majority in New Duma.


MOSCOW, December 1 (Itar-Tass) - Emergencies Minister Sergei Shoigu's 
election bloc Yedinstvo (Unity) which is also known as Medved, or Bear, 
called for the consolidation of all healthy forces in Russia in order to 
create a pro-Putin majority in the next State Duma. 


"At last voters see a real force capable to creating a constructive majority 
in the State Duma. This force is a powerful union between Medved (Unity) and 
government chairman Vladimir Putin," the bloc said in a statement on 
Wednesday. 


"Unity supports Putin, Putin leans on Unity," the statement said. "This is a 
union of victors". 


In the next Duma, Unity plans to build a new relationship between the 
parliament and the government. "Time has shown that the left-wing majority 
prevented the adoption of laws which are badly needed in the country. None of 
the existing political parties has so far been able to destroy the monopoly 
of communists in the Duma. And only now do we have a real force capable to 
turning the Duma from a political show into a constructive parliament working 
not for its own sake, but for the sake of Russia," the statement said. 


Unity has a "special political mission. It will have to become a link in a 
new coalition of majority both during and after elections. Unity is ready to 
fulfill this mission," it said. 


"We realise our responsibility and call on all progressive parties and blocs, 
and independent deputies, governors, the mayors of Russian cities and towns 
to consolidate. The time has come for all those who are tired of empty 
rhetoric and ready for real action to pull together for the sake of solving 
our common task," the document said. 


"Out goal is to create a pro-Putin majority in the State Duma. And we will 
create it. We will do it together with those who are capable of rising above 
their ambitions for the sake of Russia," the bloc said. 


*******


#18
Moscow Times
December 2, 1999 
Duma Committee Critical Of Privatization Program 
By Yevgenia Borisova
Staff Writer


Some privatizations could be reversed, but only at enterprises that were 
unlawfully sold off and only after a court ruling, the head of the State 
Duma's property committee said Wednesday. 


Of the more than 100 countries around the world carrying out privatization 
programs, Russia is the only one where the process was abused, said Pavel 
Bunich, head of the Duma's Property, Privatization and Economics Committee. 


An analysis of privatization from 1992 through 1996 showed that only $20 
billion has been raised from the sell-off of about 70 percent of all state 
enterprises, according to a statement from the special Duma commission that 
carried out the investigation. 


"Privatization became a symbol of destruction, injustice, robbery and 
violence, moving people to misery and tears," the statement reads. 


Bunich criticized Prime Minister Vladimir Putin's recent statement that the 
results of privatization should not be reversed. 


"They should not be reversed if privatization was made according to the law, 
however bad the law may be," Bunich said. Similarly, minor violations should 
be ignored to avoid creating chaos. 


But truly criminal privatizations must be corrected, Bunich said. 


For what he called the "failure" of privatization, Bunich blamed poor laws, 
"which covered only about 15 percent of the legal issues involved." 


Too great a degree of flexibility was left to those carrying out the 
sell-offs. Another problem was that too much was sold off and often at the 
wrong time - exactly when demand for most of the enterprises was poor. 


******


#19
Chubais Says Situation with Power, Fuel Supplies "Complex".


MOSCOW, December 1 (Itar-Tass) - Anatoly Chubais, chairman of the board of 
the United Energy System of Russia, said the situation with energy and fuel 
supplies in Russia is "complex". 


Speaking to the press after a meeting chaired by Prime Minister Vladimir 
Putin on Wednesday, Chubais said "the current situation is quite tense 
because electricity consumption has grown by 5-6 percent from last year, but 
gas supplies have shrank in November-December also by 5-6 percent compared to 
the same period last year." 


He said the RAO UES of Russia and Fuel and Energy Ministry have submitted to 
the government a set of proposals on how to remedy the situation. They 
include compliance with the agreed- upon plan of gas supplies for December, 
additional measures to saturate the market with fuel oil, tougher 
requirements for power companies and the payment of old budget debts. 


These measures will be formalised in a protocol to be signed by the prime 
minister on Thursday. 


Commenting on the situation with electricity supplies to Chechnya, Chubais 
said they resumed to Gudermes on November 26. 


Earlier, Chubais admitted that the situation with power supplies in the 
country is "very serious and unprecedented". 


He stressed that "maintaining the country's energy-generating systems during 
the winter in such a situation is the hardest task of all". 


What makes the situation dramatic is that for the first time in 30 years 
demand for electric energy has grown sharply, by 7 percent, but there is a 
shortage of energy carriers, he explained. 


Chubais noted that the gas monopoly Gazprom has begun, for the first time in 
the last years, reducing gas production and sales on the domestic market. 


He believes that Gazprom's fuel supplies to the energy sector in the fourth 
quarter of this year will fall short of its obligations by about 12 percent. 
This will force RAO UES of Russia to be more demanding in dealing with its 
customers. 


Energy systems will accept only cash as payment for power consumption and 
will reject barter deals, Chubais said. 


He noted that the share of cash in payments for power consumption in the 
first 10 months of 1999 increased from 16-17 percent to 43 percent, but "we 
need 100 percent cash payments". 


Chubais pointed out that RAO UES of Russia "has to take very harsh measures 
with regard to all categories of consumers in order to preserve the united 
energy system." However, maternity houses and children's hospitals will get a 
special treatment. 


He said Russian energy systems have 85-90 percent of coal and fuel oil they 
need for the winter, but the situation in Sakhalin, Kamchatka, the Primorsky 
Territory and the Arkhangelsk region remains complex and their stocks of fuel 
are much smaller. 


He said these problems have been successfully solved in some regions which 
have a severe shortage of fuel. 


He said fuel supplies to Kamchatka will improve soon, but the energy crisis 
in the Primorsky Territory was caused by "the craziness, stupidity and 
narrow-mindedness of local bosses". 


Chubais accused Primorsky Territory governor Yevgeny Nazdratenko of 
"organising a campaign of terror against the region's energy system and its 
general director, with threats, blackmailing, attempted searches and 
'attacks' on his family members". 


The RAO UES of Russia had to ask the Prosecutor General's Office and the 
Federal Security Service to interfere, he said. As result, "Nazdratenko's 
first deputy received an official warning from the prosecutor's office, and 
if things go like this in the future, he will get a full-blown criminal 
case," Chubais warned. 


He stressed that the RAO UES of Russia is determined to put an end to the 
energy crisis in the Primorsky Territory despite its authorities' resistance. 


*****