April 14, 1998  
This Date's Issues: 2145• 2146  • 

Johnson's Russia List
#2146
14 April 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Parliament May Back Yeltsin Nominee.
2. Laura Belin: RE: Latynina on Lebed campaign.
3. Jerry Hough: Re: 2145-Latynina/Lebed.
4. Freedom Forum: "Chechnya: Calamity in the Caucasus" by Carlotta Gall & 
Thomas de Waal.
5. DPI: NYET MORE FIRINGS IN RUSSIA.
6. Russian Communist Party on Power Crisis in Moscow: Remarks by Gennady 
Zyuganov.
7. Moscow Tribune: John Helmer, GLAZYEV WARNS OF GOVT DEBT PYRAMID.
8. Business Week: Carol Matlack, IT'S RAINING RUBLES ON YOUNG TALENT.
There's hot 
demand for Russians well-versed in capitalism--and it's setting off a
headhunting war.
9. Paul Goble (RFE/RL): The Political Ends of Russian Economic Advice.
10. Boston Globe: David Filipov, Snow socks Moscow, city sacks forecaster.
11. New York Times editorial: Ukraine's Dangerous Decline.]

*******

#1
Parliament May Back Yeltsin Nominee 
By Vladimir Isachenkov
April 14, 1998

MOSCOW (AP) -- A leading Communist said today that parliament might
reluctantly approve Boris Yeltsin's candidate for prime minister to avoid a
full-scale confrontation with the Russian president. 
Gennady Seleznyov -- the speaker of parliament's lower house, or State
Duma -- has been a leading critic of Yeltsin's nominee, Sergei Kiriyenko,
who was rejected by lawmakers last week. 
But after meeting with the president today, Seleznyov said he would
rather approve Kiriyenko as prime minister than have Yeltsin dismiss
parliament and call new elections. 
``The president repeated that he has no other candidate. He insists on
Kiriyenko's candidacy,'' Seleznyov said. ``He did not convince me, but we
must confirm him.'' 
Under the constitution, Yeltsin has the right to dissolve parliament and
call new elections if the Duma rejects his nominee three times. 
However, it was not immediately known whether other members of the Duma,
which is dominated by Communists and nationalists, agreed with Seleznyov.
The Communists have been the most outspoken critics of Kiriyenko, and
several legislators said today that resistance to Kiriyenko's candidacy
remained strong. 
The opposition has argued that Kiriyenko, 35, a former banker with less
than a year of government service, is too inexperienced to lead Russia's
Cabinet. 
Duma leaders scheduled a debate Wednesday on a non-binding resolution
urging Yeltsin to expand the choice of candidates. Seleznyov said Yeltsin
immediately dismissed the idea, claiming it violated the constitution. 
The Duma also is to debate a possible appeal to the Constitutional Court
in which judges would be asked to rule on whether Yeltsin could re-nominate
the same candidate. 
Opposition legislators argue the constitution requires the president to
submit a new nominee after the first one is rejected. But Yeltsin has said
he can and will nominate Kiriyenko up to three times. The second vote is
scheduled for Friday. 
A statement released today by the Communist Party, Duma's largest group,
called Yeltsin's stubbornness ``a mockery of the constitution, commonsense
and the country.'' 
``An agreement according to Yeltsin is when everybody accepts anything
that comes to his head. Those who disagree face blackmail and threats,'' it
said. 


Russia has been operating with an interim Cabinet since March 23, when
Yeltsin dismissed Prime Minister Viktor Chernomyrdin's government, accusing
it of poor performance. 

********

#2
Date: 14 Apr 1998 15:26:48 U
From: "BelinL" <belinl@rferl.org>
Subject: RE: Latynina on Lebed campaign

Regarding Yulia Latynina's latest Moscow Times article, "Lebed Loses
Allies in
Race For Governor": 
Latynina's comments on Lebed's campaign backers may be accurate, and her
prediction that he will lose the election may be on the mark. (In fact, an
RFE/RL correspondent who has been in Krasnoyarsk covering the campaign
recently reported that Lebed is trailing even according to his own campaign's
opinion poll data.)
Still, it should be noted that Oneksimbank, which finances the magazine
Expert
(Latynina's primary employer), cannot be considered a disinterested observer
in the Krasnoyarsk gubernatorial race. 
One of the bank's key industrial holdings, Norilsk Nickel, is on the
territory
of Krasnoyarsk Krai. By many accounts the bank has a good relationship with
the incumbent, Valerii Zubov. 
Furthermore, coverage of Lebed's campaign has been unrelentingly
negative in
the daily newspaper Izvestiya, which is also financed by Oneksimbank.
I don't mean to single out Latynina or Expert. But it's an unfortunate fact
that news analyses in the Russian media often reflect the hidden agendas of
financial backers, and readers of JRL and the Moscow Times should keep that in
mind.

Yours,
Laura Belin
Radio Free Europe/Radio Liberty, Prague

********

#3
Date: Tue, 14 Apr 1998 12:04:50 -0400 (EDT)
From: "Jerry F. Hough" <jhough@acpub.duke.edu>
Subject: Re: 2145-Latynina/Lebed

Our sociological network in Russia reports that Lebed has the 
same problem that Latynina reports in #2145. A survey conducted in 
Krasnoiarsk krai in December 1997 under the supervision of Dr. Sergei 
Tumanov, head of the Sociological Center of Moscow University, our chief 
collaborator in the oblasts, shows that the percentage of those 
identifying with the region was even higher in Krasnoyarsk krai than 
in Russia as a whole. 25.6 percent of the population as a whole in the 
krai answered the USSR was their motherland, 29.9% Russia, and 42.0% the 
krai. Young people in the survey answered 14.2 percent USSR, 30.6 
percent Russia, and 54.6% the krai. Lebed's trouble is that apparently 
he is neither tapping this nor presenting a coherent Asian economic 
program, and people think he is just a Moscow politician running for 
president of Russia instead of governor of their motherland. 

Actually the person who is closest to the mood is Kiriyenko. 
Alas, as I have been working on my chapters in our book with Davidheiser 
and Lehmann on democratization and economic reform under Yeltsin, I have 
been rereading in detail the events of December 1992 when Chernomyrdin 
was named premier. He said exactly the same things Kiriyenko is, only 
stronger. Civic Union thought they had promises on the cabinet, and 
Chernomyrdin as premier actually announced price freezes. But Boris 
Fedorov was appointed as Gaidar's successor and when he came back from 


his position in World Bank in Washington (well, actually he retained it for 
much of the year along with its salary), he announced that Chernomyrdin's 
decision was not government policy. Indeed, it was not. When the 
decision was made to privatize oil and gas, Chernomyrdin suddenly found 
that an industrial policy was not so desirable, and he allied with 
Fedorov against Lobov (who became first deputy premier during the April 
referendum to reassure people that Yeltsin meant it when he said there 
would be a change in policy and social protection if people supported 
him and his policy in the referendum.) When the US offered 
its support for the dissolution of the Congress, Yeltsin sacked Lobov and 
replaced him with Gaidar in conjunction with Larry Summers' visit to 
Moscow in September 1993. The rest is history.

God knows if Kiriyenko speaks for Yeltsin. God knows who will 
be first deputy premier . God knows if, like Lobov, he will last four 
months. God knows if Yeltsin thinks he is in 1993 and he is going to 
have another confrontation with the Duma and institute his new election 
law without PR. (God also knows why he wants it, for the Communists and 
nationalists would do great in the districts, and two of the major 
government parties--Our Home is Russia and Zhirinovsky's Liberal 
Democrats--would be wiped out, along with Yabloko, the great hope of the 
United States.) The great advantage of Kiriyenko as 
premier is that if something happens to Yeltsin, either naturally or 
because he provokes a crisis or it just occurs, there would not be a 
president who would be a contender in the election. Conceivably there 
might even be a fairly fair election. Yeltsin has got himself in a box 
where he cannot afford a potential president like Chernomyrdin in the 
premiership and he cannot afford a potential president that no political 
forces would fear as president. One wonders if he will make the 
astonishing judgment that his safest course is actually to institute a 
policy that the Duma and population could support. Larry Summers is 
once more saying that the US opposes such a policy, this time on an 
official VOA editorial of US government position. Even God is not smart 
enough to know why.

********

#4
From: Robert Paul <rpaul@freedomforum.org>
Subject: International Author Series program
Date: Tue, 14 Apr 1998 10:39:34 -0400

Hi David,
Would you please place this invitation on johnsonslist? I think there might 
be several who would be interested in this.
Thanks so much,
Bob Paul
The Freedom Forum

The Freedom Forum cordially invites you to attend an International Author 
Series program

"Chechnya: Calamity in the Caucasus"
by Carlotta Gall & Thomas de Waal

Special introduction by
Jonathan Sanders
veteran CBS News correspondent

April 22, 1998

6-6:30 p.m. - Reception
6:30-7:30 p.m. - Program

Newseum/NY
580 Madison Avenue
New York, NY 10022

RSVP: Robert Paul
212-317-7591
rpaul@freedomforum.org

Carlotta Gall, 35, studied Russian and French at Cambridge University. She 
has a masters degree from City University in international journalism. She 
has worked for Radio Liberty in Munich, and Central Television and ITN in 


London. She lived in Pakistan and Afghanistan for two years. In 1994, she 
moved to Moscow where she joined The Moscow Times as a reporter. She 
covered the war in Chechnya for the paper and continued visiting the region 
through 1998. She works as a free-lancer in Baku, Azerbaijan, writing for 
the Financial Times and The Economist.

Thomas de Waal, 32, studied Russian and Modern Greek at Balliol College, 
Oxford. He has spent much of the last 14 years travelling, studying and 
working in Greece and the former Soviet Union. He worked from 1991 to 1993 
as a production trainee for the BBC World Service in London. Then, he moved 
to Moscow where he reported for The Moscow Times and The Times (London) and 
intermittently for The Economist. He worked in London for the past year.

"Chechnya: Calamity in the Caucasus" tells the story of the war in 
Chechnya. It traces the roots of the conflict, the Chechens' history of 
resistance, and uncovers the Kremlin politics that precipitated the 
Rusians' decision to invade. With its exclusive material and eye-witness 
reporting by two Moscow-based journalists, "Chechnya: Calamity in the 
Caucasus" is the definitive account of the most tragic and extraordinary 
story to emerge from the end of the Soviet Union.

*********

#5
Date: Sat, 11 Apr 1998 23:20:19 -0400
Subject: NYET MORE FIRINGS IN RUSSIA
From: zhivoy@juno.com (ZHIZN SMERT)

NYET MORE FIRINGS IN RUSSIA

MOSCOW, RUSSIA (DPI) - More has been learned about President Boris
Yeltsin's sudden firing of his entire cabinet including Prime 
Minister Raukem Sokim Roybut. Reportedly, Yeltsin, laid up in his
rest home for 16 days recovering from one of his frequent colds 
and denied by doctors his customary "Nyquil with Stoli chaser" 
treatment, began to notice small members of the cabinet crawling
all over his skin like spiders. Recognizing this as the Soviet 
resurgent tactic that it was, Yeltsin wasted no time appearing
on Russian television -- in his underwear -- to fire his entire
cabinet (his attempts to fire the Pope and three of the Spice Girls
went largely unnoticed in the ensuing mayhem). The noticeably shaky
President made plans for his new government by "introducing" new
members of his cabinet by simply placing a series of bad wigs on 
his head and introducing himself with names like Yelti Yelti and 
Bori Boris. Used to his odd behavior Russians were largely non-
plussed, however Miami officials are rumored to be wooing him to
run in the next mayoral election.

- Reported by Davejames

*******

#6
From: NDobrokhot <NDobrokhot@aol.com>
Date: Tue, 14 Apr 1998 00:33:48 EDT
Subject: Power Crisis in Russia 2

Russian Communist Party on Power Crisis in Moscow
[translation for personal use only]
Remarks by Gennady Zyuganov, the Head of KPRF Group at the State Duma of
Russian Federation Plenary Meeting April 10, 1998 (http://www.kprf.ru)

Dear colleagues, today we are choosing not only the Head of the
Government but much more then that - the way out for the country from the
severe, protracted crisis, trying that at the time trouble conditions, when
we do not have time already for insufficiently considered experiments and
new failures in the selection of personnel. In this connection I would like
to underline two specifics of the Russian State developments and the life
of Russia.
The First of them is connected with the fact that all troubles and big
problems have appeared in our history when powers that be or as it was told
now frequently - the elite, failed to reach an accord for the simplest
matters. It happened at the beginning of this century. This conflict
finalized with the civil war. Within our memory it happened with
Khrushchev, Gorbachev and unfortunately Mr. Yeltsin was continuing the same
policy. He failed to reach agreement with Supreme Soviet and it finalized
with firing in Moscow downtown. He failed to reach agreement with Chechnya
also and that turned out in mass bloodshed.


The Second of them is connected with the following reality: while
bankers, lawyers and journalists were the rulers in the United States, in
Russia - the State, traditions and faith have been ruling since the
beginning of time. The State without ideas and faith cannot survive and be
strong enough. As soon as communal values that were the basics of our
statehood had been destructed, the State itself went to pieces. Even tanks
and army were unable to withstand.
Now we do see how the democratic values also that fall into thievish
hands in general, have been destroyed as well. And our common perturbation
(why criminals longing to seize power?), is very easy to explain - there is
no universally recognized national program in the country how to take it
out from crisis. 
We do believe that the heart of the current problem is following: from
the executive powers crisis the country before ours very eyes slipping into
general political, national crises.
First of all, it clarify itself by the fact that the Government which
has resigned without any report of its results, was hundred-per-cent
bankrupt because it couldn't pay neither pensions, nor wages and
allowances. 60 percent of the citizens are not getting their salaries in time.
This is clear for all of us that Mr. Yeltsin is unable to work and to
rule effectively but he still insists on his nominees without proper
consultations with State Duma and Council of the Federation. 
Only after decision was approved by Duma and Council of the Federation, the
"round table" took place which by Yeltsin has been promised to be held each
month.
Solution of the problem by force is excluded today also. From one hand,
the Minister of Defence has recognized honestly - only the rocket forces
and few paratroopers divisions are capable in the country. All the rest is
incapable. But from another hand - the volume of mutiny has exceeded the
critical point. 
I just want to remind you that there are three millions of homeless
children, each tenth child up 10 years old has never visited school, we do
have 10 millions hungry people, 32 millions are leaving under the poverty
level (Mr. Kirieyenko just confirmed it today), and 80 millions of Russian
citizens lost all their savings. 
The gap between people and power has reached critical, horrific degree.
For the last month only I have visited dozens of Russian regions and do
want to tell you roundly - I had never seen such fierce feelings of the
people as yesterday during the rallies. Yesterday almost 15 millions of
people said "no" to this course, the distrust to Mr. Yeltsin has been
accepted as the major political slogan in 79 regions of Russian Federation
from 89. Financiers predicts the ruble downfall in the nearest 3-4 months.
And this is a background which Mr. Kiriyenko did have when he agreed to
lead the country out of crisis. 
I must inform you that "Kremlin gold-diggers" are considering now
additional version, from my view - criminal scenario, connected with
possible Duma dissolution - they wants to postpone the elections to Duma on
year 1999 under the pretence of financial difficulties and to coincide them
with presidential elections, another words, they wants to elect Mr. Yeltsin
on the third term. 
We do believe that it is completely inadmissible. Today we do have three
versions of the future developments and responsible decisions making.


First version. The decay and dissolution of the country which is going
on now.
Second version. This is when "lower classes doesn't want" and "upper
classes unable" (to live old way). We did study it well and not only as
history lesson.
And third version. The creation of capable Government, which will be
supported by both Federal Assembly chambers, and by the regions, and taking
urgent measures to take country out of crisis.
I do believe that no party alone may be able to do that, as no party
group (at the Duma) also irrelative to any of their speeches now. "Their
Home - Russia" has been tried already to run those policy in behalf of 10
percent of electorate. The "young reformers" which have joined Government
and treated with disdain our budget that we had developed together were not
helpful also.
Now Kiriyenko does propose the program. It contains the interesting
things. But I don't know any political forces which will allow him to
realize it in full because our premier is in absolute dependence from the
President's will and from his close circle. Yavlinsky has stated also that
he would manage it. But I do know very well that maximum 10 percent of
country's citizens does support his standpoint. 
In my view it is possible to manage the situation if you will get
support by two third both in Duma and Council of the Federation, as in the
regions of our country. I feel that it would be possible to manage if we
develop completely different course which basics has been formulated very
clearly by Council of the Federation when it had adopted the program to
increasing of the role of State and reconstruction of the national economy.
It would be possible to find capable premier for the realization of this
program, to put together a team and to develop the National Anti-Crisis
Program. The security and the health of children, literate generation and
strengthening of our State are extremely important for all of us. We do
believe that in such situation it's very important to accumulate all the
efforts and to take into consideration the proposals that Mr. Kiriyenko has
described in this audience.
We do believe that without the development of such program and putting
together a team it has no sense to elect the premier today. Our group will
vote against Kiriyenko's nomination. To take into account that there are no
such program and team yet we don't believe that it's possible for us to
participate at the election process itself.
At the same time I would like to ask Gennady Selesnyov and Egor Stroyev
after today's meeting (it's result is clear in advance), to meet Mr.
Yeltsin and to have necessary consultations. I don't want at all to see the
situation to be deadlocked again and then to be engaged in the mutual arm
twisting. This task lacks of any prospect. Because some has already
constrained the soul of the whole country".

*********
#7
Date: Tue, 14 Apr 1998 08:27:44 +0400 (WSU DST)
From: helmer@glas.apc.org (John Helmer)
Subj: GLAZYEV WARNS OF GOVT DEBT PYRAMID

>From The Moscow Tribune, April 14, 1998
GLAZYEV WARNS OF GOVT DEBT PYRAMID


John Helmer

The man who would be in charge of Russia's finances and
economic policy -- if the opposition could choose the government -- 
warned the International Monetary Fund (IMF) against trying to pressure the
caretaker government into signing an "illegal" economic program.
"From a legal point of view," said Sergei Glazyev, the IMF program 
"is illegal." Citing measures the IMF has ordered, and government policies
the IMF has blocked, Glazyev added "these programs contradict the national
legislation."
Referring to the IMF proposal in this year's program to cut up to
300,000 jobs in education and health care, Glazyev added: "It's not
necessary to be an economist to combat such primitive ideas. It means
the government is forcing the population to pay for the chaos in
government. [Deputy Finance Minister Alexei] Kudrin proposes to cut
social expenditures while expenditure on internal debt grows enormously.
The Russian government is creating a financial pyramid of debt, and the
main taxpayers are so powerful, they don't pay tax. It's easier for
the government to cut social welfare, and allow the oligarchy to be
relieved of tax."
Glazyev is currently head of the Information and Analysis Department 
of the Federation Council, and an influential advisor to Council
Speaker, Yegor Stroyev. Stroyev, the governor of Orel, has been named
by the Communist Party as its candidate for Prime Minister, replacing
the sacked Victor Chernomyrdin and the presidential candidate,
Sergei Kirienko. 
While Glazyev and Kirienko are both in their 30s,
Glazyev has had considerably more experience as a reformer in government. He
served for two years as the minister in charge of
trade. He was the only reform minister to resign in protest against
government policies, and against the destruction of parliament in
1993. Glazyev went on to win a seat in the 1993-95 Duma, where he
chaired the Economic Policy Committee. During the presidential
election of 1996, he was Alexander Lebed's economic advisor, and
served under him at the Security Council.
According to Glazyev, IMF intervention protects the energy and financial
sectors by stimulating their revenues, and helping them avoid taxation.
The government is willing to go along, he noted, because Gazprom
and the banks profit hugely.
He attacked the government's rouble policy for producing an eightfold
drop in price competitiveness for domestically produced goods,
and for facilitating a massive dependence on speculative foreign capital
inflow into high-interest government bonds (GKO's). 
"Debt service is now two and a half times higher than tax revenues, and
it's
growing at 30% per annum."
Glazyev proposes to increase budget revenues by imposing taxes on
the export of natural gas, and on the import and domestic sale of
alcohol. Together, he calculates the measures would add $7 billion
to the budget. In addition, "we should tax the profit of the Central
Bank." Observing that the government pays the Central Bank to buy
GKO's at the market interest rate, and then doesn't reclaim the profit, 
Glazyev charged the Bank "is out of control. It doesn't declare profit.


It pays super-high wages and builds palaces. It refuses to allow
the Accounting Chamber to audit its books." All three measures are opposed 
by the IMF, Glazyev noted.
By blocking simple lending by the Central Bank to the government at
10% interest, Glazyev accused the IMF and the Bank of creating a
lucrative trade in which the Bank buys GKO's at 30% or higher,
and keeps the profit. The Federation Council voted last June to order
an Accounting Chamber investigation, but the Bank blocked access
by the auditors. The Council has requested the Procurator-General
to force the Bank to comply with the law.
Glazyev's attack on GKO financing directly threatens the profitability
of the banks on whom the electability of government candidates and
President Yeltsin depend. But the rising debt, and the start of a 
new election cycle requiring higher GKO volumes and interest rates,
make it "impossible to avert a crash of the GKO financial
pyramid without restructuring it."
Glazyev proposes to freeze all interest payments on GKO's held by
the Central Bank, either writing them off or converting them into longterm,
interest-free bonds. Rescheduling the GKO holdings of the state savings
bank, Sberbank, should also be done, he said.
Only when interest rates have been pulled down, and the size of the debt
repayment in the federal budget cut dramatically, will it possible,
according to Glazyev, to draw investment into reviving domestic
industry. Unless this happens, Glazyev predicts no growth and continuing
budget crisis to the point where, by 2003, the government "will not be able
to afford to service [its foreign debt]."
Referring to the economic policy announced to the Duma by candidate
prime minister Kirienko, Glazyev commented "Kirienko won't be any different. 
[This] is a stupid policy which can't lead to any consensus." 
A report by the Organization for Economic Cooperation and Development
(OECD), issued this month in Paris, warns similarly that "at the
higher interest rates, government debt could potentially spiral out of
control, particularly if growth in the economy does not pick up."
Martin Gilman refused to comment on Glazyev's charges. He has announced
publicly that he expects the new Russian government to sign
the IMF program soon.

*******

#8
Business Week
April 20, 1998
[for personal use only]
International -- European Business: RUSSIA
IT'S RAINING RUBLES ON YOUNG TALENT (int'l edition)
There's hot demand for Russians well-versed in capitalism--and it's setting
off a headhunting war
By Carol Matlack in Moscow 

Natalya Ivanova has kept busy since graduating from the elite Moscow State
Institute of International Relations in 1991. Starting as a trader at a
fledgling Russian brokerage, the fluent English speaker was soon hired by
accounting giant Price Waterhouse to work on a privatization project. Then
came posts as an equities analyst at two Western-run investment houses. Last
year, MFK-Renaissance, Russia's biggest investment bank, hired the 28-year-old
Ivanova as an asset manager. She won't divulge her earnings, but local
recruiters say base pay for such jobs is at least $80,000 a year, with annual


bonuses of up to 100%. ``It was easy to find a job,'' Ivanova says. ``The
headhunters came looking for me.''
For ambitious young Russians such as Ivanova, there's no place like home.
As the economy matures, a bidding war has broken out in Moscow's executive
suites. The prize: members of the first generation of Russian professionals
with experience in a capitalist business environment. Urged on by aggressive
headhunters, including international heavyweights such as Korn/Ferry, Antal,
and Ward Howell, up-and-comers are hopping from one employer to the next,
commanding ever higher salaries from local and foreign companies. And while
industries such as oil and gas remain male-dominated, women are as much in
demand as men.
So tough is the competition that a group of Western pharmaceutical
companies recently ran an ad in a local newspaper complaining about
headhunters' poaching their top talent. ``It's a jungle,'' says Laurence
Bapaume, head of L.O. Recruitment, a local agency. Bapaume and other
recruiters say the situation isn't likely to change soon.
Employers may grumble, but the Russians passing through their doors are the
nucleus of an emerging managerial class. Too young to have worked in the
Soviet-era planned economy, they are quick to embrace capitalism. Most speak a
foreign language, and an increasing number have studied outside Russia. Even
as reformers come and go at the Kremlin, Russia's young professionals are
helping homegrown companies learn to compete.
TOP DOLLAR. Behind the boom is a classic case of supply and demand. In a
country of 150 million people, a few thousand are trained in fields such as
corporate finance, marketing, and Western-style accounting. Yet the need for
such specialists is zooming. Brokerages and investment banks, Russian and
foreign alike, are especially aggressive. When the Russian stock market
sizzled in 1996 and 1997, rising more than fourfold, they went on a hiring
spree.
Although the market has since cooled, the financial-services industry has
kept growing to meet demand from Russian companies as they restructure and tap
global financial markets. Among the most active recruiters: the investment
banking units of major Russian banks such as Menatep, Oneximbank, and Alfa
Bank. Western investment houses already in Russia are beefing up operations,
while others, such as Merrill Lynch & Co. and Goldman Sachs & Co., have
recently opened Moscow offices.
Many Russian companies, especially in financial services, now have enough
cash coming in to pay top salaries to fill key positions. Chief financial
officers of Russian companies earn a third more on average than counterparts
in the local subsidiaries of multinationals, according to a survey by Russian
Market Research Co. But good pay isn't the only appeal of Russian companies,
says Alexander Chistiakov, who was lured away from ING Bank 18 months ago to
head the investment department at Bank Menatep. ``In a foreign group, you're a
tiny piece of a big machine,'' says the 25-year-old Chistiakov. ``Here, you
can influence significant decisions.''
Until recently, Moscow offices of foreign companies were top-heavy with


expatriates, mainly because there were no qualified Russians. With the number
of job openings still expanding rapidly, expatriates remain in demand. But
competition from locals is growing. Most employers now expect expats to speak
Russian and have solid experience--qualifications they didn't insist upon in
the past. Even then, most of the new jobs are going to Russians. With a few
years' experience in these companies, Russian workers have the edge--for
reasons both practical and political.
For one thing, native Russians are more attuned to the subtleties of
marketing and sales in their own country. Cadbury-Schweppes PLC, for example,
recently replaced its expat marketing manager with a Russian as it prepared to
launch product lines tailored specifically to Russian consumers. For another,
locals can help employers forge political connections and navigate
bureaucracies.
Employers, for their part, are eager to shed the expense of expatriates.
``Companies interested in staying in Russia long-term are realizing that they
need to be managed by Russians,'' says Ann Ouroussoff-Jordan, country manager
at the search firm Heidrick & Struggles Inc. Personnel managers say that while
the salary gap between expatriates and Russians is narrowing, it still costs
50% to 100% more to hire expats because of relocation costs, housing
allowances, and other outlays.
Even without changing jobs, ambitious Russians can double and triple their
salaries within a few years. Thomas Balestrery, head of research at
Creditanstalt Grant investment bank, says base pay for equities analysts
ranges from $75,000 to $100,000--roughly 50% more than a year ago--and is
still rising. Marketing and finance professionals are seeing equal gains. And
many companies add home and car loans to the usual package of health and
insurance benefits. So far, though, the bonanza hasn't spread much beyond
Moscow, where most multinationals and Russian financial institutions have
their operations.
For Russian companies in need of capitalist expertise, Western accounting
and law firms are favorite hunting grounds. Russian universities still don't
teach international-style accounting and corporate finance, so the only way to
get training is on the job. At the same time, the only way to hire trained
pros is often by poaching them. ``Every business in the country that wants
Western capital needs to produce numbers, so they need comptrollers and
financial officers,'' sighs Tom Kelly, who heads the Moscow office of Arthur
Andersen & Co. ``And the Big Six is their supply.'' Law firms likewise train
Russian lawyers to do complicated deals, only to have them be lured away by
investment banks and companies offering much higher salaries.
DUBIOUS TACTICS. In a country where people once kept the same job all their
lives, all this has raised the recruitment market to a fever pitch. Ward
Howell, the New York search firm, says its Moscow office, opened five years
ago, is now the No.7 revenue producer among its 59 offices. But what's good
for the headhunters can be tough on employers--many of whom say recruiters
have gone too far. Paul Carter, general director in Russia for SmithKline


Beecham Consumer Healthcare, recalls one agency that sent him the resume of a
rival company's sales manager--while simultaneously trying to recruit
SmithKline's sales manager for the other company. Such tactics anger companies
that have invested heavily on Russian employees, often training them abroad.
The talent chase will continue. But some recruiters and employers say that,
as the ranks of business-savvy young Russians grow, frantic job-hopping will
decline and young Russians will settle into careers with both foreign and
Russian-owned businesses. Ivanova, for one, says she is ``tired of changing
jobs so often'' and has no plans to leave MFK-Renaissance. Headhunters call
constantly, though, and if Ivanova ever changes her mind, her resume--and
paycheck--could only grow fatter.

********

#9
Russia: Analysis from Washington - The Political Ends of Russian Economic
Advice
By Paul Goble

Washington, 13 April 1998 (RFE/RL) -- Even as Moscow applies economic
pressure to Latvia, Russian officials are once again seeking to use
economic arguments to promote Moscow's political influence over the members
of the Commonwealth of Independent States. 

Last week, a spokesman for the Russian ministry for relations with the CIS
countries suggested that reversing the decline in trade turnover among
these countries was the key to restarting economic growth in all of them. 

Deputy Ministry Marat Khasmutdinov noted that overall trade turnover among
the CIS countries was down another 10 percent in 1997. He said that such
trade now amounted to only six percent of the total CIS GDP, down from 21
percent in 1992. Only by increasing trade, he concluded, could these
countries escape their current economic slump. 

Such arguments are superficially plausible: After all, an expansion in
foreign trade has often helped power economic growth. But there are three
reasons that the countries involved are unlikely to take such arguments
seriously, even if Western commentators do find them attractive. 

First, the decline in trade turnover among the former Soviet republics that
make up the CIS today is not the primary cause of their economic distress.
And reversing it would not necessarily be the primary cause of their
recovery. Indeed, such a change might impede further economic reform. 

It is certainly the case that dislocations in trade following the collapse
of the USSR had an impact on the economic situation of the 12 CIS member
states. When the Soviet Union fell apart, enterprises and ministries on the
territory of each of the 12 countries suddenly had to seek new partners to
obtain raw materials and spare parts and new markets to sell their own
products. 
But whatever impact that process had on their economic growth, three other
factors had considerably more: the shift toward a free market in many of
these countries, the collapse of political authority, and the impact
uncertainty about both these processes had on investment both foreign and
domestic. 

Second, the CIS itself has little prospect of becoming the most relevant
trade organization for most of the countries that are currently its members. 



On the one hand, most have more natural trade partners beyond its borders.
Moscow managed the Soviet economy in such a way to promote the integration
of its empire into a single state, cutting off the republics from most
foreign trade and creating chains of economic activity that could only be
described as irrational. 

In many cases, individual republics could have made far more by selling
their products abroad than they did by providing them to Moscow. And few of
them could have seen arrangements in which each republic was so highly
specialized and so dependent on Moscow for establishing prices that it
could not conceivably go their own ways. 

And on the other, the CIS is increasingly a Russian claim than a genuine
reality. Since its creation in December 1991, the CIS has adopted some 800
agreements. But very few of these have been approved by all the members or
implemented even when they are approved. 

As a result, and whatever the advocates of the CIS say in its defense, the
CIS is simply not a the most important actor in either the economic or
political lives of its member states. Indeed, an increasing number of the
leaders of these countries have indicated that they remain members only
because of the likelihood of a sharp Russian reaction should they leave. 

And third, this argument obscures the fundamental difference between
economic integration and economic reintegration. 

As the Soviet Union moved toward its end, USSR President Mikhail Gorbachev
and his supporters routinely pointed to developments in the European Union
and argued that integration rather than disintegration was the order of the
day. 

Russian officials are again repeating these arguments, but they are
unlikely to impress many because such claims represent a confusion between
integration and reintegration. The first is a natural process reflecting
both individual national interests and a level of self-confidence that
would allow countries to yield some of their sovereignty for other gains. 

Reintegration, in contrast, is something else. Even before all the member
countries of the CIS can feel themselves confident about their status, some
in Moscow are advocating that they yield some of the sovereignty that they
have not yet been able to completely secure in the name of economic
interests. 

But the reactions of the non-Russian countries to such proposals in the
past suggest that most of these countries will view these arguments for
what they almost certainly are: a political program to expand Moscow's
influence rather than a genuinely economic one intended to benefit them all. 

*********

#10
Boston Globe
14 April 1998
[for personal use only]
Snow socks Moscow, city sacks forecaster 
Bad predictions stir mayor to form own weather service
By David Filipov,

MOSCOW - New Englanders, have you ever wished, after one of those July 4th
picnic rainouts or those White Christmases that turn out brown, that you
could just fire the weatherman? 
That is what Moscow Mayor Yury Luzhkov is doing, after a two-day storm
dumped record-setting snows on the Russian capital, causing more than 100
auto accidents and tying up Moscow's clogged thoroughfares even more than
usual. 
Bad weather is happening in lots of places in this year of El Nino. But
unexpected weather is serious business in Russia, where cash is short and
people have grown too cynical to believe in accidental surprises. 


Case in point: When extended forecasts predicting that the winter of
1998 would be one of the coldest on record turned out to be exaggerated, a
rumor soon appeared that a ''weather mafia'' had spread the false reports
to get people to run out and buy warm winter coats at stores run by the gang. 
No one is saying which mafia benefited when six inches of snow fell in
Moscow on Sunday after the federal weather service predicted rain with
temperatures in the low 50s. More than a foot more fell yesterday, despite
a forecast for mostly sunny skies. That led to perhaps the most
high-profile weather firing since Steve Martin's zany meteorologist
promised sun and 75 one too many times in ''LA Story.''
Moscow City Hall, fed up after a winter of incorrect forecasts and late
warnings about bad weather that it says has cost billions of rubles, said
it would stop using the federal service and form its own weather bureau.
Luzhkov's spokesman, Sergei Tsoi, yesterday called Sunday's storm ''the
last straw.''
As a mayor, Luzhkov, a favorite to succeed Boris N. Yeltsin as Russian
president in 2000, likes to run Moscow like his private
state-within-a-state. He has ignored Russia's privatization rules and has
installed his own, allowing his city government to become a wealthy partner
in Moscow's most lucrative businesses. The mayor runs his own TV station
and newspapers. So why not have his own weather service? 
Luzhkov yesterday also commended Nikolai Pavlov, head of Moscow's
communal services, who mobilized Moscow's snowplow fleet in time to head
off any real disasters on Sunday. Pavlov said he had ''sensed'' a storm
coming, although he could have just turned on CNN, which was forecasting
snow for Moscow. 
Alas, the federal meteorological service radars simply missed the storm
system as it rolled in from Ukraine. 
''The storm fooled everyone,'' lamented Alexander Bedritsky, the
service's director. ''Even a doctor doesn't always make the right diagnosis.''
Bedritsky admitted his service had made a few bad calls recently, but he
blamed the subpar performance on reduced state funding that has forced
Russia to shut down a third of its 2,100 weather stations. Equipment is
outdated or out of service; workers, tired of earning $33 a month, are
leaving in droves. 
But whither the weather? When the first snowfall was two months late in
the fall of 1996, worried Muscovites wondered if Russian winter would ever
be the same. Now, people are saying the same thing about spring. 
Never fear, said Roman Vilfand, the federal weather service's chief
meteorologist. Warmer weather will arrive, but not until the end of the
month. 
More bad news from the elements: Moscow's Institute of Earth Magnetism,
Ionosphere and Radio Waves is forecasting a week of magnetic storms over
the Russian capital. Kharlampy Kanonidi, who studies the storms' effect on
humans for the institute, foresaw an increase in psychic illnesses and
cardiovascular disease, as well as foul moods for those he called the
''meteo-sensitive'' population. 
Bedritsky did find one silver lining: On Friday, a new front developing
over the Baltic Sea will roll in, bringing lots of rain. 
Since when is rain good news? ''I think at this point any spring whether
is good news,'' Bedritsky said. 



*********

#11
New York Times
April 14, 1998
Editorial
Ukraine's Dangerous Decline

Last year, Ukraine and Turkmenistan were the only former Soviet
republics to see their official economies shrink. Ukraine's steady decline
is the main reason that voters abandoned the relatively reformist governing
party in parliamentary elections two weeks ago. 
The big winner was the Communist Party, a group so troglodyte that it
favors "voluntary reunification" with Russia. The vote practically insures
that Ukraine will see none of the reforms the country needs. 
Since its independence in 1991, Ukraine has had some limited economic
success, largely thanks to the skill of the central bank governor, Victor
Yushchenko. Inflation, 10,000 percent five years ago, has fallen to around
10 percent today. About half the economy is now in private hands, compared
with 70 percent in Russia. 
But privatization has not generated economic growth. Important areas,
like agriculture, have yet to be touched. The tax system is arbitrary,
burdening legitimate businesses and driving them into the shadow economy.
Regulation is stifling -- setting up a construction company requires some
50 different licenses, virtually all of which must be accompanied by bribes. 
President Leonid Kuchma and his allies in the Parliament introduced an
important package of reforms more than a year ago, but it died, a victim of
the pervasive corruption that is choking modernization and driving away
investment. 
Ukraine's economy also suffers from the country's uneven progress in
democratic reforms. Ukraine is one of a handful of former Soviet republics
that have had relatively clean parliamentary elections and changed their
presidents. The country's treatment of national minorities is also good,
and it has shown the political maturity to give up its nuclear weapons. But
Ukraine's newspapers and especially its television stations are politicized
and controlled to the point where they cannot keep an eye on the Government. 
Ukraine is the fourth-largest recipient of American aid, but that
assistance may be cut in half under a misguided new law requiring the
Administration to certify that the country is making progress on the
problems of a few American investors. 
The World Bank and International Monetary Fund should condition their
assistance on changes like tax and regulatory reforms designed to speed
economic growth. 
Ukraine's politicians need a clear message that economic reform cannot
wait. 

*********