May 18, 1998  
This Date's Issues: 2182 •2183• 

Johnson's Russia List
#2183
May 18, 1998
davidjohnson@erols.com

[Note from David Johnson:
1. RFE/RL: Yeltsin Has Legal Right To Run For Third Term In 2000.
2. Interfax: Duma Likely To Put Off Hearing On Start II Until Fall.
3. Bruce McClelland: skinhead URL.
4. AP: Lebed, winning governor's race, sees `big, difficult' work ahead.
5. Interfax: Russian Communist Leader Dismayed Over Lebed's Triumph.
6. Interfax: Russian Govt Announces Economic Priorities.
7. Moscow Tribune: Dmitry Polikarpov, Media Gears Up for Elections.
8. RFE/RL NEWSLINE: KIRIENKO OUTLINES HIS RESPONSIBILITIES...
AND DIVISION OF LABOR AMONG HIS DEPUTIES. 
9. Russky Telegraph: KPRF PREPARING FOR AUTUMN DISSOLUTION.
10. Washington Times: Paul Bedard, Clinton, Yeltsin eye further cuts in
arms.
11. Russia Today: Rod Pounsett, The Nickel-and-Crime War of Krasnoyarsk.
12. Kennan Institute meeting report: Regional Development: The View from
Novgorod.
(Mikhail Prusak, Governor of Novgorod Oblast).
13. U.S. News and World Report: Space waste race.
14. Russia Today satire by Mary Campbell: Cyber Boris.
15. New York Times: Group of 7 Becomes Group of 8.
16. Interfax: Shokhin: Krasnoyarsk Has Actually Nominated Presidential
Candidate.] 

********

#1
Russia: Yeltsin Has Legal Right To Run For Third Term In 2000

Moscow, 18 May 1998 (RFE/RL) - A Kremlin spokesman said today that
President Boris Yeltsin had the legal right to run for a third term in
office in elections due in 2000. Sergei Yastrzhembsky, answering a question
from Ekho Moskvy radio station, said Yeltsin was entitled to run for a
third term in the Kremlin. But he said that was his "personal opinion" and
would not confirm whether Yeltsin would stand again. 
Under the constitution, Russian presidents are barred from holding three
successive terms. But Yeltsin's first term started in 1991 in the last
months of the Soviet Union, two years before the current constitution was
adopted. The Constitutional Court is to rule before the end of the year on
whether he can run in 2000. Yastrzhembsky's comments coincided with the
victory of Aleksandr Lebed, a potentially strong presidential candidate in
2000, in gubernatorial elections yesterday in the Siberian region of
Krasnoyarsk. 
On the START-II nuclear disarmament treaty, Yastrzhembsky said Yeltsin
will urge prompt ratification at a meeting later this week with his prime
minister and the speakers of both houses. Yastrzhembsky said that "it is
not the president who needs START-II ratification, it's Russia which needs
it." Yeltsin's next summit with U.S. President Bill Clinton hinges on the
START-II ratification but the State Duma has so far dragged its feet. 

********

#2
Duma Likely To Put Off Hearing On Start II Until Fall 

MOSCOW, May 18 (Interfax) - The the Liberal Democratic Party of Russia
(LDPR) and the Communist Party of Russia (KPRF) are very likely to suggest
at the tomorrow's meeting of the State Duma Council that the final
parliamentary hearings on the ratification of START II be put off from June
9 to the fall, Defense Committee member *Sergei Yushenkov*, Russia's
Democratic Choice, told Interfax. 
Only two members of the committee, Alexei Arbatov, Yabloko, and himself
voted for the ratification at the last week's committee meeting, he said.
Liberal Democratic Party leader Vladimir Zhirinovsky called for putting the
parliamentary hearings off until next fall, Yushenkov said. The committee's
communist members will join the LDPR in pressing for the postponement, he
said. 

The Duma rejected last week a proposal made by International Affairs
Committee Chairman Vladimir Lukin, Yabloko, that a commission of all
parties should evaluate the desirability of ratifying START II but upheld
without voting Duma Chairman Gennady Seleznyov's proposal that final
hearings on the issue be held behind closed doors June 9. 
The General Staff of the Russian Armed Forces plans to hold a meeting on
preparation for the ratification and invite Duma members to attend,
Yushenkov said. He believes that "with the mood of most MPs as it is now,
full-fledged parliament hearings, let alone ratification of START II, are
next to impossible now." 
"If the United States links the forthcoming visit of the U.S. president
to Russia which, as President Boris Yeltsin has told us, can take place as
early as in July with the ratification of START II, the visit is not very
plausible," Yushenkov said. 

*********
#3
Date: Mon, 18 May 1998 
From: "Bruce A. McClelland" <bmcclell@irex.ru>
Subject: skinhead URL

I don't recall whether anyone has mentioned/posted the RNE/Skinhead URL. So
here it is:


http://www.ruspatriot.com/skinhead/white/index.htm
for those who wish.

One Russian friend proposed to me that the recent fluff in Moscow around
the Skinheads was actually part of a scheme to replace the Communists as
the bad guys. That sounds a little far-fetched to me. But I'm willing to
listen to any sort of speculation.

--Bruce McClelland
Director, Internet Programs
IREX/Moscow

*********

#4
Lebed, winning governor's race, sees `big, difficult' work ahead
May 18, 1998

KRASNOYARSK, Russia (AP) - After winning a Siberian governor's race,
Alexander Lebed acknowledged today that he faced a formidable task before
he could run for the office he really wants: Russia's presidency. 
``Right now, big, difficult, routine work is waiting for me,'' the
retired general said on national television after defeating the incumbent
governor in the huge Krasnoyarsk region in a runoff election Sunday. 
``I've got the right to use the power, and I will be using it
judiciously, accurately, cautiously, because people are very tired, and I'm
the last hope for them,'' he added. 
With all but a handful of polling stations reporting today, Lebed, the
former national security chief, had defeated Gov. Valery Zubov by 57
percent to 38 percent. 
The race was widely seen as a test for the 2000 presidential campaign,
and drew comparisons in the Russian news media to the New Hampshire primary
in the United States. 
By winning in Krasnoyarsk, Lebed immediately joined the top ranks of
prospective candidates. Other potential contenders include Communist leader
Gennady Zyuganov, former Prime Minister Viktor Chernomyrdin, Moscow Mayor
Yuri Luzhkov and liberal leader Grigory Yavlinsky. 
But Lebed has backpedaled recently in talking about his presidential
ambitions, insisting that he has no plans to run in 2000, and could only do
so if he has substantially improved the economy in Krasnoyarsk - a giant
task to accomplish in two years. 
``A presidential election is a time- and money-consuming campaign, and
right now I don't see any basis for running for this post,'' he said in the
televised interview with the popular ``Itogi'' program. 
Still, he gave himself some wiggle room, saying, ``The main factor is,
if I will be needed, I will run.'' 

While the Krasnoyarsk election revived Lebed's political fortunes, the
Communist Party made a relatively weak showing. 
After the Communist candidate finished a distant third in the first
round of voting in Krasnoyarsk, on April 26, Zyuganov urged voters to
support Zubov in the runoff. Local Communists urged supporters to vote
against both candidates. 
Both strategies failed. Zubov picked up little additional support in
Sunday's ballot, and only 4 percent of voters checked the box marked
``against all candidates.'' 
Lebed said the election proved that Zyuganov, who is at or near the top
of presidential preference polls, had lost ``the remainder of prestige and
respect'' he once held. 
``Zyuganov is out of the game,'' he said, according to the Interfax news
agency. 
Lebed has been vague about what he will do as governor, except to say he
will demand a larger cut of tax revenues for the regional budget and send
less money to Moscow. 
Asked what he would do first, Lebed said today that he intended to order
an audit of the government and shake up its higher echelons. 
``The system will be demolished,'' he said. ``We are going to do it
together without any fight or revolution.'' 

********

#5
Russian Communist Leader Dismayed Over Lebed's Triumph 

MOSCOW, May 18 (Interfax) - The election of Alexander Lebed to the position
of Krasnoyarsk governor is detrimental to Russia, Communist Party leader
*Gennady Zyuganov* told Interfax Monday. In all the gubernatorial elections
held Sunday, in Karelia, Krasnoyarsk territory and Smolensk region,
"representatives of the authorities suffered a debacle," he said. 
"Like Boris Yeltsin took power on the crest of a wave of protest against
he helpless Mikhail Gorbachev, Alexander Lebed is heading for power now,"
Zyuganov said. It was "utterly illegal that the heaps of money injected by
the Lebed team" in the financing of his campaign were not even commented on
by the appropriate agencies, he said. 
Zyuganov did not answer a question whether he believed that Lebed would
not run for president in 2000. He expected the developments in Krasnoyarsk
territory to be very dynamic. 

********

#6
Russian Govt Announces Economic Priorities 

MOSCOW, May 18 (Interfax) - The Russian government intends to reduce state
borrowing, increase the average term of borrowings, put an end to the
growth of the state debt and keep its fraction in GDP stabilized and reduce
the spending on the service of the state debt to 4.2% of GDP in 1999 and to
3.6% in 2000. 
It said in a statement that it would reduce new borrowings to pay the
old debts and the T-bill yield to a level sufficient to resume sufficient
financing of production, a maximum of 20% a year, in 1998. 
The government will work for improving the efficiency of budget
spending, increasing budget revenue and reducing budget deficit to 3.6% of
GDP in 1999 and 2.5% in 2000. 
Another priority is to "keep the real value of the ruble stable with
faithful observance of the earlier currency peg policy and the parameters
of the monetary program declared in the joint statement of the government
and the Bank of Russia." 
The government will be guided by the basic principles of the economic
policy defined in the presidential message to the Federal Assembly and the
budgetary message, the statement reads. 

The work for these goals is already underway. The organizations which
receive budget money know what minimum real amounts they will have. A
three-year program of budget policy has been adopted with estimates of
federal budget revenue and expenditure until 2001. Government ordinances
and presidential decrees have been adopted which specify the procedure of
budget expenditure, the possibilities of additional mobilization of the
revenue and ways to tackle the budget debt. 
These steps are yielding results, the statement reads. New borrowings
were made in the first quarter of the year only to an extent needed to
serve and repay the debts. The tax revenue in real terms was 16% higher in
the first quarter of the year than in the same period last year. The
federal budget deficit amounted to 3.5% of GDP. 
The consistent implementation of the above steps will stabilize the
financial system and create a favorable environment for stable economic
growth, the statement reads. 
********

#7
Moscow Tribune
15 May 1998
[for personal use only]
Media Gears Up for Elections 
By Dmitry Polikarpov 

The Russian media is currently facing a major shake up ahead of the
upcoming Duma elections and presidential elections slated for the year 2000. 

"The election technologies were well trained during the last polls," said
Otto Latsis, an observer with the Noviye Izvestia. "Key forces in the
future polls are trying to consolidate their media strongholds in advance." 

President Boris Yeltsin issue a decree earlier this month to create a state
controlled media holding on the basis of the All-Russian Radio and
Television Company (VGTRK). 

Yeltsin granted VGTRK unprecedented powers which enable the new media giant
to control almost all its private competitors. 

The decree, which makes VGTRK a kind of information ministry, subordinates
all 113 regional state television companies which were traditionally
controlled by local authorities to the new company. The new regulation also
gives VGTRK ownership of retranslating centers all over Russia. 
"The presidential elections are not going to be easy. Each of the existing
media empires is playing its own game and it becomes each time more
difficult for the Kremlin to come to agreement with media tycoons," wrote
the Russky Telegraf daily earlier this week. 

Recent governor's elections in Krasnoyarsk apparently demonstrated the
limited influence of the Kremlin even on the Public Russian Television
(ORT) company. Despite urging from Yeltsin, ORT in which the government
owns 51 per cent share, supported Gen. Aleksander Lebed instead of
campaigning for Valery Zubov -- candidate of the party of power. 

Lebed's support was prompted by media tycoon Boris Berezovsky, who has
major influence on ORT and owns a considerable share in the company. 

VGTRK and its RTR television channel are currently enduring a serious
crisis which may undermine its position on the Russian media market. Some
1700 RTR employees have lost their jobs as a result of the reform advocated
by the channel's chairman Nikolai Svanidze. 

RTR received only some 30 percent of the financing allocated by the 1997
budget. 

VGTRK's spokeswoman Olga Churilova told The Moscow Tribune on Thursday that
"the restructuring stages (mentioned in the decree) have not yet been
defined by the company's leadership." 

Churilova said that RTR will launch a campaign, which includes both special
events and new programs, aimed at consolidating its image as the only state
channel in this country. 

The Russian press has also been specially active since the beginning of the
year with several new publications launched and other to start later in the
year. 

Moskovskiye Novosti (MN) publishing house said earlier this month that it
will launch a new political and economic daily called Vremya MN (The MN
Times) on May 20. 

The newspaper will have eight pages and will be published five days a week
starting on Monday. Vladimir Gurevich, MN's long-time journalist, will be
the daily's editor-in-chief. 

Vremya MN will be financed by Aleksander Vainshtein, president of the MN
publishing company and co-sponsor of the Kremlin Cup tennis tournament. 

But a source close to the new publication told The Moscow Tribune earlier
this week that the daily will be supported by SBS-Agro bank controlled by
business tycoon Aleksander Smolensky. 

An editor with Vremya MN said on Thursday that during the first several
months the newspaper will have a circulation of some 50,000 copies which
will be distributed mostly in Moscow and other large cities. 

The editor, who wished to remain anonymous, told The Moscow Tribune that
the new venture was an "apparent preparation for the upcoming elections." 

Vremya MN will come out just days after the Federal Assembly launched its
own newspaper -- Parlamentskaya Gazeta. It's expected that the daily will
advocate the interests of the Duma in the run up to the parliamentary
elections due in 1999. 

Moscow mayor Yury Luzhkov also expanded his media empire last month by
launching the Rossiya national daily. 

Some 70,000 of the paper's 100,000 circulation will be distributed in
Russian regions to promote Luzhkov's political views among potential voters
in the upcoming presidential elections slated for the year 2000. 

Last year the Moscow government launched the TV Center television channel
to support Luzhkov's possible presidential bid. The station has been
building a wide regional network. 

Tatyana Tsyba, a former Argumenty i Fakty journalist, became Rossiya
editor-in-chief. Tsyba said that the new daily pretends to be a resurrected
version of a Russian newspaper started 100 years ago in St. Petersburg. 

*********

#8
RFE/RL NEWSLINE Vol. 2, No. 93 Part I, 18 May 1998

KIRIENKO OUTLINES HIS RESPONSIBILITIES... Prime Minister
Kirienko has signed a document assigning the
responsibilities within his cabinet, Russian news agencies
reported on 15 May. In addition to supervising the
activities of other cabinet members, Kirienko will be
directly involved in the work of the following ministries:
Atomic Energy, State Property, Science and Technologies,
Agriculture, Finance, Economics, and Justice. He will also
monitor the work of the "power ministries," which are

directly subordinate to the president, and will coordinate
Russian policy on arms exports, military and technical
cooperation with other countries, and military reform. LB

...AND DIVISION OF LABOR AMONG HIS DEPUTIES. Deputy Prime
Minister Nemtsov will carry out the prime minister's duties
in Kirienko's absence, according to the document signed by
Kirienko. He will also be responsible for land reform and
housing policy and will coordinate government policies on
energy, transportation, regulating natural monopolies,
ensuring competition, and supporting small businesses.
Deputy Prime Minister Viktor Khristenko will be responsible
for a wide range of economic issues, including the
development of the banking sector, the management of state
property, privatization, revenue collection efforts, and
matters related to Russia's internal and external debt.
Deputy Prime Minister Oleg Sysuev will supervise the
government's social policies, in particular pension reform,
restructuring the social benefits system, and health and
education matters. He will also coordinate the government's
relations with the mass media, trade unions, public
associations, and religious organizations. LB

*********

#9
RIA Novosti
KPRF PREPARING FOR AUTUMN DISSOLUTION
Russky Telegraph
May 14, 1998
But the communists may as well reconsider that
By Darya KORSUNSKAYA

KPRF leader Gennady Zyuganov has suggested that the attitude
of his party on the new government will be worked out at its
congress scheduled for May 23. But then, considering his
statements that the new cabinet "refuses to take counsel with
either the Federation Council or the Duma" on any issue, it can
be assumed in advance that the party resolution will turn out to
be extremely negative. However, everything indicates that till
the end of the spring session the communists intend to limit
themselves to the usual criticism of the government and the
policy it pursues.
Having preserved the Duma from dissolution in the spring,
the communists, perhaps, will not be so afraid of losing their
mandates as deputies in the autumn. According to sources in the
KPRF faction, the most compelling argument that forced a number
of communists to support the candidacy of Kiriyenko in the third
round of voting was the impossibility of participation by the
party as an electoral association in an early parliamentary
election. Under the Law on Basic Guarantees for the Electoral
Rights of Citizens, only parties may take part in an election
that have made amendments to their rules at least a year before
the election. The Central Election Commission and the Ministry of
Justice had reminded the Duma members who for some reason had
forgotten about that in time. The communists, convening an
extraordinary congress to amend their party's rules, will
certainly have time to reregister it by the deadline of July 1,
current year, set by the Ministry of Justice. In addition, before
recess the Duma members will certainly do their utmost to pass
amendments to the Law on Guarantees, under which parties that
have not succeeded in adjusting their rules in time nevertheless
will be able to take part in an off-term election called earlier

than July 1, 1999. The Duma also intends to pass as a whole
amendments to the law on elections of deputies of the Lower
House. Having thus closed the gaps in electoral legislation, the
Duma members expect to create a reliable guarantee that an
off-term election will be held according to the laws that suit
them and not according to decrees of the president, who so far
has not given up the idea of a purely majority system.
The reason for an autumn confrontation between the Duma and
government could be the draft budget for the next year.
Considering the projections prepared by the Ministry of Finance,
it can be said that the 1999 budget will be the most rigid in all
the years of reform and certainly not to the liking of the
deputies. By returning the draft budget to the government, they
could raise the question of a vote of no-confidence. If the Duma
confirmed its dissatisfaction with the cabinet twice within three
months, the president will have to make a choice between the
government and the Duma. Most likely the president's
decision will not be in the Duma's favour.
Such a decision might only play into the communists' hands,
though. A snap election would be called for February-March. The
communists are confident that they will be able to increase their
presence in the Lower House. A new Duma will for a year and a
half enjoy a constitutional immunity. According to the
Fundamental Law, a State Duma "may not be dissolved within a year
after its election, as well as within six months before the
expiry of the term of office of the President of the Russian
Federation." Thus, within this period the communists would be
able fearlessly to demonstrate their opposition to the regime,
and their candidate for President, using the material and
technical resources of parliament, as well as the Duma rostrum,
could calmly prepare for his presidential campaign.
However it is possible that the Federation Council or the
president will not support the electoral laws suiting the
communists. In this case the communists might not go for an early
autumn dissolution.

********

#10
Washington Times
18 May 1998
[for personal use only]
Clinton, Yeltsin eye further cuts in arms
By Paul Bedard

BIRMINGHAM, England
President Clinton and Russian President Boris Yeltsin yesterday used
nuclear tensions in South Asia to push for a START III treaty slashing
nuclear warheads.
"I think all of us, because of the India nuclear tests [last week],
feel an even greater sense of urgency to change the debate again over
nuclear issues toward less, not more -- to change the whole direction
here," Mr. Clinton said after meeting with a healthy looking Mr. Yeltsin
for 45 minutes.
The two leaders said the tests should push the Russian legislature's
lower house, the State Duma, to approve START II, the strategic arms
reduction treaty reducing nuclear warheads in each country to 3,500. The
U.S. Senate already has approved the treaty.
During the wide-ranging meeting -- their first in a year -- Mr.
Clinton won new assurances from Mr. Yeltsin to clamp down on Russian sales
of sensitive missile technology to countries such as Iran.
"It is clear that President Yeltsin wants to stop this flow of
technology," National Security Adviser Samuel R. Berger said.

Mr. Yeltsin said after the meeting, "We agreed about everything."
They met in the Hyatt Hotel, just blocks from the site of the Group of
Eight economic summit, which ended yesterday.
The G-8 nations issued a statement on trade and foreign policy issues
and agreed to make greenhouse gas emissions voluntary for developing
nations. Industrialized nations such as the United States must enact costly
reductions under the climate change treaty approved in December in Kyoto,
Japan.
Mr. Clinton and Mr. Yeltsin want to begin work on a START III treaty
that will cut warheads to between 2,000 and 2,500 each.
"President Yeltsin reaffirmed in the clearest and most unambiguous
terms his own personal commitment and that of his government to continue
working with the United States to address these problems and to do so very
promptly," Deputy Secretary of State Strobe Talbott said.
Mr. Yeltsin repeated a promise he has been making since 1993 that the
Duma will quickly pass START II and announced that Mr. Clinton would visit
Moscow in July to open talks on START III.
However, Mr. Talbott indicated a Clinton visit won't happen until the
Duma votes.
He said the agenda for a summit will cover economic and nuclear arms
reduction issues.
"The second of those items will obviously be much easier to deal with
in a productive and promising way if START II has been ratified," said Mr.
Talbott, the administration's expert on Russia policy.
"Without START, there will be no start to the visit," agreed Yeltsin
spokesman Sergei Yastrzhembsky.
Mr. Clinton said, "I think [START II] ought to be ratified, because
then we can get more things done."
START II was signed by President Bush in Moscow Jan. 3, 1993. START I
cut warheads to 8,000-9,000 each.
Mr. Clinton will travel to London today to discuss the situation in
India and Pakistan with members of the European Union, currently headed by
British Prime Minister Tony Blair, before flying to Geneva to herald the
50th anniversary of the World Trade Organization.
Mr. Clinton will return home at about midnight tonight.

*********

#11
Russia Today


http://www.russiatoday.com
May 18, 1998 
The Nickel-and-Crime War of Krasnoyarsk
By Rod Pounsett

So the citizens of Krasnoyarsk have voted for new governor, but could
the result also be a blow against some of Russia's major business empires? 
It seems clear that this contest was more about money and power than
party politics. Political contests are rarely totally clean, open fights.
This gubernatorial battle in Siberia, however, must rate as one of the
dirtiest and intrigue-riddled yet in Russia. 
It was a race where ideological imperatives took a poor second place to
the fight for control of a giant nickel-producing conglomerate. That and
the alleged criminal activity, or at least dirty dealing, both during and
prior to the election campaign. I've dubbed it the Nickel-and-Crime War. 
I suspect the next presidential election will be conducted under similar
rules of engagement. 
The country's banking and industrial barons ­ a half dozen of which
claim to control half of the nation's wealth -- see any political contest
as an ideal battlefield on which to fight their commercial wars and to
defend their influence over Russia's political destiny. 
Both the major contestants for this governorship, Gen. Aleksander Lebed
and incumbent Valery Zubov, seemed little more than pawns in a
not-so-behind-the-scenes fight among some of Russia's most wealthy tycoons.
These barons want control of industrially-powerful Krasnoyarsk, a region a
quarter the size of the United States. 

It was also the place to settle old scores. The jewel in the crown they
were after was Norilsk Nickel, one of the world's largest suppliers of this
valuable metal. Former paratrooper Lebed may like to be known as the man
who stands for things like honor, nationhood and the abolition of
corruption, but he too exposed his political greed in wanting control of
this massive industrially-rich Krasnoyarsk region, which stretches from the
Arctic in the north almost to the border of Mongolia in the South. 
He did not seem to care who helped him. After all, with his brother
Alexei already governor of the neighboring republic of Khakassia, a sibling
duo will now have political control of the vast supplies of aluminum, and
other valuable metals lying beneath Siberian soil. 
It will also give him a potential pipeline to much-needed campaign cash
if he wants to run for president. For Lebed, however, it was no straight
contest with Zubov. 
A brigade of Russian business tycoons and their empires were lined up
behind Zubov, including Vladimir Potanin of Uneximbank (owners of Norilsk
Nickel), Vladimir Vinogradov of Inkombank and many heads of the region's
large and small businesses. 
Even the Duma Communists and Moscow Mayor Yury Luzhkov, supported Zubov;
not to mention a couple of Russian pop stars. Potanin, Vinogradov and the
others viewed a change of governor as a risk to their influence in, and
income from, the region. Zubov was very much their man. 
The Communists simply fear Lebed's ambitions to become Russia's
president. Under a cloud of corruption allegations, Potanin's Uneximbank
won control of Norilsk Nickel, with highly lucrative platinum and nickel
deposits, during the privatization in 1996. 
Vinogradov's bank recently extended a $16.5 million loan to the region.
Norilsk Nickel spokesman in Moscow, Igor Plotnikiv, told me the change of
governor in Krasnoyarsk could threaten the company's plans for the region. 
When Potanin took over Norilsk Nickel he said he wanted to change the
company, and therefore the city. He made good on his promise. There already
has been a major cutback in the workforce. 
Potanin's unpopularity with other tycoons and bankers prompted a similar
brigade of businessmen to throw their support behind Lebed. Not least among
these was mega-rich industrial and media baron Boris Berezovsky, who has
become a bitter rival to Potanin. The rivalry was sparked when Berezovsky,
unfairly he claims, lost out to Uneximbank in the Norilsk Nickel acquisition. 
Lebed also won the support of Vladimir Gusinsky, head of the Most Bank
Group, who, like Berezovsky, has ambitions to oust Potanin from control of
Norilsk Nickel and Krasnoyarsk Aluminum. 
Rossiysky Kredit Bank also stepped in line behind Lebed, again because
of sheer dislike for Potanin and because it sees Uneximbank as its main
rival to winning the right to control Russia's customs accounts: cash that
helps banks bid for state property auctions. 
The campaign was littered with allegations of fraud, corruption, misuse
of influence over the media and various other incidents of political
impropriety. There is even a suggestion that the Krasnoyarsk prosecutor's
office may rule the whole contest invalid because of the dossier of
complaints it has received. 
One can, of course, find sidebar political motives behind the support
for each candidate. There are the various scenarios that have Lebed
entering the presidential contest in the year 2000. 

Some people fear he might just gather enough popular support to win his
way to the Kremlin top job. Others simply believe it would be strategically
useful to have him in the frame to divide the opposition to their own
choice for president. 
In my book, however, these Machiavellian scenarios are not nearly as
significant as the outright power and money motives of the combatants. Or,
more precisely, those behind them. 
When Russia's mighty moguls get in the ring together they are hardly
likely to wear kid gloves ­ knuckle-dusters seem more their style. History
books tell us these might not be misplaced weapons in Norilsk, where in the
1930s several hundred thousand prisoners were imported as slave labor for
the mines. 
Today, however, Norilsk's 250,000 ordinary residents are not a criminal
fraternity that deserves to be tossed around in a battle among power-hungry
political and industrial giants. Their lives are tough enough, even if the
average local wage for those still in work is much higher than in most
other areas of the country. 
They have to contend with a harsh climate where the sun dips below the
horizon for months at a time. Thanks to wasteful and thoughtless planning
during Soviet times, the region is an ecological disaster. Their air and
water is polluted by chemicals. Respiratory illnesses are commonplace,
especially amongst the elderly. 
They are also virtually cut off from the rest of the world. The only
realistic way in or out is by boat or plane. There have been plans, put
forward by Norilsk Nickel, to ship out more than 100,000 residents to a
better environment. A scheme, supported by Moscow, which unfortunately
hinges on a World Bank loan. 
Without regional stability that cash may not be forthcoming. The people
of Krasnoyarsk region have, for whatever reason, voted for change. They
have had their taste of perestroika, glasnost and the privatization of
their workplaces. 
For some, it has resulted in a few more rubles in their pockets. For
most, however, it has created even more hardships and uncertainty on top of
their inclement weather and isolation. Lebed cannot put more sunshine in
their daily lives, but he has promised them greater security. 
Maybe they also believe he is really on his way to power in the Kremlin
and on that way will build them a bridge to the center. Lets hope now that
he is in charge of the Krasnoyarsk region the general has more on his mind
than his own political and financial ambitions, and that the needs of his
electorate take precedence over the demands of big business. 
Rod Pounsett writes a weekly column for Russia Today. 

********

#12
Kennan Institute for Advanced Russian Studies
NEWS/Meeting Report
Regional Development: The View from Novgorod
by Nancy Popson

The task of bureaucrats in the transition is to create favorable conditions
for entrepreneurship and investment, declared Mikhail Mikhailovich Prusak,
Governor of Novgorod Oblast', at the fifth lecture in the Kennan
Institute's Russian Governors' Forum series on 2 March 1998. It is that
task to which the Governor has devoted his team of reformers since his
appointment and subsequent reelection in 1991 and 1995, respectively.


Governor Prusak explained that Novgorod Oblast' currently has a large
amount of foreign investment--49 percent of oblast' GDP is derived from
foreign investment. The same figure for Russia as a whole is only 2 3
percent. In investment dollars per capita Novgorod is second only to
Moscow, and is rated third for its economic development over the past six
years.

Major foreign investors in the oblast' include the English firm
Cadbury-Schweppes, and the Danish company Stimorol. In addition, firms from
Germany, Finland, Austria, and South Korea are operating in Novgorod. This
investment has brought the official unemployment rate in the region down to
4.8 percent, and has also enabled significant retraining of the work force.
However, the Governor lamented that as of yet no American firms have
invested in the region.
The Governor attributes his region's success in attracting European and
Asian investors to bold tax and land policies aimed specifically toward
investment. Novgorod did not wait for the federal government to pass an
ideal tax code, but instead worked within the framework of the constitution
and the authority given to the regional government to put together its own
tax system. According to Prusak, the basic principle of that system is that
private individuals should carry the bulk of the tax burden.
Prusak admits that this was a very bold step, given the poorness of the
region. However, the reformers came to realize two lessons in economics:
the poorer the region the more it must do to attract investment; and
individuals receiving regular salaries will be willing and able to pay
taxes. Therefore, the Novgorod tax code relieves both foreign and national
investors from all taxes until the company becomes self-sufficient. This
tax break amounts to approximately 50 percent of all taxes owed by foreign
companies in the Russian Federation.

Regarding land ownership, Prusak remarked that since approval of the
federal land code has been delayed, Novgorod decided to create its own de
facto solution that would keep agricultural land restricted but allow
investors to own land on which they build production facilities. One such
regulation allows the Russian partner in a joint venture to purchase land
at very low prices. This in effect gives ownership to the foreign partner
as well once the joint venture becomes a legal entity. Moreover, a
completely foreign venture is able to lease land for a period of forty-nine
years with the option to buy after that time. 

Oblast' regulations also aim to make it more attractive for foreign
companies to invest in failing Russian concerns. For example, they take
into account the possibility that an investor taking over an existing
factory may not need the entire amount of land set aside for that factory.
Therefore, the government allows the firm to only pay taxes on the land
actually used, and the remaining land is put in a fund for non-liquid
assets and distributed to small and mid-sized businesses in need of
facilities. In addition, once a foreign company takes over a heavily
indebted Russian firm,oblast' regulations provide for an amnesty on all
debt owed by the firm up to the date of sale or creation of the joint venture.

Support for small and mid-sized businesses is another priority for Governor
Prusak. Currently, Novgorod boasts 7,000 small businesses, or one for every
100 citizens. Banks that invest in small and mid-sized businesses are free
from taxes on profits. As a result, many larger Moscow and international
banks have begun investing in Novgorod, including Smolensk Bank, Avtobank,
Promstroi Bank, the World Bank, the European Bank for Reconstruction and
Development, and the Export-Import Bank. Moreover, the government has
created an insurance fund for small and mid-sized businesses consisting of
100 million new Russian rubles.

Although he is certain that all these issues will eventually be resolved at
the national level, the Governor explained that it seemed absurd to wait
for federal laws when there was concrete work to be done in the region.
According to Prusak, Novgorod's favorable business climate is due to the
work of the regional legislature and the political and social stability
brought about by six years of governance by the same team of reformers. He
also attributes the lack of corruption in the region--noted in a 1996
Interpol study--to the legal framework set up by the government: he
explained that if the bureaucracy does not attempt to deprive businesses of
that which they require, the criminal element will not follow suit.

The Governor concluded his remarks by noting that Novgorod's positive
results stem from the reform team's conviction that there is no such thing
as a dead end economic situation. Prusak strongly believes that optimal
solutions can be found if one respects the objective laws of economics and
is willing to be proactive in making reform policy decisions.

"Managing the Economic Transition in Russia's Regions: The View from
Novgorod" sponsored by the Kennan Institute for Advanced Russian Studies,
was presented 2 March 1998 by Mikhail Mikhailovich Prusak, Governor of the
Novgorod Oblast'. Nancy Popson is Program Associate, Kennan Institute for
Advanced Russian Studies. 

********

#13
Date: Mon, 18 May 1998 
From: Christian Caryl <110317.1466@compuserve.com>
Subject: Space waste race

Dear David:
Here's an interesting tidbit I wrote for this week's "Washington Whispers"
(in the front of the mag). Best wishes from the Big M.
Regards,
Christian Caryl

Space waste race
U.S. News and World Report
It's well known that the Russian space program is hazardous to cosmonauts'
health. (Note the succession of near disasters that made "Mir"
international shorthand for "bucket of bolts.") Now there's some evidence
that it's even more dangerous to bystanders. A study by the Arkhangelsk
Medical Academy says that rockets from the Plesetsk Space Launch Complex,
just below the Arctic Circle, are harming the health of local inhabitants.
Apparently, the rockets' booster stages are dripping poisonous fuel into
the countryside during launches. The researchers found that 50 percent of
the inhabitants in the study sample suffer from liver ailments consistent
with the effects of dimethyl hydrazine, a supertoxic rocket fuel that can
persist in soil and water for years. U.S. aerospace engineers are bound by

strict regulations to prevent chemicals of this type from entering the
environment, and the Federal Aviation Administration recently revoked the
license of one U.S. commercial launcher that failed to handle its hydrazine
properly. But similarly tough standards don't seem to have reached
Plesetsk, which has also been used to launch U.S. payloads as part of
extensive NASA cooperation with the Russian Space Agency.

*********

#14
Russia Today


http://www.russiatoday.com
The Week That Was
Satire by Mary Campbell
Cyber Boris 

(Boris Yeltsin is about to make his on-line debut. He's sitting gazing
intently at a computer screen. His spokesman, Sergei Yastrzhembsky sits at
another computer, reading a list of questions and preparing to type
Yeltsin's answers.) 

Yastrzhembsky: Okay, Boris Nicholayovich, we're just about ready to begin. 

(No reply) 
Yastrzhembsky: Boris Nicholayovich! I said, we're just about ready to
begin! What are you doing there? 

Yeltsin: (still intent on screen)
I'm looking at Nemtsov's home page! Have you seen this, Sergei? Look, here
he is in his tennis clothes! I can wipe the court with him, Sergei, but I
bet he doesn't mention THAT anywhere! 

Yastrzhembsky: Yes, yes, Boris Nicholayovich ­ but you can read that later.
It's time to decide what questions we'll answer. 

Yeltsin: (typing with two fingers)
One moment, Sergei, there's a place here where you can send messages to
Nemtsov ­ I'm going to send him one. How do you spell "lunkhead?" 

Yastrzhembsky: Stop that, Boris Nicholayovich! Help me decide what
questions you're going to answer! Here's one about NATO, and there's one
about the EU, and one about whether you think the Constitution gives too
much power to your successor… 

Yeltsin: (looking at questions)
Here's a nice one, Sergei ­ it's about my hair! Someone likes my hair ­
let's answer this one. 

Yastrzhembsky: (sighing)
Okay, Boris Nicholayovich, we'll answer the one about your hair, what do
you want to say? 

Yeltsin: Hmmm, well, first she wants to know if I have any Irish ancestry
because the Irish, apparently, are known for their hair. I'm afraid I must
tell her that I have no Irish blood in my veins ­ although I have been there… 

Yastrzhembsky: Yes, that time you refused to get off the plane at Shannon
airport. Do we really want to get into that? 

Yeltsin: (narrowing his eyes at Yastrzhembsky)
Sometimes, Sergei, you are a real wet blanket…I think I should tell her
something about my hair care regime ­ what shampoo I use, what conditioner,
how I try to avoid blow dryers. It could lead to some promotional work too,
if I decide not to run in 2000 ­ I mean, if Gorbachev can shill for Pizza
Hut! 


Yastrzhembsky: Speaking of that… 

Yeltsin: Yes, I'm hungry too… 

Yastrzhembsky: I mean speaking of Gorbachev, there's a question here about
what you think of him. 

Yeltsin: Yesterday I thought about him ­ I was thinking that he doesn't
even HAVE any hair to speak of! I think historians may see that as one of
the fundamental differences between us as leaders. Today I don't think of
him at all ­ well, until just now, when I remembered the Pizza Hut
commercial and got hungry. 

Yastrzhembsky: (typing) 
"Yesterday I thought about him… Today I don't think of him at all." 

Yeltsin: Hey, that's good Sergei! Catchy. 

Yastrzhembsky: Okay, now Boris Nicholayovich, we must answer something
serious ­ here's one about the fight against organized crime… 

Yeltsin: Wait, Sergei! Here's a better one ­ Robert of the Netherlands
wants to know if I smoke. Take this down: Never in my life I've smoked! I
never tried to smoke at all. I feel bad when someone or my friend is
smoking close to me. Even Clinton, who does not inhale. 

Yastrzhembsky: I'm not typing that, Boris Nicholayovich. 

Yeltsin: (giggling)
Your call, Sergei. Okay, I've had enough of this ­ I'm going to Pizza Hut. 

Yastrzhembsky: But Boris Nicholayovich, we're not finished! There are more
questions to answer! 

Yeltsin: (leaving) 
You can answer them, Sergei! You know the way I think! 

Yastrzhembsky: (head down on keyboard)
Yes, Boris Nicholayovich, that's very true… 

********

#15
New York Times
18 May 1998
[for personal use only]
Group of 7 Becomes Group of 8

BIRMINGHAM, England -- This year, for the first time, the annual summit
meeting of the world's seven major industrial democracies and Russia became
formally known as the Group of Eight, reflecting the gradual effort to give
Russia an expanded voice in global economic and political issues. 

"The format is now the G-8," a spokesman for the British government said.
"The idea was always that Russia would be included. It just took a while
for the name to catch up with the reality." 

The old Group of Seven will continue to exist in a certain sense. The seven
-- the United States, Britain, France, Germany, Italy, Canada and Japan --
are free to meet without Russia on some issues, especially relating to
global finance. The leaders of the seven nations gathered without President
Boris Yeltsin during the first session here on Friday, primarily to discuss
the Asian financial crisis. Yeltsin was present later when the nations
discussed India, Indonesia and the situation in the Balkans. 

For now, Russia will not take a place in the rotation as host of the annual
event, although American officials say they expect that to happen within
the next few years. 

The summit meetings started in 1975.

********

#16
Shokhin: Krasnoyarsk Has Actually Nominated Presidential Candidate 

MOSCOW, May 18 (Interfax) - Leader of the Russian Duma's Our Home is Russia
faction *Alexander Shokhin* thinks that by supporting Alexander Lebed in
the gubernatorial elections, most of the Krasnoyarsk residents have "voted
for their future presidential candidate." 

"If Lebed acts astutely in the future he will be able to score quite a few
points for the 2000 presidential elections," he told Interfax Monday. 

In his opinion, the defeat of the current governor of the Krasnoyarsk
territory Valery Zubov was caused by two things: "insufficient support from
Moscow before the first round and the resignation of the Viktor
Chernomyrdin government." 

"Zubov, who is a member of the political council of the Chernomyrdin-led
Our Home is Russia movement, is associated with the party of power, whose
prestige was shaken during the government crisis in the spring," he said. 


He said that in the 2000 presidential elections Lebed will be countered by
two representatives of the party of power - Mayor of Moscow Yuri Luzhkov
and leader of the Our Home is Russia movement, ex-prime minister Viktor
Chernomyrdin. He said Boris Yeltsin's participation in the presidential
elections was not ruled out, either. Yeltsin may announce his decision to
run for president "given a direct threat of dictatorship," Shokhin said. 

********