August 27, 2001

This Date's Issues:   5411 • 5412

Johnson's Russia List
#5412
27 August 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russia's Putin backs 2002 draft budget.
2. Versty: A LIBERAL DEMAGOGUERY BUDGET. Interview with Mikhail Delyagin, director of the Globalization Institute.
3. Chicago Tribune: Steven Kellman, Andrei Makine's new novel of 20th Century Russia.
4. The Scotsman: Chris Stephen, Ailing Russian army hunts deserters.
5. Nezavisimaya Gazeta: Ivan Sas, WILLIAM MERCER AND A MUSCOVITE'S BASKETS. It's only for the rich that Moscow is expensive.
6. Moscow Times: Vladimir Kovalyov, Avoiding the Inconvenience of Elections.
7. Inostranets: YELTSIN'S PEOPLE WILL BE PAINLESSLY REMOVED.
8. Vek: RUSSIA SET TO HOLD POPULATION CENSUS.
9. Parlamentskaya Gazeta: Nikolai Petrakov, FLIGHT CAPITAL WILL REMEMBER HISTORICAL HOMELAND YET.
10. New York Times editorial: The Plutonium Nightmare.
11. Financial Times (UK) editorial: Deep decisions.
12. The Independent on Sunday (UK): TRAVEL: YO HEAVE HO What can a man do when his love is unrequited? Take a boat down the Volga, says Jeremy Atiyah. After all, what is a Russian river for but escaping heartache?]

*******

#1
Russia's Putin backs 2002 draft budget

MOSCOW, Aug 27 (Reuters) - Russian President Vladimir Putin thanked the
government on Monday for the timely drafting of the 2002 budget and urged
parliament to pass the blueprint.

The State Duma lower house of parliament received the draft on Sunday. It
foresees gross domestic product growth of 4.3 percent, inflation of 10-13
percent and aims for a budget surplus of 1.19 percent of GDP next year.

Putin urged government ministers to start consultations with parliament
members to provide for the budget's smooth passage.

"It should be clear to anyone that all budget figures are justified and the
targets the country posts (for 2002) can be achieved only on conditions of
tight budget policy and financial discipline," Putin said in televised
remarks.

He named raising salaries for workers who are paid out of the budget and
servicemen and implementation of judicial, military and administrative
reforms among 2002's priorities.

"It is necessary to focus on key issues to keep from wasting government
funds...(and) provide for an unconditional pace of economic growth that would
be the basis for achieving social targets," Putin told a cabinet meeting.

The 2002 draft budget foresees revenues of 1.998 trillion roubles ($67.95
billion) and spending of 1.872 trillion roubles.

For the first time in years social spending, set at 406.250 billion roubles,
will exceed defence expenditure, set at 281.970 billion roubles. The
government also plans to spend 289.734 billion roubles on state debt
servicing in 2002.

Deputy Prime Minister Alexei Kudrin said on Sunday the government was
confident of meeting spending targets, even if world oil prices -- key to
Russia's budget revenues -- fell.

"We will spend more (in 2002 than before), but even under the most
pessimistic scenario...we will fulfil all budget obligations," Kudrin, who is
also finance minister, said.

Finance ministry officials have said spending in the 2002 draft budget was
based on a conservative oil price forecast $18 per barrel of the Urals blend,
which Russia mostly produces. But in terms of revenue it is targetted at $22
per barrel.

Urals was traded at $25.95 per barrel on Friday.

SUPPORT SEEN FROM MPs

Alexander Zhukov, head of the Duma's influential budget committee, told
Russian reporters the Duma would discuss the draft budget in the first of
four required readings before the end of September and forecast approval
after tough debates.

He said deputies were likely to expect higher budget revenues and more
generous spending on agriculture, industry and road construction and to
question the financing of a so-called reserve fund, earmarked for savings for
rainy days.

"But in the end the budget should be approved as the most deputies support
the government," RIA quoted Zhukov as saying.

Zhukov praised the government's intention to pay due debts in full next year.
"On the whole, the 2002 draft budget is better than in previous years and it
clearly favours social spending," Interfax quoted him as saying.

Yuri Maslyukov, former first deputy prime minister and a senior member of the
powerful Communist faction, which often opposes government initiatives in the
Duma, also approved the bill.

"We are encouraged by a reasonable character of many government proposals,
including...increased financing of many key items, such as social policy,
healthcare, education, military and judicial reform," Interfax quoted him as
saying.

Zhukov said the budget committee would start debating the draft budget on
September 7 or 8.

($1-29.36 Rouble)

********

#2
Versty
August 25, 2001
A LIBERAL DEMAGOGUERY BUDGET
Interview with Mikhail Delyagin, director of the Globalization Institute
Author: Evgeny Lakoza
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE DRAFT BUDGET FOR 2002 DEVELOPED BY THE GOVERNMENT IS MAINLY
ORIENTATED TOWARD SERVICING FOREIGN DEBT. THE INTERESTS OF THE
NATIONAL ECONOMY AND DOMESTIC CREDITORS ARE GENERALLY IGNORED. THE MEASURES SET OUT IN THE BUDGET BY THE CABINET WILL LEAD TO INCREASED CAPITAL FLIGHT.

The draft budget for 2002 indicates that the Russian government's
priorities focus on the interests of foreign creditors - not
developing Russia's national economy.

Question: The government supposes that the draft budget for 2002
may become the first liberal economic budget in Russian history. This
must be due to its new legislative base, which means low taxes,
business initiative encouragement, and reduction of red tape in
economy. Do you share this opinion? After all, reduction in the profit
tax and at the same time abolition of tax relief for investment did
not encourage those companies that invest a considerable part of their
income in the production.

Mikhail Delyagin: Do not trust the official propaganda. What low
taxes is it talking about? The gist of the draft budget for 2002 -
reduction in the profit tax - is compensated for with abolition of
exemptions and introduction of a draconian tax on the extraction of
natural resources. The latter does not take into consideration the
cost of prospecting, thus making it impossible under relatively
difficult conditions. According to the Finance Ministry, tax revenue
in 2001 is expected to be 15.62% of the GDP, against 15.34% in 2002.
There is nothing to be proud of, it seems.

In general, the reduction of tax pressure on the economy is 1.5%
of GDP. But the government made it by way of regional revenue
reduction and enlargement of the federal revenue. This can deprive
many regions of their means for life support systems investment, which
will cause uncontrolled and therefore most destructive reform in the
housing and utilities, and lead to a number of large-scale industrial
accidents and housing disasters. Cleaning up their consequences will
require increasing the tax burden to the level higher than that of
2001. As they say, a miser pays twice.

All in all, reduction of the revenue tax in view of investment
relief abolition the liberal reformers do not stimulate investment but
orientation of means towards consumption or capital flight.

Question: According to the Finance Ministry, the regional revenue
decrease will make 76 billion rubles. The government is supposed to
compensate for it but we all know how long money goes form the center
to the regions. So the governors will be kept a thumb on. What is your
attitude towards this?

Delyagin: The government does not hide its understanding of
budget federalism. As the result of its actions the regional budgets'
costs will be cut for 1.5% of GDP, as I said already. At that the
government ignores the Budget code, for the regions receive only 47%
of the taxes collected, but not the 50% due to them. However, the
liberal reformers declare that the laws which interfere with them are
out of date and will be re-written.

Question: Does the government set the inflation rate too low in
the draft budget? Is it done on purpose in order to have extra income
in the budget?

Delyagin: First of all, the government is unable to decide on
inflation. It is said to be 12-14%, but these figures presuppose two
different budgets.

However, generally, as long as the government does not fight the
tyranny of monopolies, the inflation will be not less than 15%.
Inflation income will allow to report of the plans' overfulfilmllent,
but products and services will more expensive than planned. At that
the shortage of means will not be compensated eve if the budget bursts
of money like in 2001, because all extra income will go to creditors.
The result will be the winterkill of new Russian regions.

Question: Andrey Illarionov, the president's economic adviser,
has tried to prove that the government should support capital flight
in order to prevent inflation and increase of the real exchange rate
of the ruble. Do you think his ideas have prevailed in the draft
budget for 2002? Will it affect the interests of ordinary Russians
adversely?

Delyagin: The government's policy is inconsistent. The draft
budget was made on the basis of the socio-economic development
forecast that assumes capital flight will halve by 2004. This is
viewed as a positive fact. But the government does not make or plan to
make efforts to contribute to this revolutionary breakthrough.
Although even the hope for it seems an advantage against the
background of the presidential advisers nonsensical remarks.

However, the government's real policy is directed to driving
capital out of the country, this being the practical realization of
Illarionov's ideas. Thus, another "guru" of liberal reforms Gref has
developed a bill according to which sums below $5 million may be taken
out of Russia freely, and sums over $5 million - with a minimum of
formalities. In view of the government's lack of interest in
protecting the property and restraining the tyranny of monopolies the
bad investment climate in Russia will not grow any more favorable. So
the liberalization of the currency regulation will turn a growing
outflow of the capital.

Question: Does the government go to far in directing all extra
income in the following year to servicing foreign debt?

Delyagin: Moreover: besides the plan payments the government
speaks about "reduction of borrowing on the foreign and domestic
markets", which will enable it to make extra payments on the foreign
debt. At the same time the government has practically prohibited
direction of the extra revenues even to the most vital needs of state-
funded groups.

This serves the evidence of the government's orientation towards
the foreign creditors' interests rather than national economy
development. The budget has a deficit of at least $3.3 billion, that
is supposed to be compensated for by selling precious metals and
mostly by privatization, while the Land Code allows the reformers to
launch an outrageous land privatizing campaign.

(Translated by P. Pikhnovsky)

********

#3
Chicago Tribune
August 26, 2001
Andrei Makine's new novel of 20th Century Russia
By Steven G. Kellman. Steven G. Kellman is professor of comparative
literature at the University of Texas at San Antonio and author of "The
Translingual Imagination."

Requiem for a Lost Empire
By Andrei Makine, translated by Geoffrey Strachan
Arcade, 252 pages, $24.95

Like Vladimir Nabokov, the translingual master who pronounced "Lolita- a
record of his love affair with the English language, Andrei Makine writes
rhapsodically in and about the language that he, whose mother's mother went
to Russia from France, calls his "grandmaternal tongue.- Since emigrating to
Paris in 1987, Makine, a native of Novgorod, has become a leading virtuoso of
French prose fiction. Though set largely east of the Urals, "Dreams of My
Russian Summers,- the 1995 novel that won the most glittering of France's
literary prizes, stunned French readers with its upstart author's exquisite
command of their venerable, venerated tongue.

"Requiem for a Lost Empire- is the fifth Makine book to appear in English
translation, and its reverence for sumptuous French is evident, even in
Geoffrey Strachan's careful rendition. In the novel's primal, recurring
scene, an infant is simultaneously delivered from destruction by his late
grandmother's friend Sasha and entranced by the foreign syllables she utters.
Her language is French, and, much later, recovering "the velvety suppleness
of its sounds,- the grown-up Russian child is moved to tell his story in it.

Makine's unnamed narrator recounts a nomadic life spent in Aden, Afghanistan,
Angola, Ethiopia, Nicaragua and other global trouble spots. Trained in
medicine, he is saving lives in Yemen's civil war when recruited by a Soviet
intelligence agent known only by the nickname Shakhmatov (the chess player),
affectionately given him by American spy Ethel Rosenberg. Donning multiple
new identities and teamed with a woman who becomes his lover, the narrator
tracks down arms merchants who endanger Kremlin interests. As the Soviet
Union disintegrates, he quits clandestine work and settles, alone, in France.

To recover the truth about himself, the narrator, who was raised in an
orphanage, recalls the stories that Sasha told, in French, about his family
origins. His grandfather, Nikolai, deserted the Red cavalry in 1920 to return
to his native village, where he was eventually killed by invading Germans.
After surviving ferocious combat throughout Europe, Nikolai's son Pavel bids
farewell to arms, but the Caucasian forest in which he and his wife seclude
themselves is not beyond the reach of a firing squad.

"Requiem for a Lost Empire- is a wistful thriller that spans generations and
continents, a blend of John le Carre and "Dr. Zhivago- refracted through the
language of Marcel Proust.

Makine's fiction often features a violated woman who is rescued by a valiant
man. In "Dreams of My Russian Summers,- Grandmother Charlotte is helped to
escape perdition. In "The Crime of Olga Arbyelina- (1999), Olga is redeemed
from rape by a Georgian prince. In Makine's latest novel, Nikolai saves and
marries Anna, whom he finds pregnant, tongueless and buried alive. During
World War II, his son Pavel is arrested for interfering with a sexual assault
by his own commanding officer. Later, after fighting off the brutes who are
abusing her, Pavel runs away with the woman who will be his wife and the
narrator's mother.

In "Dreams of My Russian Summers," Makine identifies the Russian language
with masculine brawn and French with feminine refinement, as though rendering
his violent, savage universe in French--reimagining Dostoyevsky as
Flaubert--is a way of salvaging it. For all its sundry datelines, "Requiem
for a Lost Empire" is a novel of Russia, "that great white void, with its
wars, its cruelty, its beauty, its suffering." Makine and his world-weary
narrator ponder a barbarous century that is "nothing more than a monstrous
organism that digests gold, oil, politics, and wars, and secretes pleasure
for some, death for others." The text is their attempt at redemption, at
transmuting unspeakable horror into the magnificent complexities of (French)
language.

In its title, "Requiem for a Lost Empire" suggests nostalgia for the ancien
regime, for an expansive political entity, the Union of Soviet Socialist
Republics, that was imploding in "a cacophony of shattered lives" even as the
narrator and his beloved continued to risk their lives in its service. He is
scathing in his portraits of the West--of Parisian intellectuals mouthing
glib abstractions and of blithe American triumphalists. Yet he enlists in the
Cold War as a covert soldier not out of ideological commitment but rather a
desire to expunge his own painful past. His is not a tale of lost illusions,
because he had no illusions to lose.

As the original title, "Requiem pour l'Est," suggests, this is an elegy for
the East; not a tribute to the "phantom country" that battered its own people
but rather a dirge for a direction. Facing east, the willfully amnesiac
narrator invokes peace for his troubled childhood and love to transcend his
solitude. He does so in a language almost equal to the task. "Our lives,
after all, are wholly made up of parentheses," he, wise in the ways of
punctuating lives, observes. "The art is knowing how to close them at the
right moment."

********

#4
The Scotsman
August 27, 2001
Ailing Russian army hunts deserters
Chris Stephen In Moscow

RUSSIAN military police units are fanning out in southern Russia to search
for a 74-man infantry unit that has deserted en masse, highlighting the
worsening crisis of the country’s decaying armed forces.

The soldiers broke out of their base near the southern city of Samara,
apparently after fighting broke out in the garrison. The incident comes
amid fears that large sections of Russia’s under-funded armed forces are on
the point of disintegration.

The army is struggling to cope with poorly paid, poorly fed recruits,
ever-growing numbers of desertions and record outbreaks of "hazing" - the
practice of soldiers shooting their officers.

"This just shows what a terrible state the armed forces are now in," said a
Moscow defence analyst, Pavel Felgenhauer. "This sort of thing is happening
all the time. And it’s getting worse. The problem is the triple spiral of
moral, ethical and technical degradation of the armed forces."

The large-scale desertion came on the same day as the discovery of two
guards at a navy base in Kaliningrad found shot dead, apparently by robbers
who had stolen their weapons.

Last month a conscript became so angry with fellow soldiers taunting him
while they were guarding a train taking tanks to the Far East that he shot
four of them dead.

Kazakhstan has meanwhile demanded an end to haphazard missile testing by
the Russians after an S-300 rocket careened off course, flew over the
border and hit a Kazakh village. No-one was killed by the explosion, which
gouged a 14-metre wide crater, but the Kazakhs say it is the fifth such
incident.

All this comes with teeth already on edge in Moscow’s defence ministry as
the country prepares for the raising next month of the wreck of the Kursk
submarine. The vessel blew up and sank last August, apparently as a result
of being loaded with cheap but volatile torpedoes.

This summer has seen explosions tear through an anti-aircraft missile
battery outside Moscow and fire destroy the air force’s satellite
communications centre.

Almost 70 per cent of the navy’s ships need major repairs and 49 of the
nation’s 115 air bases have no fuel for their planes. Conscripts often go
unpaid for months, and officers are forced to work as taxi drivers,
security guards or farmers to feed their families.

This year Russia’s president, Vladimir Putin, appointed his close friend
Sergei Ivanov, a former KGB colonel, as minister of defence. His main task
was to cut 400,000 personnel from the 1.2 million strong armed forces.

But his reforms have run into the sand in the face of official resistance.
The generals, admirals and air marshals, keen to keep their departments
intact, have fought against reforms and the expected cuts have not
materialised.

Mr Ivanov has run up against a second obstacle - the Kremlin itself. While
Mr Putin talks of the need to trim the armed forces to an affordable size,
he is also insisting that Russia maintain its global role.

Thus the armed forces are committed to challenging NATO on land and sea,
maintaining a nuclear strike force, deploying for a possible future war
with China and a current war in Chechnya, all with a defence budget about
one tenth the size of Britain’s.

In Chechnya, desperate attempts to plug the gaps in trained manpower has
seen units of contract soldiers hired. These troops include Russia’s
flotsam and jetsam, and have established a reputation for thuggery, murder,
and robbery akin to that enjoyed by Britain’s Black and Tans in Ireland in
the 1920s.

Meanwhile, the guts of the armed forces, its sergeants corps, has
disintegrated. Sergeants are no longer given proper training but are simply
picked from the ablest recruits three months into the mandatory two-year
term of conscription.

"There are no professional sergeants, so these units are basically kids
with guns left on their own," says Mr Felgenhauer. "So you are going to
have sergeants killing officers and soldiers killing sergeants. If you want
to have a professional force you have to pay for it."

For NATO, there is a certain irony in all this. During the Cold War it
feared attack by Russia’s nuclear submarine fleet. Now it again fears that
fleet, because of the risk of leaks from the nuclear reactors left on the
dozens of submarines that have been left to rot.

The Kremlin might have a different worry. Its rag-tag force in Chechnya is
not only incapable of beating the guerrillas in battle, but its brutality
is alienating the civilians and stoking the flames of hatred to make any
settlement ever harder to forge.

********

#5
Nezavisimaya Gazeta
August 25, 2001
WILLIAM MERCER AND A MUSCOVITE'S BASKETS
It's only for the rich that Moscow is expensive
Author: Ivan Sas
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
ACCORDING TO THE WILLIAM M. MERCER RESEARCH AGENCY, MOSCOW IS THE WORLD'S SECOND MOST EXPENSIVE CITY. HOWEVER, THIS FACT IS ONLY RELEVANT FOR RICH WESTERN AND RUSSIAN BUSINESSPEOPLE AND TOURISTS. AVERAGE MUSCOVITES ARE CONCERNED WITH DIFFERENT FIGURES.

The sociological research center has published new rating of the
world's most expensive cities in which Moscow gave the first place
only to Tokyo. New York, London, and Paris, traditionally having high
places in such ratings, have got the eighth, twelfth, and fifty-
seventh position.

What an ordinary Muscovite should think about this news? Should
he be glad? Or, maybe, sad? "Not care a straw" - this was the advice
of the State Statistics Committee (SSC) specialists. "Such ratings
have absolutely nothing to do with most of Muscovites". However,
charging the William Mercer specialist would be insubstantial. Their
researches are usually done very carefully. The question is what
"consumer's basket" was taken as the basis last time.

"It was orientated fully towards the West business world, that
makes money in Russia, also towards well-off tourists", said one of
the SSC heads to the NG reporter. "That is why there are such figures
as the price of a five-star hotel residence, a lunch or dinner at a
local restaurant, a limousine hire, etc. All this is really expensive
in Moscow. The rating consumers are also interested for the lodging
price, at that not somewhere else, but in the center. The result is a
set of really expensive products and services which ordinary citizens
and even average domestic businessmen prefer not to consume.

Similar ratings always have much conventional, and researches of
different companies usually have considerable variances. Thus, in
January 2001 in the Economist Intelligence Unit rating Moscow did not
even enter the first ten. Although Tokyo still had the first place.

As for Moscow, the cost of living here is not determined by
ratings of the world's most expensive cities, but by the cost and
content of the Muscovite's consumer basket. Unlike the "William
Mercer" basket it looks not so chic and more resembles the "medical
minimum" for survival. It contains (by a year's norm) 62.8 kg of wheat
bread, 105 kg of milk and kefir, 19.6 kg of sugar, 3.2 kg of salt and
the like. Industrial products are: a raincoat - for seven years, a
suit - for five, a winter coat - for eight, a TV set - for fifteen
years, etc. According to the city administration calculations, this
set costs 2112 rubles 53 kopecks. Expensive? Well, it depends. The
Muscovite's basket will be 1.5-2 times more expensive in Lensk, a town
in Yakutia. The prices for industrial products and food are
traditionally higher in the Arctic and Far East regions of Russia, as
well as in resort zones. However, in towns like Lensk "William Mercer"
does not make its researches, for there are no five-star hotels, or
fashionable business-centers. Neither do representatives of western
business circles or rich tourists rush there.

So, every one has its own basket, and its content depends on the
thickness of one's purse. The Moscow life is doubtless expensive;
however, most Muscovites can afford it. Let alone the clients of
"William Mercer".

(Translated by P. Pikhnovsky)

********

#6
Moscow Times
August 27, 2001
Avoiding the Inconvenience of Elections
By Vladimir Kovalyev

It has been 10 years since the vanishing of the Soviet Union, and you'd
think the people in power would have changed a bit by now. But they haven't.

A surprising number of our governors, for instance, seems to think it would
be much better if the country avoided the inconveniences of elections and
simply adopted a system under which the president appointed regional
leaders. So much for their understanding of democracy.

"Why should we limit a leader's terms in office if he has good health,
experience and a desire to work?" Leningrad Governor Valery Serdyukov asked
recently.

Sergei Katanandov, chairman of the government of the republic of Karelia,
agreed that the president should appoint governors. "That is absolutely
right. The question is whether or not we are ready for this step. Time will
tell," Katanandov said.

Of course, they aren't ready. Not enough time has passed since Vladimir
Putin was elected president in March 2000. Not all the governors have
succeeded in attracting the president's attention.

But this month was Katanandov's chance to shine. Putin spent a chunk of his
vacation in Karelia, staying for a time at Shuiskaya Chupa, the
presidential resort located there. Russian-politics addicts may remember
this as the place where former President Boris Yeltsin liked to fish while
scuba divers attached lunkers onto the presidential hook.

No doubt, Putin will remember how many fish he caught in Karelia for the
rest of his life, giving Katanandov one more opportunity to be noticed.
That's the way Russia works sometimes — fish can be more important than
people.

The ironic thing is that our local governor, Vladimir Yakovlev, comes off
looking like a dyed-in-the-wool democrat. Of course, his credentials took a
bit of a beating back in 1998 when his supporters in the Legislative
Assembly falsified the voting in an attempt to move the elections for
Yakovlev's convenience. But today he is on more solid ground. His approval
rating is more than 60 percent and, as a result, his views on democracy
seem pretty reasonable.

"Elections are one of the foundations of democracy," Yakovlev's spokesman
Alexander Afanasiyev said earlier this month. "[Yakovlev] feels that his
position is stronger if he is elected."

And what does Putin's local representative Viktor Cherkesov have to say on
this matter? After all, he is the one who theoretically should be reminding
the governors about the Constitution, which doesn't say anything about
appointing governors.

In fact, he might even cite to them passages such as Article 3: "The
multinational people of the Russian Federation is the locus of sovereignty
and the only source of power in the Russian Federation."

But Cherkesov never has liked talking about the Constitution very much. Of
course, it is hard to be surprised by this, considering that Cherkesov was
among those who prosecuted people for fighting for democracy in the Soviet
era.

Now, I think it is likely the State Duma, controlled by the Kremlin, may
pass a law allowing the president to play with regional leaders in any way
he wants. It has done as much with the Federation Council, whose members
are appointed by regional leaders.

This is the president's new "vertical of power": the president looming
above a bunch of cowering regional leaders clutching onto their seats,
while the people are off to the side somewhere, not getting in the way.

Vladimir Kovalyev is a reporter for The St. Petersburg Times.

******

#7
Inostranets
August 21, 2001
YELTSIN'S PEOPLE WILL BE PAINLESSLY REMOVED
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

This autumn, President Putin may partially respond to the "Appeal
of the 43" [an open letter to the president published in "Sovetskaya
Rossiia" on August 14 - translator's note]. They called on him to
sever all ties with "Yeltsin's corrupt cadres"; and while Putin might
not remove all the "Voloshins, Fridmans, and Abramoviches", he may at
least significantly weaken the positions of Yeltsin's "Family".

For politicians of the Yeltsin era, the presidential
administration is just about the last stronghold. But now there are
more and more indications that the presidential administration is
facing a major shake-up. According to some sources, the Main State
Legal Directorate and the Personnel Policy Directorate have worked out
a plan for transforming Alexander Voloshin's presidential
administration into a presidential "secretariat".

According to the plan, the presidential administration will
concentrate on analysis, information, protocol, and expert studies.
But its political, territorial, economic, legal, supervisory, and
personnel functions will be transferred to the staff of the State
Council - headed by Putin himself. The plan has been developed by the
St. Petersburg clique. It painlessly excludes Yeltsin's former team
from the system of decision-making. It is said that President Putin
has already seen this plan.

*******

#8
Vek
No. 33
2001
[translation from RIA Novosti for personal use only]
RUSSIA SET TO HOLD POPULATION CENSUS
The nationwide population census will take eight days and
four billion roubles to complete.

Following below is an interview with Irina ZBARSKAYA, who
heads the population-census and demographic-statistics
department at the Russian Federation's State Committee for
Statistics.

Question: Ms. Zbarskaya, what does the state need the
population census for?

Answer: Well, you see, it became necessary to conduct a
population census a long time ago because we now have some
outdated statistics dealing with the break-down of the Russian
population and its size. The previous census was held in 1989;
besides, it was intended to conduct yet another census in 1999.
However, Russian financial problems prevented us from
organizing the latter census. Mind you, any census is a
large-scale undertaking; it takes more than three years to
prepare for each eight-day census.

Question: Why eight days?

Answer: This is a standard deadline, which conforms to
international recommendations. We'll also be conducting the
population census on its critical date, e.g. 00:00 October 10,
2002. Those, who were born after that deadline or died prior to
that deadline, won't be registered.

All in all, 4 billion roubles have been allocated over a
four-year period, with due account taken of the preparatory
stage.

Question: That's a lot of money. Will such expenses be
justified?

Answer: Any population census, which makes it possible to
estimate the size and quality of a country's population, is
called on to provide all the required socio-demographic
characteristics. Current estimates and forecasts, as well as
any state's social policy, are based on such characteristics.
For instance, the population census now serves as the only
source of information about Russia's ethnic line-up. Moreover,
we don't even know anything about the marital status of our
citizens. This can be explained by the fact that nearly 33
percent of all children are being born into unwed families
over the last several years. However, the baby is being
registered in line with the wishes of his or her parents.
Consequently, Russia has quite a few normal and full-fledged,
albeit unregistered, families.

Question: What other questions will be asked?

Answer: The program includes 16 questions to the entire
population, as well as six additional questions to every fourth
family. We'll be interested in education levels, marital
status, employment status, place and date of birth and living
conditions.

Question: People are worried about incomes. What can you
say on this score?

Answer: We don't strive to attain any fiscal goals
whatsoever because this constitutes the prerogative of this
country's tax-police service. We are going to find out
popular-income sources, i.e. wages, college-and-university
grants, dole payments and private farmers' incomes, rather than
their scale. A population census is some kind of an "instant
photo" of society, rather than that of any particular
individual.

We don't even request any documents proving whether any
respondent's answers are correct, or not.

Question: Will such information be authentic enough?

Answer: Well, a certain error margin does exist; however,
it won't make census results less authentic. Surely enough, we
trust people; however, some specific features of the human
mentality should not be overlooked here. For example, the
previous census revealed that the number of married Russian
women exceeded that of married men. Moreover, women tend to
understate their age, with men overstating their education
levels.

Question: And what can you say about illegal migrants and
drifters? How will these population categories be registered?

Answer: Just like everybody else. The census will be
conducted in line with permanent street addresses, rather than
in accordance with the registration principle. Drifters and
homeless children will be registered in line with their places
of "residence", e.g. railroad stations, markets, etc. Meanwhile
illegal migrants are to be registered at specific construction
sites employing workers from other former Soviet republics. Any
person, who has been staying on Russian territory for less than
12 consecutive months, is considered to be a temporary resident.
Meanwhile anyone staying well in excess of this period has
permanent-resident status. We would like the police to help us
in this connection. Plans are in place to register the full
names of respondents, rather than their passport data;
therefore no one will be left out. Such information will
subsequently be erased during processing.

Transcript by Darya YEFREMOVA.

*******

#9
Parlamentskaya Gazeta
August 25, 2001
[translation from RIA Novosti for personal use only]
FLIGHT CAPITAL WILL REMEMBER HISTORICAL HOMELAND YET
By Nikolai PETRAKOV, academician of the Russian Academy of Sciences

Aggregate capital has not only been divided in Russia; a
greater part of it has been actually withdrawn from the
country's economic turnover. It is not important whether
capital is in a Swiss bank or under the mattress in a Moscow
apartment. The most disquieting thing is that this capital does
not work: money has stopped to make money. Various estimates of
the amount of US dollars stashed by Russian citizens boil down
to the figure of $60 billion. This is largely the money of the
middle class whose faith in the honest state, commercial banks
and numerous financial pyramids has been undermined. At the
same time, the Russian nouveau riche keep no less than $150-160
billion in the vaults of foreign banks. The reasons for the
withdrawal of such large amounts of money from the real economy
are obvious:

distrust for the inflationary national currency; tax evasion;
the reaction to the purposefully instigated political
instability and, to a certain degree, the expressly criminal
origin of incomes.

It is not so important what mechanisms of the return of
this money will be tried; what is important is that the state
is seriously concerned with this problem. Indeed, in the
estimates of foreign specialists, with the commencement of
reform, $2-2.5 billion fled Russia every month. (However, more
impressive estimates also exist.) So, there is something to
regret and think about. The paradox of the situation consists
in the fact that the Russian state has already played the role
of an intermediary (and an active one) in the process of taking
Russian capital out of the country. So, it is necessary to
think seriously about why the system of foreign currency
operations regulation and control was destroyed.

It is clear that billions of US dollars were not
transported in handbags across the border every month; oil was
not transported in jerrycans and non-ferrous metals were not
brought in rucksacks out of the country.

It is obvious for everyone: the rules of foreign currency
operations, the oil and gas pipelines, the railways and the
customs are all in the hands of the government. Hence the
conclusion: from the beginning of reform, a large bloc of the
state machine purposefully worked for bringing large foreign
currency funds out of the country. This also involves Russian
specifics. Not a single country in the world, all the more so a
country experiencing a crisis has departed so easily on the
legal basis with large chunks of the national product. Capital
exportation has always been regulated and the observance of
this procedure has always been under strict control.

Even from the viewpoint of the concept of the capital
initial accumulation, the so rapid flight of private capital
looks rather strange. It would seem that if such a serious and
large-scale re-distribution of property was planned for the
sake of creating new non-state potential investors, it is
absurd to create first a whole system of technical conditions
and economic levers of pumping these funds into foreign banks
and then devise methods of their return to the places of their
origin.

The absurdity of the current situation is so obvious that
its creators are feverishly beginning to look for at least some
analogies. In doing so, they cite the experience of China. They
draw attention to the fact that the funds of Chinese emigrants
account for two-thirds of foreign investments in the Chinese
economy. However, it is necessary to specify that this capital
was not brought out of the country but was created by the
labour and talent of Chinese expats. The difference with the
Russian nouveau riche is very large.

The mechanisms of capital flight are well-known. It is
better to ask about them former ministers from the Gaidar and
Chernomyrdin governments who enthusiastically created schemes
of the migration of Russian riches in the Western direction.
Characteristically, these mechanisms have not been dismantled
to this day. The government for some reason believes that the
channels of capital flight can be closed only by making
amendments to laws, although the sluices, through which this
money escaped from Russia to the West were opened by simple
departmental instructions and by-laws. So, our authorities have
set the task of returning the flight capital to Russia.

But how to return: with the help of the Interpol or Carla
del Ponte? This option is degenerating into a sluggish attempt
at frightening oligarchs to make them share in.

Let us think why about $150 billion has come to stay in
foreign banks and why Russian capital has not organically
integrated into the Western economy. To my mind, there are two
reasons for that: a subjective and objective one. The first of
them consists in complete failure by the new Russians to work
in the conditions of a civilised competitive economy. All the
models of enrichment of these money bags were either criminal
by Western standards or simple and primitive. For instance, to
organise a small company or an authorised bank, through which
state funds can be pumped.

It has to be admitted that some of our rich compatriots
did take efforts to join the Western elite of really business
people.

However, even the most capable and ambitious of them were
confronted with opposition of objective nature. Russian capital
is not needed on the Western markets of investments; likewise,
Russian goods are not needed by the West. This is the point.
The Western investment market is over-saturated with the offers
of capital. Offer clearly exceeds demand. This may lead to the
drop of interest rates on huge funds concentrated in various
pension, insurance and other funds, in the first place, in the
USA. This is why, in particular, the West hands out so
generously loans to countries experiencing an investment
hunger. For example, one-party Communist China alone has
received loans worth $400 billion.

The attitude to Russia is different. It is kept on an
investment diet and will continue to be kept in this way until
its complete economic exhaustion and ideal political
complaisance. When this stage, in the opinion of Western
experts, sets in, excessive foreign capital will flood Russian
expanses.

And then the run-away Russian capital will not be needed again.
Respectable Western banks will leave it in the backyard of the
investment market. This scenario is so evident that it is not
noticed only by those nouveau riche for whom money has long
served as a substitute for any intellect. These persons need to
hurry back to Russia and themselves offer to the Russian
authorities the options of cooperation for the revival of the
Russian economy.

*******

#10
New York Times
August 27, 2001
Editorial
The Plutonium Nightmare

While the Bush administration is worrying about potential missile threats
from North Korea, Iran or Iraq, it must not neglect the more immediate danger
posed by tons of inadequately secured Russian plutonium. Any country trying
to develop nuclear weapons would love to steal a few pounds of the
bomb-making material. Yet the White House is considering indefinitely
delaying a plan worked out with Moscow last year to begin disposing of the
Russian plutonium.

The agreement provides for each country to gradually eliminate 34 metric tons
of plutonium from its own stockpiles, mostly by burning it in power reactors.
Citing rising costs, some administration officials prefer to wait until a
newer, cheaper disposal technology can be developed. That would be a
dangerously false economy.

Russia is the world's most inviting source of plutonium. It has more than 160
metric tons in all, roughly half contained in weapons and the other half
stored under less than ideally secure conditions. The stored portion alone is
enough to build about 8,000 nuclear bombs. Getting that plutonium out of the
reach of would-be bomb makers should be one of Washington's top defense
priorities.

The 34 metric tons of Russian plutonium and most of America's corresponding
share — the United States has about 100 metric tons altogether — were
to be mixed with uranium and burned as fuel in power reactors. The remaining
American plutonium was to be mixed with other materials and turned into logs
of radioactive glass and buried, a cheaper and safer method but one that
Russia could not be persuaded to adopt. Earlier this year the Bush
administration suspended the glass logs approach indefinitely, arguing that
it would be cheaper to use just one disposal method. Now it may give up on
the burning method as well.

Cost estimates for both methods have risen steeply since the plan was first
proposed. Nevertheless, it is still a bargain compared with the risk of
plutonium theft by a foreign government or terrorist group. Even using the
more expensive burning method, the total cost of disposing of some 80 metric
tons of plutonium would be about $6.6 billion on the American side and
somewhat over $2 billion on the Russian side, spread out over nearly two
decades. Most of the Russian cost would have to be assumed by the United
States, although Europe has also promised to help.

In return, enough plutonium to build thousands of nuclear warheads would be
eliminated. An administration prepared to spend more than $8 billion in a
single year testing an unproven missile defense system should not object to
spending much smaller yearly amounts to eliminate a tempting source of
plutonium. There is no harm in exploring other potential disposal
technologies. But such experimentation should not delay carrying out the
present agreement with Moscow. If anything, that arrangement, which calls for
each side to dispose of just two metric tons per year, should be accelerated.
Meanwhile, Washington should increase its investment, currently $140 million
a year, in improving security at Russian plutonium storage facilities.

Missile defense, even if technologically perfected, cannot by itself provide
adequate protection against nuclear dangers. Ballistic missiles are only one
of several ways a potential foe could subject the United States to nuclear
threat or attack. The faster excess bomb plutonium can be eliminated, the
safer Americans will be.

*******

#11
Financial Times (UK)
27 August 2001
Editorial
Deep decisions

The very public attempt to raise the Kursk submarine from the bottom of the
Barents Sea marks a welcome change in the Russian military's attitudes to the
rest of society. A year ago, the vessel's sinking was accompanied by
deliberate obfuscation. Today, there is clear progress, even if basic
questions such as the cause of the tragedy have still to be honestly
addressed.

However, it will take a lot more than an improvement in public relations to
modernise Russia's defence forces. The Kremlin has struggled for nearly a
decade to modernise the overmanned, underfunded and demoralised remains of
what was once the Red Army. President Vladimir Putin seems ready to put the
military through a modest overhaul. But fundamental reforms are unfortunately
still off the agenda.

Sergei Ivanov, a close Putin aide who was appointed defence minister in
April, has wasted little time in setting out a streamlining plan designed to
cut 365,000 of the army's estimated 1.2m troops, trim command chains and
rationalise weapons procurement. In 10 years, he wants hardware's share of
military spending to rise from 30 per cent today to 50 per cent.

Mr Ivanov has already introduced tough financial controls. He is also well on
the way to achieving a remarkable reduction of 90,000 troops in his first
year. But other issues have still to be addressed, such as conscription. The
system is wasteful and unpopular, but continues because officers believe it
is a cheap source of manpower.

More fundamentally, Mr Putin and his colleagues have yet to define properly
the armed forces' role. Russia cannot afford the multi-purpose military of
Soviet times. It remains committed to a horrendously expensive nuclear
deterrent but at the same time it wants to have conventional forces capable
of dealing with local conflicts such as Chechnya.

The Kremlin has yet to accept that the only way of financing these
conventional troops properly is to cut the nuclear forces far more than has
previously been done in arms reduction agreements with the US.

The west should help by offering to reduce its own arsenals. Both the US and
Russia still have vastly more warheads than are needed for nuclear Armageddon
- and considerably more than China, the next largest nuclear power. The Bush
administration's proposals for scrapping the anti-ballistic missile treaty
should be linked to plans for more bilateral missile cuts.

But it is for Russia to decide what is the best defence it can afford given
its limited economic resources. To do that it must start setting priorities.
Better housekeeping is not enough.

******

#12
The Independent on Sunday (UK)
26 August 2001
TRAVEL:
YO HEAVE HO What can a man do when his love is unrequited?
Take a boat down the Volga, says Jeremy Atiyah.
After all, what is a Russian river for but escaping heartache?
BY JEREMY ATIYAH

It was fleeting summertime by the Volga river, and I was in love with Maria.
I was also in Kostroma. It was hard to believe that I had spent a whole week
in this old Tsarist town, traipsing overgrown pavements, perspiring under
giant skies. And wasn't all this grass growing at a preternatural rate?
Perhaps speed was in the nature of Russian herbage, given the certainty that
frosts would kill it all within weeks.

The whole of Kostroma, with its ancient, off-colour trading arcades, seemed
to have exploded in undergrowth. There beside the brown waters of the Volga,
I expected to find horses being saddled up for journeys into Tartary.

Instead, here was Maria, pale and serious. "Of course, I am not planning to
spend the rest of my life in this dull little place," she told me. Nor,
apparently, was she impressed by the fact that the dynasty of the Romanov
Tsars had originated here.

Later she pointed at a low concrete wall overlooking the river. "This is
where we usually sit," she sighed. And we sat. There was nothing else to do.
So what now? Where could this possibly lead, beyond days, and more days,
waking up in an old hotel room with peeling wallpaper, while receptionists
downstairs knitted socks and waitresses in the breakfast hall looked
affronted when asked to bring coffee? I was in Kostroma. I was in love. But
right now I could only hold my head in my hands, listening to thunder and
incessant rain, beside a dank skyline of unkempt trees and storm-stained
tower blocks.

Maria, too, was losing heart. When I called her the next morning, she gave me
several plausible reasons why we could not meet that day. "The Ipatevsky
monastery?" she yawned. "Isn't that your kind of thing? Can't you go by
yourself? The frescoes are startling." I imagined her hands dropping
effortlessly at her side. Her eyes would close in a sceptical smile. She was
the most startling thing in Kostroma. Other than suicide. In other words, I
only had one choice: to get on to that river, and out of this town, fast.

What was a Russian river for, after all, if not for escaping hopeless loves?

According to Chekhov, the Volga put gloom into people's souls. "Whoever is
born on the Volga carries her image through life," added Trotsky. Perhaps,
then, the Volga would continue to lash me with images of the beautiful,
unobtainable Maria, no matter how far down its length I travelled. I hoped
so.

Every day, one saw the boats drifting past, southbound for Astrakhan and
Rostov, or northbound for Moscow. And at Kostroma's dilapidated boat station,
one afternoon, I found a vessel for Kazan.

"You do whatever you want," said Maria with a fixed smile, her lashes
glittering in the sun. "Yes, I'll do whatever I want," I replied, handing my
fare to a drunken sailor, securing for myself a private cabin, with a sink
and a window. After all: what more than this (I now asked myself) could a man
want from life? I would travel to the south, down Europe's longest river. I
would submerge my emotional heart within that of Russia itself. Turgenev or
Pushkin would have done the same. Probably.

Only later, on deck - after I had watched Maria, clutching her skirts,
disappear in a shimmer of gold up the bank and into the trees - did I realise
that the atmosphere on the Yakov Sverdlov might be stretching my penance a
little too far. Turning round, I got the feeling that I had blundered into a
Soviet sanatorium.

Here we were, floating away from the station with a sinister, disembodied
voice crackling from the bridge. A mournful silence was about to descend.
Just a few old men and women with sandals on their feet and mushrooms of
silver hair on their heads were shuffling about. One minute we were in
farmland scattered with shacks and rickety wooden houses; the next we would
be in forest-choked wilderness stretching to distant green horizons.

Only the safety instructions, pinned to a wall below deck, featuring a man
with tousled hair and a stiff upturned collar like a romantic poet, looked
interesting. Otherwise, there was nothing to do, except pace the narrow
decks, or gloomy corridors occupied by cleaners in turquoise aprons and
peroxided hair.

Even the bar was closed, which shocked me. At dinner a polite waitress asked
if I wanted tea or coffee with my meal. It was as though we were here to
escape, not into drunkenness, but from it. "Please," I begged. "Give me
vodka."

So I ate and drank alone, while oil-smooth waters fanned out in silence
behind us. The white cupolas of a lonely monastery came gliding by. A tiny
rowing boat passed in front. I saw those sandy banks turn golden in the
evening sunlight.

Were we, or were we not, sailing through the ruins of a dead empire? From
time to time, empty factories came in and out of view, surrounded by cranes
rusted into immobility. And yet here on board, pedantic old rules still
operated. One announcement spluttered at 8am, telling us to get up. Then came
another at 11pm, when the sky was still streaked with polar light, telling us
to go to bed.

One morning, from a wooden chair on deck, I tried asking a man in a tracksuit
and plastic sandals if he had done this trip before. "Seventeen times," he
mumbled, as the boat pulled into one of the locks built along the river. Huge
machinery began towering up around us, including weed-clogged ladders and
slabs of concrete so mighty that only Soviet Man could have built them. On
shore, men stood beside motorcycles with sidecars of Second World War
vintage. One old woman in a headscarf with a sickle over one shoulder was
walking along the towpath. She was so close she could have stepped on to the
boat. "Morning," she said. The old man beside me suddenly sprang into life.
"What's the name of this place?" he burst out from his deck chair. "It's been
a pleasure!" we all called out, when the lock doors finally opened and the
boat began to inch forward.

Kazan, a few hours later, was quietly frying in the sun when the Yakov
Sverdlov arrived. I seemed to be the only passenger disembarking. The
sultriness of Kostroma, here, had been replaced by a desert heat. I no longer
knew where I was. Could a city, 500 miles east of Moscow, be considered a
part of Europe? But perhaps it was. Grand 19th-century buildings, with towers
and slate roofs, stood on street corners. At night, young people began
walking the streets, listening to live music and drinking beer - but the
Russian winter would smother even these slight pleasures in a few weeks'
time.

Five more days on a boat, or two on a train: that was the choice I faced when
considering the next leg of my journey down the river, to Volgograd. Thinking
back to the sanatorium, I chose the train.

On board, the next day, I promptly found myself in a compartment with a huge,
blond, military man, who was only 23 years old, but wore a loaded gun in a
halter strapped round his shoulders.

"Don't worry, I'm an off-duty body-guard," he told me. He was from Ulyanovsk,
of all places, now renamed Simbirsk: Lenin's home town, a few more stops down
the river. He had been

in special forces in the Russian army. "How can I help you?" he kept asking.
"You want the window open? You need tea?"

But when the window stuck in its frame, and when the movement of the train
had slowed to a gentle bounce, his blond features sagged grey with anxiety.
"You see, I was born in Lenin's home town," he kept sighing. "And what can I
do about that?" It was as if he were talking about a wayward uncle who had
taken to crime. Lenin, for him, was still slightly bigger than Russia. And
now, whether Lenin stayed in Red Square, or got buried, or suffered anything
else, was a great worry and a responsibility.

No matter. The next day, a family from Dagestan moved in. There was dad
(friendly), his 17-year-old daughter Fareeda (attractive) and 15-year- old
son Tamerlane (smart). There was also a swarthy man from Azerbaijan who had
fallen in love with Fareeda, and who later explained to me how he felt about
her. "What do you reckon about that empty compartment down there?" he asked.

"Are you crazy?"

Everyone, it transpired, had spent the previous eight months working in the
frozen oilfields of northern Siberia, and now wanted to enjoy a hot summer in
the Caucasus. "My sister has set fire to him," Tamerlane explained, as if in
sympathy for the Azerbaijani's condition.

We sat around for hours, drinking tea. People kept buying me pieces of cake.
We picnicked on strawberries. Tamerlane gave me old Soviet coins in exchange
for English ones. Fareeda spent three hours making up her eyelashes and
looking dark and beautiful. This was the Russian south.

Rolling across the steppe into Volgograd at dusk, I glimpsed the gigantic
statue of Mother Russia from the train, marking the point of the German
surrender at Stalingrad on 31 January 1943. We seemed to have entered
another, stranger, world. I disembarked under a hot night sky and soon found
myself in a magnificent hotel room, a Stalinist palace, with parquet
flooring, a ceiling 6m high, and a balcony overlooking the city's central
square.

But the strangest thing was to have the place completely to myself. Walking
the corridors I met no one. All I could hear from the square, far below, were
outbreaks of funereal music. Events unspeakably terrible had once happened in
this city. Now it felt as though the Soviet regime lived on; as if this whole
hotel - or maybe this whole city - was no more than a ghost. One could only
suppose that my journey down the Volga was coming to some kind of meaningful
conclusion.

To Astrakhan there remained another 24 hours, by boat. From deck, on that
last day, I would see wide sandbanks and cliffs of loamy soil crumbling into
the water. In this heat, it would not have surprised me to see water buffalo
breaking the surface. Surely I was coming to the end of Europe now? So it
seemed. Astrakhan, to judge by its name and proximity to the Caucasus,
promised oriental costumes and a melee of peoples and tongues. And on my
first night in town, I could almost believe it, to judge by the people
carousing, late, by the shores of the Volga. A Middle-Eastern spin had
entered the pop music. The local mobsters sat over shashlik and tea under
trellises.

From my room, I called Maria in Kostroma, to tell her that I had reached the
end of the Volga. "You mean you are still in Russia?" She sounded very far
away.

"Of course."

"What have you been doing?"

I told her how I had come 2,000 miles along the river that protected Muscovy,
that nourished and inspired the nation, that saved it from fascism...

"I'm glad you are enjoying it," interrupted Maria, with the voice of one who
did not intend to be so easily defined. And suddenly, on that hot night, a
presentiment of Russian winter came blowing through my heart.

The Facts

Getting there
Return flights to Moscow cost from pounds 364 through Trailfinders (020-7937 1234).

Being there
Tickets for ferries are available at the boat stations. Fares are calculated
according to where you are going and the class of cabin you have. Prices
range from about pounds 5 per person per day to pounds 40. The set meals are
very cheap: dinner for under pounds 2.

Further information
For details about visas, call the Russian High Commission (020-7229 2666).

******

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