#1
Excerpt
United States Information Agency
Foreign Media Reaction
SITUATION IN RUSSIA: 'NEW RED MENACE' IN THE OFFING?
http://www.usia.gov/admin/005/wwwh8917.html
September 17, 1998

Amidst news reports that the ruble has further weakened and statements
today by Russian President Boris Yeltsin that the formation of the new
Russian cabinet may take another week, a majority of commentators in
Europe, Asia, the Middle East and Latin America expressed grave doubts
about the economic and political future of Russia. Last Friday's
confirmation by the Duma of Yevgeny Primakov as prime minister--a former
foreign minister and spy chief--was the major focus in commentaries. His
selection was met with relief in some quarters, but the general sentiment
among most analysts was overwhelmingly pessimistic that his stewardship
would not improve the long-term prospects for either the political or
economic situation in the former superpower. In Russia, opinion in
reformist papers ranged from guarded assessments of Mr. Primakov's
potential strengths to fears echoed elsewhere that a "new Red menace"
threatens Russia. Following are commentary highlights:

SMALL SIGH OF RELIEF: Several observers were cautiously optimistic,
expressing hope that Mr. Primakov would be able to garner broad political
support to carry out "unpopular" economic measures--something they said
erstwhile reformist officials were unable to do. Others pointed out that
the political vacuum created by the departure of Sergei Kiriyenko--Mr.
Primakov's predecessor--had been filled and that was sufficient to halt the
political crisis threatening Russia, if only temporarily. Rotterdam's
centrist Algemeen Dagblad observed: "It was a good idea to

nominate...Primakov.... He is regarded as being experienced enough to be
able to maintain himself in the political mine field between the Duma and
the Kremlin." 

BIG NEW 'RED MENACE'?: Critics of Mr. Primakov emphasized that his
background is sorely lacking because he has no expertise in economic
policy, and that that bodes ill for the economic situation in Russia. While
more optimistic pundits believed Mr. Primakov has a good chance to bring a
broad range of political factions together--ranging from Duma Communists
and reformers to Western leaders--many more opinion-makers saw only
difficulties ahead for the new prime minister as he tries to wrestle with
the roiling political scene. Many commentators noted that the political
forces are poles apart, especially with regard to economic policy, and it
appears nearly "impossible" that Mr. Primakov will be able to forge any
compromises. A number of editorialists pronounced Russian President Yeltsin
"politically dead" and expressed concern that the reins of the Russian
government would soon be in the hands of the Duma. Many analysts feared
that the Communist faction in parliament was gaining in influence over the
democratic forces, and that the former superpower is headed toward a
reversal of its program of economic reforms. Several analysts held that the
recent political developments in the country were also a demonstration that
Russia is distancing itself from the West and its policies, and that the
former superpower intends to "go its own way." 

INTERNATIONAL RESPONSE: Several editorialists urged the international
community to continue pressing the Russian government to follow the path of
economic reform. Some, however, were uncertain as to what extent outside
forces could help the country out of its political and economic crises.

This survey is based on 71 reports from 27 countries, September 11-17.

EDITOR: Diana McCaffrey

EUROPE

RUSSIA: "Red, Pink, White...." 

Reformist Izvestiya (9/17) front-paged this commentary by Andrei Kolesnikov
and Sergei Chugayev: "Such is the composition of the Primakov cabinet, now
in the making, that it is hard to tell whether it is 'red', 'pink' or
'white.' But it definitely shares one quality with all the previous
cabinets (except for the Gaidar and Kiriyenko Cabinets)--checks and
balances at the vice premier level. Under the circumstances, this approach
seems justified. But it is unclear whether this government will be
effective and have solid political support, its members so vastly different
in their political affiliations." 
"One-Man Political System" 

Aleksandr Konovalov, president of an institute for strategic assessments,
stated in centrist Nezavisimaya Gazeta (9/17): "Russia's is a one-man
political system. Its dependence on that man, the state of his health and
his boundless power is dangerous. He belongs to no political party and is
responsible to no one for what he is doing. Also, he appoints a premier,
and it is the premier, not a party or a coalition of parties, who forms a
government. You cannot expect such a government to pursue a consistent
policy adopted and supported by a majority of voters. So this will have to

be changed, along with the Constitution, after we clear the mess in the
economy." 

"Back To G-7-Plus-1 Formula" 

Dmitry Gornostayev commented in centrist Nezavisimaya Gazeta (9/17) on
relations between the world's leading industrialized nations and Russia:
"We are about to return to the G-7, a formula for which credit must go to
Mikhail Gorbachev, not Boris Yeltsin. As the Seven met without us again, it
considered what to do with us and whether it should do anything at all. It
looks as if it is ready to write us off as a world-class player." 

"Time to Pressure Moscow" 

Dmitry Yuryev wrote in centrist daily Nezavisimaya Gazeta (9/17): "A
special adviser to Madeleine Albright, Stephen Sestanovich, speaking in a
Senate commission, was critical of measures like an increased money supply
and price and wages control and recommended that Moscow should focus on tax
collection, budget control, improving the investment climate and combatting
corruption. Basically, all that coincides with the position expressed by
the Big Seven at its meeting in London recently. Maybe it is early yet to
speak of Washington putting pressure on Moscow as far as its economic
policy is concerned. But if it, really, were to use pressure, it would do
so now when the new government and the Central Bank in Moscow have yet to
make their final decision and announce it publicly." 

"Yevgeny Primakov's Indian Summer" 

Columnist Alexander Bekker observed in the reformist Vremya-MN (9/16):
"History has saddled Yevgeny Primakov with a role that is extremely
difficult to perform. Politically the premier's calendar shows the Indian
summer.... One shouldn't have any illusions about the current trends of the
ruble exchange rate and the slow, almost reluctant, decline of prices. The
worst is soon to come. Without being able (any more than anyone else) to
define the term "regulated emission" the government and the Central Bank
will try to funnel finances into the economy in installments. That is,
while increasing money supply, to see to it that prices do not gallop out
of sight. Apparently, given a measure of professional vigilance and
skillful actions to keep down panic among the public, the country has 4-5
months in order to gird itself for the first wave of hyperinflation." 

"Carte Blanche" 

Otto Latsis wrote on page one of reformist Noviye Izvestiya (9/12): "The
chief problem of the reform governments is that all of them lacked
political resources to carry out unpopular measures. Hard decisions were
put off until 'better times.' But only 'worse times' came, and the hard
decisions became even harder. Primakov does not have such a problem. He has
no presidential ambition, it seems, and, as premier, has carte blanche. As
he has stayed out of economics in the reform period, he is not responsible
for his predecessors' real and imagined sins. The main thing now is for him
to hold out against lovers of fishing in troubled waters." 

"End Of Era" 

Igor Kirillov stated on page one of reformist, business-oriented Kommersant
Daily (9/12): "A new premier and a new political reality have emerged.
Russia has ceased to be a presidential republic to become a parliamentary

one. This, in effect, is a constitutional coup. After several years of
trying, the opposition has finally pushed Boris Yeltsin to the sidelines of
political life. The Duma and government have become the key players. But
the Kremlin is totally wrong if it thinks that the Duma will settle for
that. With the government taken away from Yeltsin, the Kremlin may follow.
There is nothing now to stop the opposition from forcing the president to
step down. The bad thing is not his resignation--after all, he has outlived
himself, as a politician. The bad thing is that the financial and economic
elite may merge with the Communists." 
"Red Menace Again" 

Centrist Nezavisimaya Gazeta (9/12) front-paged this comment by Tatyana
Koshkareva and Rustam Narzikulov: "Russia's government has aged by a couple
of decades overnight, physiologically--it is essential that it should not
age politically.... A new red menace is facing crisis-ravaged Russia. As 81
years ago, clever, voluble and educated Duma deputies are leading this
country to a dictatorship. Again, the population has no part in deciding
its own destiny. Yesterday a narrow circle of MPs, in a mere couple of
hours, with smiles and snickers, adopted decisions critical to Russia's
social-political and economic system. Obviously, it deserves better." 

"Politics Prevail Over Economics" 

Sergei Chugayev said on page one of reformist Izvestiya (9/11): "The
president's choice is strictly political. The struggling economy has
nothing to do with it. Without a doubt, the Duma will approve Primakov, but
its standoff with the president is not over, and will unfold in a way
unfavorable to Yeltsin. His first concession made, more will follow, as he
will gradually depart from power. So, by the end of next year, Primakov may
have to act as the head of state, as well as premier." 

"Politicial Premier" 

Sergei Agafonov commented on page one of reformist Noviye Izvestiya (9/11):
"All factions, except the LDP (Liberal Democrats), welcome Primakov in his
hitherto unknown capacity, a political premier. It is quite new and attests
to a quiet constitutional coup. The good thing about Primakov, which has
endeared and united even the staunchest opponents of all, is that he has no
special ambition." 

"Leftist Revanche" 

Yevgeny Yuryev remarked in reformist Segodnya (9/11): "It is not the end of
a leftist revanche. It is only the beginning."

#2
IntellectualCapital.com
http://www.intellectualcapital.com
Primakov: A Plus for Russia and the United States
by Melvin A. Goodman
September 17, 1998 
Melvin A. Goodman is a senior fellow at the Center for International Policy
and the author of The Wars of Eduard Shevardnadze. [DJ: Former CIA analyst]

  The national media are ridiculing Russia's new prime minister, Yevgeny
Primakov, as hopelessly anachronistic and even threatening to Western
interests. 

  The New York Times called him the "architect of Russia's hard-line foreign
policy" and predicted a tougher Russian stance in the Balkans and the
Middle East. The Washington Post described him as a "thorn in the side of
U.S. and Western diplomats" and referred to his "stubborn resistance" to
any cooperation with the United States. 

  The Wall Street Journal termed him a "prickly nationalist and an
international obstructionist," and the Christian Science Monitor cited his
"ties to terrorist groups" in the Middle East. The Washington Times termed
Primakov a "supreme ideologist whose chief interest is former Soviet
greatness." 
  
Refuting the conventional wisdom 

  Fortunately for Washington and Moscow, the national media are wrong. 

  Primakov was an attractive candidate for Russian President Boris Yeltsin at
this perilous time because the former foreign minister is prudent and
pragmatic, and not ideologically linked to any political faction. He
managed to establish a prominent role for Russia in foreign affairs because
he is not a Cold Warrior. 

  The numerous references to his Marxist past are spurious, and he has never
been identified with any of the Duma's warring factions or linked to any
terrorist organizations. 

  The former foreign minister has been particularly friendly to U.S.
interests. He cooperated with Washington to arrange the Dayton agreement
for peace in Bosnia, and, more recently, he voted with the United States at
the U.N. Security Council to suspend the review of sanctions on Iraq.
Primakov strongly favors the ratification of the START II nuclear weapons
treaty in the Duma. 

  He has been incorrectly labeled as anti-American because of his efforts to
prevent the war against Iraq in 1991; in fact, he was acting as then-Soviet
leader Mikhail Gorbachev's emissary in trying to prevent the use of force
near Russia's borders. As a liberal adviser to Gorbachev in the 1980s,
Primakov supported the strategic Soviet retreat that brought the collapse
of the Berlin Wall and the end to the Cold War. 

  Primakov may not be a supporter of NATO expansion, but he nevertheless
negotiated the Founding Act that marked Moscow's recognition of the new
member states to NATO. It is particularly noteworthy that Primakov, along
with then-Foreign Minister Eduard Shevardnadze, was one of the earliest
supporters of Germany's reunification with continued membership in NATO. 

A diplomat, not a communist 

  At home, Primakov has proven to be a force for diplomatic reconciliation as
well. He tried to mediate nationalist unrest in the Caucasus for Gorbachev
in 1990. He also arranged a compromise with Belarus for Yeltsin, which
avoided the security commitment that Belarus President Alexander Lukashenko
desired.

  As a respected academic, Primakov joined such liberals as Leonid Abalkin,
Nikolai Petrakov and Oleg Bogomolov to give advice to Gorbachev. These men
probably will replace the young and inexperienced economists Yeltsin
brought into the government after the collapse of the Soviet Union. 

  The current conventional wisdom that Primakov is a cat's paw of the
Communist Party is particularly egregious. He already has challenged the
Communists by inviting an International Monetary Fund (IMF) official to
urgent talks to gain release of a $4.3 billion loan package to Russia that
was part of last July's IMF agreement to help rescue the ailing Russian
economy. 

  This is directly in opposition to the Communist calls for a complete
rupture with the IMF. 

  Similarly, Primakov is seeking ways to repay foreign loans and to
restructure domestic loans. Communists favor defaulting on these short-term
loans, which would be a financial disaster for Moscow. In the few days that
Primakov has been prime minister, the ruble has strengthened against the
dollar by nearly 30%. 

  Naturally, there is a down side to the naming of Primakov as prime
minister. He has no economic or domestic administrative experience.
Unfortunately, his first two appointments to government were former
Soviet-era economic planners. Viktor Gerashchenko is known for printing too
much money as head of the central bank, and Yuri Maslyukov is known for
favoring protectionism and reversing privatization. 

Hope for the future 

  On balance, the Primakov appointment is an excellent one, arranging at
least a temporary end to Russia's political crisis and allowing Moscow to
focus on its banking and economic crises. Russia will remain in crisis for
the near term, but at least the man at the helm is a nationalist in the
best sense of the term and a problem-solver who believes in diplomacy and
conciliation. 

  Primakov deserves the opportunity to reverse the spirit of cynicism and
demoralization that has captured Russia. It is important to the national
interests of both Russia and the United States that Primakov meet with
success. 
 

#3
Russia Today
http://www.russiatoday.com
Sept. 16, 1998 
Russia's Day of Reckoning 
By Rod Pounsett 

  The West faces a critical decision during the next few weeks: Is the Russia
it now sees unfolding under new leadership a nation which deserves its
continued support or one against which it should begin to protect itself?
The G7 group of industrialized nations has said it is willing to help,
provided it sees evidence that Russia continues on the path of reform and
does not move back to a centralized economy. 

  According to one of Russia's leading reformers, Boris Grigoriovitch
Fyodorov, the G7, IMF and World Bank should be firm in this stance. The former
finance minister and current head of Russia's State Tax Service who is
highly respected in the West told me, in an exclusive interview for Russia
Today, that he and many other reform-minded colleagues in Moscow are
seriously concerned about the shape of things to come. He has identified a
major shift in policy that could push Russia back into some of the dark old
ways of the Soviet Union. 

  Meanwhile, world leaders take a different view. President Boris Yeltsin has
told President Clinton and Chancellor Helmut Kohl that new Prime Minister
Yevgeny Primakov will not steward Russia's abandonment of reform and
subsequent return to Soviet-style state control. According to Yeltsin, his
new prime minister's mission is onwards and upwards along the market
economy route and continuation of cooperation and friendly relations with
the West -- and Clinton and Kohl seem willing to take his word for it. 

  But Yeltsin's power base has been eroded by his surrender to adversaries in
and outside the Duma. Factor in his health failing, and he is not the sort
of spent force we should be listening to. 

  In fact, all three of these world leaders -- Yeltsin, Clinton and Kohl --
are heading for the exit. Why, then, should we believe any of them when
they say Yevgeny Primakov is the right man for the job? They are about to
be has-beens and will not be around for the fallout. Clinton is engrossed
in his battle against impeachment and Kohl is embroiled in a neck-saving
election campaign. I doubt they are giving the Russia issue appropriate
attention. 

  Any decisions, therefore, must be based on the words and actions of the man
who finds himself, however reluctantly, now in charge: Yevgeny Primakov. 

  Whatever doubts I have expressed about Primakov's personal ability to pilot
Russia out of its economic nosedive, the wily diplomat is running true to
form with his rhetoric. In tune with his part-time president, he is
cleverly lacing pronouncements about his intentions with suitable helpings
of reassurance for the international community. Duplicity, however, is the
trademark of spies and diplomats -- and we know how those vocations match
up with Primakov's pedigree. 

  With the G7 countries considering future assistance for Russia, Primakov is
bound to carefully choose his words for their ears. Wherever it ends up in
the future, Russia urgently needs Western support in the short term. But
actions speak louder than words, and we have yet to see action. 

  Domestically, Primakov is summoning the nation to unify. He has promised to
consult with all sectors of the community and capitalize on the skills of
professionals while drawing up his plans to save Russia. My worry is that
he is going to leave out the few people who understand the imperatives, and
rely on old definitions formulated during the Soviet era. 

  In a long interview on Russian TV over the weekend, he hinted that he wants
Russia to take a social-democratic line in the future. How social and how
democratic it will be only time will tell. From all he has revealed so far,
however, it looks as though democracy
and market reform will certainly take a back seat to old-style socialist
state control. 

  Both Primakov and Yeltsin have promised all current debts to the West will
be honored, although neither has explained quite how Russia intends to
fulfill that promise. Primakov's plan to print rubles in the absence of
collateral, just to pay back wages and temporarily fuel the economy, is
hardly designed to improve Russia's liquidity. 

  Fyodorov, for one, thinks such a decision would be disastrous, leading to
hyperinflation and subsequent demands for pension and wage increases. Far
from being a temporary measure, Fyodorov says there would be too much
temptation to repeat the action. He has no confidence in men like Yury
Maslyukov, the new first deputy prime minister in overall charge of
economic strategy, coming up with solutions that will meet the sort of
criteria set by G7 and others. 

  My own bet is that in a couple of months, Primakov will be calling up his
so-called "friends" in the West pleading poverty and asking for a further
extension of loans. An even worse scenario could be eventual reconstruction
of an "iron curtain" in order to totally renege on debt. 

  Of course, Primakov's appointment is primarily political and we have to
remember the very different cultural environment and conditions under which
Russia's leaders have to operate. Pasting over Western paradigms just will
not do when trying to understand the options. Regardless, there are some
basic constants that apply. Countries such as Russia must be made to
understand that living beyond their means is an unacceptable price to pay
simply to fend off discontent within the population. All bills eventually
have to be paid one way or another. Putting off the day of reckoning can
lead to even higher costs in the future. We should not encourage them along
that route. 

  There are dangerous signs of a move toward a constituency that believes
policies can be formulated to create a metamorphosis within the Russian
industrial sector whereby the nation becomes less dependent upon Western
imports and finance. 

  There have been reports that Maslyukov has given outline approval to a plan
drawn up by a group of academics including Leonid Abalkin, Oleg Bogomolov,
Stepan Sitaryan and Dimitry Lvov. In my view, not men at the leading edge
of reform strategy. 

  According to the report I received, these guys think Western investment is
more or less unnecessary and that Russian producers can be helped to meet
all domestic demand. They have come up with a whole bunch of suggestions
for raising the necessary finance, most of which includes a reversal of all
measures taken by hitherto reform-minded Russian governments, such as that
of the recent Sergei Kiriyenko. 

  Among other things, they are advocating state control over exports. Worst
of all they suggest "the government must print as much money as it will
need to pay domestic debts and put primary goals into practice." Now where
have we heard that before? 

#4
Moscow Times
September 17, 1998 
Army Opens Offensive on Zadornov 
By Simon Saradzhyan
Staff Writer 

  Russia's cash-strapped Defense Ministry has launched an offensive this month
to unseat Finance Minister Mikhail Zadornov, who the military is now holding
responsible for their financial dire straits. 
 
  The first wave of the attack began Sept. 14, when the Defense Ministry's
main directorate for military budget and financing announced that mobile bakeries
had been deployed throughout the armed forces to help feed cash-strapped
officers. 

  That announcement drew extensive coverage in the Russian media, with
national television showing footage of senior officers carrying plastic bags filled
with bread away from the ministry's Moscow headquarters at Ulitsa Znamenka.
Officers interviewed, who had gone without pay since May, lost no opportunity
to criticize the federal government. 

  A week later, the Defense Ministry narrowed its verbal offensives, saying
that the Finance Ministry should bear the sole blame for the military's woeful
condition. 

  "All of the president's promises to pay arrears to the Defense Ministry get
lost in the Finance Ministry," an anonymous senior officer of the General
Staff of the Armed Forces was quoted by Itar-Tass as saying Monday. 

   On the same day, the Defense Ministry issued a news release lamenting the
nonpayment of military wage arrears. 

  "Undoubtedly, there is a planned campaign to remove Zadornov, who
personifies a rigid financier in the eyes of Defense Ministry" officials, said Yevgeny
Volk of the Heritage Foundation. 

  Over the past eight months, the Defense Ministry has received only about 40
percent, or 20.426 billion rubles ($1.64 billion at Thursday's official rate),
of what it was promised in the national budget. 

  The Finance Ministry now owes more than 30 billion rubles to the military,
including 16 billion rubles in wage arrears, according to the Defense
Ministry's main directorate for military budget and financing. Before the
devaluation, that 30 billion rubles would have been worth $4.8 billion; at
Wednesday's Central Bank rate of 11.8, however, the value of those debts drops
to $2.5 billion. 

  As a result of poor financing, the Defense Ministry itself has sunken into
debt. It owes 1.5 billion rubles to food suppliers, most of whom have already
started to demand advance payments for deliveries. 

  The Defense Ministry's statements came as newly appointed Prime Minister
Yevgeny Primakov has struggled to form a government. Zadornov's future
remained unclear Wednesday, and NTV television suggested he might soon be
replaced by a former deputy finance minister, Andrei Vavilov. 

  The Finance Ministry fired back with a news release Tuesday that said it had
already transferred unspecified billions of rubles for military food
purchases. Reached by telephone Wednesday, Finance Ministry officials wouldn't
comment on the government's debt to the armed forces, but attacked the
military for making "anonymous comments." 

  "These men wear shoulder straps and should have the courage to openly
stand up and confront us with their accusations," Finance Ministry spokesman Pyotr
Afanasyev said.  

#5
Christian Science Monitor
SEPTEMBER 17, 1998 
Russia's New (Middle) Class Struggle
A building block of democracy, white-collar workers feel blue. The high life
ends. Résumés flow.
By Judith Matloff 
Staff writer of The Christian Science Monitor
MOSCOW 

  The worst of Russia's financial panic appears to be over. But T.G.I.
Friday's is keeping its "anti-crisis menu."

  The restaurant still offers smaller portions and prices pegged to the dollar
because many customers have not returned a month after the ruble collapsed.

  Russia has seen food lines, hyperinflation, and a collapsed currency before.
But this crisis has knocked not only the poorest but the new middle class.

  The lost patrons of places like T.G.I. Friday's had tastes for things
American beyond Cajun chicken. They embraced a capitalist mentality after the Soviet
Union's demise in 1991.

  They opened bank accounts instead of hiding money in closets. They
vacationed in Spain, wore designer jeans, and read computer manuals in English. They
started businesses, chatted on mobile telephones, and ate in fashionable
restaurants.

  Although found mainly in big cities, they were an important step in Russia's
transition to democracy.

  Now they're broke. Their bank accounts are frozen, and they're worried
about losing their jobs.
  
  The ruble has rebounded somewhat, a political power vacuum has been filled
with a new prime minister, and Muscovites are no longer hoarding food. But the
middle class is making new plans.

  "I think about making lifestyle changes now that I'll spend more money on
food," says Alexei Burtzev, who epitomizes the twentysomething business class
whose very existence is endangered.

  The computer-software company Mr. Burtzev started two years ago has seen
turnover fall from $12,000 a month in July to $3,000 now. He is thinking of
laying off one of his 10 employees. He frets about losing access to funds as
his bank goes bankrupt and having to cancel a trip to America.

  Dozens of shops, cafes, and kiosks have closed. Discos are empty on Saturday
nights, or closed temporarily. Recruitment agencies report streams of jobless
bankers, humbly shuffling in with résumés looking for work.

  The biggest victims are from the sectors that arose from the ashes of
communism - bankers, insurance salesmen, travel agents, advertisers,
stockbrokers, accountants.

  "Our white-collar workers will now have to change their collar color to
blue," says Vladislav Sedlenek, vice president of Triza recruiting company.

  The number of résumés appearing on his desk has doubled to 600 a day
since the ruble was devalued on Aug. 17. Half of them are from people who still have
jobs, but fear they won't much longer.

  Mr. Sedlenek estimates that financial companies are dismissing 60 percent of
their staff and that marketing and public relations companies are letting go
70 percent.

  Maybe half of commerce companies have been stricken, because their
imports are frozen due to uncertainty over the exchange rate, he says.
 
  The impact is more devastating for Russians, say social scientists, than the
1987 stock market collapse in London was for British yuppies, although
thousands lost their jobs. This is because Russia's new middle class was a
fragile phenomenon, which had too little time to take root.
 
  It now may be wiped out forever, says Vladimir Andreyenkov, who heads the
Center for Comparative Social Research, based in Moscow.

  "The middle class only began to emerge in 1992. Its formation period was too
short," he says.

  According to the Moscow city government, the full effects of the crisis have
yet to be felt, because many companies gave dismissed workers two months'
notice.

  The number of officially unemployed in Russia's capital will rise from
35,000 currently to 50,000 by the end of the year, gloomily predicts Andre Grinburg,
spokesman for Moscow's Employment Department.

  "Over the last two weeks, 200 companies informed us they will sack about
5,000 persons by the end of the year," he says. "About one-fourth are from banks."
  
  As in wartime America, one area that seems to be thriving is the cinema.

  The ticket saleswoman at the theater downstairs from T.G.I. Friday's reports
that the crowds seeking distraction are not deterred by doubled prices.

  "Crisis? No effect," she says.

#6
Jamestown Foundation Monitor
September 17, 1998

RUSSIA'S FOREIGN POLICY GOALS LISTED. Recently named Russian Prime Minister
Yevgeny Primakov used an address to his former colleagues yesterday to
emphasize that Russia's diplomats must continue to defend the country's
interests in the international arena. Primakov, who served as foreign
minister for nearly three years, said that the primary goal of Russian
diplomacy--particularly now during the country's economic and political
crisis--must be to create favorable external conditions for Russia's
domestic development.

Primakov listed three priorities for Russian foreign policy today: a maximum
effort to aid the country in solving its domestic problems, a consistent
defense of national interests without sliding into confrontation and the
presentation abroad of a positive image of the new Russian government's
reform efforts. Primakov's remarks to the gathering of top Russian diplomats
came after he presented Igor Ivanov to them as Russia's new foreign minister
(Russian agencies, Xinhua, September 16). Russian reports have said that
Primakov pushed for the appointment of Ivanov--a long-time first deputy
foreign minister--to the top diplomatic post.

Russian leaders have said that the recent change in governments will not
result in a change in the country's foreign policy, an assertion that
appears to have been reflected in yesterday's proceedings. Primakov's
remarks suggest that the Russian Foreign Ministry will continue to try to
balance two not entirely harmonious goals: on the one hand, to maintain
generally friendly and cooperative relations with the West while, on the
other, to pursue what Primakov perceives to be Russia's interests in other
parts of the globe. The first goal is aimed at winning Russia the
benefits--both in economic and political terms--of sustained cooperation
with the West. The second is aimed at maintaining friendly relations with a
number of non-Western countries--India and China first but a host of others
as well, including Iran, Iraq and Yugoslavia.

The trick for Moscow is in not allowing its foreign policy goals in these
last areas to disrupt Russia's relations with the West too seriously. The
likely result is that Russia will continue to try to maintain Western
friendship on the basis of Moscow's proclaimed adherence to economic and
political reforms and the benefits that Russian cooperation could bring in
dealing with some of the world's trouble spots. At the same time, Russia can
be expected to pursue its interests in other parts of the globe--sometimes
spurring or exacerbating the very conflicts that make Russian cooperation
desirable for the West. Moscow can also be counted on to pursue its
interests in ways that sometimes exploit growing post-Cold War differences
between and among the Western allies.

#7
Duma likely to refuse to ratify START II: deputy

SAINT PETERSBURG, Sept 17 (AFP) - The chairman of the security committee of
the State Duma, the lower house of parliament, on Thursday said it was
unlikely fellow deputies would agree to ratify the START II nuclear arms
reduction treaty signed with the United States.

  "I think the majority of deputies will vote against START II," Viktor
Ilyukhin, a communist, was quoted as saying by the Itar-Tass news agency.

  He cited last month's US strikes against Sudan and Afghanistan as a major
reason along with the fact that the United States was seeking to boost its own
anti-missile defense system.

  Russia's new Prime Minister Yevgeny Primakov last week urged deputies to
ratify the much-delayed START II treaty, saying he would not back down on the
issue.

  Communist and nationalist lawmakers in the Duma have delayed adoption of the
treaty -- signed in 1993 and already ratified by the US Congress -- insisting
it hurts Russia's security interests by giving the United States a strategic
advantage.

  The treaty would reduce the US arsenal of nuclear warheads to 3,500 and
Russia's stock to 3,000.

  Ilyukhin, quoted in Saint Petersburg while on a visit, said the country's
national security was in a critical state that had been accentuated by the
recent internal political and financial upheavals.

  "Since the (1991) breakup of the Soviet Union the borders have become
transparent and members of foreign intelligence agencies, including from ex-
Soviet republics, can (easily) get into the country," he said.
  

#8
Date: Thu, 17 Sep 1998
From: Cleve Gray (clevegra@cdi.org)
Subject: House hearing on Russian Economic Crisis and US Policy

SUMMARY OF HOUSE INTERNATIONAL RELATIONS COMMITTEE HEARING ON U.S. RELATIONS
WITH RUSSIA AND THE RUSSIAN ECONOMIC CRISIS
Prepared by Cleve Gray
Research Intern
Center for Defense Information
1779 Massachusetts Ave, NW
Washington, DC 20036 

WASHINGTON, D.C., September 17 - In a hearing held today before the House
International Relations Committee, the state of U.S. relations with Russia and
Russia’s economic crisis were discussed.  Participating in the hearing were
Deputy Secretary of State Strobe Talbot and Deputy Secretary of the Treasury,
Lawrence Summers.  Also joining the panel via live videoconferencing from San
Francisco, California, was former Secretary of State George Shultz.

  The hearing began with the assertion by the Chairmain of the Committee that 
the U.S. government has been lied to by high Russian officials, including
Anatoliy Chubais.  He said that the situation in Russia has never been clearly divulged
to the United States, and that it is time for the Clinton Administration to
"move away from bumper-sticker slogans." Reforms have not been progressing
smoothly as the U.S. was led to believe.

  Deputy Secretary of State Talbot said that Russia’s transition into a
"normal modern state" is far from over.  The recent appointments in Russia’s economic
policy circles are "cause for concern," he said.  There are positive
developments, however, Talbot said.  There are no Russian troops in the Baltic
states, nuclear weapons have been dismantled in Ukraine, U.S. and Russian
troops are working together in Bosnia, for example.  Talbot delineated various
Russian needs, including the need for non-proliferation, an undivided Europe,
and a strong relationship with NATO.  Talbot said that the United States needs
"clarity in purpose and interest."

   Lawrence Summers, Deputy Secretary of the Treasury, followed by saying
that the Russian government suffers from an inability to control the budget
deficit. This problem is compounded by two broader problems, he said.  One problem is
the basic difference of "reconciling government needs with the capacity to
generate revenue."  Also, the state lacks the ability to regulate banks,
establish rules of law, and regulate large concentrations of financial powers.

  "A crucial part of fighting corruption is building a market economy,"
Summers said.  Russia must do this in order to "join the community of nations."  In
Russia today there are "fires burning in many places," Summers said.  Russia
and the United States must work together to "keep the firefighters in place."

  Former Secretary of State George Shultz said that the current U.S.
Administration was sending various messages to Russia by way of action that
weren’t necessarily true.  Secretary Schultz said that the United States was
sending a message to Russia that the United States "knew what to do" to help
them in their reforms.  Also, he said that the United States was sending a
message that it "could have a part in implementing the goals,"the goals
towards market reform.  Still further messages included that "outside money
would help" and that the outside money was readily "available."  It was wrong
to send these messages to Russia, Schultz believes.

  Secretary Schultz also said that Moscow is becoming less important as the
regions become more important.  He also said that the fact that the ruble
economy has collapsed does not mean that the whole economy has collapsed.  50%
of Russia’s economy is an "underground economy," meaning it isn’t monitored by
normal banking and financial institutions.

  Secretary Shultz also said that the Clinton Administration has "shown
incompetence in dealing with threats" to the United States, referring to the
possible diffusion of nuclear weapons from Russia to rogue states.  Regarding
the nuclear weapons issues, Schultz said that the "Nunn-Lugar money is the
best money we have appropriated so far."  

  In dealing with Russia, Shultz concluded, the United States should
express its "respect for Russia."  He then reminded everyone that Russia led the way in
the "space race" and said that Russia should be admired for its high rate of
literacy, its educational system, and its scholars, who are among the best in
the world.