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Gennady Zyuganov, chairman Communist Party of Russia, member of parliament, 1997; MY RUSSIA: a political autobiography, p. 7 acs-VT99

The radical reforms started in January 19925 have brought catastrophic results. Today it is clear that the real goal of the "reformers" was the destruction of Russia's economy under the slogan "The state must be removed from managing the national economy." The country has been deeply damaged by the principle that calls for maximum exports of raw materials and semifinished goods and encourages unlimited imports of food and industrial products. As a result of this grave distortion, gross domestic output has declined by 40 percent. The production base of the economy and the network of economic ties have both been undermined. Enterprises are forced to reduce the volume of production radically because of declining orders and purchases, shrinking investments, unrealistic prices, and their diminishing ability to compete.


CURRENT REFORMS HAVE DESTROYED RUSSIAN AGRICULTURAL SECTOR
Gennady Zyuganov, chairman Communist Party of Russia, member of parliament, 1997; MY RUSSIA: a political autobiography, p. 7 acs-VT99

The foundation of our agriculture has been virtually destroyed. Agricultural production has been decreased by one-third. Our country has lost its food security and become dependent on foreign imports: 54 percent of the food consumed in Russia (70 percent in its urban centers) comes from abroad.


RUSSIAN ECONOMY AND AGRICULTURE ARE COLLAPSING UNDER CURRENT REFORMS
Gennady Zyuganov, chairman Communist Party of Russia, member of parliament, 1997; MY RUSSIA: a political autobiography, p. 141 , acs-VT99

The results of Yeltsin's governing are catastrophic. Never before has our country sustained in time of peace such a destructive blow to the national economy-industnial output has been halved. The most severe losses have been suffered by the previously most advanced, progressive, and promising sectors: machine building, instrument and machine-tool making, and the electronic, electrical, light, and food industries. Our agriculture is rapidly disintegrating, and living standards have declined precipitously, resulting in a sharp social polarization into the very rich and the very poor.


AFTER FIVE YEARS OF REFORM, THE POOR ARE WORSE OFF AND THE NEW RICH ARE IN CONTROL
Arnaud de Borchgrave; The Washington Times, July 25, 1997, Pg. A19, HEADLINE: Ignoring Russia's crisis of crime , acs-VT99

In its July 12 special Russian survey, the Economist said, "Five years of reform, and most Russians are far poorer than they were. A few are far richer, and they are the ones who seem to be running the show. It is not that the vulgarians are at the gates; they are inside them."


THE RICH GET RICHER, AND EVERYONE ELSE IS MUCH WORSE OFF
Grigory Yavlinsky; Russian economist and the leader of Yabloko, a democratic, reformist political party, Foreign Affairs, May, 1998 / June, 1998; Pg. 67, HEADLINE: Russia's Phony Capitalism acs-VT99

In the meantime, while the big boys -- they are all men -- fight over an ever larger piece of the Russian economic pie, the government has been unable to create economic conditions in which the majority of Russians can thrive. The problem is not only that the majority of Russians remain worse off than before the economic transition began, but that they cannot become better off. The economy is stagnating at half its 1989 level. Real incomes have fallen by a third, and living standards in most regions have deteriorated to levels not seen in decades. Government attempts to curb inflation resulted not only in tremendous wage and pension arrears, but also in the government's inability to pay its bills for the goods and services it consumed. This led to total disarray in payments, with up to 75 percent of goods and services either paid in kind, or by promissory notes that cannot be cashed, or transacted through illegal channels to dodge taxes entirely.


YELTSIN’S DIRECTOR OF ECONOMIC REFORM IS HIMSELF A CORRUPT SWINDLER
Katrina vanden Heuvel, The Nation, August 11, 1997; Pg. 24; HEADLINE: The other Russia: Moscow glitters, the economy collapses, the army rumbles. acs-VT99

Yeltsin's Western supporters many find this latter charge outrageous, but their current hero and de facto head of the Russian government, Chubais, is already endangered by documented charges that he has done some considerable looting of his own. (Virtually no one in Moscow, not even pro-Yeltsin journalist, takes seriously the Kremlin's recent "anti-corruption" campaign, promoted by the recently arrived 37-year-old Nemtsov.) On July 1 Izvestia, Moscow's most authoritative and generally pro-Kremlin newspaper, reported that Chubias had received a $ 3 million interest-free loan from a leading bank, which he then helped to win control of a large oil company. And suspicions that Chubais may have personally pocketed U.S. Agency for International Development funds channeled through Harvard University's Institute for International Development to a network of quasi-private centers he and his cronies created are being investigated in Washington and Moscow. If Chubais, the architect of privatization since 1992 and patron saint of Russian's ruling political-financial oligarchy, is not safe, can anyone in or around the Yeltsin regime really feel secure?


RUSSIA'S GOVERNMENT IS NOT RESTRAINED. BY LAW, SO ALL LAW IN RUSSIA FAILS AS A RESULT
Victor Sergeyev, Moscow State Institute for International Relations, 1998; THE WILD EAST: Crime and lawlessness in post-communist Russia, p. 166-167 , acs-VT99

Finally, if the existing institutions of power are not guided or restrained by laws, then what is the sense of speaking about any crimes except the shortened list of Gospel commandments, "Thou shalt not kill" and "Thou shalt not steal"? In other words, does it make any sense to use, in a social and scientific discourse, concepts that are not institutionally supported and morally justified? Would it not be easier to speak a human tongue to wild beasts? So far, the only person who managed to do so was St. Francis of Assisi.


SHOCK THERAPY IS A VIABLE METHOD OF REFORM
SHOCK THERAPY REFORM DESCRIBED
NIKOLAI BIRYUKOV & VICTOR SERGEYEV, Moscow State Institute of International Relations, 1997 RUSSIAN POLITICS IN TRANSITION: Institutional conflict in a nascent democracy, p. 291 H acs-VT99

In other words, what a society at this transitional stage requires is a "shock" reform of its system of political institutions implying preservation of the existing political forces and new constitutional arrangements as a form of a nation-wide consensus between them, instead of preservation (or slow transformation) of the old institutions and forcible elimination of one of the political forces. "Shock therapy" must thus be employed in the political, not in the economic sphere. It seems that such shock therapy in the political field, based on a preliminary consensus about procedures of politics, is the society's only chance to avoid the institutional traps described above and forestall the competition of legitimacies and the ensuing superimposition of the institutional and political conflicts, i.e. a situation fraught with the downfall of new democratic institutions and restoration of authoritarianism (albeit in a novel, "revolutionary", disguise).


ONLY A SHOCK THERAPY REFORM CAN SUCCEED IN CREATING A NEW STABLE SYSTEM
NIKOLAI BIRYUKOV & VICTOR SERGEYEV, Moscow State Institute of International Relations, 1997; RUSSIAN POLITICS IN TRANSITION: Institutional conflict in a nascent democracy, p.291-292 H acs-VT99

If institutional transformations are carried-out in a "shock" manner, the disbalance of legitimacies (of which the dynamics have been described above) does not occur, for all the institutions are established at once and their very system embodies the consensus achieved in the field of operational experience. It is this absence of a conflict of legitimacies that seems to account for the successful, i.e. comparatively "painless", cases of democratisation (that, unfortunately, happen to be an exception rather than a rule): the institution of a democratic regime in the United States in the late 18th century or Spain's democratic revival in the 1970s. In both cases the executive and the legislative were renovated simultaneously which facilitated a nation-wide consensus about the proper balance between them and helped keep the political process within the framework of this balance. The two nations could safely proceed with the necessary "adjustments" of the separated powers then and develop a viable system of mutual checks and balances, a task that would appear almost hopeless should a political conflict assume the form of an institutional one.


SHOCK THERAPY REFORM SUCCEEDED IN POLAND AND HUNGARY
NIKOLAI BIRYUKOV & VICTOR SERGEYEV, Moscow State Institute of International Relations, 1997; RUSSIAN POLITICS IN TRANSITION: Institutional conflict in a nascent democracy, p.292 , acs-VT99

In less remote circumstances (in time, as well as in space) comparatively successful transformations of this kind have been fulfilled in a number of East European countries, e.g. Poland and Hungary, where the appropriate strategic consensus has been reached at the "nationwide" "round-tables" prior to the constitutional reforms. The nations that saw their old regimes collapse before such a consensus was worked out (Czechoslovakia, the Soviet Union, Yugoslavia) had to pay the heavy price of disintegration for this absence of a "shock" constitutional reform.


THE RUSSIAN ECONOMY IS IN VERY ROSY SHAPE
THE RECESSION IN RUSSIA IS ENDING, AND THE COUNTRY IS EMBARKING ON A GROWTH CYCLE
Alexei Berezhkov, January 29, 1998 [TASS. HEADLINE: Seven-year-long recession ending in Russia \\ jan]VT99

The seven-year-long recession is ending in Russia and the country is embarking upon an economic growth cycle. This is one of the most important world economic events of the past decade.

This view was expressed by Anirwan Banejee, Director of the New York Institute for the Study of Economic Cycles, who analysed, at the request of the Wall Street Journal, Russian statistics on the economic situation in the country.

These figures, the newspaper notes, apparently reflect the true situation. The International Monetary Fund began to use the figures of the Russian State Statistical Board last month in its calculations and holds that they testify to economic recuperation. "We presume that these figures are absolutely trustworthy," IMF Moscow representative Martin Gilmann said. Just as the other economists, he is sure that such sectors as metallurgy, automobile-building, and oil extraction are now on the upgrade. The Statistical Board's figures for these sectors are beyond doubt.


RUSSIA IS GROWING ECONOMICALLY AND CONTROLLING INFLATION
Strobe Talbott; Deputy Secretary of State, US Department of State Dispatch, August 18, 1997; Pg. 22; HEADLINE: The end of the beginning: the emergence of a new Russia; acs-VT99

Second, in the economy, after 5 years of virtual free fall, Russia's gross domestic product seems finally, in 1997, to be stabilizing and may be registering a real upturn. That achievement, combined with the government's success in slaying the beast of hyperinflation, means that Russia can focus more on taking advantage of its immense human and natural resources to build a world-class market economy.


RUSSIA HAS RACKED UP AN IMPRESSIVE LIST OF ECONOMIC SUCCESSES
DEBORAH ANNE PALMIERI, Journal of Commerce, August 29, 1997, Pg. 8A, HEADLINE: Russia's productive summer acs-VT99

By most counts, Russia has scored a large number of economic successes this summer. Is it by luck or good policy. On the domestic front, things seemed to be going the right way. The income gap between Russia's rich and poor narrowed for the first time in five years. Industrial production, for the first time in six years, registered a slight increase (0.8 percent), primarily as a result of output by small firms and joint ventures. Those figures don't even take into consideration the shadow economy, which is estimated at minimally $129 billion a year and takes in almost 50 percent of the country's economic activity.

And the list continues. The government made a dent in paying off pension arrears. The stock market continued to soar at a breakneck pace, privatization of the largest monopolies went as scheduled (albeit not without charges of controversy and mishandling) and Russia's foreign reserves increased from $15 billion in January to $23.8 billion by the end of the second quarter.

The trade surplus grew by $2.2 billion to $11 billion (although foreign trade turnover in general slightly decreased). President Yeltsin signed an important decree protecting the rights of investors in Russia's financial and stock markets. The government's anti-corruption campaign got off the ground.


RUSSIAN COMPANIES ARE SCORING IMPRESSIVE ECONOMIC PERFORMANCES
DEBORAH ANNE PALMIERI, Journal of Commerce, August 29, 1997, Pg. 8A, HEADLINE: Russia's productive summer acs-VT99

Many Russian companies registered stunning performances. Gazprom made it to 146 on Fortune Magazine's Global 500 list on the world's largest companies, and was rated second on Business Week's list of 200 leading companies. Three Russians made Forbes richest people in the world list (Boris Berezovsky, Mikhail Khadorovsky and Vagit Alekperov).


RUSSIAN ECONOMIC SIGNALS ARE IMPROVING
Stephen Sestanovich; Ambassador at, U.S. Department of State, Heritage Foundation , April 6, 1998; Pg. 1, HEADLINE: THE STATE OF RUSSIAN FOREIGN POLICY AND U.S. POLICY TOWARD RUSSIA; OPENING STATEMENT acs-VT99

Let me turn to economic issues. Last year, the Russian government brought inflation down to record lows and kept the ruble stable. With U.S. support, the international financial institutions provided necessary assistance -- linked, of course, to structural reforms and sound fiscal policy. The Russian stock market enjoyed a surge of Western portfolio investment.


ECONOMICS IS THE TRUE MEASURE OF MODERN POWER, AND RUSSIA MAY BE ABLE TO TRANSITION INTO FUTURE SUCCESS
Josef Joffe, Time, April 6, Pg. 19, HEADLINE: Three's A Crowd; Yeltsin's attempt to create an axis of power comes off as sheer anachronism acs-VT99

Today, the grand chessboard has changed. The stakes are welfare, not warfare, and the balance sheet is more important than the balance of power. Winning and losing have to do with the strength of a nation's economy and the stability of its socio-political arrangements. Boris Yeltsin, of all people, should understand this. The Soviet Union collapsed precisely because it insisted on playing the arms game while its economy rotted away and its people succumbed to political cynicism. Today, Russia has a real chance of taking home the Big Prize of democracy and market economics.

But watching Yeltsin's antics, one wonders. His imagination seems limited to thinking up bolted drinking cups. These might be good for boozing. But in the 21st century, a high-speed road link between London and Moscow is worth more than an anachronism by the name of axis.
RUSSIA IS IMPLEMENTING ECONOMIC REFORMS TO HELP COUNTERACT THE EFFECTS THE SOUTHEAST ASIAN CRISIS IS HAVING ON ITS ECONOMY
VANORA BENNETT, February 19,1998 [Los Angeles Times. SECTION: Business; Part D; Page 1; Financial Desk; HEADLINE: ADVERTISING & MARKETING; NEWS ANALYSIS,RUSSIA'S DELAYED REACTION; STABILIZATION PLAN COMES MONTHS INTO ASIAN CRISIS\\jan

Economists say the stabilization program--even if late--shows that reformers have at last figured out how to deal with their first imported financial crisis in six years of capitalism.

"This is the first time the Russian government's ever had a crisis where they're directly affected by foreigners," said economist Al Breach of the Russian-European Center for Economic Policy. "They had to show everyone they understood what was needed. They've done it. They've learned to make all the appropriate noises. "

Reformers say they will now move to tackle the underlying problems that left them vulnerable to the Asian turbulence. They say Russia will spend less, will rely less on borrowing from fickle foreigners and will collect taxes more efficiently. They say these measures will cut the budget deficit-which last year came to a whopping 7% of gross domestic product--to less than 5% this year.


RUSSIAN ATTITUDES CHANGED RAPIDLY AND BY 1993 WERE PROFOUNDLY PROMARKET
Matthew Wyman, Prof. of Politics at Keele University [UK], 1997, PUBLIC OPINION IN POST COMMUNIST RUSSIA, p. 233 , acs-VT99

It was clear that, despite substantial reservations, over time a number of important features of the market had become accepted: these included the development of co-operatives, private ownership I of small businesses, free pricing (within limits), even by 1993 the acceptability of getting rich by honest means.


CITIZENS OF POST COMMUNIST NATIONS DO NOT LINK LIBERAL DEMOCRACY TO PROSPERITY AND WILL ENDURE HARDSHIP AS LONG AS THEY HOPE THINGS WILL IMPROVE
Bruce Parrott, Prof. Russian & East European Studies at Johns Hopkins Univ., 1997; DEMOCRATIC CHANGES AND AUTHORITARIAN REACTIONS IN RUSSIA, UKRAINE, BELARUS, AND MOLDOVA, p. 25 , acs-VT99

The citizens of many postcommunist countries do regard economic prosperity as a central feature of liberal democracy, but they seem prepared to endure material hardships so long as they believe that economic circumstances will ultimately irnprove.


THE RUSSIAN ECONOMY IS IN SHAMBLES
RUSSIAN ECONOMIC PERFORMANCE IS OVER 100 YEARS BEHIND THAT OF THE USA
JOHN STEINBRUNER and CLIFFORD GADDY, Brookings Institution's foreign policy studies program, Los Angeles Times, May 3, 1998, Part M; Page 5; HEADLINE: THE BEAR HAS LOST ITS ROAR // acs-VT99

The first step in understanding Russia's economic prospects is to acknowledge just how small that economy is now and is likely to remain. Russia today has about 150 million people, roughly what the United States had in 1950. Russia's total economic product, however, is in terms of market value only one-quarter the size of America's in 1950. To put it another way, Russia is currently running more than a century behind the United States in overall economic performance.


WITHOUT A FINANCIAL STRENGTHENING OF THE RUSSIAN ECONOMY NOW IT WILL BE LEFT BEHIND FOR A LONG TIME TO COME
Daniil Osmolovsky. Kommersant-Daily, April 25, 1998, pp. 1, 3. Current Digest of the Post-Soviet Press, May 27, 1998; Pg. 4, HEADLINE: Kiriyenko Wins Confirmation on Third Try acs-VT99

Since without an industrial upswing and the financial strengthening of leading Russian-owned businesses, sooner or later Russia will completely lose its economic independence and be shunted to the sidelines of world technical progress for a long time to come, the official pursuit of fiscal priorities in economic policy must be accompanied by a deliberate industrial policy. This means a radical lightening of the tax burden and a set of measures to stimulate foreign investment.


RUSSIAN TAX COLLECTION SYSTEM HAS BROKEN DOWN DUE TO BARTER TRADING AND PAYMENTS -- NO MONEY IN THE TREASURY AS A RESULT
JOHN STEINBRUNER and CLIFFORD GADDY, Brookings Institution's foreign policy studies program, Los Angeles Times, May 3, 1998, Part M; Page 5; HEADLINE: THE BEAR HAS LOST ITS ROAR // acs-VT99

Consider the findings of a recent government audit of the country's 210 largest corporate taxpayers. Those companies, which account for most of the taxes paid, paid 85% of their federal tax obligations, but only 10% of that amount was in cash. The rest was in the attributed value of products delivered and services performed.

As a result, the total cash revenue available to the Russian federal government last year, not including amounts borrowed or raised from selling state property, was barely $ 36 billion. It is not likely to be any greater this year.

To put it mildly, no matter how wise or skilled one happens to be, it is extremely difficult to direct the fortunes of 150 million people with a sustainable resource base of $ 36 billion a year.


RUSSIAN INDUSTRY HAS BROKEN DOWN INTO A BARTER ECONOMY
JOHN STEINBRUNER and CLIFFORD GADDY, Brookings Institution's foreign policy studies program, Los Angeles Times, May 3, 1998, Part M; Page 5; HEADLINE: THE BEAR HAS LOST ITS ROAR // acs-VT99

The major commodity-producing enterprises have set up an elaborate set of barter arrangements that allows them to sustain production under conditions highly buffered from market discipline.

They induce state orders for their products and use them to meet federal tax obligations. They provide goods and services for local governments in lieu of taxes.
RUSSIA’S ECONOMY IS IN A CRISIS OF MISMANAGEMENT
Daniel Williams, Washington Post Foreign Service, The Washington Post, May 01, 1998, Pg. A28, HEADLINE: Yeltsin Fills Posts Mostly With Old Standbys; Russian Leader Positions Chubais and Berezovsky to Continue Their Rivalry // acs-VT99

Russia faces severe economic problems from a combination of mismanagement and adverse economic factors, notably the decline in prices for oil and gas, the country's main exports. The Yeltsin government has been notoriously inefficient in collecting taxes and paying wages to state employees. Economic growth, a key goal for the year, remains elusive. "The choices for any government would be narrow," Piontkovsky said. "It will have to work in a difficult period."


RUSSIA'S ECONOMY IS FRAGILE. THE SLIGHT AMOUNT OF GROWTH IT EXPERIENCED LAST YEAR COULD EASILY BE REVERSED
Anatoly Chubais, February 11, 1998 [Russian Press Digest. HEADLINE: Anatoly Chubais: Decade Of Stagnancy And Slump In Russia Has Ended. SOURCE: NEZAVISIMAYA GAZETA, pp. 1, 3\\jan]VT99

To back up his optimistic statement, Chubais offered the following figures: it was precisely in 1997 that Russia's gross domestic product grew by 0.4 percent; industrial production, instead of declining, rose by 1.9 percent; average real wages increased by 3.5 percent, retail trade turnover went up by 1. 5 percent, the gap between 10 percent of the wealthiest and 10 percent of the poorest has narrowed instead of becoming wider- the mortality rate has dropped, while the inflation rate in 1997 was I I percent, an unprecedented low index for all the past ten years.

But, there is one "but," Chubais explained, This swivel from "Minus" to "plus" in Russia's economic development represents a very weak, or to more precise, extremely fragile tendency, and in no way can it be viewed, as irreversible.
RUSSIA'S ECONOMY IS IN SHAMBLES AND THE RUBLE IS ON THE BRINK OF COLLAPSE
Konstantin Levin, February 17, 1998 [HEADLINE: Chubais Kills President's Dream. Russian Press Digest. SOURCE: KOMMERSANT-DAILY, p. 1\\jan]VT99

First Vice Prime Minister Anatoly Chubais has said that the 1998 budget might be revised to cut government spending, reports KOMMERSANT-DAILY. This means, the paper comments, that the current government financial policies have suffered a fiasco. Only two or three months back the Government considered the budget "hard to fulfil yet fulfillable." Now many government officials say privately that state expenditure should be cut 5 percent. This pessimism is quite explainable -- the Finance Ministry says this year's inflation rate may reach 10 percent, not the planned 5 to 7 percent. In other words, the budget, which has not yet been finally approved by the Duma, may become a big headache for the Government. The situation is further exacerbated by the fact that President Boris Yeltsin personally pushed the budget and even came to the opposition-dominated Duma last December to give a medal to communist Speaker Gennady Seleznyov.

Many connect this gloomy development in Russia with the negative consequences of the financial Crisis in South East Asia which compelled foreign investors to withdraw their money from the Russian market, As a result, the ruble was on the brink of collapse.

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