Letters from Peter Vassiliev in Russia >From Russia, with Love and Squalor - part 2 The place is called REVDA, it is 180 kilometers away from Murmansk, a city in Russia's North where the convoys of the anti-Hitler coalition were coming during the second World War. It is a miners' town with approximately 12 thousand people living there. In the old, Soviet days, this town saw prosperity, full employment, growing construction, and its future seemed rather bright. People went there for better payment, apartments and various benefits, guarante ed to them by the law as to all those who lived in the Northern territories. The Revda rare metals processing plant was famous not only in the former USSR but also abroad. Its production was demanded by the aviation, space and defense industries. After the collapse of the Soviet Union and further economic disintegration, Revda lost many of its buyers. It is at halt now, the plant has not paid its workers for two years now. Its produc tion is no longer needed, nor used by other Russian industries which are struggling to survive themselves. A funny thing here is, Revda is not allowed to sell its product abroad as rare metals are considered a matter of strategic importance. The factory and its people have been discarded and abandoned by the federal authorities. They stopped receiving money from the federal budget that is guaranteed to then by the law as a Northern territory. The town continues to live and survives for a third year simply by inertia. People go to work but they do not work there, nor they are paid for it The town relies more on the humanitarian aid from Norway rather than on food supplies from Central Russia. The town has stock of fuel worth three -- five days. And this is when winter has already tested Revda's people with its early frosts -30 deg. C. A woman who has been living in Revda for the past 40 years, said she fears more cold weather rather than shortages of food. "We, who still remember W.W.II, are used to shortages of food but we are terrified by a possible absence of heating during the coming winter." All people whom I talked to, said that they "feel abandoned and betrayed by the Moscow authorities." The town found itself unneeded by Russia, and its people ripped of any future for them and their children. At a local children's hospitals, more than half of their patients are kids with pneumonia. The hospital lacks antibiotics and other drugs. When a new sick kids arrives, we start calling all neighboring clinics trying to find necessary medicine elsewhere, said the nurse. The children get two meals a day, mashed potatoes, porridge, bread, milk and tea. The hospital does not have money to buy meat or diary products for the sick kids. Only few parents can afford them as well. As the daily ration of a child either at home or in hospital does not make any difference. The tea is served in glass jars as there are not enough cups or mugs at the hospital. But that does not worry doctors, most of all they fear the coming winter, and mainly if the hot water and heating is cut off. Local authorities keep saying it would not happen. But at the same time they themselves keep their fingers crossed as they get nothing but promises from Moscow. So far, Revda has enough fuel to last for five days. And its mayor did not know when the next supply was coming. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Peter Vassiliev worries about the military in this installment... ================== IS THE MILITARY READY TO KICK BACK? [part 3] An officer's wife wrote a letter to a Defense Ministry newspaper, "The Red Star," accusing the Russian top brass and power elite of destroying her life and killing her husband. Her family of three lived in a distant military base in the Siberia. Her husband, like all other officers in his unit, had not been paid for almost two years. They managed to survive for a while, borrowing money from their friends and getting money transfers from their parents until they exhausted all means of help. The family could no longer buy food for themselves and their 3-year old son. When the situation became desperate -- no more hopes to get money from anywhere -- the officer's wife went to a local food story owner and offered herself in exchange for six jars of canned meat and a loaf of bread. She made love to the store owner in the back room on the dirty sacks with potatoes, got her payment, and went home. She continued to sell herself and fed her family for nearly four months. When her husband learned about it a few months later, he shot himself, leaving a letter blaming his command and Russia's politicians for his situation and his death. Another officer from a tank unit near Nizhni Novgorod, a city 500 kilometers to the East of Moscow, drew his tank out of the hangar to the city's main square in an open protest against unpaid back wages. He and his fellow officers did not get paid for more than 18 months. The unit commander tried desperately to persuade the officer to get back to his barracks before a number of top military arrived from Moscow to deal with this situation in Nizhni Novgorod. The officer's action drew a huge crowd of people, mainly officers' wives and children, who offered him support and openly accused the top military brass and Russia's power elite of corruption and stealing their money. The officer threatened to stay until he and his comrades-at-arms were paid in full for all the months. His action got an immediate response from the Defense Ministry which found the money to compensate the back wages for this unit. However, many of the military and their wives expressed doubt that the situation would change in other places where officers had not been paid for a period of 18 to 24 months. The living conditions in such places are awful to say the least. Most of the officers' families consider themselves lucky if they get one or two-bed room apartments. But the apartments they get by no means are appropriate by the sanitary norms to live in. The wallpaper peels off the walls because of the constant leaks and absence of heating during fall and in winter time. The temperature indoors goes lower than the freezing level, and people are forced to use as many heating devices as possible. But the electric wiring in such houses, built some 20 or even 30 years ago, could not withstand high voltage currents, and often short-circuits. Sometimes there is no electricity at all. Russia's elite helicopter squadron based in Malino, two hours by car from Moscow, where Yeltsin's helicopters are based, met last New Year by candle light for a simple reason. There was no electricity on the base for several days. The pilot's wives told me that they are scared when their husbands have to fly because many of them work the night shifts at a local meat farm, loading and unloading trucks with frozen meat. They get paid some 200 rubles (approximately $10.00) a night, and it is the only money they get to feed their families. Like in many other places, these officers have not been paid for several months. Lt. Colonel Alexander Lebedev, an air traffic controller who just retired after 30 years of the military service, invited me to his home to show that because of the constant leaks from the holes in the roof, he had to moves his furniture away from the walls to free some space for the buckets necessary to collect the running water torrents. Another officers told me over drinks, "Sometimes when I lift a combat helicopter, a terrible idea occurs to me, that Moscow is only twenty minutes away ... " The situation in the Russian armed forces is scary. General Igor Rodionov, a former defense minister, who openly accused president Yeltsin of destroying Russia's defense potential and armed forces, said that it is "a clock mine which is ticking." And nobody knows how much time is left till the humiliated and hungry military in Russia remain under command and control from Moscow. Sleep in peace. Respect, Peter XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Subj: Russia, part 4: Boris the Illogical One of the people I'm sending these missives to wondered about how Yeltsin fits into the situation in Russia right now. Peter replies: ------------------------------- Is it necessary to try to understand what Yeltsin's next step is likely to e? No. Especially because no one motivated by human logic can predict or uess what his next move may be. Previously Russia's president Boris Yeltsin fought against his opponents, as well as those he considered his political enemies, like the Communist opposition, or anti-reformers, or against those who dared to disagree with him. Ten years earlier, in 1989, he unleashed a struggle against the ruling minority of the Communist party, accusing it of the indecisiveness and lack of action in reforming the USSR. A few years later it became clear that Yeltsin had made a purely propagandistic move to win easy popularity. In 1991, he had the courage to stand up against the Communist-dominated plot attempting to reverse initial democratic changes in his country. But many years later it is still unclear what really happened and what Yeltsin's role in it was. Was it a real plot? If it were why was Yeltsin not arrested, nor removed as a major political opponent to the plotters? In 1993, took an unprecedentedly bold step and dispersed the Supreme Soviet, dominated by the Communists, which he believed had blocked his reforms. But one does not need to be a shrewd politician to understand that the use of military force against your political opponents means that the crisis had gotten out of your control, and he, Yeltsin, allowed that to happen. He repeated the same mistake two years later in Chechnya, which led to a bloody war there. In 1996, he openly defied the Communist challenge at the presidential elections and won second term in office. A few months later independent journalists and observers discovered that it was Russia's banking capital and big business (seven or ten top financial and industrial groups) that made Yeltsin's re-election possible. But at least during those years Yeltsin demonstrated some sort of political will and made various public appearances. Nothing of the kind happens now. Yeltsin stays in the hospital and communicates with his country and other politicians though his press secretary. When he appears on TV, you cannot even hear what he is saying as all the pictures are voiced over by a narrator. He no longer sends radio addresses to the nation. The president is sick, and even worse, he is disabled. This is political nonsense. A country can not exist when its president and supreme commander of the armed forces is totally incapable, and even worse than that, some political analysts are suggesting, Yeltsin can not adequately react to the events and occurrences. Logically enough, the president had to disprove that. To be more precise, his inner circle wanted him to disprove that. What can be done in this situation when the president no longer has the real power in his hands? The only logical thing is to fuck up his personal team, his administration. He can hardly take the risk of antagonizing the State Duma further, nor could he fire his new cabinet. This could have easily antagonized all of the power elite in Russia. It would be impossible to explain. But who cares about a few bureaucrats from his personal administration? They could be easily sacrificed. And the desired reaction has been achieved - his action received a broad public resonance, and once again the media talk about Yeltsin as the major political figure and decision-maker in this country; whereas, in reality, he is a very sick and old man who needs to take illogical steps, dictated to him by his inner circle, in order to imitate political decision-making. Otherwise, nobody would even remember he is in the hospital. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Subj: Russia, part 5: The Emergence of the Barter Economy DO WE REALLY NEED MONEY? We all get paid for the work we do, don't we? As a rule, it is a check, a bank deposit or cash in some instances. Some people win prize money, expensive cars, etc. People at the bottom of the social hierarchy often agree to work for food or a place to spend a night. But can a person get paid for two years of his work with an airplane? Sure, he can. According to a small air carrier in Ryazan, there is nothing wrong with it. Especially when the airplanes are old and the owner does not know what to do with them. The pilots and technicians from this unit, which seceded from Aeroflot to become a shareholding company several years ago, have not been paid for more than 18 months. The company flew rather old, small planes, mainly to fight forest fires and spray pesticides. Eventually it became redundant and made no profit as the local farms could no longer not pay for its services. The pilots and technicians could not quit as there was no hope for them to find employment elsewhere. With their skills and training to fly small planes they can hardly expect to enter a large air carrier company. In addition to non-payment, the squadron had no fuel and no spare parts to fix the aircraft. Eventually, only two out of eight planes were still flying. Six others sat on the edge of the airfield without engines, wheels, and other parts that had to be removed to keep the remaining two operational. The Ministry of Aviation, Aeroflot and local municipal authorities all refused to shoulder responsibility for the situation. All of them had too many of their own problems to be interested in getting still another one. Finally, the aviators were told that they would be compensated for all the months of non-payment and even for the next year. The payment was - surprise, surprise - in the form of the six old broken aircraft. They had to be divided between more than 30 pilots, technicians and air-traffic controllers. Not that they had to be cut into pieces. They had to be sold, and the money received would go to the aviators as their salary. Ads, small posters, telephone calls, radio messages and other forms of marketing were used to offer this unusual product, which by all expectations should not find any demand. However, two of the planes were sold. But to make these deals possible, the technicians had to cut off the wings. The fuselages serve now as improvised barns and tool houses to a couple of local farmers. Their aluminum bodies will last for centuries, plus they can not be easily penetrated by beggars and small thieves. What a lovely beautiful solution to a terrible problem of non-payment amidst a lasting economic crisis. Russia has become a huge barter state. The producers prefer to pay with what they produce rather than with the money, especially now, when most of them experience constant shortages of it. Employees get parts of the final product as a kind of their payment. There are situations when people are paid with two micro-ovens every month. Or with three dozen bras. They themselves have to find buyers for these products. Or with crystal jars, glasses and china tea cups. You can see lots of them on the side of the road to Guss-Khrustalni, 80 km from Moscow, offering the crystal at much lower prices than in the stores. All of them hope to get some money to buy food or clothes, or medicine for their kids. Such examples are numerous. Long live the money-free economy! The former socialist state economy of the Soviet state has made Marx and his political economy concepts irrelevant. No need to read Marx any more!!! Peter Vassiliev XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXX Corruption and Gratitude: part 6 A lot has been written about corruption in Russia. And still this phenomenon has not been understood, nor any tangible mechanism proposed for saving the society from it in the future. At the moment it looks like the corruption will remain one of the major elements of Russia's life, no matter whether in business or in personal affairs. Though here it is perhaps more accurate to talk about gratitude. Once you talk to any foreigner doing business or coming on a personal trip to Russia, you'll immediately discover that acts of 'gratitude' make his or her life much easier. All foreign companies based in Russia have special gratitude funds. In some cases they can be worth tens of thousands of dollars a year, and even more. Gratitude can be in a form of bottles of nice whiskeys or cognacs, boxes of expensive chocolates, and more precious gifts. They are given to Russian authorities at different levels to resolve various problems 'nicely' or prevent them from appearing in the foreseeable future. A typical situation in a foreign bureau is a visit of a bureaucrat from the local fire brigade or sanitary controller. Unless you structure your relationship with them properly, i.e., express your gratitude to them, problems are guaranteed. Later you will pay much more to resolve them. Almost any situation in Russia can be resolved once your arguments are supported by some kind of gratitude. All drivers are familiar with the situation when you are stopped by the road police looking for your money. It can be a minor traffic violation or some other pretext, like to check your papers. The experienced drivers know perfectly well that you can get away with almost everything, even driving while under the influence of alcohol, but you have to pay them. In each particular case it is the matter of how much you are ready to offer. For a minor violation, as a rule, you pay half of the fine in cash to the road police officer at the spot. And both sides are happy. Or take the tax problem. For a number of years Russia has not been able to collect enough taxes to finance its budget. It's little wonder most businesses prefer to conduct a double accounting, an official and unofficial one. Say your official salary is 1,000 rubles a month. You are obligated to pay 12% in taxes. At the same time every month you get an envelope with some $2,000 or 3,000 tax free. In reality you are supposed to pay 35% in taxes on this money. Some of my colleagues working for various Russian media told me proudly that they consider it a personal matter not to pay taxes. "We are not fools. The state has been robbing us for decades - why should I be honest with it now?" Or take deals with buying and selling property and lands in Russia. Both the buyer and seller are required to pay a certain tax after the deal. But who wants to do this? So they agree on a price, but put quite a different one than is indicated in the official papers. A lawyer, for a moderate gratitude, is ready to legalize almost any deal. This means that a real price for a two-bed room apartment can be $40,000 but on paper it would be much lower to save you from paying taxes. Last fall I wanted to buy a small patch of land outside Moscow to start a construction of a summer house for my family. We were dealing though my friend's friends and until the very last minute I had no idea about what kind of scam I might find myself in. We struck the deal and I was ready to pay a little more than an average at the market. But we loved the district and had already chosen a construction company to start our would-be house. However, the deal was never finalized. To my astonishment I was told that the official property papers would quote a price 100 times lower than the one I had to pay. But it was not over yet. I learned that the lower price was the 'official,' while the higher was purely the black-market price, called by the other part "the market price." An official estimate of the illegal capital flow in Russia is approximately between $60 and $80 billion a year. At the same time Russia has been desperately trying to get stabilization loans from the IMF and World Bank worth $4-8B for 1999. What kind of sense are we talking here?! The best help the West can offer Russia at the moment is to stop financing its growing corruption and stop helping to launder the illegal capital secretly shipped abroad, mainly to a number of European and off-shore banks. When the famous Russian historian Solovyev was asked more than 100 hundred years ago about his very brief definition of Russia, he said "Thieves around you." It looks like nothing has changed. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Subj: Russia, part 7: Fiddling While Rome Burns IS THERE AN ANSWER? To say that Russia is a society that can be analyzed or explained as a system means making a claim which can easily destroy the researcher or make a poor mockery out of him. All schemes or analyses are valid for a limited time only or as a small part of still a larger whole which isBEYOND human understanding. Everybody knows that Russia is going through a sharp economic crisis: many industries do not work, people are not paid, the national currency (the ruble) is collapsing, and prices are rising. If you open any newspaper,you'll see terrible stories about people not being able to buy food or pay the rent. I have seen such people and heard their sad stories myself while traveling some time ago. You came back to Moscow and it looks like you have gone abroad. The city lives its lavish and cheerful life, ignoring the crisis and the hungry and ill people in other places. When you see the city's glamour, expensive cars, newly built houses in the city and outside it, numerous presentations and celebrations, endless fashion shows and expensive boutiques, the nightlife and TV gambling with a handful of people winning or losing yearly earnings of an average person living outside Moscow, and so on, your immediate reaction would be, 'Wait a minute, am I hallucinating?' Try to buy a holiday tour to any nice hotel or resort outside Moscow. All of them are gone long before the holiday season. It is much cheaper to go for six weeks to Prague than to spend three days at a near-Moscow resort. Go shopping, and you'll be amazed how much people are spending and what kind of things they buy as New Year gifts. Of course, this happens only in Moscow, and perhaps in St.Pete. But not elsewhere in Russia. Here is my question: 'What is supposed to happen to this city, its people and especially to its leaders when hungry and mad people from the periphery start pouring in, or worse, decide to storm it?' No comment. Moscow's Mayor Yuri Luzhkov has restored the Christ the Savior Cathedral destroyed by the Bolsheviks. Even by the most moderate estimates its price is $80M, and it the works are not over yet. Yeltsin has attended its opening ceremony, turned into a huge event with the consequent banquet. This cathedral becomes a monument to Russia's power elite stupidity, shortsightedness and greediness. They spend tons of money on their political campaigns and other attributes of power and prestige, leaving thousands and thousands of people to freeze and starve in the Northern territories. Officers do not get paid what little they are supposed to receive in time but Yeltsin's top generals live in country houses worth a million dollars each. Ex-defense minister Pavel Grachev, who was removed for incompetence and the inability to exercise proper management of the armed forces, occupies a house he would have not been able to pay for even if he put together his life's earnings. Where does the money come from? Where does the next credit from the West, if granted, go to? If it is not clear yet, it goes to finance Russia's crony capitalists who continue to represent this country's political elite. Peter Vassiliev ******************. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Peter Vassiliev wonders if Russia's leadership might see the need for a familiar and common enemy in order to squelch domestic unrest.... ====================== COMMON ENEMY AS UNITING ELEMENT [part 8] The Russian Communists and hard liners could not be more grateful to the U.S. president right now, nor could they expect a better time for the return to Cold War politics. One may disagree with my logic or say I amtoo pessimistic but let's face the facts. Russia's Northern Navy has been put on high alert. President Boris Yeltsin held extraordinary consultations with his defense minister, chief of the General Staff and his national security advisor. Russia's Foreign Ministry, under instructions from the Prime Minister, demanded an extraordinary session of the UN Security Council. The State Duma started its morning session with a minute of silence and condemned the U.S. and British 'brute aggression' against Iraq. One of the major Russian MPs immediately stated that now the START-II ratification by Russia's parliament was ruled out. Yeltsin is expected to come out later today with a strong statement, condemning the U.S. strikes on Iraq. Russia is just one step away from entering another period of 'Cold War' against the West. For centuries the Russian people lived under the readiness to oppose aggression from the East or the West. As soon as this idea disappeared with the collapse of the Berlin Wall, the society lost its strongest unifying element and began disintegrating. The society lost the idea of unification - it started to be torn apart by numerous internal contradictions, including ethnic and regional ones, which previously had been easily controlled by a common defense factor, as well as the need to counter aggression. Russia can not be governed by free market mechanisms,nor by liberal or democratic ideas, because its public consciousness sees such ideas as foreign. But it can easily be governed by the idea of war time mobilization. The former USSR was a huge military and defense machine. Its economy, politics and social life all were built and manipulated for the sole purpose of withstanding competition from the West and countering aggression. The whole country lived according to the mobilization plans: from their school years until their last days people lived with the readiness for permanent sacrifices. Whether personal or financial, as a community or society, they were ready to live deprived of human and social needs in order to survive the arms race and be able to strike back. Any sacrifice can be easily motivated by national or high political interests, especially if such are deeply rooted to the mass consciousness. The Soviet, and currently Russian society is psychologically ready to live under economic difficulties for the sake of some 'high political values or goals,' which in reality may be purely false or cynical. It becomes so easy to govern and control the society that becomes homogeneous whet it faces a 'common enemy.' The United States makes a perfect common enemy because it is rich and decadent by Russian mass consciousness stereotypes, and secondly, it was Russia's enemy not long ago. Once it becomes clear that the political, economic and social reforms are not working in this country, it will be just a matter of time before we see a shift in Russia's foreign policy, and especially in its approach to the West. In the face of a common enemy all economic and social problems can easily be written off as political imperatives. Yesterday's U.S. strikes on Iraq may give Russia a legitimate excuse to return to Cold War in its politics, economy and social sphere. Peter Vassiliev XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXX MEET THE NEW BOSS, SAME AS THE OLD BOSS [part 9] The problem of corruption among high governmental bureaucrats in Russia, as well as the broader issue of corruption generally, has become a terrifying and devastating factor in Russia's life. They are called the Fathers of the organized criminal groups, the Red Mafia, the Oligarchs, etc. Who are they? What makes it possible for them to appear? The existing system of power invites corruption, financial crimes and abuses in Russia, a point I'll explore in a series of pieces examining the problem of corruption in my country. A month ago Gregory Yavlinsky, a Liberal member of parliament and potential candidate for the presidency, sent an open letter to the prime minister stating that the country's power elite is corrupt and guilty of numerous financial abuses. The letter posed several questions to prime minister Evgeni Primakov, inviting him to think about the commercial activities of his four deputies: In part, Yavlinsky raised the following issues: -- Whether vice-premier Maslyukov has been involved in commercial activities while serving as the vice-premier in the cabinet, and whether he let anyone know about his side activity? -- Whether the cabinet has already made any decisions regarding the companies whose interests Maslyukov or his relatives represented or lobbied? -- Why did Maslyukov grant a special status to the VympelCom company on 9/16/98 without announcing a tender or competition, as required by law? -- Whether Primakov or other governmental officials were aware of the commercial activities of another vice-premier, Kulik, when offering him his present job? -- What is known about Kulik's involvement with a Swiss company NONA, and an agreement with this company he signed on 4/12/91? -- Whether Kulik was involved in any illegal transfers of federal funds abroad while he headed the RossInterBank during 1993-96? -- Whether Kulik was involved in transferring funds granted to the Ministry of Agriculture from the federal budget to a private company, Expa, in 1998? Questions were also raised about Vadim Gustov, formerly the governor of the Leningrad region, currently serving as a vice-premier in the Russian cabinet. Namely, -- Whether he granted special status to a number of commercial companies in his region, and benefitted from that? -- What was his role in building the Ust-Lug sea port in his region? The money was allotted but construction on the site has not been finished yet. The excuse? Absence of financing. Yavlinsky waited for a month but did not get a reply from the cabinet, though the Procurator General acknowledged that corruption in the high echelons of power "has become a huge problem in Russia." Only after Yavlinsky said in a radio interview a week ago that, "No answer to his letter is an answer in itself," did the cabinet reply, promising to study the problem. Would it be really studied? All the bureaucrats named by Yavlinsky serve as high governmental officials, and they supervise the activities of the state security bodies, the Interior Ministry and Procurator's Office. Nice deal - an accused man is instructed to catch himself. There is no doubt that the documents which could have proved the involvement of these men have already been destroyed. And Yavlinsky's letter will remain, but no action will be taken. The political power in Russia creates opportunities for enrichment and wealth, and it allows corrupt officials to effectively eliminate public and social accountability in decision-making. For centuries Russia existed as a state built according to a principle of power which gave the ruler or a group of rulers ultimate decision-making authority in all spheres of political life. It remained the same under the Bolsheviks, and survives now during the Yeltsin presidency - the Russian power elite still comprise a closed sect, exercising the unrestricted authority and decision-making. Peter Vassiliev