CHEAP AND ANGRY

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CHEAP AND ANGRY

Izvestia, April 28, 1999, p.1

The Central Bank (CB) needed almost nine months to figure out which Russian commercial banks are still alive. It turns out that not so many of them are. On April 27, Alexei Simanovsky, Director of the Supervision Department of Prudence Bank, said that his department had defined 85 strong banks which will form the backbone of the new system. This means that the fate of the other 1,359 banks does not worry the Central Bank. A large number of large-scale banks with thousands of investors are among those that will not get help from the CB. It is quite possible that Victor Gerashenko, director of the CB, meant this very decision when he stated that Russia needs no more that 200 banks.

The cheapness of the new banking system is its undoubted advantage. According to the calculations of the CB, the creation of the new system requires only 5 billion rubles. It is unnecessary to force the capitalization of the banks and to organize a complicated and expensive supervision system to make the transfers pass regularly. The risks of the banks are minimal in this case.

At the end of May, the CB intends to start the process of creating strong banks. The Agency for Restructuring Credit Organizations (ARKO) may start improving the financial health of the Samara branch of AvtoVASbank and Kaliningrad’s Investbank. In the near future, ARKO will also start reorganizing the banking system of Kemerovo, in particular Kuzbasssocbank and Kuzbassprombank. About 70% of the monetary resources of the region are in these two banks. The main task of the banking reorganization in Kuzbass is the creation of a bank that will be able to make transactions and guarantee the servicing of regional accounts and programs.

“For real crediting of big enterprises, we need two or three big banks, not more”, noted Alexei Simanovsky. “One of these banks is Sberbank. Who the other luckies are we do not know yet.”

A SCANDAL IN THE MILITARY PROSECUTOR’S OFFICE

Trud, April 28, 1999, p.1

Major General of the Military Prosecutor’s Office Yuri Bagrayev, who had been debarred from the supervision of Skuratov’s case, made a desperate move on April 27: he invited journalists and told them how the case looked and why he considered it illegal. This action is unprecedented for the department in which the general serves.

Yuri Bagrayev reminded his audience about how the case fell into the hands of the Military Prosecutor’s Office. Moscow Deputy Prosecutor Rosinsky initiated it on April 2, and it appeared in the General Prosecutor’s Office on April 7. The same day Bagrayev, studied all 30 pages of the case and came to the conclusion that it was initiated illegally and had to be disaffirmed. The documents of the case drove him to this decision. There were just a few petitions from citizens concerning Skuratov, but Bugrayev did not consider them serious documents: none of the papers were properly validated, and some of them were without signatures and dates.

On April 8, the major general reported his reasons to the deputy of the general prosecutor, but the leadership did not react, and then Bagrayev appealed against the actions of his superior to the general prosecutor. The result was the following: he was debarred from supervision of Skuratov’s case and thanked for his good work.

The criminal case against Skuratov is still in the process of being decided, but Bagrayev states: “The opinion of the general prosecutor is not the opinion of the General Prosecutor’s Office.” According to him, his main task is to return the case to the legal field, and only then decide whether Skuratov is guilty or not. Soon the Duma Anti-Corruption Committee intends to interfere in the case. Its Secretary, Alexander Kulikov, stated that, after the holidays, he would raise the question of the legality of the actions of the officials who initiated the case.

THE DISCUSSIONS ABOUT THE IMF CREDIT TO RUSSIA

Izvestya, April 28, 1999, p.2

If the International Monetary Fund (IMF) intends to credit Russia, it will happen no sooner than this summer. According to Russian Executive Director of the IMF Alexei Mozhin, “The board meeting of the IMF can take place only at the beginning of June.”

It is safe to say that the maximum sum of the hypothetical credit will be halved.

After the political demarche of Moscow caused by NATO’s aggression in Yugoslavia, the IMF made hints that the credit would be given as a kind of political concession – as an advance to the big and comparatively influential country if it guarantees that it will follow the process of economic reforms. Now the position of the IMF has became more traditional: “The chairs in the morning, the money in the evening.”

The IMF insists that all Russian oil and gas companies pay their debts to the treasury by November 1999. According to some sources, the Russian government has agreed with these demands, and in the course of the next two weeks it will draw up individual plans envisaging the payment of all debts of oil and gas companies.

It seems that the mission of Gerard Belandje was a very good present for the left. It is stated in the report: “The IMF will not credit Russia until it submits satisfactory results of an audit of the previous IMF credit, which is supposed to be finished by the middle of May.” As is known, the pro-Communist opposition maintains that these drafts were stolen.

On the day of the report of the IMF, the statement of the Ministers of Finance and the Secretaries of the Central Banks of the G7 was proclaimed in Washington. In this statement, Moscow was advised to come to an agreement with the IMF about the program of the reforms. And they also assured that the Paris club of creditors would not consider the request of Russia to restructure its external debt without this agreement.

It is evident that the political pressure of Moscow on Western creditors under the pretext of the NATO aggression in Yugoslavia has failed to get any results. Russia is not considered a great country, and they are not afraid of its possible default. And Russia will be given help only in two cases: if the country continues the process of reforming the economy according to the IMF formula, or if the restoration of Communism seems too dangerous for them.

PERSONNEL CHANGES IN THE CABINET

Russian Television, Vesti, April 27, 1999, 20:00

On April 27, President Yeltsin appointed Yury Skuratov Senior Vice Premier. Skuratov will handle regional and ethnic policy, simultaneously retaining the position of the Interior Minister. Earlier, Vadim Gustov was responsible for this sphere of activities of the cabinet. Inasmuch as the most problematic regions in Russia are Chechnya and the North Caucasus as a whole, it is logical enough that Skuratov has been appointed to this position, since he has been intensely involved with Chechen problems for years.

WORKING MEETINGS OF BORIS YELTSIN

Russian Television, Vesti, April 27, 1999, 20:00

Overall, Boris Yeltsin held eight working meetings on April 27. Among his interlocutors were Yevgeny Primakov, Viktor Chernomyrdin, Konstantin Titov, and others. At the meeting with Konstantin Titov, the Governor of the Samara region and the leader of the Voice of Russian electoral bloc, he expressed his idea that the electoral blocs unite. For instance, he suggested that Voice of Russia merge with the All Russia bloc led by Tatarstan President Mentimer Shaimiev. Later, he discussed the problems of the upcoming elections with Shaimiev on the telephone.

BEREZOVSKY MEETS WITH PRIMAKOV

Russian Television, Vesti, April 27, 1999, 20:00

After the first four-hour questioning in a modest room of investigator Volkov, Boris Berezovsky went to the office of Prime Minister Yevgeny Primakov, where they talked for two and a half hours. This meeting was a sensation for journalists, since Berezovsky blames Primakov for all his troubles.

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