idbits, May 15.

Zyuganov Warns of Duma Dissolution, Violent Confrontation.

Radiostantsiya Ekho Moskvy
April 11, 1997

Gennadiy Zyuganov, leader of the Communist Party of the Russian Federation, says there may possibly be an attempt to dissolve the country's parliament in the near future. He said that the government is displeased with the Duma because we--and I quote--do not permit its clerks to carry out of Russia whatever they have not managed to carry out yet. However, the President needs to watch out, Zyuganov said, that the events of October 1993 [confrontation between President and parliament] are not precisely repeated, but with the opposite outcome--end of quote.

Party Official Denies Possible Replacement of Zyuganov.

Interfax in English
April 14, 1997

MOSCOW, April 14 (Interfax) -- Valentin Kuptsov, deputy head of the communist party group in the State Duma, has bluntly denied news reports about the possible replacement of the KPRF [Communist Party of the Russian Federation] leader at its congress scheduled for April 19-20. This issue has never been raised, he told Interfax. Under the party Charter, however, 25% of the Central Committee have to be replaced at the congress.

The elections of the party leadership will take place at a closed session of the congress in the afternoon of April 20, he said. The congress will pass a basic resolution on the Central Committee's political report to be read by party leader Gennadiy Zyuganov, Kuptsov said.

The congress will pass numerous resolutions, in particular on the party's attitude towards the executive authorities. The drafters of the resolution never raised the issue of no confidence in the government, but the congress itself may do so, he said.

Other resolutions are expected to cover the preparations for the 80th anniversary of the Great October Socialist Revolution this year, the unity of action of communist and workers' parties, the protection of Russian-speakers abroad, the youth policy and celebrations of May 1 and May 9, Victory Day.

The congress will make 10 to 15 amendments to the party program which will not change its general lines. The parts of the program which cover the new interpretation of the class structure of society, national security, ethnic issues and the regional and agrarian policies, Kuptsov said. [sentence as received]

The amendments to the party charter will be still less significant, he said.

A news conference on preparation to the party congress will be held in the State Duma Wednesday, Kuptsov said.

April, 1997

Belarus was among the leaders in CIS by the growth rate of industrial output in the first quarter of 1997. Its industrial output went up by 9.8 per cent in comparison with the similar period of 1996. It was second only to Georgia, which had the industrial growth rate of 10.9 per cent. This follows from the information of the CIS Interstate Statistics Committee, received by PRIME-Tass today. Russia was the last but one by the growth of industrial output (0.7 per cent) among the seven CIS member states, which registered the growth of this index.

The largest falling-off of production was registered in the first quarter of 1997 in Moldova (14.9 per cent) and in Tajikistan (14.5 per cent), and the smallest -- in Armenia (2.4 per cent). The figures are given for January-February.

Expats cite hurdles on Russia investing frontier

YEKATERINBURG, Russia, April 10 - An irate neighbour often telephones Daniel Billman, who heads the U.S. Russia Investment Fund in this Urals city, in the middle of the night, accusing him of making an incredible racket as he sleeps.

"It's as though it's the Cold War again," said Billman, explaining that his neighbour seemed to want to make his life miserable just because he is American.

The hot water in his apartment in Yekaterinburg, just east of the European-Asian divide, did not work for four of the first 10 months he was there.

Unlike Moscow and St Petersburg, where tens of thousands of foreigners have long done business, Yekaterinburg was closed to outsiders until the early 1990s and foreign businesspeople have started living there only recently.

Living on the frontier of foreign investment in Russia gives these pioneers an early crack at what is likely to be a lucrative market in the long term. Such opportunities give them a shot at personal wealth, but it also means facing a steady stream of challenges at home and in the office.

GETTING PAST THE BABUSHKA SYNDICATE

Paul Sofianos, the top regional official with Pepsi International Bottlers, who is charged with building a $40 million factory by the middle of this year, says that getting even simple matters approved by regional officials can be a nightmare.

"It's getting past the middle level of what I call the babushka (granny) syndicate, those that are 45 to 55 years old," he said."It's that middle level group of functionaries and bureaucrats who make life very difficult."

Just obtaining enough telephone lines was so difficult that he had to threaten top officials with pulling out all together before he got results.

"We had to sit down with the mayor and say 'I can't run my business with six telephone lines,"' he said."The next morning I had 30 telephones."

"If the administration, city and oblast (region) are not behind you, you're dead in the water. They control everything," Sofianos said. ``Electricity, water, sewerage, gas, the movement by which things are done are not acceptable by anyone's standard."

Pepsi and Britain's Inchcape, which plans to build a Coca Cola Beverages factory, have decided to tackle the especially daunting goal of building plants from scratch.

But even firms who limit their efforts to trade representation offices say completing deals is particularly difficult in a country that has a bewildering array of rules and legal obligations.

"It is a shock for the Japanese mentality," said Igor Fishelev, acting director of Japan's Mitsui Co."Sometimes they (Russian partners) are not reliable, they can change their mind, their decisions, rather quickly."

Russian accounting, which evolved in the years of the Soviet planned economy but is still required by local authorities, is also difficult for foreigners to fathom.

"Some Western firms run a parallel set of books because they cannot get the numbers they want from Russian accounts," said a foreign official. Tax and customs rules can be so arbitrary that diplomats stationed here say they have been hassled on occasion -- even though diplomatic protocol exempts them from such obligations.

"Unfortunately, the overall economic situation is completely unpredictable," said Vladimir Lomovtsev, head of the provincial foreign investments department.

Business officials disagree about whether large foreign businesses fare better than smaller ones in this difficult environment.

"It takes millions if not tens of millions to establish a viable entity in this part of the world," said Sofianos, adding that Pepsi's large investment has opened doors closed to others.

Others say there are more opportunities in small and medium enterprises outside the focus of huge companies.

PROVINCIAL RUSSIAN LIFE TAKES TOLL ON HEALTH

The hardships of Russian life usually affect expatriates of companies big and small.

Lack of renovated apartments has inspired some foreigners to live in one of Yekaterinburg's three-star hotels -- there are no better lodgings in town. In winter the trip from home to office means a trek over snow and ice in temperatures as low as -30 Centigrade.

Then the expatriate dealing with local partners can look foward to many "business lunches" -- often a bonanza of toasts, vodka and a wide variety of dishes swimming in mayonnaise.

"You sacrifice a lot out here: diet, health," said Billman, whose firm makes loans to small Russian businesses."I work maybe 80, 90 hours a week; I am completely worn out."

Such difficulties means he sometimes envies expatriates living in the Russian capital."Moscow is like another New York. When I go there it's like going to the land of Oz," he said.

President Boris Yeltsin appealed to Russians on Tuesday to bolster the nation's stumbling economy by consuming more local products, but shoppers complain they can't find many worth owning.

"By buying nationally-produced goods, we help our country, our Russian industry and help ourselves," Mr. Yeltsin said in a nationwide radio address. "This is the kind patriotism that is after my own heart."

Mr. Yeltsin recently ordered his government to sell-off its luxurious fleet of Volvo, Mercedes and BMW limousines, and cram commuting officials into boxy Russian-built Volgas instead. "Yes, that decision aroused exasperation and sarcastic grins among some officials," Mr. Yeltsin admitted. "But I shall succeed in getting the decision implemented."

He may have a tougher sell with ordinary consumers, who claim Russian-made clothes are shabby, milk goes sour, beer has no froth, sausages are greasy, appliances break easily and cars are unspeakable.

"Yeltsin should mind his own business," says Olga Bulatova, a 35-year old doctor. "I have a very modest personal budget, and I have to make hard choices on the basis of cost and quality.

"Russian products are hopeless. Yeltsin should do something to put our factories on their feet that instead of lecturing people who are struggling to get by."

Russian industry, never distinguished for quality consumer goods, has slumped by almost 50 per cent since the collapse of the USSR.

Meanwhile, cheap and attractive imports have inundated shop shelves, gladdening the hearts of Russians who can afford them but leaving experts worrying whether local manufacturers can ever recapture the market.

As much as 60 per cent of the food Russians eat, half of the new cars they drive and most of the clothing, appliances and electronic goods they buy are of foreign origin. Russia enjoyed a trade surplus last year, thanks only to vast exports of raw materials.

"There is a vicious circle in which Russian industry cannot produce competitive commodities until it modernizes, but cannot afford to modernize unless it sells its production," says Yevgeny Khozhokin, an economist with Moscow's Institute of Strategic Studies.

"There is no simple answer to this dilemma. Closing our borders or imposing tariffs would only isolate Russia in the world market," he says. "On the other hand, simply appealing to people's patriotism and asking them to buy Russian seems far too little."

For 74-year old Yevgenia Chernikh, who says she survives on her pension of $45 US per month, the whole debate seems pointless.

"I can't really afford to buy much, really just tea, bread, cabbage, potatoes and a little sugar," she says.

"But if they gave me more money, I'd spend it on Russian products."

Mr. Yeltsin argued that Russians have come a long way since Soviet days, when shops were empty and consumers had to queue for hours for daily necessities.

But he admitted domestic factories are in mired in debt and inefficiency, unemployment is climbing and new industrial investment has been slow to materialize.

He promised there would be no return to state control or tough tariff barriers against imports, and urged people to voluntarily support local producers.

"I will allow myself only to call on the people of Russia: buy Russian-made goods," he said. "I am confident that my call will find a response in your hearts."

But some people complain that the few good products they used to enjoy have vanished in the post-Soviet scramble to imports and locally-made imitations.

"In Soviet times we had the best black bread in the world, wonderful fresh dairy products and good, pure vodka," says Stanislav Denikin, a 60-year old machinist.

"You can't find those things anymore. There is only mass produced garbage, too expensive and tasteless. Who cares where it's from?"

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