Fellow pen-l'rs,
Here is the latest from Fred Weir in Moscow. His article is followed by
John Thornhill's article from the Financial Times, on the Russian firms
resorting to hiring Western PR 'specialists' in hopes of attracting the
fleeing investors
Regards,
Greg.
*****
#1
Date: Thu, 13 Aug 1998
[for personal use only]
For the Hindustan Times
From: Fred Weir in Moscow
Moscow (HT Aug 13) -- As Russia's economy continued to crash
Thursday, the opposition-led parliament dealt the government a
potentially fatal political blow by refusing to hold an emergency
session on the crisis.
"Russia is on the verge of financial collapse, and we are
now facing sharp political struggle and possible change of
government," says Andrei Piontkowsky, director of the independent
Centre for Strategic Studies.
Last week parliamentary Speaker Gennady Seleznyov agreed
with a request from Prime Minister Sergei Kiriyenko on holding an
urgent Duma session next Monday to consider 17 draft laws to
slash spending, raise taxes and stabilize state finances.
But Duma deputies, in an angry mood, decided this week not
to convene the meeting.
Mr. Seleznyov's deputy, Mikhail Yuriev, told journalists
that the request for an emergency session was illegal because it
was made by the Prime Minister.
"The Duma can cold an extraordinary session only in three
instances: at the request of the President, the Duma speaker or
one-fifth of the deputies," he said. "It is quite possible that
the Prime Minister did not understand that. In any case, there
will be no extraordinary meeting."
However, he added, the session might go ahead if President
Boris Yeltsin, who is currently vacationing in Russia's lake
district, submits a personal request.
Despite sealing a $22-billion bailout package from Western
lending agencies last month, Russia's financial markets have
continued a disastrous months-long plunge.
The Moscow stock exchange, which was the world's best
performing in 1997, has lost over 70 per cent of its value since
March and is still dropping.
Interest rates on state bonds have climbed from about 20 per
cent in March to over 120 per cent this week.
Analysts say there may be no choice but to devalue the
battered rouble, a move that would lead to rapid price increases
in Russia's import-dependent consumer economy and could push tens
of millions into abject poverty.
Particularly dangerous, rouble devaluation would shatter the
tenuous prosperity of Russia's new middle-class -- mainly based
in Moscow -- who are the mainstay of the Yeltsin regime's
support.
"The only achievement from six years of reform that the
government could point to was a stable rouble and low inflation
rate," says Mr. Piontkowski. "Now that is in ruins, and
devaluation of the rouble looks imminent."
The Duma's refusal to get behind the government's harsh
austerity program may make little economic difference since
President Yeltsin can implement many of the measures by decree,
but it will explode confidence in the political system at a time
when social unrest is already rising precipitously.
Wildcat strikes are multiplying across Russia's vast
hinterland, where millions of workers have gone without wages for
months due to the economic crisis.
Coal miners have been blockading railroad tracks in several
regions, and trade unions are promising a general strike this
autumn over the huge buildup of wage arrears.
Ironically, parliamentarians say the government has not paid
their salaries for months either, and therefore the refusal to
meet in emergency session may also be viewed as a justifiable
work stoppage.
Communist leader Gennady Zyuganov, whose party controls
almost half the seats in parliament, said the government owes the
Duma 126-million roubles ($20-million).
"Why hasn't the government transferred the money to us if it
wants the Duma to convene?" Mr. Zyuganov said.
*****
#2
Financial Times (UK)
12 August 1998
[for personal use only]
MOSCOW: Brokers take on western PR
By John Thornhill in Moscow
A group of Moscow-based stockbrokers is hiring a western public
relations company to improve Russia's image among foreign investors and
help reverse the savage falls in the country's financial markets over
the
past year.
The stockbroking firms, which have seen daily turnover on Russia's
rudimentary stock market reduced to just ?6m, are desperate to entice
foreign investors back into Russia - and salvage their own businesses.
"There is a feeling that Russia generally gets a bad rap, and we are
looking at ways of correcting that," said a member of the group.
The 15 firms, which are forming a non-profit industry association
called
the Financial Council of Russia, have selected Burson-Marsteller to head
the public relations campaign. Burson-Marsteller, which has confirmed
its
involvement in the project, is one of the biggest public relations
companies in the world and has wide experience of working for foreign
clients.
Discussions are at an early stage but it is envisaged the council
will
act as a clearing house for information about Russia's financial markets
and liaise with the government about how it can communicate its economic
message more effectively.
The council is also looking to recruit a prominent spokesman who
would
devise a communications strategy with Burson-Marsteller for "selling"
Russia to foreign investors.
Charlie Ryan, chief executive of United Financial Group, one of the
council members, said the firms had met several times over the past two
months to discuss ways of encouraging the development of Russia's
financial
markets.
"All of us have been so competitive with each other that we have not
been very good at co-operating. "But there is now a sense that we need
an
industry association which can represent our views and correct some of
the
misconceptions out there," he said.
The financial council, which includes leading local brokers such as
Troika Dialog and MFK Renaissance, as well as international investment
banks such as Credit Suisse First Boston, also intends to lobby the
government to improve the corporate governance environment within
Russia.
Abuses of minority shareholder rights have deterred many foreign fund
managers from venturing into the Russian market, which has plunged more
than two-thirds this year.
The Russian government is encouraging the stockbrokers' initiative,
although it has not given it any direct support.
--
Gregory Schwartz
Dept. of Political Science
York University
4700 Keele St.
Toronto, Ontario
M3J 1P3
Canada
Tel: (416) 736-5265
Fax: (416) 736-5686
Web: http://www.yorku.ca/dept/polisci
