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Western Press Review: The New Siege of Moscow

By Don Hill and Aurora Gallego

Prague, 30 July 1997 (RFE/RL) -- Moscow's latest privatization drive, which includes feverish competiton for ownership in the high-potential Svyazinvest telecommunications company, generates Western press commentary on Russia's economy.

WASHINGTON POST: Wealthy industrialists have turned on the government they helped install

Daniel Williams writes in an analysis that the Svyazinvest battle has turned industrialist against industrialist and some of his ardent supporters against President Boris Yeltsin. Williams says: "When (Yeltsin) ran for re-election last year, Russia's powerful new industrialists pooled their resources and used their clout to help him beat the Communist opposition. Now those same tycoons are feuding bitterly with one another -- and some have angrily turned on the government they helped install.

"At issue is the partial privatization of one of Russia's most coveted government-owned assets, the Svyazinvest telecommunications company. Losers in the bidding are crying foul. The winners say it's just sour grapes.

"Merits of the various positions aside, the rift sheds light on the evident focal point of political struggle in contemporary Russia. If politics here a year ago was perceived as a battle between Communists and Yeltsin's economic reformers, it now seems to be a battle among big business groups known here as clans -- all nominally Yeltsin supporters -- in pursuit of government property."

LONDON GUARDIAN: Auction marks reformers' most dramatic move so far

First Deputy Prime Minister Boris Nemtsov has been voluble in recent days, taking a stand against what he and others are calling "bandit capitalism," charging that new-rich Russian investors are conspiring in schemes to cash in on privatization. James Meek writes from Moscow that Nemstov's challenge is "the most dramatic move so far by the government's young reformers in an increasingly hysterical media war between a handful of powerful Russian financial-industrial groups, as government-owned stakes in some of the country's most attractive enterprises come up for sale."

Meek says in his news analysis: "By putting up the lion's share of the $1.9 billion winning bid for a 25 percent stake in the telecom giant Svyazinvest, the best price Russia has ever got in a privatization auction, (financier-philanthropist George) Soros has tied his name to that of his Russian co-investor, Vladimir Potanin of Uneximbank-MFK, the object of a ferocius media smear campaign for the past two months."

FINANCIAL TIMES: Soros walks tricky line between philanthropist and investor

Today John Thornhill reports on a conversation he had with Soros. Thornhill quotes Soros as saying that "it often is tricky to reconcile his roles as philanthropist and investor." Thornhill says: "He does not like to invest in countries in which his charitable foundations are active, believing it could lead to confusion over his intentions"

"But in the case of Russia, where his philanthropic funds have disbursed hundreds of millions of dollars to support science and culture," Thornhill writes, "(Soros) has finally overcome such misgivings."

The writer says: "This week, Mr. Soros disclosed he had invested almost $1 billion in Svyazinvest, the giant telecommunications holding company partially privatized last week. That brings his funds' total investments in Russia to $2.5 billion, making him by far the largest Western portfolio investor in the country."

FINANCIAL TIMES: Oil to become next target in battle against 'bandit capitalism'

Another Financial Times article by correspondent Thornhill analyzes Nemtsov's fight against "bandit capitalism" and for what the official calls "honest privatization." Thornhill writes : "To reinforce the point, the Russian government said it would now sell its entire stake in Rosneft, the giant oil producer, and not just a minority shareholding, as it previously had indicatd. Several powerful industrial groups appeared to be trying to carve up the company between them."

Thornhill says: "Mr. Nemtsov, who promised a new era of open government when he entered office in March, faced a barrage of criticism from several Russian media outlets over his involvement in the sale of the government's 25 percent share in Svyazinvest."

WASHINGTON POST: Russian fueling stations to appear across U.S.

Farther afield, in the town of Altavista, Virginia, Martha M. Hamilton wrote yesterday that Russian industry -- in addition to importing capital -- also is exporting some. She wrote: "The latest wonder of the global economy can be found in Altavista, Va., south of Lynchburg, where a Russian oil company opened its first U.S. gasoline station (Monday). The Russian company -- one of the former Soviet republic's free-market pioneers -- has teamed up with Texas-based Nexus Fuels Inc. to open fueling stations in supermarket parking lots nationwide. The Altavista station is in the parking lot of a store operated by Food Lion Inc., one of four supermarket chains that have signed up.

Hamilton writes that "For Lukoil (whose name is an amalgamation of Langepasneftegaz, Uraineftegaz and Kogalymneftegaz), it is an opportunity to become more visible in the United States, where its shares are traded now on the Nasdaq Stock Market." She quotes Stephen O'Sullivan, an industry analyst with MC Securities Ltd. as saying the arrangement is also a chance for Lukoil "to learn to compete against the Western oil companies that are beginning to invade its turf. The practical aspect is that it will learn about marketing in what is a very competitive marketplace."

LE FIGARO: Alcohol abuse constitutes public health, criminal law issue

And in yesterday's edition, Isabelle Lassere commented from Moscow that 43,000 deaths a year in Russia from impure vodka constitute not only a public health issue and a criminal law issue, but also an economic issue. In her analysis in the French daily, Lasserre wrote: "Poverty is at the root of the entire situation, explains Vladimir Ielistratov, a sociologist specialized in the correlation between Russian culture and vodka consumption. They do not have money anymore. They buy the cheapest vodka which is also the worse. They feel suspicious against foreign vodka. They think it has been poisoned."

She wrote: "In Russia the government does not care at all about this. It only cares about getting its share of the profitable market of hard liquor sales. Concerning the idea of advising the Russians to drink less, it is a pure illusion. In this country. Vodka, good or bad, has always killed. But it also gives the strength to go on."