-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Russian Follies Yeltsin Relies on KGB to Control Kremlin The ex-KGB job market is good KGB veterans are making a powerful comeback at the heart of Moscow's political establishment, with scores of top jobs going to former agents. To the consternation of many in Russia, key posts in the Kremlin and the government, the arms industry and the media - even that of head of Russia's fisheries committee - have recently gone to career security officers, and the trend seems set to continue. President Yeltsin recently ordered the head of Kremlin personnel policy "to improve work" and fill vacancies with individuals who "correspond to the demands of the time". Vladimir Makarov, who was in charge of KGB personnel before the collapse of the Soviet Union, was widely expected to interpret his boss's instructions as a signal to recruit more former comrades to influential jobs within the Kremlin. There they will join other KGB men already in place, including Nikolai Bordyuzha, the President's chief of staff and head of Russia's security council, and Vladimir Osipov, Mr Yeltsin's own personnel director. Mr Yeltsin's weakness for former KGB officers is seen as especially curious. Historically, ex-KGB men have worked as his bodyguards, but few were given any political responsibility. His fear of its dirty tricks after his expulsion from the Politburo in 1988 and its role in the 1991 coup filled him with a lasting aversion for the KGB. Now, in the closing phase of his presidency, having fallen out with most of his trusted advisers, he appears to feel secure surrounded by products of the notorious Soviet intelligence service. He increasingly seems to believe that his only hope of survival is to rely on the cloak-and-dagger skills and absolute discretion of former KGB officers. By contrast, Mr Primakov, head of Russia's foreign intelligence until 1996, has never been hostile to the security services. He is rumoured to have carried out errands for the KGB while a journalist in the Middle East. To broaden his power-base as he contemplates running for the presidency, he has been quietly slipping proteges, many of them professional spies, into some of Russia's most powerful positions. Yuri Kobaladze, a veteran of the KGB's London team and spokesman for the foreign intelligence service (one of his favourite lines to journalists was "I am very lunchable") was recently inserted into a top post at Itar-Tass, the state news agency. Former KGB men, including a recent head of station in Norway now running the news on a state television channel, have been parachuted into managerial positions in broadcasting. An ex-KGB officer was also put in charge of the main arms exports agency, one of the few Russian organisations that earns much foreign currency. Former spies, especially those with experience of Western business practices gained during the Cold War, had a head start when Russia's private sector first emerged in the dying days of communism. Ex-KGB officers also dominate the huge private security industry. Many make money by spying on rival businessmen or trading secrets colleagues still in the service sell them. The London Telegraph, Feb. 16, 1999 Japanese Financial Markets Japan's Solution to Bad Bank Debt: Issue More Debt Government-Guaranteed Bonds The Japanese government is likely to issue several trillion yen worth of additional government-guaranteed bonds to fund banking reform in the coming weeks, Hakuo Yanagisawa, financial reform minister, indicated yesterday. The new bonds, which could be worth more than ¥7,000bn, ($61bn) would come on top of Tokyo's record net issuance of ¥34,000bn of Japanese government bonds in the 1998 fiscal year. The issue of additional bonds could deal a further blow to JGB markets, which have already seen prices tumble in recent weeks on fears of excess supply. Sentiment in the market worsened yesterday after the Bank of Japan's announcement last Friday that it would not buy more JGBs, even though it planned to reduce the overnight market rates to a historic low of 0.15 per cent. The yield on the 10-year benchmark JGB closed at 2.14 per cent yesterday, 0.6 percentage points up from the close on Friday. Jeffrey Young, analyst at Salomon Smith Barney in Tokyo, said: "If the [government] has to raise more money to finance the recapitalisation of the banking sector . . . there's a potential for a sharp sell-off in the bond market." The issue of funding bank reform is particularly critical because last Friday the Financial Reconstruction Committee, the government body charged with implementing banking reform, reported that the largest banks had asked for a ¥7,450bn injection of public funds. The FRC had hoped these injections would come from Bank of Japan loans to the Deposit Insurance Corporation, another government body that funds bank reform. However, the Bank has recently opposed this plan because it fears extending loans to the DIC would undermine its credibility as a central bank. Mr Yanagisawa, chairman of the FRC, yesterday stressed that "it was up to the DIC" to decide the final details of how it would fund the bank reform. However, he admitted: "It will be difficult for [the DIC] to borrow the whole amount from the Bank." "I think the DIC will be forced to consider raising most of the funds from the market," he added. "From our point of view we would like the option which has the lower funding costs. That would probably be Bank of Japan loans." Mr Yanagisawa warned that the scale of capital injections could change because the FRC was still reviewing the banks' restructuring plans. However, FRC hoped to inject the cash before the end of March. The DIC has not yet indicated how it plans to issue the bonds. However, it is expected to issue relatively short-term government-guaranteed bonds, rather than ask the Ministry of Finance to issue 10-year JGBs, in an effort to avoid more strain in the main JGB market. The Financial Times, Feb. 16, 1999 Euroland European Businesses Are Gloomy Things are getting worse FRANKFURT - Europe's economies are weakening, but with a contradictory element that leaves room for both a trace of optimism and the more frequent analysis here in the city's skyscrapers of cash that things will get worse. With projections for growth pointing downward, the twist lies in the continuous rise of consumer confidence over the past seven months. It is at record levels in France and very healthy ones in Germany. But over the same period since July 1998, business confidence has retreated month after month in both countries, reflecting a darker view of Europe's prospects. New export figures from Germany to Russia and China for late 1998 show declines of 50 percent and 32 percent from the comparable 1997 figures. The consumers-versus-entrepreneurs conflict of sentiment plays itself out publicly through politicians' calls - which reflect their worries about a deep slowdown - for lower interest rates and the possible use of budget-stimulus measures. At the same time, fearing that too somber an outlook will affect consumer confidence, the politicians offer reassuring but contradictory tones that some economists say do not match reality. In the extreme, the contrast comes to this: While Thomas Mayer, senior economist at Goldman, Sachs & Co. in Frankfurt, said last week that he could envision a worst-case scenario in which the economy of the European Monetary Union zone could run into Japan-like troubles, Yves-Thibault de Silguy, the European Union's commissioner for economy and finance, was insisting that the slowdown was ''limited and temporary'' and that there was ''no breakdown in European growth.'' Most estimates for growth this year in the 11 countries that adopted the common currency, the euro, on Jan. 1 average out to about 2 percent, a decline of close to one-third from initial projections and well short of the rate needed to create jobs or establish the euro as an independent currency safe from the prospect of political tampering. Among the core euro countries, Germany and Italy appear most affected, with Goldman Sachs, for example, placing Germany's growth at 1.5 percent this year (compared with 3.8 percent in the first quarter of 1998), Italy at 1.2 percent and France a bit better at 2 percent. For next year, 2000, the brokerage's overall European outlook gets worse. Influenced by the foundering first three months of Chancellor Gerhard Schroeder's government, the mood in the banks and brokerages in the streets around the new European Central Bank is far from up-beat. Eckhard Schulte, senior economist of the Industrial Bank of Japan (Germany), said that he felt Europe was ''going through hard times'' and that statements like the one from Mr. de Silguy were so far out of touch they were ''undermining the credibility of the commission.'' In fact, he asserted that Europe, as an open economy more dependent on exports than the United States, was particularly vulnerable to the effects of an external slowdown. Illustrating this, capital-goods orders in Germany plummeted in the last quarter of 1998, while exports to the Netherlands, a leading trading partner, declined. Exports to South Korea were off 45 percent in a year, and declines between 12 and 35 percent were registered for Singapore, Malaysia, Indonesia, Thailand and the Philippines, according to the federal statistical agency. The reality of Europe suffering from the series of international financial crises - in contrast to its politicians' assertions that EMU would provide shelter from them - has deeply affected business European confidence since the middle of last year. This negative outlook accelerated, in the view of segments of the Frankfurt investment community, with the election of the Social Democratic government in Bonn last autumn and its perceived failure to offer business real prospects of tax cuts, freer labor markets and incentives to risk-taking. Because consumer confidence is a lagging indicator, it grew in the second half of the year on the basis of good growth and some progress in lowering unemployment in the early part of 1998 - albeit to rates still above 10 percent in France and Germany. Mr. Mayer said the crucial issue was whether declining business confidence would lead to new layoffs. Growing unemployment figures would hurt consumer confidence and rule out the possibility that domestic demand could compensate for the loss in exports. ''The fact is,'' Mr. Schulte said, ''industrial confidence drives the cycle. The question is, will consumer confidence keep the economy going until the industrial cycle picks up. If sentiment stabilizes, this would be positive.'' But he was not optimistic, and he projected a decline in the euro to a level of $1.05 by the end of 1999, compared with about $1.17 at the beginning of the year. Neither was Johannes Reich, who heads equity research at B. Metzler seel. Sohn & Co., one of Frankfurt's oldest private banks. He said he saw the economies of the European heartland threatened by what he described as politicians' attempts to turn the European Central Bank into their instrument. ''Europe is going back to 1970s remedies to some extent,'' he said. Referring to the German finance minister, he said, ''Oskar Lafontaine points to the Fed as an example of policy-making, but it's an entirely false one because it uses a United States that has undergone deep structural reform and compares it with a Europe that is still waiting for its own.'' ''I don't see anything stimulating growth right now,'' Mr. Reich said, ''and there are more risks in the offing.'' Mr. Mayer of Goldman Sachs found the issue of labor-market flexibility and structural reform ''the red line dividing Europe'' between countries such as Ireland, the Netherlands and Finland, where there had been some, he said, and Germany, where he considered the new government was doing ''the opposite, almost a mirror image, of what is needed.'' Stressing Germany's disproportionate role in Europe's economic well-being, Mr. Mayer said, ''If I were to wear my German hat, I'd be very, very negative.'' But, he added, better performances in some of the smaller countries ''prevent the situation from looking totally bleak.'' Mr. Mayer believes that at its bleakest - a worst-case set of circumstances - Europe could be pushed by political pressure from the governments in Germany and France toward a Japanese situation. He defined that as one where interest rates had been cut to zero and monetary policy was no longer effective. If Europe were also to attempt to fire up its economy through budget-stimulus measures, Mr. Mayer said, a brief lift would be followed by a petering out and a limited net effect. ''What Japan shows you is that a lack of structural reform and heavy reliance on monetary and fiscal policy is a dead end,'' he said. Deep structural reforms in Europe could create new demand, Mr. Mayer said, but with the present political line-up, ''they are not going to come.'' International Herald Tribune, Feb. 16, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://home.ease.lsoft.com/archives/CTRL.html http:[EMAIL PROTECTED]/ ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
