THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, March 30, 1995 TAG: 9503300358
SECTION: FRONT PAGE: A10 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 61 lines
Four years after the Soviet Union's collapse, stability in Russia is threatened by a widening gap between a ``filthy rich'' entrepreneurial class and millions with barely enough money to buy food, a former U.S. ambassador to the Soviet Union said Wednesday.
``A situation like that is socially explosive,'' said Jack F. Matlock Jr., who served as ambassador in Moscow from 1987 to 1991 during the fall of communism.
About 1.5 million Russians - less than 1 percent of the country's population - had annual incomes of $300,000 or more in early 1994, he said at a luncheon of the Economics Club of Hampton Roads.
``On the other hand, you had 30 percent of the population living below the poverty line, and the poverty line wasn't defined like ours. The poverty line was defined as enough income to eat.''
The solution to Russia's economic ills will require changes to the country's tax system and other measures to make investment more attractive to its own citizens, said Matlock.
Partly out of fear of inflation and uncertain tax policies, Russians have spirited $100 billion out of the country to foreign banks, he told the club at the Norfolk Waterside Marriott.
The largest of the 15 republics of the former Soviet Union, Russia has been hobbled also by an unwieldy government bureaucracy, including a 20,000-member staff working for Russian president Boris Yeltsin.
``Any time there's a budget crunch, they may go two to three months without getting paid,'' said Matlock, who served as a Foreign Service officer in Moscow during the early 1960s, mid-1970s and in 1981 before serving as ambassador there.
``Sometimes they have to take bribes to stay alive and to feed their families,'' he said.
After living under the Communist Party's control for almost 70 years, Russians have had to devise new institutions, a process that could take decades, said Matlock.
The Communist Party, he noted, was at the core of every Russian organization, even those as simple as stamp collectors' clubs. ``To go from that to what we know as a civil society is a long jump.''
Some Russians yearn for the power of the old Soviet Union, but most realize there is no going back to the old order, Matlock said. Hisbook about the collapse of the Soviet Union, ``Autopsy on an Empire,'' is scheduled to be published in October by Random House.
Amid its difficulties, Russia has some achievements , including the development of a free press.
``This is a country that never had anything resembling a free press before 1990 or 1991,'' said Matlock, a professor of international diplomacy at Columbia University. ``Yet during the war in Chechnya, the Russian media really went after the government and the military at a lot of personal risk. They turned the country totally against that operation.'' ILLUSTRATION: John Matlock, former U.S. ambassador to the Soviet Union.
by CNB