In response to "Drug Runners of the Golden Crescent," by Mumin Shakirov, Feb. 18.
Editor:
The photograph on the front page of your Feb. 18 edition shows Abdulamon Lyombekov, described as a Tajik drug dealer, purportedly reading a letter from the Aga Khan Foundation concerning food aid for opposition forces. Then, in your feature article on Gorny Badakhshan, Tajikistan, the author suggests that the survival of the population of Gorny Badakhshan has been dependent on food supplies provided by Lyombekov.
Since early 1993, the Aga Khan Foundation has been undertaking humanitarian and development programs in Gorny Badakhshan with official funding from the United States, Great Britain, Switzerland, the Netherlands and the European Union, as well as from a number of non-governmental agencies. We wish to point out the following:
?At no time did the Aga Khan Foundation ever have any form of communication with Lyombekov.
?The humanitarian assistance provided by the Aga Khan Foundation is made available to the whole population of Gorny Badakhshan without regard to religious or political affiliation. At no time has the foundation made any special arrangements for delivery of food aid to opposition groups.
?The survival of the population in this region since the Tajik civil war has been due in large measure to the combined efforts of the government and the Aga Khan Foundation and its donors, together with other relief agencies such as M?decins Sans Fronti?res, the International Federation of Red Cross and Red Crescent Societies, the World Food Program and the UN High Commissioner for Refugees. We are unaware of any other source of humanitarian assistance for Gorny Badakhshan.
Robert Middleton
Legal Adviser,
Aga Khan Foundation
Intricacies of Investing
In response to the editorial "Investment Licensing Still Unclear," Feb. 18.
Editor:
Your editorial addresses the issue of foreign investment in Russia -- a topic dear to the hearts of many of us. Because this topic is of such crucial significance and has received an incredible amount of attention recently, I would like to make a few observations.
The first is that in most recent discussions of the topic there has been a tendency to "throw in the kitchen sink." Alongside valid arguments, one often hears arguments that are not very well thought out, or are a result of an incomplete understanding of the situation.
Regulation of capital inflows is not a particularly Russian phenomenon, and it happens to have some economic justification. Countries from Malaysia and the Philippines to Chile have various forms of control of movement of capital into the economy.
Russia, like most countries, has its own currency, and it is perfectly understandable that it wants to make that currency the only currency in the country. We can criticize the authorities for high budget deficits financed through credit emissions which result in high inflation and a depreciating currency, but we cannot fault anyone for not just letting everybody use dollars, no matter how convenient we may think that would be.
Similarly, rather than just making a blanket statement that regulation of capital inflows is "bad," we should give the government the benefit of the doubt and look at how they would actually go about it. Regulation requiring Central Bank permission for loans from abroad with maturity of more than 180 days has been in place for awhile, and is enforced. I am not aware of a single case where a legitimate transaction would not have received such permission.
Your editorial contains a couple of statements which seem to be a result of misinformation, or at least of incomplete information. First, you say that "I" accounts are "hard to administer." We have been opening and administering "I" accounts for a year and a half, and we find them no different than other banking operations in Russia (which are, admittedly, more bureaucratic than in most other countries).
Second, you seem to be under the impression that the amount invested into the country by the investor will sit in cash in their "I" account, therefore loosing value every day. In practice, the "I" account is a tracking mechanism only, and for most investors rubles move out of it immediately to buy what they are here to buy: shares, manufacturing facilities, real estate. The ruble value of these fixed or financial assets is adjusted by the markets to take into account ruble depreciation.
What do need to be changed are the conditions of investment tenders which obligate the investor to bring a specified portion of the bids into the country even if the project/plant is not yet ready for that amount of capital expenditure. This could result in an investor sitting a large amount of rubles in an "I" account for a period of time, and therefore needs to be changed. But this is a perfect example of the need to focus our criticism on situations that really matter, and where a small change can bring about a significant positive result.
If we do not discriminate between things in Russia that are nonsensical and the ones that actually do have a rational foundation, we will loose credibility, and the ear of government.
Miljenko Horvat
President
Citibank, Moscow
Editor:
The photograph on the front page of your Feb. 18 edition shows Abdulamon Lyombekov, described as a Tajik drug dealer, purportedly reading a letter from the Aga Khan Foundation concerning food aid for opposition forces. Then, in your feature article on Gorny Badakhshan, Tajikistan, the author suggests that the survival of the population of Gorny Badakhshan has been dependent on food supplies provided by Lyombekov.
Since early 1993, the Aga Khan Foundation has been undertaking humanitarian and development programs in Gorny Badakhshan with official funding from the United States, Great Britain, Switzerland, the Netherlands and the European Union, as well as from a number of non-governmental agencies. We wish to point out the following:
?At no time did the Aga Khan Foundation ever have any form of communication with Lyombekov.
?The humanitarian assistance provided by the Aga Khan Foundation is made available to the whole population of Gorny Badakhshan without regard to religious or political affiliation. At no time has the foundation made any special arrangements for delivery of food aid to opposition groups.
?The survival of the population in this region since the Tajik civil war has been due in large measure to the combined efforts of the government and the Aga Khan Foundation and its donors, together with other relief agencies such as M?decins Sans Fronti?res, the International Federation of Red Cross and Red Crescent Societies, the World Food Program and the UN High Commissioner for Refugees. We are unaware of any other source of humanitarian assistance for Gorny Badakhshan.
Robert Middleton
Legal Adviser,
Aga Khan Foundation
Intricacies of Investing
In response to the editorial "Investment Licensing Still Unclear," Feb. 18.
Editor:
Your editorial addresses the issue of foreign investment in Russia -- a topic dear to the hearts of many of us. Because this topic is of such crucial significance and has received an incredible amount of attention recently, I would like to make a few observations.
The first is that in most recent discussions of the topic there has been a tendency to "throw in the kitchen sink." Alongside valid arguments, one often hears arguments that are not very well thought out, or are a result of an incomplete understanding of the situation.
Regulation of capital inflows is not a particularly Russian phenomenon, and it happens to have some economic justification. Countries from Malaysia and the Philippines to Chile have various forms of control of movement of capital into the economy.
Russia, like most countries, has its own currency, and it is perfectly understandable that it wants to make that currency the only currency in the country. We can criticize the authorities for high budget deficits financed through credit emissions which result in high inflation and a depreciating currency, but we cannot fault anyone for not just letting everybody use dollars, no matter how convenient we may think that would be.
Similarly, rather than just making a blanket statement that regulation of capital inflows is "bad," we should give the government the benefit of the doubt and look at how they would actually go about it. Regulation requiring Central Bank permission for loans from abroad with maturity of more than 180 days has been in place for awhile, and is enforced. I am not aware of a single case where a legitimate transaction would not have received such permission.
Your editorial contains a couple of statements which seem to be a result of misinformation, or at least of incomplete information. First, you say that "I" accounts are "hard to administer." We have been opening and administering "I" accounts for a year and a half, and we find them no different than other banking operations in Russia (which are, admittedly, more bureaucratic than in most other countries).
Second, you seem to be under the impression that the amount invested into the country by the investor will sit in cash in their "I" account, therefore loosing value every day. In practice, the "I" account is a tracking mechanism only, and for most investors rubles move out of it immediately to buy what they are here to buy: shares, manufacturing facilities, real estate. The ruble value of these fixed or financial assets is adjusted by the markets to take into account ruble depreciation.
What do need to be changed are the conditions of investment tenders which obligate the investor to bring a specified portion of the bids into the country even if the project/plant is not yet ready for that amount of capital expenditure. This could result in an investor sitting a large amount of rubles in an "I" account for a period of time, and therefore needs to be changed. But this is a perfect example of the need to focus our criticism on situations that really matter, and where a small change can bring about a significant positive result.
If we do not discriminate between things in Russia that are nonsensical and the ones that actually do have a rational foundation, we will loose credibility, and the ear of government.
Miljenko Horvat
President
Citibank, Moscow
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