Boris Fyodorov, a former tax and finance minister, founder of the Forward Russia! political movement and a leader of the Right Cause coalition of liberal reformers, spoke to The Russia Journal. The first part of the WORLD REPORT appeared in last week's Russia Journal. Here is the second part.

RJ: It has been suggested Russia will receive the IMF loan with or without the Duma passing the required laws ? as a pay-off for Russia resolving the Kosovo conflict.

BF: I would say that all loans to Russia, all $20 billion from the IMF and World Bank over the last six years were all purely politically based. They had nothing to do with economic reforms. Nothing to do with implementation of agreements, and it was always an effort to keep Russia quiet. And keeping Russia quiet in different senses: supporting Yeltsin and allowing him to get the upper hand over his enemies - the question of very stable markets just before presidential elections. Did the IMF not notice that GKOs were paying 180 percent per annum? Each time, the IMF gets less and less professional in its attitudes. Today it's quite clear nobody really gives a damn about what's happening with laws. And in any case, who really believes adoption of new laws in the Russian Parliament changes anything? So that means it is a very cynical Western game of double standards where their own interests are much more important than the interests of Russian democracy and economic reform.

RJ: Given the laws have no impact?what should be the criteria for Russia to receive IMF loans?

BF: Very simple. Each month 100 people jailed for not paying taxes. Each month 1,000 officials jailed for bribery. Do you need any more? Everything according to the law. ? You don't have to go to the parliament to adopt any new laws; it's already there. It's more important than the budget deficit, than the primary surplus on the Russian budget, you know all this bullshit that people are talking.

RJ: Does Russia need the IMF loan, given its trade surplus?

BF: Of course not. We have $9 billion in trade surplus over four months. Multiply it by three and you get $27 billion. Our debt servicing this year is $17.5 billion. The official figures are at least 30 percent less than the real figures, which means another $10 billion will disappear into Swiss banks. The West never really wanted to help us with curtailing capital flows. I remember passing letters to American officials asking for help in looking for the real estate of some of our famous people in the United States. I've never got any response; so it's a game where most of Russia's money is in any case in the West helping to finance the Western economy, we're giving a huge interest free loan to the American Treasury and Fed. In Russia today we have $30, $40, $50 billion in cash, which is our main money supply, because if you look at our current rate of ruble money supply it doesn't mean anything. So that's very funny, when the IMF, these famous economists come to discuss regulation of a very small part of our monetary system. Rubles do not matter. Most of the flows are in barter, counter-trade, netting operations, quasi-money instruments and dollars. So why concentrate on this small part which is rubles? We give a lot of money buying these bank notes, we put a lot of money in Western banks, and then we don't pay the West, and the West wants to give us more money. Thank you very much. It doesn't help Russia; it doesn't help the West because, first, nobody will say thank you, and the anti-Western sentiments in this country are developing at a very nice pace. So the more money you ship here the less we like you.

My advice to America is to put a line in your budget. Keeping Russia quiet $20 billion - no missions, no discussions, no IMF, no nothing. This is divided among the oligarchs. We shall keep quiet. We like to go to Nice, we like to buy castles and go to Florida to enjoy ourselves, to spend money in casinos in Monaco. We help the real estate market in London quite nicely. The West ultimately gets everything back. I'm exaggerating, but clearly this money is not used effectively.

RJ: The Soviet Union defaulted on its debt in 1991 and Russia was involved in negotiations until January 1998. It then repaid its debt for eight months until the crash. Does Russia deserve debt forgiveness?

BF: Being a patriot of Russia, I would say I don't give a damn about any write-off or anything, we are rich enough to pay off any debts. It's your money, you can write it off if you wish. Today you will write off Soviet debts; tomorrow you will also write off Russian debts. This is the game that the West engages in. It's very nice to see talks about writing off debt with a country that participates in G-7 meetings.

RJ: It has been said Maslyukov was a fool but Aksyonenko is a dangerous fool. What are your thoughts?

BF: I think Aksyonenko is much more professional, at least he understands railroads, at least he is a tough manager - a real manager. Railroads under him became more efficient, much better at paying taxes. I'm a witness to that. And he is a very energetic person; so I don't believe that he is really a fool. The problem is you don't put a railroad engineer in charge of a macroeconomic policy position. It is clear today's Russian government is extremely weak. I can give you one very small personal example. In 1993, I was doing the job that four people now do - Khristenko, Kasyanov, Livshits and Zadornov. I was alone, and I wasn't complaining that I had too much work. It's also clear none of them is a specialist in macroeconomic policy. How can Zadornov negotiate with the IMF when he doesn't speak English? How can you allow Mr. Kasyanov to be in charge of the Ministry of Finance, since he never stepped aside from external debt negotiations. He doesn't really know anything about the budget or economic situation in Russia; it's very strange.

RJ: What are the chances of Stepashin surviving?

BF: 50-50 or even less. He is a weak prime minister. He managed to lose a lot of credibility in the first days. If a person on the third day of being nominated prime minister has to say publicly at a government meeting, "Well, I am the prime minister, I will decide here!" Something is wrong. If you come to a meeting to discuss the former Gore-Chernomyrdin Commission and stop short of calling it the Gore-Stepashin Commission because you probably shouldn't risk it publicly. If you go to Moscow University and start weakly speaking about future teaching jobs, then something is wrong. Then he has a first deputy prime minister, Mr. Aksyonenko, who thinks he is prime minister, who has much more support in the presidential surroundings, who sometimes makes mistakes in his presentations, naming himself prime minister. And Stepashin has a major weakness. In Russia, the prime minister's job is 90 percent about economics. Stepashin definitely is much weaker [on this] than even Aksyonenko.

RJ: It's been nearly a year since the devaluation ? and although brutal, has it had a positive impact on Russia as a whole?

BF: Positive for exporters. But clearly a four times over devaluation cannot be positive for the economy. We talk about the Euro devaluation of 10 percent since the beginning of the year - it's worrying a lot of Western Europe. Here we have four times devaluation and it's a question of how it is used; so, probably it was inevitable there would be a devaluation. But, so far as I know as an economist: First, any devaluation only has a temporary effect and it can only go on for so long. That is why today we basically have a stable exchange rate, it will be stable for months now, and slowly this competitive advantage we have gained will evaporate. And in a normal country, this period is used to modernize the economy, to increase productivity. Do you think anybody is increasing productivity in Russia today?

I think some people are busy minting money and then hiding it from the government. It's clear. 90 percent of all federal budget revenues are coming from huge monopolies - and 90 percent of what they're paying is coming from exports. Increased exports are more than four times in rubles; there should be more taxes. Taxes are not even overtaking ruble inflation. So you ask yourself who is getting richer and who is getting poorer? It's only a temporary effect. It's good Mr. Primakov was frightened to the degree that he became a staunch monetarist. I think today, the government is saved by devaluation, higher oil prices, some of the commodities. It is clear the economy is generally helped by the fact that there are no GKOs, once there are no GKOs, liquidity has to flow somewhere. And even if 10 percent of what was flowing into GKOs is now flowing into the real economy, it's helpful. But we don't really see any meaningful measures. It's mostly that luck is on their side for the moment, but it's not for long.

RJ: As we draw to the end of the Yeltsin-era, overall, would you judge it as positive for Russia, an absolute disaster, or better than it might have been?

BF: I don't think you can assess Yeltsin's period on one level, there are several. It's clear he played a positive role in the switch from a communist state to a more democratic state. Basically, if he stopped being president in 1992 to '93, it would have helped. It's clear he is a person of action, of fight, of revolution; he is not a person of reforms, of hard work, of doing things in a proper way. So that's why he will be in history because of certain features in his character, which obviously are unique.

And its clear that in May we've seen another example of how you can have an absolutely desperate situation, when you're half dead, you're weak, you don't really have any supporters, you've annihilated all those around you, all your team. And here is impeachment, here is a prosecutor general, here is a prime minister who is betraying you. Here is a population where 99 percent hate you, [you are] losing in international prestige - in Yugoslavia you are in a losing position because you don't have real force to do anything. And still this half-dead person, who many people buried a lot of times, he makes a move, which surprises many, he turns the tables on them, he gets the upper hand, and what does he do next? He never avails himself of the opportunity; he never uses his victory. He always goes into a passive state. He allows this family to start ruling, to create weak governments and not do anything in the economy. I never had any hopes he would do anything this time. I had hopes in '91, '92, '93, but that's his character. So he's unique in certain positions, and he's very weak and bad for the country in others.