Event Summary
Stabilizing Russia''s Middle Class Through Mortgage Lending
A strong, property-owning middle class is the cornerstone of any democratic system, granting individuals a permanent stake in the country''s economic and political future. In pursuit of a stable democracy in Russia, SDI has continued the work it began last January when BCSIA Director Graham Allison and Moscow Mayor Yuri Luzhkov agreed to cooperate in developing a home mortgage program in Moscow. The establishment of such a system will help average Russians acquire and improve their housing, and ultimately will help make property ownership a reality for a far larger segment of the Russian population.
Despite the ongoing turmoil in the Russian economy and government, in September Graham Allison, accompanied by the Executive Director of SDI''s Moscow Initiative, Stefan Zhurek, attended Moscow''s 851st anniversary celebration at which Mayor Luzhkov announced the initiation of a trial mortgage program, and awarded certificates to twelve Muscovites who had been pre-approved for mortgages by selected banks. These recipients can now search for new apartments with the assurance that they will not be required to pay the entire purchase price up-front, but instead over a period of several years - just as commonly occurs
In the West. While widespread implementation of a mortgage system will require improvement and stabilization of Russia''s underlying economic climate, this pilot program will allow Muscovites to gain familiarity with the basic principles and concepts of mortgage lending.
The Moscow Mortgage Initiative (MMI) is also working with the Moscow City Duma and the Moscow City Administration to develop other essential elements of a functioning mortgage system. A mortgage law which will provide for enforceable eviction and foreclosure received passage of its first reading from the Moscow City Duma in August, and it is likely to be approved in its final form in December. Work is also continuing on improving Moscow''s system of title registry and on implementing uniform mortgage underwriting standards, in order to promote the ultimate development of a secondary mortgage market, as well as other key elements of the financial infrastructure.
The MMI working group also includes BCSIA Executive Director John Reppert; SDI Associate Director Fiona Hill; SDI Research Assistant Cameron Half; SDI Fellow Vladimir Boxer; and Kennedy School Lecturer in Public Policy Jay Walder, all working in conjunction with an international group of experts in housing and housing finance. For more information, contact Cameron Half at 617-495-1288 or cameron_half@harvard.edu.
Controlling Loose Nukes
Russia''s deepening economic crisis is escalating the threat that nuclear weapons materials and the knowledge to turn them into nuclear bombs will make their way into hostile hands. The economic status of nuclear guards and workers is increasingly desperate, as the Russian Government is increasingly unable to pay for nuclear security measures. The signs of crisis are everywhere: thousands of workers from Russia''s premier nuclear weapons laboratory striking over unpaid wages; the Russian Minister of Defense ordering officers to take the task of providing resources for their troops into their own hands, and ordering the troops into the fields to find food; armed military helicopters, apparently stolen by military officers, intercepted by customs on their way to North Korea; a building in Moscow containing over 100 kilograms of weapons-usable highly enriched uranium standing entirely unguarded because the institute cannot afford a guard''s $200 monthly wage; the list goes on. The United States is spending hundreds of millions to cooperate with Russia to improve security for nuclear warheads and materials and find new employment for desperate nuclear workers - but far more remains to be done, and there has been little response to the urgent risks posed by the new crisis. NASA''s recent announcement that it was considering asking for $660 million in additional funds to support Russia''s participation in the international space station shows that the U.S. Government is capable of "new thinking" on projects whose importance is recognized, but no similar action has been taken to address the "loose nukes" threat. BCSIA researchers, John Holdren, Matthew Bunn, and Jennifer Weeks, working with experts at other universities and the national laboratories, have been developing and promoting a broad agenda of new steps to address the "loose nukes" problem - perhaps the most urgent military security threat the United States now faces. At this year''s U.S.-Russian Investment Symposium there will be a session devoted exclusively to the plight of the 12 "nuclear cities" in Russia - formerly closed and secret cities whose economies are dependent on a crumbling nuclear industry. 1st Deputy Minister in the Ministry of Atomic Energy (Minatom), Lev Ryabev will lead a Minatom delegation to the Symposium.
Understanding Investment in Russia
On January 14-16, 1999 BCSIA''s Strengthening Democratic Institutions Project (SDI) will host hundreds of Russian and Western leaders for the third annual U.S.-Russian Investment Symposium. The Symposium, which will this year be called "Financial and Direct Investment in Russia: Meeting the Challenge," has for the past two years brought together the largest group of senior Russian and Western business and economic leaders ever assembled in the United States.
Despite the recent political and economic turmoil in Russia, the 1999 Symposium promises to provide an excellent forum for leaders to analyze the current economic disorder in Russia, and brainstorm about how to meet future challenges. Keynote speakers will include U.S. Deputy Secretary of the Treasury Lawrence Summers, Moscow Mayor Yuri Luzhkov, World Bank President James Wolfensohn, and Krasnoyarsk Governor Alexander Lebed. Also speaking will be International Monetary Fund First Deputy Managing Director Stanley Fischer, Russian Central Bank Chairman Viktor Gerashchenko, European Bank for Reconstruction and Development First Vice President Charles Frank, Russian Minister of Economics Andrei Shapovalyants, World Bank Vice President for Europe and Central Asia Johannes Linn, Overseas Private Investment Corporation President and CEO George Mu-oz, LUKoil Chairman and CEO Vagit Alikperov, and Committee on CIS Relations Executive Secretary Boris Berezovsky.
Panel discussions will spotlight the Russian regions, in conjunction with the Presidential Administration of the Russian Federation. Other sessions will focus on the role of international financial institutions and foreign investment in Russia; investment in specific sectors of the Russian economy; investing in the Russia''s former "nuclear cities"; the legal environment, management and corporate governance, taxation, and other key issues of foreign investment in Russia. The 1999 Symposium will also include a special plenary session entitled, "Russia''s Financial Crisis and its Meaning for Investment: An Open Exchange," which will bring together selected Russian and Western participants to discuss the sources of the current crisis and its impact on investment and the investment climate.
This year, SDI is organizing the symposium in conjunction with the U.S.-Russia Business Council, The Conference Board, Presidential Administration of the Russian Federation, Russian Marketing Association, and the Russian National Foundation for Strategic Research.
For more information on the 1999 Symposium, contact Colin Harper at 617-495-1356 or colin_harper@harvard.edu or visit the Symposium web site at http://www.ksg.harvard.edu/bcsia/sdi