`Impoverished' Kremlin has pounds 400bn assets

NO MATTER that 40 million Russians are below the poverty line. No matter that Moscow is looking for another multi-billion dollar bail- out from the International Monetary Fund to plug a gaping hole in the budget, or that it defaulted on foreign debts to the horror of world financiers only months ago.

The country is - at least by one calculation - extremely wealthy, with enough funds to pay off its international debts four times over, and to dwarf the personal fortune of the Queen.

A senior official, Pavel Borodin, has told the Russian television channel NTV that the Kremlin owns $650bn (pounds 400bn) - yes, billion - of property, making it one of the world's largest commercial entities. "It is national wealth and cannot be sold," explained Galina Khavrayeva, a consultant for Mr Borodin.

Mr Borodin is manager of the Kremlin Office, an empire directly answerable to Mr Yeltsin, which is believed to comprise 60 separate companies, including 10 construction firms, eight farms, a furniture factory, about 100 sanatoriums and rest homes, and the exclusive President Hotel in Moscow, orginally built for the Communist Party elite.

It also controls luxury dachas - country retreats - hotels, restaurants, and the lavish, multi-domed Kremlin Palace itself. Rumours abound in Moscow that revenues from these businesses were used to finance Mr Yeltsin's extravagant, but successful, 1996 election campaign, although there has been no firm proof. "This property is ... very effectively run," Mr Borodin told NTV's respected Itogi programme.

His remarks are likely to revive an issue that has long irked Mr Yeltsin's foes, who find it hard to reconcile Russia's bankruptcy and worsening widespread poverty with the lavish spending of the Kremlin and its incumbent.

The mass circulation Argumenti i Fakti weekly paper reported recently that an estimated $250m has been spent repairing the Kremlin alone, including the purchase of a presidential dinner set costing $1,000 a plate. One square metre of repairs cost several thousand dollars, the paper said.

Mr Yeltsin, whose declared 1997 salary was the rouble equivalent of $325,000, is certainly no stranger to fine living. Apart from the Kremlin, he has four presidential country retreats (including one on the Black Sea), a 650-strong corps of guards, and an Ilyushin-96 aircraft which reportedly costs $42,000 for a one-hour flight.

President Boris Yeltsin's chief doctor said yesterday the ailing leader would spend at least two weeks in hospital recovering from a bleeding ulcer. Sergei Mironov said tests due tomorrow will decide whether an operation is needed.