CDI Russia Weekly-#116

25 August 2000

Edited by David Johnson

Center for Defense Information

1779 Massachusetts Ave. NW

Washington DC 20036

phone: 202-332-0600; fax:202-462-4559

djohnson@cdi.org

The CDI Russia Weekly is an e-mail newsletter that carries news and

analysis on all aspects of today's Russia, including political,

economic, social, military, and foreign policy issues. With funding

from the Carnegie Corporation of New York, CDI Russia Weekly is a

project of the Washington-based Center for Defense Information (CDI),

a nonprofit research and education organization.

  CDI Russia Weekly web page (with archive): http://www.cdi.org/russia/

  Visit CDI's web site: http://www.cdi.org

Contents:

  1. Moscow Times:  Anna Badkhen and Simon Saradzhyan, Investigation Opened Into Sinking of Kursk.

  2. The Globe and Mail (Canada): Geoffrey York, Russia's official react to outrage. Authorities respond with meek apologies, confessions and quick offers of resignation.

  3. AFP: Putin uses Kursk tragedy to turn up heat on Russia's oligarchs.

  4. BBC: Stephen Mulvey, Reforming Russia's military.

  5. Moscow Times: Pavel Felgenhauer, Officials Inept at Fudging.

  6. RFE/RL: Sophie Lambroschini, Environmentalists Warns Of Submarine's Nuclear Risk.

  7. AFP: Kursk tragedy unlikely to damage Russian arms sales.

  8. Itar-Tass: Russian politicians call for increased defense spending.

  9. Voice of America: LAurie Kassman reports on Russia media and the Kursk crisis.

  10. The Russia Journal: Patrick Gill, 2 years on, Russia's economy 'healthy'

  11. gazeta.ru: Text of President Putin's August 23 television address.

*******

#1

Moscow Times

August 25, 2000

Investigation Opened Into Sinking of Kursk

By Anna Badkhen and Simon Saradzhyan

Staff Writers

Twelve days after the Kursk hit the seafloor, military prosecutors finally

opened a criminal investigation Thursday into the submarine accident.

But even so, the prosecutors refused to say exactly what crime they were

investigating and continued to spin various theories as to what could have

caused the submarine to sink.

The latest theory was officially put forward Thursday by Federal Security

Service director Nikolai Patrushev, who said the FSB is investigating whether

the nuclear submarine was sunk by Dagestani kamikaze bombers working for the

Chechen rebels.

Other theories include an encounter with a mine that has been floating in the

Barents Sea since World War II and, the military's favorite scenario, that

the Kursk collided with a mysterious foreign submarine.

A duty officer at the Northern Fleet prosecutor's office would not say what

article of the Criminal Code was used to open the formal investigation, or

why his office waited so long to act.

The case was opened the day after President Vladimir Putin promised in a

televised address that the tragedy would be thoroughly investigated.

In remarks reported by Interfax, Patrushev said two men from Dagestan who

were not members of the crew were on board the Kursk. It is unclear whether

this increases the death toll from 118 to 120.

"We have been gathering information about them and found no data indicating

that they were related to the accident on the nuclear submarine," Patrushev

was quoted as saying in Murmansk.

His statement came on the heels of an announcement by Chechen rebel leaders

last Saturday that the Kursk sank because of an explosion set off by a

Dagestani kamikaze bomber.

Both men f Mamed Gadzhiyev, 42, and Lieutenant Captain Arnold Borisov, 24 f

worked at a torpedo-design bureau at the Dagdizel military factory in

Kaspiysk, Dagestan, where Gadzhiyev was head of the bureau and Borisov was

his deputy.

They were on the Kursk to oversee testing of torpedoes they designed, said

factory acting director Rustam Usmanov, who denied they could have

intentionally caused the accident.

"These two people were patriots on a sacred mission. They were overseeing

[torpedo] tests," Usmanov said by telephone. "Only scum could say that they

were kamikaze bombers, and these scum must be drowned in junk."

Usmanov denied a report in Kommersant newspaper that Dagestani FSB officials

interrogated his co-workers about Gadzhiyev and Borisov. He said FSB

officials came to his office Wednesday to "express their condolences." The

Dagestani FSB in Makhachkala denied they had questioned anyone about the

Kursk.

Usmanov also denied media speculation that the torpedo being tested was of a

new risky design. One torpedo was indeed to have been test-fired, he said,

but it was a regular weapon commissioned more than a decade ago.

Western experts have said the most probable explanation for the two

explosions recorded by Norwegian seismologists and sonars at the time of the

accident was the detonation of one or several of the Kursk's torpedoes.

Moreover, the Defense Ministry's official mouthpiece f Krasnaya Zvezda f

reported last Friday that it could have been a torpedo detonation that sank

the Kursk. The daily quoted a retired Northern Fleet admiral as saying that a

few years ago a defense company, which he did not name, had lobbied his fleet

to test and commission a new torpedo that would run on liquid fuel after

being launched by a stream of gas.

The admiral, who was not identified, said the fleet believed the torpedo was

too dangerous to maintain and launch, but he believed it could have been

test-fired by the Kursk. The daily newspaper never followed up its own

report.

Alexander Pikayev, a military expert at the Moscow Carnegie Center, said the

authorities produced different versions of why the Kursk sank "to shift

responsibility for their lack of activity."

When it became clear that the foreign submarine theory was incredible,

Pikayev said, the authorities picked up the Chechen theory "to unite the

society around them against a new threat from the Caucasus."

*******

#2

The Globe and Mail (Canada)

August 25, 2000

Russia's official react to outrage

Authorities respond with meek apologies, confessions and

quick offers of resignation

By GEOFFREY YORK

Moscow Bureau

Moscow -- Russian President Vladimir Putin, humbled by the fury of a grieving

nation, says he feels "responsibility and guilt" for the deaths of 118

sailors on the destroyed nuclear submarine Kursk.

Under intense pressure from angry relatives of the seamen, Mr. Putin

yesterday cancelled a memorial ceremony and hastily departed from the Arctic

naval base where the families are gathered.

His awkward change of plans showed how the Kremlin is struggling

unsuccessfully to control a new Russian phenomenon, the power of public

opinion.

Mr. Putin and his advisers were caught off-guard by the outpouring of

grassroots demands for swifter rescue work after the Aug. 12 disaster.

Thousands of Russians clogged radio call-in lines and newly created Web sites

to vent their criticism of the seemingly paralyzed Kremlin and the secretive

military.

The torrent of public emotion has been surprisingly effective, forcing

authorities to respond with meek apologies, confessions of errors, promises

of compensation and offers of resignation.

While the submarine disaster has exposed the Russian military's Cold War

instincts of blaming the West and concealing the truth, it has also

demonstrated that a groundswell of opinion by ordinary Russians can be

remarkably influential.

"Russians are losing their sense of fear," military analyst Alexander

Konovalov said yesterday. "It's been 10 years since the collapse of the

Soviet Union, and we have a new generation that has grown up in an era

without censorship or fear of arrest."

Military commanders, who stonewalled and gave false assurances in the early

days of the crisis, are now begging for forgiveness from the Russian people.

The Kremlin has announced compensation of at least $10,000 for each sailor's

family -- equivalent to 10 years of a seaman's salary.

Defence Minister Igor Sergeyev, who acknowledged mistakes in the rescue

effort, has offered his resignation. Russia's top naval commander, Vladimir

Kuroyedov, and the northern fleet's commander, Vyacheslav Popov, have also

offered to resign.

Mr. Putin yesterday said he won't accept any resignations until there is a

complete investigation of the disaster in which the Kursk was devastated by

two explosions. The authorities must determine "whether there are guilty,

truly guilty [officials], or simply a confluence of tragic circumstances," he

told Russian television last night at the end of a day of national mourning

for the lost crew.

"Politicians have said that I must show a strong character and should sack

somebody . . . or put someone in jail," he said. "But this is the simplest

way out of this situation and in my opinion would be a mistake."

In an unusual sign of humility, Mr. Putin said he felt "a great feeling of

responsibility and guilt for this tragedy." But he also lashed back at his

critics, calling them "unfair" and "ill-intentioned."

He vowed to "restore the army, the fleet and the state."

Mr. Putin insisted that he had accepted an offer of foreign aid as soon as it

was proposed. He has been widely criticized for waiting several days before

accepting Western offers of help in the rescue effort.

Before leaving the north yesterday, Mr. Putin endured a grueling three-hour

meeting Tuesday night with about 500 relatives of the Kursk crew, including

some who shouted at him and demanded answers. Several people fainted in the

emotionally charged meeting.

At the request of the families, he cancelled a memorial ceremony scheduled

for today and postponed plans to visit the frigid waters where the disaster

took place.

Mr. Putin has apparently realized that he made a huge mistake by staying on

vacation at a Black Sea resort for the first several days of the crisis. "He

put too much faith in his public-relations strategists," Mr. Konovalov

commented.

"They can construct a sophisticated system of controlling public opinion, but

they never considered the moral factor. They probably told Putin to stay as

far away as possible from the tragedy, so that he could later blame someone

else. They tried to erect a barrier between him and the bad news, but it

didn't work."

Unlike previous Soviet-era military disasters, which were hushed up or never

acknowledged, the Russian navy this time allowed a state television reporter

to visit the disaster scene and give live broadcasts of the rescue effort.

"The very fact that the fleet's general staff were meeting the TV cameras

several times every evening, this is unique. It had never happened before,"

Mr. Konovalov said. "The times are changing."

*******

#3

Putin uses Kursk tragedy to turn up heat on Russia's oligarchs

MOSCOW, Aug 24 (AFP) -

Russian media tycoons were bracing themselves Thursday for a new showdown

with the Kremlin after President Vladimir Putin lambasted their

"unscrupulous" coverage of the Kursk tragedy.

Signalling a fightback after 10 days of media criticism, Putin said on state

television late Wednesday he accepted "responsibility and guilt" for the 118

deaths but accused his critics of "trying to use this tragedy ... to gain

political capital."

Russia's business elite, known here as "oligarchs," form an almost mythical

band of tycoons who amassed vast wealth and a powerful political punch during

Boris Yeltsin's two terms as president.

Analysts interpreted Putin's comments as a thinly-veiled attack on oil and

media megnate Boris Berezovsky and Media-MOST chief Vladimir Gusinsky, who

own Russia's two top private television channels, ORT and NTV.

Self-appointed champions of the bereaved families, the two channels have

blasted Putin for his insensitive handling of the Kursk crisis and have

spearheaded fundraising efforts to help the relatives.

But in an effort to put the heat back on the two oligarchs, both of whom are

currently under investigation by tax police, Putin implied that the tycoons'

profiteering was partly to blame for the rundown state of the Russian navy.

"Those who say that the people who helped ruin the army, the navy and the

state for a long time turned out to be in the first ranks of the seamen's

defenders are right," Putin said.

Last month, the Russian leader launched a crackdown on business tycoons

widely despised for growing fabulously rich during the helter-skelter

privatisations of the Yeltin era while much of the nation suffered in dire

poverty.

In his television broadcast, Putin scoffed at the financial aid offered to

the Kursk families by the oligarchs, adding: "Some of them have even

collected a million (dollars) each."

In a deft aside, the Russian leader condemned for not interrupting his

holiday in a Black Sea villa at the height of the crisis, turned the tables

on the media moguls, saying: "It would be better if they sold their villas on

the Mediterranean, the coast of France or Spain.

"Only then would they have to explain why all this property is registered in

false names and law firms. And we would ask them perhaps where they got the

money," he added.

Already under criminal investigation for allegedly bilking hundreds of

millions of dollars from Russia's state airline Aeroflot, Berezovsky

confirmed that he has held negotiations with the government on giving up his

stake in ORT, the most-watched television station in Russia.

Charges against Gusinsky were dropped earlier this month after a heavy-handed

probe by the Russian authorities into his business affairs saw him thrown

into jail briefly in June.

Neither was invited to a Kremlin round-table summit attended by leading

businessmen such as Yukos chief Mikhail Khodorkovsky, Interros boss Vladimir

Potanin and Rem Vyakhirev, head of the Gazprom gas giant.

Predictably, Russia's media reacted cooly Thursday to Putin's remarks, which

many see as the beginning of a fresh attack on press freedoms.

"So that's what the president thinks of the independent media's coverage of

the Kursk tragedy," said the daily Novye Izvestia.

But commentators were divided about the long-term effects of Putin's latest

initiative to focus on the Russian businss elite's allegedly ill-gotten gains.

"Playing this populist line, Putin is bound to score points with the large

mass of the Russian population," said Vyacheslav Nikonov of the Politika fund.

But, according to Yury Korgonyuk, of the Indem Foundation, the bid to

highlight profiteering in the Yeltsin era could backfire on a president who

has vowed to restore Russia's armed forces to their former glory.

"Before accusing the oligarchs Putin should have recognised that the military

top brass was one of the worst offenders when it came to looting the

resources of the former Red Army," he said.

*******

#4

BBC

August 23, 2000  

Reforming Russia's military

By BBC News Online's Stephen Mulvey

For the outside world the Kursk tragedy has highlighted as never before the

parlous state of Russia's armed forces.

In Russia itself, it comes as just another confirmation of a truth that has

long been common knowledge.

In a television address on Wednesday, President Vladimir Putin said

conclusions about the future of the army and the navy would be drawn, in the

light of the disaster.

He said he felt bitter when he heard people say that Russian pride had

drowned along with the Kursk, but pledged to revive the armed services and

the Russian state.

Withdrawal

The tragedy occurred just as Russia was in the throes of a new round of

debate on military reform, which has been a perennial source of concern since

the demise of the USSR.

The collapsed superpower left Russia with a bloated, ageing and unaffordable

military machine - a product of the international arms race that helped drive

the USSR towards financial ruin.

Russian generals and politicians have repeatedly come forward with plans to

turn this into a lean, modern, well-armed, professional and mobile force, but

little has been achieved in practice.

On the plus side, Russia has accomplished a withdrawal of hundreds of

thousands of soldiers from eastern Europe and the Baltic states.

It has also reduced the number of men under arms to 1.2 million, and

introduced a system of contracts to supplement the ranks of conscripts with

professional soldiers.

On the minus side, the armed forces have remained deeply underfunded, with

all the consequences this has for training, maintenance, morale, safety and

combat-readiness.

More cuts

The mid-90s conflict in Chechnya showed just how far standards of

professionalism have sunk - from the first disastrous entry into Grozny in

1994, which left hundreds dead, to the recapture of the garrisoned city by a

few hundred determined Chechen guerrillas the following year.

Mr Putin summed up the need for military reform at a Russian Security Council

meeting on 11 August.

"The current structure of the armed forces is hardly optimal," he said.

"How can it be considered optimal if training is not conducted in many units,

pilots hardly ever fly and sailors hardly ever put to sea."

He added: "The structure of the armed forces must precisely correspond to the

threats Russia faces now and will face in the future."

It has been suggested that the armed forces could be in for more cuts, down

to 900,000.

The Kursk disaster may also have jolted some in Moscow to reflect that

Russia's military ambitions must be radically scaled down to a level it can

realistically afford.

However, precisely what lessons are drawn will depend on what explanation for

the tragedy is finally arrived at.

Superpower psychology

While poor training and poor maintenance may seem to analysts in the West

among the most likely causes of the accident, the Russian military has

preferred to speculate about the possibility of a collision between the Kursk

and a Western submarine.

Furthermore, many Russians, particularly those in the military, have not

shaken off their vision of Russia's destiny as a superpower.

Mr Putin himself has given them hope, by promising to increase military

spending, and to reinvigorate the armed forces.

He flexed Russia's muscles by sending the army back into Chechnya in 1999,

with better results than in 1994.

In the last couple of years Russian submarines have begun again to increase

their activity in the world's oceans, far from Russia's shores, and a Russian

aircraft carrier is due in the Mediterranean this year for the first time

since the winter of 1996/97.

There is also talk of refurbishing naval bases in Syria and Vietnam.

Mr Putin's notion of military reform may well be one that continues to

project Russian military might as far as possible - but in a more

cost-effective and rational way than it currently does.

*******

#5

Moscow Times

August 24, 2000

DEFENSE DOSSIER: Officials Inept at Fudging

By Pavel Felgenhauer

The fate of the men aboard the nuclear submarine Kursk has been decided after

more than a week of agony. On Monday, Norwegian divers opened a hatch in the

stern and found no survivors. The rescue operation was curtailed, but the

saga of the Kursk does not end there.

The sinking of the Kursk f a sub the navy deemed "unsinkable" f clearly calls

into question the credibility and seaworthiness of its Oscar-II class sister

ships and also of our other nuclear subs, including strategic ones.

All Russian subs are armed with the same torpedoes. Strategic subs carry

large stockpiles of standard and ballistic nuclearmissiles. Naval officials

say the Kursk was wiped out when its torpedoes detonated after an underwater

collision. If one takes such a statement at face value, any Russian nuclear

submarine can turn into a fireball at any time, at sea or in harbor, if it is

hit accidentally.

Defense Minister Igor Sergeyev has announced that Oscar-II subs will stay in

port while the investigation continues. Are the authorities truly planning to

investigate what went wrong on the Kursk and who was responsible, or do they

simply want to cover up the facts?

Day after day, naval and government officials told the public a different

yarn about the sinking of the Kursk, and virtually none of these stories

turned out to be true. Last week, officials largely tried to paint a rosy

picture, insisting that all aboard the Kursk were alive and that rescuers

would soon bring them all to safety.

This week, official accounts changed dramatically: Now officials imply that

all or almost all on board the Kursk were killed instantly, that the Kremlin

knew the crew was dead, that the rescue operation was actually a sham and

that the authorities did nothing wrong when they delayed deployment of

foreign rescuers for several days, since it was too late to save anyone

anyhow.

The authorities also insist that the detonation of the torpedoes was in fact

caused by a collision with some mysterious foreign submarine. The military

top brass is obviously trying to tap the xenophobic feelings that are never

far beneath the surface in much of the population and indict NATO as the main

perpetrator of the Kursk disaster.

Sergeyev has stated this week that the navy observed an "unidentified" sub

near the Kursk and sighted "foreign" green/white buoys on the sea surface.

"But the unknown sub disappeared before we managed to get to it together with

the buoys," lamented Sergeyev. Admiral Mikhail Motsak, chief of staff of the

Northern Fleet, was more specific and identified the foreign bandit submarine

as being "probably British." Some naval officers have told reporters that the

sinking of the Kursk was not an accident at all and that "the Kursk was

attacked."

Those accusations have been dismissed as "fantasy" by the British Defense

Ministry, which says no British naval vessels were anywhere near the Barents

Sea at the time. It was also reported last week from the scene of the Kursk

disaster that the Russian navy had finally identified the green/white "buoys"

Sergeyev had mentioned. They turned out to be heads of cabbage that fell

overboard when provisions for sailors were loaded on to the deck of the

Russian nuclear cruiser Peter the Great.

What narrative will the authorities be promoting next week? Most likely, they

will be telling the world that Russia does not have the money or the

expertise to salvage the battered hull of the Kursk, while the public at home

will be continuously inundated with "secret details" of a NATO-lead

conspiracy that killed the gallant sub.

Of course, bureaucrats worldwide tend to fudge the facts. However, our

officials do it so unprofessionally that they constantly embarrass Westerners

trying to cooperate with Moscow. Still, there seems to be no alternative but

to continue to engage Russia. The state of the reactors aboard the Kursk is

still in question, though the navy assures us that they are "safe for 100

years or more." No one has actually seen the Kursk reactors or has any

reliable information about them since the ship went down. Norwegian divers

report that the hull of the ship was smashed during the accident. It's

possible that the reactors also could have been physically damaged. If they

are not leaking now, they may do so soon. And, if that happens, the only

thing Russia seems able to do well on its own in an emergency is to spin

yarns.

Pavel Felgenhauer is an independent, Moscow-based defense analyst.

*******

#6

Russia: Environmentalists Warns Of Submarine's Nuclear Risk

By Sophie Lambroschini

For the moment, no radioactive leaks outside the sunken wreck of the Russian

nuclear submarine "Kursk" submarine hull have been detected. But Thomas

Nilsen of Norway's environmental Bellona Foundation -- an expert on

radioactive contamination by old nuclear-powered submarines -- warns that the

long-term risks of leakage are very real. RFE/RL correspondent Sophie

Lambroschini spoke with Nilsen today about the dangers posed by the "Kursk."

Moscow, 23 Aug 2000 (RFE/ RL) -- "There's no way of being 100 percent sure

the 'Kursk' will not leak," Nilsen said in a telephone interview from Oslo.

Nilsen says a meltdown of the "Kursk's" two nuclear reactors was prevented

because they had been turned off. For now, he adds, Norwegian scientists

confirm Russian officials' claim that the potential radioactivity leakage has

been contained. That, he says, still leaves the Arctic seas -- where the

accident occurred -- some of cleanest in the world, with one-tenth of the

radioactivity now found in the North or Irish Sea.

Nilsen is co-author of a 1996 Bellona report on nuclear waste leaks from

Russian Northern Fleet submarines. The report unleashed the fury of Russian

security organs against its other co-author, Aleksandr Nikitin, a former

Russian Navy nuclear engineer, who was charged with high treason -- and

eventually acquitted. Now an ardent environmental advocate, Nikitin said

yesterday that the "Kursk" might begin leaking radiation within six weeks.

One of Bellona's chief concerns, according to Nilsen, is that the Russian

Northern Fleet continue seeking international cooperation both in securing

the "Kursk's" nuclear reactors and in monitoring possible radioactivity.

Although the submarine sank in international waters, he says, a lot still

depends on Russian's future conduct.

"If the Northern fleet decides to close off the area around the wreck in the

Barents sea, then there is of course no way for other countries to force

themselves in there and make measurements -- that will be impossible."

Nilsen notes, however, that Norway does have a system of monitoring

radioactivity in fish trawled in the Barents Sea. Such a control system means

that, even if Russia closes off the area to foreign inspection, the truth

will eventually emerge.

Nilsen says that the force of the explosion that destroyed the front part of

the "Kursk" may also have damaged part of its reactors' cooling systems,

since the nuclear reactor compartment is located just behind the sub's

control tower. For him, the "worse case scenario" would be a combination of

saltwater in the reactor compartment and the heating of fuel elements

speeding up the corrosion process of the reactor's body. In that event, he

says, there could be direct contact between the first cooling circuit --

which is quite radioactive -- and sea water, provoking leakage outside the

submarine. This would most likely only affect a small area around the bottom

of the submarine and would not contaminate fish throughout the Barents Sea.

But, he says, in the long term -- tens of years from now -- the radioactivity

inside the reactor core will leak out because of the hull's inevitable

corrosion. Then the heavy radioactivity of the spent fuel in the reactors

will pass into the sea water. So, Nilsen concludes, something has to be done

now with the "Kursk."

"We cannot leave the submarine as it is without doing anything. This is the

most important fishing ground, not only for Russia but also for Northern

Europe."

Should the "Kursk" be raised to the sea's surface or should it be left on the

sea bed? Nilsen urges the decision be "hurried" but not "rushed." He does not

recommend, for example, hauling the submarine up before its condition has

been thoroughly evaluated. If the submarine was very heavily damaged, Nilsen

says, its reactors could emit radioactivity and contaminate even a bigger

area on the sea's surface.

On the other hand, Nilsen says, if experts conclude that the "Kursk" should

be secured on the sea bed, then radioactivity inside its reactors could be

contained through chemical treatment. Another possibility would be to seal

off the holes in the submarine to prevent sea currents from penetrating and

flushing out radioactivity. That, Nilsen recalls, is what the Russians did

with the wreck of the Komsomolets submarine that sunk to almost 1,700 meters

in the Norwegian Sea in 1989. Building a sarcophagus is the worst option,

Nilsen says, because the Chornobyl experience shows that the container

started to leak after 10 years.

Nilsen says that what he calls a major "dilemma" with the "Kursk" is what to

do with the sub if it is raised. He points out that there is no more storage

space for the "Kursk's" spent nuclear fuel on the Kola peninsula. There is

also no storage space for its reactor compartment.

Bellona and other environmental groups have for years warned of the dangers

of storing some 100 Russian nuclear-powered submarines that have been taken

out of active service since the end of the Cold War in the early 1990s. They

are all now rusting away in ports on the Kola Peninsula. More than 70 of them

still have spent nuclear fuel in their reactors. In four or five of the older

submarines, direct leakage of their cooling circuits into sea water has

already been detected.

Therefore, Nilsen concludes, Russia must open its naval bases and nuclear

waste storage sites to international experts. Most of these experts, he says,

now discount as unimportant the arguments of Russian authorities about

protecting the country's military secrets.

*******

#7

Kursk tragedy unlikely to damage Russian arms sales

LONDON, Aug 24 (AFP) -

The Kursk submarine tragedy is unlikely to have a significant impact on

Russian arms exports, analysts believe, even though it may have damaged the

country's political and military credibility.

On the one hand, experts say, potential buyers will see the sinking of the

nuclear-powered submarine in the Barents Sea, with the loss of its 118 crew,

as a one-off accident with no connection to arms sales.

On the other, much of what Russia exports in the way of tanks, light arms and

artillery, is relatively good value on a cost and quality basis.

Moreover, some purchasers, such as China, are unlikely to want to have to

look elsewhere.

Take India, for example.

"The truth is that a lot of people in the Indian armed services are fed up

with Russian weaponry which they consider unsophisticated and, in some cases,

downright dangerous," said Indian defence analyst Rahul Bedi.

"But India has very little choice, and the bottom line is that nobody can

match Russian prices."

Joanna Kidd, a naval expert from the International Institute of Strategic

Studies, said China and India were Russia's two main arms export markets, and

"I don't see where else they can buy."

The Kursk accident, while tragic, will not change priorities.

"This is an accident that can happen anytime," an Indian defence ministry

spokesman said. "It will have no impact at all on existing contracts."

Kidd said Russia was already developing two nuclear-powered submarines for

China.

"I don't know where else China could get the technology because the other

countries that make nuclear-powered subs are France, the UK and the US.

"I don't know if China would be happy to buy from these countries, or if

these countries would be prepared to sell to China."

Of India's 14 submarines, 10 are Russian-made, four German.

The bulk of China's submarine fleet was bought from the former Soviet Union,

and it also has at least four conventional subs bought from Russia within the

last five years, according to a Beijing-based Western military expert.

However Paul Beaver, of Jane's Defence Weekly, said the Kursk tragedy could

have an impact on sales, "particularly because in recent years Russia has

been trying to sell more and more submarine-related products."

"If it's true, or even suspected, that the hypothesis that a torpedo or a

missile malfunction caused the disaster, that will affect the acquisition of

naval products," he added.

"Russian technology is obviously not as advanced as we originally thought and

during the days of the Soviet Union, it was vying to have quantity, not

quality ... but people (now) want to see high-quality products and also safe

products."

He said the Kursk tragedy was unlikely to affect sales of MiG fighters or T80

tanks, but clients "may be less likely to buy high performance weapons" as a

result of this accident.

According to Beaver, the value of Russian arms exports reached four billion

dollars in 1999 but is likely to fall to about three billion dollars this

year. The United States, Beaver says, is the world's biggest exporter of arms

with about 38 percent of the market, followed by Britain with a 10 percent

share, France with eight percent, Germany with six percent and Russia, with

between four and five percent of the market.

The traditional customers of Russia's arms industry understand the context of

what happened to the Kursk, according to Richard Grimmet, author of a US

congressional report on arms sales to the developing world.

"Does that translate into an assumption that Russian systems are no good, and

are not of interest to traditional clients? I think not.

"They have still got some pretty sophisticated weapons systems that work,

that people in developing regions of the world would very much like to get if

they can."

Whatever the speculation, most analysts said it was probably too early to

predict precisely how the accident would affect Russian arms exports.

*******

#8

Russian politicians call for increased defense spending 

MOSCOW, August 22 (Itar-Tass) - Russian lawmakers,

shocked with the death of the crew in the disaster-stricken submarine

lying on the bottom of the Barents Sea, called for increasing defense

spending.

    The Barents Sea tragedy is forcing to change priorities in the budget

policy, leader of the Yedinstvo (Unity) faction at the State Duma lower

chamber of parliament Boris Gryzlov said on Tuesday.

    Defense spending is not a budget item that one may give the least

priority, he emphasized, noting that his faction will insist on

specifying the defense spending items.

    "I believe the president will unquestionably support us," Gryzlov

said.

    The leader of the Russian regions group, Oleg Morozov, said "we have

an oppressive feeling of tremendous grief and unrealized hopes." Full

explanation of the circumstances of this disaster is necessary, he said.

    Communist leader Gennady Zyuganov said "almost all systems have so

worn out in the past decade, that accidents became commonplace and

regular, and if no urgent measures are taken, more accidents will occur."

    In his view, the budget needs to be filled up to 150 billion roubles.

  "One cannot achieve anything with a 20-billion budget, regardless of

who is in the government," Zyuganov said.

    In the Kursk submarine disaster, Russia demonstrated unprecedented

openness and granted international access, chairman of the Duma committee

on international affairs Dmitry Rogozin told Itar-Tass.

    According to Rogozin, no country has ever asked for international

help when its submarines met with an accident.   Russia was the first to

do it.

    Deputy chairman of the Duma committee on defense Eduard Vorobyov told

Tass "Russia needs to decide what kind of armed forces and their

equipment it should have and on what bases they should be formed."

    The task is not to look for the culprits in this disaster.   All the

branches of power must unite in order to think over how to overcome the

weak points in the army and navy, Vorobyov emphasized.

    "In time, we will lean the true causes of the tragedy," the

Otechestvo (Fatherland) movement said in a statement.

    "But it is clear already today that the situation in which the armed

forces were placed, the level of their equipment and personnel's morale

are fraught with unforeseeable consequences.   It is the most real danger

faced by the country.   The president should promptly take decisive

measures to ensure the effective functioning of the army and navy," the

statement said.

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#9

Voice of America

DATE=8/24/2000

TITLE=RUSSIA SUB / MEDIA ROLE

BYLINE=LAURIE KASSMAN

DATELINE=MOSCOW

INTRO:  The Kursk nuclear submarine disaster may have

highlighted the dangerous deterioration of Russia's

military machinery.  But it has also widened the gap

between the government's reliance on secrecy and

society's push for openness.  What role has the

Russian media played?  V-O-A Correspondent Laurie

Kassman explores the Russian media's battle for

ratings and responsibility in its coverage of the

Kursk disaster.

TEXT:  Most official information about the Kursk

nuclear submarine accident has been confused and

contradictory.  Not surprising, says journalist Masha

Lipman of the independent magazine, Itogi.  From the

start, she says the government tried to control and

manipulate coverage to protect the military's pride

and to hide its inadequacies.

Only state T-V had access to the accident site and

President Vladimir Putin's stormy session with angry

relatives of the Kursk crew, which was carefully

edited to play down the hostility.

Still, Miss Lipman says the independent media managed

to break through the barriers.

            /// LIPMAN ACT ONE ///

      The coverage was quite professional, with many

      publications.  There was reporting, analysis,

      opinion, everything.  When the authorities would 

      not  give the list of those who were on the

      Kursk submarine, one of the Russian papers

      procured the list.

            /// END ACT ///

Editor Mikhail Berger of the newspaper Segodnya

insists the media's rage over the government's

handling of the disaster was  not  aimed at President

Vladimir Putin but at what he represents.

            /// BERGER ACT ONE ///

      It's more than a conflict between Putin and the

      media.  It's conflict between Soviet style of

      relations between power and the people and the

      new feeling and new construction of a semi-open

      society, which Russia is now.

            /// END ACT ///

Media analyst Alexei Pankin is more skeptical about

the motivation and impact of the media coverage.  He

calls it the battle between ratings and

responsibility.

            /// PANKIN ACT ///

      It's like the press is primarily working for

      their ratings and I expect that a lot of the

      public simply switched off television after

      reading the first or hearing that nobody was

      rescued.

            /// END ACT ///

All the reports and criticism about the inept handling

of the disaster still have  not seriously damaged

President Vladimir Putin's popularity.

Journalist Masha Lipman says that has a lot to do with

the public's access to information.  She compares the

impact of a mostly state-controlled television that

reaches into the Russian heartland with a handful of

liberal newspapers based in Moscow.

            /// LIPMAN ACT TWO ///

      We're talking about press runs of most

      newspapers of under 100-thousand copies, which

      means the impact on public opinion is very

      limited.  And I think one should  not  be misled

      to think that because the press is so

      unanimously bitter, the public also is

            /// END ACT ///

Still, some journalists like Mikhail Berger suggest a

feisty media forces Russia's new leaders to react in

ways their predecessors would  not  contemplate.

            /// OPT // BERGER ACT TWO ///

      The media now is trying to play a role

      representing society and they're trying to force

      the government to uncover all secrets connected

      with this tragedy.

            /// END OPT ACT ///

In 1986, Russian leaders tightly controlled

information and misled the public about the health

risks of the Chernobyl nuclear plant explosion.  They

offered  no  explanations,  no  apologies.

In an action more commonly seen in Western

democracies, President Putin has publicly accepted

responsibility for the Kursk tragedy and promised a

full investigation.  Mr. Putin's interview on state T-

V -- although carefully orchestrated -- did sharply

contrast with his earlier silence.

Political analysts say it could reflect Mr. Putin's

growing awareness of the power of public opinion and

an unshackled press.  But independent journalists fear

Mr. Putin's government will most probably move to curb

the media and its criticism rather than respond to it. 

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#10

The Russia Journal

August 19-25, 2000

2 years on, Russia's economy 'healthy'

By PATRICK GILL

On the second anniversary of Russia's Aug. 17, 1998, financial meltdown,

two pieces of economic news gave further indications that the country's

economic recovery is continuing unabated.

The announcement that industrial output climbed by 10 percent year-on-year

in the first seven months of 2000 came hot on the heels of news that world

oil prices had hit $32.80 per barrel, a 10-year high.

Russia's overall industrial output went up by 4.5 percent in July, with

light industry at the forefront of the increase with 33.8 percent growth.

Record oil prices are also allowing the government to run a budget surplus,

build up hard-currency reserves and meet its financial commitments for the

first time since the collapse of the Soviet Union.

"These figures are healthy ­ although the Russian economy is susceptible to

external factors such as a fall in oil prices or the dollar rate," said

Sergei Prudnik, an economist at Troika Dialog.

He added, though, that an oil price dip would not seriously knock the

positive growth figures off track. "The government clearly understands the

reliance on oil prices. If prices fall, it will hit domestic growth, but

not stop it."

He said the improved economic figures would likely continue into next year,

although a deceleration in the rate of growth should be anticipated.

"We expect industrial output will begin to grow from internally generated

demand from households," Prudnik said. "Industry should continue growing,

although at a reduced rate, until mid-2001. Then it will be up to the

dynamics of internal demand."

In the wake of the crisis, purchasing power in Russia collapsed, and

analysts say the strength of domestic demand will determine the pace of

future growth.

"[Domestic demand] is emerging," Prudnik added. "Consumption growth is

developing, something that has not happened since the reforms."

Analysts caution that a different issue is whether these positive signs in

the economy will translate into tangible improvements for ordinary

Russians, with only a select few benefiting from the recent growth.

Some are also more inclined to the view that the recovery is superficial.

"We continue to remain skeptical that a continuation of the present

economic recovery is sustainable in the medium term, in the absence of

structural reform," said Renaissance Capital in its daily market comment

Friday.

Meanwhile, the bonanza of petrodollars Russia has enjoyed for much of this

year appears set to continue, with oil prices hitting record highs last

week on the back of news that U.S. oil reserves had fallen to 24 year lows.

Growth in the global economy ­ particularly the rebound in Asia ­ is also

helping drive up the price of oil.

Observers warn, however, that oil prices alone cannot be relied upon to

prop up the Russian economy indefinitely.

Steven Dashevsky, an oil analyst with Aton, a Moscow brokerage, said there

was unlikely to be a sharp fall in oil prices in the immediate future and

that although next year's trends were harder to foresee, the expected price

decline would be gradual.

"This year, we have witnessed a record year for export growth and refining

growth ­ everything is up," he said. "There is good visibility for the next

three to four months, but for next year, the visibility is worse. There

will be no meltdown in 2001, however. Rather, prices will fall to a more

sustainable level."

Dashevsky said next year's average Brent price would be considerably lower

than the current high levels, though Russia's oil industry would continue

to reap the benefits of the status quo.

"We're basing our predictions for next year on an average Brent price of

$22 per barrel, although predicting prices is more art than science," he

added. "The oil price windfall is generating much-needed cash into an

industry that was underfunded for the last four years. Now there is a

chance to close the gap using these revenues."

Dashevsky pointed to conflicting pressures affecting world oil prices, with

high output on one hand and growth in global demand on the other, saying

that soon the factors against high prices would outweigh the factors for

them.

Russia's oil barons were also buoyed last week by the news that the

government has decided against increasing export tariffs, a step which

could have cost the industry $1 billion per year.

*******

#11

gazeta.ru

August 24, 2000

The Kursk Disaster According to Putin

On Wednesday night President Putin addressed the nation to mark the

national day of mourning for the 118 sailors who perished aboard the Kursk

K - 141submarine. Here Gazeta.Ru gives you a full translation of the address.

No words are enough, it’s difficult to find them and I want to wail. At

least night’s meeting (with the families of the Kursk crew), one of those

present said, “It was only recently that you took up the post, just over

100 days ago, but you took that cross upon yourself and now you must bear

it.” That person was right because, despite the fact that I’ve been at the

post in the Kremlin for just over 100 days, I feel absolutely responsible

and feel I am guilty for this tragedy.

I feel bitter that over the last few days some have been attempting to use

this disaster, what’s more in a very unscrupulous way, to blow up their

political gills (i.e to exaggerate their political importance-trans), in

order to gain political capital or sort out the interests of some groups.

It’s exactly those people who are the first to say they are the defenders

of the sailors, but it turns out that they are the ones who over a long

period of time have caused the breakdown of the army and the state.

Instead of asking for donations from everyone, they would do better to sell

their villas on the Mediterranean in France and Spain. But then they would

have to explain why all that property is registered in the names of

commercial companies, and we would ask where that money came from. But God

will judge them.

Now we must think of the sailors and their families, about the future of

the army and the navy and make definite conclusions. Yesterday the

relations and the day before yesterday famous and experienced people who

have been in politics for many years, advised me to show character, to

demonstrate my will, saying  that it is absolutely necessary to fire

someone, even better to put them behind bars. For me that would be the

easiest way out of this situation. But in my opinion this would be the

worst mistake, one that has been made many times before.  Unfortunately,

such a decision would not change the fact of the matter. If someone is

guilty then they must undoubtedly be punished. But we must get an objective

picture of the reasons behind the tragedy and the work of the rescue

operation and only then can we make some conclusions.

The day before yesterday, the Minister of Defence Igor Sergeyev and

yesterday the Chief Commander of the Navy Vladimir Kuroyedov and the

Commander of the Northern Fleet Vladimir Popov offered their resignations.

However, their resignations won’t be accepted and will not be accepted

until there is a full understanding of what happened and whether they are

guilty, really guilty or whether it (their offers of resignation) is just a

consequence of the tragedy. There will be no hasty and unfounded

punishments due to the outburst of emotions or the consequent

circumstances.  

I shall stand by the army, I shall stand by the navy and I shall stand by

the people. Together we shall rebuild the army and the navy and the

country. I have no doubts about this.  It troubles me a great deal that the

thesis has emerged that together with the Kursk, the navy’s honour and the

country’s pride have also drowned. Our country has seen worse times of

troubles than we have lived through over the past few years. We and our

ancestors have faced worse tragedies, yet we have survived them all. Russia

has always had a future. What we are living through now is a very hard to

bear, but I'm absolutely convinced that this sort of tragedy must not

divide, but unite society and unite the people. I’m convinced that

together, not only shall we overcome the natural, social and technological

disasters that we have come up against in recent years, but we shall

overcome them and rebuild the army, the navy and the state.

The relations of the Kursk sailors are worthy of their husbands, brothers

and sons. They are courageous people and they’re coping bravely with this

tragedy which has deeply bereaved us all, but it is them first and foremost

who have been affected by this tragedy. But I believe that we understand

each other despite the state they are currently in. It’s hard for them to

believe that the state proved powerless in the first few days and now. As

you know, there were, and are, many specialists, many people who have long

been connected with the navy and of course they understand what happened

and what is happening.

One of the issues which has been and still is being debated is the timing

of the announcement, secondly the timing of the beginning of the rescue

operation and thirdly the question about obtaining foreign specialists.

Contact with the boat was lost on August 12th at 23:30. The search was then

begun. The boat was located at 4:30 on the 13th and at 7:00 the Minister of

Defence informed me. At that moment in time they knew that contact with the

boat had been lost, secondly that the boat was laying on the seabed and

thirdly, that contact had been established with the help of technical

equipment on the boat. And that’s all they knew.    

It was a military exercise. Of course it would have been possible to

announce that contact with the boat had been lost, it is an irregular

situation, but it happens. It’s possible to argue and criticize, but I

would not make any condemnations. As soon as it was known that the

situation was critical, that was on the 14th, it was immediately announced

to the media. And the rescue operation was launched as soon as

communication was lost. I repeat, immediately after communication was lost.

The fact that the boat was found 4 and half hours later proves the rescue

operation had started.

And now about whether the military did or didn’t use all the means at their

disposal for the rescue operation. Not everyone knows about this so it must

be said. The fact of the matter is that when the plans for the boat were

drawn up in the mid 80’s, rescue equipment was included in the project. And

those were the rescue vehicles that our sailors used. They were in a fit

state for use and the sailors were counting on them, so when the defence

minister reported to me that they had everything, he was telling the truth,

it was the equipment designed for the boat.

As for accepting foreign help, the first official offer came on August !5th

and the sailors immediately accepted the offer and the explanation of the

technical parameters and the organization of cooperation began. As we know,

five days passed following the 15th and only on the sixth day did the

Norwegians open the ship’s hatch. The sixth day. As sad as it is to say,

even if we had asked for help on the 13th, they wouldn’t have opened it

before the 18th. The Norwegian divers are not military divers, they are

from a commercial company and are used to dive to oil wells on sea shelves.

I’m sure that if our oil companies set up offshore drilling, they will have

exactly the same sort of divers. The issue is that the navy didn’t have

such divers. This is the principle and main issue. Basically the answer is

clear.

I don’t think it was a wise resolution to say the least, but the answer is

that the rescue equipment designed by the boat’s builders was considered to

be enough. What’s more, without rescue vessels divers alone cannot rescue

people. That’s an obvious fact. Simply to open a hatch, even if somebody is

inside means that all those alive inside the boat would be killed

immediately. So without underwater rescue vehicles, it’s not possible to do

anything.

All this gives us grounds to confirm that the sweeping and epidemic

accusations of incompetence and late information on the part of the

military are groundless. But this does not mean that we must not thoroughly

get to the bottom of the reasons behind the tragedy and how the tragedy

developed. This will be done by a technical commission, the General

Prosecutor and the FSB which will secure the operative aspects of the

criminal investigation.  

I walked the streets of the town (Vidyayevo) and I was in the submarine

commander’s flat ­ I myself used to live in such flats. There was nothing

unexpected or surprising (about the conditions) and that is where the

disaster comes from, that our military, the elite of the army and navy live

in such conditions. But if you think it was a discovery for me, you are

wrong. The question is, how can we get out of this humiliating situation.

There is only one possible answer ­ our military forces must on the one

hand meet demands, and on the other hand the possibilities of the state.  

The army must be compact, but modern and well paid. This will take a

certain amount of time and this was what the last session of the Security

Council was devoted to; the size of the army and navy and the armament and

material allowances for the servicemen and the proportion between cash

flows inside the military departments themselves. I think that we have all

the reasons to hope that in implementing the recent Security Council

decisions, we will finally meet the requirements behind these decisions.

What we need are not hopes and promises, but concrete actions, actions that

people can actually feel. We must stop talking and start acting. The talks

about military reform in our country have been going on for 8 years now,

maybe 10 and there have not been many moves in a positive direction. I

strongly hope that we will manage to move in the positive way, without any

serious rifts, which we cannot allow, because we cannot allow our defence

potential to crash. We must introduce corresponding laws for the social

allowances of the servicemen. We are to a large extent bound to the

framework of these laws. We have to fulfill them and we will fulfill them,

we will move in the direction that I have marked out.

We will do our best to retrieve everybody aboard from the submarine and

have them all brought ashore. There are various technical suggestions, the

specialists must choose, but the most simple and effective is to cut the

submarine`s hull ­ these questions are being discussed now. Questions about

raising the submarine and transporting it to the shallow waters are being

discussed, the various possibilities. We are now working upon this with our

domestic specialists and with our foreign partners.

I would like to use this occasion to thank the leaders of the foreign

countries for their help and for the condolences that Russia is receiving.

But it is becoming clear that our major partners, the Norwegian

specialists, cannot solve this problem by themselves. They will probably

get additional help from Dutch specialists. In any case it will either be a

lifting or penetration into the submarine with the help of windows that

must be made in the hull. In any case it is going to be an international

project. It will definitely be done.

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