Even on a cold, snowy evening, Moscow's main shopping drag is awash with pulsating light and music.

It's the January festive season and the city's fur-clad shoppers are out in force. It's not exactly 'spend spend spend', but nevertheless Russia appears to be emerging from the economic doldrums.

Spending power

Step off the street into the Muskvitchka shopping emporium, and you could be anywhere in Western Europe. Nikora Ivadava is the manager of the Festival Clothes shop. Sales are way up, she says, thanks to a new class of buyers.

Today's Russian middle class is very different from what we had before the crisis. They understand that you can't make money out of thin air

"The so-called middle class now has the opportunity to buy good things and good clothes for their children," she said. "The young people who are working themselves in the private sector - they can buy everything they want."

The street of Novi Arbat is mainly filled with families and young professionals, shopping for things they couldn't possibly have afforded a couple of years ago.

The 1998 financial crash all but destroyed Russia's tiny middle class. But the signs are that retailing is making a comeback.

And success is not just confined to the shops. NTV Plus, the cable channel of Russia's independent television, has seen soaring sales in the goods it advertises - another sign of growing consumer confidence.

The vice president at Moscow's IBC Investment Bank, Sergei Gansuk, believes the middle class isn't just back, it's also much better equipped to survive. "Today's Russian middle class is very different from what we had before the crisis. New people came - young, devoted professionals. They understand that you can't make money out of thin air," he said.

Bright young things

Twenty-seven-year-old Pavel Cherkashin talks business with his colleagues. He's just the sort of man the IBC bank has in mind.

Pavel's internet business was almost wiped out by the financial crash, but now he's bounced back - wiser, he says, and fitter. His company employs 250 people, all of them under 30, and he's looking to expand abroad.

Pavel is optimistic. "I know several people whose businesses collapsed during the crisis and almost all of them are now in a better position than they were before," he said.

He believes the key to Russia's political and economic health lies in the formation of a dynamic middle class.

"Good characteristics for the Russian middle class would be somebody who gives a commitment to Russia - gives a commitment to staying in this country, making sure his children stay in this country, and making sure he can provide good soil for growing his own children here," he said.

After work Pavel goes to his local bowling club. He's relaxed and confident - almost as comfortable in English as he is in Russian.

Pavel is one of a new generation of Western-oriented businessmen - young, educated and wealthy, that wants to stay in Russia and make this country a success.

The obstacles are immense, but they have set their sights and the ball is rolling.

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#2
strana.ru
January 11, 2001
Russians size up new U.S. president

The recent presidential elections in the United States aroused considerable interest among the Russian public, according to the results of an opinion poll conducted by the Russian Public Opinion Foundation at the end of 2000.

The poll results show that Russians were very well-informed about the outcome of the elections in the U.S. 72% of the respondents knew that George W. Bush had won the elections, while another 19% said that they had heard something about that. The educational level and material status of the respondents had direct bearing on how well they were informed about the election results. 78% of the male respondents were in the know about Bush's victory, while for women this figure was 67%. People in the 35 to 50 years age bracket were the best informed.

Respondents were asked about their personal sympathies towards the candidates running for the U.S. presidency. It appears that more Russians (28%) "rooted" for Bush than for Al Gore (15%). It is indicative that among those who gave preference to Bush there was a considerable share of those who support the leader of the Russian Communists Gennady Zyuganov. People with a higher education, residents of large cities and inhabitants of the northwest part of Russia had a strong showing among Gore supporters. But almost one-half of the Russians (47%) demonstrated that they were indifferent as to who would be America's next president.

Russian Bush supporters explain their sympathies towards the new American president for absolutely different reasons. Some consider that his election to the White House will be advantageous to Russia. Others value his business-like qualities and the merits of his father. For some Russians he is simply a more pleasant person than Gore.

Russians sympathizing with Gore consider that as Vice-President, he had learned a great deal and was better prepared for running the country than his contender. In Russia Gore has a reputation of an intelligent man and it is this that attracts people with a higher education. In the opinion of Russian Gore supporters, his rival (Bush) does not have enough competence.

The majority of experts who participated in the poll believe that changes in America's policy will by all means affect Russia's interests. But approximately a fifth of the experts consider that for Russia it makes no difference who sits in the U.S. president's chair. In their opinion, there may be only slight fluctuations in the (U.S.) political course and this will not lead to a serious reassessment of relations between the two countries. These experts maintain that such stability is the result of the democratic structure of American society.

But the experts have different opinions on the prospects for Russian-American relations with the arrival of Bush in the White House. A little more than a third of the regional elite considers that relations will worsen. Approximately one-fifth believe that relations will improve. Another third of the experts have no definite opinion concerning possible changes. In the opinion of the experts, as president, Bush will be free from any commitments in respect to Russia as compared to the Clinton Administration. This will enable Bush to pursue a tougher and more pragmatic policy. On the one hand, this may pose some kind of threat to Russia, while on the other hand, this will enable Russia to conduct its own policy that will be less dependent on the United States.

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#3
Russia, Chinese entities scored for weapons proliferation

WASHINGTON, Jan 10 (AFP) -
Entities in Russia and China have emerged as the main suppliers of equipment and technology to "states of concern" trying to acquire weapons of mass destruction and missiles to deliver them, a Pentagon report released Wednesday said.

Titled "Proliferation: Threat and Response," the report said about a dozen countries are actively pursuing offensive biological and chemical weapons, aided by greater availability of components, technologies, expertise and information.

"Entities in Russia and China are the main suppliers of NBC (nuclear, biological and chemical)- and missile-related equipment and technologies, especially to states of proliferation concern," the report said.

Russian entities have exported ballistic missile and nuclear technology to Iran, and it remains a potential source of biological and chemical warfare expertise, the report said.

Chinese firms have provided such items in recent years to Iran, Libya and North Korea, it said.

Although it cited some improvements in Chinese behavior, the report said that China "remains one of the world's key sources for missile-related technologies."

"Although China has ratified several key nonproliferation treaties and regimes and made numerous nonproliferation pledges, it likely will continue to take advantage of those ambiguities in those commitments to advance its strategic and economic interests," it said.

China pledged in November 2000 not to assist countries in developing missiles with ranges that exceed the limits established under the Missile Technology and Control Regime.

But the report said: "The United States continues to have concerns about possible Chinese nuclear assistance to Pakistan, Chinese behavior, in this regard, is likely to be driven by strategic interests in South Asia and the Middle East, as well as by domestic economic pressures."

"Foreign assistance, particularly from Russia, China and North Korea, continues to have demonstrable effects on missile advances around the world," it said.

"Moreover, some countries that have traditionally be recipients of foreign missile technology are becoming suppliers and are pursuing cooperative missile ventures," it said.

At the same time, China and Russia have continued to modernize their own arsenals, it said.

It noted that Russia is reported to have developed a new generation of chemical warfare weapons known as "Novichoks" that are designed to defeat Western detection and protection measures.

"There is additional concern that the technology to produce these compounds might be acquired by other countries, amplifying the threat," it said.

On the nuclear front, it said China is qualitatively improving its nuclear arsenal, testing a road-mobile DF-31 intercontinental ballistic missile with an 8,000 kilometer range and developing another longer range missile that will likely be tested in the next few years.

"While the ultimate extent of China's strategic modernization is unknown, it is clear that the number, reliability, survivability and accuracy of Chinese strategic missiles capable of hitting the United States will increase during the next two decades," it said.

China also maintains elements of an offensive biological weapons program and has not acknowledged the full extent of its chemical weapons program, the report said.

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#4
Russia: Report Of Missile Deployment In Kaliningrad Threatens To Upset East/West Ties
By Jeremy Bransten

A report last week by The Washington Times that Russia was moving tactical nuclear weapons into the Kaliningrad enclave prompted protests in neighboring Poland and raised the specter of increased East-West tensions. The United States says that if confirmed, the deployment would violate Russia's pledge to remove nuclear weapons from the Baltic region.

Prague, 11 January 2001 (RFE/RL) -- Since the collapse of the Soviet Union, the Kaliningrad enclave has found itself detached from the rest of Russia -- a Cold War orphan uneasily sandwiched between Lithuania and Poland.

Poland realized its ambition of joining the NATO military alliance in 1999 and Lithuania hopes that it will not be far behind.

In June 1998, Russian military officials warned that if the Baltic states joined NATO Moscow would base tactical nuclear weapons in Kaliningrad. In an article published last week, The Washington Times cited unidentified U.S. intelligence officials who said Moscow had already followed through on that threat. The article raised hackles in Poland. Some officials in Warsaw last week, including President Aleksander Kwasniewski, called for an international inspection of the territory to verify the report.

Those statements were later tempered. Speaking to RFE/RL this week, a spokesman for the Polish Foreign Ministry, Grzegorz Dziemidowicz, said Polish-Russian relations are what he called "normal." He added that no alarm was warranted.

"In our opinion, Polish-Russian relations are absolutely normal and very good."

Russia has categorically denied the charge and the United States has declined to comment on the alleged intelligence report. But the Pentagon, through its spokesman Kenneth Bacon, said this week that if the reports were indeed true, it would mean Russia was violating a pledge made in the early 1990s to remove nuclear weapons from the Baltic region

In a valedictory speech yesterday that reviewed American-Russian relations, outgoing U.S. Defense Secretary William Cohen said the U.S. would have to examine "whether Russia is going to pursue a course which is one of seeking cooperation and full integration in European affairs and a better relation with the United States, or whether it's going to revert to the past." Cohen's question raised the possibility of the deterioration of Russia's relations with the West.

Timothy Garden, a European defense-policy expert and former director of the London-based Royal Institute of International Affairs, says the latest controversy demonstrates that despite improved East/West ties the balance is never far from tipping back.

"The worry is that this is getting us a bit back into a sort of Cold War confrontational style of relationships, when we thought that had all disappeared."

The allegations regarding the placing of weapons in Kalinigrad have not been proven, but Garden notes that tactical nuclear weapons have begun to play a more prominent part in Russia's military strategy.

"What has happened is that there's been a sort of swap-over of military doctrine in as much as when NATO saw itself as the weaker power in the Cold War, it relied very much on an early escalation or threat...in order to deter the Warsaw Pact from attacking. Now that Russia sees itself as the weaker military side, it is, in its new doctrine, putting more emphasis on the likelihood that if it were attacked, it would have to go nuclear early."

Garden notes from a military standpoint, Russian missiles in Kaliningrad would be insignificant. Both Washington and Moscow have so many intercontinental, air, and submarine-based weapons aimed directly at each other that a few more short-range weapons would hardly tip the military balance.

"The question of where they [missiles] happen to be based -- in military terms -- is pretty much irrelevant. There are so many missiles still available to Russia and America of every conceivable range, that it almost doesn't matter where they are placed. It's a political symbol rather than a military utility."

For that reason, some analysts have suggested that Russia might move tactical nuclear weapons into Kaliningrad, as a political warning to NATO not to expand to the Baltic states, as the alliance prepares to consider a second wave of expansion.

It is still too early to tell whether the Kaliningrad controversy will help or hurt NATO aspirants in the Baltics. Garden says the administration of U.S. President-elect George Bush is likely to take a harder line on military issues with Moscow and might favor including the Baltics in the alliance, especially if Moscow is perceived once again as a military threat. But NATO's European members have indicated they would be less willing to risk Russia's ire.

Nevertheless, Garden says that if proven true, the reports of Russia's new deployment in Kaliningrad would usher in a new atmosphere of distrust, and Moscow's new relationship with both Europe and the United States could wind up a casualty.

"If it proved to be true, this would call into question the integrity of [Russian President Vladimir] Putin because he has categorically denied this when Schroeder was on his visit to him. So he has told the German chancellor that there is no truth in this."

How the issue is resolved could portend the fate of East-West relations -- at least in the near term. Indications from Germany and Sweden, which currently holds the rotating EU presidency, are that Europe hopes this will turn out to be no more than a tempest in a teapot.

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#5
Baltimore Sun
January 4, 2001
NATO is Bush's first big foreign challenge
By John R. Deni
John R. Deni, a doctoral candidate in international affairs at George Washington University, is a consultant in international security affairs for the U.S. departments of state, energy and defense.

WASHINGTON -- The most important foreign policy challenge that George W. Bush will have to face at the start of his presidency will center around NATO enlargement.

In 1999, NATO added three new members -- the Czech Republic, Hungary and Poland. Other countries, such as Bulgaria, Estonia, Latvia, Lithuania, Slovenia, Slovakia and Romania, lobbied for NATO membership but were not invited in the first wave of post-Cold War enlargement.

Their candidacies will be taken up again a little more than a year after Mr. Bush's Jan. 20 inauguration, when NATO meets to determine which countries, if any, it will invite to become the next members of the alliance. Vital preparations for that important meeting will likely begin immediately after the new administration takes office. And rightfully so. Inherent in that meeting will be nothing short of the most fundamental issues regarding European security and the U.S. role in safeguarding it.

European security remains at the top of the United States' national interest hierarchy, despite the challenges facing the next administration in securing a Middle East peace, combating global terrorism and managing U.S.-China relations. Choosing whether to further enlarge the Atlantic alliance and, if so, whom to invite, will face Mr. Bush early this year in the run-up to NATO's spring 2002 decision.

Based on campaign statements, it appears that Mr. Bush advocates a continuation of NATO's open invitation policy in which any country interested in membership that meets alliance standards will be given due consideration. But the decision to invite new members into the alliance carries with it implications for NATO's purpose that transcend mere political rhetoric.

Lord Ismay, NATO's first secretary-general, once noted that NATO's purpose was threefold: to keep the Americans in, the Russians out and the Germans down. Metaphorically, that statement is no less true today than it was 50 years ago.

Keeping the Americans in: From the perspective of the United States and that of most of its allies, one reason why NATO remains vital is that it ensures a U.S. role in European security. Although this component of NATO's purpose has taken on increased importance recently as the European Union moves to develop its own military force -- a move that could decouple European and U.S. security -- the 2002 enlargement debate admittedly will have little impact on this facet of NATO's purpose.

Keeping the Russians out: Just as in Lord Ismay's day, NATO's founding treaty commits alliance members to come to the defense of each other in the event of an attack by an outside power. Are policy-makers in Washington and other NATO capitals seriously concerned about an invasion from Russia as they were 50 years ago? Probably not, but at the same time they're probably searching for ways to avoid angering a large, nuclear-armed country with a history of authoritarianism in the event, for example, any of the Baltic countries, all three of which were in the Soviet bloc, are invited into NATO.

Keeping the Germans down: Are Europeans still worried about a resurgent, reunified Germany as they were after World War II? Perhaps some still are. But far more important that just keeping Germany "down," NATO's third purpose -- and arguably the most important of the three -- has been to de-nationalize Western European defense, including that of Germany. By collectivizing national security, NATO helped Western Europe overcome centuries of bloody rivalry, allowing the alliance's European allies to focus on economic development. Further enlargement of the alliance should only serve to bring the de-nationalization of defense to Eastern Europe.

Given the importance of de-nationalized defense in Western European history over the last 50 years, the benefits of another round of NATO enlargement seem to outweigh the risks associated with an angry Russia.

History and political science tell us that to maintain peace, an evolving institution like NATO needs to ensure that security becomes ever more inclusive. Enlarging the alliance to include countries such as those in the Balkans or the Baltics is the next logical step for NATO and will allow the alliance to remain true to its most important reason for being.

Given the shortened transition period, the Bush administration will need to hit the ground running as the clock counts down to the alliance's 2002 debate.

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#6
Voice of America
January 11, 2001
Aid Groups Suspend Operations in Chechnya

International relief groups are suspending operations in the violence-ridden breakaway Russian republic of Chechnya, where Russian authorities are vowing to make every effort to find kidnapped American aid worker Kenny Gluck.

A spokesman for the U.N.'s aid coordination office in Moscow tells VOA the United Nations is unlikely to resume work there in the near future out of safety concerns. He adds that all his agency's programs in the North Caucasus are currently under review.

In addition, the organization Mr. Gluck works for, Doctors Without Borders, says it has moved its staff from Chechnya to neighboring Ingushetia. So has the Paris-based group Action against Hunger.

Mr. Gluck, who is 38, was kidnapped by masked gunmen who stopped a humanitarian convoy about 15 kilometers south of the Chechen capital, Grozny. Russian authorities say they are making every effort to find Mr. Gluck. Meanwhile, a Chechen rebel group has rejected Russian allegations that rebels were involved in the kidnapping. A rebel spokesman has offered to help search for Mr. Gluck.

The Russians say Doctors Without Borders is partially responsible for the kidnapping because the group was in Chechnya without permission. But the aid organization strongly denies this, saying it had notified Russian authorities of the convoy's itinerary.

A State Department spokesman says the U.S. embassy in Moscow is in touch with Russian authorities. He adds that U.S. officials are continuing their efforts to find Mr. Gluck and secure his release. Kidnappings in Chechnya are common. Abductors usually ask for a ransom in exchange for the release of their captives.

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#7
Moscow Times
January 12, 2001
Editorial
Vodka, Not Beer, Is the Real Issue

It is especially frustrating to watch as government agencies address serious problems with proposals that are almost laughably inadequate. The latest case in point came Tuesday when Deputy Health Minister Gennady Onishchenko launched an assault on the beer industry, claiming that beer had become a major contributing factor to Russia's overall alcoholism crisis.

Obviously, it is ridiculous that Russian law treats beer as a nonalcoholic beverage, and it is clear that this absurdity plays a role in introducing children to drink. This lapse can and should be immediately remedied, and Russia's responsible beer producers should be the first to advocate this step.

However, the Health Ministry must realize that Russia's alcoholism problem is far more serious than this. In fact, the bare statistics make a strong case that alcoholism is the most serious problem Russia faces. Half of all Russian men who die, says one study, are drunk. Thirty-thousand Russians each year die of alcohol poisoning. Alcohol plays a major role in road accidents, homicides, suicides, domestic violence, industrial accidents, birth defects, violent crime and so on. Orphanages are full of children abandoned by their alcoholic parents.

In today's Weekend section, The Moscow Times is reprinting a New York Times report by Michael Wines that paints the dreadful picture of how this national crisis looks from the perspective of the small northern town of Pitkyaranta.

Alcoholism is a major contributor to the country's demographic crisis, the claims of nationalists about an anti-Russian genocidal conspiracy notwithstanding. In fact, despite the fact that former Soviet leader Mikhail Gorbachev's anti-alcohol campaign has been roundly trashed as a failure, demographic data show clearly that the number of deaths due to non-natural causes fell considerably in 1986-88, before once again beginning to rise. Since 1991, accidental death in Russia has increased by 83 percent, according to the British Medical Journal.

A big part of the problem lies in the fact that the Russian state is as addicted to drink as the Russian people are. Last year, vodka duties accounted for $470 million in state revenues. Last May, the government set up a state-controlled holding company made up of 70 distilleries in an effort to squeeze even more revenue from this sector. Obviously, it will be hard for the Health Ministry to combat the alcohol problem when other state agencies are committed to increasing production and sales.

Russia and the government - in a serious, concerted and determined way - must face up to this catastrophe. It is literally destroying the nation.

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#8
Washington Post
January 11, 2001
[for personal use only]
An Unacceptable Risk
By Howard H. Baker Jr. and Lloyd Cutler

Russia's nuclear stockpile is the most serious national security threat we face today. It includes at least 40,000 nuclear weapons, more than 1,000 tons of nuclear materials capable of being used in weapons and vast quantities of materials for biological and chemical warfare. In Russia's weakened financial condition, the Russian scientists who design and produce this material, and the security guards who protect it, are inadequately paid and are tempted to sell weapons materials and technologies to agents for "wannabe" nuclear weapon states or terrorist groups, many of whom proudly proclaim themselves to be our enemies.

During the past decade, a number of cooperative U.S.-Russian nonproliferation programs have been launched by the departments of Defense, State and Energy. The efforts to identify and safeguard weapons and weapons-grade nuclear materials, and to convert them into commercial grades of material not usable in nuclear weapons, have been under the direction of the Department of Energy. At the request of Energy Secretary Bill Richardson, a nonproliferation task force has concluded a nine-month study of the DOE programs and filed a report that was published yesterday. We are co-chairmen of the task force, which was made up of former legislators and executive branch officials with significant national security and arms control experience.

Our principal findings and conclusions are as follows:

The most urgent unmet national security threat to the United States today is that weapons of mass destruction or weapons-usable material located in Russia could be stolen and sold to terrorists or hostile nation states and used against American troops abroad or citizens at home.

In a worst-case scenario, a nuclear engineering graduate with a grapefruit-sized lump of highly enriched uranium or an orange-sized lump of plutonium, along with other items readily available in commercial markets, could fashion a nuclear device that would fit in a vehicle like the van the terrorist parked in the World Trade Center in 1993. Its explosive effects would level lower Manhattan.

Current nonproliferation programs in the Department of Energy, the Department of Defense and related agencies have achieved impressive results thus far, but their limited mandate and funding fall short of what is required to fully address the threat.

The programs now in place have achieved considerable success. Many efforts to steal weapons-usable material have been intercepted by Russian and international police operations. To the best of our knowledge, no nuclear weapons or nuclear weapons-usable materials have been successfully stolen and exported from Russia.

But the current budget levels are inadequate and the management of the U.S. government's involvement is too diffuse. The existing scope and operation of the programs leave an unacceptable risk of failure and the potential for catastrophic consequences. The new president and the leaders of the 107th Congress face the urgent challenge of devising a stronger response proportionate to the threat.

This response should include a net assessment of the threat; a clear and achievable mission statement; development of a strategy with specific goals and measurable objectives; and a more centralized command of the financial and human resources required to do the job.

The president and Congress should promptly formulate a strategic eight- to 10-year plan to secure and neutralize all nuclear weapons-usable material located in Russia, and to prevent the outflow of scientific expertise and equipment that other states or terrorist groups could use for nuclear or other weapons of mass destruction. To achieve this goal would be one of the greatest contributions the United States and Russia can make to the security and safety of their own citizens and the rest of the world.

The task force did identify one major cloud on the horizon: Russia's continuing trade with Iran in dual-use nuclear technology and missile technology, as well as Russia's apparent intention to supply new conventional weapons systems to Iran. Despite the fact that these issues have been raised with Russia at the highest level, the problems have not yet been resolved. While the task force affirms that the DOE nonproliferation programs are unequivocally in the U.S. national security interest, the task force is particularly concerned that if Russia's cooperation with Iran continues in a way that compromises nonproliferation goals, it will adversely affect U.S.-Russian cooperation in a wide range of other important nonproliferation programs.

Howard Baker, a former Republican senator from Tennessee, was Senate majority leader from 1981 to 1985 and chief of staff to President Reagan in 1987-88. Lloyd Cutler served as counsel to Presidents Carter and Clinton.

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#9
Moscow Times
January 11, 2001
Capital Flight Said To Reach a 4-Year High
By Natasha Shanetskaya
Staff Writer

The country's economic health may have vastly improved over the past year but capital flight reached its highest levels since 1996, a leading independent analyst said Wednesday.

Some $24.6 billion fled the country in 2000, an increase of about 30 percent compared with the previous year, Mikhail Delyagin, head of the Institute for the Problems of Globalization, said in a telephone interview.

"Capital flight is just a symptom that shows investors cannot find safe and profitable investment opportunities at home," said Delyagin.

"However, capital flight numbers should not be examined out of context," he added.

The context Delyagin refers to includes looking at Russia's overall trade balance that the Central Bank publishes quarterly. In 1999, the trade surplus amounted to $34 billion while capital flight was estimated at about 55 percent, or $18.6 billion.

In 2000, capital flight o the funneling of money outside the country o totaled about 46 percent of the trade surplus, which is expected to ring in at about $60 billion.

Analysts are welcoming the narrowing difference as a sign of recovering investor confidence.

"Obviously, when the trade balance is increasing, you expect capital flight to grow as well," said Christopher Granville, strategist at United Financial Group. "But the fact that it decreased as a proportion of the trade balance means that the propensity to get the money out of the country is declining."

More of Russia's wealth is being invested at home than in years past as the Kremlin moves to push through economic reforms, according to official numbers released by the government. The State Statistics Committee estimates that domestic investments increased in 2000 by about 18 percent year-over-year.

Some of the most recent examples of reinvesting capital at home include Siberian Aluminum's decision to buy into troubled car maker GAZ and Tyumen Oil Co.'s purchase of an 85 percent stake in state-owned oil company Onako for just over $1 billion.

"When the economy is stable, even if some enterprises continue to bank offshore is not so tragic," said Granville. "In this case, the motive for banking abroad is the inefficiency of the banking system or the desire to avoid taxes, not the need to get the hell out of the country."

While Delyagin concedes Russia's rebounding economy has smoothed the effects of capital flight, he argued that it will continue, especially when commodity prices decline.

"It is only a matter of time before world prices for oil, gas and precision metals drop," he said. "That's when the capital flight will reach catastrophic proportions."

The International Finance Institute, which comprises nearly 300 representatives of foreign financial institutions, estimates more than $140 billion has been funneled out of Russia over the past 10 years.

Delyagin said government attempts to fight semi-legal channels for taking money out of the country simply pushes people to use illegal channels.

"Those who want to take the money and run will find a way to do it," he said.
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#10
The Globe and Mail (Canada)
January 11, 2001
The President and the dead man
A strange tale of muckraking and murder has Ukraine's leader enveloped in scandal
By GEOFFREY YORK

KIEV -- Miroslava Gongadze will go to Ukraine's authorities today to plead for a funeral for her murdered husband. His soul, she says, will not rest in peace until he is buried.

But the torment of Georgy Gongadze seems destined to continue. His headless corpse is the battleground for the biggest political scandal in Ukrainian history, and the authorities have no intention of giving it up soon -- not even for something as simple as a funeral.

For months, Ukrainians have been gripped by a drama with all the characteristics of a Hollywood thriller, featuring an explosive set of secret tapes suggesting that the President may have plotted murder. Now there is another strange twist in the tale.

Ukraine's chief prosecutor, Mykola Potabenko, revealed yesterday the results of DNA tests that show, with 99.6-per-cent certainty, that the headless corpse is that of Mr. Gongadze, a muckraking journalist who had exposed corruption at the highest levels of government.

But in a move that the opposition called a cynical delaying tactic, the prosecutor refused to confirm the journalist's death. He insisted that Mr. Gongadze might still be alive, and he announced that the police will keep searching for him.

For Mr. Gongadze's wife, this only prolongs the agony. "I see him in my dreams almost every night," she said in an interview yesterday.

"It's the most awful thing that could happen to anyone -- a body found so long ago and still not buried. This has to be brought to an end." "His soul cannot rest until he is buried," she added.

Mrs. Gongadze will contact the prosecutor today to ask for her husband's body. But after Mr. Potabenko's defiant speech yesterday in the Ukrainian parliament, she knows that she is unlikely to get much sympathy from him.

"It has all been intentionally arranged to make it appear that my husband is still alive," she said. "It serves their interests. They don't want to admit his death. If they admit there is a crime, they would have to find someone responsible for it."

Mr. Gongadze, the 31-year-old editor of a Ukrainian Web site that produced hard-hitting reports on government corruption, disappeared mysteriously on Sept. 16.

At the time, President Leonid Kuchma expressed his deepest concern. "No one is more interested in finding out what happened to Gongadze than I am," he said.

A few weeks later, a mushroom picker found the headless corpse in a shallow grave in a forest near Kiev. Then, in late November, a former presidential bodyguard stunned the nation by releasing videotapes -- secretly recorded in Mr. Kuchma's office earlier in the year, he claimed -- that appeared to show the President crudely ordering his security chiefs to get rid of the annoying journalist, with violence if necessary.

Mr. Kuchma has denied the allegations and accused the bodyguard of being "sick in the head."

His prosecutor says the tapes are fake. But the scandal has continued to widen, with new charges that Mr. Kuchma ordered a grenade attack on an opposition rally and then falsified voting results to secure his own election victory.

The prosecutor and the police, meanwhile, had swiftly removed the headless corpse to a secret location. After that hasty move, their investigation moved at a pace so leisurely that it seemed almost indifferent.

Mr. Potabenko, in his speech to a jeering and heckling audience of parliamentarians yesterday, revealed the long-awaited results of tests comparing DNA samples from the headless corpse and from Mr. Gongadze's mother. According to the results, the DNA samples match each other with 99.6-per-cent certainty.

Despite these results, he insisted the reporter could still be alive, and he said the police have found witnesses who saw someone resembling Mr. Gongadze in Western Ukraine last month.

"We are actively trying to find Gongadze," the prosecutor told the parliament. "I do admit there were a number of shortcomings in the operation of the prosecutor's office, but I insist that the matter is being investigated at a sufficiently high level."

He said the murder had become a "dirty political affair" that was being manipulated by the opposition. And he repeated that the alleged tapes of Mr. Kuchma were fakes. It was "completely impossible" for anyone to have planted a secret recording device in the President's office, he said.

Mr. Potabenko's report to parliament was quickly rejected by the opposition and by Mr. Gongadze's family. Mrs. Gongadze said her husband's mother had talked to one of the female "witnesses" cited by the prosecutor yesterday, and the woman had denied having seen Mr. Gongadze alive.

Critics said the prosecutor was covering up the truth. "The prosecutor's report is proof that his own office was misleading the country for months," said Serhiy Holovaty, member of a parliamentary commission investigating the Gongadze scandal.

A media freedom group, Reporters Without Borders, has estimated there were 20 incidents of violence or intimidation against journalists in Ukraine last year.

A delegation from the group is visiting Kiev this week to probe the Gongadze affair. A member of the delegation said they were disappointed by the prosecutor's report and the continuing delay in any final conclusions on Mr. Gongadze's disappearance. "People have been waiting for this report for months, and this was supposed to be the moment of truth," he said.

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#11
gazeta.ru
January 10, 2001
Russian Diagnosis of Balkan Syndrome

The Russian Defense Ministry has contributed to the scandal concerning the so-called Balkan Syndrome. General Boris Alexeyev claimed on Tuesday that Russia had warned of the dangerous consequences of deploying depleted uranium shells.

At a special news briefing the chief of the Russian Defense Ministry's environmental safety department General-Lieutenant Boris Alexeyev condemned American militarism and criticized the world community for failing to heed Russia's warning, made almost a year ago, about the consequences of using depleted uranium.

Before the briefing, journalists were shown a video film on the environmental disaster in the former Yugoslavia caused by NATO bombings and also on dangerous consequences of deploying shells tipped with armor-penetrating depleted uranium.

"We began sounding the alarm back in June 1999," said the General. "It was then that we made that film. However, our apprehensions did not produce any effect neither in our country, nor in the West."

General Alexeyev said he did not have any doubts that there is a direct link between the use of depleted uranium used in NATO shells and cases of leukemia among KFOR servicemen: "Even though I am not a doctor, and only doctors can determine the causes of any illness, for me, as a military man, everything is absolutely clear in this case. Italians served in the area where DU bombings were most intense."

In General Alexeyev's opinion, the Americans were the luckiest: U.S. servicemen are stationed in the clean zone, where not a single shell tipped with depleted uranium fell, he said.

Russian peacemakers are not in any danger either, holds the general. Only those of them who have served in the area of Slatina airport may have been exposed to a certain risk. All Russian peacemakers are undergoing medical check-ups. One-fifth of Russia's contingent of Peace Corps has already passed tests and not a single case was found.

Nevertheless, a special delegation of Russian military chemists, environmentalists and doctors will soon travel to Kosovo to inspect the areas where the Russian servicemen are stationed.

Some 10 thousand Russian soldiers who have served in Kosovo will undergo medical examination at home.

Also on Tuesday, Andrey Vorobyov of the Russian Academy of Medical Sciences told the press that, in his opinion, "depleted uranium does not possess serious levels of radioactivity that could cause changes in the blood and induce leukemia. There have been no cases in which (depleted) uranium caused leukemia."

Vorobyov also said that the period between contact with uranium and the development of leukemia usually takes several years.

However, Vorobyov said that the cases (of leukemia) could have been caused by other chemicals "we do not know about" (i.e. used secretly), as genetic changes can be caused not only by radiation.

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#12
The Independent (UK)
10 January 2001
Russia tries to outlaw 'subversive' Sally Army
By Patrick Cockburn in Moscow

Officials in Moscow are seeking to close down the city's Salvation Army because, they claim, it is a subversive paramilitary group dedicated to the violent overthrow of the Russian government.

The city authorities have persuaded local courts to uphold the rejection of an application by the Salvation Army, which feeds 7,000 homeless people a month in the capital, to be allowed to register. The official deadline for registration passed at the end of last year.

In its evidence the Moscow Department of Justice cited the Salvation Army's uniforms, and the fact that its members have military ranks, as a sign that it is secretly a subversive organisation.

"It's mind-boggling," said Colonel Kenneth Baillie, the head of the Salvation Army in the former Soviet Union. "The city government can now apply for our liquidation as a religious organisation in Moscow."

He does not know who is behind the campaign against his organisation, founded in Britain in 1865, but the court verdicts are already having an impact on its work. In one Moscow district, Salvation Army volunteers had organised, with local social services, a meals-on-wheels service to bring food, cooked in a cheap restaurant, to 40 elderly people too feeble to prepare their own or to shop themselves. When news began to circulate in the Russian press about the organisation's legal problems with the city government, the director of social services in the district said the scheme must stop because the Salvation Army was not registered.

Col Baillie, an American who has worked in Russia for three years, says the problems facing his organisation have increased rapidly in the past month. The Salvation Army holds religious services at seven different places in the Russian capital. At one of them, the local chief of police recently turned up in uniform. As soon as the service was over he stood up and demanded to see the documents of all those who had taken part. Elsewhere in Moscow, the Salvation Army will have to leave two properties it rents because landlords say they are afraid of renewing a rental agreement with an organisation without official registration.

The Salvation Army has been in Moscow since 1992. Its present difficulties stem from the Law on Religious Organisations passed in 1997. This was primarily aimed at consolidating the position of the Russian Orthodox Church, which, since the fall of Communism, has wanted to recover its old status as the official state church, which it held under the Tsars.

Col Baillie says the Salvation Army discovered two years ago that it was going to face problems in the capital, though its application for official registration was not officially rejected until August 1999.

It has been caught up in a legal wrangle, extraordinary even by Russian standards. At first, different courts claimed they had no jurisdiction over the case. When it was finally heard the city lawyer did not turn up. He had no reason to. Unknown to the Salvation Army, he had filed a private brief alleging that the group might be plotting an insurrection. The court agreed with him and its decision was upheld on appeal.

There is still a chance that the venerable organisation may escape a complete shutdown in Moscow. An official committee of religious experts, set up under the 1997 law, says that the Salvation Army is exactly what it says it is.

Col Baillie, bemused by the accusation that he is a secret revolutionary, hopes he may be able to register his organisation nationally, making registration in Moscow unnecessary.

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#13
BBC Monitoring
Russia sets new priorities in policy on Transcaucasus - newspaper
Source: Nezavisimaya Gazeta, Moscow, in Russian 11 Jan 01

Russian President Vladimir Putin's recent visit to Azerbaijan was indicative of Russia's foreign policy priorities in the Transcaucasus. According to an article in the Russian newspaper Nezavisimaya Gazeta, Russia is no longer bound by the Yeltsin legacy of better relations with Armenia than Azerbaijan nor by Yeltsin's agreement to reduce Russia's presence in the region. Instead, the newspaper discerns a new pragmatism that accepts deteriorating relations with Georgia and seeks instead a rapprochement with Azerbaijan, largely engineered by Russia's oil chiefs. It is a rapprochement in which Azerbaijani President Heydar Aliyev has also played a part. The following is the text of the report, published on 11 January; subheadings have been inserted editorially:

When the new Russian leadership started talking last spring about the possible introduction of visa arrangements with a number of CIS countries, putting forward as an argument in favour of this step the transparency of borders for the spread of international terrorism, the countries that were primarily in mind were Azerbaijan and Georgia. Russian Federation Security Council Secretary Sergey Ivanov then set off to clarify the positions of these states. He had not even left Baku before Azerbaijani President Heydar Aliyev clearly and definitively stated in a Nezavisimaya Gazeta interview that there would be no visa arrangement between Russia and Azerbaijan (see the 20 June 2000 edition of Nezavisimaya Gazeta). This was unambiguously confirmed on Tuesday, 9 January 2001 by Russian Federation President Vladimir Putin, who was in Baku. To all intents and purposes it can be said that, following Putin's visit to Azerbaijan, Russian policy with regard to the countries of the Transcaucasus (or the Southern Caucasus, as we can now fashionably dub this region, following Eduard Shevardnadze's example) has determined where its priorities lie.

Yeltsin's personal preferences determined Russian policy in Transcaucasus

During the years of Boris Yeltsin's rule a great many things were determined by the personality factor. Thus, it was known that Boris Nikolayevich did not like Heydar Aliyevich. He just didn't like him - and that was that. And, conversely, for some reason our president did like Levon Akopovich Ter-Petrosyan, president of Armenia, which is not entirely friendly with Azerbaijan. Those personal preferences and antipathies were superimposed on the geopolitical situation of the mid-nineties, which included the Azerbaijani elite's ongoing desire to build the Baku-Ceyhan pipeline, the flourishing of Western-oriented oil consortiums, the clouding of the Western public mind with not entirely accurate reports about huge reserves of Baku oil, the traditional Armenian-Russian sympathy, the successful formation of a military-political partnership between Moscow and Yerevan, political games by the influential Georgian president under the vague but gripping slogan "Let others do what they like, we're joining NATO", the outbreak of the Chechen War and so forth. The highly complex picture of Russian-Transcaucasus relations reached its zenith in the Organization for Security and Cooperation in Europe's Istanbul Summit (hastily declared a success for Russia), whose main result was Yeltsin's agreement to the demand for an immediate (on a historic scale) removal of any Moscow presence in the Transcaucasus. The time has now come to revise this part of the Yeltsin legacy too.

Of course, it will not be possible to revise everything in Russia's favour. It would seem that the withdrawal of Russian military bases from Georgia is something that has already been decided and paid for by the EU and NATO. It is merely a question of timing and Moscow is now trying to delay the process, coercing Georgia with visas and the threat of economic pressure. But it is currently clear that Georgia, which has never been an ally of Russia's since the time it gained its independence, has ceased to even be considered as such. It is clear the Kremlin has decided no longer to draw attention to a virtual bugbear in the shape of a NATO that is moving towards the shores of the Black Sea and has quite soberly calculated the real amount of possible Western support for Georgia as being very, very insignificant. The losses for Moscow from a deterioration of relations with Tbilisi are correspondingly small, and they could even in time (if our current pragmatism is consistent) turn into an advantage.

Anti-Russian moves in Armenia met with "wait and see policy" in Moscow

There is one other element of the Yeltsin legacy - the consistent deterioration, unnoticed by Russian diplomacy, in its relations with its seemingly eternal ally, Armenia. Paying scarcely any attention to the very acute domestic political, economic and demographic processes in Armenia, Moscow has unexpectedly encountered, first, the complete removal of pro-Russian politicians from the Armenian politician scene and then, bafflingly, "arm's-length treatment" on the part of Armenian diplomacy. Without fully having determined where it stands, the Kremlin is holding long-drawn-out and semi-secret consultations with Armenian political figures who are not of the first rank, sometimes expressing its dissatisfaction to Yerevan in the form of purely protocol-style measures. A great many things may be clarified by Vladimir Putin's upcoming official visit to Yerevan in May, but it cannot be ruled out that, prior to this, the Armenian president will be received at top level in Washington by George Bush. At any rate, so far Russian policy on Armenia can be described as a restrained, wait-and-see approach.

Oil pushes Moscow and Baku closer together

Returning to Azerbaijan, we can say that Vladimir Putin has enshrined what was achieved over the past year by the aforesaid Sergey Ivanov, as well as by LUKoil boss Vagit Alekperov and Semen Vaynshtok, head of the Transneft Russian state company. Alekperov has from the very outset participated actively but on a relatively small scale in virtually all Azerbaijani oil projects. And Vaynshtok devoted his main attention throughout last year to the modernization of the Makhachkala-Novorossiysk oil pipeline. The Russian oil men are sceptical about the possibility of building the Baku-Ceyhan oil pipeline, quite realistically assessing Azerbaijan as having no alternative to using Russia for the transit of its hydrocarbon raw materials. In an interview to the magazine Ekspert just before the new year, Vaynshtok stated bluntly that what is good for Transneft is good for the state, and he assessed the objective anti-Russian option of the Baku-Ceyhan oil pipeline as an uneconomic project.

The results of Putin's trip to Azerbaijan are already being assessed in both Moscow and Baku as positive. It can be said without undue exaggeration that a new Russian policy line has been drawn here by the Security Council's Ivanov and by the oil men Alekperov and Vaynshtok. No figures on such a scale with an interest in strengthening Russo-Georgian or Russo-Armenian ties have as yet been found. In this connection we can speak of pretty good prospects for Russo-Azerbaijani relations - there are influential figures who have a personal interest in this. Moreover, Moscow is now cautiously trying to change the international backdrop, which had hitherto developed not in its favour in the Transcaucasus. This is shown by the recent statement by a ranking Russian diplomat about the possibility of Russia's becoming an associate member of the EU-sponsored TRACECA [Transport Corridor Europe Caucasus Asia] project, which the Kremlin and Smolensk Square [Foreign Ministry] had previously "snubbed".

Azerbaijani president played "strong hand" in friendship with Russia

At the same time, Heydar Aliyev has played a very strong hand, demonstrating his political talents for the umpteenth time. At the necessary moment for Azerbaijan he stopped irritating Moscow with his support for the Chechens, pinning all the blame for it on the opposition; having become convinced of the ultimate futility of playing games over incomplete or unbuilt oil pipelines, he has returned to the realistic Russian option; and he has saved his country the no less than 500m dollars a year that is received from Azerbaijanis working in Russia. No less strong for Aliyev is the domestic political impact - he has managed to organize relations with Russia, which is very important to the overwhelming majority of Azerbaijanis. Knowing Heydar Aliyevich, there can also be no doubt that he has got Moscow to tacitly give up its equally tacit - but real, let's make no bones about it - support for Ayaz Mutalibov, a possible contender for the presidency in Baku. And the level of Aliyev's hospitality, which is something of which Vladimir Putin is also now aware - is renowned even in the Transcaucasus, which is rich in this sort of tradition.

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