#1
Russia "still in search of itself": departing US envoy

MOSCOW, July 5 (AFP) -
Outgoing US ambassador to Moscow James Collins said Thursday he was leaving a country "which is still very much in search of itself" but whose relations with Washington were set, he hoped, "to develop on a pragmatic basis."

In his last public comments before flying out for the last time next Monday, Collins said he believed Russia had "yet to determine where it is going and how it will establish itself in the international system."

Its future ties with the United States were "an open book remaining to be written."

Obstacles to the development of closer Russia-US ties were the "re-emergence of arbitrary authority" in Russia and the war in Chechnya, he said.

The exercise of arbitrary authority in both the state and private spheres is "a continuing problem" in Russia, he said in reference to the enhanced role allotted to the security services since Vladimir Putin became president at the start of last year, and to growing contraints on media freedoms.

"If Vladimir Putin and the administration are to modernise the economy and institutions in such a way that Russia is able to compete in the modern economic system, they are going to have to ensure that the rule of law is the principle of the future," he said.

The key area was that of judicial reform, Collins noted, describing Putin's ambitious reform package, whose first installment passed an initial reading in parliament on June 28, as an "extremely important change of direction" that would provide "a legal basis for an independent judiciary."

The reforms, unveiled in Putin's state-of-the-nation address earlier this year, would take a long time to reach completion, but the departing envoy had the sense of "a new set of norms being set in place," and called for "a new effort to have laws enforced uniformly across the country."

Russian actions in the continuing conflict in Chechnya were "a burden" to Moscow's relationship with the United States, he said, referring to continuing reports of human rights abuses by Russian forces in the breakaway republic.

As long as the war continued, he said, Washington would regard it as "a major shortcoming and defect in the accomplishments of this country" and in the Russian government's "capacity to deal effectively with the rights of its citizens."

On the strategic defence debate in which Moscow and Washington are at odds over the US administration's plan to deploy a missile shield, the envoy said he found Russia's present position "not surprising" given that the United States had not as yet made specific proposals.

Given that Washington was proposing "a comprehensive review of all elements of the strategic system," it was unsurprising that Russia had been "essentially reiterating its position for some time now," which he summarised as saying that the Russians were "prepared to talk when there are specifics to discuss."

While noting that Moscow had welcomed Washington's "openness to dialogue", he said the Russian side was at the same time signalling it had the capacity to respond to whatever decision the Americans might make.

The prospect of Russia joining NATO was "a long way off," Collins said.

The Atlantic alliance was "open to any country prepared to support its principles and objectives and contribute to achieving them," he said, but stressed that to meet these criteria Russia had "a long way to go."

Collins is to be replaced by Alexander Vershbow, the former US ambassador to the United Nations.

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#2
PUTIN PUTS FORWARD NEW PROPOSAL ON STRATEGIC STABILITY

MOSCOW. July 5 (Interfax) - President Vladimir Putin put forward a new proposal on international strategic stability during negotiations with French leader Jacques Chirac earlier this week, Moscow diplomats told Interfax on Thursday.

Putin proposed "to set in motion a permanent process of consultations on strategic stability between the five nuclear powers, the members of the UN Security Council," the diplomats said.

"The French president said that he would consider the initiative," they noted.

The proposal may also be discussed during the Moscow visit of Chinese President Jiang Zemin in mid-July, the diplomats said.

No decision has been made yet on where, when and at what level the five nuclear powers could start the discussion, they said.

If the other nuclear countries, the United States, France, Great Britain and China, agree, the first meeting on strategic stability would probably be held at the expert level, the diplomats said.

The consultative mechanism could, in particular, discuss the further reduction of strategic offensive weapons, they said.

They recalled Putin's proposal that Russia and the United States reduce their nuclear arsenals to 1,500 warheads each by 2008, provided that the 1972 ABM Treaty remains in place.

Today "all the officially recognized nuclear powers have between them about 14,000 nuclear warheads," the diplomats said. In particular, Russia has just over 6,000, the United States nearly 7,000, while France, Britain and China have a total of 1,500 warheads, they said.

If the United States supports Putin's proposal, the five nuclear powers will have cut their arsenals by over 10,000 warheads, the diplomats said. "That would be a revolutionary step," they said.

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#3
strana.ru
July 5, 2001
George Bush opens NATO's door for Russia?
Such a decision would be advantageous both to Washington and to Moscow
By Victor Sokolov

The Russian Business Consulting Agency, with reference to Deutsche Welle, which in turn refers to a U.S. State Department official, reports that the George W. Bush Administration has removed its objections to the hypothetical possibility of Russia joining NATO.

According to information from Washington, the U.S. Administration considers that the doors to NATO should remain open.

The State Department official went on record as saying that NATO membership was possible for any European country that is prepared and agrees to taking upon itself the responsibility and duties stemming from membership in the alliance, and that Russia was no exception.

President Bush seems to have made it clearly understood that the USA backs Russia's aspirations to become closer to Europe, according to the official from State, who reaffirmed that the previous U.S. administrations had strongly objected to even a theoretical possibility of Russia acquiring NATO membership.

The first thing that comes to mind after that report is that someone misunderstood someone. Either the official from State failed to understand the question that was asked on this account, or that those who had asked the question did not quite correctly interpret his answer.

Second: certain circles in the USA have decided to feel out Moscow's reaction to such a decision that Washington has allegedly made - a decision that in the final count could turn out to be a well-cooked canard.

Third: it is nothing but a provocation.

That such a sensation is highly doubtful is also supported by the fact that the reports of the sources do not give the name of the official spokesman of the State Department, even though his name is known - Richard Boucher. Although, of course, the journalists could have given the name of some other official from Foggy Bottom. These are the thoughts that come to one's mind.

But then there is yet one more assumption - the fourth: but why not? Just quite recently, in Ljubljana, it was no coincidence that President Vladimir Putin read out a "secret" and very old document revealing an historic fact: the USSR, in its time, was refused membership in NATO. And the American president was really surprised - he seemed to not be in the know about that.

George Bush was surprised and left home to think it over. Meanwhile, he instructed his assistants to study the matter and find out how bad or useful it may be for U.S. national interests to block the road to NATO for Russia, considering that Washington plans to launch an NMD program and to keep expanding NATO eastwards, also by including the Baltic states in it, causing Moscow's angry protests. An answer to the question could be like this: it is not advisable to let Russia into NATO, but shutting the door to it would be of little use. It is better just to say "yes," winning a little more fame for the present Administration, while dragging the process out as long as possible. At the same time, using the euphoria evoked by that permission, perfect relations with Russia may be established. A good start has already been made in Ljubljana. Then an understanding may be reached on the 1972 ABM Treaty with no harm to the interests of the present Administration, and definitely to get from Moscow a "go ahead" for NATO expansion.

If that is so, it would be pretty nice for Moscow, because any uttered "yes" is positive in itself. And even if all this is a strategic ploy masterminded by the U.S., Moscow would respond positively. Moreover, Moscow will have to spread this positive aspect further to the East, to countries like China and India, which is just as good for the U.S. Then, even without Russia's joining NATO, Moscow and Washington would have, after the U.S. consent, to respond by changing their views on cooperation and on the security system. The inertia of the American "yes" for Russia's entry into NATO is sure to have far-reaching consequences, about which Washington perhaps does not even suspect.

Already now life gives good examples of that - in Brussels Russian and NATO generals start discussing the idea of a European missile defense system suggested by Vladimir Putin. Russians are already going to outline cooperation in this area, and call NATO generals their "colleagues."

The situation may be assessed simply enough - all will stand to gain from Washignton's opening the door to NATO for Moscow. One initiative in Moscow gave rise to another one in Washington, setting off entirely new processes. A hope that they would be positive does exist. Pity if all this will turn out to be just a canard.

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#4
Novaya Gazeta
No. 45
July 2-4, 2001
I ASKED THE TOPOL MISSILE
Putin's words: a hint or a threat?
Putin's statements, Russia's options, and the missile defense debate
Author: Vladimir Kulagin
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
WHY WOULD MOSCOW COME UP WITH A SHARPLY-WORDED STATEMENT MERE DAYS AFTER THE LJUBLJANA MEETING? HERE IS ONE ATTEMPTED INTERPRETATION OF PUTIN'S MILITANT WORDS ABOUT ADDING MULTIPLE WARHEADS TO RUSSIA'S MISSILES IF THE US PULLS OUT OF THE ABM TREATY.

Western analysts are puzzling over President Vladimir Putin's reasons for announcing that Russia would increase the number of nuclear warheads on its ICBMs as soon as the United States deploys its missile defense system.

Analysts comment that Putin made his statement at a meeting with American journalists in the Kremlin a few days after the Ljubljana summit, where George W. Bush and Putin had seemed to reach an agreement to calmly discuss the philosophy and potential practical consequences of implementing a missile defense shield. Secretary of State Colin Powell announced immediately after the Ljubljana meeting that instead of quitting the Anti-Ballistic Missile (ABM) treaty, Washington would seek mutually acceptable ways of amending it. Putin praised this particular idea at his meeting with Western journalists.

The initial assumption - that the statement was just a result of a three-hour marathon interview with persistently probing correspondents - was discarded as apparently incorrect. Putin repeated the idea when summing up the results of his meeting with the chancellor of Austria in St. Petersburg several days later. All this was clearly not due to chance, particularly in light of the tests of the SS-19 (Stiletto) missile that coincided with the president's statement. The Stiletto is not a new missile at all. Still, it can carry six warheads of 550 kilotons each.

Most analysts believe that the Kremlin is feeding the fears of US Democrats and European allies of the United States concerning another round of the arms race. What they cannot agree on is this: is the threat real, or is it a propaganda ploy, a bluff in other words?

At first sight, these developments strengthen Moscow's uncompromising stand and do away with hopes for a constructive search for ways to maintain strategic stability, the hopes generated by the Ljubljana meeting. Paradoxically enough, however, Putin's sharply- worded statement may also be interpreted as an initial phase in a maneuver which will eventually lead to a breakthrough in this direction.

Essentially, Putin stated that in the next 50 or 100 years Russia would be able to maintain strategic parity with the United States without straining its economic capacities too much. In other words, the threat of missile defense is not such a serious threat. If the United States accepts this asymmetry in strategic offensive-defensive parity, the appearance of additional warheads on Russian ICBMs - as insurance against the use of the national missile defense system against rogue states and against Russia as well - would not necessarily result in another arms race. On the contrary, the new asymmetric equation would help Moscow and Washington advance toward more drastic cuts in their offensive nuclear arsenals.

Given the existing levels (about 6,000 warheads in each arsenal) and a "thin" missile defense system, quantity of additional warheads will be an important psychological factor rather than anything else. As the strategic offensive weapons are cut back, or the missile defense system becomes "thicker", the importance of additional warheads is going to grow.

Given the condition of Russian ICBMs and considerations of economic expediency, Russia should probably place an emphasis on maintaining parity through preserving old missiles capable of carrying several warheads, and/or through the option of equipping newer Topol-M missiles with multiple warheads. This option is better for Russia nowadays than deploying a great many new and expensive single-warhead missiles.

It will also mean disrupting START II, which bans multiple warheads on land-based missiles, or at least revising it. On the other hand, it is time we finally admitted that this treaty (signed in 1993, it never came into effect; ratifications added numerous clauses unacceptable to the signatories) is clearly outdated and no longer in line with existing strategic reality.

Why wouldn't the Kremlin raise the issue of diplomatically searching for a formula of asymmetric strategic compensation? There may be various reasons for this. The US administration itself is not yet sure that missile defense systems are technically feasible. Neither is it sure of the system's technological or geographic configuration yet. Washington still has to make up its mind on prospects for cuts in offensive nuclear weapons. All this explain why Moscow is not in a hurry to clarify all the details.

On the other hand, it isn't hard to see that considerations of prestige are at play here as well as far as the Kremlin is concerned. Moscow is so used to uttering a vehement "never" at the mention of missile defense systems, that changing its position instantly must be very difficult. It will be even more difficult to explain this shift to Russian society and the international public. Moreover, doing it on the eve of an important Russian-Chinese summit is not very suitable either. Apart from the rogue states, the missile defense system would devalue China's already limited nuclear arsenals.

I don't rule out the possibility that this interpretation of Putin's militant words is just wishful thinking; but alternative interpretations are too appalling.

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#5
Vremya Novostei
July 5, 2001
[translation from RIA Novosti for personal use only]
MOSCOW LEFT WITHOUT JDEC
Global peace set for July 4 foiled
By Yuri GOLOTYUK

The Russo-American Joint Data Exchange Centre to monitor missile launches was to be opened in Moscow on July 4. The initiative was sealed at the top, presidential level and both Russia and the USA called it within the past year one of the key priorities of strategic stability. But they preferred not to remember this on July 4. Judging by everything, the creation of the centre, officially called the Joint Centre for Exchange of Data from Early Warning Systems and Notifications of Missile Launches, is becoming more and more improbable.

The JDEC idea was unbelievably good even for the benevolent 1990s, when global peace, love and brotherhood seemed perfectly feasible. To preclude a chance exchange of nuclear missile strikes, Russia and the USA decided to partially integrate their early warning systems, thus getting a possibility to monitor missile launches in any part of the world in real time. Other countries were expected to subsequently join the work of the bilateral centre, so that eventually everyone would be watching everyone, with missiles not flying anywhere without permission and peace and tranquillity reining on the earth.

The only trouble is that it took the sides too long to translate the idea, which Boris Yeltsin advanced in the very first months after he had come to power, into practical agreements. And it was already too late when presidents Vladimir Putin and Bill Clinton signed the JDEC memorandum at long last on June 4 last year (Point 1 of Article 8 of the memorandum stipulated that "the JDEC shall commence operations 365 days after this Memorandum enters into force"). In theory, the idea looked as attractive as ever, but the world had changed dramatically - and not for the better at all.

The last document signed to this effect was the memorandum of understanding, initialled by Russia's Foreign Minister Igor Ivanov and US Secretary of State Madeleine Albright in Brussels on December 16, 2000. After that, a new administration came to power in the USA and it became much more difficult for the sides to understand each other. The USA proclaimed the deployment of an NMD system as an absolute priority of its national security policy. Russia fought hard on the diplomatic front, but failed and went over from persuasion to threats of building up strategic arsenals and looking for allies.

On the other hand, the Putin-Clinton memorandum has not expired yet, as it will remain in force for ten years. Neither did the sides use the possibility to terminate the memorandum by notifying the other side of such intention six months before withdrawing from the agreement. However, in the current situation this "global Russo-American strategic initiative" looks as a monument to lost chance, rather than a living agreement that "gives peace a chance."

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#6
BBC Monitoring
Polish ambassador discusses Russian fears over NATO enlargement
Bush has demonstrated his readiness to put geopolitics before human rights
Text of report in English by Baltic news agency BNS

Tallinn, 5 July: Russia has no reason to be afraid of the enlargement of NATO, as the accession of Poland to the Western military alliance offered no grounds for such fears, the new Polish ambassador to Estonia said.

Before Poland's entry into NATO, similar fears were voiced regarding the alliance moving closer to the Russian frontier, [the Polish] ambassador [to Estonia] Wojciech Wroblewski told BNS today. Now Poland is a member of NATO, none of these fears has turned out to be true nor has the alliance become a bigger threat to Russia, he said.

The ambassador underscored that NATO was not an aggressive organization and, unlike the countries of the former Warsaw pact, it was compulsory for NATO members to establish civilian control over their armed forces.

Wroblewski also said only the alliance's members could have the right to decide which other countries to accept as members.

"Poland is against dividing the world into zones of influence between the major powers. No country has a veto on admitting Estonia, Latvia and Lithuania into the alliance, except for NATO members themselves, of course," the ambassador told BNS.

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#7
Moscow Times
July 5, 2001
Making Sense of Manilov
By Pavel Felgenhauer

Last week, General Valery Manilov, the main military spokesman on the war in Chechnya, was sacked. There are thousands of generals in active military service in Russia, but most of them are obscure figures who avoid the public eye and are not known by anyone outside their immediate line of command.

Manilov was different — a general who liked to talk anytime and got lots of media coverage.

Because of Manilov's public stature, his ouster was interpreted as a consequence of some of his contradictory statements on the conduct of the war in Chechnya. In fact, the story is not that simple. Manilov acted as main military spokesman, but his position in the Russian military hierarchy was more prominent. Manilov was first deputy chief of General Staff since 1996. When the chief of General Staff — the No. 2 after the defense minister in the military hierarchy — was out of town on a business trip or on vacation, Manilov was technically in command of Russia's strategic nuclear deterrent.

The Russian military doctrine signed into law in 2000 by President Vladimir Putin was written under Manilov's auspices and personally edited by him. In short, Manilov was an important military-political decision-maker with many important connections in places of power outside the Defense Ministry.

After several disastrous and highly embarrassing public briefings in 1999 on the situation in the Balkans by General Anatoly Kvashnin, the chief of General Staff, the Foreign Ministry insisted that in the future Manilov represent the military in public. When Kvashnin and former Defense Minister Igor Sergeyev began a public dispute in 1999, Manilov sided with Sergeyev and was considered Sergeyev's main instrument of influence inside the General Staff.

Since his appointment last March as defense minister, former KGB general and Kremlin insider Sergei Ivanov has methodically ousted most of Sergeyev's associates. Ivanov has been instead installing a new team of generals in an attempt to do the job that was assigned to him by Putin: to turn around the Russian military and create a fighting force out of a rag-tag army.

Manilov was not ousted because of his public pronouncements on the war in Chechnya. In fact, the Kremlin greatly appreciates Manilov's efforts to whitewash over the conduct of Russian troops.

Manilov was ousted as a Sergeyev associate to give way to younger and more professional officers. Manilov is 62 — two years over the age of retirement for generals — and is not particularly popular within the professional military, who consider him more of a PR executive than a military commander. He was always more popular in the Foreign Ministry and in other civilian government departments than in the military per se.

Manilov's retirement from active service will make Ivanov more popular inside the professional military. But that does not mean Manilov may not soon reappear in the Kremlin, in the Security Council or elsewhere in government.

It is also possible that Manilov will go into business to translate into hard currency his wide-ranging connections in Russia's ruling elite. A month ago in Germany, in one of the best wineries of the Rhine Valley, Manilov for more than half an hour pestered the Germans with persistent questions about the specifics of modern high-tech Rhine wine production, while all the rest of the team (including Gazprom CEO Alexei Miller) just wanted to go down to the cellar to taste the wine. Maybe Manilov is planning to take an executive position in the beverages industry?

Manilov's ouster from the General Staff may create the impression that Kvashnin's standing has been enhanced. But in the tangled world of Russia's bureaucracy, Defense Ministry observers are expecting Kvashnin's speedy ouster to follow.

Last April, Kvashnin attempted to sack General Leonid Ivashov and cleanse Ivashov's department of international military cooperation from the General Staff without consulting Ivanov.

Kvashnin lost the fight with Ivanov, and Ivashov's department was reinstated. Since then, Kvashnin has been noticed to have increased contacts with Russia's business leaders, apparently looking for a retirement position.

Ivanov has consolidated his control of the Defense Ministry. But his reforms have up to now been, in essence, personnel changes. Generals replace other generals, but the system that leads the Russian armed forces to decay and misery is still in place.

Pavel Felgenhauer is an independent Moscow-based defense analyst.

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#8
Number of Computers to Grow Notably in Russia by 2010

MOSCOW, Jul 05, 2001 (Itar-Tass via COMTEX) -- Within the next eight years the number of personal computers, owned by the population, is to grow in Russia four times over and the number of computers in offices and enterprises -- six times over. These figures are contained in the federal "Electronic Russia" target programme, covering a period from 2002 to 2010. It is being discussed by the Russian cabinet on Thursday.

Journalists were told at the Russian Ministry for Economic Development and Trade that the Russian market of information services and programme technologies is to grow two or even three times over by 2005 when this programme is implemented, and five times over -- by 2010.

The number of Internet-users is expected to grow five times over by 2005 as compared to the present-day figure, and two thirds of all the computers in Russia are to have access to global information networks by 2010. At the same time, the cost of Internet services in Russia is to drop by 40 per cent in 2005, and fifty per cent -- by 2010.

Special attention shall be devoted to the introduction of Internet and electronic documention at state ministries and departments. The later is to account for 65 per cent of all the paper work by 2010.

The Thursday meeting of the cabinet is also to consider another federal target programme -- "On the Development of a Single Information Medium in Education", which is to cover a period from 2001-2005. It deals primarily with schools and professional educational establishments, which are today at best equipped with first-generation computers. Only two per cent of all the Russian schools are now connected to computer networks and only one and a half per cent of educational establishments have access to Internet. Particularly disappointing is the situation in rural schools, where only twenty-five per cent of all the teachers know at least something about informational technologies.

Experts of the Russian Ministry of Education presume in this connection that the programme's implementation will give school teachers a chance to study computer techniques and the number of computers will be increased to one per eighty schoolchildren. Eighty per cent of all the general-purpose educational establishments of Russia and seventy per cent of the country's professional schools are to be connected to computer networks, the programme says.

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#9
MOST RUSSIANS SUPPORT DEATH PENALTY - POLL

MOSCOW. July 5 (Interfax) - Eighty percent of Russians think that the death penalty is permissible, the Public Opinion Foundation said Thursday based on a June 30 poll of 1,500 village and town residents nationwide. Eighty-nine percent of those polled named the crimes that should be punished with death. Many of them gave multiple answers. Seventy percent said that capital punishment should be applicable to murderers. Some said that only serial or extremely brutal murderers should be punished with death. Every fifth participant in the poll said that any cruelty or violence (rape, crime against human dignity, physical or psychological violence, insult and humiliation) should be punished by death. Twelve percent said that the death sentence should be handed down on drug charges (drug lords, smugglers and pushers). The same percentage insisted on killing people who commit crimes against children, such as murder, abduction or rape. Nine percent of the respondents support the death penalty for terrorism (terrorist acts, sabotage and hostage taking).

Three percent said that high treason (espionage and divulgence of state secrets) must be punished with death, and 2% held to the Soviet tradition and proposed to punish economic misdeeds against the state and individuals with death.

Two percent of the respondents said no person should be sentenced to death no matter what the crime might have been (no right to dispose of somebody's life, life in prison but not death sentence).

Russia has abided by a moratorium on executions for five years, of which 68% of those polled were aware.

Sixty-one percent of those polled said that they did not approve of Russia's decision to stick to the moratorium, while 27% said the opposite. Most opponents of the moratorium are people with incomplete secondary education (67%), villagers and supporters of Communist Party leader Gennady Zyuganov (69% each).

Those polled were offered a multiple-choice question: Should the death penalty be used, should the moratorium be extended, or should the death penalty be banned? Sixty-seven percent of respondents supported executions, 11% stood for the moratorium, and 10% called for banning the death penalty.

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#10
Development-Russia: Ambitious Plan to Overhaul Road Network

MOSCOW, Jul 4, 2001 (Inter Press Service via COMTEX) -- The Russian government plans to commit at least $76 billion to rebuild the country's highways over the next 10 years.

"The current state of Russian roads does not satisfy the needs of boosting the Russian economy," said Prime Minister Mikhail Kasyanov, after approving the provisional draft on June 29.

He ordered the final draft of the budget to reach him before the end of July.

The blueprint, called Russian Roads in the 21st Century, envisages construction of some 80,000 kilometers of roads. The government hopes the plan would result in lower transportation costs and the development of tourism, trade and industries.

Overall, the government hopes the economy will gain $300 billion from an improved road network, according to Russia's Transportation Minister Sergei Frank.

The gains would include direct revenues from road tolls and indirect economic gains from an improved highway network. There has been no independent confirmation that these official estimates are correct.

Bad roads have contributed to Russia's infrastructure woes. For instance, roughly four-fifths of the major highways are in poor condition, lacking traffic lights and possessing obsolete traffic markings and surfaces.

Many towns in northern Russia and Siberia, some of them with a population of more than 500,000, can be reached by car only in winter, when the ground is frozen solid as temperatures plummet to minus 30-40 C.

Even the country's most important route, the Moscow-St. Petersburg highway, which links central and western Russia and two cities with a combined population of some 15 million, suffers from the general infrastructure malaise.

Russia's road network has been underfunded. Inter-city roads are financed out of the federal budget, and local authorities are responsible for municipal roads.

Russia has 670,000 kilometers of roads, a little more than half of what experts say is needed. Within the past six years Russia built 65,000 kilometers of new roadways.

According to official statistics, the federal authorities invested some $5 billion in the sector in 1997, and some $6 billion in 1996.

Allegations of graft in road construction throughout Russia abound. Even in Moscow, the same sections of roads may be repeatedly repaired in just one winter -- though it is clear that no good repair could be done in Russian frost.

The new plan calls for transit roads to be built around major transport hubs like St. Petersburg and Vyborg, which borders Finland, to ease traffic congestion and increase the speed of transport.

The government has not ruled out the possibility of foreign investors participating in building the roads, according to Frank. However, he argued that federal and regional authorities should share the cost of the plan fifty-fifty.

The plan will be finalized in July, while the financing for 2003 will be worked out this September.

In the past, a wide range of measures to tackle traffic problems had been suggested, including a new licensing system, improved road building and better road maintenance.

Russian roads are increasingly unsafe, thanks to drunken drivers and speeders. Each year, more than 170,000 traffic accidents occur in Russia, claiming some 30,000 lives and causing more than 180,000 injuries, according to official statistics.

Widespread alcohol abuse is the biggest traffic problem, as one in every four crashes involves drunk drivers. In some remote parts of Russia, the figure is one in three.

However, the situation is not all gloom and doom.

For instance, a new 100-kilometer circular road, completed recently around Moscow, is up to international standards.

Moscow enjoys the most advanced traffic and road network of all Russian cities, but the capital still suffers from deteriorating traffic congestion. During the rush hours, Moscow nearly comes to a standstill, paralyzed by traffic jams, according to Moscow traffic police.

Moscow has more than two million private vehicles, with a daily flow of 300,000 vehicles, according to traffic police. By 2005, Moscow authorities plan to build the third inner circular road at an estimated cost of $1.25 billion.

While Moscow, the country's predominant financial center, can afford massive investment in infrastructure, less affluent cities have to rely on external borrowing. For instance, 14 Russian cities recently took part in the public transportation rehabilitation project, worth $329 million, funded by the World Bank.

President Vladimir Putin has said he wants more cars on the road, and hopes the highway plan will do exactly that.

By 2010, some 30 percent of Russia's 145 million people will own cars compared to 7 percent a decade ago, Frank said. "There are 150 cars per 1,000 people in Russia now, and the figure is expected to reach 250 within the next 10 years," he added.

However, its remains to be seen whether the money will be used to maintain existing roads and expand the network, or whether it will again end up in bureaucrats' pockets.

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#11
Jamestown Foundation Monitor
July 5, 2001

Is debureaucratization slamming up against Russia's bureaucratic reality?    Licensing reform measure is in danger. A key piece of legislation--part of the Russian government's effort to debureaucratize the economy--appears in danger, thanks to lobbying efforts state bureaucrats are aiming at State Duma deputies. As originally conceived by German Gref's Ministry of Economic Development and Trade, the bill would have reduced sharply the number of activities requiring licenses. Such licensing has been a major factor in the country's unchecked corruption and the correspondingly stunted growth of small businesses. According to a study done by Moscow State University, one out of ten rubles paid by Russian consumers for goods and services goes toward costs imposed by such "administrative barriers." These costs, according to the study, amounted to 162 billion rubles (some US$5.78 billion) in the first nine months of last year alone--a sum almost equal to the cost of servicing the state's debts during the same period, which totaled 166 billion rubles (Izvestia, June 29).

Gref's ministry originally sought to reduce the number of licensed activities from more than 300 down to forty or fifty. Press reports on the numbers, it should be noted, have contradicted one another. According to one, there are more than 500 activities subject to licensing at the federal level alone and no one is sure of the exact total number of activities subject to licensing at both the federal and regional levels. In any case, the government, after being subject to bureaucratic lobbying from within, introduced legislation last April reducing to 104 the number of activities subject to licensing. The Duma passed that bill in a first reading last month. Along with the fact that lobbyists had managed to keep many activities on the licensing list, some advocates of small and medium-sized businesses complained that the bill also exempted a number of powerful agencies and ministries from new regulations that would restrict the right of various bodies to carry out audits and checks, which give officials a pretext for extracting bribes from businesses (see the Monitor, April 23, June 8).

Since it passed in a first reading last month, the bill has been under discussion in the Duma's committee on property, which has been the target of strong pressure from bureaucrats who, as a newspaper put it, are "desperately fighting to keep their privileges to issue... permissions for everything, from catching stray dogs to building pipelines." These bureaucrats have reportedly found supporters among members of all of the Duma's factions, including the pro-Kremlin Unity party, who have put forward some 400 amendments that would put at least 150 types activities back on the list of those subject to licensing. The paper quoted unnamed Duma deputies as saying that had been offered "good money" for pushing through these "small amendments." The real immediate aim of the lobbyists, however, may be to get the licensing bill, which is set for a crucial second reading tomorrow (July 6), taken off of the Duma's agenda indefinitely (Izvestia, June 29).

The problems facing the government's debureaucratization efforts were further underscored on June 29. After a meeting with President Vladimir Putin, Mikhail Fradkov, head of the Federal Tax Police Service, announced that he had cut the number of deputy chiefs in his agency from seven to three. He added, however, that a tax police chief would be named for each of the seven federal districts created by Putin last year, each of whom would have the rank of deputy head of the Federal Tax Police Service. This, of course, means a net gain of three Federal Tax Police Service deputy chiefs (Izvestia, July 1). Deputy Prime Minister Aleksei Kudrin, who is also finance minister, recently claimed in an appearance before the Duma that the government had reduced the total number of federal bureaucrats, but was contradicted by State Duma Deputy Yegor Ligachev (see the Monitor, June 28).

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#12
Krasnaya Zvezda
July 4, 2001
[translation from RIA Novosti for personal use only]
WORLD POLITICAL SITUATION: SECURITY PRIORITIES

By Vladimir MOKHOV, of Krasnaya Zvezda

Recently, journalists have interviewed Colonel-General Leonid IVASHOV, head of the main directorate for international military cooperation. Ivashov, speaking of recent international developments that bear directly on Russia and its defence ministry, noted among other things that it is difficult to single out the more important ones. The situation in the Balkans is known to have worsened again. Still on the agenda is the NMD issue. Rumours abound about NATO's expansion as this organisation is heading for its regular summit to discuss the question concerned. Equally crucial is regulation of relations with Georgia and Trans-Dnestria following Istanbul obligations, and deciding the future of Russian military bases in Transcaucasia. All these issues are sensitive enough...

Our Replies

The journalists were eager to know what are the steps Russia will take if the US unilaterally opts out of the ABM Treaty. As Ivashov said, Moscow is currently making vigorous efforts in foreign policy to preserve both the 1972 ABM Treaty and the related system of strategic relationships. Meanwhile, Russia is accused of a certain measure of conservatism. It is claimed that it feeds on Cold War relics. But that is far from so.

To begin with, Russia is regularly advocating strategic stability and cuts in strategic offensive arms. And even, as was the case in the early 90s, is making unilateral steps in this direction. Today, too, Moscow is prepared to negotiate with NATO, the US and any other state in order to assess the emerging military political situation and to create a bank of those risks that may escalate into threats. Russia is ready to discuss the problem of missile threats and non-proliferation of weapons of mass destruction. It is necessary, it believes, to arrive at a common understanding of absence or presence of these threats and then, if they exist, jointly to work out measures to neutralise them.

Indicative here is an initiative advanced by Russian President Vladimir Putin concerning a European missile defence system. It incorporates an understanding of the need for holding consultations and negotiations to assess risks and threats, and only then to map out measures of a military, political, diplomatic or other nature to prevent the risks from turning into threats or to neutralise existing missile threats. And only if all these means are not enough, to go over to examining a concept of deploying technical elements of a missile defence shield.

It is too soon, in Ivashov's view, to speak of measures which Russia will undertake if the US pulls out of the ABM Treaty. He merely reiterated Putin's recent words about sub-projectile warheads. This example shows how the strategic stability system which has taken our countries many decades and great efforts to build up by tiny bits may fall to pieces. That some people in the US, in their public pronouncements, urge breaking up the ABM Treaty, is obvious. For in its very first article the parties undertake not to deploy a national missile defence system and not to create facilities for such deployment. That is the kernel of the matter. This fundamental article sets the tone for the rest. The entire American-style "modification" now is to allow such deployment. No other proposals have been forthcoming from Washington. But to accept that idea would mean destroying a system of balances incorporated in 32 previous documents (START-1, START-2 and others). The US is reluctant to calculate the consequences of such a step.

There is no doubt that Moscow will come up with an adequate reply and with matching methods of retaliation. But then the efforts of Russia and other countries of the world community will have a different orientation. As Ivashov noted, Russia is closely following US progress in implementing the ABM Treaty. There is a permanent consultation commission to discuss the treaty, and it also includes other countries. The hope still lingers that the treaty can be preserved. After the Putin-Bush meeting in Ljubljana US Secretary of State Colin Powell spoke in about the same vein. This offers some encouragement, but only some.

No Hard-Fought Retreat

There is still no consensus in Russian-Georgian relations. Ivashov recalled that in Istanbul Moscow and Tbilisi had recorded two key points. One concerned cuts in arms and equipment limited by the Conventional Forces in Europe Treaty down to a temporary basing level permitted to Georgia. Surplus armour was subject to withdrawal or recycling. The second point of talks concerned conditions and timetable for the functioning of the Russian military bases in Georgia. The negotiations were difficult, but a compromise was nevertheless reached.

Russia, ever since it signed a joint statement, has been punctually fulfilling its commitments. It cut back the arms and military hardware limited by the Treaty. Today there is not a single fighting vehicle, not a single artillery piece in Georgia that is found there against the law. The military bases at Vaziani and Gudauta have been dismantled, on which the Georgian side was insisting. Some military facilities are being finally handed over. But in the course of negotiations on the conditions and schedule of functioning of the Russian bases, General Ivashov said, the Georgian side suddenly changed its subject. The question of their withdrawal was raised. And the timetable for this withdrawal, proposed by Tbilisi, was described by Ivashov as a hasty retreat of Russian forces from Georgian territory. Three years, according to him, is an absolutely unrealistic period. For the matter concerns accommodation of personnel, and construction of storage facilities for weapons and military hardware. Besides, the amount of Russia's material resources in Georgia is too great to be pulled out post-haste.

Unlike Trans-Dnestria, where withdrawal of Russian troops is partly financed by the OSCE, nothing like that is to be seen here. Russia is only offered, said General Ivashov, a kind of unofficial bait. They say that if Russia accepts the Georgian conditions, then Georgia will pay. But Russia does not need any bait. What it needs is real money for troop billeting. Camps, flats, and equipment shelters... But none of the international organisations has so far coughed up any money for this. Besides, it must be repeated, in Istanbul the matter was entirely different - it dealt with the conditions and extent of functioning of the bases. It is this discrepancy, to put it mildly, that stands in the way of further progress.

What is behind the "new reading" of the old accords? Ivashov thinks it lies in Tbilisi having veered towards the West and wanting to join NATO. Certainly, Russia cannot judge the advisability of this step, it is the lawful right of any sovereign state. On the other hand, Russia and its Defence Ministry should give first thought to the security of its southern borders. Meanwhile, the Transcaucasian region is characterised by both instability and a certain expansion, including military one, on NATO's part, and by growing anti-Russian sentiments in some states. One cannot help ignore all this. For Russia Transcaucasia is a strategically crucial region. And the approach of military structures of foreign states towards Russian borders is pregnant with most unpredictable consequences.

And one more point. In Istanbul, Russia raised the issue of the Georgian side guaranteeing an unimpeded and safe pull-out of Russian personnel and arms and military hardware. And Georgia assumed this obligation. But withdrawal of the 50th base from Gudauta has demonstrated that such conditions were not provided.

The local population is merely blocking Russian convoys, not letting them out. This is why there are delays with the fulfilment of mutual obligations. But not through the fault of the Russian side. Unfortunately, Tbilisi has taken no steps to clear the way for troop withdrawal. It did not even enter into talks with the Abkhazian side on this score.

Also in mid-air remains the issue of who is to take over four army camps in Abkhazia after Russia has carried out its commitments. On paper they can be handed over to Tbilisi. And in practice? Also automatically hung up are the questions of guarding these camps and accords on logistic supplies for the Russian peacekeeping contingent, which is still serving in the zone of the Georgian-Abkhazian conflict. Should it be a headache for Russia alone?

Russia, General Ivashov said, will stand by its commitments.

But it believes that the Georgian side should create appropriate conditions for that. As is stipulated in the Istanbul accords.

Russia is not going to make a hard-fought retreat to the hinterland.

Let Well Alone

General Ivashov also dwelt on prospects facing the main directorate for international military cooperation. In his view, it is not worthwhile speaking now of reforming the system of international military cooperation. The most radical changes in this system, including structural ones, took place after the USSR's collapse, when Russia became a sovereign state.

Currently there is a sufficiently streamlined concept of military cooperation. There are certain priorities that largely differ from the Soviet era. One of them is security through expanding military cooperation and joint efforts with other states and international organisations. The present process is one of improving cooperation in the military field and looking for its newer and more efficacious forms. This process is logical and permanent. To be sure, there are some changes made in manning tables, in personnel, etc. but that is all.

The system has proved its worth and performs well. The geographical spread and spectrum of military cooperation are broadening. Recently, for example, its orbit came to include two more countries. For the first time in the history of Russian-Lebanese relations a Russian military delegation has visited Beirut. The same can be said of Croatia.

Non-budgetary funds likewise have a good influence on the financials. For example, contributions to Russia's system of military education and altered approaches to training foreigners in Russian military colleges have resulted in a near doubling of their numbers there.

So no radical changes in the system of international military cooperation are forthcoming. Russia's Defence Minister Sergei Ivanov approved the existing structure of the directorate.

What is more, according to General Ivashov, the directorate is expected to re-embrace a national centre for reducing nuclear risks.

Nor will there be far-reaching alterations to military technical cooperation. A structure whose prime aim has been to promote Russian-made weapons on the international market has existed at all times. It coordinated participants in military technical cooperation, enterprises and organisations that are engaged in it. True, it was removed from the Defence Ministry, belonging to other departments. Today this structure has been upgraded organizationally. The committee for military technical cooperation is accountable to the Defence Ministry and its head is one of the deputy defence ministers.

The tasks of the committee are the same - promoting Russian military hardware on world markets and coordinating efforts of all entities engaged in this process. On the other hand, General Ivashov noted, increased arms trade sometimes is at variance with the state's political interests. And the precise goal of the directorate, and of the Defence Ministry as a whole, is to uphold these interests.

A process leading up to sealing a deal, as a rule, begins with a discussion of military political issues, rapprochement of positions on some or other international issues, familiarization with Russian military equipment, etc. The initial stage is always one of making intensive studies of each other. It is only then that a political decision is taken to purchase weapons and military hardware. Here Rosoboronexport, the Committee for Military Technical Cooperation, and others step in. This is an interrelated process. Similarly, deciding the question of arms supplies, one cannot but link it with training of foreign specialists. These and many others are things supervised by the directorate, which, according to General Ivashov, has its own niche of responsibility.

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#13
The Russia Journal
June 29-July 5, 2001
Russia has always been a mad entrepreneur’s heaven
By AJAY GOYAL

A Greek publishing tycoon recently breezed into Moscow with pockets bulging from a two-year bull run on the Athens stock exchange.

He hired expensive publishing and public relations consultants and set up shop in Russian Vogue’s exquisite Moscow penthouse to put out a down-market weekly. Then, he pumped some $1.5 million of "Other People’s Money" into a project named Viva!, a magazine all about nothing in particular, and had its cover page splashed all over bus stands in central Moscow.

Some exclusive parties were thrown and pictures of management and editors schmoozing with the usual suspects among Russia’s tacky elite were duly inserted in the paparazzi pages.

Then, four weeks after the launch, the tycoon flew in again, sacked the 50-strong workforce, shut up shop, and vanished. His consultants reportedly made a hefty six-figure package while the journalists are on the road again, looking for a new project.

This is a typical story in Russia, one repeated year-in year-out by scores of foreign investors and businesses.

In 1998, the powerful French publishing group Hachette Fillipachi launched its Russian-language Paris Match magazine. After hiring one of the finest editorial and publishing teams in town and spending more than $2 million in 11 months, come August ’98 and the financial crash, the group shelved the project and left – all the while repeating the popular mantra about Russia: "It’s finished."

U.S. investment bank Goldman Sachs, having lent and lost millions of its clients’ money to corrupt and rusting Russian factories, opened an office in Moscow with much fanfare – reportedly even paying former U.S. President George Bush Sr. $100,000 to appear at the launch. But then, weeks later, the group scaled back its operations, retaining only a token presence in the country, and vowing not to return in force.

Now, it’s not as if investors like that Greek tycoon don’t do stupid things elsewhere. The carnage seen among American and European dot-coms and the amount of money spent on plainly dumb businesses is testament to that. As John Kenneth Galbraith told the Financial Times some time ago, there isn’t enough intelligence available to manage all the money in mutual funds.

But, while U.S. investors stayed away wholesale from IT and Internet-sector companies for a few months after being badly burnt from the dot-com disaster – hurting legitimate companies and projects in the process – each time an investor behaves stupidly in Russia it blackens the entire country’s image.

This adds insult to injury to Russia’s already parlous foreign-investment reputation – there is enough bad news here without cowboys coming in all guns blazing, and then, when they fall off their horses, running home to complain about bad turf.

The reality of Russia is rather straightforward, much like capital markets around the world: For every foreign business that does not succeed here, there is another that does very well.

Indeed, one inevitably comes to the conclusion that those investors that arrive here with a long-term commitment and who take the time to understand the demands of the market – and in truth every country has its unique features and quirks of business culture – tend to meet with a far greater level of success. Conversely, those that do not bother with such investigations and subsequently fail must shoulder a lot of the blame themselves.

A successful business strategy in the Russian market requires preparing a game plan for a special set of rules. To begin, one could quote a line from the golf movie "Legend of Bagger Vance." The narrator, having learned the secret to life (and golf) tells a spellbound audience: "It’s a game that can only be played, not won."

One could say almost exactly the same thing about doing business in Russia.

Doing business here must, at each step, be an experience the businessperson is prepared to live with – and learn from – and enjoy. Rarely do business plans with tightly focused returns and revenues meet the original targets set. The circumstances in this country are so fluid that, irrespective of economic stability, business targets have to be shifted around all the time.

Coupled with that, the government regularly moves the goal posts in the middle of the game, and if that doesn’t work, changes the rules altogether. Now, in such circumstances, one can either throw a tantrum, start abusing the umpire (or country) and leave vowing never to return – or one can adapt, keep playing and enjoy the game.

Naturally, corporations with shareholder accountability cannot afford to pay for their executives to live in colonial-gated ghettos in Moscow and "enjoy" themselves while their companies bleed. (Although it’s a different matter that many do the same anyway.)

That is why Russia has always been an individual and mad entrepreneur’s paradise; a place where a person who can innovate and follow his reflexes without having to ask the "people back home" for permission always does better.

But when it comes to serious strategy in Russia, it can all be summed up in the words of a famous general.

It’s commonplace for many American corporations to provide seminars for their executives on the 12th-century book of Chinese military strategist Sun Tsu. Almost every trader, sales person and street fighter in the cutthroat world of U.S. business has at some point come across the military science of this Chinese thinker.

There is no doubt that some of those strategies work very well in business, almost anywhere… except, perhaps, in Russia, where one needs to understand the strategies adopted by Russian generals in war to succeed.

The best military strategy one can adopt here is that of Gen. Field Marshal Mikhail Kutuzov against Napoleon.

Pressed by his younger officers and comrades to attack Napoleons’ advancing and then retreating armies, Kutuzov kept delaying. All the while guerilla ambushes kept disrupting the enemy lines – destroying their morale and whittling away their resources. Kutuzov’s standard reply to the prodding of those around him eager for a different strategy was "patience and time."

If one can understand the Russian approach toward time, space, and relationships, one can possibly do business here – and even make some money in the process.

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