Johnson's Russia List #6063 7 February 2002 davidjohnson@erols.com A CDI Project www.cdi.org [Note from David Johnson: 1. Moscow Times: Anders Åslund, The Russian Success Story. 2. Reuters: Russia confident on economy despite slowdown. 3. Nezavisimaya Gazeta: Natalia Melikova, GREF IS NO LONGER AN ECONOMIST. Managing the economy is partly a matter of public relations. 4. AP: Kursk Investigators Give Up Hope. 5. Luba Schwartzman: ORT Review. 6. BBC Monitoring: Chief rabbi praises Putin, Russia's new religious tolerance. 7. CIA Director George Tenet on Russia. 8. RIA Novosti: PUNDIT: US PRESENCE IN CENTRAL ASIA HERE TO STAY. (Markov) 9. Asia Times: Sergei Blagov, Moscow revitalizes its old priorities in Asia. 10. Reuters: Russia trade surplus,oil revs down in 2001-customs. 11. Susan Eisenhower speech at the National Press Club. 12. Reuters: ANALYSIS-Corpses and smears -- Ukraine election nears. 13. Russia Business List: Vladimir Gelman, DEMOCRATIC GAINS REVERSED IN REGIONAL ELECTIONS FROM MOSCOW TO SAKHA/EAST WEST INSTITUTE. 14. BBC Monitoring: Forthcoming law on Russia's political parties to ensure financial transparency. 15. Los Angeles Times: John Daniszewski, Russians Optimistic About Arms Cuts. 16. Interfax: Russian general critical of military reform, US Central Asia presence. (Andrey Nikolayev) 17. Moscow Times: Larisa Naumenko, Net Use Leaps 39% in 2001, With More Growth Expected.] ****** #1 Moscow Times February 7, 2002 The Russian Success Story By Anders Åslund Nothing is as easily taken for granted as success. Only a decade ago, the Soviet Union collapsed. Walking around Moscow at the time, I found people fearful as if they expected the sword of Damocles to fall upon them at any moment. Prophecies of impending disasters abounded. Civil war was widely predicted. The West mobilized food aid to avert famine, expecting that millions of starving Soviet citizens would flee to the West. Would the 30,000 Soviet nuclear warheads fall into the hands of criminals? Soon, worries about a communist resurgence, or a fascist rise, emerged. The problems appeared insurmountable. Many argued that Russia's dour history precluded the possibility of democracy or a market economy in the foreseeable future. The most pessimistic alleged that Russia suffered from a unique form of genetic degradation because of Stalin's purges and environmental devastation. The country seemed condemned to ever worse horrors. The contrast between those premonitions and the current reality could hardly be greater. Today, Russia is a stable, if imperfect, democracy with a popularly elected president, parliament and local governments. About 70 percent of the economy originates in the private sector, and inflation is under control at below 20 percent a year. The foreign debt has dwindled from over 100 percent of GDP to only 40 percent. The concerns about Russia's debt repayment in 2003 are exaggerated and indicative of how few economic problems there are left to really worry about. As the rest of the world sinks into recession, Russia booms. It has enjoyed an average growth of 6 percent during the last three years. There is good reason to believe that Russia has attained high sustainable economic growth driven by structural economic reforms. However strong Russia's recovery is, the cost of communism remains high, and Russia will need decades to reach a Western economic level. But rather than grumbling about remaining problems, such as a weak legal system, inefficient public health care and the dearth of small enterprises, we need to take stock of the truly amazing achievements. How were they possible? Russia's first democratically elected president, Boris Yeltsin, averted civil war by initiating the dissolution of the Soviet Union in December 1991. Thus, he let the other 14 Soviet republics go their own way. Never has an empire ended so peacefully. Later on, Yugoslavia illustrated a bloody alternative. The fears of famine abated in early 1992 after chief economic reformer Yegor Gaidar freed prices. The shortage of food was never absolute, but the communist state had ground to a halt and could no longer distribute essentials. As anywhere else, free markets could take care of that. Within days, millions of Russians were out trading hoarded surpluses in the streets, showing their entrepreneurial spirit. Amidst a multitude of collapsing states, loose nukes posed an obvious danger. Fortunately, all the four former Soviet republics with strategic nuclear arms welcomed cooperation with the West. Two U.S. administrations have cooperated deftly with them to disarm that threat, and the Nunn-Lugar program continues to destroy superfluous nuclear arms. The threat of red-brown revanche was arguably most intimidating. The first Russian parliament was elected in a not-very-democratic way in March 1990 before actual democratization. Absurdly, it could change the Constitution instantly by a simple majority. When President Yeltsin finally dissolved this unrepresentative body, red-brown forces launched an armed uprising in October 1993 that was quashed. Since then, democratic forces have managed to hold their own in Russia's many free elections. The Communists' popularity is dwindling, and Russian nationalism has never become much of a force. President Yeltsin's liberalism was actually incredible. Contrary to common prejudice, Western assistance to Russia has been minute. In the 1990s, Russia actually paid back more to Western governments on old Soviet loans than it has received in grants or loans from Western governments, the IMF or the World Bank. Yet Western advice has been useful. The three main economic aims of Western assistance have been accomplished. Russia has become a market economy; financial stabilization has long been attained; and Russia has undertaken the greatest privatization the world has ever seen in less than a decade. But the achievements are Russian. The West could only be effective when it tried to assist the country's reformers with their programs. Russia's success was by no means inevitable. Its Western neighbor Belarus failed to liberalize and privatize early. Not surprisingly, its humble reforms have crumbled, and it is now the only remaining dictatorship in Europe. Ukraine chose Russia's reformist road -- but later on -- and its population is still suffering from that unfortunate hesitancy. The lessons from the Russian transformation are plain. If people get freedom and property, markets and democracy start working. Now, new private entrepreneurs are demanding ever better legal regulation, driving an impressive reform wave. Next, the rule of law is likely to be imposed, and small enterprises will probably mushroom. It is time to realize that Russia is a country that solves its problems with an efficacy and speed that the West can only envy. Anders Åslund, a senior associate of the Carnegie Endowment for International Peace and author of "Building Capitalism: The Transformation of the Former Soviet Bloc," contributed this comment to The Moscow Times. ****** #2 Russia confident on economy despite slowdown By Darya Korsunskaya MOSCOW, Feb 7 (Reuters) - Russia said on Thursday the economy was set for more growth in 2002 after two years of boom, despite signs of a recent slowdown and soaring inflation. Russia, hit by crisis in 1998, has grown fast since then and Prime Minister Mikhail Kasyanov opened a cabinet meeting on the 2002 outlook on a positive note. "We have no fear about the balance of payments. We have every reason to say that the economy will grow," he said. But he made no mention of 3.1 percent inflation in January, well above market and official forecasts, and which the daily Kommersant newspaper described as "the forbidden theme." Deputy Economy Minister Arkady Dvorkovich played down the figure, the highest since February 1999, and said the government was still on target to meet its inflation goal. "The government is sticking to its forecast of 12 to 14 percent (by the end of this year)," he told reporters after the meeting. He said the spike in prices last month was caused by one-off factors, such as a rise in communal charges and railway prices. Stripping these out, real January inflation was 2.7-2.8 percent. He said the government would try to restrain inflation by braking rises in state regulated prices by power and gas firms. Dvorkovich said these would not be increased again this year, although the government has said they would look at the issue of further rises in the middle of the year. GROWTH STALLED LATE LAST YEAR Kasyanov's confidence was based on economic expansion of five percent last year after a record rise of 8.3 percent in 2000. Growth of around four percent is expected this year. But the Economy Ministry painted a bleak picture of the last few months of 2001 in a report prepared for the cabinet meeting. Russia had done well to grow in 2001 despite a fall in oil prices and global recession, but it added: "At the same time, especially in the last months, several negative trends emerged." "It is especially necessary to note a slowdown in economic growth in the second half of the year and even a halt to growth in the fourth quarter," it added. The ministry gave various 2002 scenarios, including a new one for what would happen if the average price for oil was $16.5 a barrel, lower than a previous worst-case expectation of $18.5. Under the lower price, GDP would rise 3.1 percent and industrial output 2.8 percent after 4.9 percent last year. It said the main problems were caused by external factors such as the global slowdown as well as the rise in the real rate of the rouble, which although falling against the dollar on the markets has risen strongly in real terms. It said manufacturing companies had also faced rising costs due to hikes in prices for power and gas and rising wages. The government needed to bring down inflation and would try to do this via monetary policy by having a budget surplus to soak up cash in the economy and structural measures to increase competition and investment, it said. ******* #3 Nezavisimaya Gazeta February 7, 2002, GREF IS NO LONGER AN ECONOMIST Managing the economy is partly a matter of public relations Author: Natalia Melikova [from WPS Monitoring Agency, www.wps.ru/e_index.html] ECONOMIC DEVELOPMENT MINISTER HERMAN GREF EXPRESSED HIS OPTIMISTIC VIEWS ON ECONOMIC GROWTH THIS YEAR. HE IS SURE THAT THE SLOWDOWN IN ECONOMIC IMPROVEMENT IN THE FORTH QUARTER OF 2001 WAS NOTHING BUT A SEASONAL FLUCTUATION. HOWEVER, ECONOMIST RUSLAN GRINBERG BELIEVES THAT THE SLOWDOWN IS LIKELY TO CONTINUE. Today the Economic Development and Trade Ministry will familiarize the Cabinet with measures on securing macro-economic stability in 2002. And yesterday at the meeting with members of the European business club the leader of the ministry once more confirmed the fact of serious slow-down of economic growth in the last quarter of 2001. According to Greff, preliminary data proves that economic growth slackened and may have come down to zero point. And really, the growth of Russian economy in the forth quarter of 2001 slowed down considerably in comparison to the third quarter. "If we took as an example the volume of production of the five basic branches of the economy, which can give us an approximate volume of the GDP, says deputy chairman of the State Duma committee on budget and taxation Ashot Yegiazaryan, then this November this index decreased by 6.3% in comparison to October. At the end of the year monthly paces of home demand growth also slowed down, as well as investments. In December we observed a sharp decrease in demand for industrial products, which affected almost all the branches of industry." The head of the Economic Development Ministry is sure that this was a seasonal fluctuation, which happened also last year. Mr. Gref hopes that this year the economic growth will resume its pace. But not all share the optimistic point of view of the minister. In particular, deputy head of the Institute for International Economical and Political Research of the Russian Academy of Science Ruslan Grinberg is certain that the tendency of halt in basic economic figures is not a short-term one. According to the economist, the reason for this is sinking home demand, which takes place due to, first of all, the fact that increase in prices surpasses the falling rate of the ruble to the dollar. And this, in its turn, naturally leads to decrease in purchasing capacity of the population. Besides, favorable for the Russian industry consequences of the ruble devaluation are fading out and the economy is more and more turning to imported products. And these factors are not connected with seasonal phenomena, and are of a long-term character. Meanwhile, the Economic Development Ministry believes that no emergency measures are needed for maintaining stable growth, and the government should concentrate on driving economic reforms. At yesterday's meeting Herman Gref gave voice to a list of more than ten and a half items, among which - continuation of the tax reform, re- structuring natural monopolies, changes in the tax legislation. The priorities for this year are social reforms: transformation in the systems of medical and social insurance, continuation of the pension reform and reform of the housing and communal services. At that, Gref laid special emphasis on the fact that 100% rent payment is an impossible and unnecessary task. According to the minister, there will be a new effective system of address subsidiaries, and only those who are well off will have to pay the whole amount of rent. Meanwhile, taking into consideration the coming two years of "big elections", the factor of failure in reforming the social sphere may become a sword of Damocles for those in power. However, the Economic Development Ministry is sure that they can handle any problem, and the most important issue is that everything should be presented to the public correctly. "The economy is 50% advertising," said Economic Development Minister Herman Gref yesterday. (Translated by Daria Brunova) ****** #4 Kursk Investigators Give Up Hope February 7, 2002 By ANGELA CHARLTON MOSCOW (AP) - Investigators have given up hope of finding any more bodies inside the wreck of the Kursk nuclear submarine, after retrieving bodies of 94 of the 118 men aboard, a top military prosecutor said Thursday. The efforts to find more bodies have been exhausted, but work is continuing on cleaning up the third compartment of the submarine, Col. Vladimir Mulov, military prosecutor for the Russian Navy's Northern Fleet, was quoted by the ITAR-Tass news agency as saying. Ninety of the sailors have been identified and delivered to their relatives for burial. Most of the bodies have been recovered since the Kursk was raised from the Barents Sea floor to dry dock last October. Twelve were retrieved during an underwater operation shortly after the August 2000 explosions that destroyed the Kursk. Investigators have also found 200 fragments of bodies, but are unlikely to be able to identify them, the daily Nezavisimaya Gazeta reported Thursday. Viktor Shein, head of the investigations department of the main military prosecutor's office, told the newspaper that investigators believe some men aboard the Kursk ``remained alive no less than eight hours after the explosion.'' Previously, officials had said no one was alive more than a few hours after the blasts. Russia's navy was severely criticized for its handling of the disaster. It wasn't announced until two days after the submarine sank, and Russian rescue crews failed for a week to reach the submarine. Foreign divers were then allowed to try, and they opened the hatch and announced the crew long dead. Investigators said that seven out of the Kursk's 22 Granit cruise missiles are still inside the submarine along with fragments of unexploded torpedoes, Nezavisimaya Gazeta said. The months of study of the Kursk in the northern port of Severomorsk has also produced two intact log books and a hydroacoustic recording, the newspaper said. Investigators have been looking for clues to the disaster's cause. Officials have said that an explosion of a practice torpedo, which set off combat weapons in the bow, caused the sinking. However, they have not yet determined whether the initial blast was caused by a flaw in the torpedo or a collision with another vessel, possibly a Western submarine. Shein said investigators had not found signs of an outside impact on the submarine, but said ``there are nonetheless people who point to indirect circumstances'' that suggest a collision is still being considered as a possible cause of the accident. ****** #5 ORT Review www.ortv.ru Compiled by Luba Schwartzman (luba7@bu.edu) Research fellow at the Institute for the Study of Conflict, Ideology and Policy at Boston University HEADLINES, Wednesday, February 06, 2002 - Interior Minister Boris Gryzlov has announced that the number of military block-posts in Chechnya will be cut on April 1st. He also said that Interior Ministry officers will now be sent to Chechnya for 6-month rather than 3-month-long assignments. - The Leningrad oblast regional clemency commission has become operational. Only four requests have been submitted so far, but many more are expected in the near future. - The two privates who escaped from the Nizhny Novgorod division have been detained. - Russian President Vladimir Putin demanded that the government fix the problem with salary payments to state employees. - The "Walking Together" youth movement has resumed the action allowing Muscovites to trade in books by Vladimir Sorokin, Viktor Pelevin and... Karl Marx in exchange for books by Bunin, Kuprin and Leskov. Contemporary writer Boris Vasiliev, whose books were originally to be given out in exchange for the "bad" lbooks, refused to cooperate with "Walking Together." - The heir to the Spanish throne, Prince Felipe of Asturias, came to Moscow to attend the opening of the Moscow branch of the Cervantes Institute. - Georgian National Security Minister Valeri Khaburzania said that Chechen fighter Ruslan Gelaev may be hiding out in the Pankisi Gorge. According to other information, Gelaev is no longer in Georgia, but in Azarbaijan. - President Putin met with the commissions preparing for the upcoming celebrations of the 300th anniversary of the founding of St. Petersburg and the 1000th anniversary of the founding of Kazan. - Finance Minister German Gref announced that the government does not plan on making the payment of full utility costs mandatory. - Deputy Prime Minister Viktor Khristenko spoke to State Duma deputies about tariffs on natural monopolies. Media Minister Mikhail Lesin also visited the Duma -- he discussed freedom of speech and the government's information policy. Lesin promised that the contest for broadcasting on the 6th Channel will be maximally open and honest. - Influenza epidemics are raging in Volgograd (where 1,500 children and teenagers have been diagnosed and schools are closed for a quarantine), Astrakhan, Novosibirsk, Omsk, Altai, and the Jewish Autonomous oblast. - The Krasnoyarsk krai court has submitted the case of Valentin Danilov (accused of spying for China) for further investigation. - An assassination attempt against Chechen Prime Minister Ali Alavdinov was made for the second time this year. A bomb exploded in his vehicle during his morning commute to work; Alavdinov received no serious injuries. - Two people died in an avalanche on the Transcaucasian highway. - Environmentalists in Saratov are protesting the construction of new blocks at the Balakov nuclear power station. - The search is on in Krasnoyarsk for Vitaly Sentyapov, a repeat offender, jailed for murder, who escaped the court building where he appeared as a witness for another trial. - In the Verkhny Beshtaunit settlement, near Mineralnye Vody, radiation levels exceed normal levels by 15 times and are 4 times higher than the limits set for miners in uranium quarries. ****** #6 BBC Monitoring Chief rabbi praises Putin, Russia's new religious tolerance Source: Russia TV, Moscow, in Russian 1100 gmt 7 Feb 02 [Presenter] Vladimir Putin received Russia's chief rabbi, Berl Lazar, in the Kremlin today. Lazar himself told journalists that during the meeting the president asked him about his recent tour of the country. The president inquired about the life of Jewish communities in Russia and their relations with fellow Jews abroad. The state of affairs at the Jewish centre in Moscow was discussed too. Berl Lazar stressed that, in the opinion of religious leaders, Vladimir Putin is actively helping them. [Lazar] We appreciate the fact that he has an open view of the future. I believe what we are seeing in all communities today, with both young and middle-aged people returning to the traditions that have almost been forgotten, is a sign of Russia having a sensible view on religion, culture and the upbringing of children. ****** #7 Excerpt Worldwide Threat - Converging Dangers in a Post 9/11 World Testimony of Director of Central Intelligence George J. Tenet Before The Senate Select Committee on Intelligence 6 February 2002 RUSSIA Mr. Chairman, let me turn now to other areas of the world where the US has key interests, beginning with Russia. The most striking development regarding Russia over the past year has been Moscow’s greater engagement with the United States. Even before September 11, President Putin had moved to engage the US as part of a broader effort to integrate Russia more fully into the West, modernize its economy, and regain international status and influence. This strategic shift away from a zero-sum view of relations with the United States is consistent with Putin’s stated desire to address the many socioeconomic problems that cloud Russia’s future. During his second year in office, Putin moved strongly to advance his policy agenda. He pushed the Duma to pass key economic legislation on budget reform, legitimizing urban property sales, flattening and simplifying tax rates, and reducing red tape for small businesses. His support for his economic team and its fiscal rigor positioned Russia to pay back wages and pensions to state workers, amass a post-Soviet high of almost $39 billion in reserves, and meet the major foreign debt coming due this year (about $14 billion) and next (about $16 billion). He reinvigorated military reform by placing his top lieutenant atop the Defense Ministry and increasing military spending for the second straight year—even as he forced tough decisions on de-emphasizing strategic forces, and pushing for a leaner, better-equipped conventional military force. This progress is promising, and Putin is trying to build a strong Presidency that can ensure these reforms are implemented across Russia—while managing a fragmented bureaucracy beset by informal networks that serve private interests. In his quest to build a strong state, however, he is trying to establish parameters within which political forces must operate. This “managed democracy” is illustrated by his continuing moves against independent national television companies. On the economic front, Putin will have to take on bank reform, overhaul of Russia’s entrenched monopolies, and judicial reform to move the country closer to a Western-style market economy and attract much-needed foreign investment. Putin has made no headway in Chechnya. Despite his hint in September of a possible dialogue with Chechen moderates, the fighting has intensified in recent months, and thousands of Chechen guerrillas—and their fellow Arab mujahedeen fighters—remain. Moscow seems unwilling to consider the compromises necessary to reach a settlement, while divisions among the Chechens make it hard to find a representative interlocutor. The war, meanwhile, threatens to spill over into neighboring Georgia. After September 11, Putin emphatically chose to join us in the fight against terrorism. The Kremlin blames Islamic radicalism for the conflict in Chechnya and believes it to be a serious threat to Russia. Moscow sees the US-led counterterrorism effort—particularly the demise of the Taliban regime—as an important gain in countering the radical Islamic threat to Russia and Central Asia. So far, Putin’s outreach to the United States has incurred little political damage, largely because of his strong domestic standing. Recent Russian media polls show his public approval ratings at around 80 percent. The depth of support within key elites, however, is unclear—particularly within the military and security services. Public comments by some senior military officers indicate that elements of the military doubt that the international situation has changed sufficiently to overcome deeply rooted suspicions of US intentions. Moscow retains fundamental differences with Washington on key issues, and suspicion about US motives persists among Russian conservatives—especially within the military and security services. Putin has called the intended US withdrawal from the ABM treaty a “mistake,” but has downplayed its impact on Russia. At the same time, Moscow is likely to pursue a variety of countermeasures and new weapons systems to defeat a deployed US missile defense. ****** #8 PUNDIT: US PRESENCE IN CENTRAL ASIA HERE TO STAY MOSCOW, FEBRUARY 6 /from RIA Novosti's Valery Asriyants/ - Sergei Markov, Director of the Institute of Political Studies think tank, believes the United States "intends to secure its military presence in Central Asia." He said that at a news conference in Moscow Wednesday. He suggested the buildup of US military bases in the region "is not so much directed against Afghanistan as against China." "Washington views China as a rival not only in terms of its military and economic potential, but also in the system of values it believes in," he argued. Commenting on the relationship between the US and Russia, Markov downplayed talk of mounting differences after the end of the counter-terrorist campaign. "Both sides are willing to cooperate, but there are some problems, notably in the field of cuts in strategic offensive weapons and defenses," he said. "Moscow and Washington have different views on these issues, so they need to narrow these differences." In this connection, he felt encouraged by US Secretary of State Colin Powell's statement that the US is willing to translate a strategic arms deal into legally binding documents. "That is a concession not just to Russia, but to all of the global public opinion, which is interested in a deal of this kind," the political scientist pointed out. ******* #9 Asia Times February 6, 2002 Moscow revitalizes its old priorities in Asia By Sergei Blagov MOSCOW - Russia has dismissed George W Bush's "axis of evil" claims, and appears to be looking to strengthen its old Asian alliances, notably with India and "evil" Iran, to counterbalance United States clout in Central Asia. Moscow came up with an initially muted but subsequently critical response to the US president's declaration that Iraq, North Korea and Iran were an "axis of evil". Russia was not going to cut its military ties with Iran, Defense Minister Sergei Ivanov stated in Rome on February 4. Russia sells conventional arms to Iran - "it's a usual commercial practice and we won't stop it", Ivanov said, adding, "I don't think that Iran, Iraq and North Korea could be described as an 'axis of evil'." Konstantin Kosachev, deputy head of the Fatherland-All Russia pro-Kremlin faction in parliament, described the "axis of evil" claims as a mistake. Moscow should go ahead with its military ties with Iran, he said. If Russia sides with the US, it will mean ditching Russia's potential for striking international partnership, he argued on Tuesday. Apart from Iran, Russia has long been nurturing ties with Iraq and North Korea. Some Russian officials and lawmakers argue that Bush had been too harsh in his State of the Union address and that Russia should pursue its policies regardless US warnings. Russia was interested in economic and political cooperation with Iraq, Ramazan Abdulatipov, head of a Russian parliamentary delegation, stated in Baghdad, also on Tuesday. The Iraqi leadership "is ready to become Russia-oriented", claimed Abdulatipov after meeting up with Iraqi's Deputy Prime Minister Tariq Aziz. Russia is owed a huge debt by Iraq, estimated at nearly US$10 billion. At the same time, Russian oil companies, both private and state-run, want to tap into Iraq's lucrative oil resources. Not surprisingly, Russian politicians are weary of the threat of US air strikes against Iraq. Dmitry Rogozin, head of the parliament's international affairs committee, said that US preventive strikes against Iraq, without UN approval, could destabilize the international situation. It is understood that Russia dismisses "axis of evil" rhetoric because the Kremlin is unhappy about increasing US influence in Central Asia. The US military presence there causes "agitation if not a scandal among Russia's politicians", Russia's official RIA news agency commented earlier this month. Now Moscow does not believe US promises and most Russians view the US military bases in Central Asia as a "tragic event, signifying the demise of the CIS [Commonwealth of Independent States] and end of centuries-long Russian influence in Central Asia". Moreover, the American "seizure" of Central Asia has a strategic dimension, since a possible deployment of US anti-missile systems at Khanabad base in Uzbekistan could affect Russian strategic facilities throughout vast areas, RIA commented. Although Russian officials are yet to come up with harsh criticism on the record, the comments of the Kremlin's official mouthpiece are indicative of what is to come. Besides rejecting "axis of evil" pronouncements, Moscow presumably intends to boost its traditional alliances in Asia to counterbalance the US presence in Central Asia. For instance, the Kremlin is apparently prioritizing its Indian policy. On February 4, Russia's Foreign Minister Igor Ivanov met with Indian Defense Minister George Fernandes in New Delhi to discuss defense ties. He also visited Kabul and pledged help to rebuild Afghanistan. Moreover, Russian Deputy Prime Minister Ilya Klebanov has arrived in India to discuss defense, including arms purchases. And Russian President Vladimir Putin is due to visit India later this year. Moscow, a traditional ally of New Delhi, is the largest supplier of arms to India and India's orders for Russian warships, jetfighters and tanks are estimated at $10 billion. Now Russia is ready to offer India new arms deals, Klebanov stated. He also hailed the "long-term strategic partnership" with India, which does not depend on international developments such as the September 11 attacks. Coincidentally or not, the Indian military has offered Tajikistan a measure of military assistance. On Tuesday, the head of the Indian Air Force, Satish Jain, met Tajik Defense Minister Sherali Khairullayev in Dushanbe and offered technical assistance to upgrade Aini military airfield near the Tajik capital. According to the Tajik Defense Ministry, the French military had previously pledged to rebuild Aini but later withdrew the offer. Meanwhile, foreign ministers of the four Central Asian states met in Bishkek, Kyrgyzstan, to discuss the launch of a "Central Asian Cooperation" forum - the only multilateral post-Soviet body in Central Asia which excludes Russia. The new organization is supposed to foster regional political, economic and security cooperation, Kyrgyz Foreign Minister Muratbek Imanaliyev stated on Tuesday. Last December, the presidents of Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan held a summit meeting in the Uzbekistan capital, Tashkent. They agreed that the Central Asian Economic Commonwealth, one of the groups within the Commonwealth of Independent States, would be transformed into the "Central Asian Cooperation" organization. The Central Asian states are using their latest get-together to highlight their solidarity. Uzbekistan does not have any territorial disputes with other Central Asian states, Uzbek Deputy Foreign Minister Ilkhom Nimatov announced in Bishkek. In 2001, Uzbekistan signed border delimitation agreements with Kazakhstan and Turkmenistan, he said. Kyrgyzstan's Imanaliyev indicated that the new body would not launch any new security initiatives or multilateral military units - despite the fact that Kyrgyzstan and the US are holding joint military maneuvers from February 4-14 (only 100 personnel from both nations are taking part). Not surprisingly, Moscow has dispatched an envoy to Central Asia to lobby in favor of yet another grouping, the Russia-sponsored Eurasian Economic Commonwealth (EEC). It was created last June and includes Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. On February 4, the EEC secretary-general, Grigory Rapota, met with Tajik President Emomali Rakhmonov to remind him that the EEC is aimed at "long-term and stable integration". Moscow, thus, is moving towards revitalizing the old priorities of its Asian policy. It remains to be seen whether the re-emerging alliances will prove viable or strong enough to counterbalance the US presence in the region. ******* #10 Russia trade surplus,oil revs down in 2001-customs MOSCOW, Feb 6 (Reuters) - A fall in the price of oil took a bite of $1.3 billion from Russian exports in the last quarter of 2001 and helped the overall trade surplus to shrink by 14 percent, the customs office said on Wednesday. Russia's shipments of oil, gas and metals account for almost three quarters of its exports, but prices for crude began to slide last year. The State Customs Committee said in a statement the $1.3 billion fall in revenues from the export of oil came in the last three months of the year as oil prices fell to $122 a tonne in December from $166 during the January-September period. The statement did not say if the Committee was using the avarage price for Urals, Russia's main crude oil export blend, or Brent. Such factors and a rise in imports caused the trade surplus in 2001 to fall by $9.7 billion to $59.5 billion. Total exports were $100.7 billion, down 2.3 percent, while imports were at $41.2 billion, up 21.7 percent. It said the total trade turnover in 2001 was the highest for 10 years. It was the first official release of trade data for the whole of last year. A fall in the surplus due to the rise in imports and lower prices for oil, gas and metals exports had been expected. The central bank also releases trade data and these are expected later this month. Although revenues from oil fell, the overall value of exports of oil, gas and other energy products remained at 2000 levels as price falls were counter-balanced by rises in volumes. These goods accounted for 56.2 percent of exports to countries outside the CIS the grouping of former Soviet nations versus 54 percent in 2000. Russia trades most with non-CIS states as Western and Asian markets are more lucrative. The share of total exports taken up by metals and metal products to non-CIS countries dropped in value in 2001 to 15.3 percent of total exports from 18 percent in 2000. ******* #11 From: Ryan McFarland [mailto:rmcfarland@eisenhowerinstitute.org] Sent: Wednesday, February 06, 2002 Subject: Susan Eisenhower speech at the National Press Club Dear Mr. Johnson, Susan Eisenhower wanted me to look into the possibility of posting an announcement of her upcoming speech at the National Press Club on your list serve. She will be discussing the problems and opportunities associated with US-Russian cooperation on terrorism and nonproliferation. The date of the event is February 11 at 12:30pm. Tickets can be ordered by contacting the Press Club at 202-662-7501 or at pnelson@press.org. Best regards, Ryan McFarland Program Coordinator, Future of Space program The Eisenhower Institute 1620 Eye Street, NW, Suite 703 Washington, DC 20006-4005 Telephone: 202-223-6710 Fax: 202-452-1837 Web: http://www.eisenhowerinstitute.org ******* #12 ANALYSIS-Corpses and smears -- Ukraine election nears By Tony Roddam KIEV, Feb 7 (Reuters) - The headless corpse scandal revived, claims of an assassination attempt, a hunted man in exile, smear campaigns -- it's election time in Ukraine. The former Soviet republic goes to the polls on March 31 in its 11th year of democracy for parliamentary voting unlikely to change the political order significantly but which will lay the foundation for the presidential race in 2004. "We're seeing this very much as a trial run, a litmus test if you like. The parties and President (Leonid Kuchma) will be testing the voters and, crucially, each other's allegiances," said one European diplomat in Kiev on Thursday. Kuchma has held sway by exploiting squabbling between more than a dozen factions in parliament. But even he has complained the multitude of parties hobbles policy-making. The new parliament will be the battleground where a challenger will seek enough support to oust Kuchma, either before 2004 or during that year if he, as some analysts expect, seeks to alter the constitution to run beyond two terms. Campaigning by 35 parties and blocs starts officially on Saturday but analysts and diplomats say the fight is already on -- and the gloves are off. "Already there are some indications about alleged violations and aberrations...These violations need to be pursued," U.S. Undersecretary of State Paula Dobriansky said on Wednesday. Visiting Kiev, she said there was concern about uneven access to media and the voter registration process. CRY FOUL Parliament is elected in a mixed system, with 225 deputies voted from a first-past-the-post system in single constituencies and 225 from party lists for a national constituency. The Socialist Party and Yulia Tymoshenko bloc, groups most openly opposed to Kuchma and expected to win up to 10 percent of seats between them, already cry foul. Aides to Tymoshenko, former deputy prime minister and one of Kuchma's most vocal critics, say the charismatic leader narrowly escaped an assassination attempt last month when her Mercedes collided with a Lada on a narrow Kiev street. Badly injured, Tymoshenko will be unable to campaign for weeks. She had been driving to court to try to overturn a parole ban on campaigning outside Kiev -- fuelling conspiracy theories. Tymoshenko's opponents immediately claimed she staged the incident to get sympathy and divert attention from fraud charges that she denies and says are politically motivated. The Socialist Party, said its rights were being trampled after authorities refused to register exiled former presidential bodyguard Mykola Melnychenko as its candidate. Melnychenko boosted a bid to topple Kuchma last year after Socialist leader Oleksander Moroz published tapes the bodyguard says he recorded in the president's office. On them, a voice like Kuchma's is heard ordering aides to deal with Georgiy Gongadze, a news reporter whose headless corpse was discovered in November 2000. Mass marches demanded that Kuchma resign. He denies any link to the killing and says the tapes were doctored to put words into his mouth. The Supreme Court is considering an appeal to let Melnychenko run. Authorities have vowed to arrest him. MUDSLINGING AND MANIPULATION More mud was flung at Kuchma this week after deputies backed a motion from the Anti-Mafia parliamentary group urging an investigation into allegations of fraud in the early 1990s. Kuchma's office refused comment on the motion, only the latest attempt to start a criminal case against the entrenched leader. It is expected to fizzle out, as the others did. Polls show eight or nine parties or blocs will vault the four percent hurdle into parliament. The Communists are expected to keep 20 percent of the seats and remain the biggest faction. They will be closely followed by the Our Ukraine faction, headed by former reformist prime minister Viktor Yushchenko, with up to 16 percent and the pro-presidential For a United Ukraine bloc, led by Volodymyr Lytvyn, head of the presidential administration, and Prime Minister Anatoly Kinakh. Other likely winners include Women for the Future, the Social Democrats and the Greens, with about six percent. Voters are likely to be dazzled by the number of parties, many of whose policies are hazy at best, even if the electorate gets the full picture from a media acknowledged to be far from free, manipulated by politicians and big business. One of Ukraine's top independent television stations said only on Tuesday that it faced the threat of closure after a court action brought by a company it said was backed by politicians and businessmen. The court ruled 1+1, which has a reputation for striving for balanced coverage, had an invalid licence. The reason: it was issued on "the wrong piece of paper." ******* #13 From From: Ben Aris Date: Thu, 07 Feb 2002 11:39:58 +0300 Subject: [RusBizList] RBL266 Russia Business List #266 Thursday, February 7, 2002 DEMOCRATIC GAINS REVERSED IN REGIONAL ELECTIONS FROM MOSCOW TO SAKHA EAST WEST INSTITUTE by Vladimir Gelman, European University, St. Petersburg Many journalists and analysts have noted the undemocratic character of recent elections in a number of Russian regions. Often they are talking about different things: from dirty tricks employed during the course of the campaign to the advantages of incumbency, which allows office-holders to buy off or pressure voters. But if we are discussing democracy as a competition of elites in elections, then the sole measure for the level of democracy is whether elections are the only mechanism for replacing the authorities. If elections do not threaten the incumbent with a loss of power or the elections simply serve to legitimize other ways to replace the authorities, then elections do not play a role as democratic institutions. By this measure democracy is losing ground in Russia. Examples can be found in several recent races where incumbents were able to name their successors: President Yeltsin at the federal level, and Krasnodar's Nikolai Kondratenko and Primorskii Krai's Yevgenii Nazdratenko at the regional level. The recent Moscow City Duma and Sakha presidential elections further demonstrate these alarming tendencies in Russia's electoral processes. In both cases the elections were not a means of political competition. The results were known in advance and were achieved not as a result of voter preferences, but regardless of them. In Sakha, as earlier in Kursk, the courts played an active role in removing candidates from the field even before election day. Other candidates were forced to resign from the race. Thus, incumbent Mikhail Nikolaev terminated his bid for a third term after meeting with Putin in the Kremlin and threw his support behind Alrosa President Vladimir Shtyrov, who went on to win. Deputy Procurator General Vasilii Kolmogorov also withdrew from the race as a result of this deal. In the Moscow City Duma elections, four parties, Otechestvo, Yedinstvo, Soyuz pravykh sil (SPS), and Yabloko, signed a cartel agreement dividing the electoral field between them. Such coalition agreements among parties about mutual support for each other's candidates are widespread in Russian elections. But in Moscow such an agreement achieved almost absolute success since the slate of candidates won 33 of 35 seats. There was no real alternative to the city's party of power represented in the elections. In contrast to the 1997 and 1999 elections, when first Yabloko, and then SPS opposed Mayor Yurii Luzhkov, these parties joined the winning coalition in order to secure their share of the seats (four and six, respectively) in exchange for loyalty to the authorities. In both Sakha and Moscow, the deals did not inspire enthusiasm among the voters and turnout was relatively low. The problem here was not the use of negative campaign tactics or the powers of incumbency, but the lack of competition among candidates for votes. While the first regional elections held in the early 1990s were an important step on the path to democratizing political life in the regions, in the beginning of this decade we are witnessing movement in the other direction, a "de-democratization" of Russian political life. The formal elections are nothing more than a smoke screen for uncompetitive voting, hiding the informal practice in which leaders are simply appointed, as happened during the Soviet era. Such elections will not bring to power politicians who are responsive to the voters. This development follows the logic of the federal government's policies toward the regions during 2001. Having failed to win the election of Kremlin-backed candidates in several key regions (particularly Primorskii Krai and Nizhnii Novgorod), the federal government has apparently decided to stop using elections as a means for obtaining a loyal regional elite. Instead it has adopted a number of other policies, such as the infamous amendment allowing the majority of current governors to seek a third, and in some cases, a fourth term, and refusing to pursue a plan requiring regional legislatures to elect half of their members on the basis of party lists (a reform aimed at reducing gubernatorial control over regional legislatures). As in the 1990s, the Kremlin is seeking to conclude informal contracts with the regional elites. The difference is that in contrast to the previous arrangement between the Center and the regional elite exchanging "loyalty for non-interference" the new bargain is "loyalty for agreeing not to compete." Such a deal is particularly important for the Kremlin on the eve of the national legislative and presidential elections set for 2003 and 2004. In those elections the Kremlin will need the support of a loyal regional elite to deliver the votes for the election of a conciliatory State Duma and another term for Putin. It is not clear that any regional groups will be able to block this retreat from democratic practices. ******* #14 BBC Monitoring Forthcoming law on Russia's political parties to ensure financial transparency Source: Radio Mayak, Moscow, in Russian 1000 gmt 7 Feb 02 Commercial confidentiality will no longer extend to the financial activities of political parties, head of the Central Electoral Commission Aleksandr Veshnyakov said today. He was opening a seminar of political party representatives on the legal aspects of party activities. Our correspondent, Aleksey Kondrashov, has the details: [Correspondent] According to the statement by the head of the Central Electoral Commission, the new law on political parties guarantees the principle of openness and transparency in their activities as never before, which, it would seem, is the best way of combating corruption. As of 1 May 2002 every registered political party will have to publish an account of its financial activities for the previous year. This will apply to all parties registered at 1 January 2002. Later on, there are plans to introduce an amendment to current legislation whereby, in the run-up to parliamentary elections, parties must publish a report on their financial activities for the four years that have elapsed since the previous election. Today's seminar is discussing a whole set of issues linked to party accounts. As First Deputy Taxes and Levies Minister Aleksandr Smirnov told the meeting, by the end of February the ministry will have drawn up a form on party accounts. Sources of party funding will be checked, including donations and party property... It should also be pointed out that cross-checks will be carried out into some items. Under the law, legal entities have the right to contribute up to R100m a year to party coffers and private persons up to R1m. The law also indicates sources that may not be used for party funding - these are foreign state capital and international foundations. Parties will have one month in which to return money from illegitimate sources. ******* #15 Los Angeles Times February 7, 2002 Russians Optimistic About Arms Cuts By JOHN DANISZEWSKI, TIMES STAFF WRITER ST. PETERSBURG, Russia -- Officials in Russia voiced optimism Wednesday that Moscow and Washington can agree to steep, legally binding nuclear arms reductions in time for an accord to be signed during President Bush's planned visit to the country in May. In Moscow, Russian Foreign Minister Igor S. Ivanov said he welcomed remarks from Secretary of State Colin L. Powell, who had confirmed Tuesday that the United States is working toward putting proposed arms cuts into a written agreement, either in a protocol signed by both countries' presidents or a full-fledged treaty. "If Russia agrees with the United States on the radical reduction of strategic offensive weapons, all countries . . . will support the agreements," Ivanov said. But one Foreign Ministry official, briefing journalists on condition of anonymity, cautioned that difficult negotiations could still be ahead because Russia wants to ensure that any arms reductions by the United States would be irreversible. That runs counter to the wishes of some U.S. experts, who believe that the United States should simply warehouse the missiles covered by any accord and retain the flexibility to put them back into service in an emergency. Ivanov said an agreement would be a step forward in U.S.-Russian relations and would show that both countries are still on track to keep their arms-control commitments. He pointed out that when Russian President Vladimir V. Putin visited Bush at his Texas ranch in November, the two leaders agreed to a new "framework" of strategic relations, including a reduction of their nuclear arsenals to between 1,700 and 2,000 warheads within 10 years. Although Bush had originally proposed that the reductions be an unwritten promise between two states that are no longer Cold War enemies but friends, Putin held out for some document that would bind the United States to a specific target. Ivanov reiterated that position Wednesday, saying, "A clear understanding was reached that agreements on this must be legally binding on the parties." A written agreement is important to Putin because he can use it to show hard-liners in the Russian military that Moscow has received something in return for its recent concessions to the United States. Russia has been a strong backer of the United States in its war against terrorism and has quietly acceded to the introduction of U.S. troops into Central Asia--an area that once was part of the Soviet Union and that the Russian military establishment still considers part of its strategic sphere. Some hard-liners also believe that Moscow has gone along too quietly with U.S. plans to withdraw from the 1972 Antiballistic Missile Treaty, an agreement that Russia continues to support. The United States has said it is exercising its right to withdraw from the ABM treaty in order to be free to pursue testing and construction of a proposed national missile defense. In remarks carried by the Interfax news agency, a senior Russian military official praised Powell for affirming the commitment to an accord on arms reduction. "Despite differences on a number of issues, the accord, or series of accords on mutual cuts to strategic offensive weapons, will, I hope, be worked out by the spring of 2002," said Col. Gen. Yuri Baluyevsky, the first deputy chief of staff of the Russian armed forces. Baluyevsky also dismissed suggestions that have circulated here that Russia should take some concrete steps to punish the United States for its move to quit the ABM treaty. "We could increase the number of deployed missiles and warheads that they carry, but that would be a road to nowhere, a new round of the arms race," Baluyevsky said. "Russia doesn't need that, and it wouldn't take that path." ******* #16 Russian general critical of military reform, US Central Asia presence Interfax Moscow, 7 February: Russia is not undergoing military reform but rather "an absolutely thoughtless (reduction of the armed forces) that is dangerous for the country", the chairman of the [State] Duma Committee on Defence, Army Gen Andrey Nikolayev, has said. The presence of American troops in Central Asia is not in line with the geopolitical, economic and military interests of Russia and China. The three former Soviet republics would not have agreed to have American military bases on their territories without Russian pressure, Nikolayev said. It is beneficial for America to oppose Russia with China, India with Pakistan, and the Islamic world with the Orthodox community, the general said. Such moves threaten Russia with a deliberate break-up through a combined use of various forces and methods, up to tactical nuclear armaments. The western and southern strategic areas will soon be the most vulnerable from the point of view of Russia's military security, he said. After its enlargement, the NATO military force advanced 650-750km to the east. NATO tactical aviation increased by 17-20 per cent. The North Atlantic alliance obtained 290 first-rate airfields which can accommodate 3,500 warplanes within a short time. The airfields enable NATO to bomb and fire missiles on areas up to the Volga and the Urals and destroy positions of the Russian strategic nuclear forces. ******* #17 Moscow Times February 6, 2002 Net Use Leaps 39% in 2001, With More Growth Expected By Larisa Naumenko Staff Writer Internet use in Russia soared last year, with the number of regular web surfers growing 39 percent to 4.3 million people, or 3 percent of the population, Interfax reported a Communications Ministry official as saying. The total number of Internet users came to some 10 million people, close to 7 percent of the population, the official, Ivan Kurnosov, said at the Northwestern Internet Forum in St. Petersburg on Tuesday. Regular users are people who surf the Internet at least once a week. The Russian Internet, or RuNet, saw a 53 percent increase in total traffic to 19.1 million, which includes web surfers outside the country, according to SpyLog, an Internet statistics company. Around 45 percent, or 8.6 million, of RuNet users were Russian residents. The number of regular RuNet users grew at a slower rate -- to 7.5 million from 4.8 million the year before -- with Russian residents making up 60 percent, or 4.5 million people. The government must create conditions to provide Internet access to a larger part of the population and budget-funded organizations, Kurnosov said at the forum. Legislation is needed to promote the development of information technology, he said. Russia has seen a few strides in IT law already this year. A law on electronic signatures -- important for signing deals via the Internet -- and the multibillion dollar Electronic Russia program for IT development were both adopted in January. Laws on e-commerce and electronic-document processing have yet to go through the State Duma. E-Russia envisions the IT sector accounting for 2 percent of gross domestic product, compared to only 0.61 percent now, said Tseren Tserenov, head of the e-Russia program. The number of Internet users is expected to reach 26 million people by 2010, according to the program, while the number of personal computers used by businesses is expected to grow six times and the number of household PCs is to increase four times. Approximately every second computer is to be connected to the Internet. ******