January 8, 2001   

This Date's Issues:   5012 • 5013

Johnson's Russia List
#5013
8 January 2001
davidjohnson@erols.com

[Note from David Johnson:
1. AFP: Russian nukes in Kaliningrad puts Baltics' NATO bid back on front burner.
2. Itar-Tass: No Radiation in Kursk Wreck Area.
3. RFE/RL: Don Jensen, The Rise of Russia's Security Council.
4. Baltimore Sun:  Michael Olesker, Shortages in Russia providing perspective.
5. The Globe and Mail (Canada): Geoffrey York, Bush, Putin seen headed for trouble over missiles.
6. Washington Post: David Hoffman, Russian Oil-Price Boom Washed Away Economic Reform Impetus.
7. World Socialist Web Site: Elizabeth Zimmermann, Unicef report highlights situation of children in E. Europe and the former Soviet Union: The terrible price of capitalist restoration.
8. Financial Times (UK) editorial: Russian gas.
9. Christian Science Monitor: Scott Peterson, Fabled Silk Road now paved with narcotics. Late last month, Kyrgyz officials seized nearly a ton of opium, their largest catch.]

*******

#1
Russian nukes in Kaliningrad puts Baltics' NATO bid back on front burner

RIGA, Jan 8 (AFP) -
The reported deployment of Russian nuclear weapons in Kaliningrad puts the
issue of NATO enlargement into the three Baltic states back on the front
burner, analysts said Monday, bolstering their case for membership at the
cost of regional security.

Estonia, Latvia and Lithuania's struggle for independence in the late 1980s
helped trigger the collapse of the Soviet Union, and their current search for
security by joining NATO threatens to return the European continent back to
confrontation.

Russia has vociferously opposed the membership of the Baltic states in NATO,
which would result in its Kaliningrad wedged sandwiched between Poland and
Lithuania becoming surrounded by NATO members.

But Baltic defense ministers said Sunday reports that Russia has moved
tactical nuclear missiles into Kaliningrad would not block their bids to join
NATO.

"All of this noise doesn't help, but I don't think such an event could block
NATO enlargement," Lithuanian Defence Minister Antanas Linkevicius was quoted
as saying by PAP news agency.

The three ministers were in Krakow in southern Poland to meet their Polish
counterpart for a series of meetings on the Baltic states joining NATO, and
which were dominated by discussion of a report in the US newspaper Washington
Times last week which quoted US intelligence services as saying Russia had
moved short-range nuclear weapons into the enclave last June.

Russian President Vladimir Putin flatly denied the reports on Saturday,
saying such allegations were "absurd", Interfax news agency reported, but top
Russian military officials and lawmakers called last year for restationing of
nuclear weapons in the region in response to NATO enlargement.

But others in the Baltics believe that, if verified, Russia having moved
nuclear weapons into the region wedged between Poland and Lithuania will
bolster their case for membership.

"In the end it could leave the impression among Western policymakers that
will decide about NATO expansion that the Baltic states have no basis to
trust Russia," Latvian Defense Minister Girts Valdis Kristovskis told AFP.
"Russia is once again showing these policymakers their security policy is
unpredictable or deceptive."

One of the counterarguments to their membership in NATO the Baltics have had
to grapple with is that Russia now represents less of a threat, and their
future membership in the European Union should provide sufficient "soft"
security guarantees.

The three Baltic states hope to receive invitations to join NATO when the
military alliance next considers expanding at a summit in Prague in 2002.

"If the report is confirmed it without a doubt reduces security in the
region," said Maris Riekstins, state secretary at the Latvian foreign
minister. "However this is the decisive year for policymakers ahead of the
Prague summit in 2002. This year decisionmakers must in their minds come to a
clear decision about whom to admit in 2002. In any case the decision won't
rest so much on budgetary factors as political factors."

But deployment of nuclear weapons in the Baltics would be a double-edged
sword, according to Harri Tiido, deputy under-secretary of the Estonian
foreign ministry.

"It's an argument that both sides can exploit: those who say the Baltic
should be admitted to NATO much more speedily now, and those who say the
Baltics should stay out forever," he said.

NATO countries have repeatedly said Moscow does not have a veto over
enlargement, but British officials reportedly told former Lithuanian
parliamentary speaker Vytautas Landsbergis last year some members did not
want to confront Russia over including the Baltic states.

President Aleksander Kwasniewski Sunday renewed Polish calls for Russia to
allow international inspections in Kaliningrad to verify reports that Moscow
had moved nuclear weapons into the enclave.

*******

#2
No Radiation in Kursk Wreck Area.

MOSCOW, january 8 (Itar-Tass) - Radiation in the area of the wreck of
Russia's nuclear-powered submarine Kursk is not the above natural
backgound, the Russian navy's press service told Itar-Tass on Monday.

It said water sampling by specialists of the Northern Fleet's hydrographic
service shows that the "radiation situation is normal".

"The radiation level is not above the natural background, and such figures
are registered permanently," the press service said.

The chief of the Russian army's environmental safety department,
Major-General Boris Alekseyev said "information from autonomous detectors
installed on the hull of the Kursk is obtained strictly at set dates and is
absolutely accurate".

The president of the Center for Ecological Policy, Professor Alexei
Yablokov, said the radiation situation in the Barents Sea, where the Kursk
perished on August 12 with its 118 crew, would remain "calm", but the
submarine would have to be raised. If it is left buried in the sea bed,
radionuclides will inevitablty leak from the submarine's reactor because of
its corrosion, Yablokov said. The contamination level would not make a
direct danger, but radiation could reach the humans with contaminated fish
whose radionuclide levels would rise tenfold.

*******

#3
From: JensenD@rferl.org (Don Jensen)
Date: Mon, 8 Jan 2001
Subject: The Rise of Russia's Security Council

The Rise of Russia's Security Council
By Don Jensen
Radio Free Europe/Radio Liberty

Vladimir Putin has transformed Russia's Security Council, a traditionally
advisory body, into a major policy making forum. It is unclear, however,
whether he seeks to use the Security Council as a counterweight to other
presidential structures or give it the pivotal role in governing the
country.   Meanwhile, Council secretary and Putin ally Sergey Ivanov,
perhaps the second most powerful politician in Russia, reportedly may be
line to be the next Defense or Prime Minister.

In addition to Ivanov and Putin, who serves as ex officio chairman, Council
members include Prime Minister Kasyanov, Foreign Minister Igor Ivanov,
Defense Minister Sergeyev, Chief of the General Staff Kvashnin, as well as
other cabinet members, the heads of the foreign and domestic intelligence
services and law enforcement officials.

Since its creation in 1992, the Security Council has functioned -- not
always successfully - as a permanent presidential staff and a forum for
discussing policy.  Although Yeltsin originally set up the Council as an
alternative to existing security structures, opposition from entrenched
bureaucratic interests prevented the Council from becoming fully
established.  Nevertheless, the body served as an effective war council
during the first Chechnya conflict, when then-head Aleksandr Lebed used it
to broker a settlement.  (The Council also was influential when oligarch
Boris Berezovsky held the post of deputy secretary in 1996-97.)  In 1999,
Putin combined the post of Security Council Secretary with that of head of
the Federal Security Service.  He began to build up the Council when he
became acting president a year ago and named ally Sergey Ivanov, like Putin
a career KGB officer from St. Petersburg, to head the body. 

Under Ivanov the council has given the broadest possible interpretation to
the concept of national security, with the scope its work often resembling
that of the old Soviet Politburo.  The council has helped draft the
country's new national security and foreign policy doctrines, took the lead
in military reform - it was the arbiter of a dispute last summer between
Defense Minster Sergeyev and General Staff Chief Kvashnin -- and led the
recent reorganization of the military-industrial complex.  In addition, the
council has crafted the so-called information concept, which would impose
restrictions on the country's press, and debated the country's hemorrhaging
of capital abroad.  But there have also been several missteps along the
way.  It was the council, according to press reports, which recommended
that the Kremlin to back Yugoslav leader Slobodan Milosovich until just
before his fall.  Putin sent an initial draft of the military doctrine back
to the council for review after some Russian generals complained about its
provisions.

Ivanov has repeatedly denied that the Security Council plays a role in
policymaking.  He claims it is advisory only and notes that many government
ministers are members.  In recent months, however, the Council has taken on
executive and administrative functions.  Several sources suggest that the
security services have used the Council, via Ivanov, to lobby for
increasing the state's role in the economy and a severe crack down on
Russia's oligarchs.

As with other Russian politicians, Ivanov has been linked to large sums of
money.  The recent reorganization of the country's lucrative arms export
industry reportedly puts the profits from that sector under the control of
Ivanov and his KGB associates from St. Petersburg.  The Council's clout
derives, above all, from Ivanov's close relationship to Putin.  Ivanov is
reportedly one of the few officials with direct access to the president and
often accompanies Putin on his trips abroad. The Council's centralized,
hierarchical structure, moreover, also matches Putin's governing style.

Yet Putin has not indicated unequivocally that he wants to make the
Security Council his principal instrument of rule.  The President has given
Ivanov responsibility for the seven viceroys overseeing Russia's provinces
-- regional policy had previously been the purview of the Presidential
Administration, the council's powerful bureaucratic rival.  But Putin has
publicly stated that Presidential Administration chief Aleksandr Voloshin,
a Yeltsin holdover, will continue in his post.  Voloshin continues to play
a key policymaking role.  Competition between the two bodies is thus likely
to continue - especially as Ivanov and Voloshin reportedly disagree on how
much control to exert over the media and how the Kremlin should deal with
the business oligarchs.  They also backed different candidates in recent
gubernatorial elections in Kursk and Kaliningrad.  Although this
competition can create policy confusion, it gives Putin political cover by
allowing him to maneuver via an informal system of checks and balances.

In the coming months the Security Council's formal authority may grow.  A
bill pending in parliament provides that in cases of acute national crisis,
the president can decree a state of emergency under which the Security
Council would run the country.  Another proposal would give Council
secretary the power to compel compliance from other officials to its
decisions.

There are signs, however, that Ivanov may soon move on.  His formal
retirement as an intelligence officer last month was widely interpreted as
a step toward his becoming a civilian Defense Minister - out of uniform
Ivanov might be better able to restructure the armed forces, whose leaders
have sometimes publicly disagreed with him.  He is also seen by many as a
replacement for Prime Minister Kasyanov, to whom Ivanov's rival, Voloshin,
reportedly has close ties.  Without Ivanov to head it, however, and given
the court politics of the Kremlin -- where personality counts for much --
the Security Council might fade again into obscurity.

******

#4
Baltimore Sun
January 7, 2001
Shortages in Russia providing perspective
By Michael Olesker  
 
IN AMERICA, THE stock market slips a few points, and everybody gets chest
pains. In Russia, 44 million people live below the poverty line, which is now
$37 a month.

In America, the kids feel cheated if they turn 16 and have to settle for a
secondhand car. In Russia, thousands give up their babies because they can't
feed them.

More than two years ago, at an orphanage in Perm, at the base of the Ural
Mountains about a thousand miles east of Moscow, Amy and Paul Sponseller of
Cockeysville found Nina, a 6-year-old pixie given up at birth by her
destitute Russian mother. The moment the girl saw them, she cried, "Mama,
Papa."

Last year, at the same orphanage, they found Matthew, also 6, given up by
parents who could not support him. He ran to them and hugged them, crying,
"Mama, Papa."

"They both had that same reaction," Amy Sponseller was saying last week.
"They so much want to be loved and be a part of a family. There are
orphanages like this all over Russia now. In Perm, they told us there were
1,700 children in the city waiting for adoption. The Russians love their
children, but they have no money to support them."

The newspapers are filled with the bad news.

Seven years since abandoning communism for a free-market economy, Russia is
broke and hungry.

The government has allotted $600 million for the purchase of emergency food
supplies.

The Russian Red Cross has launched an appeal for $15 million in emergency
aid.

When the Sponsellers arrived, they stayed at the home of two Russian doctors
who earn, combined, about $200 a week.

Dr. Paul Sponseller, 44, heads Johns Hopkins Hospital's pediatric orthopedic
division; Amy Sponseller, 48, worked in communications there for 15 years.

They married three years ago. One of Dr. Sponseller's patients was a child
from Perm who needed hip surgery when he arrived here. The child's family
mentioned a Rockville agency, Adoptions Forever, run by Judy Williams.

The Sponsellers met with Williams in April 1998, filed adoption papers in May
and flew to Russia at the end of August.

"When we first met with Judy," said Amy Sponseller, "she showed us videos
from the orphanage. And they grabbed our hearts right away. All these kids
needing families, how could you not be moved? And there were three boys and a
little girl sitting on a couch, and Paul says to me, 'That's you. She looks
like your baby pictures.' I felt like I was looking at myself. And then I
looked at her face for months."

>From America, the Sponsellers flew to Switzerland, then to Moscow, then to
Perm. Nina had been told they were coming.

When the Sponsellers reached the orphanage, Amy was still taking off her coat
when Nina spotted the two of them and raced across the room.

"A wonderful moment," said Paul Sponseller. "Wonderful, right away."

"You know, nothing throws me," said Amy Sponseller. "But I see her coming,
and I just fell to my knees, I'm touching her face, it's just magic. She
started chattering in Russian. She starts showing us around, showing us her
friends. And she's got this bow in her hair that's bigger than her head. And
Paul bent down, and she looked up at him with these big eyes on this tiny
face, and he kissed her. She'd never been kissed by a man before. And, all of
a sudden, we had instant family."

In America, Nina ate ravenously, ate as though she'd never tasted food
before. In less than a year, she grew four inches.

"We gave her a doll," said Amy Sponseller. "She'd never seen a doll. The day
she left, we had chicken breasts, apples, cookies, and a box of Wheat Thins.
She asked, 'Do you have these in America?' I said, 'Yes, and you can have as
many as you want.' She did a little dance around the room and ate the whole
box. The people at the orphanage said all the children do this when they
leave."

Six months ago, the Sponsellers decided to go back for another child.

By the time Matthew had been here five weeks, he stopped speaking Russian.

He was hungry to adapt, to become an American. On New Year's Eve, the family
watched television and saw the fireworks from Moscow.

"Look," Amy Sponseller told the children. "Russia."

"I don't want to talk about it," said Matthew.

"Why not?" said his new mother. "It's a wonderful place."

"There's little food there," said Matthew.

"In Russia," said Dr. Sponseller, "they had the barest kind of nourishment.
The orphanage took care of them, but it was bread and some kind of vegetable,
and very little meat. And they had their own personalities there, but they've
adapted to a whole set of different life circumstances here. They've learned
to understand our country and our traditions in a short time, to understand
what a brother and sister means, to see what a family is like."

"They're each other's best champions," said Amy Sponseller.

Also, they followed the last U.S. presidential campaign.

The Sponsellers are Democrats. As they watched the electoral chaos, they
vented a few emotions.

The kids latched onto them. When the election was decided, for George W.
Bush, Nina declared, tongue in cheek, "That's it, I'm going back to Russia."

"You can't go back," said Matthew. "There's little food there. There's
nothing there."

In America, our kids think they're deprived if their summer camp doesn't have
air-conditioned bunkhouses.

Their parents think they're deprived if they miss a second round of dessert.

Everybody could gain a sense of perspective from the children of Russia.

******

#5
The Globe and Mail (Canada)
January 8, 2001
Bush, Putin seen headed for trouble over missiles
GEOFFREY YORK

MOSCOW -- A dispute over short-range nuclear weapons is the latest sign of
trouble looming between the two new administrations in Moscow and Washington.

The Kremlin is angrily denying U.S. allegations that it has moved tactical
nuclear missiles onto its military bases in Kaliningrad, a key Russian
outpost on the edge of central Europe, within range of targets in Poland and
the Baltic states.

The Pentagon, refusing to back down from its charges, says the move is just
the latest example of a "disturbing trend" of sabre-rattling by the Russian
military.

The dispute could foreshadow fresh tensions between the two nuclear
superpowers and their new presidents: Vladimir Putin, who was officially
inaugurated in May, and George W. Bush, who will be sworn in to office on
Jan. 20.

Mr. Putin has been increasingly assertive on the world stage. He has courted
the leaders of foreign regimes on the U.S. black list, and allowed his
military to simulate combat with American targets.
He also has approved a military doctrine that identifies Washington as a
possible threat, and defied U.S. demands to outlaw weapons sales to Iran.

Still, the Russian leader is putting a good face on maintaining good
relations with Washington and is reportedly hoping to visit the United States
this spring for a summit with Mr. Bush.

"My analysis of modern history shows that when Republicans were heading the
U.S. administration, even U.S.-Soviet relations were not harmed," Mr. Putin
told Russian journalists recently. "We have always been able to find a common
language with the Republicans."

At the same time, he emphasized that Moscow cannot return to the optimistic
days of the early 1990s, after the collapse of the Soviet Union.

"Ten years ago we decided, for some reason, that everyone heartily loves us,"
Mr. Putin said. "But this turned out to be wrong. We have to . . . clearly
understand our national interests, spell them out and fight for them."

Mr. Bush, meanwhile, has appointed a cabinet filled with right-wing hawks who
advocate a tougher line on Russia. Several of his cabinet nominees and senior
advisers vigorously support a proposed nuclear-missile defence shield,
despite Moscow's fierce opposition, and their rhetoric often sharply
criticizes Russia.

"Moscow is determined to assert itself in the world and often does so in ways
that are at once haphazard and threatening to American interests," Mr. Bush's
national security adviser, Condoleezza Rice, wrote in a recent article.

Portraying Russia as a threat to the independence of its smaller neighbours,
Ms. Rice wants Washington to strengthen those states to protect them from
Moscow's interference. She has condemned the outgoing Clinton administration
for its "romantic" policy toward Moscow. And she has criticized Russia for
its corruption, its war against Chechnya, its links to U.S. enemies and the
aggressiveness of its military.

"The Russian military has been uncharacteristically blunt and vocal in
asserting its duty to defend the integrity of the Russian Federation -- an
unwelcome development . . .," she wrote in the article published in a Chicago
newspaper.

Mr. Bush has been highly critical of Russia. During the election campaign, he
demanded a halt of all loans to Moscow as long as it is waging war in
Chechnya. He denounced Russian corruption and accused former prime minister
Viktor Chernomyrdin of stealing money from Western loans to Russia. When Mr.
Chernomyrdin demanded an apology, he refused.

If the Bush cabinet continues this tough stand, it will further complicate an
already fragile relationship.

Washington is already worried by Russia's moves toward closer political links
with Iran, Iraq, Libya and Cuba. It has criticized Moscow for using coercive
pressure tactics against pro-Western neighbours such as Georgia. It has
warned that the Kremlin jeopardized press freedom by arresting the media
tycoon Vladimir Gusinsky. And it condemned the espionage conviction of
American businessman Edmond Pope, whom Mr. Putin later pardoned.

The United States has also threatened to impose sanctions on Moscow for
abandoning its agreement to stop selling battlefield weapons to Iran.
Washington said it was "particularly disturbed" by reports that the Kremlin
is ready to sell missiles, helicopters and fighter jets to Iran. These sales
would "pose a serious threat" to security interests of the United States and
its allies, a State Department spokesman said.

Russia has its own long list of bitter grievances, a list that seems to be
lengthening.

Tensions have been rising because of the U.S.-led expansion of the North
Atlantic Treaty Organization and the NATO bombing campaign against
Yugoslavia, both of which triggered anger among Russians.

Some Russian officials also blamed a U.S. or British submarine for the
explosion that destroyed the Kursk nuclear submarine in August, killing 118
crew members.

Along with the dustup over whether nuclear weapons had been shifted to
Kaliningrad, another arms-control dispute is simmering. Last week, Russia
accused Washington of violating the START-1 treaty by destroying only the
first stage of its MX intercontinental ballistic missiles, preserving the
second and third stages for possible future use as medium-range missiles.

But the Kremlin's biggest complaint today is the U.S. plan for a missile
defence shield, which would violate the 1972 Anti-Ballistic Missile Treaty.

President Bill Clinton delayed a decision on the missile shield last year,
but Mr. Bush's cabinet lineup suggests that his campaign pledge to bring in a
"robust" missile-defence system will be kept.

Indeed, Donald Rumsfeld, the designated secretary of defence, wrote an
influential 1998 report that urged deployment of the missile shield, despite
Russian concerns. And in nominating Mr. Rumsfeld, Mr. Bush made a special
point of praising his views on the $60-billion (U.S.) antimissile plan. Many
analysts see his appointment as proof that the plan is a virtual certainty,
no matter how much Russia and other countries object.

******

#6
Washington Post
January 8, 2001
[for personal use only]
Russian Oil-Price Boom Washed Away Economic Reform Impetus
By David Hoffman

MOSCOW, Jan. 7 -- President Vladimir Putin unexpectedly delivered a
tongue-lashing to the Russian Central Bank recently, saying it had failed to
restructure the troubled commercial banking system. "I would not say our
banking system is functioning normally," he declared.

In fact, a long-needed overhaul of the banking system was just one of the
big-ticket structural reform issues that Putin and his government largely
ignored over the last year, and analysts say the explanation is not hard to
find.

With the Russian economy growing rapidly for the first time since the 1991
Soviet collapse, buoyed by high world oil prices and the lingering boost of a
ruble devaluation, the impetus has all but vanished for carrying out
difficult economic reforms.

Putin surrounded himself last year with liberal advisers and said he
supported a progressive economic agenda, promising to improve the country's
unfavorable investment climate, reform taxes, cut red tape, break the impasse
on land reform, defend property rights and strengthen the rule of law.

But after passing a significant tax overhaul in the summer, Putin and
parliament have been coasting as oil revenue has lifted the Russian budget
and economy, according to analysts and politicians. Oil and gas are Russia's
largest exports, and last year's sky-high oil prices generated a budget
windfall and huge trade surplus for Russia.

"From the economic point of view, he lost the whole year," Lilia Shevtsova of
the Carnegie Moscow Center said of Putin. "From the political point of view,
he has consolidated everything -- the Duma and everything else is in his
pocket."

Putin, whose Unity party is a major bloc in parliament, "could have pushed
the Duma to do banking reform," as well as legislation on oil production
sharing, revising the land code, protecting investor rights and judicial
reform, Shevtsova said, but he did not make the effort. Instead, she noted,
Putin used his influence to push through adoption of official national
symbols, including restoration of music from the Soviet national anthem.

In an unusual public appearance last month, Putin's liberal adviser Andrei
Illarionov lambasted the government for squandering Russia's massive oil
windfall. Illarionov, a maverick who was one of the first to warn of the need
for a ruble devaluation in 1998, told journalists that the government could
have managed the oil dividend far better, and should have used the
petrodollars to pay down Russia's huge foreign debts. Instead, the government
burned up oil revenue on a fresh spurt of domestic spending, such as raising
the minimum wage and subsidizing agriculture, he said.

More than just an economic critique, Illarionov's comments appeared to be a
deliberate gambit, perhaps to shock the political elite out of complacency,
or to give Putin some political cover if the economy turns sour. But sources
say Illarionov, a strong-minded economist, also made the comments because he
is concerned that structural reforms have ground to a halt in the euphoria of
the oil windfall.

"In the end," said Shevtsova, "Putin got concerned that Illarionov, or others
who are talking to him, are right, that probably he should not have been so
complacent." She suggested that Putin allowed Illarionov to make the remarks.

"He missed the whole year, lost the whole year, and he must do something to
avoid being responsible for last year. This whole thing was a conscious
attempt to share the blame, share the collective irresponsibility," she said.

In a television interview with Russian journalists aired in late December,
Putin said "some alarming trends have appeared" in the economy during the
month.

The most alarming, experts say, is that oil-boom growth is waning and oil
prices have begun to decline. Illarionov said the boost from the 1998
currency devaluation may be running its course. Jitters about what comes next
for Russia are already being felt.

Russia announced on Thursday that it does not plan to make a full,
first-quarter payment to the Paris Club of creditor nations on debt inherited
from the Soviet Union. Russia owes $48 billion and was scheduled to pay $3.4
billion this year -- $1.5 billion in the first quarter. Germany, which
accounts for about 40 percent of the debt, demanded full repayment, saying
Russia can afford it. Today, Putin announced after a meeting with German
Chancellor Gerhard Schroeder that Russia "intends to and will pay the debts
of the former Soviet Union," but may seek more time.

Before talks with the Paris Club can begin, however, Russia is required to
complete an agreement on its economic program with the International Monetary
Fund. An IMF delegation, which made an inconclusive visit in November, is
expected to return later this month or early next.

The director of the Moscow office of the IMF, Martin Gilman, told the
Interfax news agency that the oil boom "inevitably led to a sense of
complacency in the pace of actually implementing structural reforms." He
added that "as we watch oil prices drop . . . I cannot help but regret that
more ambitious reforms were not implemented in practice."

Energy accounts for two-fifths of Russia's exports, and 13 percent of the
national output, making the economy extremely sensitive to global energy
price fluctuations. In a refreshing turnabout from its long stagnation,
Russia's economy grew by slightly more than 7 percent last year, the best
performance since the Soviet collapse, but experts say the rise in oil prices
accounted for about a third of the growth. By most estimates, Russian growth
this year will be 3 to 4 percent.

In general, experts say every dollar that Brent crude -- the benchmark for
oil prices -- goes over $14 a barrel brings the Russian budget about $1
billion a year, and injects $2 billion into the balance of trade. Last week,
Brent crude was $23.87 a barrel; the peak for Brent was $37.73 on Sept. 7.
The Russian budget for this year assumes oil will be about $18 a barrel.

Al Breach, an economist for Goldman Sachs in Moscow, said the ruble
devaluation was even more powerful than oil prices in propelling the Russian
economy forward, so the economy will withstand some decline in oil prices.

"Oil has come down and will further," he said. "We are going to see the
economy has stabilized at the right exchange rate rather than the wrong one,
and the economy will keep going forward."

Chronic budget woes that plagued Russia in the 1990s have eased. Russia
recently adopted a balanced budget for the first time since the Soviet
collapse. Moreover, Russia's foreign currency reserves, up to $28 billion
from about $12 billion at the start of 2000, have exceeded levels last seen
before the ruble devaluation.

The devaluation cut way down on expensive imports, and made Russian exports
more competitive abroad. Moreover, the widespread problems of barter, wage
arrears and nonpayments between firms that plagued Russia in the 1990s appear
to have abated, and inflation remains moderate, although capital flight has
grown.

Breach said the Russian government has "done a decent job" on the larger
structural problems such as the adoption of a balanced budget, pension reform
and tax reform, which took effect last week, including a new 13 percent flat
tax for individuals.

But critics say Putin has let slide such important matters as banking reform,
a new land code, and protecting investor and shareholder rights. A string of
corporate boardroom scandals in the last year -- some at gunpoint --
underscored the continuing need to protect investors, but Putin took
virtually no notice.

Putin promised to distance the state from the influence of powerful
businessmen known as the "oligarchs" and carried out a personal campaign
against one of them, media magnate Vladimir Gusinsky. A second tycoon, Boris
Berezovsky, who helped bring Putin to power, also has turned critic. Most of
the others remain in business, but have taken a lower profile in politics.
The Kremlin also has begun, albeit slowly, to tackle pent-up problems at two
monopolies, the natural gas giant Gazprom and the electric power grid United
Energy Systems.

"Clearly they haven't done anything on the banking sector and they are not
going to; the Bank of Russia is weak," Breach said. The International
Monetary Fund said in a November report that "overall progress in advancing
market-oriented structural reforms had been disappointing to date."

The Russian stock market also has reflected pessimism, closing the year at
the same levels at which it began, despite the oil bonanza. When Putin took
over from Boris Yeltsin, some stockbrokers hailed the arrival of a more
politically stable period for Russia. But foreign investors, who powered the
speculative bubble before the 1998 crash, have remained on the sidelines,
reluctant to sink new money into Russian companies.

"There are no new buyers out there," Breach said. "People are giving
absolutely no benefit of the doubt to Russia."

*******

#7
World Socialist Web Site
www.wsws.org
Unicef report highlights situation of children in E. Europe and the former
Soviet Union: The terrible price of capitalist restoration
By Elizabeth Zimmermann
6 January 2001

About half a million young people aged 5-14 years of age, who lived in
Eastern Europe and the former Soviet Union at the time the Berlin Wall came
down in 1989 are no longer alive.

This is the terrible outcome depicted by the Innocenti Research Centre,
Florence, Italy, in a study on behalf of the UN child welfare organisation,
Unicef: Young People in Changing Societies. The investigation concentrates on
the situation of 65 million young people aged between 15 and 24, belonging to
the so-called "transition generation" in the 27 countries of Eastern Europe
and the Confederation of Independent States (CIS--up until 1992 part of the
Soviet Union).

While the cause of the terrible situation facing millions of children and
young people, and naturally the population as a whole in this region, is not
spelled out by the report's authors, the facts they bring together are an
indictment of capitalist restoration in Eastern Europe and the former Soviet
Union. (The complete report, with numerous diagrams and statistical material,
is available in English and Russian, and also a summary in Italian, at
http://www.unicef-icdc.org/monee7/index.html.)

In the preface, the authors point out that the transition from childhood to
adulthood is without parallel for the generation that experienced it in the
aftermath of the fall of the Iron Curtain and the associated economic and
political changes: "Today's young people find that the institutions,
resources and social norms that once smoothed the way from one generation to
the next are either weak, in the process of fundamental change or
non-existent."

Out of the entire juvenile population of the region under examination (some
65 million people) in 1999, 26 million (41 percent) were still at school or
undertaking an apprenticeship, 21 million (32 percent) were working, and 18
million (27 percent) were neither in education nor employed.

In 1989 there were 67 million children aged between 5 and 14 living in the
same region. About one million had left by 1999, but only very few of them
were able to find better conditions in other parts of the world. Destitution
and bitter poverty forced others into a life of drudgery or the sex trade.
There were also large migrations within the region, mostly caused by economic
shortages, ethnic conflicts or war. In most countries, more young people left
than returned.

The authors estimate that about half a million children and young people of
this generation died between 1989 and 1999, almost half in Russia alone. In
1998, 85,000 young people between the ages of 15 and 24 died, 30 percent more
than in 1989. The mortality rate among young people rose in 11 states,
particularly within the CIS; it fell in 16 countries, including the Baltic
states and Eastern Europe. Differences between countries became larger. The
danger of a young person dying was around three times greater in Russia and
Kazakhstan in 1998 than in Slovakia, the Czech republic or in Hungary.

Most deaths among young people were caused by accidents, violence, homicide,
suicide, infections, malnourishment, as well as problems associated with
pregnancy and childbirth. That is, they were mainly due to social causes and
could have been avoided under different social conditions.

The report establishes that of the countries examined, Russia has the highest
rate of injuries leading to deathâ?"seven times higher than in the
Netherlands.
The report also emphasises that widespread poverty and weaker social cohesion
has intensified problems that lead to bad health and risky behaviour, citing
as examples unsatisfactory nutrition, hazardous sexual relations and drug
abuse.

The increase in suicides among young people is the most extreme expression of
widespread feelings of hopelessness and stress. While the rate sank in some
"transition" countries among young men aged between 15 and 24, it rose in 16
countries. In Lithuania, White Russia, Russia and Turkmenistan it more than
doubled. It is also particularly high (tendency rising) in Slovenia, Estonia
the Ukraine and Kazakhstan. In the entire region, 10,000 males and 2,000
young females aged between 15 and 24 take their lives each year. A further
5,000 young men and 1,500 young women fall victim to murder.

The study condemns the lack of information or possibilities for consultation
available to young people on health questions, which has become even worse
since the collapse of the Stalinist regimes or no longer exist at all. Among
other things, this finds its expression in a large increase in juvenile
smokers and alcohol abusers. 10 percent of all 15-year-old girls and 22
percent of all boys of this age smoked regularly in 1993-94. Four years
later, this had risen to 18 and 29 percent respectively. Substantially more
young men smoke in these countries than in Western Europe.

The study also reveals frightening numbers involved in drug abuse. A study in
1999 found that of all 16-year-olds in Hungary, 25 percent had used various
types of drugs. In the Ukraine, some 1,000 of 13,000 drug-dependent young
people examined in the first three months of 1999 were found to be HIV
positive, and had most probably infected themselves with AIDS when injecting
drugs with dirty syringes.

While in 1995 there were only 12,000 known cases of HIV infection in all age
groups in this region, at the end of 1998 there were already over 50,000
cases. The UN organization Unaids estimates that at the end of 1999 over
360,000 people had become infected with AIDS, with young people being the
main sufferers. In Lithuania and the Czech republic, young people aged
between 15 and 24 years form a third of all known HIV cases, and in White
Russia they comprise two thirds.

School and further education

The study paints an appalling picture in relation to school attendance and
access to further education and training. The number of young people aged 15
to 18 leaving school rose from six million in 1989 to nine million in 1998.
More than one in three from this age group had left school or further
education prematurely and without qualifications. There are differences
between the various countries, with the Eastern European and Baltic states
registering a modest rise in attendance of those in further education. All
other countries in the region registered a strong decline, and particularly
in Tajikistan and Turkmenistan. In Tajikistan, school attendance fell from 61
percent in 1989 to 24 percent in 1998; over the same period in Turkmenistan
it fell from 68 percent to 30 percent.

Fewer children continue their education after High School, and leave at age
15 or earlier. While in 1989 almost all children graduated from High School,
in the CIS the number graduating had dropped 10 to 20 percent by 1997. In
some parts of Eastern Europe there was an even greater decline. Worst
effected are Albania, Bulgaria and Romania, where the proportion of children
finishing High School in 1997 was around 80 percent lower than in 1989.

The report points out that those affected most are young people from poor
families, rural areas and ethnic minorities or those with handicaps. They
comprise the bulk of those leaving school prematurely, and who have no chance
of further education, let alone university.

The reasons are not only that poor children and their parents cannot pay
school or study fees, lack cash for books and other costs of maintaining
children in further education. Often children and young people quit school in
order to contribute to their family's income to cover living costs.

Bad conditions for teachers throughout the region--in particular low
pay--make
the problem worse. For example, in Moldavia parents usually have to pay
hundreds of US dollars in fees or bribes so their children are taught foreign
languages, mathematics and the natural sciences.

The authors questioned young people throughout the region about the different
areas under investigation. They cite 15-year-old Gairat in connection with
school attendance: "Sometimes I look at my teacher and I feel sorry for her.
I see that she cannot concentrate, is thinking about other things. And I wish
that she did not have to worry about all these everyday cares. That she had
enough money to concentrate on doing her job and teaching us well."

Unemployment

In almost all countries they examined, youth unemployment was about twice as
high as the general level of unemployment: a problem that was almost unknown
before 1989. In 1998 average youth unemployment in the 18 transition
countries for which data was available amounted to 30 percent. Many of the
young unemployed, some 40 percent, had already been jobless for longer than
one year. There are also great disparities in this area. Official youth
unemployment in the Czech republic is 7 percent, whereas it is over 70
percent in the Former Yugoslav Republic of Macedonia.

As terrible as these official figures are, they are only part of the picture.
Of 18 million young people in 1998 not in school or work, roughly 8 million
were counted as unemployed, keeping 10 million young people off the
unemployment statistics, although they had neither work nor were in
education. Many of them were situated in the southern part of the region
studied. There is also much evidence pointing to the fact that certain groups
of young people are particularly affected by exclusion from the job market.
Amongst these are those with a poor education, young women, those living in
remote and rural areas, and members of ethnic and national minorities.

The study also found out that, as in the Western industrial nations, economic
growth does not automatically lead to more jobs. In Poland, Hungary and
Slovenia, economic growth since 1995 led to a higher rate of employment for
young people. But in the Baltic states, the Czech republic and Slovakia the
opposite was the case, where, despite economic growth, there was a decrease
in the number of young people employed. Between 1995 and 1998, Russia saw
around a 7 percent drop in the gross national product, with a corresponding
decrease of 4 per cent in employment over the same period, while for young
people the level fell by 23 percent.

In view of these figures, it is no wonder that it is hardly possible for many
young people in Eastern Europe and the CIS to lead an independent life or to
start their own family. The report notes that the proportion of young adults
aged 20 to 24 who still live with their parents had risen to almost two
thirds.

The birth rate sank by a third or more between 1989 and 1998 in most of the
region, and in Armenia and Lithuania by around half. If this trend were to
continue, the number of young people aged between 15 and 24 in Eastern Europe
would fall by around a third over the next 20 years.

A further section of the report deals with the increase in crime among
children and young people, which partly expresses the conditions under which
they must fight to survive. It points to the way some countries treat
juvenile offenders like serious criminals. For example, boys in Kyrgyzstan
who carry out minor thefts are locked up, often in solitary confinement, for
six months. Under these barbaric prison conditions there is no access to
education and there is no right for family visits. In Albania, young people
can be locked up for over eight months even before coming to trial. The lack
of facilities for holding juvenile offenders means they are locked up with
adults.

A 1995 report on conditions in the Ukraine brought to light that one in two
young people being detained at institutions controlled by the Interior
Ministry reported they had been subject to unwanted sexual contact, and 30
percent of those questioned said they had been raped. Investigations by
Unicef of the five central Asian states found that young people were kept in
solitary confinement in all the countries examined--with the exception of
Kazakhstan--and hardly received any visits from their families. Other
countries, such as Georgia, lack basic legal protections: a youth affairs
commission can commit repeat juvenile offenders to closed institutes for up
to three years without any court proceedings. Throughout the region there is
a general lack of proper juvenile institutions and appropriately trained
personnel.

The authors highlight the deplorable state of affairs and call for greater
public attention and expenditure, in order to invest in the future of young
people. They also call on the young people themselves to play a greater role
in shaping their own future. None of which is wrong. It is, however, illusory
to expect these changes from the very political parties and forces that are
responsible for the present conditions, and which have enabled them to enrich
themselves enormously.

Interestingly, the authors report that the majority of the young people they
questioned did not have any confidence in the so-called "new democratic
institutions" (itself a more than flattering description). A 1998 inquiry in
Lithuania found that 89 percent of those aged between 18 and 25 believed that
the country's political parties did not have any significance for them. A
similar inquiry in Russia found that two thirds of young people between 18
and 29 had a strongly negative attitude to the state institutions.

This should not, however, be equated with a rejection of democratic rights.
The inquiry in Lithuania also found out that 85 percent of the young people
questioned were interested in the political life of their country. The
Russian inquiry found out that two-thirds of young people questioned regarded
it as "inadmissible" to suspend presidential elections or to ban meetings or
demonstrations.

******

#8
Financial Times (UK)
January  8, 2001
LEADER/Editorial
Russian gas

Reliability as a gas supplier is of a quite different order to that of an oil
supplier because gas shipments generally travel along a fixed and expensive
infrastructure and any interruption in them leaves customers stranded.

Russia, the world's leading gas exporter with a quarter of all its reserves,
should remember this. In particular, Moscow should realise that its halt,
albeit brief, in gas exports last week to its neighbour Georgia is bound to
raise some questions in western Europe, which depends on Russia for 42 per
cent of its gas imports today and more in the future.

For some time Russia has been bullying other former members of the Soviet
Union - Ukraine and Moldova as well as Georgia - over energy supplies. This
is not surprising. These countries were warned by Moscow, at the time of the
Soviet Union's break-up, that they would no longer get energy on generous
Soviet terms. It is also understandable, in that many ex-Soviet neighbours
have been late paying their Russian gas bills and, in the case of Ukraine,
have simply stolen some of the Russian gas crossing their territory. In a
sense, Russia is waking these countries up to the reality of today's more
expensive energy. Ukraine appears to have got the message. Last month it
accepted strict new conditions on transit of Russian gas in return for
getting a rescheduling of its Russian gas debts.

But some of the motives behind Russia's energy belligerence are highly
questionable. It is clearly using energy as a lever to intimidate Georgia,
where it has fomented secession and is still delaying the pull-out of Russian
troops. Moscow is unhappy at the prospect of Caspian basin energy being piped
through Georgia, so bypassing Russia. Russia has also abused its own position
as a transit country. Turkmenistan, on the eastern side of the Caspian,
resumed gas supplies to the Russian pipeline system at the weekend only after
getting Russia to reduce the price mark-up at which it resold Turkmen gas to
the west.

None of this need put into fundamental question the security of Russian gas
supplies to western Europe. Twenty years ago, the Reagan administration tried
to stop western Europe linking itself to Russia's Siberian gas fields. But
the Europeans, with Margaret Thatcher at their forefront, protested at this
display of US extraterritoriality and went ahead with the pipeline projects.
Since then, Russian gas supplies have, according to a recent European
Commission energy paper, shown "exemplary stability".

This is a reputation Moscow should strive to maintain. This means treating
all its customers properly and, above all, keeping politics out of gas.

*****

#9
Christian Science Monitor
January 8, 2001
Fabled Silk Road now paved with narcotics
Late last month, Kyrgyz officials seized nearly a ton of opium, their largest
catch.
By Scott Peterson
Staff writer of The Christian Science Monitor

It may be one of the most remote places on earth, but that is exactly why
porous border areas of Central Asia - and especially Kyrgyzstan - have turned
the ancient Silk Road into a highway for narcotics traffic from Afghanistan.

Torn by religious unrest, and ruled by fragile post-Soviet regimes,
Kyrgyzstan, a crucible of regional problems, is proving to be fertile ground
for drug traffickers trying to get record opium harvests and heroin from
Afghanistan to markets in Russia and Europe.

Analysts differ on the reasons behind this resurgence: Some accuse Islamic
guerrillas of financing their conflict with drugs; others say corrupt local
officials help pave the way.

But already, the cost is becoming clear.

Kyrgyz officials in late December seized 1,828 pounds of opium and 5.5 pounds
of heroin, their largest single narcotics haul ever - one of a string of
big-ticket finds region wide. Russian officials late December announced that
drug trafficking has become the most profitable criminal business in Russia,
and that the unofficial number of addicts now tops 3 million.

New cases of HIV, the virus that can lead to AIDS, have also surged in
Russia, in some places by almost 10,000 percent, officials report. Nearly all
are among intravenous heroin users - a practice that is rising sharply across
Central Asia.

"This is a huge drugs trade," says Terence Taylor, assistant director of the
Institute for International Strategic Studies in London. "In terms of dollar
value, it has now surpassed the Golden Triangle [of Southeast Asia]."

United Nations experts estimate that more than 70 percent of the world's
production of opium - the raw material for easy-to-make, addictive heroin -
comes from Afghanistan.

While drug traffic to the West through Iran and Turkey still exists, tough
enforcement there - often leading in Iran to lethal skirmishes against
sophisticated, heavily-armed drug convoys - means that traffickers are
favoring routes further north.

"A security belt is being created around Afghanistan to stop drugs," says
Yuri Misnikov, deputy head of the UN Development Program in the Kyrgyz
capital, Bishkek. "Kyrgyzstan is seen as the weakest, most vulnerable link in
the Central Asia chain."

Most of the drug traffic reaches Kyrgyzstan through its southern neighbor,
Tajikistan, which fought its own civil war for much of the 1990s and has a
fragile coalition government.

One-third of the Tajik gross domestic product is estimated to be
drug-related. Tajik diplomats have been caught with large amounts of
narcotics in Kazakhstan; so, before, have Russian soldiers, 10,000 of whom
guard the Tajik border with Afghanistan.

Crossing remote mountain passes into Kyrgyzstan, guerrillas of the Islamic
Movement of Uzbekistan (IMU) - whose stated aim is to establish an Islamic
state in Uzbekistan - invaded in August.

"There are religious and political factors, but there is agreement in the UN
that drugs were behind those incursions," says Mr. Misnikov. "For us it is
clear that unless legitimate sources of income are created, it will not
change. Billions of dollars are behind it. People are poor."

That view is echoed by Bolot Djanuzakov, head of the Kyrgyz National Security
Council, who says that Islam is "only a veil" and that the IMU's "main aim is
distribution of drugs."

IMU guerrillas have been trained in Afghanistan by the radical Taliban
militia, which controls 95 percent of the country - and reaps taxes on the
opium crop. The IMU provides the Taliban a path to market, Mr. Djanuzakov
contends.

"These guerrillas control the export of opium in Central Asia, because it is
the easiest way to get it to the rest of the world," he says. Kyrgyz
authorities - some trained by the UN - confiscated 10 times as much illicit
drugs in the first nine months of 2000, he says, as in all of 1999.

"This is evidence of increased traffic, and why the goal of our government is
to strengthen our Army and our borders."

Few doubt the dangers. Profiteers prefer weak states, which "means that the
drug trade is at the center of a contest over the very essence of political
order in at least Tajikistan and parts of Kyrgyzstan," noted a report by the
Brussels-based International Crisis Group last year.

But many argue that, despite some success against traffickers, Kyrgyz
authorities themselves are involved, and that claims of an IMU role are a
smokescreen.

"This idea is created by the security services of Uzbekistan and Kyrgyzstan,
so that people concentrate on drugs and not Islam," says Alisher Khamidov,
director of the Media Resource Center in Osh, a hub for illicit traffic. At
the same time, he adds, "the authorities say they control drugs, but they are
the ones with the monopoly [on drug running]. How can they expect ordinary
citizens to stop, when government officials are involved?"

"There are always excuses, like the Islamic threat or drug trafficking," says
Victor Zapolsky, chief editor of "Delo No..." newspaper. "But officials that
are supposed to be fighting drugs are [the ones] trading drugs."

Still, some sources say that drugs are a means to an end for the guerrillas -
if not the aim itself. The London-based Jane's Intelligence Review says the
IMU is "primarily concerned with financial gain" and has "successfully used
terrorism" to "secure" drug conduits.

Impassable routes in winter mean that "traffickers are forced to increase
shipments in the summer," and that last year the IMU stored 1,500 tons of
narcotics, according to the review. The August attacks, JIR says, were
designed to "distract security organs while large shipments are sent through
the region undetected."

"There is a direct link," says Alexei Sukhov, correspondent of the opposition
Kyrgyz newspaper Res Publica. "The days when the IMU attacked, they wanted to
transport a huge amount of drugs. They attacked one area, the drugs went into
another."

Mohamadjan Hamidov, south Kyrgyzstan correspondent for the Vechernyi Bishkek
newspaper, says that enforcement alone is not the answer. "Drugs are inside
community life," and the trafficking "makes some contributions to developing
countries. You will never solve this problem by force. We must end
unemployment and raise the standard of living."

*******

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