January 10, 2001   

This Date's Issues:   5016 • 5017 • 5018

Johnson's Russia List
#5018
10 January 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Baltimore Sun: Jay Hancock, Russian 'loose nukes' called dire threat to U.S. security. High-profile panel says nuclear material is poorly monitored.
2. Rossiyskaya Gazeta: Irina Nevinnaya, May You Live as Prior to the Default. The Amount in Your Purse Increased Over the Year. ('Positive Changes' in Russian Living Standards Seen in 2000)
3. Interfax: Exports boost rise in Russia's GDP.
4. David Rowell: Some Positive Russian Impressions.
5. Moscow Times editorial: Slouching Toward a New Default.
6. Moscow Times: Paul Klebnikov, Russia Could Use Some Robber Barons Now.
7. Interfax: AUDIT CHAMBER INSPECTS ALL LARGE PRIVATIZATION PROJECTS IN RUSSIA.
8. AFP: Russia's oligarchs put business before politics.
9. Margaret Coker: Russian Museums.
10. Boston Globe: David Filipov, In Russia, arctic blasts prove deadly.
11. Bloomberg: US Citizen Abducted in Chechnya By Masked Gunmen, Agency Says.
12. BBC Monitoring: Russian population to keep shrinking, chief census expert says.
13. Segodnya: "IF IT'S A YEAR OF EXPERIMENTS, 2001 WILL BE A BAD YEAR."
What are the political results of the year 2000? What is Russia in for in 2001? (Interview with Gleb PAVLOVSKY)]  

******

#1
Baltimore Sun
January 10, 2001
Russian 'loose nukes' called dire threat to U.S. security
High-profile panel says nuclear material is poorly monitored
By Jay Hancock
Sun National Staff
 
WASHINGTON - Despite nearly a decade of U.S. efforts to help Russia control
its huge nuclear stockpile, a high-profile study commission has concluded
that the potential theft of nuclear technology from Russia is "the most
dangerous unmet security threat" faced by the United States and that
Washington and its allies should devote an additional $30 billion to the
problem during the next decade.

The report, due today from a bipartisan task force headed by former Senate
Majority Leader Howard H. Baker Jr. and former White House counsel Lloyd N.
Cutler, concluded that tons of Russia's weapons-grade nuclear material are
poorly guarded and ill-accounted for, according to people who have seen the
paper.

It concludes that current Energy Department programs to improve the
situation are inadequate and that spending should be roughly quintupled.

The panel, whose members visited Russian nuclear compounds and received
classified U.S. intelligence briefings, urged creation of a "loose nukes"
czar to coordinate the sometimes conflicting nonproliferation efforts among
the departments of Energy, State and Defense.

Of particular importance, the paper said, is the need for Russian and U.S.
officials to do a better job of consolidating scores of Russian nuclear
sites into fewer, better-guarded locations.

The task force, appointed in March by Energy Secretary Bill Richardson,
largely endorsed existing Energy Department programs in Russia but
concluded that at current spending levels they might take decades to
significantly reduce the proliferation threat.

"The group felt very strongly that the threat of loose nuclear material
falling into illicit hands was a very dangerous one," said a task force
member who spoke anonymously because the report hasn't been issued.

"It's not as though we haven't learned anything" from antiproliferation
programs in Russia, the member said. "But now, as we find out more, we're
thinking, 'Holy smokes, what else is out there?'"

The Baker-Cutler report is expected to add to renewed concerns not only
about Russia's rich trove of weapons-grade material but also about the 1
million Russian nuclear scientists and engineers who many fear might work
for Iraq, Iran or other unfriendly nations.

Television executive Ted Turner announced Monday that he will donate $250
million to establish a private foundation to address nuclear proliferation.

Russia has more than 100 nuclear sites. Within those locations, task force
members reported seeing nuclear material stored in several buildings, often
with inadequate security.

Security breaches and attempted nuclear thefts in recent years have
underscored the threat. U.S. intelligence officials fear that terrorists or
hostile nations will smuggle out enough Russian material to manufacture a
nuclear weapon.

Last year, Russia arrested about a dozen people suspected of stealing
materials from the Petropavlovsk-Kamchatsky naval base on the Pacific.
While apparently none of the stolen goods involved nuclear material, the
incident illustrated the vulnerability of such facilities, analysts said.

In 1998, an employee of the Sarov Russian weapons lab was charged with
trying to sell documents to Iraq and Afghanistan. Since the end of the Cold
War and the decline of Russia's economy, highly trained Russian scientists
are often poorly paid or unemployed.

The situation is severe enough that Russian Defense Minister Igor Sergeev
and Chief of the General Staff Anatoly Kvashnin have quietly asked U.S.
officials for more assistance in controlling Russia's nuclear stores, said
Bruce Blair, president of the Center for Defense Information in Washington.

"There is definitely evidence of lax security, and there is definitely
evidence of vulnerabilities, of deficiencies," said Blair, who resigned
from the task force last summer for personal reasons and has not seen the
report. "Part of the problem is the security and accounting are so lax that
it's hard to know whether any of [the nuclear material] has been ripped off."

The United States has backed efforts to inventory and secure Russia's
nuclear stores almost since the collapse of the Soviet Union in 1991. A
huge step forward, analysts agree, was the decision by non-Russian, former
Soviet states to return their nuclear weapons and materials to Russia.

Current U.S. programs

Energy Department programs to reduce the loose nukes risk include the
material protection, control and accounting program, which aims to identify
and guard dangerous material; the plutonium disposition program, which
converts highly radioactive material into nonweapons material; a program in
which the United States buys enriched uranium; and the nuclear cities
initiative, which furnishes financing for Russian nuclear scientists to
become legitimate entrepreneurs.

Commission members also identified the need for better coordination among
U.S. agencies involved in addressing Russian nuclear capabilities. For
example, Energy Department efforts have been hindered by State Department
concerns about diplomatic implications and by Pentagon interest in
intelligence on Russian capabilities, they said.

"There are some troubling stories about the lack of coordination within the
U.S. government," said a task force member who emphasized the need for a
loose nukes czar. "This is a very serious problem."

Covering the cost

The U.S. government spends more than $600 million annually on Russian
antiproliferation programs. A spending increase to $30 billion during the
next decade would roughly quintuple the amount spent, and the call for
money is likely to unsettle advocates of another expensive national
security proposal - a national missile defense.

But panel members said U.S. allies and Russia should be asked to help
finance the increase. They said Russia could take over much of the budget
once its economy improves.

In one sense, addressing the loose nukes problem "is a bottomless pit," a
commission member said. "And I don't think anybody is recommending we spend
the rest of the century pouring that kind of money into that situation. But
obviously there are some things that can be done that would make an
enormous amount of difference."

******

#2
'Positive Changes' in Russian Living Standards Seen in 2000 

Rossiyskaya Gazeta
January 5, 2001
[translation from personal use only]
Article by Irina Nevinnaya:  "May You Live as Prior to the Default. 
The Amount in Your Purse Increased Over the Year"

   In one of the government sessions at the beginning
of last year Vladimir Putin admitted that our life was by no means as
good as it might be.  According to the premier and acting president, as
he was then, Russia remained at 71st place in the world in terms of the
standard of living, below even its neighbor Belarus, by the way.
   At that time the government outlined a plan of action which would be
able to make the economy a growing economy, the social and political
situation in the country stable, and the state power strong.
   A year is too short a time to pull ourselves out of the deep pit into
which we have all rolled in recent years.  Thus, according to the results
of research by the Russian Academy of Sciences Institute of the
Socioeconomic Problems of Population, published last October, the
Russian's average income still does not exceed 70 percent of the
indicators for the precrisis year of 1997.
   Nevertheless, we have still seen some positive changes during the
year.  According to the Ministry of Economic Development and Trade, in
the space of 10 months the physical volume of GDP increased 7.3 percent
compared with the same period of the previous year, while the volume of
industrial production increased 9.8 percent.  Production was increased
not only by oil and gas workers or lumberjacks, say:  Practically all the
major sectors of industry exceeded the 1999 production level.
   Real work began, and a source of additional income for the population
also appeared.  In November we earned, on average, 11.1 percent more than
a year previously.  During the first 10 months since the start of 2000
the average monetary income increased 9.6 percent.  The Ministry of
Economic Development and Trade believes that roughly the same growth rate
of the population's monetary income -- up to 8 percent a year -- is also
to be maintained for the immediate future.
   Incidentally, the computed average monthly wage for the country in
November stood at 2,534.2 rubles [R] -- an increase of almost 50 percent
compared with the previous year.  The result is more modest in respect of
real wages, but it is still palpable:  They increased 23.4 percent.
   There is another pleasant news item.  In 2000 the government finally
coped with the repayment of debts to budget-paid employees.  The
"federals" (budget-paid employees under the jurisdiction of the federal
center) have no debts at all.  Local budgets are still holding back money
in some places, but by no means on such a mass scale as was the case just
a year ago:  As of 1 December, these debts totaled R5.9 billion. 
Nevertheless, according to the data of the State Committee for
Statistics, the total arrears in the country as a whole at nonstate
enterprises and in organizations amounted to approximately R37 billion at
the beginning of December, although this amount is diminishing little by
little.    After taking a long, long time to get started, the government has
at
last tackled the minimum wage in real earnest.  Effective 1 July, it was
increased by 50 percent at a stroke (to R132), and as of January 2001 by
practically 50 percent more (to R200).  As of 1 July this year, the
minimum wage will reach R300.  The government believes that the increase
in the minimum state guarantees for labor remuneration will promote
growth in the average wage and lead to an increase in its tariff part --
which in turn will bring out of the "shadow" part of the hidden wage.  If
these expectations are realized, the nonbudgetary social funds, including
the Pension Fund, will be swelled by additional contributions, and the
possibility of improving the situation of old people will emerge. 
Pensioners got through 2000 without debts.  Moreover, their pensions
increased by an average of 60 percent.
   We have already reported that the first increase in pensions in the
new year is planned for February.  At our request the Pension Fund
specified recently that pensions will be indexed, on average, at 9
percent.  In all, pensions are to be indexed four times during the year. 
Pension Fund and government experts believe that for the first time in
the years of reforms the size of pensions will not only reach the
subsistence minimum but will also exceed it by 20-25 percent.  Benefits
will go up to R1,260-1,300.  But at the same time it would be quite a
good thing if the minimum pension (today this is R453) could also be
brought up to the subsistence minimum.
   In short, we are promised that the incomes of the majority of citizens
must increase in 2001, albeit not by much.  Provided that the need for
additional expenditure does not "eat up" this growth.  In recent days
there have been more than enough alarming news items in this regard.  The
railroads have announced a significant increase in the cost of tickets. 
New standards were adopted in the middle of December with regard to
payment for housing and for municipal services, which "permitted"
municipal workers to increase the cost of servicing 1 square meter of
housing in Russia to an average of R14.2 (in 2000 it was R12.8).  In
Moscow, for example, in the second half of last year alone city folk
started paying 25-30 percent more for housing, and officials in the
capital are promising that a new price hike is possible as of January.
   Power workers also produced an unpleasant surprise on New Year's Eve. 
As of the beginning of 2001, the standing charge for electricity is being
increased from 3.5 to 4 kopeks per kilowatt-hour -- an increase of more
than 11 percent.  And not over the course of a year, let us note, as for
wages, but instantly, at once....
   Nevertheless, the prognoses are such that by the end of 2001, given
the optimistic combination of circumstances, we may attain, in terms of
well-being, the standard of living of the precrisis year of 1997.

******

#3
Exports boost rise in Russia's GDP
Interfax

Moscow, 9 January: Russia's nominal GDP for 2000 in current market prices
is preliminarily estimated at R6.92 trillion, with a deflator index of
141.4 per cent, an Economic Development Ministry report on the country's
economy in January-November says.

Ministry analysts note that this figure is 7.6 per cent up on 1999, when
GDP rose 3.2 per cent year-on-year.

The GDP deflator exceeded the consumer prices index considerably throughout
2000, due to a sharp rise in prices on the export side of GDP.

The main factor behind GDP growth in 2000 was an increase in exports, which
accounted for around 34 per cent of overall GDP growth and high domestic
demand. Also, investment demand accounted for around 24 per cent of GDP
growth and consumer demand for around 36 per cent. An increase in real
disposable incomes boosted consumer demand, analysts say.

Spending on state institutions increased the least, which analysts
attributed to tough budget policy.

Accrued fixed assets increased 15.9 per cent, according to preliminary
figures, on 1999.

Net export accounted for 21 per cent of GDP use and domestic demand for 79
per cent. In the latter, gross accumulation totalled 17.7 per cent, up 20.2
per cent year-on-year and end consumption spending totalled 61.3 per cent,
up 7.2 per cent. Household spending totalled 44.2 per cent, up 9.3 per
cent, spending on state institutions 14.8 per cent (up 1.6 per cent and
spending on non-commercial organizations servicing households totalled 2.3
per cent (down 0.3 per cent).

*******

#4
From: "David M Rowell" <David@Rossia.com>
Subject: Some Positive Russian Impressions
Date: Tue, 9 Jan 2001

I've just read the scholarly and interesting article by Prof Shlapentokh in
JRL 5017 "Putin's Uniqueness in Russian History: The Prospects for
Prolonged Corruption in a Nondemocratic Society".

It is hard to disagree with his recitals of history and his analysis of the
present, however, his views on the immediate future of Russia allow for
some discord.  At the risk of increasing the already prodigious megabyte
count of JRL, I quote the section considered particularly contentious:
~~~~~~~~~~
"In the next decades, Russia will most likely remain an authoritarian
country deeply engulfed in crime and corruption. It has very little chance
of making democratic progress, or establishing law and order. Only an
economic boom, which is very unlikely in view of the low inflow of Western
capital, could radically change the political landscape of the country.
With Putin's policy aimed at freezing the current state of affairs,
Russia's economy will remain weak, even if revenues from the sale of oil
(the country's main export) continue at the current levels.  The country
will not present a direct threat to the world, but will continue
incrementally declining in several key areas, such as the quantity and
quality of the population, morals and order in society, science and
technology, the safety of equipment in nuclear and chemical facilities as
well as the public infrastructure and the territorial and social
cohesiveness of the nation."
~~~~~~~~~~
My disagreement is based on my impressions and experiences of Russia,
gained during the course of my most recent visit to St Petersburg (where
this note is being written from).  It was an embarrassingly long two years
between my last visit and this visit; however, the extended time frame
between visits has allowed for slowly evolving trends to become more
apparent - trends that are more likely to remain obscured when making
regular repeated visits each year as has been my more normal practice.

St Petersburg is brighter and bolder than ever before.  There are more
decorations and lights in the streets, shops have newer store-fronts and
more modern signage and window displays, and there is a generally positive
bustle and feeling of improvement.

Some further micro-economic indicators to support these impressions:

The Mariinsky Theatre is more prosperous than when I last visited it, and
indeed last night saw the premiere of a new opera (Salome) which was not
only lavishly staged, but also unnecessary (they had a perfectly good
version in production already and Salome is surely a minor part of their
total repertoire).  Theatre tickets are now commonly being sold for well
over their published value (a 200 ruble ticket may cost twice that much -
I've never before had to pay over list price when buying tickets through
regular outlets rather than from scalpers) but these prices are not
deterring strong local support.

There are now lines of people queuing outside McDonalds restaurants during
some periods of the day.  While this was a common phenomenon when McD first
opened in Moscow, I've never observed it before in St Petersburg, and
indeed I understand that the lines are no longer common in Moscow.

Interestingly, applying the "Big Mac" theory of world currency values, the
ruble is strongly undervalued at present.  A Big Mac costs 30 rubles
($1.05) - I vaguely recall paying at least twice this price back home in
the US and (if one accepts the slight correlation between Big Mac pricing
and world currency relativities) that would suggest that the ruble is
undervalued rather than overvalued.

The quality of service in Russian shops continues to improve; I've
experienced a significant number of shop assistants who actually
volunteered suggestions and assistance during the course of selecting
various items to purchase.  Sure, some remain inexcusably dreadful, but the
general trend is clearly towards better and better service.

Improved public transportation - a growing number of mini-buses (11-15
seaters) are providing good quality and frequent local transportation, eg,
from a train station to apartment blocks nearby.  At the same time, St
Petersburg's metro continues its remarkable building spree, with a line
extension and four new stations added in the last three years.

I lack sufficient data to support the next comment, but based on the few
interactions that I have had over the last week, my feeling is that the
"infrastructure" of business services in general is improving, with more
and more small entrepeneurs opening "cottage industries" and with a
generally laudable and positive business ethic.

I'll immediately concede that every good thing that can be said about
Russia can be, in turn, countered with at least two bad things, but my
feeling is that the trend is positive and upwards - the good things are new
whereas the bad things are historical.  It is hard to make a scholarly
paper based on ground-zero level personal observations and experiences, but
I believe them to be at least as valid as "reading the tea leaves" of the
current macro-economic situation and political influences.

It is this very vulnerability to criticism which fatally tempts some
Russian observers - and embittered Russian expatriates - to take "cheap
shots" about the reality of Russia's current struggles to bootstrap itself
into some semblance of an orderly modern society (by which I mean throwaway
lines such as "the incompetence of the police has only grown worse".  In my
day, when writing scholarly papers, it was necessary to support opinions
with facts, and a strident claim such as this needs hard cold facts to back
it up and give both it and its writer credibility).  Yes, of course Russia
is awash with more problems every which way than any sane person would ever
wish to confront, but a fair observer will form his opinions and
impressions about the future not so much on the immediate reality and past
history, but on the less clear trends beneath the surface of the immediate
reality.

Maybe I'm just an naieve foreigner, but it seems to me that Russia is
making slow but certain progress, and unlike Professor Shlapentokh, I see
nothing at all to suggest that there will be "incremental declines in
morals and order in society".

*******

#5
Moscow Times
January 10, 2001
Editorial
Slouching Toward a New Default

The 19th-century Spanish-American war left the United States briefly in
possession of Cuba - and Cuba's international debts. But the U.S.
government announced then it would not honor those debts, labeling them
"odious" because they represented money borrowed without the consent of the
Cuban people, with no accountability to them and for the purpose of
repressing their democratic aspirations.

If the Kremlin truly wanted to shrug off its Soviet-era borrowing, it could
cite this Doctrine of Odious Debts.

Or alternatively, it could do what any other self-respecting nation would
do in Russia's circumstances: take advantage of Germany's Weimar
Republic-inspired laws on debt relief. As The Moscow Times has reported
repeatedly, Russia has a strong legal case to win a $12 billion write-off
under German laws that offer debt relief to any nation where the economy
tanks.

Frankly, we would have sympathy with either scenario - or any other
reasoned and forthright effort to pay faceless lenders less and ordinary
Russians more.

The one course of action we have no sympathy for is a Russian government
too lazy to pay its debts, too lazy not to pay, and too lazy to make clear
which it's going to be.

The nations that loaned the Soviet Union billions, and are collectively
known as the Paris Club, are right to insist that Russia pay up. Russia is
able to do so. More importantly, Russia has pledged to do so - and it's
high time for the national government to confront the concept of a
contract. As Putin so pithily put it, "At one point in our conversation,
the [German] chancellor told me that friendship is one thing, but duty is
duty."

Moscow, in turn, would be wise to counter with the Doctrine of Odious Debts
and with legal action in Berlin. If Mikhail Kasyanov and Vladimir Putin
were the CEOs of Russia, their failure to seek German debt relief would be
an unforgivable lapse of fiduciary duty to their shareholders. (Happily for
Kasyanov and Putin, they are failing a passive citizenry, instead of a few
vocal and well-informed shareholders.)

Were the Kremlin to dust off and invoke the Doctrine of Odious Debts, it
would probably eventually lead to across-the-board Third World debt relief
- which would be a plus for the global economy.

Invoking that doctrine would also give the West an incentive to look more
aggressively for the fabled Soviet Communist Party wealth salted away in
Swiss banks and New York real estate. We would think energetic new scrutiny
of this a desirable thing, though perhaps Putin and Kasyanov would not
share our enthusiasm.
 
******

#6
Moscow Times
January 10, 2001
Russia Could Use Some Robber Barons Now
By Paul Klebnikov
Paul Klebnikov, a senior editor at Forbes, is the author of "Godfather of
the Kremlin: Boris Berezovsky and the Looting of Russia." He contributed
this essay to The Moscow Times.

A couple months ago, Forbes magazine published its list of the 400
wealthiest Americans. A Russian journalist came to me with a peculiar
question: The biznesmeny on the list - were they the amerikansky version of
Russia's oligarchs?

I thought about that for a second. Bill Gates? Herb Allen? George Soros?
Rupert Murdoch?

No, I told the Russian journalist, America doesn't have any oligarchs. The
members of the Forbes 400 are rich and powerful, but they don't control the
government. They made their fortunes honestly; with a few exceptions
(fugitive commodities trader Marc Rich comes to mind), they had obeyed the
law. They didn't bribe government officials, and they didn't maintain
private armies of thugs to intimidate business rivals.

I suspect that many of Russia's most successful biznesmeny would disagree.
They see themselves as the same kind of entrepreneurs as the men and women
on the Forbes 400 - they just operate in a rougher neighborhood. Over the
past decade, whenever I asked Russian business tycoons why their market was
characterized by gangsterism and corruption, they almost always argued that
capitalism in the United States had also initially been violent and lawless.

Sometimes the imitations of this imagined America can be quite crude. In
1993, having heard that a dozen bank presidents had been assassinated in
the mob war raging in Moscow, I asked the head of Aeroflot Bank if he was
nervous being a banker. "Why should I be?" he replied. "Bank managers get
killed in the West all the time."

Other times, the reference to America would come from the most educated
people. Anatoly Chubais, the architect of Russian privatization, averred to
me that America's major capitalists had criminal beginnings. What about the
bootleggers and gangsters of the 1920s? The violent fights over land claims
on the frontier? "During the formation of capitalism in the United States,
there was a phenomenal amount of killing, bloodshed and lawlessness,"
Chubais pontificated.

It seemed there was even a Western analogy to the notorious "loans for
shares" auctions of 1995 and 1997, when the oligarchs were allowed to
organize and run the auctions of the largest state-owned oil companies and
mines. "In the West this process is called underwriting," former Deputy
Prime Minister Alfred Kokh, a leading Russian "democrat" and "reformer,"
explained to me.

So if the oligarchs had only engaged in the standard business practices
prevailing in the West, why were they met with vague revulsion in the West?
"Russian biznesmeny have not paid enough attention to their public image,"
Boris Berezovsky told the Council on Foreign Relations in New York
recently. Yes, the Russian biznesmeny certainly do suffer from an image
problem. But the real problem is that they have a completely false image of
capitalism and the West. Where did the Russian oligarchs get such a twisted
idea of America and what had made it prosperous?

As I listened to people like Berezovsky and Chubais talk, I kept getting
the feeling that I had heard the terminology somewhere before. Then it
dawned on me. It was an echo of the works of Marx and Lenin. All of
Russia's big businessmen had received the best Marxist-Leninist education
the Soviet Union had to offer, and this upbringing had left an indelible
imprint on them.

Berezovsky, for instance, loves the term "primary accumulation of capital."
Marx used this term to describe the most primitive stage of capitalism -
the way a medieval baron would loot and pillage his way to his first
fortune, which his heirs would later invest in some textile mill or iron
works. For Berezovsky the term meant the "privatization of the profits" of
Russia's main state-owned enterprises. The way you did this, as
Berezovsky's business career shows, was to co-opt the managers of the
enterprise and then send all the profits to your own sales and financial
companies. In an interview with talk-show host Charlie Rose, Berezovsky
again tripped over his Soviet upbringing. "Your Morgan and Rockefeller
would have acted in the same way," he declared.

The fact that Russia's biznesmeny still think, at least subconsciously, in
Marxist-Leninist terms explains a lot. Marx and Lenin, after all, believed
that all property was theft and that all the great fortunes were built on
violence, fraud and embezzlement from government coffers. They maintained
that the elected governments in the West were merely vehicles for a small
elite of capitalists to enrich themselves at the expense of the population.

Often I tried to disabuse biznesmeny of the notion that the Rockefellers
and Morgans were simply crooks or gangsters who had gone legit. The success
of America's capitalists was due to innovation, hard work and steady
reinvestment in their businesses, I pointed out. They had earned their
money honestly, had paid their taxes, had succeeded in a market that gave
all participants an equal chance. America's prosperity was due in large
part to the strength of the nation's system of values. America was a
society in which honesty, thrift, industriousness, fair play, trust and
decency were still highly valued.

I was met with complete disbelief by my Russian acquaintances. They would
react with a knowing smirk. Honesty and trust? Surely I was smart enough to
understand that any successful endeavor was accompanied by intrigue and
double-cross?

By Marxist-Leninist standards, the new Russian kapitalisty have done
everything right. They can boast of ripping off the masses, of stealing
from the government treasury, of perpetrating gigantic frauds, even of
leaving a few corpses in their wake.

But they are a completely different species from the pioneers of American
capitalism. The robber barons of the 19th century presided over the biggest
economic boom the world had ever seen. Rockefeller created the world's
largest oil industry. Carnegie built the world's largest steel company.
J.P. Morgan mobilized American capital to fuel the country's industrial
boom and made Wall Street a more honest marketplace. Even the notorious Jay
Gould built thousands of miles of railroad track and helped develop myriad
different industries out West. They all created something out of nothing.

Russia's tycoons, by contrast, are almost without exception mediocre
businessmen. They have not created a single noteworthy industrial or
business enterprise. The big state-owned companies they have taken over
with their murky inside deals have almost all languished under their
management. Russia has suffered the biggest catastrophe - economically,
socially and demographically - since the Nazi invasion in 1941. The
oligarchs wouldn't survive long if Russia possessed a real market economy.
Many of them would be in jail if Russia were a true democracy.

*******

#7
AUDIT CHAMBER INSPECTS ALL LARGE PRIVATIZATION PROJECTS IN RUSSIA

     MOSCOW. Jan 9 (Interfax) A Russia's Audit Chamber is inspecting all
the large privatization projects realized in the country to see if there
have been  any breaches  of law  or damage  caused  to  the  state,  the
Chamber's head Sergei Stepashin informed Interfax on Tuesday.
     Stepashin made a reservation, saying "this does not mean a possible
revision of  the results of privatization." But he did not rule out that
if breaches  of law  were  found,  "there  might  be  talk  of  possible
compensation to be paid by the owners."
     Earlier, Stepashin  reported to Russian President Vladimir Putin on
the  results  of  his  Chamber's  audit  of  the  privatization  of  the
Novolipetsk metal works and the plant producing Stinol refrigerators.

******

#8
Russia's oligarchs put business before politics

MOSCOW, Jan 10 (AFP) -
President Vladimir Putin's year-long campaign against Russia's oligarchs
has severely curtailed their power to influence political events but failed
to curb tycoons' appetite for empire-building.

"The oligarchs represent the big firms who have been abusing their position
in society to influence political decision-making," the president declared
late last month. "I do not think they exist any more," he noted.

Russian media have have been avidly reporting the travails of Vladimir
Gusinsky, one of the most prominent business magnates who flourished under
Putin's predecessor Boris Yeltsin and who is currently fighting to avoid
extradition from Spain on embezzlement charges.

Another symbol of the Yeltsin era, Gusinsky's fellow tycoon Boris
Berezovsky, has opted to remain abroad in self-imposed exile rather than
risk arrest by returning to Russia.

A new generation of magnates is emerging under Putin, the most prominent of
which is 34-year-old Roman Abramovich, who alone is also active in the
political field.

The head of the oil group Sibneft last month got elected as governor of
Chukotka, the frozen peninsula in far-eastern Siberia which is as remote
from Moscow as it is possible to be.

But at the same time Abramovich has quietly consolidated his business
empire, acquiring control of the giant aluminium plants Kraz and Braz
before teaming up with Oleg Deripaska, the 33-year-old head of the Sibal
group.

Together, their Russal consortium now controls nearly 80 percent of
aluminium production in Russia and ranks third worldwide in its sector.

Russal has continued expanding, taking over a failing aluminium plant at
Novokuznetsk in western Siberia and moving into auto construction by taking
major shareholdings in GAZ (cars) and PAZ (buses).

Iskander Makhmudov, 37, the so-called "king of copper," a longtime friend
of Deripaska, has similarly been carving out an empire for himself with the
Urals Mining and Metallurgy Company (UGMK).

The business weekly Dengi has singled out Makhmudov as "a new figure among
the Russian oligarchs" about whom "we know little concerning what he
controls in his own name, what he controls indirectly, and what he intends
to take over," though he is already the founder, owner or co-owner of
innumerable companies.

All three metal barons have received backing from MDM-Bank, a
rapidly-expanding private bank headed by Andrei Melnichenko, 28, an
associate of Deripaska and Makhmudov for several years past.

The only other entrepreneurs who have been operating on a similar scale in
recent months, in the view of the daily Vedomosti, are Mikhail Friedman,
36, of the Alfa industrial-financial group, and Viktor Vexelberg, 43, of
the Renova/Sual holding.

Between them the five industrialists "by year's end controlled 95 percent
of Russia's production of aluminium, 18 percent of oil production, 40
percent of copper, 20 percent of steel and 20 percent of auto production,"
Vedomosti said.

Although circumstances may occasionally pit them one against the other, the
new figureheads of Russian big business have clearly opted, in the view of
most observers, to confine their activities to making money and to leave
the corridors of power to the politicians.

******

#9
Date: Wed, 10 Jan 2001
From: Margaret Coker <megc@coxnews.com>
Subject: Russian Museums

David -- I am working on a light feature about the variety of musuems found
in Russia, and the often heroic ways people keep museums working. I'd like
to ask members of our group for some of their favorites, wacky, serious or
otherwise, preferably little-known ones in out of the way places, like the
Tolstoy Museum that I visited during a trip to northern Chechnya last year.
The Chechen curator kept a loaded rifle at the door in case of attacks
while he accompanied me around the joint with a flashlight and a bottle of
vodka, as both the electricity and heating weren't working. Any thoughts
can be sent to my personal email:  megc@coxnews.com

Thanks kindly,
Margaret Coker
Moscow Bureau Chief
Cox Newspapers/The Atlanta Journal Constitution

******

#10
Boston Globe
January 10, 2001
In Russia, arctic blasts prove deadly
By David Filipov

MOSCOW - Given a choice between freezing in their apartments and risking
fire or explosion, most Russians would rather be warm than safe.

That is the inescapable conclusion as a frigid spell, severe even by
Siberian standards, sweeps across Russia, leaving a trail of tragedy and
chaos in its wake.

As temperatures dive below minus 40 across a wide swath of Siberia, rescue
workers have scrambled in the numbing cold to keep up with the string of
blasts and blazes as heating systems break down and beleaguered citizens
flout safety norms in a desperate attempt to stay warm.

In the Kemerovo region in western Siberia, where temperatures reached minus
70 over the weekend, 21 people died and hundreds were hospitalized in more
than 150 fires and other accidents, according to Gennady Kondrashov, a
Kemerovo official. Most of the accidents were caused by gas stoves and
ovens that residents often leave on to stay warm when the power plants that
normally supply centralized heating break down or run out of fuel, he said.

This happens often with Russia's outdated power plants and heating
stations, which suffer from poor maintenance and inadequate fuel supplies.
Monday, power stations in Novosibirsk, Siberia's largest city, broke down,
leaving thousands of people without heat. Russian television reports from
the area said temperatures in apartments were hovering around freezing. A
fire broke out in a bus station, incinerating 28 vehicles, after an engine
that had been running all night to keep the driver warm short-circuited.

When winter temperatures start to drop, only the resourceful stay warm in
Russia, where cold weather kills hundreds of people each year. Wearing
winter clothing indoors or sleeping under a multitude of blankets only
keeps one warm for so long. One popular remedy is stuffing rags into an
empty can, dousing them in vegetable oil, and setting them on fire.

Even more dangerous are the gas-powered water heaters used by millions
across Russia. Moscow is trying to outlaw them, but without luck: Even in
the well-heated capital, everyone wants a hot shower.

''Lots of people have portable gas tanks in their apartments with poor
ventilation,'' said Yury Vidneyev, a spokesman for Moscow's emergency
service. ''And this is a big no-no.''

But none of this is nearly as dangerous as the popular practice of
diverting natural gas from outside gas lines into private apartments.

Authorities believe this trick, often used by residents whose gas has been
shut off because of late payments, was the cause of a blast last Wednesday
in the central Siberian city of Biisk. Three people were killed and eight
were injured.

Rescue workers said the blast resulted when someone in the Vdovin family
used a match to light a gas stove, apparently unaware that a large amount
of gas had already leaked into the apartment from an illicit pipeline in a
neighbor's apartment.

''Most likely, this was a result of violation of safety rules,'' Alexander
Alexandrov, a Biisk civil defense official, told NTV television. ''This is
a banal reason, for which we have on many occasions suffered such disasters.''

Residents often steal copper piping to help divert gas to their homes,
which causes potentially dangerous gas leaks. Such a leak is believed to
have caused a New Year's Eve explosion that blew off the top two floors of
a five-story building in the Siberian city of Novosibirsk, killing at least
five. Rescue workers had to stop their search because of the wall of ice
that formed when firefighters put the blaze out in the minus-30-degree cold.

Residents are not always at fault. Four people died Dec. 29 in Stary Oskol,
in southern Russia, in a natural-gas explosion the local prosecutor blamed
on sloppy repair work on the heating system.

A more deep-rooted problem is that gas pipelines are usually in places
where anyone can get at them, such as thieves who swipe the pipes to resell
them at street markets. And the fundamental problem is that Russia's
centralized heating systems are often ancient and neglected, with lots of
rusted, cracked pipes held together with tape and rags. The systems seem
poorly prepared for the weather that comes every year. In Kemerovo, for
example, authorities say their heating system is not capable of functioning
at temperatures lower than minus 33.

The farther one travels from Moscow, the more difficulty authorities have
trying to provide regional power plants with the fuel necessary to keep the
systems operating. No one can decide who is to blame. Local authorities
point their icy finger at the federal government, and the Kremlin accuses
governors and mayors of poor administration.

The people, meanwhile, just want to be warm. And they will do what they
have to do.

******

#11
US Citizen Abducted in Chechnya By Masked Gunmen, Agency Says
 
Gudermes, Chechnya, Jan. 10 (Bloomberg) -- U.S. citizen Kenny Gluck was
abducted by masked gunmen in Russia's southern republic of Chechnya, where
he was serving as an aid worker, the military said, Interfax news agency
reported.

Gluck, head of mission for Medecins Sans Frontier, an international medical
aid organization, and his bodyguards were ambushed by masked men with guns
as they left the Chechen town of Stariye Atagi, the agency said. A second
U.S. citizen traveling in the convoy, Jonathan Little, managed to escape,
the agency reported. The incident took place Jan. 9. A Medecins San
Frontier official said the organization had lost contact with Gluck.

``The law enforcement organs of the republic and the representatives of the
special services have started active operation on the kidnapping of the
foreigner,'' said General Ivan Babichev, Russia's military commander in
Chechnya, the agency reported. Gluck did not have official permission to be
working in Chechnya, Babichev said.

Kidnapping is common in Chechnya, where two wars since 1994 have destroyed
the republic's economy. Russia says Chechen warlords kidnap foreigners
hoping to receive large ransoms, to pay for arms. Some Chechens allege that
Russia has been behind some of the kidnappings to discredit Chechnya.

Fighting broke out in the North Caucasus last year when Islamic militants
from Chechnya invaded neighboring Dagestan, in Southern Russia. Russian and
Chechen casualty reports indicate that as many as 56,000 civilians,
soldiers and rebels have been killed in the conflict. Both sides regularly
overstate the other side's casualties and understate their own.

Instances of people being enslaved are still relatively common in the North
Caucasus region, especially in remote mountain villages; captured or
kidnapped Russian soldiers are often kept in Chechnya as slaves, as they
were in the 19th century.

Chechen rebels say they are fighting Russian imperialism. Russia says it is
defending its territory against international Islamic terrorists, which it
blames for a series of apartment bombings in Moscow and south Russia that
killed about 300 people.

******

#12
BBC Monitoring
Russian population to keep shrinking, chief census expert says
Text of report by Russia TV on 10 January

[Presenter] Russia is inexorably getting older. In ten years the current
demographic situation may lead to a collapse of the pension system and a
lack of the work force.

How true are these forecasts? We asked the head of the census and
demographic situation department of the State Committee on Statistics,
Irina Zbarskaya, to answer this question. She is the guest of our programme
today.

Good morning, Irina Aleksandrovna.

[Zbarskaya] Good morning.

[Q] Is Russia really in a demographic abyss?

[A] I would say that all experts consider the demographic situation in
Russia to be pretty difficult. But this difficult situation was
predetermined by the history of the 20th century. Looking back at our
demographic history, we can say that no other nation suffered to the same
extent as the population of our country. This predetermined the unfortunate
effects that we registered at the end of the century. That includes the
fact that the number of those who die exceeds the number of those who get
born. This means a reduction in the population of our country, which is
only being compensated by immigration.

[Q] What is your forecast for the demographic situation in Russia in 2010?

[A] According to our forecasts that extend to 2015 - and we are planning to
extend them to 2050 - these unfavourable trends will remain intact. The
population will be getting smaller and smaller. But the pace of reduction
will get slower, which will depend on immigration that can slightly improve
the demographic situation. But so far experts are saying that this trend
will remain intact.

[Q] But doctors hope to change the situation in the next few years. Is this
feasible?

[A] I think, yes. Measures undertaken in the field of health protection
show that we could reach a turning point. As far as the causes of deaths
are concerned, a large part of them are the so-called unnatural causes
[deaths caused by accidents, crime or hostilities]. Speaking about baby
mortality, your previous report [on alternative methods used in maternity
homes] showed that it is possible to change the trend. The baby mortality
in 2000 was a bit lower than 1999. Of course, one cannot make conclusions
based on just one year, but at the same time I think that the situation
could be changed.

[Q] Thank you very much.

******

#13
Segodnya
January 10,2001
[translation from RIA Novosti for personal use only]
"IF IT'S A YEAR OF EXPERIMENTS, 2001 WILL BE A BAD YEAR"
What are the political results of the year 2000? What is
Russia in for in 2001? Segodnya's Avtandil TSULADZE asked
Efficient Policies Foundation director Gleb PAVLOVSKY to answer
these and other questions.
    
     Question: What do you think is the main result of the past
year?
     Answer: It is, above all, the fact that the Moscow
political stock has been exhausted. Yeltsin's Moscow is no
longer the leader in the political process. Moscow has been
de-politicized and a new national political scene is under
construction. New figures may appear or old figures may play
new roles on it.
Unfortunately, our political scene is governed by deficits
today - everything is in short supply, you name it.
    
     Question: Do you think the problem is in the lack of a
concept of the country's development?
     Answer: Putin's problem is a shortage of instruments,
rather than the lack of a concept. A concept is an objective
set for society. The social strata are not yet prepared to
speak a common political tongue, let alone agree on a concept.
And the authorities do not have the new instruments they need.
Yeltsin's instruments no longer work. Power actions may easily
lead us to this or that variant of purges. Of course, there are
certain groups in both the regional and the federal apparats
that are now hamstrung and willing to break loose. They would
support purges.
Putin has to keep them in check. Putin has built a relationship
with the masses. But he cannot let the country's elites be in
their current self-destructive state. De-politicized elites are
capable of doing anything. Putin's team, and I am counting
myself in, are dizzy with success. When nobody can tell you No
and substantiate his stance, one can take to any road. There is
the threat of mistakes and stagnation. There is also Putin's
'gravy train.' Everybody knows he has nothing to fight Putin
with and jumps onto his 'gravy train.'
    
     Question: Stalin said once that weak, redundant people are
apt to fall off the cart at sharp turns in history. Do you
think that once his 'gravy train' is overloaded, Putin might be
tempted to make a 'sharp turn'?
     Answer: Putin is often compared to Stalin. There is
nothing bad about such comparisons. Stalin had similar
opportunities in the latter half of the 1920s. Simply, he
picked another strategy.
He had come to power as the man of common sense, the leader of
economic invigoration and the leader of the masses who were
irritated by the party elites that were at each other's throat.
There is a similarity here. But Stalin had initially had to
tackle the task of obtaining power for himself - here he
differs appreciably from Putin who is the legitimately elected
leader of the nation.
    
     Question: What about the 'gravy train'?
     Answer: It is a big problem, of course. If Putin reduces
the number of seats on the 'gravy train,' he would thus commit
an act of unprovoked political aggression, something that
contradicts the logic of his line. The problem would be tackled
differently.
The old political scene sees new political figures and
instruments rising. Thus, there is the figure of a new Senator
(member of the Russian parliament's upper chamber, the
Federation Council - Ed.). He no longer exercises clandestine
control over the federal or the local assets. He is a gofer.
There appear new power figures, of which the president's
plenipotentiary envoys are the strongest. A new Governor gets
power coupled to an opposition that Putin's center does not let
him crush. Nobody gets an absolute mandate at elections any
more. What we need is a stronger figure of a Russian
businessman. Business people have been far too meek so far.
Unless they become a political force, they would find
themselves in involuntary combinations. Thus, it would be very
dangerous if the plenipotentiary envoys were to do business.
    
     Question: Do you mean the big business does not fit into
the new power system?
     Answer: Our big business people were really scared last
year, are still groggy and uncertain of their actions. They do
not suggest any new ideas or new projects to the authorities.
They simply want to be forgotten about. But all our conflicts
are about property. For as long as property is not guaranteed,
any local conflict, the growth of any industrial group would be
a conflict about property. A conflict about property would
tempt the 'power structures' to interfere in it. This is
dangerous.
Putin cannot control the situation if only because hundreds of
such conflicts are bound to appear every day. My Utopian hope
is that the figure of a dirty, mean oligarch, the essence of
all evil, will one day be replaced by the figure of a Russian
businessman as one of the key players in the new Russia. A
state cannot rest on bureaucrats alone.
    
     Question: Are oligarchs no longer the main enemies of the
state?
     Answer: Last year's brawls formed a temporary bureaucratic
ideology - our internal enemy is the oligarch, a.k.a. the
entrepreneur. The ideology is very handy for the bureaucracy
that can appoint anybody an oligarch every time. Putin has
opposed it on several occasions. But so far, the ball is in the
bureaucracy's field. This is another dark side to the fact that
Putin has no social partner. The medium and big businesses are
not politically represented. If businesses continue to be as
passive, they would provoke a crisis: some groups would fight
others, wars would be fought at factories, and the authorities
would interfere. We cannot imagine what would happen if the
authorities were to interfere.
    
     Question: The former restraining mechanisms are becoming
things of the past. Do you discern the threat of a new surge of
the masses' activity?
     Answer: There has been a system where the media were
controlling the behavior of the masses under Yeltsin.
Incidentally, the hatred of Yeltsin has been another safety
valve, for the focus was on him. This valve has now been
removed.
Today, there can only be local disorders. In Russia's Eastern
parts, for instance, where people do not get enough heating.
Mass disorders can arise not only as a reaction to the central
authorities' actions, but also as a reaction to threats to
property. The trade unions may come into play. The Governors
have oppositions. They are not always constructive. Remember
the Mai movement that employed a technology of provoking mass
disorders.
    
     Question: If the center of gravity is shifting to the
provinces, cannot Moscow lose its political clout?
     Answer: Unless Moscow becomes the country's leader, having
rallied behind Putin on a political platform, the Kremlin would
be the only leader in the process, while Moscow would become
more provincial politically, and the center would no longer be
in Moscow. This scenario may seem fantastic these days, but I
would not exclude it.
    
     Question: How predictable do you think is the political
process in Russia?
     Answer: It is as predictable as the first string of
political players is definite and as each player is predictable.
There is nothing of the kind in this country. There is so far
the only predictable player - Putin himself. There will be no
alternative to Putin this year, which is a factor of
predictability of the process, although it is a negative factor
in some respects. Another factor of predictability is Putin's
clear attention to combining the external parameters with the
internal ones. Putin does not let anybody dictate conditions on
Russia, but he has firmly announced that Russia will be
predictable on the global plane. He does not intend to build a
Russia that everybody would be afraid of.
    
     Question: What do you expect of the new year?
     Answer: The question: What are you, Mr. Putin? will be
finally removed from the agenda this year. There will be a
working system of understanding of Putin's course and his
objectives for the immediate future. It will be a year of
attempts to work the planned way. But if it is a year of
experiments, 2001 will be a bad year.
    
******

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