April 18, 2001 

This Date's Issues:   5208 • 5209 • 5210

Johnson's Russia List
#5209
18 April 2001
davidjohnson@erols.com

[Note from David Johnson:
1. AFP: Homes from home: Russian orphanages boom as children founder.
2. AP: Bush Selects Ambassadors.
3. Novye Izvestia: Mikhail Berger, LONG LIVE THE ONE-PARTY STATE! The Kremlin is making sure that no political opposition will arise.
4. Interfax: Duma deputy speaker says democracy will ruin Russia. (Zhirinovsky)
5. Moscow Times: Alla Startseva, Minister: IMF's Days Of Teaching Finished.
6. Andrei Liakhov: RE: 5208-New Criminal Code.
7. Reuters: Russian weapons firms eye national sales of $6 bln.
8. Washington Post editorial: Consequences for Russia.
9. New York Times editorial: Russia's Endangered Media.
10. Interfax: Russia's Yabloko movement slams Kremlin's "offensive" against free speech.
11. New book: Russian Media Challenge.
12. RFE/RL Security Watch: Victor Yasmann, END NOTE: A TURNING POINT FOR CORPORATE GOVERNANCE IN RUSSIA?
13. Moscow Times: Thomas Rymer, AmCham's Somers Gives Putin 'A' for Efforts. (interview)
14. International Herald Tribune: Bruce A. Elleman, S.C.M.Paine and Robyn Lim, Alignment With Moscow Would Be a Poor Move by Beijing.
15. Moskovsky Komsomolets: Mikhail Rostovsky. DEFENDER OF THE FATHERLAND.
Interview with Yevgeny Primakov of the Fatherland - All Russia faction.
16. RFE/RL: Sophie Lambroschini, Duma Considers Limits On Foreigners' Media Ownership.
17. Reuters: Lenin still holds place in hearts of many Russians.]

*******

#1
Homes from home: Russian orphanages boom as children founder

RYBINSK, Russia, April 18 (AFP) -
Artyom has spent four of the six years of his life in orphanages. His
mother is a chronic alcoholic, his father disappeared soon after his birth.
But overall, by Russian standards, he isn't doing too badly so far.

There was only one orphanage in Rybinsk, a town of 250,000 people 300
kilometres (180 miles) north of Moscow, in 1995. Today there are eight, the
result of a phenomenon known as "social orphanhood" in which childhood has
become a high-risk occupation.

Social orphans are children like Artyom whose parents have abandoned them
or who have been stripped of their parental rights, and whose numbers have
been increasing at the terrifying rate of about 100,000 a year since 1996.

Of the 80 children who share Artyom's orphanage, only eight have been
orphaned in the traditional sense. The others are paying the price for the
collapse of Russia's economy and welfare structures.

Nina Kornyushkina, director of former Kindergarten no. 72, now designated
Children's Home no. 72, believes her charges lead a relatively happy life,
"certainly by comparison with what they had experienced previously."

Artyom and his friends -- he is thick as thieves with two chums he knew
from his time in an infants' home -- will receive three square meals a day
and an education tending towards the practical, and is sure of a roof over
his head until he is at least 16.

"Obviously they have integration problems at first," Kornyushkina said. "We
don't have the resources to cater to individual cases, but we do the best
we can. I've tried to create as much of a family atmosphere as possible."

The children, aged from six to 16, are allotted by age and sex to
dormitories of 10 and lead a largely collective existence.

They are supported by a team of educators whose salaries, averaging around
1,000 rubles (35 dollars) a month, along with the cost of meals, equivalent
to 30 rubles per child per day, are paid by the local authorities.

The home's budget exists "mainly on paper" (February's allocation of funds
is still to come in) and even for basic items such as clothing it is
largely dependent on donations, including some from abroad.

There are officially 340 orphans in Rybinsk, with a further 612 children in
foster homes, which usually means living with relatives such as uncles,
aunts or grandparents, Valentina Naumova, the city's child welfare officer,
said.

There are also what she called the "undetected" orphans, the children who
are living with their parents but are systematically neglected or abused by
them, or who if they are lucky have been unofficially adopted by relatives
or a friend's family.

The factors fuelling the catastrophic breakdown in traditional family ties
are unemployment and alcoholism, though these are closely related, Naumova
noted.

For a fortunate few, adoption provides an escape route. Twelve of
Kornyushkina's children have found new homes in the United States over the
past six years. But only two have done so in their own country.

Despite the generous government inducements for families to adopt orphaned
children -- 2,000 rubles per month, well above the average working wage,
per child -- only half a dozen couples in Rybinsk have come forward, a lack
of response that Naumova is at a loss to explain.

Home no. 72 is the biggest and best-run of Rybinsk's orphanages and its
residents have been given a toe-hold on life, Naumova said.

The downside is that after several years of living in a protected
environment in which everything is provided and many of the most important
decisions are made for them, they may prove incapable of making the
transition to the rigours of the outside world.

Little Artyom is by no means out of the woods yet. According to government
figures, only 10 percent of former orphans succeed in adjusting to social
life once they are out on their own.

Some 40 percent end up in prison and 30 percent opt for the bottle, Naumova
said.

For the rest it is a sorry story of drugs, prostitution and in some cases
suicide.

******

#2
Bush Selects Ambassadors
April 18, 2001
By BARRY SCHWEID

WASHINGTON (AP) - President Bush has selected a career Foreign Service
officer to be ambassador to Moscow and a Hong Kong-based lawyer, businessman
and former Yale classmate as envoy to China.

The president's choice to become ambassador to the Kremlin is Alexander
Vershbow, 48, a Russia specialist who is now U.S. ambassador to NATO. He
would succeed James Collins, who retiring from the Foreign Service after
almost four years as ambassador in Russia.

Clark Randt Jr., who speaks Mandarin Chinese and was posted at the U.S.
Embassy in Beijing in the early 1980s, is to succeed Joseph Prueher, a
retired Navy admiral, as envoy to China.

Prueher played a leading role in negotiations that led to the release of the
American crew of a U.S. surveillance plane that collided with a Chinese jet
fighter and made an emergency landing April 1 on a South China island. He was
praised by the White House for his work and reportedly was interested in
remaining in the post, but a well-placed U.S. official said Tuesday that Bush
intends to name Randt.

Vershbow is fluent in Russian and has headed the Soviet desk at the State
Department and the National Security Council. He first served at the U.S.
Embassy in Moscow 20 years ago.

His pending appointment was disclosed Tuesday to The Associated Press by a
senior U.S. official who requested anonymity.

Vershbow joined the foreign service in 1977 and has been U.S. ambassador to
the North Atlantic Treaty Organization for three years. Before that, he was
President Clinton's special assistant for Russian and European affairs.
Vershbow attended Yale University and Columbia University

Randt, 55, a 1975 graduate of the University of Michigan law school, is a
partner with the law firm Shearman & Sterling, specializing in capital
markets and direct foreign investment in Asia.

He has represented AT&T, Apple, Chrysler and Johnson & Johnson's direct
investment in China.

>From 1982-1984, Randt was first secretary and commercial attache at the
American embassy in Beijing. He also served as former first vice president
and governor of the American Chamber of Commerce in Hong Kong.

He also has experience in Republican politics as a member of the national
steering committee for the successful 1988 presidential campaign of president
Bush's father, George W. Bush.

On the Net: U.S. Embassy, Moscow: http://usembassy.state.gov/moscow/

U.S. Embassy, Beijing: http://www.usembassy-china.org.cn/

******

#3
Novye Izvestia
April 18, 2001
LONG LIVE THE ONE-PARTY STATE!
The Kremlin is making sure that no political opposition will arise
Author: Mikhail Berger, "Segodnya" journalist
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
NTV WASN'T AN OPPOSITION, BUT IT WAS AN IMPORTANT SOURCE OF
INFORMATION WITHOUT SELF-CENSORSHIP. NOW THE KREMLIN IS ELIMINATING THE INDEPENDENT MEDIA, JUST AS IT HAS ELIMINATED OPPOSITION WITHIN PARLIAMENT - EXCEPT FOR YABLOKO. WE ARE ALREADY LIVING IN A QUASI-SOVIET ONE-PARTY STATE.

The takeover of the NTV television network by the state-
controlled Gazprom company sends a very important political message:
we are now living in a quasi-Soviet one-party state.

Of course, NTV wasn't an opposition - a media outlet can't be a
political organization, by definition. However, like other independent
media, NTV presented an uncensored point of view, it offered its
viewers unregulated information about events in Russia. By
"uncensored", I don't mean censorship as such, of course - what I mean
is the self-censorship which has blossomed in the minds of publishers
and editors, those who at some point became fearful of spoiling their
relations with the regime. The state's furious battle against Russia's
largest independent media company is rather a weighty argument for
anyone who seriously attempts to criticize the Kremlin, who isn't
afraid of challenging the official viewpoint on events in Chechnya,
the Kursk disaster, and other particularly sensitive issues. There are
more and more such sensitive issues all the time. Hence, media owners
and journalists are faced with a choice: either they restrain
themselves, in order to stay within the bounds of "managed democracy"
- or they defend their right to do their job, risking being flattened
by the state steamroller. Looking around at the Russian media
landscape, it isn't hard to tell which publishers, broadcasters, and
journalists have chosen which option.

President Putin's team is building a structure in which the
regime will have no competitors in any field - in parliament, in
general politics, or in the media (public opinion). The upper house
used to be a timid but viable opponent of the Kremlin; it has now been
reformed and will never attempt to argue with the president. The
regional leaders have lost their independence. All the parties are
either joining the ranks of the ruling party (Unity), or collaborating
with the regime as the Communists and Liberal Democrats do. The right
is mortally afraid of being called an opposition party; at least, the
idea of needing to take an oppositional stand hasn't found any support
among most leaders of the Union of Right Forces. Only Yabloko - with
its firm but not very numerous support base - is consistently
disagreeing with what the regime is doing. However, this doesn't
change the overall one-party picture.

If there really was political pluralism in Russia, reports of
corruption at the top (as reported by Media-Most outlets) couldn't be
ignored. The General Prosecutor's Office and the courts couldn't be
ordered to go after recalcitrant media companies. The mass rallies in
support of free speech and NTV couldn't be ignored. Russia has no
political force with enough influence which would have an interest in
supporting media sources independent of the regime. Now that the
regime is eliminating such sources of information, there is less and
less chance of a true political opposition arising outside the
framework of the ruling political party (the government club). And
that is precisely what the Kremlin is after.
(Translated by Kirill Frolov)

******

#4
Duma deputy speaker says democracy will ruin Russia
Interfax

Moscow, 17 April: Vladimir Zhirinovskiy, Duma deputy speaker from the Liberal
Democratic Party faction, connects changes in the NTV management with the
restriction of democracy in Russia.

"It's a good thing they are closing down NTV. Other channels should be closed
as well, you are all offspring of the American CIA," he told parliamentarians
and television reporters on Tuesday [17 April].

According to Zhirinovskiy, "we do not need democracy, democracy will ruin the
country". "As soon as we take democracy away, everything will be quiet and
peaceful," he said.

The Liberal Democratic Party leader advised Yabloko leader Grigoriy
Yavlinskiy and Union of Right Forces leaders Boris Nemtsov and Irina
Khakamada to leave Russia and live abroad.

There should be "a centrist party" in the country, which should be the
largest party in the country. The Liberal Democratic Party can be the
right-wing party, and the left-wing party can be a social democratic party
formed on the basis of the Communist Party. Zhirinovskiy called the name of
the Communist Party "idiotic" and advised Communist leader Gennadiy Zyuganov
to change it.

Aleksey Mitrofanov, another representative of the Liberal Democratic Party
faction and a Duma deputy, believes that now that Yevgeniy Kiselev's team has
joined TV-6 the channel will "turn opposition" and will "toughly" oppose the
Kremlin. Thus, a clear opposition to the government will be formed and all
other political forces "will have to position themselves".

Speaking about the formation of a coordination council of the Unity and
Fatherland factions, and also the groups People's Deputy and Regions of
Russia in the State Duma, Mitrofanov said that "these political forces may
form some kind of a political bureau". The deputy believes that in the future
this political bureau, already at a party level, will be able to "take away
some of the president's powers".

After this political bureau functions successfully for half a year, the
president's power may be weakened by the increasing political weight of the
figures included in the coalition, the deputy forecasts. This is why it is
very important who will head this coalition, Mitrofanov said. The Liberal
Democratic Party is not going to join any coalition, he said.

******

#5
Moscow Times
April 18, 2001
Minister: IMF's Days Of Teaching Finished
By Alla Startseva
Staff Writer

Russia can't learn anything more from the International Monetary Fund and,
in fact, the IMF should be learning from Russia, Deputy Economic
Development and Trade Minister Arkady Dvorkovich said Tuesday.

Dvorkovich said that Russia no longer needs IMF money and "politics" is the
only reason the government needs the IMF's approval for its economic
program. He said the IMF was "getting slow" in learning from the country's
current economic program.

Dvorkovich was speaking alongside current IMF adviser and former IMF chief
envoy to Russia Martin Gilman at a Finance Ministry seminar.

Gilman said he was surprised last month when the government turned down an
IMF loan offer and didn't announce "almost a victory after almost 10 years
of IMF guidance."

Dvorkovich dismissed predictions that Russia will need IMF money when its
external debt repayment schedule balloons to $18 billion in 2003, saying a
major restructuring was unlikely because "difficulties connected with
restructuring exceed the benefits of that restructuring."

"If before 1998 Russia's main motivation in negotiating with the IMF was
money, this year money stopped being the motivation — it isn't needed
anymore. … The conclusion is that after 10 years the evolution has
happened," Dvorkovich said.

Russia owes some $11 billion to the IMF, 1 1/2 times the fund's "country
quota." According to the terms of the IMF loans, any country with debts
exceeding this quota has to get the fund's approval for its economic policy
at least every six months, unless it has a formal agreement to the contrary.

Prime Minister Mikhail Kasyanov said Saturday that by the end of the year
debt to the IMF would be under the quota and "Russia will be working within
the IMF like a normal country, like countries of the G-8," Prime-Tass
reported.

Dvorkovich criticized the IMF's track record in Russia, especially its
insistence on a one-size-fits-all economic program that ignores the "real
situation in the country."

A prime example of this flawed approach, he said, was the fund's "stubborn"
insistence that increasing tax collection be a top priority of the state —
even after the 1998 financial meltdown, when there was a lot more to worry
about than taxes.

Between 1992 and last year, the government had no idea about its economic
program, which was drafted very spontaneously, Dvorkovich said. "But, at
least, for the first time, the government has written its economic program
by itself," he said. "Russia is not defending itself anymore. It learned
and now knows its position well."

The criticism at the seminar, however, went both ways.

Gilman, who left his IMF post in February to teach at the Moscow
University's Higher School of Economics and write a book about IMF-Russia
negotiations over the last decade, had plenty to say about Russia's
performance as well. "Each country has their own method of formulating its
economic program and discussing it with the IMF. But Russia's method is
rather unusual," Gilman said.

Unusual, he said, because Russia used to send either a deputy prime
minister or a special representative to negotiate with the IMF, while most
countries send their finance minister, central banker or head of state.

To its credit, Russia recently changed that by naming Finance Minister
Alexei Kudrin as head of negotiations with the IMF, Gilman said.

Despite this, however, the IMF "continues to be disappointed with the lack
of completeness in Russia's economic policy and the lack of resoluteness in
the government," he said. "The difference between words on paper and words
spoken and what Russian authorities actually do leads to misunderstandings."

One of the reasons for this, he said, is that the Russian government hasn't
fully emerged from the Soviet Union's shadow. An example of this was last
year's high world oil prices, which put Russia in the very uncommon
situation of having more money than it knew what to do with, Gilman said.

******

#6
From: "Andrei Liakhov" <liakhova@nortonrose.com>
Subject: RE: 5208-New Criminal Code
Date: Wed, 18 Apr 2001

Please correct the mistake - the Article in Novaya Gazeta is about Draft
Criminal procedure Code and not Criminal Code. The difference is that CPC is
dealing with crime investigation and prosecution and CC defines what crime
is. It is a very important decision!!

******

#7
Russian weapons firms eye national sales of $6 bln
By Karl Emerick Hanuska

MOSCOW, April 17 (Reuters) - Russia could boost its annual arms sales by
nearly one-fourth, but only if it sells to markets opposed by the United
States, the head of a top defence holding firm said on Tuesday.

Boris Kuzyk, the head of New Programmes and Concepts (NPK), told a news
conference that defence firms could increase exports to about $6 billion if
they clawed their way back into markets lost after the collapse of the Soviet
Union.

"This is just one sixth of the weapons market and well within Russia's
reach...Russia once gave up part of what it held in this market. It is time
to take that position back," he said.

President Vladimir Putin told a government commission on military trade last
month that Russia exported $3.68 billion in weapons last year, with revenues
to federal coffers totalling $2.84 billion.

Kuzyk said Russia could increase sales to $4.2 to $4.5 billion over the
coming years by stepping up partnerships with allies such as China, India,
Iran, Egypt, Algeria and Syria.

"Specifically, these countries should become the foundation on which Russia
builds contacts, with potential partners in this sphere in southeast Asia,
the near east and Africa," Kuzyk said.

Washington has criticised the export of Russian arms and technology to what
it calls "rogue states," and has said plans to create a U.S. national missile
defence system stem directly from Moscow's willingness to "sell anything to
anyone for money."

Kuzyk seemed unconcerned by such criticism.

"One still has to defend one's own interests," he said, adding that potential
partners in Europe were Germany, France and Great Britain.

"Western Europe is feeling an increasing need to oppose U.S. expansion in
(the arms industry) by setting up firms producing its own high-tech types of
weapons," he said.

Kuzyk added that developing the arms industry was key to reducing the
economy's reliance on Russian commodity exports.

NPK, which holds a controlling stake in 15 defence firms, was set up in 1998
and is this year investing $60-90 million in projects. Last June, Kuzyk said
NPK's export contract portfolio was around $960 million.

Russia sells just five percent of the world's arms, compared with 50 percent
sold by the United States.

*******

#8
Washington Post
April 18, 2001
Editorial
Consequences for Russia

LAST THURSDAY Secretary of State Colin Powell told Russian Foreign Minister
Igor Ivanov of the Bush administration's support for preserving the freedom
of Russia's NTV television network, reiterating a concern that the
administration had repeatedly voiced publicly. On Sunday, security forces
evicted NTV's journalistic team from the network's studios, forcibly
installing new management selected by the state-controlled gas company. On
Monday, the same government toadies shut down the newspaper Sevodnya, another
beacon of the post-Soviet free press controlled by NTV's holding company,
Media-Most. Yesterday, the apparatchiks ousted the editorial team at Itogi, a
Media-Most weekly news magazine published in cooperation with Newsweek (which
is owned by The Washington Post Co.).

The sum of these actions is clear: President Vladimir Putin has flouted the
appeals of the United States and other Western governments that he preserve
Russia's free media. Instead, piece by piece, his cronies have crushed the
most prestigious television, newspaper and magazine organizations in the
country. The claims of Mr. Putin's surrogates that they are motivated by
business concerns, never very plausible, have been shredded in the last week:
The first action of the new managers has been to dismiss the independent
journalists who enraged Mr. Putin with critical reports on the war in
Chechnya, on corruption and on reconstruction of the secret police apparatus.
One group of journalists, led by television anchor Yevgeny Kiselyov, tried to
move to a cable television network; on Monday, government tax police, led by
a recent Putin appointee, brought charges against that network's directors.

The Bush administration and the governments of the European Union, Canada and
Japan now face an important challenge: to ensure that Mr. Putin suffers some
consequence from his grossly anti-democratic behavior. To avoid action after
the many warnings to Moscow would be a serious blow to Western credibility.
At the same time, the sanction must be suited to the offense; it would make
little sense, for example, for the administration to curtail aid programs to
Russia that support non-government groups or are aimed at dismantling nuclear
warheads and preventing the leakage of nuclear materials. The nuclear
cooperation programs directly support U.S. security interests, and Mr.
Putin's autocratic behavior can best be countered by increasing, not
curtailing, U.S. aid to human rights groups, small independent newspapers and
other organizations struggling to keep an independent civil society alive.

White House officials say they are seeking to coordinate a response to Mr.
Putin with other governments, which is good. The most effective message to
Mr. Putin can be delivered not by the Bush administration alone, but by the
Western-led international organizations his government aspires to be part of.
Even as he moves to centralize power and stifle opposition at home, Mr. Putin
imagines leading Russia back into a position of world influence, and revels
in his membership in the G-7 group of industrialized nations and the Council
of Europe. Russia's place in those prestigious but largely ceremonial
organizations is ripe for reconsideration.

The United States supported Russia's addition to the club of seven rich
democracies even though it was neither rich nor fully democratic; the idea
was that inclusion in annual summit meetings would encourage Moscow to
cooperate and eventually integrate with the democratic West. But Russia has
ruptured that premise; and there should be no place at a summit of Western
democracies, or any European political council, for a government that has
suppressed freedom of speech, built up a secret police apparatus and waged a
brutal campaign of repression like that in Chechnya.

Mr. Putin has been unwilling take the West seriously when it has raised these
issues; if he is disinvited from the next G-7 summit meeting, he just might.

*******

#9
New York Times
April 18, 2001
Editorial
Russia's Endangered Media

Russia's progress toward democracy during the past decade has been uneven.
But one crucial factor driving it toward a freer society has been the rise of
truly independent newspapers, magazines and television stations. Now, one by
one, these voices are being stilled. Last weekend, new management with
economic ties to the government took over the country's only autonomous
national television network, NTV. This week the Moscow daily newspaper
Sevodnya was shut down and the staff of the political weekly Itogi, a joint
venture with Newsweek, was dismissed.

If this trend is not quickly reversed, President Vladimir Putin could regain
some of the power his Soviet-era predecessors had to suppress or manipulate
unfavorable news.

NTV, Sevodnya and Itogi were all part of the media empire built by Vladimir
Gusinsky, a flamboyant entrepreneur. Although Mr. Gusinsky was himself an
opportunist, all three of his enterprises were known for high standards of
journalistic professionalism and for their willingness to challenge the Putin
government. That combativeness appears to have made Mr. Gusinsky a target for
government prosecutors. He is now in Spain fighting charges of embezzlement.
This month, parts of his indebted media empire fell victim to hostile
takeovers engineered by the government-dominated energy monopoly, Gazprom,
which is now moving quickly to rein in Mr. Gusinsky's most independent
journalists.

President Putin has disingenuously tried to portray the takeover as a mere
business dispute. But with forces friendly to the Kremlin now running NTV and
Itogi, and Sevodnya shut down, he is the obvious beneficiary. That is
particularly worrisome because Mr. Putin's commitment to democratic freedoms
appears a lot less firm than that of his predecessor, Boris Yeltsin. As Mr.
Putin steadily tightens his grip on power, it is important that Russia's
citizens be able to hold him accountable through unfiltered sources of
information.

For the past few days, NTV's former journalists have been trying to get their
newscasts out through a smaller cable station, and have sought financial
backers to help them reach a larger audience. But the government is now
pressuring the cable station's owners with charges of tax evasion. Mr. Putin
needs to demonstrate that independent television stations, newspapers and
magazines can still operate freely in Russia without government harassment.

*******

#10
Russia's Yabloko movement slams Kremlin's "offensive" against free speech
Interfax

Moscow, 18 April: The liberal Yabloko movement is alarmed by the current
state of freedom of speech in Russia.

In a statement issued in Moscow on Wednesday, Yabloko's Central Council
Bureau describes "the forceful seizure of the NTV channel, the closure of the
Segodnya newspaper and the dismissal of the entire staff of the Itogi weekly
magazine as the beginning of a large-scale offensive against freedom of
speech in Russia".

The statement places the responsibility for the situation on the presidential
administration. "Under the cover of arbitrarily interpreted judicial
procedures, the Kremlin administration is trying to destroy the very
possibility of free public access to information," which "directly
contradicts the constitution", it says.

In Yabloko's opinion, "the financial interests of Gazprom are only a pretext
for fulfilling a political order".

"A strike has been delivered primarily against the media outlets and
journalists who did not accept the rules of the game of controlled democracy,
who dared to criticize certain moves and policies of the country's
leaderships as a whole," the statement says.

"The only way to restore true, and not decorative, lawfulness in the present
situation is an objective discussion of the question of the lawfulness of
steps to destroy NTV in the Supreme Court," it says.

Yabloko expressed solidarity with all journalists "experiencing crude
pressure from the authorities".

"We will be using all legal opportunities to defend the right of citizens to
objective information, to protect journalists and to insist on the revival of
the lawful right to professional activities," the statement says.

"As of this moment, efforts to ensure freedom of speech and free access of
the Russian public to information, as well as the protection of fundamental
constitutional rights and liberties, should become the main cause of all
democratic forces in Russia," Yabloko feels.

*******

#11
Date: Tue, 17 Apr 2001
From: "Owen V. Johnson" <johnsono@indiana.edu>
Subject: New book

I've discovered that the Institute just changed its webpage address.
Further, the new one isn't completely set up yet. So the contact should
probably be listed as kikimora-publications@helsinki.fi

Owen

The Aleksanteri Institute (the Finnish Centre for Russian and East European
Studies, founded in 1996, has published Russian Media Challenge, edited by
Kaarle Nordenstreng, Elena Vartanova and Yassen Zassoursky. The volume
includes articles on current media structures and characteristics by the
dean and four scholars of different generations from the Faculty of
Journalism at Moscow State (including Zassoursky's grandson), an essay on
Finnish perspectives, a speech on freedom of information given by Gorbachev
last fall, an appendix with statistics for newspapers, and a full
translation of both the 1991 mass media law of the Russian Federation and
the 2000 doctrine on information security.

http://www.halvi.helsinki.fi/aleksanteri/kikomora.html

Prof. Owen V. Johnson, School of Journalism
& Adj. Prof., Dept. of History
Ernie Pyle Hall
Indiana University
Bloomington, Indiana 47405
U.S.A.
812 855-9247
fax 812 855-0901
email: johnsono@indiana.edu

********

#12
RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
RFE/RL Security Watch
Vol. 2, No. 15, 16 March 2001

END NOTE: A TURNING POINT FOR CORPORATE GOVERNANCE IN RUSSIA?
By Victor Yasmann

The long-running struggle over the ownership of NTV
highlights a more fundamental and widespread problem in
Russia: the emergence of a crisis of corporate governance that
has arisen because of the lack of generally-accepted legal
arrangements for owners and minority stockholders. Indeed, if
Russia had the kind of laws that other modern states do, the
entire Gusinsky-Gazprom saga would almost certainly not have
taken place.

In research published in the April 2001 political-
economical supplement to "Nezavisimaya gazeta," Nikolai
Sofronov and Leonid Volkov of the government's financial
academy argue that without the creation of corporate
governance and the complex legislation needed to support it,
Russian capitalism will face either endless conflicts or
complete stalemate and that will make its future development
virtually impossible.

Unlike most advanced industrial societies, shareholders
in Russian enterprises have no effective way to protect their
ownership rights. Because of the botched handling of
privatization, Sofronov and Volkov argue, the right of
ownership itself has never been clearly defined legally. In
addition, managers of companies have virtually unlimited
opportunities to defend themselves against outsiders,
including transforming a public shareholding company into a
closed one, the mandatory transfer of ownership shares into
the initial capital fund, and so on.

Moreover, Russia lacks institutional constraints such as
a liquid stock market and accountability legislation, and in
Russia, there is no linkage between the income of managers and
the performance of the enterprises they manage. Most Russian
managers, Sofronov and Volkov point out, now have incomes
roughly equal to their Western counterparts even though the
average Russian's income is about 20 times lower. They cite as
an example the results of a recent probe in Tula Oblast where
investigators discovered that in that oblast alone at least 46
local managers have incomes above $1 million a year, a figure
that is 1,000 times larger than the per capita income of the
oblast's population.

Managers also can use the threat of firing to restrain
any protests from a group that is often the largest
shareholder, the workers who were given shares during
privatization. And with regard to the second largest
shareholder in many firms -- the state -- managers have worked
to make the state's representatives on their boards dependent
on management for their salaries, thus eliminating any
possibility that government representatives will actually
exercise supervision.

And as a result, Sofronov and Volkov argue, Russian firms
seldom can project the stability and transparency Western
investors and even Russian investors expect. And that in turn
means that the failure to develop modern standards and
mechanisms of corporate governance will not only preclude any
significant investment in most firms but lead to even more
capital flight until the problem is addressed.

*******

#13
Moscow Times
April 18, 2001
AmCham's Somers Gives Putin 'A' for Efforts
By Thomas Rymer
Staff Writer

ST. PETERSBURG — When Andrew Somers took over as president of the American
Chamber of Commerce in Russia last year, he brought with him extensive
experience in dealing with business issues in Russia. Having already worked
as chief international lawyer and special adviser on Russia for American
Express, and then as a consultant to Russian firms looking to attract
foreign investment, he was already well acquainted with the difficulties
faced by foreign and Russian companies.

Q: Prior to accepting your present position with AmCham in Russia, you ran a
consulting firm in Moscow that worked with Russian firms looking to attract
foreign investment. How has that experience affected your approach to your
work now?

A: It taught me that issues of transparency and the conversion to
international accounting standards are major obstacles to funding for small
and medium-sized businesses.

That's for two reasons. First of all, they don't have the resources in
personnel or money to transform their accounting systems in a manner
consistent with the timing of their financing needs. This is also an issue
with major companies, but at least they have the resources — if they have
the will — to do it.

Secondly, I think there's a lack of understanding by these companies as to
exactly why they should become more transparent in their financial
accounting and why they should transform their books, or at least create a
second set of books to comply with international accounting standards.

I think part of that has to do with Russian tradition, concern about the
tax authorities and various methods that companies use to reduce their
exposure to Russian tax authorities.

Q: Speaking of Russian authorities, President Vladimir Putin recently
celebrated his first year in office. How would you evaluate the performance
of his administration so far?

A: Given the enormous obstacles that the Russian government has to overcome in
terms of attracting investment and regularizing the business climate, as
well as the political challenges any new president faces, I would give him
an A.

Q: Why?

A: First, he's brought back political stability, which is a key to attracting
potential investment as well as to normalizing business conditions.

Second, he has shown a very strong commitment to economic restructuring,
ranging from the implementation of Tax Code Part II to a number of efforts
in the legislature, in the State Duma, to amend key laws that are
inhibiting development.

And I would add his very firm commitment to having Russia accede to the
World Trade Organization as soon as practically possible.

Q: Looking forward there are a couple of initiatives afoot dealing with
corporate governance issues in Russia. What do we know of their content?

A: Russia's Federal Securities Commission intends to release the first draft
of a multiple-chapter code in the next couple of months, so we don't
actually have the substance of the code yet, but I do agree with the tactics.

The draft will be subject to comments, which will have a twofold purpose.
It will gain further insights, but it will also begin familiarizing Russian
companies that will be subject to this code with its content before it
becomes effective.

The Duma is discussing the issue of corporate governance and the
appropriate legislation that is required. I haven't seen a draft document
yet — I don't know if one is available — but there is vigorous debate in
the Duma over issues that affect corporate governance, such as minority
shareholder rights, independent directors, the transparency of accounting
records, the right of shareholders to have access to material information
and the right of shareholders to vote on issues of major importance to the
company — these are all issues being discussed in the Duma by the Federal
Commission for the Securities Market. I think they're covering the issues
pretty well.

One of the special issues for Russia in this area arises from the fact that
the government has significant ownership in a number of large enterprises
and that the government, regardless of whatever financial interests it has,
also often has certain social responsibilities tied to enterprises where it
has significant ownership. So, the question of determining the right
approach to corporate governance may be somewhat difficult in those
companies where the government is a significant shareholder, as it perhaps
has different interests than solely financial investors.

Q: How sensitive is U.S. support to the climate of U.S.-Russian relations,
especially given the new presidential administration in the United States
and incidents such as recent charges of spying and expulsion of diplomats?

A: First, to the extent that funding is cut for the agencies that sponsor
business support programs, that will have a negative effect. I know there
have been proposals to cut funding in some of these areas that aren't
directed directly at Russia, but are part of an overall budgetary analysis.

In terms of the political situation, I believe the U.S. government is still
formulating its Russia policy. I don't think they have one yet. They
certainly have not articulated one. I would hope that the final
articulation of the policy would recognize that Russia has a market, that
American companies here are doing well, for the most part, and that they
are working not only to make money, but also to help develop the Russian
business environment in a way that's consistent with attracting further
investment. Given the business background of many of the high-level Cabinet
appointments made by President George W. Bush and their pragmatic approach
to problems, I would say that once a period of adjustment passes relations
between the two countries would normalize and that business will not be
significantly affected.

I also think that, notwithstanding political disputes and differences,
business will continue to function and that the programs I spoke of before
will continue to receive support from the U.S. government. I think that the
government recognizes that these small and medium-sized businesses are
vital to economic growth and that from a political- or defense-oriented
perspective, these companies are probably the least likely to engender a
negative attitude from the U.S. government. I think you might even find
more emphasis on these support programs.

*******

#14
International Herald Tribune
April 18, 2001
Alignment With Moscow Would Be a Poor Move by Beijing
Bruce A. Elleman, S.C.M.Paine and Robyn Lim
Mr. Elleman and Mr. Paine are Asia specialists at the at the U.S. Naval War
College. Ms. Lim is professor of international politics at Nanzan University
in Nagoya, Japan. They contributed this comment to the International Herald
Tribune.

NEWPORT, Rhode Island  Russia has played an indirect role in the EP-3E
reconnaissance plane incident.

In the past decade Russia has sold China advanced military equipment,
including Sovremenny missile-armed destroyers and Kilo-class submarines, that
could be used in the South China Sea and against Taiwan. Such sales promote
Russia's long-standing interest to deflect China's attention from their long
and contentious shared border to trouble elsewhere.

A quick glance at the Moscow press shows how eagerly many Russians have
supported China over the EP-3E incident. Striking an anti-hegemonistic pose,
they have accused the United States of trying to bully China. Offers of
closer bilateral relations have appeared with increasing frequency.

Russian columnists have advocated dismantling the U.S. plane and returning it
in a box, and even suggested that the secret data could best be analyzed
jointly by teams of Russian and Russian-trained Chinese computer experts. The
implication, of course, is that China and Russia would share the intelligence
bonanza.

Moscow and Beijing have been negotiating a new alliance for some time. They
have set the signing of this friendship treaty for July. Should the
Chinese-U.S. negotiations on the fate of the EP-3E stall, there will be those
in the Chinese government and military who would support forging an even
deeper alliance with Russia.

The foundations of this alliance might include opposing U.S. political
influence, hindering U.S. attempts to build missile defense systems and
cooperating to erode U.S. military power throughout the Far East.

The Chinese would do well to ponder traditional Russian geopolitical
strategies and the underlying continuities in Russian-Chinese relations.
Since the days of the czars, Russia has sought to create a weak, dependent
and divided China. The czars and the Soviets removed a landmass greater than
the U.S. east of the Mississippi from the Chinese sphere of influence.

Stalin was more than happy to drag out the Korean War so that Chinese
recruits could become American cannon fodder. From the Russian viewpoint, the
current Chinese-U.S. incident ties down two rivals.

Russia's nightmare has always been a strong China. The recent economic,
political and geographical implosion of Russia has given such fears
particular urgency. Now the nightmare includes an economically dynamic China
with close ties to the United States.

One solution is to stir up tensions between Beijing and Washington. An
attempt to take Taiwan by force would wreck China's trade with the United
States. So could growing tensions over the South China Sea. China should
remember its own history when it starts talks with the United States this
Wednesday on the fate of the EP-3E that is still stranded on China's Hainan
Island where it made an emergency landing. The 1950 Chinese-Soviet alliance
worked mainly to Moscow's advantage, with Soviet leaders claiming sole
leadership over the Communist bloc.

Should Beijing decide to repeat this failed strategy of alignment with
Moscow, its international trade would decline, its entry into the World Trade
Organization and bid for the 2008 Olympics might fail, and regional tensions
would increase. Washington would deepen its security commitment to Japan,
South Korea and Taiwan.

Today Russia is a frustrated former great power. It lacks the wealth and
authority to play a leading role in international politics. But it still
possesses the diplomatic skill to play the role of spoiler.

China should be careful, lest in its desire to prove to the United States
that it cannot be bossed around it destroy the economic base on which its
political stability and military power depend.

*******

#15
Moskovsky Komsomolets
April 18, 2001
DEFENDER OF THE FATHERLAND
Interview with Yevgeny Primakov of the Fatherland - All Russia faction
Author: Mikhail Rostovsky
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
YEVGENY PRIMAKOV WILL REMAIN THE LEADER OF THE FATHERLAND - ALL
RUSSIA DUMA FACTION. HE SEES IT AS MORE OF A LEFT-CENTRIST GROUP THAN RIGHT-CENTRIST. HE APPROVES OF HAVING A CENTRIST COALITION IN THE DUMA, BUT THINKS A MERGER BETWEEN FATHERLAND AND UNITY MAY NOT HAVE BEEN THE BEST WAY OF GOING ABOUT IT.

Many have considered the merger of Unity and Fatherland to be a
direct blow against Yevgeny Primakov. According to Primakov, a former
prime minister, although he is the leader of the Fatherland - All
Russia Duma faction, he only learned of the proposed merger at the
last stage of the negotiations. However, it is now clear that things
are more complex than they may seem at first.

Question: Mr. Primakov, this decision - so important for
Fatherland - All Russia - was made without consulting you, the faction
leader. Many think that if you now remain the leader of Fatherland -
All Russia, or become the leader of the new structure, you risk
becoming a figurehead... What do you think your political future will
be?

Yevgeny Primakov: No, I did not participate in the negotiations.
Why not? Moscow Mayor Yuri Luzhkov has already provided an
explanation, and I agree with him. I'm not a member of Fatherland, so
I cannot decide the fate of that party. I do not like false modesty -
I am not a commander... What is my political future? I will remain the
leader of the Fatherland - All Russia Duma faction. This is the
opinion of the members of the faction, and Yuri Luzhkov, and the
president.

Question: Still, it seems to me that Fatherland - All Russia is
now in the position of someone who had been married off without being
informed about it.

Primakov: First, let's start with the fact that a centrist party
is necessary in Russia. Judging by the president's policies, Putin
prefers the centrist position. Such a party would be a very good
supporter of reforms in Russia, for the benefit of our society.
Unfortunately, the meaning of "ruling party" has been perverted in
Russia. The ruling party is meant to be the party that forms the
government; it is not a party that is founded by the government and
rushes to fulfil every order from the top. Yes, such a party is a
great support for the president. But this does not mean that it should
automatically support everything the government does. According to our
experience, some bills presented to the Duma by the Cabinet and the
presidential administration leave much to be desired. Do you think we
should shut our eyes to that?

I believe that the best way to establish a centrist party is not
by merging the existing Unity and Fatherland, but by these parties
disbanding themselves, and allowing a new party to be founded on their
basis.

Question: By the way, who would lead such a party?

Primakov: Only Yuri Luzhkov.

Question: Do you think this is fair? Unity has many more Duma
members than Fatherland...

Primakov: The number of the Duma members plays no decisive role
here. I can see no other major politicians, except for Luzhkov, who
could lead the political "center"...

Question: What will the merger of these two political forces
really mean?

Primakov: I should start by mentioning that the Fatherland
movement and the Fatherland - All Russia Duma faction are two
different things. Fatherland - All Russia includes not only members of
the Fatherland movement, but also members of the Agrarian party, labor
unions, women's movements, and independent deputies. And merging the
two parties cannot automatically merge different Duma factions. By the
way, Duma factions cannot merge at all - it is legally impossible.
Duma factions are established based on the number of votes they get.
But we propose establishing a coordination council, which would
include members of the centrist deputy factions, Russian Regions and
People's Deputy. This council would coordinate the activities of the
deputy groups. If we have a major disagreement, we should vote in
accordance with the interests of our voters; this may involve voting
with the left or the right. So pre-determined voting is out of the
question.

Question: You said that the programs of the two parties do not
contradict each other. Meanwhile, according to Unity leader Sergei
Shoigu, a right-centrist bloc is to be established. Do you approve of
this?

Primakov: Speaking on behalf of the Fatherland - All Russia
faction, I can say that we do not intend to reject the ideas of a
socially-oriented economy, a social state, and the need for state
intervention in order to prevent the domination of tycoons, as well as
the idea of protecting the rights and interests of low income earners.
All this does not conform with the definition of right-centrism. It is
more like left-centrism.

Question: Is that true that far from all members of the
Fatherland - All Russia faction agreed with the "marriage" of
Fatherland and Unity? Do you think a "mutiny" could change anything?

Primakov: I can't see any mutiny at all. At the faction meeting,
its members supported consolidation of the centrist forces. At the
same time, the independence of the Fatherland - All Russia faction was
also unanimously supported. The only difference was that the minority
supported adding this to the faction statement. The majority of
faction members considered it would better to announce it at a press
conference.

Question: They say that in agreeing to merge with Unity,
Fatherland has betrayed some part of its voters, since during the
elections the party presented itself as an opposition to the
president. And now it is merging with the pro-presidential party...

Primakov: Yes, indeed, we presented ourselves as an opposition -
but that was under a different president. Now the situation has
changed. I believe that the direction proclaimed by President Putin is
mostly in line with the interests of our society. Why should I oppose
it?
Question: They are two theories about the role of President Putin
in the merger of the two parties. According to the first, he
personally convinced you to support this initiative; according to the
second, the move was unexpected for Putin as well. What is the truth?

Primakov: Such major changes cannot be unexpected for the
president. But he didn't talk me into it either.

Question: Still, in late 1999 there were so many oppositionists
in Russia. Now there are fewer of them each month. Could it be that
soon only the Communist Party and some NTV journalists will be the
opposition?

Primakov: That is very simplistic. The real situation is much
more complicated. The right wing still talks about being in opposition
to the Kremlin. At the same time, the left wing supports the president
on a number of issues. Moreover, until recently, the forces loyal to
the president were divided in two: one of them unconditionally
supported all initiatives from the top, while the other - just like
the Fatherland - All Russia faction - reserved the right to criticize
the government's mistakes.

Question: According to some analysts, merging with Unity is
Fatherland's only chance of making it into the Duma at the next
elections. And this was the main reason for such a move. Could you
comment on this?

Primakov: I don't think that was the main reason for Fatherland
as a whole, though perhaps it was for some members.

Question: According to Unity, the Kremlin has not given up on the
idea of disbanding the Duma early. Do you think the merger of the two
parties is the first step in this direction?

Primakov: No, I don't think so. Neither the public nor the
president want early elections: this would only destabilize the
situation.

Question: They say that after Unity and Fatherland merge, the
federal law-enforcement bodies will give up on their cases against the
Moscow government. What do you think of this?

Primakov: I think that's just too far-fetched.

(Translated by Arina Yevtikhova)

******

#16
Russia: Duma Considers Limits On Foreigners' Media Ownership
By Sophie Lambroschini

The bitter feud around NTV and the idea of attracting foreign investors as a
potential safeguard against state control have spurred interest among
lawmakers to regulate foreigners' ownership of Russian media companies.
RFE/RL's Moscow correspondent Sophie Lambroschini looks at some of the ideas
being floated in the Russian State Duma.

Moscow, 17 April 2001 (RFE/RL) -- Foreign investment in Russian media has
become a sensitive issue since the head of NTV television, Vladimir Gusinsky,
earlier this year appealed to U.S. businessman Ted Turner to acquire shares
in NTV as a way of barring partly state-owned Gazprom from gaining control of
the channel.

The State Duma in coming days may consider three proposals to limit access to
the media market for foreign investors. Russian law currently places no limit
on foreign ownership of media concerns. This contrasts with the United
States, which limits foreign ownership to 20 percent.

Alexandr Chuyev, a deputy from the pro-Kremlin Unity faction, last week said
he would present a bill to limit foreign ownership of electronic and print
media to 50 percent. Chuyev says he has the backing of at least seven
deputies.

"I think that the same way the law on elections says that foreign
individuals, companies with more than 30 percent foreign capital, and states
cannot contribute money to Russian election [campaigns], you can apply [that
rule] to media organizations...because there are not so many of them. So
that's why we should protect their freedom and independence."

Chuyev says he is "absolutely convinced" that any investor with a controlling
stake would try to bend editorial policy in his favor. By way of an example,
he says that a Chinese investor could broadcast misleading propaganda about
the investment climate in Russia.

He also says he would like to make his bill retroactive as a way of
invalidating any past deals, including a Turner bid for NTV, that may already
have been made.

The Duma considered a similar proposal two years ago when well-known media
businessman Rupert Murdoch expressed an interest in buying Russia's ORT
television. That bill, which banned the state from selling any media shares
to foreigners, died before it was ever put to a vote.

A second bill to be considered by the Duma would impose an even lower limit
for foreign ownership in media -- to 30 percent.

A third bill proposed by some liberal deputies would impose a 25 percent
maximum stake for all investors.

Viktor Pokhmelkin, the Union of Rightist forces deputy head of the Duma
Legislation Committee and the author of the bill, explains that in his
opinion the real issue is not xenophobic fear of foreigners' policies in
Russia, but about anyone -- whether the state, an oligarch, or a foreigner --
gaining control over the media.

Pokhmelkin says his proposal, by splitting responsibility and control, would
be the Russian media's best chance at achieving balanced coverage.

"Of course, it is a step in the direction of public television because any
demonopolization -- by distributing control over media into different hands,
into the hands of different owners that often represent different social [or
financial interests] -- is exactly a step toward public television [and] away
from state television and radio."

Experts say that given the investment climate, with foreigners already wary
of putting money into the country, none of the options are especially
attractive.

The economic weekly "Vek" said it was "unlikely" that a foreign investor
would put money into a company that it can't control, especially in Russia.

Kim Iskyan, a media investment expert at the investment bank Renaissance
Capital, tells RFE/RL that new restrictions would dampen investor enthusiasm,
but she says foreigners dealing with Russia are used to it:

"It certainly casts a [cloud] over potential investment and raises the level
of uncertainty considerably. [I don't think] it will completely chase away
any potential investors because foreign investors are quite accustomed to the
investment environment shifting."

The Press Ministry has distanced itself from the Duma proposals.

Deputy Press Minister Mikhail Seslavinsky told ITAR-TASS last week that the
mere discussion of a bill to limit foreign investment in Russian media would
discourage potential investment in all spheres.

He suggests that the Duma wait until the situation surrounding NTV calms down
and only then make a decision on investment limits.

In the past the Press Ministry has been very careful in its assessment of
foreign investment in media. In 1999, for example, then newly appointed Press
Minister Mikhail Lesin said foreign capital should not be banned from the
Russian media market.

Chuyev admits to a disagreement with the Press Ministry, but he claims that
his idea to limit foreign investment has the support of the presidential
administration.

Indeed, Russian authorities have shown an increasing willingness to impose
media restrictions in the name of safeguarding what they call "information
security." A controversial doctrine adopted last September by the Security
Council and endorsed by President Vladimir Putin underscored this concern. It
specifically cites foreign economic and financial activity in the information
sphere as a threat to information security.

******

#17
Lenin still holds place in hearts of many Russians

MOSCOW, April 18 (Reuters) - Ten years after the collapse of Communism and
turbulent decades since his death, two-thirds of Russians still look fondly
on Vladimir Lenin.

A survey conducted ahead of the Bolshevik leader's 131st birthday on April 22
showed that 66.7 percent of those questioned regarded Lenin's role in Russian
history positively, Itar-Tass news agency said on Wednesday.

Some 29 percent of these said his role was completely positive and 37.7
percent saw it as "rather positive." The majority of those in favour were
from the older generation, pensioners and those living in rural areas.

The survey said 14.5 percent saw Lenin's role in an unfavourable light, while
7.6 percent viewed him completely negatively. The survey was carried out by
independent research centre ROMIR and questioned 2000 people.

But the positive assessment of Lenin does not mean people want to go on
viewing his mummified body.

A majority of 51.3 percent supported the idea of removing his embalmed corpse
from the mausoleum on Moscow's central Red Square, where it has lain since
his death in 1924, and reburying it elsewhere.

Most of those in favour of removing the body were young and middle-aged city
dwellers with some degree of higher education.

But a considerable 41.5 percent opposed removing the body.

The debate over the future of Lenin's remains has been simmering in Russia
for some years and former President Boris Yeltsin often called for their
reburial while in power.

But Russia's Communists still revere the so-called father of the revolution
and strongly oppose any plans by authorities to move the body.

Lenin's mausoleum is a major Moscow tourist attraction.

******

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