#5213
20 April 2001
davidjohnson@erols.com

[Note from David Johnson:
1. BBC Monitoring: Pro-Putin bloc moves to deprive Communists of all
their Duma committees.
2. Itar-Tass: Duma Passes on First Reading Legal Act on Martial Law.
3. Moscow Times: Boris Kagarlitsky, No One Is Free Until We All Are.
4. The Economist (UK): Media muzzle.
5. Reuters: Russia making right reform steps but pace too slow.
6. Business Week: Paul Starobin and Catherine Belton, The Easter Raider. Where will Boris Jordan take NTV?
7. RIA: AMERICAN POLITICAL ANALYST: SITUATION AROUND FREEDOM OF SPEECH IN RUSSIA IS PUMPED UP ARTIFICIALLY.
8. RIA: KHAKAMADA: NTV RELIED UPON WESTERN ASSISTANCE, HENCE U.S. UPHOLDS ITS INTERESTS.
9. gazeta.ru: Ousted Editors Optimistic About Future.
10. AFP: Russian monopoly reforms hampered by vested interests, Kremlin hesitation.
11. Nezavisimaya Gazeta - Dipkurier: Dmitry Gornostayev, A TROUBLESOME BUT PLEASANT GUEST. Introducing the new US Ambassador to Russia - Alexander Vershbow.
12. Itar-Tass: US Considering RUSSIA'S Initiative to Set up New Commission.
13. AFP: Western analysts scoff at ITERA ownership statement.
14. Moscow Times editorial: Itera, We Are Still Waiting for Answers.
15. Ray C. Finch: Is Russia Finished?/5210.
16. Stanislav Menshikov: COMMENT ON THE WASHINGTON POST EDITORIAL in JRL 5209.]

******

#1
BBC Monitoring
Pro-Putin bloc moves to deprive Communists of all their Duma committees
Source: NTV International, Moscow, in Russian 0800 gmt 20 Apr 01

The People's Deputy group today tabled a motion in the State Duma for the
number of Duma committees to be reduced from 28 to 12 as a result of
reorganization and amalgamation. This amounts to a complete revision of the
package agreement on the distribution of Duma committees. As a result, the
CPRF [Communist Party of the Russian Federation] could be deprived of all its
key posts in the Duma. The first deputy head of the People's Deputy group of
deputies, Vadim Bulavinov, told Interfax news agency this proposal will
probably be debated at the next meeting of the Duma Council, to be held on
Tuesday next week [24 April]. It will also be discussed on Monday by the
recently formed coordinating council of four factions - Unity, Fatherland-All
Russia, People's Deputy and Russia's Regions.

In a letter to the chamber's speaker, Gennadiy Seleznev, the head of the
People's Deputy group, Gennadiy Raykov, asks the speaker and deputies to put
forward any objections to this initiative by 15 May, so that the wording of a
State Duma resolution can be drafted.

According to today's edition of the Kommersant newspaper, the Kremlin fears
that the left will start blocking the legislative initiatives of the
president and the government. The only solution to this problem, the paper
writes, is to deprive the Communists of their influence in the lower house,
and this has become a possibility following the establishment of the new
coalition. It will be guaranteed by the adoption of the proposal to
redistribute committees. In this event, Kommersant writes, the only thing the
Communists will have to console themselves with will be the fact that
Gennadiy Seleznev will keep the post of speaker.

******

#2
Duma Passes on First Reading Legal Act on Martial Law

MOSCOW, Apr 19, 2001 (Itar-Tass via COMTEX) -- The State Duma on Thursday
approved upon first reading a draft federal constitutional law concerning the
martial law in the country.

The lower house had examined two alternative draft laws - one introduced by
the president and the other by a group of deputies - and preferred the former
over the latter: 377 deputies present at the plenary meeting of the State
Duma voted unanimously in favour of the presidential version of the law.

The law envisages that the martial law shall be introduced in the entire
territory of the Russian Federation or in separate localities thereof in the
event of aggression against Russia or a direct threat of aggression. The
document contains a clear-cut definition of aggression which necessitates the
introduction of martial law.

The law also defines the powers vested in the president, the government of
the Russian Federation, the bodies of executive power in the federal
constituents and local governments in the event of martial law. It also
contains provisions concerning bans and restrictions on activity under
martial law.

******

#3
Moscow Times
April 20, 2001
No One Is Free Until We All Are
By Boris Kagarlitsky

For seven years now you have been broadcasting that you support the market
economy and capitalism. Now, we have it - and for you, too. We've had
enough of communism for one television channel. Now you can have some of
the capitalism that you have been pushing all these years." In a nutshell,
this is the message that Gazprom-Media's Alfred Kokh delivered to the
journalists of NTV.

And, hard as it is to admit, it is difficult not to agree with him. Those
who have been dreaming of a free market have now seen their dreams come
true. After all, the basic principle of capitalism is "money decides
everything." Our naive, perestroika-era intelligentsia sincerely believed
that free trade was the equivalent of freedom of speech. But things have
turned out a bit differently. In reality, free trade means the freedom of
the victor to shut the mouth of the loser.

Gazprom has treated its debtor very badly. But who forced Vladimir Gusinsky
and Media-MOST to borrow Gazprom's money in the first place? It is obvious
that the money was borrowed on political terms. When the loans were taken,
the company had no political problems: Gazprom and Media-MOST both
wholeheartedly supported Boris Yeltsin. Both were happy to smear the
Communists in 1996, using whatever dirty tactics they could think up.
Although it is hard to sympathize with the Communist Party, they never
deserved the treatment they got in 1996. In effect, the state took away the
people's right to choose.

Then the situation changed and the political camp split. NTV supported Yury
Luzhkov over Vladimir Putin in the 1999 political race. And that is when
the accounts came due. Politics seamlessly turned into business and the
struggle for property.

It is bad taste to delight in the misfortunes of others, even when those
people are tripped up by their own mistakes. There can only be one freedom
of speech and it must be the same for everyone. If a legally operating
opposition - such as the Communists were in 1996 - can be silenced and if
the public consciousness can be openly manipulated, then all talk of
democracy is pure demagoguery.

Gusinsky's journalistic team never understood this. Nonetheless, the
current attempt to silence the liberals of NTV is also an assault on the
rights of us all. We must defend the freedom of journalists by proceeding
from general, democratic principles. After all, even the most compromised
democracy is better than the finest form of fascism.

However, we must defend freedom of speech not only from the likes of Alfred
Kokh and Boris Jordan, but from the free market itself.

In Russia, property rights ultimately mean the right to wield force. But in
this we are not unique. The history of capitalism is characterized by a
constant and sometimes brutal struggle between journalists and media
owners. In many countries, this struggle has led to the passage of laws
protecting journalists from their bosses.

It is interesting to note that the methods chosen by the NTV journalists
are typical of those used by millions of workers throughout history: an
ordinary sit-down strike. And in a society where strikes do not work, this
method was doomed to fail. Possibly, if post-Soviet Russia had some
tradition of successful strikes, the NTV situation would have turned out
differently.

You can't defend the rights of a few without defending the rights of all.
When that lesson is finally learned here, the government will be faced not
with a few dozen journalists but with millions of people who have learned
to stand up for their interests.

Boris Kagarlitsky is a Moscow-based sociologist.

******

#4
The Economist (UK)
April 21-27, 2001
Media muzzle

TO HEAR some journalists talk, it is time to pack for Siberia. Yevgenia
Albats, a veteran KGB-watcher, says that "democracy died in Russia" over
Easter. Mikhail Berger, the editor of Sevodnya (Today), a daily newspaper
that closed two days later, talks of a "quasi-Soviet" system being restored.

What is certainly true is that the remains of Russia's frayed and battered
independent media have taken another walloping from the Kremlin. The
country's main independent television channel, NTV, in effect came under
government control with the Easter takeover by new management that answers
to Gazprom, the national gas monopoly in which the state is the largest
shareholder. The same fate has befallen Itogi (Results), a weekly, as well
as Sevodnya. Like NTV, both were part of the media empire of Vladimir
Gusinsky, a tycoon much disliked by the Kremlin, who is in Spain fighting
extradition to Russia to face fraud charges back home.

It is not over yet, though. Many journalists from NTV have temporarily
migrated to TNT, a small and hitherto lightweight cable channel also owned
by Mr Gusinsky. NTV's editor has joined TV6, another minor but bigger
channel owned by Boris Berezovsky, once a powerful tycoon but now also a
fugitive (in Paris) from the Kremlin's brand of justice. His news programme
will be screened on both channels. Journalists from Itogi hope to start a
new magazine, also in partnership with Newsweek, an American magazine that
this week hurriedly suspended its licensing agreement with Itogi. All the
victims' websites are still functioning.

While the journalists keep up a shrill chorus of protest, Gazprom crunches
on. Its next targets are TNT and Ekho Moskvy (Moscow's Echo), an
influential radio station whose programmes are widely rebroadcast across
Russia. Some hope that the Kremlin will call its dogs off before then.
Meeting the German chancellor, Gerhard Schröder, last week, President
Vladimir Putin insisted that he believed in press freedom. Ensuring that
what is left of it survives the summer would be a good start.

The panicky reaction of Russian liberals may yet be proved right.
Independent media in the provinces of Russia have been shrivelling for
years, under the combined assault of powerful regional bosses and their
business friends. Now the same is happening at the centre. But, for the
time being at least, information is still available to anyone with an
Internet connection or a decent radio. The Kremlin's line so far seems to
be that it will whack powerful opponents but ignore weak ones. And the
process is a slow one, with at least a light dressing of legality. Mr
Gusinsky's large unpaid debts to Gazprom made him an easy target.

In other circumstances, Mr Gusinsky's empire would be hard for lovers of
press freedom to defend. Its history of sleazy practices (such as blurring
editorial and advertising) and toadying to the authorities (notably in the
Yeltsin era) make some Russian journalists think that the official media
are on the whole less bad. The new tie-up with Mr Berezovsky, who mixed
money and politics as flagrantly as any of his fellow magnates, tests even
the most cynical journalists' stomachs.

Mr Putin and his government may benefit in the short term from silencing
their critics. In past days, he has also consolidated his position in
parliament. In the lower house, the Duma, the main non-Communist opposition
grouping, Fatherland-All Russia, has decided to merge with Unity, the main
party that was in the Kremlin's camp. Two other factions are set to join
too. That would give the government an overall majority. "Mr Putin's team
is building a structure where the regime will have no competitors in any
field," says Mr Berger.

Shooting (or bankrupting) the messengers does not change the message
though: economic growth is slowing, reform is flagging, the Chechen war is
at stalemate, and the country continues its downhill slide.

******

#5
ANALYSIS-Russia making right reform steps but pace too slow
By Svetlana Kovalyova

MOSCOW, April 19 (Reuters) - Russia is going down the right road in reshaping
its economy, but the pace of reform is too slow and opportunities to make
changes are disappearing.

The State Duma, Russia's lower house of parliament, passed a package of
banking reform bills on Wednesday, which had been urged by the International
Monetary Fund.

The deputies, who have been more willing to back President Vladimir Putin
than his predecessor, Boris Yeltsin, also approved measures aimed at easing
central bank control over foreign currency operations.

But analysts said on Thursday more needed to be done.

"They (the bills) are a minor part of structural reforms, said Roland Nash,
chief economist at Renaissance Capital.

"But Russian economic growth is slowing and the window of opportunity that
was provided by oil prices and the devaluation is closing. They have to do a
lot of things quickly. It's one step forward, but it's not enough," he said.

The economy had been boosted since the middle of 1999 by high international
oil and metals prices, Russia's main exports, and a competitive boost from
the rouble's devaluation after the 1998 economic crisis.

But the impact of these factors has eased after last year giving Russia its
highest post-Soviet economic growth.

Growth this year is expected to slow, with industrial output declining in the
first two month. Inflation has increased, raising concerns about a further
economic recovery.

President Vladimir Putin said on Monday that rising inflation threatened to
hamper economic growth and devour budget revenues, needed to carry out
structural reforms and pay debts.

The laws approved by the Duma were in line with Putin's economic views the
analysts said, but their passage days after his address to the nation, where
he called for liberal reforms, were a coincidence as they had been drafted
long ago.

APPROVED LAWS NECESSARY BUT TECHNICAL

Among other reforms, Putin called for bringing foreign currency controls
closer to international norms.

He did not elaborate, leaving the government and the central bank to argue
about the current requirement for exporters to sell 75 percent of their
revenues on the local exchange.

Analysts said the amendments on the law on currency regulation and control,
passed by the Duma, were a sensible step as they removed administrative
restrictions but remained a technical measure and were irrelevant for the
markets.

The Duma's amendments to the law on foreign currency control and regulations
aim to reduce the number of currency transactions requiring the central
bank's special permission.

"They are not linked to the fundamental issues of foreign exchange market
liberalisation - obligatory export revenue sales, control over export and
import and capital operations," said Oleg Vyugin, chief economist at Troika
Dialog brokerage.

The amended law does not resolve the controversy between the central bank and
the government over obligatory export sales, adding uncertainty to the
market, Alfa-Bank bank wrote in a market research note.

The bank laws, aiming to improve the transparency of the banking system and
the central bank's control over the sector, increase bank owners'
responsibility and speed up bankruptcy procedures, but were needed a long
time ago, analysts said.

"It is a significant step forward, but it's not enough by a long way to
reform the banking sector, " Nash said.

He said Russia needed to take more drastic measures to restructure the
sector, by rooting out the many insolvent banks, forcing transparency rules
and attracting foreign capital.

The IMF has repeatedly urged Russia to accelerate banking reform as a key
part of changes necessary for economic recovery and foreign debt repayment.

Russia's banks were hit hard in the 1998 economic crisis and have struggled
to get back to the levels of activity they had before the crash.

Analysts and IMF experts have urged the government to spur structural reforms
while external factors remain favourable.

They say the government needs to keep inflation under control, restrain any
excessive rouble appreciation and swiftly reforming banks and natural
monopolies such as giant Gazprom.

*******

#6
Business Week
April 30, 2001
The Easter Raider (int'l edition)
Where will Boris Jordan take NTV?
By Paul Starobin and Catherine Belton in Moscow

*******

#7
AMERICAN POLITICAL ANALYST: SITUATION AROUND FREEDOM OF SPEECH IN RUSSIA IS PUMPED UP ARTIFICIALLY

MOSCOW, April 19, 2001. /from RIA Novosti correspondent Arina Dovgan/.

The situation around freedom of speech in Russia is "to a considerable degree
pumped up", Nixon Centre president Dmitry Simes told journalists in the State
Duma (the lower house of the Russian parliament). As he puts it, "the
situation is pumped up by many, including numerous representatives of Mr
Gusinsky." "Huge sums of money being spent on services of his American
lawyers and his spin control" evoked a certain response from the US public
opinion, Simes said.

The Nixon Centre president also noted that in connection with the pumped-up
situation around freedom of speech in Russia, the US State Department could
not help "expressing its own opinion". However, he said, it was "nothing more
than an opinion", it should not be regarded as interference. Simes believes
that "all those sanctions, ultimatums and threats are interference." Thus, he
thinks that "one should have a calm attitude" towards the concern, expressed
by the State Department.

"Hot discussions around Gusinsky do not in any way affect the interests of
the two states and do not pose a threat of war," Simes said.

At the same time he stressed that "some Russian oligarchs, who have stolen a
lot of money in Russia, already have former American ambassadors, senators,
Cabinet members at their disposal", spending on their services "millions of
dollars".

Simes said that his Centre had also been under pressure. "They wanted us to
give up our unbiassed attitude towards the problem and even did not allow,
for example, Mr Kokh to speak." While speaking on the attitude of the
American press towards the problem of freedom of speech in Russia, Simes
noted that some newspapers, for instance the Washington Post, "reacted
sharply" in connection with the situation. However, Simes explained, the
newspaper was "Gusinsky's business partner". Besides, the Washington Post has
always supported the so-called "radical reformists". He believes that almost
everything that has been written in the newspaper about Russia, is absolutely
wrong.

Thus, Simes stressed, one who regards the opinion of such mass-media as "the
opinion of the American people and the US Administration, is mistaken".

As for exaggerations made by Gusinsky's US lawyers and spin doctors, it is a
matter of conscience. "The White House is not responsible for it," Nixon
Centre president Dmitry Simes concluded.

*******

#8
KHAKAMADA: NTV RELIED UPON WESTERN ASSISTANCE, HENCE U.S. UPHOLDS ITS INTERESTS

MOSCOW, APRIL 19, 2001 /FROM A RIA NOVOSTI CORRESPONDENT/ -- The NTV network staked upon western assistance in upholding its interests in Russia, hence
the US State Department took the channel under its wing. Duma /lower house/
deputy Irina Khakamada thus commented on the US State Department's statement
blaming the Russian government for the so-called restriction of freedom of
expression.

Khakamada, a leader of Russia's right forces, believes that western political
elite can draw a line between the notion of property and the freedom of
expression. In Khakamada's opinion, the western community is really concerned
with the threat to the freedom of expression in Russia, but it does realize
that debates on NTV property and the conflict between media mogul Vladimir
Gusinsky and Gazprom are a separate issue.

******

#9
gazeta.ru
April 19, 2001
Ousted Editors Optimistic About Future
By Yelena Shishkunova, Svetlana Nesterova

Sergei Parkhomenko and Mikhail Berger, the ousted chief editors of the weekly
Itogi magazine and the Segodnya daily newspaper, and the president of Sem
Dnei Publishing House Dmitry Biryukov on Wednesday drew a line to the
conflict that has been simmering between them. Sergei Parkhomenko and Mikhail
Berger are looking forward to future projects, while Dmitry Biryukov is
pretty satisfied with his current financial fortunes.

On Wednesday all three key figures in the conflict held two news conferences
at the Interfax news agency's office. Some reporters were secretly hoping to
witness a heated row between Dmitry Biryukov and his opponents. However, the
opponents did not even bumped into each other in the news agency's corridors.

The chief of the Sem Dnei publishing house Dmitry Biryukov was very courteous
as he recounted the story of the conflict. He refrained from calling the
ex-chief editors of Segodnya and Itogi any bad names, though he did refer to
them as "Jacobeans".

Itogi's Parkhomenko was less discreet, but he too tried to be as polite as he
could and did not air any open resentment towards Sem Dnei's president, nor
to the newly appointed management of Itogi. He even used his favourite word
"strike-breaker", which he has used liberally in recent statements, only
twice.

In his news conference Sem Dnei's chief Dmitry Biryukov introduced the new
management of Itogi -- Kirill Dybsky, Mikhail Loginov, Alexei Dityakin and
Natalya Kalashnikova. And although all of them are still officially employees
of Segodnya daily, according to Gazeta.Ru's sources, they have been working
on Itogi weekly for three weeks already.

Biryukov revealed that Kirill Dybsky's candidacy for the position of Itogi
chief editor had already been endorsed and he then passed all questions
concerning the weekly's future to the latter.

Naturally, the issue of relations between Itogi and the U.S. journal Newsweek
could not be avoided. On Tuesday Newsweek said they were breaking off ties
with Itogi following the staff reshuffle.

Commenting on Newsweek's move Dmitry Biryukov said he had received no
official document confirming the US journal curtailing cooperation and said
that the next issue of the magazine would bear the same old Itogi-Newsweek
logotype. Unless of course Newsweek issued an official statement before the
next print.

"Maybe, at this moment Mr.Biryukov has already received an official
document," Sergei Parkhomenko said later at his news conference with Mikhail
Berger. Sergei Parkhomenko said he had absolutely no doubts that the
cooperation between Newsweek and Itogi had ended. But he did say he thought
the magazine would most likely survive the divorce.

Several hours after the news conferences, in the US Newsweek's
editor-in-chief Richard Smith issued an official statement confirming that
Newsweek was ending all collaboration with Itogi.

Hitherto the two magazines were bound by mutual partnership agreements
providing for an exchange of editorial materials. Recently, that exchange
became almost non-existent, Parkhomenko had complained.

Thus the US weekly's statement most likely was aimed at encouraging the
ousted editor of Itogi and protesting against Gazprom's moves against
Media-MOST's media concerns. Sergei Parkhomenko said he had twice informed
Newsweek about the latest developments at the edition and in the publishing
house.

On Wednesday the daily Novye Izvestia, in which Boris Berezovsky has the
controlling share packet, published a series of articles by Segodnya's ousted
journalists, which, naturally led to rumours that Mikhail Berger could
replace Novye Izvetia's current chief editor Igor Golembiovsky.

Soon afterwards reports emerged alleging Parkhomenko might be appointed chief
editor of the Kommersant-Vlast weekly, in lieu of Maxim Kovalsky. The head of
Segodnya's politics department Natalya Kalashnikova said such suggestions
were quite reasonable. Biryukov said of the rumours, "If it is really so,
then it is disgusting. It is like using people as cannon fodder"

In their turn, Parkhomenko and Berger called all those rumours "heer
nonsense"

"ovalsky is my good friend,"Parkhomenko emphasized. He then and said that
in no way would he and his team from Itogi end up on the street. "kho Moskvy
(radio station), Novaya Gazeta (daily newspaper) have offered to collaborate
with us,"he said.

"And as for us," Segodnya's ex-chief editor continued, "Next week we will
issue a supplement to Obshchaya Gazeta".

Thus, both exiles from the crumbling Media-MOST empire remain optimistic and
are looking forward to the future with confidence. "Investors are showing
interest," Parkhomenko stated. He has already announced his plans to start a
new weekly, and hopes that new one will be much better than the Itogi he
lost. He said he had already devised the name of his new project, but is
refusing to unveil it yet.

Incidentally, at Wednesday's news conference, Sergei Parkhomenko highly
praised Gazeta.Ru's coverage of the conflict.

*******

#10
Russian monopoly reforms hampered by vested interests, Kremlin hesitation
MOSCOW, April 19 (AFP) -

Plans to restructure Russia's huge state utility monopolies are being
hampered by powerful industrial lobbies and a lack of determination within
the Kremlin, analysts believe.

Reforms aimed at modernising such giants as the gas monopoly Gazprom, the
power utility UES or the Russian rail network to facilitate privatisation,
due to get under way this year, have made little headway, with the government
reluctant to impose its preferences.

Commentators are divided as to where the chief responsability lies, some
seeing UES management as too radical, others believing Gazprom to be too
conservative, with yet others accusing rail management of being too much in
thrall to industrial lobbies.

The delay in getting the reform process under way "is due mainly to the
determination of pressure groups to resist change and a lack of political
will among the reformers who are unable to make up their minds what path to
follow," Roland Nash of the Renaissance Capital bank said.

UES chairman Anatoly Chubais announced his own reform programme in the spring
of 2000, providing for independent regional power generators, separating the
production, and sales and transport functions for each.

In the long run much of the industry was also to be sold to the private
sector.

His plan was greeted by a chorus of complaints, with political leaders,
regional barons, minority shareholders and members of the presidential
administration accusing Chubais of heeding a few privileged interests and of
proceeding too quickly or too radically.

At first accepted by the government, the plan was finally shelved and a
working group charged with coming up with a compromise arrangement.

The new scheme, due to be presented to the Kremlin on Saturday, is reported
by Russian media to favour a 10-year schedule for creating a number of
vertically integrated regional companies.

A reform plan for the railways, which still have their own ministry, has been
adopted "in principle" but differences between Rail Minster Nikolai
Aksyonenko and Economic Development Minister German Gref have prevented it
from being put into effect.

The restructuring of Gazprom, Russia's largest company and often described as
"a state within the state," is proving even more delicate, with little
progress likely while Gazprom's current chairman, Rem Vyakhirev, remains in
office. His present mandate expires in May.

"Getting reforms under way is hard enough when a company management is
reformist. When it is opposed to any restructuring at all, you have to adopt
an extremely cautious approach," a Kremlin official told AFP on condition of
anonymity.

But much hangs on whether reforms can be pushed through, with experts warning
of likely crises for the industry in the near future.

"The question now is whether (the government) can get enough of a consensus
with political support to launch the monopoly reform programme next year,"
Nash said.

Among the priorities are price deregulation, increasing competition and
attracting the billions of dollars in investment needed to modernise outmoded
infrastructures.

In 1991 UES, with its 80 subsidiaries, provied a power surplus. Now,
shortages occur every winter.

Gazprom, the world's largest gas producer, has seen output fall continuously
and is having to turn to new deposits.

And the railways -- which carry much of Russia's fuel, gas, metals and coal
-- desperately need an injection of 15 to 25 billion dollars for renovation.

Seventy percent of Russia's trains are decrepit, 35 percent of the track is
defective, and 720 rail bridges and other installations built at the end of
the 19th century are considered to have served twice as long as originally
intended, according to ministry officials.

******

#11
Nezavisimaya Gazeta - Dipkurier
No. 7
April 2001,
A TROUBLESOME BUT PLEASANT GUEST
Introducing the new US Ambassador to Russia - Alexander Vershbow
Author: Dmitry Gornostayev
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE APPOINTMENT OF ALEXANDER VERSHBOW DOES AWAY WITH THE MYTH THAT RUSSIA HAS CEASED TO PLAY ANY IMPORTANT ROLE IN AMERICAN FOREIGN POLICY. SECRETARY OF STATE COLIN POWELL ADVOCATES A MORE CONSTRUCTIVE DIALOGUE WITH RUSSIA, AND VERSHBOW IS POWELL'S CANDIDATE. THIS IS A GOOD SIGN.

     The appointment of Alexander Vershbow does away with the myth
generated by Washington itself that Russia has ceased to play any
important role in American foreign policy with the appearance of the
new administration in Washington. Yes, Russian-American relations have
indeed deteriorated, and this coincided with the appearance of the new
administration. All the same, Russia is important for the United
States and the US administration, no less important now than it used
to be for Clinton. If nothing else, this importance is ascribed to a
great many problems Bush and his team will have to cope with.
Vershbow's appointment shows that Washington is aware of this.

     The delay with appointing the US ambassador to Russia is another
revealing aspect. The US administration needed time to decide what
sort of signal it should send the Kremlin. It is common knowledge that
Defense Secretary Donald Rumsfeld is a hardliner on Russia, while
Secretary of State Colin Powell advocates a more constructive
dialogue. Vershbow is Powell's candidate. This is a good sign. Moscow
may hope that Powell's strategy of cooperation got the upper hand in
debates within the US administration. Even though the dialogue is not
going to be easy.

     It should be noted as well that the leak about Bush's decision to
appoint Vershbow took place five days after negotiations between Igor
Ivanov and Powell in Paris. Both diplomats evaluate their meeting as
successful. Both capitals showed the world that despite all serious
discord, Moscow and Washington did not want a confrontation. When
asked a direct question, Powell even said the United States was going
to take Russia's interests into account.

     In principle, Vershbow's appointment is an element of the policy
for which Moscow has braced itself - a difficult but professional and
specific discussion over complex issues (like NATO expansion and
nuclear arms reduction and missile defense systems); and no less
professional cooperation in the spheres where this cooperation is
possible (settlement of regional conflicts, countering international
terrorism). It is clear that a professional has been appointed to
Moscow. It is also clear that he is going to make life hard for his
Russian colleagues, at least due to this professionalism of his.

     Vershbow does know Russia. He worked at the US Embassy in Moscow
and at the Soviet division of the State Department (he headed it
afterwards for three years), he participated in negotiations over SALT
I and II, he was President Clinton's special adviser for Eastern
Europe and Russia.

     The assumption that Vershbow will make life hard for his Russian
counterparts is supported by the fact that he is a specialist in
virtually all matters on which Moscow and Washington cannot reach an
agreement. The list includes NATO expansion, NATO membership for the
Baltic states, a new NATO concept which stipulates the use of force
beyond the zone of responsibility, and missile defense. Vershbow has
always taken a tough position with regard to Russia on all these
matters. Some reports even indicate that in his previous capacity
Vershbow's relations with Russian diplomats were rather cold. When
NATO expansion was debated in Brussels, discussion even deteriorated
into quarrels. (Needless to say, the public was not informed of that.)

     Neither shall we forget, however, that Vershbow did a lot of work
in the Clinton administration. More importantly, he worked at the
political level of foreign policy, not at the technical level. The
administration is different now, but it does not mean a person should
immediately change his outlook and reject what he himself persuaded
others of only recently. Here is a quote from Vershbow of old. "After
six months of productive consultations... we admit that allies [in
NATO - Author] share our desire to preserve the ABM Treaty and to
avoid a confrontation with Russia, a confrontation will may jeopardize
prospects for our cooperation," Vershbow said in Berlin less than a
year ago. Here is another, dated December 1998. Vershbow said, "We
wish success to the Russian reforms. We are not out to isolate or
punish Russia. We are not talking about our triumph in the Cold
War..." Does Vershbow think so nowadays?

*******

#12
US Considering RUSSIA'S Initiative to Set up New Commission

WASHINGTON, Apr 19, 2001 (Itar-Tass via COMTEX) -- The United States is
considering most seriously Russia's initiative to set up a new
intergovernmental commission at the level of ministries of economy, U.S.
Secretary of Commerce Donald Evans stated in reply to an Itar-Tass question
during his meeting with journalists in Washington. The proposal to set up a
new body for practical cooperation instead of the previous bilateral
commission for economic and technological cooperation was delivered to him by
Russian Minister for Economic Development and Trade Gherman Gref during his
recent visit to the United States.

Evans said that the talk with Gref had produced a very good impression on
him. In his opinion, it showed that both sides are trying to look farther
into the future, are seeking ways to consolidate their relations, especially
in business. The Secretary of Commerce said the U.S. would consider the
Russian initiative seriously and would give an answer to it. Gref stated
during his visit that this answer was expected to be received within a month.

The dispute over Russian steel deliveries to the American market are among
the principal irritators in the Russia-U.S. commercial relations. The U.S.
"steel lobby" is actively opposing them by means of such protectionist
measures as anti-dumping investigations. In spite of this, Evans, and his
close friend President George Bush, claim to be advocates of free trade.

Asked in this connection whether it was expedient now to stop the
anti-dumping procedures, the Secretary of Commerce made it clear that foreign
importers should not expect such a turn in the foreseeable future. Everybody
must play on equal terms, he said. If somebody does something dishonest in
his own favour, it is our duty to American companies and to the country to
even out the field, Evans added.

By such dishonest behaviour he meant suspicions that foreign importers are
selling their goods in the United States at prices below their net costs, in
other words are dumping them. The prices that should be regarded as "fair"
are determined in such cases by the Americans themselves and according to
their own rules.

Evans particularly stressed that unobstructed trade was the correct way not
only to boost the quality of life all over the world, but to promote
democracy, political and economic rights and liberties. Capitals and
commodities are exported wherever the most favourable conditions are created
for them. It is primarily private business that determines such places, and
the new U.S. Secretary of Commerce intends to depend on it in deciding, for
instance, where to pay working visits.

His closest plans are linked with a trip to Quebec and with the establishment
of a free-trade zone in the Western Hemisphere by 2005. He is rather
optimistic about the prospects of this process. His next task after Quebec is
to get the consent of the U.S. Congress to give the president the right to
conclude commercial agreements on the basis of an easier procedure. This
means that they should not be amended in the course of ratification.

Evans said he hoped that it would be possible to start a new successful round
of global commercial negotiations under the aegis of the World Trade
Organisation. For the time being, the United States intends to focus its
attention on the drafting and implementation of bilateral trade agreements
with Chile, Singapore, Jordan, and Vietnam. The Secretary of Commerce refused
to comment on the possible impact of the recent spy-plane incident with China
on America's commercial relations with that country.

Evans believes that personal trust among partners is the most important
element of business contacts. Therefore, he assured the journalists their
governments could rely on America and on its president, that the United
States would steadfastly implement its commitments.

******

#13
Western analysts scoff at ITERA ownership statement
MOSCOW, April 19 (AFP) -

Western investors scoffed Thursday at a financial statement from a subsidiary
of Gazprom aimed at quashing reports that it was a secret piggy bank for the
Russian gas giant's directors.

The private ITERA company said in a statement faxed to AFP that it had no
direct links to either Gazprom or its executives.

ITERA said that three-quarters of the company -- an eight-year-old start-up
registered in Florida that now controls the world's fourth-largest natural
gas reserves -- was held through private trust arrangement.

The company also said 26 percent of the shares were held by ITERA president
Igor Makarov.

"Even though Gazprom is one of ITERA's main partners and participates in
joint projects (with ITERA) ... neither Gazprom nor its top leadership are
ITERA's beneficiaries," the statement said.

Analysts said the ITERA statement did little to dispel suspicions about an
illegal ITERA-Gazprom link, adding that only a planned summer inquiry by the
Russian audit chamber can help shed light on the company.

"Given that a large percentage of the company's shares are held through trust
arrangement, it is clearly impossible to verify any statements as to the
ultimate owners of the majority of ITERA's shares," the Renaissance Capital
bank said in a research note.

"Individuals can obviously benefit in ways, other than holding shares, from
the relationship between the two companies," it added.

Others added that it made no sense for Gazprom to cooperate with its major
competitor on the natural gas market.

"It would simply not be in Gazprom's commercial interest as a company to
encourage the development of ITERA as a competitor," the United Financial
Group said.

"Yet this is precisely what appears to have happened, and to continue to
happen today. Disclosure of ownership via a series of discretionary trusts is
not going to resolve the basic concerns of investors in Gazprom," UFG added.

Gazprom minority shareholders, led by former finance minister Boris Fyodorov,
allege that Gazprom's directors are illegally siphoning off profits into
ITERA at the expense of both the state and Russian taxpayers.

They point out that Gazprom's profits, on paper, have fallen drastically in
recent years while those of ITERA -- whose ownership had never before been
publicly revealed -- have inexplicably surged.

Fyodorov has attempted to launch a private audit of ITERA's links to Gazprom.
However the natural gas monolith, which remains one of Russia's largest
companies, has refused to cooperate with a private investigation.

President Vladimir Putin, stepping into the dispute for the first time last
week, suggested that Gazprom's ownership must become more "transparent" --
sending the stock's value surging on investor hopes that the state was ready
to crack down on the powerful giant.

Western media including Business Week and the Wall Street Journal have linked
ITERA's managers to current Gazprom directors, including the company's
founder and former prime minister Viktor Chernomyrdin.

*******

#14
Moscow Times
April 20, 2001
Editorial
Itera, We Are Still Waiting for Answers

Finally, after the business community has been pounding on Itera's doors
for years clamoring for hard information about its owners and structure,
the company has responded with a significant but far from satisfactory
gesture toward transparency. For the first time in its nine-year history,
Itera - whose growth into the world's seventh-largest gas company in less
than a decade is both highly suspicious and little short of miraculous -
released a partial breakdown of its complex ownership structure this week.

Nevermind that Itera president Igor Makarov had the gall to claim that he
is "fed up" with all the speculation about Itera's questionable ties to
Gazprom and to complain that such conjecture "disturbs our ... normal,
objective work." We'll forgive Makarov his petulance if he'll forgive us
our understandable dissatisfaction with the sketchy and evasive information
that his company provided.

If Itera thinks this single press release will ease pressure on it to come
clean, it is mistaken. This thing raises a lot more questions than it
answers, and we still need to know the basics: Who is getting rich on
Russia's gas and who set them up to do it?

The crux of the controversy surrounding Itera is its relationship with
Gazprom and with Gazprom's managers. Itera's "miraculous" growth provides
plenty of reasonable grounds to suspect that Gazprom has squandered or
stolen billions of dollars worth of Russia's resources in what would appear
to be a thinly veiled effort to cheat the state, which controls 38 percent
of Gazprom.

Such suspicions have even taken root in Gazprom's board, although oddly not
among those members who supposedly represent the state's interests.

Minority shareholders, though, have called repeatedly for an independent
audit of the Itera-Gazprom connection.

Like the rest of us, those shareholders would like to know exactly why
Gazprom's gas production has fallen over recent years just as Itera's has
increased.

Itera's statement this week merely outlined a vague system of trusts that
control its shares. The company claimed that only Itera employees are
beneficiaries of those trusts and that no "Gazprom managers, their children
or relatives" are among them. However, after facing years of stonewalling,
we need a lot more than mere verbal assurances.

Until a believable, independent audit such as minority shareholders have
called for is carried out - one that details the history of the company as
well as its current status - with the full and willing cooperation of Itera
management, the company's "normal" work will continue to be dogged by our
impertinent conjectures.

******

#15
Date: Thu, 19 Apr 2001
From: "Ray C. Finch" <rcf43@juno.com>
Subject: Is Russia Finished?/5210

What a dumb title to a rather bland and condescending article (DJL 5210
"Russia is Finished"). I'm certain that most Russians would not agree
with Mr. Tayler's judgment. In an effort to boost sales, it appears that
The Atlantic has its resident catastrophologists scour the
globe looking for apocalyptic signs. I'm reminded of a paragraph from a
biography about Malcolm Muggeridge, where he is speaking about the
absurdity of modern journalism:

"It is impossible to stay honest and clear-headed if you have to crank
out news in enormous quantities for the maw of the public. The news, somewhere in
there, becomes pure fantasy, creating bogus events out of nothing and
then magnifying them into the diurnal apocalypses in order to keep the
populace tuning in and buying the sponsors' products if nothing else."

The situation in Russia is bad, but it's been that way for the past
millennium, yet they seem quite capable of muddling through. Don't cross Russia off your
maps yet.

*******

#16
Date: Thu, 19 Apr 2001
From: "Stanislav Menshikov" <menschivok@globalxs.nl>
Subject: COMMENT ON THE WASHINGTON POST EDITORIAL in JRL 5209

I, too, together with many others, deplore the untimely demise of the Old
NTV. Not because it was really independent. Being half subsidized by the
government, directly or indirectly, and run in a dictatorial manner by
Vladimir Gusinski and Yevgeni Kiselyov, it was always slanted one way or
another and was never an example of objectivity. Its principal value to
myself in recent months was that I could, by switching on NTV, always know
the latest American view of things happening in Russia and elsewhere even
before that view was expressed in the US media. The alternative was watching
CNN or listening to Radio Liberty but CNN does it clumsily and without real
knowledge of what is going on in Moscow while Radio Liberty spends half or
more of its news time on Chechnya without leaving adequate space for events
in Russia proper. As everybody in Russia knows, Old NTV was a "hidden"
American station while the other two were "open" American ones. Not that I
object to the NTV freely choosing that mode of operation. I only wish to say
that they did it much more professionally than "open" American reporters
could ever hope to. It is therefore a pity that Mr. Gusinsky had neglected
to run the NTV in a profitable and businesslike manner and by doing so left
it defenseless for the Gasprom sharks to gobble it up when they felt like
it.

But I do object to the unprofessional and arrogant way, in which the matter
is treated in the WP editorial.

1. There were no government security forces involved in the NTV takeover.
These were men from a private security agency hired by the new management
acting with a court order in hand. I hate the procedure but it is completely
legal and is being widely used in Russia when conflicting business groups
are vying for various properties and fail to yield to court orders.
Sometimes, two security agencies have to fight it out. In the case of NTV,
the old security guards inspected the court order and receded without a
fight.

2. The new NTV management did not fire or evict the NTV journalists. On the
contrary, they asked them to stay and to continue their work. Part of the
old team chose to leave because they disagreed with the decision of the new
owners to change the management, NOT the editorial staff or reporters.
Another part of the staff chose to stay. Watching NTV every day, I do not
see any great change in the way they present news. The staff there is doing
a highly professional job. Their criticism of the government continues. They
sympathize with Mr. Gusinsky in his struggle against extradiction though he
is not their boss any more. Even the "Puppets" show is still on the air with
its usual non-complimentary treatment of Mr. Putin and his minions, as the
WP puts it.

3. The journalists that left have since moved to another national station
(TV6) majority owned by Boris Berezovsky who effectively fired its former
staff, which, while being critical of the authorities, does not want to work
under the haughty and authoritarian Mr. Kiselyov and his team. Mr.
Berezovsky has thus practically taken over the old NTV staff for free and
hopes to make TV-6 national station number three pushing NTV to the position
of number four or five. His board of directors, whom he did not consult, has
resigned in protest. Whoever wants to watch TV-6 instead of NTV is free to
do so. The outcome of their competition will be decided by the viewers and
advertisers. Freedom of information is therefore preserved.

4. TV-6 is not cable television and is not to be mixed up with TNT which is
a cable networks and still belongs to Mr. Gusinsky. Apparently, the WP and
even the CNN man who commented yesterday on "Q and A" are not aware of the
difference.

5. The Sevodnia newspaper and Itogi (run in partnership with WP) which are
both unprofitable were closed by their publisher, Mr. Biriukov, a former
partner of Mr. Gusinsky, who was left carrying the bag after Gusinsky
stopped subsidizing the publications. Mr. Biriukov is not an apparatchik, as
WP puts it, but a businessman publisher who does not wish to go bankrupt.
One can understand the WP bias in this particular matter, but one can only
advise it to better monitor its Russian business interests. Actually, both
publications are free to choose another publisher, which they are already
doing.

6. There are quite a few privately owned national daily newspapers in
Moscow, which are subsidized by various oligarchs. They are quite
independent of the government and critical of it. Nezavisimaya Gazeta,
Izvestiya, Vedomosti, Komersant, Novyie Izvestiya, Komsomolskaya Pravda are
just some of these very well known names. None of them have been intimidated
or closed by the authorities. Incidentally, they do change owners once in a
while. When Izvestiya was taken over by Potanin and Lukoil and part of its
journalists left for Novyie Izvestiya, nobody protested though the
government owns a solid block of shares in Lukoil. There are also many other
opposition papers in Russia who are not as fortunate to have oligarchs as
publishers. But they also were and are free. When they are closed for
financial or other reasons nobody in the West raises hell and accuses Mr.
Putin. Actually, the media in Russia today is much more versatile than in
the US where there is only one general purpose newspaper of note in both New
York and Washington. The WP may for some reason like Sevodnia more than its
competitors but to call it the most prestigious Russian newspaper is a
doubtful claim. If it were that prestigious it would not have gone under,
unlike the others. To choose it out among others as the "beacon of the
post-Soviet free press" is nonsense.

7. Not surprisingly, the WP castigates Mr. Putin for ignoring appeals of
Colin Powell to preserve the freedom of NTV television network. Since the
Russian President, in the WP view, is an underling of the US Secretary of
State, such an approach is perhaps logical. But demanding that Mr. Putin pay
for his misbehavior by being removed from the G-8 summit format is, perhaps,
asking for too much. It suggests that the US government is something like
the Chief Justice of the world and has the right to judge and punish other
nations for "misbehavior". That view reminds me of the time when the Earth
was considered the center of the Universe and when those who defied that
dogma were burned alive by the Inquisition. The WP is not going that far.
But it is strangely firm in its belief that the US today is the center of
the modern Universe while other nations are revolving around the American
Sun as planets, not as sovereign states. Some might believe this US-centrist
view is somewhat old fashioned. To my taste, will all due respect, it is
sheer lunacy. Russian democracy will do much better developing on its own
momentum without heeding provincial and largely misinformed advice beaming
from the "center of the Universe".

******