April 26, 2001 

This Date's Issues:   5223 • 5224 • 5225

Johnson's Russia List
#5224
26 April 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russians drinking more coffee but tea still cheers.
2. strana.ru: Solzhenitsin presents literary prizes.
3. AFP: 15 years on, Chernobyl workers flee Ukraine for new life in Russia.
4. Moscow Times editorial: Russia Can Have It Both Ways. (re nuclear waste)
5. Reuters: Russia finally joins world pact against dirty cash.
6. RFE/RL: Yevgenia Borisova, Russia: Lack Of Funds Hinders Access To Anti-AIDS Drugs.
7. Irish Times: Eugene Cahill, Belarus brought to its knees by 'invisible enemy.' Fifteen years after Chernobyl, the world has moved on. But for Belarus the problems are only beginning. Thyroid cancer rates have risen by 2,400 per cent since the explosion.
8. Wall Street Journal: Andrew Higgins and Alan Cullison, U.S. Financier Sits at Center Of Russian Media Tempest. Battle Over NTV Control Is Familiar For Jordan, Warrior of Two Cultures.
9. Foreign Policy Research Institute: Alvin Rubinstein, A U.S. POLICY FOR RUSSIA.
10. Putin's First Year - The Heritage Foundation Discussion.]

*******

#1
Russians drinking more coffee but tea still cheers
By Sujata Rao

MOSCOW, April 25 (Reuters) - Russia's huge tea market is under attack from
growing coffee consumption but industry players said on Wednesday the trend
was unlikely to overturn the population's traditional preference for the cup
that cheers.

Russia consumed over 150,000 tonnes of tea last year, making it the world's
largest importer. Two-thirds of this came from India which supplies about
100,000 tonnes a year.

But while tea imports have remained more or less stable, coffee is growing by
leaps and bounds. A walk around Moscow reveals sparkling new coffee bars
everywhere -- all of which have sprung up in the past few years.

"Coffee consumption is rising by over 10 percent per year in Russia,"
International Coffee Organisation head Michael Heath told a news conference.
"But there is potential for more."

Russia's 145 million population and rising disposable income will ensure
future growth, he said noting Chinese consumption was rising by 30 percent
annually.

While exact figures are not available, a study commissioned by coffee firms
estimates about 32,000 tonnes was consumed in Russia in 2000, a figure that
could rise to 38,000 tonnes this year and represents a manifold rise over
Soviet-era levels.

Most of this comes from Brazil and India though imports are rising of
Columbian, Kenyan and other coffees as well.

Consumption patterns are also changing. While soluble coffee still dominates
the market, consumption of green and roasted coffee is growing faster.
Imports of the latter rose 17 percent in 2000, compared to a 15 percent rise
for instant coffee.

"This is a sign of a maturing market and improving economy," Ramaz Chanturya,
editor of industry magazine Tea and Coffee in Russia, told Reuters. "Coffee
is linked closely to socio-economic factors, above all to living standards."

TEA STABLE BUT NO CAUSE TO WORRY

Tea on the other hand has remained more or less stable though the proportion
of quality tea seems to be slowly rising.

Tapan Chakraborty, Russia and CIS head of India's Tea Promotion Board said
Russian tea imports from India would remain stable at about 100,000 tonnes
per year for the next five years.

"The coffee market is growing in a very noticeable manner. But Russians are
traditional tea drinkers and in most of the country tea still is the norm,"
Chakraborty told Reuters.

Chanturya agreed, noting that 80 percent of the coffee imported was consumed
in large, more affluent Russian cities.

India's market share is being eroded not only by coffee but also imports from
Sri Lanka, China as well as quality teas from the United Kingdom. It accounts
now for 70 percent of Russia's tea imports, down from 95 percent in Soviet
times.

"Our market share is smaller. But because of overall market growth, export
volumes have not fallen," Chakraborty said adding that his board was planning
how to hang on to the Russian market which takes in half of all Indian tea
exports.

"There is now a segment that is willing to pay higher prices for better tea
and we are preparing to compete for that market."

Market players agree that tea is unlikely to be toppled from its pedestal.
They note scope for Russian tea consumption to grow in volume as well as in
quality as Russian per head consumption of tea is about a third of British
levels.

Alexander Malchik, head of the Russian Coffee Producers' Union believes tea
will always have a niche in Russian hearts.

"We expect coffee consumption will rise but it doesn't mean people will stop
drinking tea. Coffee consumption is linked to changing lifestyles not big
changes in tastes," he said.

*******

#2
strana.ru
April 25, 2001
Solzhenitsin presents literary prizes

Russian writer and Nobel Prize winner Alexander Solzhenitsin presented
literary prizes to authors Yevgeny Nosov and Natalya Vorobyova, a daughter of
writer Konstantin Vorobyov on April 25.

Solzhenitsin said at the prize awarding ceremony that the Great Patriotic War
of 1941-1945 left unremovable bitter marks in the life and literary work of
Vorobyov and Nosov.

Solzhenitsin reminded those present that Vorobyov, to whom the prize has been
awarded posthumously, had fought near Moscow. "War and captivity became a
theme of his life," Solzhenitsin remarked.

Vorobyov's book "Oh Lord, It's Us!" is the first "and perhaps the last in
novella in Soviet literature about nazi captivity, he said. Vorobyov sent
this story to the Novy Mir literary journal in 1946, but it was rejected and
published only in 1986.

Yevgeny Nosov, 74, now living in the town of Kursk, during the war was a
gunner in an anti-tank brigade, which reached as far as East Prussia. He
celebrated the Victory Day in hospital. Nosov is the author of many books and
stories.

Vorobyov (1919-1975) was trained at a higher infantry school, fought near
Moscow and was taken prisoner in December 1941.

His best known novellas are "Killed Near Moscow" and "Oh Lord, It's Us!"

Solzhenitsin's prize with a fund of $25,000 is the first and the only big
literary prize in Russia.

During four years of its existence the prize has been awarded to philologist
Vladimir Toporov, poetess Inna Lisyanskaya and prose writer Valentin Rasputin.

******

#3
15 years on, Chernobyl workers flee Ukraine for new life in Russia

SLAVUTICH, Ukraine, April 25 (AFP) -
Disgruntled ex-workers at Ukraine's Chernobyl plant are celebrating
Thursday's 15th anniversary of the world's worst civilian nuclear accident by
packing their bags for a new life in Russia.

"All the top specialists are preparing to leave the region, and 300 of them
have already gone, mostly for Russia," where the nuclear industry is still
booming, said engineer Boris Baranov, who worked at Chernobyl for 25 years.

Between 15,000 and 30,000 people have died as a result of the explosion on
April 26, 1986, which spewed radiation into the atmosphere equivalent to 500
times that of the atomic bomb dropped on Hiroshima in 1945.

But local anger at the Kiev authorities for bowing to Western pressure and
shutting down Chernobyl's last reactor in December is likely to make
Thursday's anniversary a doubly solemn occasion.

Baranov, 60, laments the brain drain to Russia, where 11 Chernobyl-style
nuclear reactors are still in operation, but he concedes that many unemployed
workers have no choice but to join the exodus.

A headhunter for Russia's Bilibinskaya nuclear plant arrived in Ukraine last
week to recruit 50 former Chernobyl workers.

"He was promising good salaries, around 200 dollars a month, and an apartment
in Russia," said Baranov. "Me, I'm too old to uproot myself now. But the
young people, they're ready for anything.

"They've taken the closure of Chernobyl very hard and now many of them want
to restart their lives elsewhere," he added.

In total, Russia has 29 nuclear reactors in use but that number is set to
more than double by 2020 with 40 more coming on line, sparking an upsurge in
demand for highly experienced workers.

Many workers in the Ukrainian nuclear industry were trained during the Soviet
era, and most speak Russian as their first language, so they are richly
prized by their Slav "big brother."

"All my career prospects are blocked at Chernobyl," says Viktor Kuchinsky, a
37-year-old engineer who lives in the small town of Slavutich built in the
wake of the 1986 disaster to accommodate workers at the plant.

"This week, I am due to be promoted to the rank of chief supervisor, but
what's the point of being chief supervisor in a plant that has been shut
down? It's absurd. I'm going to leave as soon as I find another job," he adds.

The Ukrainian authorities have only made around 40 Chernobyl workers
redundant since the final shutdown in December. The rest of the 6,000-strong
workforce continues to be employed overseeing the upkeep and decommissioning
of the plant, spokesman Sergei Pavlovsky said.

But sooner or later the axe will fall -- and the job losses are bound to
accelerate the migration to Russia.

Leaving will not be easy for many, as Viktor Kuchinsky explains: "Chernobyl
became my home from home, I've worked there since I was 14 years old."

Meanwhile, Boris Baranov said he planned to hold his own memorial for the
Chernobyl victims, who are also due to be remembered at a special ceremony
attended by President Leonid Kuchma on Thursday.

"At 1:23 am (the exact time of the 1986 explosion), I will ask my friends and
colleagues to observe 15 minutes silence, one minute for each year that has
passed since the accident," Baranov told AFP.

Others will drink vodka but without clinking glasses, the traditional Slav
way of paying respect to the dead.

******

#4
Moscow Times
April 26, 2001
Editorial
Russia Can Have It Both Ways

Smart politicians know that half the job of getting any proposal approved
is controlling how it is debated, just as smart generals know that most
battles are won before they even begin.

The ongoing debate over the government's controversial plan to import and
reprocess foreign nuclear waste is an excellent illustration of this
truism. The proposal, which passed its second reading in the Duma last week
and seems well on its way to adoption, is being improbably sold as the only
conceivable way to raise the money Russia needs to modernize its dangerous
nuclear plants and to clean up its many badly contaminated sites.

If we don't import spent fuel, advocates say, we'll never be able to help
the millions of people now living in areas that, by any decent standard,
are unfit for habitation.

They are, in effect, trying to link two very different topics and to force
us to accept what is a patently dangerous plan in order to achieve an
important and laudable goal.

We are not taken in by this demagoguery. We know perfectly well that it is
possible — even logically consistent — to be simultaneously against the
importing scheme and for the clean up of the environmental disaster areas
that the nuclear program has already created.

The Nuclear Power Ministry's assertions that importing spent fuel is the
only way to finance cleanups is simply disingenuous.

As far as we are aware, there is no law saying that each ministry must fund
itself. The Defense Ministry does not fund the army by looting neighboring
countries, and the Education Ministry doesn't underwrite textbook purchases
by tutoring Japanese students in its spare time.

If the government is serious about decontaminating the land that its people
live on and the water that they drink, it will allocate money for this
purpose — no strings attached. It is highly unlikely that taxpayers would
complain.

But is the government serious? Last week Norway announced that it is
cutting aid that had been allocated for a nuclear cleanup program in the
Arctic. Why? Because Russia has used the funds to prolong the use of four
Chernobyl-type nuclear reactors instead of decontaminating the Kola
Peninsula. There is no reason to think that things will be any different
with the proceeds of the government's importing plan.

Deputies, don't be fooled and don't think that you are fooling us. Say "no"
to imports and "yes" to cleanups. Tell the Nuclear Power Ministry to shut
up and get to work.

*******

#5
Russia finally joins world pact against dirty cash
By Daniel Mclaughlin

MOSCOW, April 25 (Reuters) - Russia finally ratified a global treaty on
money laundering on Wednesday, a decade after its creation and under
Western pressure to clean up the banking sector and escape a blacklist of
financially murky nations.

The State Duma, or lower house of parliament, voted overwhelmingly to adopt
the international convention, created in 1990 to combat the flow of
illegally gained money through an increasingly integrated world banking
system.

But commentators said it should only be a prelude to a bill submitted by
President Vladimir Putin to the Duma this week, which would provide Russia
with a law on money laundering and give the convention legal teeth on
Russian soil.

The bill is part of Putin's plan to liberalise the economy and banks,
increase transparency and improve the business climate, after Russia lost
at least $20 billion in capital flight last year.

Moscow signed but did not ratify the global treaty in 1999, and was
embarrassed when the influentual Financial Action Task Force (FATF) said
last year that Russia was one of 15 countries which were doing very little
to stop money laundering.

The G7 group of industrial nations, of which the FATF is an arm, urged
Russia at its last meeting in February to ratify the convention, and
Russian officials have said failure to do so could invite sanctions when
the FATF meets in June.

Mikhail Zadornov, a former finance minister and now a deputy on the Duma's
budget committee, said ahead of the vote that ratification could help
Russia reclaim billions of dollars stashed illegally abroad.

"When Russia joins the convention, it will gain the ability to confiscate
funds which were acquired in Russia in criminal ways and bring them back
from abroad," he said on NTV television. "We will join a respectable
society which fights money laundering."

But Sergei Yegorov, president of the Association of Russian Banks, said
much damage had already been done.

"Many commercial banks abroad began closing correspondence accounts of
Russian banks because Russia had not ratified the convention and did not
have its own law on fighting the laundering of dirty money," Yegorov told
Ekho Moskvy radio.

TAINTED IMAGE

Financial scandals battered Russia's reputation in the late 1990s, ranging
from alleged laundering by Russians of billions of dollars through the Bank
of New York, to more recent charges against President Boris Yeltsin's
former aide Pavel Borodin.

Borodin returned to Russia this month on bail from Switzerland, where he is
charged with money-laundering and belonging to a criminal organisation. He
denies the charges.

While ratification of the FATF convention is a positive step in the fight
to stem flows of dirty money, Andrew Somers, president of the American
Chamber of Commerce in Russia, said on Wednesday that legislation and bank
reform must follow quickly.

"That would definitely have an effect and deal in a very positive way with
the very negative image Russia has, after being recently rated just above
the bottom of a money-laundering list," Somers told reporters.

"The legislative effort will be very important for the investment climate
in Russia by removing this stigma."

*******

#6
Russia: Lack Of Funds Hinders Access To Anti-AIDS Drugs
By Yevgenia Borisova

At first glance, Russia seems to take an almost paternal role in caring for
its citizens with HIV and AIDS. Russian law stipulates that treatment of
HIV-positive patients must be funded by the state. Moreover, Russian
pharmaceutical companies have recently developed two anti-viral drugs that
are as effective -- and cause fewer side effects -- than Western analogs like
AZT. But as Yevgenia Borisova reports for RFE/RL, Russia's lack of adequate
social funding means only a handful of its growing number of AIDS sufferers
have access to the drugs and care they need.

Moscow, 25 April 2001 (RFE/RL) -- In late 1999, Russian drug researchers
announced that they had developed an AIDS-treatment medication that could
compete with -- and possibly surpass -- AZT, the West's most common
anti-viral drug for people suffering from HIV and AIDS.

The Russian drug, phosphazide, is said to offer one notable advantage: it is
far less toxic than other anti-viral drugs, and therefore causes fewer side
effects. Alexander Yurin, of the Russian Federal AIDS Center in Moscow, says
clinical tests indicated that patients taking phosphazide suffer side effects
six to eight times less often than patients taking AZT.

"With phosphazide, the only negative effect is nausea and vomiting with some
patients taking large doses of it. But it happens much less often than with
those [patients] taking AZT."

There are other advantages to phosphazide as well. Marina Kukhanova heads the
Krayevsky Laboratory, which spent eight years developing the drug. She says
the HIV virus can take five to 10 times longer to build up a resistance to
phosphazide than to AZT.

The state-funded AIDS center and the Krayevsky lab are just two members of
the pool of Russian organizations working to develop anti-AIDS drugs. Another
is the private AZT Association, which manufactures phosphazide and another
AZT analog, tymazide.

Mikhail Kaikov, the general director of the AZT Association, says that a
major factor in Russia's growing AIDS problem is the state's failure to
provide adequate funding for drug development and production:

"When you try to do something here [in Russia], you face something fairly
routine -- a [complete] absence of money in the budget, or an insufficient
amount. [This is] because the budget does not take into consideration the
epidemic growth [of people with HIV infection] throughout Russia and the
regions."

The official number of HIV infections in Russia has doubled over the past
year alone, with 102,000 people registered as HIV-positive and an additional
448 suffering from full-blown AIDS. The drug manufacturers say the state is
only giving them a tenth of the money they need to adequately treat the
country's HIV-positive.

This year, the Russian Health Ministry reported that just $4.2 million were
allocated for HIV treatment -- three times more than last year but, according
to health experts, still far from enough.

Last year, the Russian AZT Association was given $1 million from the state --
enough to produce phosphazide and tymazide treatments for only 1,000
patients.

Although tymazide is relatively inexpensive at $90 per monthly prescription,
phosphazide is markedly higher at $240 a month. Kaikov says his firm simply
does not have the money to produce sufficient amounts of either drug.

Kaikov adds that the state has yet to sign a contract with his firm this
year, meaning he does not know how much cash he can rely on getting. In the
meantime, he says, the AZT Association is looking for alternative ways of
raising funds so that it can increase production.

One possible solution is selling the drugs abroad. Phosphazide has already
passed pre-clinical tests at Canada's McGill University and could move on to
clinical tests in other Western countries.

The AZT Association already holds the license to make and sell drugs in the
United States, Japan, South Korea, and several European Union countries. But
Kaikov says it will take at least five more years -- and $50 million -- to
complete all the necessary clinical tests and approvals to begin sales
abroad.

"We are looking for investments -- there might be absolutely different forms
of attracting investments, and there are different approaches to it in
different countries."

At the same time, the Krayevsky Laboratory is actively working on a new
anti-viral drug. Kukhanova says the new drugs could produce even fewer side
effects than phosphazide.

"We have obtained several substances that at the first stage of biological
tests on HIV-infected cells show activities comparable with existing drugs,
but with toxicity levels that are up to 60 times lower than that of
phosphazide. We are now testing the most promising substances on animals."

But Kukhanova's cash-strapped laboratory cannot count on making fast
progress: she has only $13,000 in state grants to work on HIV and AIDS
programs this year. Once salaries are paid, she says, there will be nothing
left for supplies or new equipment.

*******

#7
Irish Times
26 April 2001
Belarus brought to its knees by 'invisible enemy'
Fifteen years after Chernobyl, the world has
moved on. But for Belarus the problems are only beginning. Thyroid cancer
rates have risen by 2,400 per cent since the explosion, writes Eugene Cahill
Eugene Cahill is press officer of the Chernobyl Children's Project.

At 1.23 a.m. on April 26th, 1986, an explosion occurred in the No. 4 reactor
at the Chernobyl nuclear plant in Ukraine. Some 190 tons of highly
radioactive uranium and graphite were blasted into the atmosphere.

The radioactive cloud released from the burning reactor travelled north into
the neighbouring country of Belarus. It then moved east over western Russia
and west across Europe.

The fallout from the disaster has directly affected over nine million people
in Belarus, Ukraine and western Russia. The people of these countries were
exposed to radioactivity 90 times greater than that released by the atom bomb
dropped on Hiroshima. The UN has declared the disaster the worst
environmental catastrophe in history.

It is the country of Belarus which has suffered, and continues to suffer,
most from the disaster: 70 per cent of the radiation has fallen on its land
and people.

Mr Vladislav Ostapenko, head of Belarus's Radiation Medicine Institute, told
a recent press conference that "science cannot yet completely assess the
consequences of the Chernobyl accident, but it is plain that a demographic
catastrophe has occurred in our country.

"We are now seeing genetic changes, especially among those who were less than
six years of age when the accident happened and they were subjected to
radiation. These people are now starting families."

Medical research has shown that radioactive elements (primarily caesium 137
and iodine 131) cross the placental barrier from mother to foetus,
contaminating each new generation. Faced with soaring levels of infertility
and genetic changes, the gene pool of the Belarussian people is now under
threat.

The rates of thyroid cancer have increased by 2,400 per cent in the 15 years
since the disaster and this figure is expected to continue to rise. There has
been a 1,000 per cent increase in suicides in the contaminated zones and a
250 per cent increase in congenital birth deformities.

With 99 per cent of the land of Belarus contaminated to varying degrees, the
people of this stricken country are forced to live, eat, drink and breathe
radiation.

Ms Adi Roche, executive director of the Chernobyl Children's Project, which
has initiated 14 aid programmes for the stricken regions, has travelled on
many humanitarian aid convoys to Belarus. She has found it to be "a country
on its knees, struggling to fight against the invisible enemy of radiation,
an enemy that is slowly destroying its people".

The Chernobyl disaster has financially crippled Belarus. It has cost the
country 25 per cent of its annual national budget and it is estimated that by
2015 the fallout from the accident will have cost Belarus $235 billion.

Because there is no international law governing an accident such as that
which occurred at Chernobyl, Belarus has received no compensation for the
damage to it from either Ukraine or Russia.

In a vicious and toxic cycle, the country cannot afford to minimise the
effects of the disaster because it is so economically crippled as a direct
result of it.

Within the world's most radioactive environment, some 2,000 towns and
villages lie eerily silent and empty. These towns were evacuated in the weeks
and months following the disaster because of the extremely high levels of
radioactivity.

Yet, in a very worrying development, the Belarussian authorities are
attempting to change the existing laws relating to the protection of citizens
suffering from the disaster to reduce the financial burden on the state.

Prof Nesterenko is a Belarussian scientist who carries out independent
research into the effects of the contaminated land. His research is crucial
to all aid work relating to the disaster carried out in Belarus.

He has warned that the authorities are propagating a return to living in
contaminated zones instead of giving objective information to the population
about the dangers to health of living in contaminated areas.

In spite of such a large-scale tragedy, the issue has been largely forgotten
or ignored by the international community and the voices of the victims
remain largely unheard.

Fifteen years after the disaster - at a time when its full consequences have
not yet peaked - there is a growing complacency within the international
community about it.

There is an urgent and vital need for the Chernobyl issue to be placed back
at the top of the international agenda.

Most of the aid to the affected regions is collected and distributed by
international non-governmental organisations. If the problems are to be
correctly tackled, it is imperative that increased financial commitments be
given by UN member-states to the relief effort. Every government and every
country has a crucial role to play.

Although the Chernobyl power plant was finally closed down last December, it
is by no means the end of the problem. An omnipresent threat of nuclear
apocalypse still hangs over much of Europe.

Within the last few weeks, a former director of security services in the
Chernobyl region, Mr Valentine Kupny, has warned that radiation is still
seeping from the entombed reactor.

Speaking in last week's German weekly Focus, he alerted people to the fact
that the steel casing entombing the nuclear reactor was crumbling and in
imminent danger of collapse. When this casing collapses, much of what will
happen will depend on the wind.

Mr Kupny has said that nobody knows exactly what is happening inside the
reactor. "In September 1996 we recorded the last atomic chain reaction but it
is very possible that something is happening now. We don't know."

Mr Kupny was dismissed from his post shortly after his interview for the
article. Many people do not want to hear the truth.

Isn't it about time that we did?

*******

#8
Wall Street Journal
26 April 2001
[for personal use only]
U.S. Financier Sits at Center Of Russian Media Tempest
Battle Over NTV Control Is Familiar For Jordan, Warrior of Two Cultures
By ANDREW HIGGINS and ALAN CULLISON
Staff Reporters of THE WALL STREET JOURNAL

MOSCOW -- Looking for a way to break Vladimir Gusinsky's grip on Russia's
NTV, the media boss for Russia's natural-gas monopoly flew to Switzerland
last month to talk strategy with an envoy from a Los Angeles investment fund
that owned a small but critical stake in the television network.

Because neither spoke the other's language, they needed an interpreter. On
hand for the job at a hotel overlooking Lake Geneva was Boris Jordan, a
34-year-old American financier of Russian descent.

A month later, Mr. Jordan now runs NTV out of the eighth-floor Moscow office
of the network's ousted general director -- and the center of an
international storm over the future of free speech in Russia under President
Vladimir Putin. "It's been a rough couple of weeks," he says. The U.S. State
Department is crying foul. Many of NTV's best-known anchors have quit. The
European Union wants to meet them to discuss press freedom.

Add it all up, and Mr. Jordan faces what he calls "the biggest challenge ...
in my professional career."

In some ways, though, it is a familiar role for Mr. Jordan, a New York
University graduate who, for nearly a decade, has placed himself at the
hazardous intersection between Russia and the West. As a banker for Credit
Suisse First Boston in Russia and then as a founder of a Moscow-based
investment bank, he plunged into a series of high-profile and often
bare-knuckled business struggles.

Mr. Jordan, whose grandparents fled Russia after the 1917 revolution, grew up
on Long Island but spent summers at a camp linked to an émigré branch of the
Russian Orthodox Church and learned to sing Czarist-era anthems and psalms.
After moving to Moscow in 1992, Mr. Jordan set himself apart from other
foreign businessmen, most of whom spoke little Russian, as someone who could
understand, and operate in, two very different worlds. It made him wealthy.
It also made him enemies.

Powerful aides to former President Boris Yeltsin pulled his visa during a
1996 battle for a steel factory; a former finance minister quibbled over
details of his Russian ancestry; rivals and some former partners have
complained that he pushed too deeply into the murky byways of Russian
business. In an interview last year, Mr. Jordan described the pitfalls of
trying to straddle two cultures, saying he was "disliked by the foreigners
for his Russianness, and by the Russians for his foreignness."

His job at NTV, like most of his previous ventures, flows from a flair for
brokering between Russian and foreign interests -- in this case between OAO
Gazprom , which owns 46% of NTV, and Capital Research & Management, a unit of
Capital Group Cos. of Los Angeles, which holds 4.5% of the television
network. The head of Gazprom's media arm, Alfred Kokh, is an old friend of
Mr. Jordan. Their daughters play together, and the families vacation
together. Last month, Mr. Jordan arranged for Mr. Kokh to meet Martial
Chaillet, a representative for Capital Research in Geneva. A Capital Research
spokesman declined to discuss details of the talks.

Two weeks later, Gazprom called an NTV board meeting at the gas company's
glass-tower Moscow headquarters. Capital Research abstained in a vote for a
new board but gave Gazprom the quorum it needed to engineer a board-room
coup. The gas company ousted Mr. Gusinsky's allies and then swiftly convened
a meeting of a new board and named Mr. Jordan to run NTV.

Mr. Jordan scoffs at accusations from NTV journalists who resigned in protest
that he wants to muzzle the network's boisterous voice on behalf of the
Kremlin. His job, he says, is to bring Western-style financial controls to a
Russian media business buried in debt and beholden for too long to the
political and business interests of Mr. Gusinsky, who fled Russia last
summer. It is, he says, "a natural step for someone with strong financial
background and a good understanding of the lay of the land in Russia in order
to come into a very difficult situation."

Indeed, Mr. Jordan has made his career in Russia by offering to smooth
Russia's deeply rutted business landscape. It has been a bumpy ride.

Hired by Credit Suisse First Boston to develop its then-tiny Moscow office,
Mr. Jordan arrived just as a new Russian government stacked with young
free-market economists was launching plans to put Soviet industries into
private hands. Mr. Jordan advised them how to do it in face of strong
opposition from a legislature then still dominated by the Communist Party.

Along with another CSFB banker, Stephen Jennings, he then scrambled to buy up
privatization vouchers that had been issued to Russian citizens and sold them
to Western investors at a markup. In 1995, Messrs. Jordan and Jennings left
CSFB to found their own investment bank, Renaissance Capital, where Mr.
Jordan headed up a private equity fund, Sputnik. Investors say that Mr.
Jordan acquired a reputation as a "jungle guide" -- a trusted scout who could
guide them to profit through Russia's potentially lucrative but perilously
unregulated markets.

Among the foreign investors who turned to him to find a safe path were George
Soros and Harvard University. Mr. Jordan often led them to Vladimir Potanin,
a member of a small group of Russian moguls known as "oligarchs." Teaming up
with Mr. Potanin, Mr. Jordan's investors snapped up stakes in the country's
fifth-largest oil company, Sidanco, and the biggest telecommunications
holding company, Svyazinvest. Sputnik also bought a stake in the country's
biggest steel plant, Novolipetsk.

But some of Mr. Jordan's biggest deals turned out to be duds. Just as
Russia's 1998 market fallout helped destroy the finances of Mr. Gusinsky's
media empire -- and paved the way for Gazprom's recent takeover of NTV -- it
also undid much of Mr. Jordan's labor. Mr. Soros called Svyazinvest his
worst-ever investment. Sidanco went into bankruptcy, though it is now back on
its feet.

Hit hard by the 1998 crash, Mr. Jordan's Renaissance Capital fell behind in
debt payments and had to restructure. Mr. Jordan left and took the equity
fund Sputnik with him. He still has office space in the same building as
Renaissance, but the door leading to his erstwhile partner, Mr. Jennings, has
been taped shut.

"We don't want to be associated with the situation at NTV," Mr. Jennings said.

*******

#9
Date: Wed, 25 Apr 2001
From: Foreign Policy Research Institute <fpri@fpri.org>
Subject: A U.S. Policy For Russia by Alvin Z. Rubinstein

Foreign Policy Research Institute
A Catalyst for Ideas
E-Notes
Distributed Exclusively via Fax & Email

A U.S. POLICY FOR RUSSIA
by Alvin Z. Rubinstein
April 25, 2001

Alvin Z. Rubinstein is a Senior Fellow of the Foreign Policy
Research Institute; co-chairman of FPRI's InterUniversity
Study Group on Russia, Europe, and the United States; and
Professor of Political Science at the University of
Pennsylvania.

For related FPRI E-Notes, see "From Russia Without Love," by
Alexander M. Haig, Jr., and Harvey Sicherman (March 2001),
and "Nuclear Smuggling from the Former Soviet Union: Threats
and Responses," by Rensselaer Lee (forthcoming).

A U.S. POLICY FOR RUSSIA
by Alvin Z. Rubinstein

To the administration of George W. Bush falls the
responsibility for fashioning a coherent, long-term policy
toward Russia. When the Cold War ended in 1990 and the
former Soviet Union unexpectedly imploded in December 1991,
the first Bush administration demonstrated statecraft at its
best, in guiding the U.S.-Soviet relations peacefully
through that critical period. Perhaps at no time during the
global rivalry had the uncertainty and danger been greater.
Dealing diplomatically with one leadership that was in the
process of relinquishing power (Gorbachev's) and with
another that was seizing the reins of a humbled superpower
in the throes of major regime change and the loss of 25
percent of its territory and 40 percent of its population
(Yeltsin's) required judgment, patience, and a steady
course. It was George Bush's finest hour.

His successor, for a combination of strategically short-
sighted reasons, downgraded the Russian issue. He failed to
provide sustained attention or effectively target assistance
to a Russia seeking a democratic and Western-oriented path.
Instead of cultivating a cooperative relationship on the
basis of a few shared common security interests, the Clinton
administration substituted atmospherics for policy, relying
on ego-enhancing media events and official visits, and an
uncritical courtship of President Boris Yeltsin. But public
displays of camaraderie cannot replace sound agreements. At
the end of the Clinton era, U.S.- Russian relations were in
worse condition than at any time since the early 1980s.

Any authoritative assessment of the present administration's
attitude toward Russia must await publication of the
strategic assessment being prepared by Secretary of Defense
Donald Rumsfeld and due to be completed this summer.
However, on the basis of what we do know about the personnel
at the heart of the effort, the administration of George W.
Bush will be less likely to cater to Russian pretensions of
still being a major Great Power; less sympathetic to its
economic needs and requests; less apt to indulge in hollow
expressions of comprehensive cooperation; less tolerant of
Russia's freebooting arms sales to rogue regimes; and less
sympathetic with its snail-like pace of movement toward
democratization and the establishment of a market-oriented
economy. The administration is impatient with Russia's
dilatory approach to crucial domestic problems from public
health to Chechnya, and annoyed with President Vladimir
Putin's grandstanding tours abroad in transparent efforts to
stoke anti-American sentiment and disrupt the NATO alliance
by wooing Germany and France. Moreover, Putin's
centralization of power without signs of an agenda for
reforming society or the economy is worrisome. In brief,
the administration's propensity is toward deep distrust of
Russian declarations and intentions.

Before venturing to offer recommendations for the
consideration of the Bush administration, it may be
appropriate to make clear four assumptions that underlie my
own overall assessment and determine the consequent
suggested approach.

First, Russia is not an enemy; it may not be a friend, but
there is nothing inevitable about its becoming a global
adversary as it was in the recent past. Putin's Russia is
not bent on restoring the empire, much less seeking
domination over the Eurasian heartland. It lacks the
capability, the resources, and the ideological impetus.
Actually, empires are obsolete, economically as well as
politically. A severely wounded civilization and power
still in decline, Russia must look inward to its own
parlous condition or face further retrogression. Whatever
its perception of itself and its role in the world, in this
era of globalization and transparency, its relative
backwardness is apparent to all. If China took 30 years to
shed the tragic Maoist legacy, Russia will require far
longer to overcome the deformations of the Soviet era.
During his eight years as Russia's first president, Yeltsin
failed to set Russia on the road to essential reforms.

Second, neither in Europe nor in the Far East does Russia
threaten America's allies or national interests. In Europe,
where the U.S. national interest is basically the same today
as it was at the beginning of the 20th century, namely, to
ensure that no one power dominates the European continent,
the American position is stronger militarily than ever
before. But Clinton's restless activism and domestically
driven acceleration of NATO's timetable for enlargement
prompted Russia to question American's benign hegemonial
ambitions. As a result, the European security environment
has been unnecessarily repolarized Specifically, Russia
fears a second tranche -- a further expansion that would
bring the Baltic States into NATO. This could prove
especially tension-generating because of Bush's stated
determination to push a missile defense program that Russia
believes could jeopardize its nuclear deterrent.

There should be no mistaking the position of the Russian
military -- politically and strategically. Certainly,
expansion has had chilling effects on Russian-American
relations, and reopened a psychological and political divide
that will not easily or soon be bridged. In light of
Yeltsin's experience with the Clinton administration, Putin
most likely assumes the United States is hostile to Russia's
concerns and interests. If so, he may be expected, given
his weak position, to engage in wide-ranging diplomatic
maneuvering and adept use of the limited military,
political, and economic instruments at his disposal to
safeguard and advance Russian foreign policy interests. It
would be strategically unwise were the United States to do
nothing to try to reverse Russia's road to alienation.

Third, looking ahead to the next decade, coalition warfare
will be the mode of conflict of choice in campaigns against
other nation-states, as it was, in NATO's war against Serbia
in the spring of 1999, and in struggles against terrorism.
Coalitions are essential for democracies in this age of
consensual policymaking to deter and defeat the designs of
rogue states and movements. An inclusive strategy should be
developed wherever possible. But this requires making
judgments about priorities. In thinking about Russia it is
important we consider not just what Russia may do but also
what it may not do. For example, as a member of the United
Nations Security Council, Russia can exercise its veto power
to stymie a wide range of U.S.-backed measures that -- for
diplomatic reasons -- requires a UN imprimatur. Just as
there would have been no Gulf War to undo Iraq's aggression
against Kuwait had the Soviet Union not cooperated with the
United States, so in the attempt to arrest the proliferation
of weapons of mass destruction, Russia's assistance would be
invaluable.

My final assumption is that Russia is an integral part of
Christendom. For most of the past 300 years Russian elites
have been culturally Western-oriented. In an age of growing
ethnic, religious, and cultural differentiation, the sense
is pervasive that Russia aspires to be accepted as part of
Europe. Russia's society was unleavened by religious
reformations and free-wheeling capitalistic influences,
which played so central a role in transforming the rest of
Europe. But its culture -- music, literature, architecture,
painting, dance -- has been influenced by European currents;
in turn, the streams of Russian creativity and thought have
touched every part of Europe and America. From 1918 to
1991, the communist epoch separated Russia from the rest of
Christendom. But this is the past, and not a necessary
prologue to the future. It is in the U.S. national interest
that Russia and America resume the grand reconciliation that
was started in the late Reagan era.

President Bush has made a strong commitment to strengthen
U.S. security and defense capability. His key advisers are
experienced professionals. A first recommendation would be
for them to explore a development that started at the end of
the first Bush administration but was only erratically
continued under Clinton -- the close, working relationship
with the Russian military, particularly on nuclear issues.
Fred C. Ikle, Undersecretary of Defense for Policy in the
Reagan administration, had it right when he told Congress
not to be diverted from strengthening ties with Russia on
this issue: "There is only so much time in high level
meetings to cover multiple agendas. The nuclear issues that
require Russian action are so important, so overwhelming,
that we must focus all our leverage and influence in Moscow,
with all the carrots and sticks that we command for the
continuing negotiation with Russian authorities." What he
said in 1991 is even more urgent in 2001.

Notwithstanding straitened circumstances and a diminished
conventional weapons capability, Russia remains a nuclear
superpower, second only to the United States; and only the
United States is able to negotiate effectively with Russia
on a range of critical nuclear and nuclear-related issues:
to help ensure a reliable command and control system,
decrease the vulnerability to theft of nuclear stockpiles,
enhance the safety of nuclear facilities and weapons grade
material, improve verification procedures, curb the
diffusion of nuclear weapons-related technologies and
equipment, and so on. In any effort to forestall the
emergence of new nuclear-capable states, Russian
collaboration is essential.

The most imaginative piece of legislation charting U.S.-
Russian military cooperation remains the Nunn-Lugar Act,
formally known as the Cooperative Threat Reduction Act,
passed in late 1991. It focused on the downsizing of
nuclear weapons stockpiles, with extensive verification
procedures to ensure that the lethal radioactive cores were
rendered inert and buried. Congress should adequately fund
and expand its operation. The money we spend to help the
Russians in this effort enhances our own security.

Second, our government needs to be clear about its aims in
Europe, to distinguish what is essential for our security
from what is merely desirable. No power challenges U.S.
preeminence in Europe, our allies are at peace and secure,
and the addition of new members to NATO would unnecessarily
increase the defense burden without enhancing strategic
stability. Indeed, further enlargement of the alliance to
include the Baltic States will surely worsen relations with
Russia, very likely aggravate tensions to a point of no
return on the road to repolarizing Europe, and induce Putin
to upgrade his nuclear and missile forces and forge stronger
links to China. And, as so often happened in Russia's
history, the preoccupation with security would quell
whatever prospects exist for a more open and reform-minded
leadership.

Nothing prevents the European Community (EC) from admitting
Estonia, Latvia, and Estonia, and whomever else it wishes.
But keep NATO separate. As it is, NATO's bureaucracy is
bloated, preoccupied with conferences, perks, and reports,
and less with security, given the absence of serious threats
to the alliance. Too much can be made of its "out-of-area"
activities in the Balkans, which hardly justify any further
enlargement at this time.

Third, the U.S. policy of containing Russia in the Far East
should be modified. Relative to all the other regional
actors in Asia, Russia is weaker than it has been since the
early years of the 20th century. Angered by Washington's
policy of trying to marginalize it to the extent possible,
Moscow seeks ties with whomever it can. Not surprisingly in
its courtship of China, it has emulated the American policy
of commercialism: whereas America's coin of the realm are
supercomputers, the latest Boeing aircraft laden with
advanced electronic equipment, and other types of dual-use
technology and equipment, Russia's is modern weaponry,
virtually anything in its arsenal. Both countries seem
hell-bent on maximizing exports, seemingly without regard
for the strategic consequences. With a steeply rising
deficit in its balance of trade with China - now in the
vicinity of $100 billion a year - the United States is
becoming more the supplicant than the prudent lender at the
Chinese money table. On the Korean Peninsula, the U.S.
policy of denying Russia any role in efforts to foster
stability and security is short-sighted.

Russian analysts know that they are building up a more
powerful China with which they will have to contend in the
future, but they blame the United States for their sense of
beleaguerment. In addition to NATO enlargement, NATO's use
of force against Serbia, and U.S. moves to authorize
construction of a national missile defense and possibly
scrap the ABM treaty, they cite NATO's Partnership for Peace
(PfP) activities in Transcaucasia and Central Asia. PfP's
intrusiveness in the form of military exercises held with
Kazakh, Uzbek, Kyrgyz, and Georgian forces and its
encouragement to these countries to seek formal security
ties with NATO are viewed as part of a general U.S. strategy
of gaining control of oil and natural gas pipelines and
reserves in the region. This "New Great Game," the meshing
of anti-Russian containment with commercialism in the quest
for spheres of influence all along Russia's vulnerable
southern periphery, worries Moscow. Should China prove to
be the greater long term challenge to significant U.S.
national interests in Asia, then the current exclusionary
policy toward Russia is ill-suited for the strategic
environment of the foreseeable future.

Fourth, Some improvements in the U.S.-Russian relationship
in any or all of the three issue areas noted above could
have a spillover effect elsewhere. For example, Russia
could be a help in the fight against drug trafficking, the
smuggling of illegals, and crime syndicates whose
operations, which are spread across Central Eurasia and
Russia, have their sights set primarily on Eastern and
Western Europe as their lucrative targets, not Russia.

In the Middle East, Russia sells arms and technology to Iraq
and Iran, much to America's ire. But Moscow's principal aim
is market share and hard currency earnings, not strategic
advantage or strategic denial, as it was in the Cold War
era. Improved U.S.-Russian relations, coupled with some
generous financial packages, could bring changes in Russian
policy, which could be reassuring to the Bush
administration.

Combating terrorism and militant Islam are two broad
objectives the United States and Russia share. Of course,
Russia's behavior in its autonomous republic of Chechnya is
a problem for human rights advocates, but the two countries
will have to agree to disagree and move on to higher
priority concerns, as was done during the Cold War.
Moreover, in time, we may find connections between the
terrorist attack on the USS Cole in Aden, the bombing
several years ago of the U.S. Army barracks in Saudi Arabia,
and the insurgency in Chechnya. Russia is interested in
stability in Transcaucasia and Central Asia, and in
recognition of its national interest there. Like the United
States, Russia is trying to assert influence and affect
regional developments, not impose a new imperium. Prudence
dictates that their competition be disciplined by their
broader shared strategic objectives.

In the U.N. Security Council, Russia is a necessary partner
in promoting long overdue change in the financing and
purposes of peacekeeping forces, in managing multilateral
responses to humanitarian catastrophes, and in refocusing
U.N. priorities away from mushrooming welfarism to
unaddressed security challenges -- military, energy,
environmental, and technological.

Finally, antipathy toward Russia is deeply rooted in the
United States. Russia may be the only country without a
lobby among its former countrymen now living in the United
States. My final recommendation would be to direct
attention to a field where Russia can help the United
States: education. Whatever its many faults, the former
Soviet Union did turn out well-trained students in
mathematics and the sciences. The shortages in these
subjects in U.S. high schools is near crisis proportions.
Request Moscow's assistance in recruiting Russian teachers
to work in the United States for two or three years. The
federal government could fund a program involving one
thousand or more trained Russian high school teachers,
commencing with a two-month intensive course in English and
familiarity with the United States. After that, teams of
teachers would be assigned to target schools in as many
states as expressed interest and a willingness to share the
cost with the federal government. Benefits should accrue to
all parties.

For our part, in the event that Putin delivers on his
promise to privatize land and institute a land reform
program, the United States government could offer to help
finance teams of agricultural specialists to work with
Russian farmers in modernizing the way they produce,
package, and market their crops.

The Russia that once was need not predestine the Russia to
come. A wise U.S. foreign policy can go a good way toward
determining the kind of Russia we deal with in the years
ahead.

******

#10
From: "Ariel Cohen" <ariel.cohen@heritage.org>
Subject: Putin's First Year - The Heritage Foundation Discussion
Date: Wed, 25 Apr 2001

YOU ARE CORDIALLY INVITED TO ATTEND A DISCUSSION ON: PUTIN'S FIRST YEAR: DEVELOPMENTS IN RUSSIAN SOCIETY, FOREIGN POLICY AND U.S.- RUSSIAN RELATIONS

Featuring
STEPHEN BLANK
U.S. Army War College
IAN BREZINSKI
Senior Professional Staff, Senate Foreign Relations Committee
Ariel Cohen
Research Fellow, Russian and Eurasian Studies
The Heritage Foundation
BLAIR RUBLE
Director, Kennan Institute for the Advanced Russian Studies

May 7 is the first anniversary of Vladimir Putin's inauguration as
the second president of Russia. Since his appointment as Prime Minister in
August 1999, Russian foreign policy and society have changed. Russian
external behavior causes deep concern among U.S. policymakers over
proliferation of ballistic missile technology, sale of advanced military
systems and elements of weapons of mass destruction technology. Moscow
opposes the US ballistic missile defense plans and promotes economic
expansion in the "near abroad" to re-establish Russian dominance. Domestic
developments, such as crushing of the opposition media and consolidating
federal and parliamentary control, make Putin's Russia more authoritarian
than under his predecessor, Boris Yeltsin.

Please join us to hear our panel of experts discuss these developments and
US foreign policy towards Russia on Putin's first presidential anniversary.

TUESDAY, MAY 8, 2001
12:00 P.M.
THE HERITAGE FOUNDATION'S LEHRMAN AUDITORIUM
214 MASSACHUSETTS AVENUE, NE
PLEASE RSVP TO (202) 675-1752
OR SEND YOUR EMAIL TO lectures.seminars@heritage.org
www.heritage.org

Ariel Cohen, Ph.D.
Research Fellow in Russian and Eurasian Studies
Kathryn and Shelby Cullom Davis
Institute for International Studies
The Heritage Foundation
Washington, D.C.
ariel.cohen@heritage.org
www.heritage.org

*******

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