April 26, 2001 

This Date's Issues:   5223 • 5224 • 5225

Johnson's Russia List
#5225
26 April 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Ukraine parliament dumps PM, protest swells.
2. Reuters: NEWSMAKER-Ukraine's ousted premier a pro-Western reformer.
3. Reuters: U.N. marks 15th anniversary of Chernobyl disaster.
4. strana.ru: Chernobyl: Russia hit more than others.
5. BBC Monitoring: Russian prosecutor-general wants to revise privatization.
6. Vremya Novostei: Dmitry Volkov, PROSECUTOR HITS THE ROOF. Vladimir Ustinov
expresses allegations against the court reforms.
7. Novye Izvestia: Nikolai Aleksandrovich, THE TAME MANAGER. Why Gleb Pavlovsky is promoting Anatoly Chubais.
8. The Times (UK) editorial: Fewer and weaker. Russia's Government readies itself to curb its oligarchs. (re Gazprom)
9. Financial Times (UK): Andrew Jack, Gazprom investors welcome board's decision.
10. Moscow Times: Alla Startseva, PwC Study: $10Bln Lost To Opacity Every Year.
11. RFE/RL: Paul Goble, When There Is No Opposition.
12. New York Times: Patrick Tyler, Grozny Journal: Life Is Terrifying in Chechnya's Sad Capital.
13. Reuters: Armenia says no Azeri rule for Nagorno-Karabakh.
14. Itar-Tass: Kasyanov Submits Draft Land Code to Duma.
15. strana.ru: Presidential adviser urges creation of stabilization fund. (Illarionov)
16. BBC Monitoring: Kommersant, Putin's new manager puts blame on his predecessor Borodin.]

*******

#1
Ukraine parliament dumps PM, protest swells
By Michael Steen

KIEV, April 26 (Reuters) - Ukraine's parliament voted overwhelmingly on
Thursday to oust Prime Minister Viktor Yushchenko in a move likely to hobble
the country's faltering reform programme and escalate its political crisis.

The decision outraged thousands of Yushchenko supporters who swarmed through
Kiev towards parliament in the biggest demonstration yet of months of
political turmoil and protests against President Leonid Kuchma.

Kuchma, who has repeatedly criticised the government and failed to back his
prime minister publicly, said this week the government's breakup would not be
in Ukraine's best interests.

"Shame, shame. Kuchma out, Kuchma out," the crowd roared outside parliament.
Police estimated some 15,000 people had joined the protest. Inside,
Yushchenko vowed to fight on.

"I am not leaving politics. I am leaving so I can return," he said as his
supporters yelled "Yushchenko, Yushchenko!."

It is unclear who might succeed Yushchenko. Deputies said the divisions in
parliament meant only a complete unknown could be nominated to replace him.

The crowd cheered as Yushchenko emerged from parliament, flanked by his
colleagues and wiping tears from his eyes.

"I said this government would be for the people and for all the citizens of
Ukraine. Thank you to all those who supported me and my government for the
past one and a half years," he said.

A coffin daubed with the names of the parties which opposed Yushchenko was
lain at the steps of parliament. Opposition deputies called for Kuchma's
impeachment.

Around 3,000 protesters marched to Kuchma's residence nearby, confronted by
lines of police. Armoured riot police stood quietly by in adjoining streets.

"The police are with the people, the filth are with Kuchma," the crowd,
carrying national flags, chanted.

The vote, sponsored by the Communist Party and backed by large sections of
parliament, sealed Yushchenko's fate although it was unclear whether the rest
of the cabinet would be dismissed or retained in a caretaker capacity.

Kuchma has now to sign a decree relieving his cabinet chief of his post but
it is unclear when that will take place.

Deputies voted in two stages to oust the premier. In the final stage, the
450-seat parliament voted 263 to 69 to dismiss Yushchenko, a former central
banker appointed in December 1999. In a preliminary vote earlier in the day,
deputies had voted 262 to 86 against the prime minister.

Yushchenko's belt-tightening reforms and measures to clean up Ukraine's murky
economy had angered many deputies and run up against entrenched business
interests across the former Soviet state of 49 million people.

WEST LOSES ITS BRIGHTEST HOPE

Western investors and the International Monetary Fund are expected to be
alarmed by the demise of Yushchenko, whom they regard as the former Soviet
state's best hope for reform.

Polls showed Yushchenko was Ukraine's most popular politician with a
reputation for honesty in a country notorious for corruption.

"He raised our pensions and is a decent man who works for the people," Maria
Pitrivna, a pensioner on the march, said.

Communist Party leaders have dismissed suggestions Yushchenko could be
replaced by Serhiy Tyhypko, head of the Labour Ukraine party and a
progressive former economy minister who is well regarded by Western investors
and the IMF.

Yushchenko has said he would not accept a caretaker post if dismissed, and
analysts say serious candidates, such as Tyhypko, would want to wait for
parliamentary elections in early 2002 to win power with a credible mandate.

Western diplomats in Kiev have said the possible collapse of such a
pro-Western government is a sign that Ukraine may be drifting back into the
orbit of giant eastern neighbour Russia.

(Additional reporting by Pavel Polityuk, Tony Roddam in Kiev)

*******

#2
NEWSMAKER-Ukraine's ousted premier a pro-Western reformer
By Olena Horodetska

KIEV, April 26 (Reuters) - Viktor Yushchenko, ousted by parliament on
Thursday, is a dashing former central bank chief renowned as much for giving
the ex-Soviet state its own currency as for struggling to reform the economy.

Appointed prime minister in December, 1999, Yushchenko was seen as one of the
country's best hopes for a fresh start, but was under fire for most of his
one-and-half year term.

Parliament voted to sack him on Thursday, axing the man who had been a
darling of Western lending institutions and foreign investors even as the
country was battered by a political scandal surrounding President Leonid
Kuchma.

Yushchenko had vowed to implement sweeping reforms in every sector of the
economy to stamp out poverty and corruption after years of economic
mismanagement and decline.

Jaded compatriots were sceptical he would succeed in the face of massive
opposition from entrenched business interests, dubbed "oligarchs" by
Ukrainian media.

One weekly political cartoon lampooned Yushchenko as Baron von Munchausen, an
18th century German whose liking for telling tall tales prompted a medical
condition -- when patients invent illnesses -- to be named after him.

Others said the government under Yushchenko was one of the most successful in
the history of independent Ukraine.

It managed to achieve Ukraine's first economic growth after almost a decade
of shrinking, escaped huge defaults on Eurobonds, pushed through vital
reforms in the financial and energy sectors and speeded up stalled
privatisation.

Yushchenko took pride in his achievements but acknowledged much remained to
be done. He warned repeatedly the country could plunge into chaos if his
government was forced out.

REPUTATION FOR HONESTY

Yushchenko enjoyed a reputation for honesty amongst ordinary voters in a
country notorious for corruption.

He remained untainted by the murder of a reporter which plunged Ukraine into
its biggest political crisis in a decade and led to calls the president's
resignation.

But Yushchenko was scarred by allegations last year of misuse of
International Monetary Fund loans in operations with central bank reserves in
1997 and 1998.

He denied any wrongdoing and an independent audit requested by the IMF
subsequently exonerated him, but said the central bank had overstated its
currency reserves which allowed Ukraine to receive more loans than it would
otherwise have been due.

"If burning myself to ashes could help Ukraine...I would be happy,"
Yushchenko, an admirer of classical Ukrainian poetry and avowed patriot, once
told the popular daily newspaper Fakty.

Yushchenko, 47, was appointed central bank chief in 1993. He increased the
central bank's role in the economy and defended its independence.

He has also been hailed as the "father of the hryvnia" for masterminding a
monetary reform to introduce the new currency in 1996, after which annual
inflation fell from dizzying levels to single digits.

Yushchenko was also credited with cushioning the impact of the financial
crisis that caused havoc in Russia and other former Soviet republics in
August 1998.

He has four children -- a daughter and son from his first marriage and two
daughters with his U.S.-born second wife. He also has one granddaughter.

*******

#3
U.N. marks 15th anniversary of Chernobyl disaster

UNITED NATIONS, April 26 (Reuters) - Fifteen years after the world's worst
nuclear disaster, the United Nations appealed again on Thursday for health
and development assistance for the victims of Chernobyl in the Ukraine,
Belarus and Russia.

Declaring the world should "never forget Chernobyl," Secretary-General Kofi
Annan said in a message: "Together we must extend a helping hand to our
fellow human beings and show that we are not indifferent to their plight."

The appeal has been made annually for the past five years, with U.N.
officials saying most monies are earmarked to help shut down the infamous
power plant in the Ukraine and construct a confinement structure, called a
sarcophagus, to contain the remains of the reactor core.

"While hundreds of millions of dollars have been pledged to the construction
of a new and safer sarcophagus, comparatively little has has been done by the
international community to provide direct assistance to the population
affected," said Kenzo Oshima, the U.N. undersecretary-general for
humanitarian affairs.

Some five million people were exposed to radiation or otherwise affected when
the fourth nuclear power reactor at Chernobyl burst into flames on April
16,1986. The meltdown terrified Europe and corroded public confidence in
nuclear power plants around the world.

Russia, Ukraine and Belarus estimate the collective cost of Chernobyl was at
least $7 billion.

More than 4,000 people who took part in the former Soviet Union's haphazard
clean up attempt have died and another 40,000 involved in the operation
became ill or were disabled.

Oshima spoke at a news conference on Wednesday, a prelude to Thursday's
events that include discussions, two photo exhibits and a bazaar. Among the
speakers are New York Sen. Hillary Clinton.

The Chernobyl Children's Project of Ireland is sponsoring an exhibit "Black
Wind-White Land" of photographs, sculpture, painting and films on the lives
of people coping with the aftermath of the disaster. The photographs also
reflect the deteriorating health services for the victims.

Statistics of the disaster, updated annually by the United Nations still
shock. Three million children need medical care, and more than 11,000 of them
have thyroid cancer. Cancer and other disabling diseases are still expected
to reach their peak over the next 30 years.

Hardest hit was Belarus, only a few miles north of the Chernobyl plant, which
received some 70 percent of the fallout. Rain sent radiation onto
unsuspecting people and left tens of thousands of acres contaminated.

"The territory of our country has become a zone of ecological disaster,"
Belarus' U.N. ambassador, Sergei Ling, told a panel.

In the Ukraine, the closing of the reactor in December cost 9,000 people
their jobs and reduced the country's electrical power.

But the government not yet received money promised by the international
community to make up for the loss of electricity, Conditions have been
attached to the funds, partly out of apprehension of mismanagement in Kiev.

*******

#4
strana.ru
April 26, 2001
Chernobyl: Russia hit more than others

April 26, 2001 marks 15 years since the Chernobyl disaster, the most dreadful
technogenic calamity in human history. We still ignore the real causes of the
accident. Nor are there any final data about its consequences.

According to some information, April 26, 1986 saw an experiment investigating
the reactor's security potential, which required a lower power output. No one
is able to recreate an adequate picture of that night's events, but some
manipulations made in the course of the test seem to have disabled the
security barriers and systems protecting the environment from radionuclides
contained in irradiated fuel, thus leading to a discharge of radioactive
matter from the reactor.

The power of the discharge was about one million curies a day and it lasted
during ten days, tapering off in the subsequent period. The event was on the
seventh level of the ten-level INES international scale (grave accidents).

The hot exhaust from the wrecked fourth power plant was over one kilometer
high for four days, later scaling down to several hundred meters. The
emissions ceased only after a "sarcophagus" was built in November 1986.
Radioactive fall-off from the accident contaminated 150,000 square kilometers
of the territory of the former USSR with a population of 6,945,000.

There were 834,000 people fighting the consequences of the disaster. Of
these, 55,000 died right away and 150,000 turned invalids. As of today, more
than 300,000 have died of radiation sickness.

Initially experts believed the radioactive cloud would mostly affect Kiev,
but the winds willed otherwise, driving it to Gomel and Mogilyov,
Byelorussia. The hardest-hit were large areas in Byelorussia, Ukraine and
Russia. In Ukraine, the cloud covered 12 out of 25 oblasts (about 44,000
square kilometers) with a population of over 3 million.

In Byelorussia, contamination spread to 46,000 square kilometers, with one in
every five inhabitants of the republic (about two million people) suffering
as a result. In Russia, the contaminated area measures about 60,000 square
kilometers with a population of up to three million people. The number of
oblasts officially declared nuclear danger zones grew from 4 to 19 since the
accident. The hardest-hit are the Bryansk, Kaluga, Oryol, and Tula oblasts.

According to expert calculations, the total emission of radioactive matter
added up to 50 million curies, or an equivalent of 500 Hiroshima atomic
bombs. The tragedy affected, not only the USSR but also the entire European
continent, with three-fourths of its territory ending up contaminated with
radioactive cesium. Of the entire amount of cesium fall-off, 30% was in the
territory of Russia, 23% Byelorussia, 18% Ukraine, 4.8% Finland, 4.6% Sweden,
3% Norway, 2.4% Austria, and 1.8% Germany.

The governmental commission said the accident had been due to the plant
personnel mishandling some or other operation. To this day scientists go on
suggesting various explanations. It is still early to draw the bottom line.

*******

#5
BBC Monitoring
Russian prosecutor-general wants to revise privatization
Source: TV6, Moscow, in Russian 1100 gmt 25 Apr 01

[Presenter] Important events are taking place today in the State Duma.
[Russian] Prosecutor-General Vladimir Ustinov makes statements about the
possibility of revision of the results of privatization. Today he said in the
State Duma that law-enforcing agencies would investigate into illegal
privatization and open criminal cases irrespective of prescription. We
support President [Vladimir] Putin's balanced position as for irreversibility
[of privatization], but we shall return to such cases, Ustinov said. This is
a requirement of the law and people's demand, because the poor became even
poorer and the rich became richer, he added.

[11'00'37"] [Video shows photo of Ustinov]

*******

#6
Vremya Novostei
April 26, 2001
PROSECUTOR HITS THE ROOF
Vladimir Ustinov expresses allegations against the court reforms
Author: Dmitry Volkov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
VLADIMIR USTINOV HAS SUDDENLY ABANDONED RESTRAINT - SAYING IN PUBLIC THAT THE PLANNED COURT REFORMS ARE NOT REFORMS AT ALL, BUT A TRICK FOR "THE UPCOMING REDISTRIBUTION OF PROPERTY". THE KREMLIN IS REFUSING TO RISE TO THE BAIT. STILL, USTINOV MAY BE DISMISSED FOR THIS; OR EVEN MORE DRASTIC CHANGES COULD FOLLOW.
Prosecutor General Ustinov condemns the regime and its policies

Vladimir Ustinov became prosecutor general on May 17, 2000. On
April 25, 2001, he suddenly abandoned restraint - saying in public
that the planned court reforms are not reforms at all, but a trick for
"the upcoming redistribution of property".

Actually, no one asked for Ustinov's opinion. He was invited to
the lower house for a routine function known as "the government hour".
When invited to speak during the government hour, state officials
politely report their achievements and failures, and give formal
replies to lawmakers' questions. Ustinov did more or less all right
with the first part. He assured lawmakers that their enquiries were
treated with all due respect and attention, etc. However, shortly
afterwards he mentioned that "it happens occasionally that an enquiry
is used to put the investigation under pressure..." Duma deputies
seemed to miss the implications.

Ustinov let loose when Nikolai Kolomeitsev of the Communist
faction asked a totally innocuous question about the prosecutor
general's opinion of the court reforms. It is common knowledge that
Ustinov personally - and the Prosecutor General's Office as a whole -
object to liberalizing the punitive system. It is common knowledge
that Ustinov has said so to the president, in no uncertain terms,
during private audiences. Yesterday was just the first time Ustinov
voiced his opinion in public.

Ustinov: Our reformers... simply copy Western models and tell us
they're the best... Reform is needed, but not like the reforms we have
made in the economy... We are on the brink of new battles over
property... You all know about Russian Joint Energy Systems, Gazprom,
and so on. Only the prosecutor's office prevents dishonest people from
doing certain things. Hence the attempt to remove it altogether.

Mentioning the upcoming reorganization of natural monopolies -
which President Putin has described as essential - Ustinov called them
a redistribution in which the prosecutor's office stood in the way of
dishonest people.

This is not a rebellion. Ustinov said he "wholly subscribes to
the position of the political leadership and the president: that there
can be no turning back." In fact, Ustinov still hopes that Vladimir
Gusinsky and Boris Berezovsky are correct in their assumption that
Putin is out to establish totalitarian rule in Russia.

All the emotion of Ustinov's fiery speech was aimed against
Deputy Director of the Presidential Administration Dmitry Kozak, who
is considered the major driving force behind the court reforms. Kozak
is refusing to rise to the bait. He responds calmly, calling Ustinov's
speech "emotional" and "a personal opinion..." A senior Kremlin
official says: "We are not going to start a row with the prosecutor
general. The court reforms will continue. The legislative phase is
coming up. The reaction of the Prosecutor General's Office is quite
natural for a structure whose powers are to be revised."

On the one hand, the Kremlin considers that unless Ustinov ends
his crusade, he will get his just desserts. After all, there is much
to be said against Ustinov, just as there is much to be said against
any senior official. On the other hand, why bother replacing the
prosecutor general alone - when the whole prosecutor's office requires
radical surgery.

This is the Kremlin's reasoning. Of course, some analysts will
surely say that Ustinov has done what had to be done. Oligarchs are in
exile. Gusinsky is shuttling between Spain and Israel. Berezovsky is
safely abroad with no chance of returning. Actually, Ustinov himself
may be exiled, if we follow Joseph Stalin's reasoning. No one would be
especially sorry to see him go...

******

#7
Novye Izvestia
April 26, 2001
THE TAME MANAGER
Why Gleb Pavlovsky is promoting Anatoly Chubais
Author: Nikolai Aleksandrovich
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
ANATOLY CHUBAIS IS LIKELY TO BECOME THE KREMLIN'S TAME OPPOSITION LEADER. GLEB PAVLOVSKY WANTS A POLITICAL CAREER - HE AIMS TO LEAD THE RIGHT-WING OPPOSITION. BY PROMOTING THE POLITICAL CAREER OF ANATOLY CHUBAIS NOW, PAVLOVSKY HOPES TO SUCCEED HIM LATER IN THE UNION OF RIGHT FORCES.
Chubais, Pavlovsky, and the realities of the right-wing opposition

Until recently, everyone assumed that since two monopolist
ministers had already been swept away, the presidential train would
surely run down Anatoly Chubais as well. It seemed to be on the verge
of crushing Chubais permanently.

However, the recent meeting between President Vladimir Putin and
leaders of the Union of Right Forces provided an entirely new
perspective on the intrigue concerning Anatoly Chubais. The conclusion
is simple. Chubais will be dismissed after all. Taking offense, he
will finally become leader of the democratic opposition - the Union of
Right Forces. He will be a tame opposition leader, a leader all but
appointed by the regime.

Senior members of the Union of Right Forces have never bothered
to conceal the fact that they are ready to accept Chubais as their
leader as soon as he quits state service. All by itself, the Union of
Right Forces faction cannot decide the fate of any bill in the Duma
these days. Its calls to the Duma to use common sense remain mostly
unheeded.

However, we should not forget that Gleb Pavlovsky is the real
author of the new chapter in the political career of Chubais as leader
of the Union of Right Forces. Pavlovsky, the Kremlin's top political
consultant, is having problems. He has been steadily losing regional
elections, where his sophisticated ideas, like using the Internet,
inevitably fail because of the provinces' technological backwardness.

Pavlovsky is not going to tolerate this. He aims for the role of
puppet-master in the political theater. Pavlovsky proclaims himself as
the author of the plans for "state information security", despite
general skepticism from the media. He is aiming for a different image.
He no longer wants to be associated with personnel issues. Pavlovsky
wants to be thought of as a politician. All through the latest
presidential campaign he promoted himself much more than he promoted
Putin...

Pavlovsky is no longer welcome in the Kremlin. He is not yet ripe
for an independent political career. As far as the public is
concerned, he is a political consultant, not a politician. That is why
he has been playing for time. Promoting Chubais to the Union of Right
Forces through his dismissal from Russian Joint Energy Systems is the
last "loan" Pavlovsky is bound to get. Chubais will be put in charge
of the right wing, just like ministerial failures were appointed
agriculture minister in the Soviet Union...

But Pavlovsky has different plans. Chubais will return to the
corridors of power sooner or later. This is just a matter of
technique, and Pavlovsky is a master of intrigue. Once Chubais is back
in the government, Pavlovsky will try to succeed him as leader of the
Union of Right Forces.

*******

#8
The Times (UK)
26 April 2001
Editorial
Fewer and weaker
Russia's Government readies itself to curb its oligarchs

It is crunch time in Russia again. This time, the issue is whether President
Putin, who has made his rallying cry the restoration of order after a chaotic
decade (his early successes included reining in regional governments, taming
a wilful Duma, breaking media moguls and curbing press freedom) really
intends to go beyond the superficial and cure the corporate corruption that
is still gnawing at the Russian state. The answer that emerged on Tuesday, at
a board meeting at Russia's biggest company, Gazprom, was a tentative, and
encouraging, "yes".

Gazprom, which holds a quarter of the world's gas reserves and supplies a
quarter of Western Europe's gas, is an immensely powerful
state-within-a-state in Russia. Opinion is divided as to whether Gazprom is
the Kremlin's foreign policy arm, or the Kremlin an operating subsidiary of
Gazprom; but what is certain is that Gazprom's opaque management style has
for years allowed questions about it to remain unanswered. Gazprom denies
allegations that billions of dollars' worth of assets have been hived off, at
the expense of shareholders, to subsidiary companies run from abroad by top
managers' families -- allegations which, if proved, could lay Gazprom's board
open to charges of asset stripping and indeed theft. Minority shareholders,
led by a liberal banker, Boris Fyodorov, are demanding an independent audit.
How the Government, which holds 38 per cent of Gazprom shares, deals with
this demand for full public scrutiny will show how sincere Mr Putin is about
straightening out business in Russia.

A showdown is fast approaching. On May 31, the contract of Gazprom's general
director, Rem Vyakhirev, runs out. At the June annual general meeting,
shareholders must either re-elect him or choose a new general director. A
proper investigation into Gazprom's accounts will become far likelier if the
firm is in new, clean hands. Since the Russian Government holds five of the
11 seats on the board, its vote will be crucial. Tuesday's board meeting, a
preliminary skirmish before the AGM, left Government representatives with
their honour reassuringly intact. They refused to nod through a management
proposal of dubious legality, that might, if approved, have blocked a free
vote on replacing Mr Vyakhirev.

This is a small achievement in itself, but it may indicate a new government
approach to business whose potential is very broad. It suggests that the
Kremlin, after lengthy wavering, may at last be ready to challenge the few
huge companies dominating Russia's economy. Their bosses, known as the
oligarchs, have in the past had carte blanche in business; in return, they
bankrolled Mr Putin's predecessor, Boris Yeltsin. Russia has been the loser.
The contempt with which the energy company UES, the savings bank Sberbank,
and the metals firm Norilsk Nickel, among others, treat both international
business rules and their few foreign investors has kept away the mainstream
investment needed to renew Russia's economy.

Russia's lack of clear, accurate and widely accepted business practices is at
present costing the country $10 billion a year in direct foreign investment,
according to a study published this week by the financial consultancy,
PricewaterhouseCoopers. The pursuit of economic transparency could reap Mr
Putin's homeland huge rewards -- if he has the courage to proceed.

*******

#9
Financial Times (UK)
26 April 2001
Gazprom investors welcome board's decision
By Andrew Jack in Moscow

Foreign investors in Gazprom, Russia's largest company, on Wednesday gave a
muted welcome to a decision by the board to postpone a contested share
subscription and resist attempts to strengthen the position of Rem Vyakhirev,
the chief executive.

The actions, taken at a board meeting late on Tuesday, were seen as efforts
by the Russian government, which owns 38 per cent of the gas group, to
further rein back the authority of the company's executives. Last summer, the
board was changed to ensure government and minority shareholders were in a
majority over in-house directors.

"We welcome the fact that the government is taking a more active role at
Gazprom," said Gabor Sitanyi, director of emerging European markets at
Schroder in London, a Gazprom investor. "These decisions seem quite positive.
We need support from the government."

Under criticism from German Gref, minister for trade and economic
development, who sits on the board, plans by Gazprom to maintain its
controlling stake in the petrochemicals group Sibur by contributing $1.2bn in
cash and shares in a rights issue were postponed.

Sibur announced earlier this month plans to launch a Rbs70bn ($2.4bn) rights
issue ahead of acquisition and restructuring plans designed to turn it into a
leading integrated Russian petrochemicals group.

Mr Gref and other government board directors attacked the lack of clarity
over the valuation of the rights issue. They were also unhappy about the
inadequate information provided on how much cash and what other assets
Gazprom would provide in order to subscribe to the issue.

Separately at Wednesday's meeting, proposals to change Gazprom's rules at the
annual general meeting in June, so that unanimous board approval would be
required to dismiss Mr Vyakhirev, were overturned.

Gazprom had previously attempted a similar modification to the current
procedures, which require a simple board majority. The move indicates that
the government is leaving open the question of Mr Vyakhirev's succession
after his contract expires at the end of May.

The board also approved a 30 kopeck per share dividend for 2000, and the
establishment of a dividend policy.

*******

#10
Moscow Times
April 25, 2001
PwC Study: $10Bln Lost To Opacity Every Year
By Alla Startseva
Staff Writer

A lack of clear, accurate and widely accepted business practices is costing
Russia $10 billion a year in direct foreign investment, according to a new
study.

The study, conducted by consulting giant PricewaterhouseCoopers and advised
by former U.S. President Jimmy Carter, was designed to illuminate the
financial advantages countries can reap by pursuing greater economic
transparency.

"Nontransparency is an additional tax for investors," PwC partner Alexander
Bolshakov said at the presentation of the study Tuesday.

PwC examined 30 emerging market countries and compared them with its four
opacity "benchmarks" — Singapore, Chile, the United States and Britain —
which experienced no "deterred foreign direct investment" for lack of
clarity last year.

Russia scored the worst in two categories: the overall opacity ranking and
the percentage of annual foreign direct investment lost due to its lack of
economic transparency — 263 percent of actual FDI, or $9.8 billion.

The 30 countries lost a total of $131 billion in FDI last year as investors
diverted their capital to more transparent economies, PwC estimated.

PwC based its foreign direct investment estimates on International Monetary
Fund data for the countries' balance of payments over the last three years.

Last year Russia received $2.7 billion in FDI, 20 percent less than in
1999, according to the IMF.

"For attracting foreign investors many countries are reducing their tax
load, but increasing transparency is much more effective for attracting
investors," Bolshakov said.

The opacity index consists of five equally weighted sub-indices in five
areas, including corruption, laws governing contracts or property rights,
economic policies, accounting standards and business regulations.

Bolshakov said Russia is making improvements in these areas, but at varying
speeds.

"You should be a big optimist to hope that something can be changed with
the problem of corruption," he said. But in the field of legislation,
Russia is doing much better.

"The economy is getting more predictable, and by 2004 all Russian companies
will use [generally accepted accounting practices]. … Let's be optimists,"
he said.

Investment bank Troika Dialog has also been researching the equity market
using similar methods — and came up with similar results, namely that it,
too, is under-invested.

The market capitalization of publicly traded Russian companies is 50
percent less than it should be due to poor corporate governance, said chief
Troika researcher Christopher Weafer.

"The practice and perception of bad corporate governance among Russian
companies greatly adds to the volatility of the equity market and this in
turn increases the risk associated with investing in Russia," said Weafer.

The current capitalization of Russian equities is approximately $50
billion. "We estimate that a fair valuation is about $100 billion," said
Weafer.

Of the $50 billion between current and target valuation, $34.7 billion is
accounted for by an aggregate of Gazprom, UES, Norilsk Nickel and LUKoil.
All four companies are now at the forefront of corporate governance
concerns, according to the survey.

*******

#11
Russia: Analysis From Washington -- When There Is No Opposition
By Paul Goble

Washington, 25 April 2001 (RFE/RL) -- Countries without a recognized
political opposition are likely to find that the social and political space
such groups normally occupy will increasingly be filled by extremists,
according to an article in today's (25 April) "Izvestiya."

Its authors, Aleksandr Arkhangelsiy and Irina Podlesova, argue that even when
such radicals appear to be marginal, they are likely to play a role far out
of proportion to their numbers and poison the political system that gave them
birth.

Entitled "Extremists are occupying the place of the absent opposition," the
article notes further that Russia is currently experiencing the rise of
extremists on the left and right who are unhappy with the current state of
their society but who have no legitimate channels to express their views in
the absence of a genuine opposition party.

Arkhangelskiy and Podlesova then discuss the ways in which the Russian
government's response to such extremist groups -- employing psychiatric
examinations and conducting closed judicial proceedings -- only compound the
problem, further isolating people who might otherwise find a place in a
genuine political opposition to the current government and its policies.

Among the examples the two authors give are the ongoing psychiatric
examination at the Serbskiy Institute of a young man accused of involvement
in Moscow explosions two years ago and the closed investigation of writer and
National Bolshevik Party leader Eduard Limonov in the Lefortovo prison.

Precisely because these investigations are being conducted out of the public
eye and because the two men involved, one on the far left and one on the far
right, are viewed as marginal or even crazy, many in Russia or elsewhere are
relatively unconcerned by this particular application of the state.

But examples of similar actions could be multiplied almost at will, the
article implies, not only in Russia but in other post-communist countries as
well. And the authors suggest, intolerance of a political opposition appears
to be one of the hallmarks of many post-communist regimes.

Throughout history, governments have faced challenges from extremist groups
and have used a variety of means to try to limit their influence. But those
governments which do not tolerate the emergence and institutionalization of
genuine opposition parties have typically faced greater problems than do
others.

By equating opposition to particular policies with opposition to the regime
or country as such, the historical record suggests, these governments
unintentionally incubate extremist groups and alienate ever larger portions
of the population.

But in adopting this strategy -- one inevitably justified by its authors in
terms of the need to maintain stability or promote changes desired at home
and abroad -- these governments unintentionally create problems for
themselves both immediately and in the longer term.

Governments which function without a recognized political opposition and
without a free media often appear to lose touch with their own people. And
they thereby unwittingly help to create a situation in which the ranks of
extremists may grow.

Initially, such extremists may appear to both the leaders and the broader
society to be of little more than unwanted nuisances. But if the regime does
not allow the emergence of and more importantly the institutionalization of a
genuine political opposition, one that is expected and allowed to challenge
the current government and even seek to replace it, such extremists are
likely to serve as magnets for others in society who may be disaffected.

And because the movements that form around such people are inevitably going
to be colored by their attitudes, such new movements will be even more
threatening to the prospects for democracy than anyone might have expected.

That is a lesson, the article suggests, that people in Russia and the other
post-Soviet states need to take to heart before they become another example
of it.

********

#12
New York Times
April 26, 2001
[for personal use only]
Grozny Journal: Life Is Terrifying in Chechnya's Sad Capital
By PATRICK E. TYLER

GROZNY, Russia, April 22. Men with guns are everywhere in Chechnya's
capital.

A group of Russian soldiers marched onto the bombed-out campus of Grozny
University last week and seized two male students who tried to run from them.
When Rovzan Khairullayeva, a senior history student, screamed, "Leave our
boys alone!" one soldier grabbed her by the throat and lifted her off the
bench where she was sitting.

The soldier then stepped back, lifted his rifle and fired at the ground
around her feet while shouting obscenities at her, Ms. Khairullayeva and a
number of witnesses said.

The two students were eventually released, but not before the Russian squad
leader leveled his rifle and threatened to shoot at the large crowd of
teachers and angry students pressing to recover their classmates.

The murder rate is soaring here as Chechen rebels, and men wearing masks who
could be on either side, step up a partisan campaign in which terror is an
increasingly devastating weapon against civilians.

An unidentified man walked into the central market last week and opened fire
on the fruit and vegetable traders, killing three women before he fled.
Grozny's deputy prosecutor, Vladimir Moroz, was drinking coffee in a cafe
when three men walked in and shot him 20 times. Two Russian women working for
the electric company were gunned down in broad daylight late last month.

This city, laid to ruin by two wars of rebellion against Moscow since 1994,
may be the most dangerous capital on earth. And though the first postwar
government of Chechnya is finally taking up residence here in an old
furniture factory, it will have to face the anger and frustration of a
population desperately in need of reconstruction aid and, above all,
protection.

"The city is full of bandits," said Ruslan Shavkhalov, director of Grozny's
beleaguered health care facilities. "They need to stop the murders so there
can be business, markets, and so that people can sleep at night, send their
kids to school and go to work."

With the return of warm weather and the cover of foliage that has sprouted
from Grozny's landscape of rubble, rebels are infiltrating the capital in
significant numbers, officials here say. They are assassinating Russian
residents who once formed the majority of the city's population, 12 of whom
were killed last month. They are also setting mines and stepping up nighttime
attacks on Russian "block posts" — fire bases and checkpoints comprising
pillpoxes, razor wire and concrete barriers at key intersections around the
city.

The mayor of Grozny, Bislan Gantamirov, was recently asked how he was
fighting the rebel activity with its alarming tally of civilian killings. "We
don't," he replied. "Such crimes will continue until the police are armed and
the government decides who is responsible for the situation in the city."

With 7,000 Russian troops stationed, the startling reality is that there is
almost no police authority, law enforcement or security for civilians in
Grozny, and this remains the most significant factor in Moscow's failure to
persuade 150,000 Chechens still living in tent cities, garages and animal
sheds in the neighboring region of Ingushetia to return home.

Today, Grozny's population floats between 90,000 and 190,000 as refugees from
distant camps and other cities in Russia come to pick up pension payments and
check on houses or relatives and then return to safety elsewhere. The
population drops markedly with any threat of violence and, as occurred last
week, many quit the city in the face of rumors that a rebel offensive to
retake Grozny is imminent.

By day, the Russian military continues to conduct aggressive "mopping up"
operations consisting of house-to-house searches and summary arrests. But at
night the Russian Army retreats behind its fortified checkpoints, or within
the perimeter of the main military base in Khankala, just outside Grozny.

There is no street lighting in the city, contributing to the lawlessness that
intensifies after dark, when the city tunes up an orchestra of artillery,
grenade and small arms fire. Almost all of the city remains without
electricity.

Mayor Gantamirov publicly chides Moscow about its failure to create a
transition from military to civilian authority here.

"Recently, the rebels surrounded the house of my deputy for security," he
told a Moscow newspaper last month. "He and his bodyguards fought them all
night and no one came to their aid," not from any Russian checkpoint nor from
any police station.

Chechen policemen remain mostly unarmed and are subject to the 7 p.m. curfew
under which the Russian military has authority to shoot anyone on the street.

The mayor's bodyguards fought with "weapons that they kept illegally," Mr.
Gantamirov said. "We either have to break the law or die."

Even when Russian soldiers patrol the city looking for rebels, they are
regarded by civilians as another kind of threat, like the soldiers who barged
into Grozny University.

To stop at any house that is still standing in Grozny is to hear bitter
complaints about mopping up operations that have turned into acts of theft,
humiliation and arrests of young Chechen men, who often disappear into
"filtration" camps or, in the worst cases, into shallow graves.

These abuses, even when exaggerated in the retelling, reinforce the most
negative perceptions of the Russian military and render Grozny a tense and
poisonous place.

"People cannot do anything until there is law," said Aslanbek Khasbulatov, a
historian and deputy rector at Grozny University. "From the view of a
historian, what we have now is stagnation."

The Chechen government's return to Grozny from the temporary capital at
Gudermes is a calculated risk, officials here say. By moving the institutions
of government, the offices of leaders and bureaucrats back to the destroyed
city, Moscow and the Russian military command will be forced to address the
security crisis, create an indigenous police force and dismantle the martial
law apparatus that now smothers life, commerce and learning here.

If President Vladimir V. Putin is aware of the worsening security for
civilians here, it was not apparent last week when he flew to Chechnya —
avoiding Grozny — for a meeting at the Khankala base with his top generals.
He praised the troops for "doing a good job." But several Chechen leaders
privately complained to him that little progress was being made to rebuild
the country or its capital, officials said.

"We hope the situation will improve radically," Dr. Shavkhalov, the health
care director, said. "If order is established, even McDonald's could open
here, but first they must remove the block posts, end the curfew and not
allow those rebels to appear here again."

******

#13
INTERVIEW-Armenia says no Azeri rule for Nagorno-Karabakh
By Rosalind Russell

YEREVAN, April 26 (Reuters) - Armenia rejects the idea of Azeri rule in the
disputed region of Nagorno-Karabakh but does not rule out the mountainous
territory remaining nominally within Azerbaijan, Armenia's foreign minister
said on Thursday.

"We will not accept any subjugation to Azerbaijan for Nagorno-Karabakh, any
vertical relationship with Azerbaijan," Vardan Oskanyan told Reuters in an
interview.

"But anything on the level of horizontal ties will be seriously considered by
the Armenian side," he said.

The United States has recently ratcheted up efforts to find a solution to the
13-year conflict between the two former Soviet republics. Earlier this month
Secretary of State Colin Powell hosted peace talks in the Florida resort of
Key West.

Mediators are preparing a new peace proposal which will be presented to
leaders of both sides in Geneva in June.

In the past, Armenia has called for full independence for Nagorno-Karabakh,
whose mainly ethnic Armenian population tried to break away from Azeri rule
in 1988, triggering six years of fighting in which around 35,000 people died.

A ceasefire was called in 1994 after the Azeri army suffered a humiliating
defeat at the hands of Armenian forces, and some 800,000 people fled their
homes.

But faced with a blockade by its powerful western neighbour Turkey, an Azeri
ally, Armenia now seems prepared to compromise.

"We do know there has to be compromise," said Oskanyan. "You can't have your
cake and eat it too."

PRESSURE ON MEDIATORS

Three previous peace proposals have already been rejected by either
Azerbaijan or Armenia, and another failure by U.S., French and Russian
mediators could be disastrous, Oskanyan said.

"They will be extremely careful not to put something on paper that will be
rejected outright by one or the other side because that will be a major
setback," he said. "The whole process would be undermined and questioned by
everybody."

Oskanyan said a deal is unlikely to be signed in Geneva as each side will
want to discuss the proposals at home where they both face bellicose
opposition.

"Both countries have their extremists and radicals. Those views have to be
taken into consideration," he said. "We will come home and have a public
discussion of the document."

If necessary, Armenia would hold a referendum on the issue and would include
the population of Nagorno-Karabakh in the vote, Oskanyan said.

"Karabakh would have to be involved, the Karabakh leadership would have to be
involved," he said. "They have to have their say and they would have to be a
signatory to this peace agreement."

So far Azerbaijan has refused to recognise or negotiate with the Armenian
authorities in Nagorno-Karabakh.

Last week Azeri Foreign Minister Vilayat Guliyev said he was not optimistic
that the mediators, working under the auspices of the Organisation for
Security and Cooperation in Europe, would come up with an acceptable deal.

Azerbaijan has offered Nagorno-Karabakh a "high degree of autonomy" but it is
not clear whether this goes far enough for Armenia.

"The messages we're getting from (the Azeri capital) Baku are pretty
contradictory," Oskanyan said.

"But (the mediators) think there's enough convergence of views to go
further... We think we have a pretty good chance to make the Geneva talks a
success."

*******

#14
Kasyanov Submits Draft Land Code to Duma

MOSCOW, Apr 26, 2001 (Itar-Tass via COMTEX) -- Prime Minister Mikhail
Kasyanov said on Thursday morning that he had signed the draft Land Code and
had submitted it for the consideration of the State Duma.

Opening a meeting of the Russian government, he said that the document was
one of the key draft laws, which the government urged the Duma to adopt
before the end of the spring session. Kasyanov explained that he had had a
meeting with the Duma leaders, heads of parliamentary factions and of the
Duma committees on Thursday morning, at which they had discussed the schedule
of the Duma's work on the priority draft laws.

According to Kasyanov, the government draft laws are divided into four
packages. The first one includes draft laws connected with the drawing up of
the 2002 federal budget and changes in the sphere of taxation. The second
one, Kasyanov continued, is connected with the structural transformations
going on in the country, specifically, the Land Code, the draft laws on
removing unnecessary bureaucratic barriers hampering the development of
business, as well as the draft laws banning the legalization of incomes,
obtained by illegal means.

"The third group of the draft laws affects every Russian citizen, because
they deal with the pension reform and the adoption of the Labour Code. The
latter is a system document of key importance, that is aimed at bridging the
gap between the legal norms, many of which have been in existence since the
70s, and the present-day realities," Kasyanov said. The fourth package of the
government draft laws deals with the reform of the judicial system, he
continued. "This is a very important sphere, connected with individual rights
and business activities. Naturally, it influences the investment climate in
Russia," he said.

Kasyanov pointed to the "positive attitude to the discussion of all the
government draft laws," displayed by the Duma leaders and heads of the
parliamentary factions. He stressed that the government should work hard on
the draft laws, because "now every day counts."

*******

#15
strana.ru
April 26, 2001
Presidential adviser urges creation of stabilization fund

A stabilization fund, which may be created next year along with the basic
budget of Russia, is due to be anywhere between $33 and 35 billion, President
of Russia's economic adviser Andrei Illarionov said in an interview with
Vedomosti newspaper April 26.

"All other conditions being equal, it can be said that the size of the
stabilization fund in the present situation must be not less than $33-35
billion. It does not mean though that the sum should be accumulated within
one year," he said.

In his opinion, the stabilization fund is not an institution in its own right
and may be just a special account in the Finance Ministry.

He believes it makes sense to use the fund inside the country only if the
prices of traditional Russian exports fall below the "cut-off price" (such as
$10 per barrel of oil).

The creation of the stabilization fund will not require "a radical break-up
of the budget process," he said, adding that "the requisite changes may be
made within the framework of the effective budget process."

He also commented on the situation in the domestic currency market and
chances for devaluation of the ruble.

"Today, even the reduction of the ruble rate to 30 rubles for one dollar may
be taken as a considerable devaluation. Nominal devaluation can hardly be
described in terms of "useful or not useful." Devaluation of the ruble by the
authorities would mean a more considerable scale of currency buying by the
Central Bank. In the present conditions, a decline in the nominal currency
exchange rate would increase an influx of currency to the country and thereby
would only put a stronger pressure on the ruble," he said.

******

#16
BBC Monitoring
Putin's new manager puts blame on his predecessor Borodin
Text of report by Russian newspaper Kommersant on 25 April

Yesterday Vladimir Kozhin, the Russian president's administrator of affairs,
reported to journalists. The account of the administration's successes was
more like the reading out of a list administrative omissions by Mr Kozhin's
predecessor, Pavel Borodin.

Vladimir Kozhin's wish to talk about the president's administration affairs'
undeniable successes can now be put down to several reasons. One is entirely
objective. On 7 April President Vladimir Putin signed an edict giving the
administration of affairs charge of the complex of the Kremlin museums.
Yesterday journalists were introduced to new director of Kremlin museums
Yelena Gagarina, who with her severe gray suit and immaculate hair very much
resembled Pushkin Museum director Irina Antonova. But Mrs Gagarina did not
say a word during the entire press conference, sat apart, and, having found
herself at the centre of the country's cultural life in the space of a day
(remember, it was the Cosmonauts' Day), she still felt ill at ease in front
of a large number of journalists and TV cameras.

So in the year under review Vladimir Kozhin has managed to successfully
correct the following mistakes in the work of the Russian president's
administration of affairs: reorganize the administration of affairs apparatus
and eliminate around 30 trade and intermediate enterprises "earning money for
themselves" and set up a control and auditing administration; devise a
"realistic, transparent budget"; restructure and reorganize the "plethora of
dacha complexes" in the Roublevo-Uspensk and Roublevo-Zvenigorod areas and
devise a master plan for their potential development (or, on the other hand,
the suspension of all future construction in order to protect the Moscow
Region environment); implement a single state order programme to supply
departmental enterprises (as a result of which R1m were saved in the latest
"public tender" to supply paper for the Kremlin's and White House's needs);
start resurrecting the Rossiya state air transport company, whose aircraft
President Putin uses; settle deputies in the administration's hotel complex
and stipulate all the legal niceties that will come into play when they move
out when their terms are up; embark on the solution of the question of
accommodating new Federation Council members; deal with the state car fleet
(probably reducing the number of official vehicles and subsequently switching
to a system whereby you call for a car); start revamping the Dagomys health
resort complex in Sochi in order to organize "normal recreation for officials
whose pay prevents them from visiting expensive resorts"; sort out 30 per
cent of the state property abroad and transfer it to a computer data base.

Following Vladimir Kozhin's list of achievements made by his own department,
one may think that the second reason for the administrator of affairs' making
his report right now was his predecessor Pavel Borodin's happy return home.
Since Mr Kozhin had regarded it as quite unseemly to talk about his own
successes, prefacing each point with an aside such as "a multitude of
violations was revealed here", when his predecessor, who had actually
"committed the violations", was in jail.

*******

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