July 24, 2001

This Date's Issues:   5361 • 5362

Johnson's Russia List
#5362
24 July 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Boston Globe: John Donnelly, Analysts give Bush edge with Russia. Plan for arms talks seen as US vehicle on missile defense.
2. The Globe and Mail (Canada): Geoffrey York, Even prosperous Russian towns yearn for Soviet rule. Norilsk could have barred fortune-seekers under the old system.
3. Moscow Times: Robin Munro, Land Code Won't Solve Everything Overnight.
4. International Herald Tribune: Reginald Dale, New U.S.-Russian Dynamic Should Focus on WTO Entry.
5. Washington Times: Bill Gertz, Study says Russian merchant ships spy on U.S.
6. strana.ru: Alexander Livschits: Russia may join "the financial seven" within the next two or three years. Advisor to President Yeltsin analyses Putin's role in the G8 summit.
7. AP: Russian: Caviar May be Ban Too Late.
8. abcnews.com: Josh Gerstein, Italian Leader Analyzes Russian President. And George W. Bush Thought He Was Blunt.
9. Trud: WHO BENEFITS FROM EMBROILING PRIMAKOV WITH PUTIN?
10. Vremya Novostei: Yury Golotyuk, THE GENERALS HAVE BEEN TOLD TO SHAPE UP. President Putin holds up the FSB as an example for the military.
11. Moscow Tribune: Stanislav Menshikov, RUSSIAN COMPANIES AND BANKS SHOULD BE LARGER. Let's Listen To Some Tycoons For A Change.
12. Wall Street Journal: Matthew Kaminski, As Ukraine's Economy Revives, Its Problems Become Political.
13. BBC Monitoring: NTV, Russian Greenpeace activist downbeat on spent nuclear fuel, Kursk operation.
14. strana.ru: Academician Velikhov: Kursk reactor will not be damaged during sub lifting operation. Kursk must be removed from the seabed.]

*******

#1
Boston Globe
July 24, 2001
Analysts give Bush edge with Russia
Plan for arms talks seen as US vehicle on missile defense
By John Donnelly, Globe Staff

WASHINGTON - The swift development of US-Russia arms control talks can be
traced to President Bush's insistence on building a missile defense system
and his push for fast-paced negotiations, analysts said yesterday.

Even a former Clinton administration arms specialist said Bush's unequivocal
stand to move ahead with testing missile defense technology has helped him
frame upcoming negotiations with President Vladimir V. Putin of Russia.

The upcoming negotiations - the framework for which could be laid out this
week in Moscow during a visit by Bush's national security adviser,
Condoleezza Rice - will center on reducing the stockpiles of offensive
nuclear weapons and building new defenses against ballistic missiles.

It is the formula that Bush has backed since his campaign for president,
based on the belief that today's post-Cold War reality does not need so many
nuclear weapons kept on hairtrigger alert. But Bush also believes the United
States is vulnerable to a missile attack from smaller states that possess a
handful of long-range missiles.

Despite the positive words sounded by Bush and Putin on Sunday in Genoa,
Italy, where they attended the Group of Eight summit of industrialized
nations, both leaders slightly tempered their optimism yesterday. In speaking
to his top ministers, Putin said progress was made in his talks with Bush,
but added, ''There was ... no fundamental breakthrough.''

Putin favors reducing the number of strategic nuclear warheads to around
1,500 for each side, far deeper cuts than any proposed by the current and
former US administrations. The United States now has 7,300 nuclear weapons on
strategic alert, Russia about 6,000; the START II agreement, if enacted,
would call for each side to have between 3,000 and 3,500 deployed weapons,
still more than enough to annihilate the other.

Even though Bush was successful in setting the terms of the talks, he also is
taking a major risk, analysts say. If Russia balks at allowing US officials
to develop a missile defense system, the United States will be left with no
option but to walk away from the 1972 Anti-Ballistic Missile Treaty - and
build layers of protection against the threat of a missile attack.

''This administration is in a good position to reduce the levels of nuclear
weapons. They have used missile defense as a way to do that,'' said Lee
Feinstein, who was a senior adviser on security issues to Madeleine K.
Albright, the former secretary of state. ''But the key thing with Russia is
that you want to do everything you can to avoid acting unilaterally.''

Feinstein said if the talks collapse and Bush pulls out of the ABM treaty,
the ''reaction would be even more severe than the allies' reaction to pulling
out of the Kyoto protocol.'' The Kyoto pact on global warming calls for
reductions in ''greenhouse gases''; the Bush administration has called it
unworkable, a move that has frustrated many US allies.

The ABM treaty prohibits either Russia or the United States from building
more than one missile defense system. Russia currently has a system deployed
around Moscow, while the United States has a shield around a North Dakota
field of missiles.

Bush said yesterday in Rome that he is prepared to build a missile defense
system if talks fail. ''Time is of the essence,'' he said at a joint news
conference held with Prime Minister Silvio Berlusconi of Italy. ''If we can't
reach agreement, we're going to implement'' a missile defense system.

For the Bush administration, arms control issues are being measured in terms
of months, not years. Deputy Defense Secretary Paul Wolfowitz told Congress
recently that missile defense testing could soon collide with the terms of
the ABM treaty. And yesterday Rice said the administration would know within
months whether a deal with the Russians could be reached.

Rice, a scholar of the former Soviet Union, said the administration does not
want to dally, and indicated that it may sidestep the time-consuming process
of treaties, which must include ratification by the US Senate and Russian
Duma.

''Let's be realistic. We are in office for hopefully several years, but
presidents only have limited amount of time to leave a legacy to their
successors,'' Rice said. ''We don't expect this to be a set of discussions
that goes on for a very, very long period of time, taking years to get to
what should be a fairly simple matter.''

Michael A. McFaul, a professor of political science at Stanford University
who has talked extensively with Rice about Russia policy, said yesterday that
one outcome may be a memorandum of understanding between the two countries
that calls for cutbacks in offensive weapons. As an unspoken part of the
deal, he said, the Bush administration might unilaterally pull out of the ABM
treaty, giving Putin ''an out'' to criticize the Americans as unilateralists.

''I get this strong sense that the Bush administration is willing to do that,
take the international criticism for it, as long as ... it still puts them in
a bilateral relationship'' with the Russians, McFaul said.

Putin received strong criticism yesterday in the Russian press for the terms
of the arms control talks. The Kommersant daily newspaper, owned by Putin
opponent Boris Berezovsky, blared in its lead headline: ''Russia
surrendered.''

''The Russian side to this,'' McFaul said, ''is much more mysterious to me. I
don't think Putin has really decided what to do.''

Daryl Kimball, executive director of the Coalition to Reduce Nuclear Dangers,
a Washington-based consortium that supports nonproliferation of weapons,
cautioned against high expectations from the talks - but because of Bush as
much as Putin. ''It's unclear what kind of agreement the administration is
looking for and capable of achieving,'' he said.

*******

#2
The Globe and Mail (Canada)
July 24, 2001
Even prosperous Russian towns yearn for Soviet rule
Norilsk could have barred fortune-seekers under the old system, GEOFFREY YORK
writes
By GEOFFREY YORK

Idris Jafarov thinks he has set a world record for going from one extreme to
another. He moved, willingly, from the heat of his home in Azerbaijan, which
can get up to 50 degrees, to the -50 cold of the Russian Arctic.

But while he jokes about the frigid weather, his Russian neighbours are
grimly determined to force him to go home, along with 20,000 migrants from
impoverished southern regions who have flooded into one of the world's most
northern metropolises to make money.

Norilsk, a conglomeration of smoke-spewing factories and metal-extracting
mines in the tundra above the Arctic Circle, has already achieved fame as
Russia's wealthiest and most polluted city. Now it wants another distinction:
to be the first to switch back to its Soviet-era status as a tightly guarded
"closed city."

"My relatives fought to defend this country in the Second World War, and now
they want to kick us out," Mr. Jafarov, who sells shoes in an outdoor market,
said angrily.

"They have no right to do this. We're very hard-working people. Everything
they have in Norilsk -- all the trade, the food, the clothing -- we do it
all. We feed them; we clean their streets. They should thank us for that."

The head of the city's biggest employer shows no signs of gratitude. "Norilsk
is only for Norilsk people," Jonson Khagazheyev, general director of Norilsk
Nickel, declared. "This is the will of the people."

The factory boss and the city's mayor have written to Moscow to demand a
revival of Soviet-era restrictions that prohibited outsiders from visiting.

Ten years after the Soviet Union collapsed, Russians are yearning for order
and stability, and they are willing to sacrifice some newfound freedoms to
get it. Many are nostalgic for the archipelago of closed cities that the
Soviets created. The Kremlin recently revealed that it still restricts entry
to about 90 towns and cities, mostly to protect nuclear and military secrets.

In Norilsk, about 40,000 residents have signed petitions in favour of the
travel restrictions.

"People who migrate around the country are not necessarily the best kinds of
people," Mr. Khagazheyev insisted. "Crime is rising. We have drug addiction,
which we never had before. People shouldn't be allowed to just come and go
freely."

Built on the bones of thousands of Soviet slave labourers who died in prison
camps from the 1930s to the 1950s, Norilsk has emerged as one of the most
prosperous cities in the former Soviet Union.

It is the world's biggest producer of nickel, ahead of the Canadian giants
Inco and Falconbridge. It produces more than one-third of the world's
palladium, a quarter of the world's platinum and 20 per cent of the world's
copper. It accounts for 2.1 per cent of Russia's economy.

With commodity prices rising, Norilsk earned close to $2-billion (U.S.) in
profits last year, and has increased its average wage to almost $700 a month,
more than six times the Russian average. Norilsk also provides millions of
dollars worth of social benefits and welfare programs, including school
allowances, maternity benefits, supplementary pensions, housing subsidies and
guaranteed jobs for the children of employees.

"The social conditions here are the best in Russia," Mr. Khagazheyev said.

"All of Russia would like to work here, but we cannot let them."

Norilsk, with a population of 230,000, is one of a dozen cities of more than
100,000 people built above the 60th parallel under grandiose Soviet
industrial schemes. Today, about 10 million people live in Russia's far
North, giving it a population density 50 times greater than the Canadian
North.

To reduce the social burden, northern cities are encouraging residents to
move south, with the help of World Bank loans and Russian resettlement
grants. Norilsk has cut its work force from 105,000 to about 70,000 in recent
years, and it wants to eliminate another 20,000 jobs as productivity rises.

Norilsk is so remote that it has no railway or highway. Its only links to the
outside world are airplanes and ships in the summer. But the hungry migrants
from the south are still willing to buy expensive airline tickets to reach
the wealthy city, provoking a furious backlash.

"Good things always attract bad people," Alan Lolayev, a deputy mayor of
Norilsk, said. "They can't get jobs at the factory, so they look for other
sources of income. They have low qualifications, and they are not
contributing to the city."

So far, the Kremlin has rejected Norilsk's request for closed-city status,
citing the Russian constitutional guarantee of freedom of movement. But the
city is persisting with its demand for restrictions. "Some people might
suffer from this, but the majority will benefit," Mr. Khagazheyev said.

The Azeris, meanwhile, feel they have no choice but to stay.

"It's bad for the health; it's very cold, and I cough from the smog, but I
need to earn a living," says Ekhtimar Mamoyedev, a 43-year-old Azeri selling
cheap clothing at an outdoor market.

"I worked 16 years for the state in Soviet times. I'm sorry that I lost my
job, but now there's no other place to work. If we can't make a living here,
where would we go? We'd just starve and die."

*******

#3
Moscow Times
July 24, 2001
Land Code Won't Solve Everything Overnight
By Robin Munro
Staff Writer

The real estate industry should not expect the new Land Code to start
working smoothly overnight nor to solve all problems with recalcitrant
local administrations, said the man behind the code.

"The Land Code on its own won't be able to completely change the situation
because there is a very notorious bureaucratic tradition existing in this
country and an ineffective justice system," said Deputy Economic
Development and Trade Minister Alexander Maslov at a meeting last week of
the real estate committee of the American Chamber of Commerce.

"We are going to very closely monitor the process and the prices of land
sales. If they are slow and few we will take action to remedy this by
introducing amendments into the law," he added.

In his first public engagement after the code passed the State Duma's
second reading on July 14, Maslov said a local administration opposed to
land sales could simply refuse to sell land, but he encouraged would-be
purchasers to take their local administration to court if it stood in their
way.

The latest draft of the Land Code avoided the contentious issue of sales or
"turnover" — which could include privatization — of agricultural land, but
another principal issue, the provision of a national regime for foreign
investment in land, proved a stumbling block for the government, Maslov said.

"The very idea that foreign individuals and firms should have equal rights
with Russian individuals and firms [to own land] raised problems not, as
was to be expected, only from the parties of the left, but also from the
center and even the right," he said.

The version of the Land Code that passed provided for foreign companies and
individuals and stateless persons to buy land, except on the national
borders and in other restricted areas, he said. The list of excluded areas
is to be approved by President Vladimir Putin, he added.

The code does not define what is a Russian or a foreign company and,
therefore, allows Russian-registered companies that are 100-percent
foreign-owned to qualify as Russian companies, Maslov said.

Maslov said firms should buy the land under their buildings soon after the
code comes into law because the price is likely to rise. Local
administrations have an incentive to set higher rates for selling land or
the land will be sold at the minimum rate set by the code, he added.

The government accepted that the price of the land under enterprises had
been built into the price of privatization even though the land was leased
or a permanent use right was granted; the government, therefore, did not
believe that the sales should generate large sums for state budgets, he
said. Its proposal had been to set the price of the land at five to 10
times the annual tax on the land, he added.

According to consultants Arthur Andersen, the average land tax rate in
Moscow this year is 97,200 rubles ($3,320) for 1 hectare, or 9.72 rubles
(32.2 cents) per square meter. The highest rate, for land inside the Garden
Ring, is 720,664 rubles per hectare, or $2.46 per square meter.

The sale price in the final edition of the code was set at five to 30 times
the land tax rate for Moscow and St. Petersburg, five to 17 times for
cities with populations between 500,000 and 3 million, and three to 10
times for towns with a population of less than 500,000, Maslov said.

In addition, land under different types of enterprises will cost different
amounts according to the type of the enterprise. The variation is limited
to plus or minus 30 percent.

"We are not quite satisfied with such a [system for calculating value] as
we believe that those rates remain inflated, but we could not have passed
the Land Code without this compromise," Maslov said.

Konstantine Kouzine, a real estate lawyer with Linklaters & Alliance, said
the new code was a significant improvement on earlier drafts but had
contradictions with other laws.

Kouzine and Adrian Moore, the real estate and construction partner at Baker
& McKenzie law firm, submitted comments on the draft Land Code to the
government on behalf of American Chamber of Commerce, the Russo-British
Chamber of Commerce, and the European Business Club.

"Some, but not all, of our comments were implemented in the draft," Kouzine
said. "It's a compromise. It looks as if the government wants the principal
ideas of the code adopted in the first place and to fine tune it later."

He said one advancement in the code is that there is no reference of a
separate land-privatization law, meaning that as soon as the law is
adopted, land will be able to be privatized.

Also, the code gives not only foreigners but Russians the right to own and
trade in land, Kouzine said. The Constitution had previously established
this right, but there was no law setting it up, he added.

Fritz Digmayer, a commercial lawyer, real estate law expert, manager and
head of the German desk of Arthur Andersen/Andersen Legal Moscow, said the
passage of the second reading of the law was a big political success for
the government, Maslov and Economic Development and Trade Minister German
Gref.

If the bill becomes law "it will improve the investment climate in Russia.
Land ownership will be a guarantee for investors," he said.

Digmayer, who worked for German agency Treuhandanstalt in privatizing
state-owned land in former East Germany after reunification, said the price
of land determined by the State Duma in the draft of the land code seems to
be very low.

This could be explained only by the political need for compromise, he said.
The former East Germany's state-owned land was sold only on the basis of
public tenders to achieve the highest possible price; the market value of
the land was found by "going to the market," he added.

Digmayer would not agree with Maslov's contention that the price of land
might already have been built into the price paid for enterprises. This
appears to be unrealistic, since until now land could not be owned, and
therefore was not part of economic calculations, he said.

"In my opinion, land should be dealt with as a public good, to be sold for
the benefit of the public budget on the basis of its market value," he said.

*******

#4
International Herald Tribune
July 24, 2001
New U.S.-Russian Dynamic Should Focus on WTO Entry
By Reginald Dale

WASHINGTON The United States should take advantage of the current unique
historical opportunity to transform its relations with Russia by means of
"systematic, sustained engagement at the highest level of government in the
two countries." That is the recommendation of a bipartisan report this month
from the EastWest Institute, and the Bush administration would basically
agree with it.

President George W. Bush has frequently said that Moscow and Washington
should shed the remaining vestiges of the Cold War and forge a new
relationship, an approach exemplified by the deal on nuclear strategy he
struck with President Valdimir Putin in Genoa on Sunday.

But strategic considerations will be only part of a transformed U.S-Russian
relationship. More important still will be the need to integrate Russia into
the world economy to ensure the prosperity and stability it needs to complete
its transition to a market democracy.

The problem is that while Mr. Putin appears to understand the strategic
relationship with the United States, he and his advisers are showing
distressing ignorance of the world economic system. In his efforts to
integrate Russia rapidly into the global economy, Mr. Putin has succumbed to
a dangerous dose of wishful thinking.

Now that Russia is paying off its debts and the International Monetary Fund
has stepped back from the monitoring role it exercised in the 1990s, the
global body with the most interest in the Russian economy is the World Trade
Organization, which Mr. Putin is seeking to join with increasing urgency.

The difficult economic and legal steps that Russia must take to conform to
WTO entry requirements are much the same as those it would need to take
anyway to become a market economy - leading Robert Zoellick, the U.S. trade
representative, to the sensible conclusion that Russia should link its
internal reforms to the WTO accession procedure.

Unfortunately, however, Russia's WTO negotiations plunged into crisis at the
end of June, largely because of Moscow's failure to comprehend the entry
requirements. As China did for many years before it, Russia seems to fail to
understand that joining the WTO is not a political process.

That incomprehension was publicly displayed in Genoa by Sergei Prikhodko, Mr.
Putin's top foreign policy adviser, who complained that while Western leaders
had frequently backed Russian WTO membership, such political support "somehow
evaporates on the way to experts or negotiators."

Echoing the charges of Russian negotiators in Geneva, Mr. Prikhodko said that
new demands were being made of Russia beyond "the usual rules and procedures"
of the WTO. Trade experts say those charges are both ill-informed and naive.

Moscow is equally naive in thinking that WTO membership is a political gift
in the hands of Western leaders. For a large country such as Russia, which is
still not a market economy, joining the WTO involves tough and lengthy
negotiations on innumerable concrete, technical issues that must be resolved
before entry - not after, as Moscow contends.

The crisis erupted when Australia, followed by other countries including the
United States and the European Union, suggested that Moscow submit draft laws
for review in Geneva, to ensure they conformed to WTO specifications. The aim
was to make Russian entry easier.

Russian negotiators, however, rejected the idea and returned home in a huff.
Moscow subsequently declared the talks indefinitely delayed "because of
excessive demands."

Russia appears to think that as a major power it has a right to join the WTO.
It wrongly believes the inevitable detailed queries raised by countries
ranging from Panama to Latvia and Japan are political - and deeply demeaning.

In reality, there is no way that Russia's negotiations will be completed by
the end of this year, Mr. Putin's target date. They will probably take
several years more. It is Moscow, not its negotiating partners, that is
making "excessive demands."

But Russia's WTO entry matches U.S. global interests. Russian resentment must
not be allowed to endanger the negotiations, nor the wider relationship with
Washington. During their forthcoming visit to Moscow to pursue "sustained
engagement" on the issue, Paul O'Neill, the treasury secretary, and Don
Evans, the commerce secretary, should offer Mr. Putin a tactful reality check
- and technical, not political, help if he wants it.

********

#5
Washington Times
July 24, 2001
Study says Russian merchant ships spy on U.S.
By Bill Gertz

Secret State Department and U.S. Coast Guard programs to monitor Russian
merchant vessels have concluded that Moscow is continuing to use its
commercial fleet to spy on sensitive U.S. defense facilities, including
nuclear submarines.

The programs, however, were undercut by an agreement signed June 20 by
Transportation Secretary Norman Y. Mineta that critics say will make it
easier for Russian ships to spy on sensitive U.S. Navy facilities, especially
in the Puget Sound area of Washington state.

The maritime agreement, according to a Transportation Department
statement, will "improve access by Russian merchant vessels to U.S. ports."

The agreement requires Russian merchant ships to provide 72 hours
advance notice of arrival at several U.S. ports with sensitive military
bases. But the agreement excludes the Seattle area, where U.S. nuclear
submarines are based at Bangor, Wash., on Puget Sound.

Spokesmen for the Transportation Department's Maritime Administration
refused to explain why the agreement does not include a requirement for
security notifications of Russian ship arrivals into Puget Sound.

A Pentagon official said the agreement "shifted Puget Sound into an open
port" from one that had been restricted for Russian merchant ships based on
their intelligence-gathering activity.

The official, speaking on the condition of anonymity, said an internal
U.S. government "memorandum of understanding" among the Coast Guard, Pentagon
and State Department still classifies the Puget Sound area as restricted for
Russian ships because of sensitive Navy facilities.

"If it turns out we don't get 72-hour notice, it's a problem," the
official said.

A classified Coast Guard intelligence program to monitor Russian
merchant ships entering the Pacific Northwest was started in February to
monitor the movements of Russian ships to determine whether they followed
rules requiring advance notification of their arrival.

The program began with the delivery of a Jan. 31 diplomatic protest note
to the Russian Embassy in Washington. The note acknowledged that the Russian
government objected to the advance notification requirement "at certain U.S.
ports. However, in this regard, we remain concerned about continued patterns
of unacceptable activity by Russian vessels bound to or from U.S. ports."

The note, labeled "secret," also said that unless the spying activity is
halted, "the United States may find it necessary to take appropriate national
security measures to prevent such activities," including controlling the
movement of Russian ships.

The note also said that U.S. government intended to conclude the
commercial maritime agreement, which Mr. Mineta signed in Moscow on June 20.

The Coast Guard program followed an earlier State Department program
that said Russian "intelligence collection continues" aboard Russian merchant
ships, according to classified documents obtained by The Washington Times.

One document stated that the State Department monitoring program
provided "confirmation of ongoing hostile intel collection by Russian
merchant vessels."

The document said that it is unknown whether Kremlin intelligence
"directed" the spying or was "unsolicited" activity by government-linked
commercial firms that run the merchant fleet.

The Puget Sound intelligence activities by Russian merchant ships were
revealed in a 1997 incident.

The Russian merchant ship Kapitan Man was caught spying on a U.S.
nuclear missile submarine in the Strait of Juan de Fuca, north of Puget
Sound, in April 1997.

Someone on the Kapitan Man fired a laser at a Canadian surveillance
helicopter carrying a U.S. Navy intelligence officer who was photographing
the ship. The officer and the Canadian helicopter pilot suffered permanent
eye damage as a result.

Documents obtained by The Times reveal that the Pentagon, State
Department and Transportation Department signed an agreement in January
outlining what it called a yearlong Russian "special interest vessel"
monitoring program.

The program is aimed at making sure "no Russian-flagged vessels arrive"
in Puget Sound ports "without the 72-hour ."

The program listed the ports of Seattle, Tacoma, Everett, Bellingham,
Ferndale, Olympia, Anacortes and Port Angeles.

Under the program, the Coast Guard will block any Russian ship from
entering Puget Sound if it "is found to be engaging in any anomalous
activity," such as intelligence gathering.

Intelligence officials said Russian merchant ships are spying on nuclear
submarines based in Puget Sound and frequently time their arrivals and
departures in the region with the movements of U.S. Navy submarines.

The yearlong surveillance program followed a survey last year that found
only 25 percent of the Russian merchant ships entering the port provided the
proper advance notification.

The State Department survey from January to June revealed that of the 44
arriving Russian ships, only 14 provided the required 72 hours' notice.

Of the 14 that provided proper notification, 11 were fishing ships that
arrived in one group.

******

#6
strana.ru
July 24, 2001
Alexander Livschits: Russia may join "the financial seven" within the next
two or three years
Advisor to President Yeltsin analyses Putin's role in the G8 summit

Politically speaking, Russia is a full-fledged member of the Group of Eight
but the Group of Seven meets separately to discuss financial matters.
Alexander Livschits, former adviser to President Boris Yeltsin and now vice
president of the Russian Aluminum company, looks at the chances of Russia
entering that group.

According to Livschits, the Genoa summit was a calm and successful one but it
took place in an unsettled and turbulent atmosphere.

"I have taken part in several summits in one way or another but I had seen
nothing like what they showed in TV reports from Genoa."

Livschits notes that G8 leaders confirmed that they were going to meet again
and that nobody would be able to sidetrack them by that odd behavior.

Russia's part in discussions of world issues, including poverty, was on a par
with other nations.

The Genoa summit did not raise the question of Russian debts for the simple
reason that Russia pays them.

According to Livschits, Russia has written off more debts in relation to GDP
than any other G8 member. Russia inherited debts from the Soviet Union. The
Soviet Union lended money left and right but now it is impossible to retrieve
it.

Livschits describes the summit's bilateral meetings and especially the one
with President Bush as "quite good."

"That meeting ended in a predictable and very pleasant result: an
American-Russian business dialogue will be set up, a new forum for the
businessmen of our countries, which will work out recommendations as to how
to make sure that the money comes to Russia and Russian companies have access
to the American market and discrimination is avoided."

In the opinion of the former presidential adviser, the fact that the Genoa
summit decided to hold a world conference on climate change in Russia is
important. He hopes that a market selling quotas for industrial fumes will
start operating before the year 2003.

Russia justifiably holds a seat in G8. Noting that Russia is a full-fledged
member of G8 in political terms and that the Group of Seven meets separately
to discuss financial issues, Livschits describes the fact that Russia has
entered a program to fight poverty as a step toward joining "the financial
eight."

In his opinion, Russia may become a member of the financial eight within two
or three years.

As far as relations with the United States are concerned, he notes that
Russia will never accept junior partner status. "The country is too large to
be a younger brother," he says.

He feels Russia and the United States need to benefit from the best features
of the Gore-Chernomyrdin Commission, in particular the program of commercial
launches of U.S. satellites by Russian rockets, guarantees of supplies of
American equipment to Russia and the like.

*******

#7
Russian: Caviar May be Ban Too Late
July 24, 2001

MOSCOW (AP) - The international moratorium on sturgeon fishing in the Caspian
Sea may have come too late to save the black caviar-producing fish from
extinction, the head of Russia's Caspian Fisheries Research Institute said
Tuesday.

Last month, Russia, Azerbaijan and Kazakstan agreed to halt sturgeon fishing
for the rest of the year in an effort to protect shrinking stocks.

But Magomet Amarov, director of the institute in Dagestan, a Russian region
on the Caspian, said fishing would have to be banned for at least 20 years
for stocks to be replenished, according to the ITAR-Tass news agency. At the
current rate of poaching, no sturgeon will be left in the sea in 10 years, he
said.

Under the agreement reached last month, the countries have until next June to
come up with a longer-term plan that would, among other measures, crack down
on unlicensed fishing.

Stocks of the Caspian's beluga sturgeon - which produces the most expensive
caviar - have dropped by about 90 percent over the past two decades, victims
of destroyed spawning sites, pollution and the end of strict, Soviet-era
policing of caviar production.

*******

#8
abcnews.com
Italian Leader Analyzes Russian President
And George W. Bush Thought He Was Blunt
By Josh Gerstein

ROME, July 23 -- President Bush sees himself as plain-spoken, but he
learned today that when it comes to bluntness he may have a hard time
outdoing Italian Prime Minister Silvio Berlusconi.

The president's reluctance to engage in the deliberate vagueness typical of
diplomatic exchanges is often touted as an asset by his aides.
But at a joint press conference with Bush today, Berlusconi tried something
Bush has never attempted: a public psychoanalysis of Russian President
Vladimir Putin.

In response to a question about the U.S.-Russia dialogue on missile defense,
the Italian leader said, "We also have to understand the psychological aspect
for the [Russian] president and his people."

Berlusconi went on to portray Russia as a country whose pride is derived from
past greatness. The only significant vestige of Russia's dominance,
Berlusconi said, is its nuclear arsenal.

'They Still Have That Old Pride'

"They come from a past. They were a world power. They had a very strong fall
as far as their economy was concerned," the prime minister said. "Their
global revenue is well below the other countries of the G-7, but they still
have that old pride. And above all, they have that atomic stockpile that is
still an extraordinary one. It's huge. Therefore, we must be very tactful."

Among European leaders, Berlusconi is the most supportive of Bush's missile
defense effort. Several other Europeans have expressed concern it could
prompt the Russians to resume a buildup of nuclear weapons. Bush and his
aides have said the program would be directed only at rogue states and
terrorists equipped with a few missiles and would have no impact on the
deterrent provided by Russia's thousands of nuclear warheads.

The Italian prime minister suggested today Bush and other missile defense
advocates consider not just the real-world effect of missile defense, but how
the program affects the Russian psyche. "We must take the entire situation
into account, the psychological and the actual situation."

******

#9
Trud
July 24, 2001
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
WHO BENEFITS FROM EMBROILING PRIMAKOV WITH PUTIN?

Chairman of the Fatherland-All Russia Duma faction Yevgeny
Primakov has reported in his interview to Interfax that some
provocation is being prepared in connection with his new book "Eight
Months Plus..." Referring to well-informed sources, Primakov has
reported on a certain group of people engaged in making a forgery of a
fragment from Primakov's book that was allegedly excluded from the
book at the very last moment.

Primakov has said that this extract proves his negative attitude
toward Vladimir Putin at the time when he was the prime minister and
even earlier. According to Primakov, this forgery is likely to be
published in the media or on the Internet. Primakov has said that he
is used to the black PR, but this action is something special. The aim
of this action is to prove that Primakov's public announcements
radically differ from his true thoughts, which he has even excluded
from his book.

As for the source of such actions, Primakov has made it clear
that they are instigated by such people who state that Putin's
presidency will be over by the end of the year. These people "intend
to isolate the current president, but they will fail to do this," as
Primakov thinks.

******

#10
Vremya Novostei
July 24, 2001
THE GENERALS HAVE BEEN TOLD TO SHAPE UP
President Putin holds up the FSB as an example for the military
Author: Yury Golotyuk
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE GENOA TALKS HAVE OBVIOUSLY PUT THE KREMLIN IN A PEACE-LOVING
MOOD. AT ANY RATE, OUR MILITARY SOURCES CLAIM THIS WAS THE ATMOSPHERE AT LAST MONDAY'S MEETING BETWEEN PRESIDENT PUTIN AND THE TOP BRASS. PUTIN SAID THAT NO "DIRECT LARGE-SCALE AGGRESSION" POSES A THREAT TO RUSSIA AT THIS POINT.

Moscow refrains from rattling the ballistic saber at Washington

The Genoa talks have obviously put the Kremlin in a peace-loving
mood. At any rate, our military sources claim this was the atmosphere
at last Monday's meeting between President Putin and the top brass.
Twice a year, the president meets with the heads of the security
departments who introduce to the supreme commander-in-chief any new
generals appointed to military posts since the last meeting. The head
of state gets acquainted with the appointees and delivers to them a
traditional speech about the current state of the nation, in which the
Kremlin instructs the military chiefs on exactly what internal and
external threats they are to combat. The key moment of yesterday's
presidential address to the security departments became the statement
that no "direct large-scale aggression" poses a threat to Russia at
this point. Our military sources hold it that this statement implies a
considerable adjustment of Russia's strategic policy: over the past
year, "destruction of the international strategic stability system"
(as a result of the planned deployment of the US national missile
defense) and the necessity of searching for "an adequate response" in
this connection have invariably been named as one of the primary
threats to Russia's national security.

Of course, the president did not say yesterday, "It's neither war
nor peace, and we might as well disband the army altogether." Support
from the top-ranking military chiefs (or at least their loyalty and
controllability) is still vitally important to the head of state.
Therefore, President Putin sees his primary task in assuring the top
brass that their role will not decline to zero over time. That was
exactly what the president did yesterday, by pointing to "the
necessity of ensuring the security of the state and society". However,
according to President Putin, "global hazards" come not from US
bombers backed up by the future national missile defense but rather
from "regional crises and international terrorism". Not accidentally,
when citing an example of a recent successful action to protect
national security, the president mentioned a purely law-enforcement
(rather than a military) operation: namely the FSB measure to prevent
"an attempted injection of forged financial/credit documents into the
domestic market". When speaking about "ensuring the nation's
territorial integrity", the president again referred to the FSB. As to
the army, it merited only reproachful presidential theses about the
necessity of "strengthening discipline" and "observing Russian law".
In the context of the ongoing trial of Colonel Budanov and the recent
scandal over search operations in Chechnya, these pieces of criticism
were apparently meant to convince the military chiefs that the winner
doesn't always take it all.

One peculiar fact is that President Putin's speech to the top
brass was in fact a version of the US military reform plans, only
recently subjected to the Kremlin's stern criticism. Putin's theses
about the current international proliferation of weapons of mass
destruction and the increasing conflict-fraught potential of regional
crises repeats nearly word for word the program statements by the new
US president about the impending reform of the Pentagon. At the same
time, the Russian president's speeches bear absolutely no resemblance
to the Kremlin's recent threats to respond to Washington's withdrawal
from the ABM Treaty by mounting "three, four, five, and more warheads"
on each Russian ICBM. President Putin himself was fairly cautious
after the Genoa summit when appraising the results of his missile
defense talks with George W. Bush: "There is certainly no decisive
breakthrough. We have confirmed our commitment to the 1972 ABM Treaty.
But still, it was a step forward."

According to our source: "Judging from what we heard at
(yesterday's) meeting with the president, the role of the Russian
military will be kept down to the minimum at the upcoming talks with
Washington: we will be kept in the background as the traditional
scarecrow, nothing more than that."

(Translated by Andrei Bystrov)

*******

#11
From: "Stanislav Menshikov" <menschivok@globalxs.nl>
Subject: RUSSIAN COMPANIES AND BANKS SHOULD BE LARGER
Date: Tue, 24 Jul 2001

"MOSCOW TRIBUNE", 20 JULY 2001
RUSSIAN COMPANIES AND BANKS SHOULD BE LARGER
Let's Listen To Some Tycoons For A Change
By Stanislav Menshikov

Russian oligarchs are usually objects of attack and ridicule, traditionally
described as men who acquired their riches by dubious means and are using
their economic power as a lever to gain undue political influence. Vladimir
Putin is being alternatively praised for cleaning the Kremlin stables from
characters like Berezovsky, blamed for persecuting media magnates like
Gusinsky and suspected for giving in to other multimillionaires, like
Potanin or Khodorkovsky. While all these allegations are partly true, one
does have to admit that once in a while the tycoons do emit words of wisdom
that are worth while listening to.

Lev Chernoi who once controlled the largest aluminium smelters in Siberia
and, through his London connections, much of Russia's aluminium exports
recently sold out to Oleg Deripaska and others. He has now published a book,
in which, rather than telling his own interesting story, he suggests a
policy package to help promote Russia's economic renaissance. Unlike some
other tycoons he refutes most liberal reforms and makes a strong case for
state intervention to support competitive power of Russian industries. His
proposals are reminiscent of government indicative planning that was used in
France and Japan to rebuild their economies in the decades after World War
Two.

One of the cases he makes is that most Russian companies are too small to
withstand competition with foreign transnational corporations. Even in
export industries, he claims, their prospects to remain independent are dim
and, if nothing changes soon, they will be swallowed by their much larger
and more powerful foreign competitors. The small size of companies oriented
towards the domestic market also puts a limit on their ability to invest in
large projects needed to modernise the economy and make it competitive
vis-a-vis imports. Therefore, writes Chernoi, the government should make
special pains to promote business concentration and not fear dangers of
monopolisation, which in an open economy are not great.

Lists of 500 largest world companies recently published in Forbes and
Financial Times tend to confirm this view. Only four Russian companies make
the Forbes list, which is based on annual revenues of companies outside the
US. All four are in the oil and gas sector. The largest, Gazprom, only 138th
on the list, is certainly the largest non-US gas company. But it is the only
exception. Lukoil ranks 180th and is only 13th in the oil industry, ten
times smaller than Royal-Dutch Shell or BP. However, not a single Russian
company makes the Financial Times list, which includes US businesses and is
based on capital employed, rather than revenues.

Of course, size alone does not automatically make a company non-competitive.
For instance, Russian oil concerns have no trouble selling in world markets
and face little foreign competition at home. Transnational corporations are
so far more interested in Azerbaijani and Kazakhstan oil rather than in
Russian deposits. Rusal, not listed in Forbes or Financial Times, is by far
the second largest aluminium company in the world and a sturdy competitor to
leading US and Canadian businesses. Norilsk Nickel, also failing to make
those lists, either, is certainly the largest world company producing nickel
and some other non-ferrous metals.

But while we do not share Mr. Chernoi's pessimism as to the fate of Russia's
export industries, he is certainly right where manufacturing is concerned.
With the possible exception of steel no Russian manufacturing company is
large enough to withstand foreign competition in the long run without
serious efforts at modernisation and concentration.

Another oligarch, banker Alexander Mamut, usually referred to as part of the
"family", recently explained that no single commercial bank in the country
(excluding the government-controlled Sberbank) is large enough to supply the
financial requirements of any leading domestic industrial company. In his
view, the government and Central Bank should centre on drastically reducing
the number of banks and increasing their capitalisation. As he sees it,
there is room today for a maximum of a few dozen large banks holding a
general federal license and capable of providing a wide range of products to
major clients.

There is a lot of sense in this proposal (supported by the Russian Union of
Entrepreneurs and Industrialists). At the end of 2000, total assets of all
commercial banks were only 17 percent of the total assets of industrial
companies. If Sberbank is excluded, the ratio goes down to 12 percent. For
comparison, in the US bank assets are half as large as those of industrial
corporations, and two thirds as large if insurance companies (major
creditors to the economy) are included. The contrast is obvious.

The president and the government today are too busy pushing ill prepared
reforms in many spheres where restructuring could wait until elementary
business order is restored. But so far nothing substantial is being done
either in bank restructuring or in industry concentration, which are central
to sustaining economic growth. Time is long due to start formulating a
concrete policy in these areas. Unless Russia can compete with other
industrial nations economically, it has no bright future ahead.

******

#12
Wall Street Journal
July 24, 2001
[for personal use only]
As Ukraine's Economy Revives, Its Problems Become Political
By MATTHEW KAMINSKI
Staff Reporter of THE WALL STREET JOURNAL

KIEV, Ukraine -- Bohdan Zholdak, a prominent Ukrainian writer and humorist,
looks at the construction cranes and busy stores in this picturesque capital
and marvels at the recent reversal of fortunes -- both his and his country's.

"I feel like I've died and come back to life several times, just like
Ukraine," says Mr. Zholdak, whose publishers for the first time in a decade
have enough money to actually print his books, thanks to a national economy
that's growing at an annual 6%.

See a breakdown of the Ukraine's recent economic growth.

But Mr. Zholdak -- who calls himself "Ukraine's greatest writer" on account
of his 150-kilogram frame -- isn't celebrating, despite the prospect of
royalties. "The streets and the stores look better, but the country is still
run by stukachy," he says, using Russian slang for rats.

Ukraine's backers abroad are no happier that its democratic credentials, once
among the strongest in the former Soviet Union, have been sullied by
questions surrounding the murder of two high-profile journalists. Ukraine is
strategically located between Russia and Central Europe, and a key to the
West's vision for stability in the region is for Ukraine to be economically
healthy, independent and democratic. For years, the depressed economy proved
the main obstacle, and the U.S. responded with $2 billion (2.29 billion
euros) in aid, making Ukraine the third-biggest recipient of American
largesse. But now the problem is the messy politics.

The 43-country Council of Europe, the Continent's leading human-rights
watchdog, recently threatened to revoke Ukraine's membership, and the U.S.
House of Representatives this month moved to cut the $235 million in annual
aid that has gone to Kiev, citing concerns about press freedoms and
democracy. The Senate has yet to act.

The chill in relations between Ukraine and the U.S., its pre-eminent foreign
advocate during the 1990s, comes after the unsolved murder of a critic of
President Leonid Kuchma brought about the most serious political crisis in
the country's near-decade of independence.

The discovery last November of the headless corpse of Georgy Gongadze, an
Internet journalist who wrote about alleged corruption within the Kuchma
administration, coincided with the appearance of secretly recorded tapes of
the president telling his aides to "get rid" of the journalist. A former
Kuchma security officer who made the recordings fled to the U.S.

The president, who controls the state media, denies any involvement in the
murder and claims he was set up by opponents. Thousands of opposition
protesters took to the streets this spring calling for his resignation, but
their rallies fizzled out.

The U.S. and its European allies were also unsettled when Mr. Kuchma, heeding
pressure from powerful business tycoons to pull back on economic reforms,
stood by in May as Parliament sacked his prime minister, Viktor Yushchenko.
Mr. Yushchenko's efforts to improve tax collection, clean up the energy
sector and sell off government-owned farmland helped put the economy back on
track, winning him approval in the West but angering important business
interests.

Mr. Kuchma found a new friend during the Gongadze crisis in Russian President
Vladimir Putin, who made a point of visiting Ukraine when protesters were
calling for Mr. Kuchma's resignation. Mr. Kuchma also fired his pro-Western
foreign minister, who worked to get Ukraine closer to the North Atlantic
Treaty Organization and the U.S., and brought in a centrist figure more
palatable to Moscow.

Western leaders are treading carefully, saying publicly that the tilt toward
Russia, Ukraine's biggest trading partner, is natural and unthreatening. "We
appreciate very clearly the balancing act required by a country like
Ukraine," George Robertson, the NATO secretary general, said during a recent
visit to Kiev.

Kiev does appear interested in reviving ties, and Western leaders seem
willing to oblige: Donald Rumsfeld, the U.S. defense secretary, preceded Mr.
Robertson in Kiev. Mr. Kuchma wants to restore his credibility at home, too,
and regain the trust of the electorate before next year's parliamentary
election.

One way is to claim credit for the economy, and it's hard to miss the signs
of an economic revival, at least in the big cities. Under floodlights,
Ukrainian workers are digging up the capital's central square for a big
underground shopping mall, as well as a new independence monument. The latest
reincarnation of October Revolution Square -- christened Independence Square
in 1991 when Ukraine broke from Russia -- comes as some economists predict
growth will be 8% this year, after nearly a decade-long depression. Inflation
last month was 4% from a year earlier, compared with 10,000% in 1993 when
Ukraine recycled its rapidly devaluing currency into toilet paper.

That's progress, and as a man of letters, Mr. Zholdak sees it on another
front -- in language. He's a connoisseur of surzhik, a patois of Russian and
Ukrainian and a product of three centuries of Russian rule. "The deformation
of our country under colonial rule comes through our language, in surzhik,"
says Mr. Zholdak, who writes entire scenes in the dialect.

Mr. Zholdak recalls that an audience didn't laugh at a reading of his stories
a few years ago in Dnipropetrovsk, an eastern industrial town where Russian
dominates. "They thought I was making fun of them," he says. When he won the
presidency in 1994, Mr. Kuchma, a former Soviet missile-factory boss who
comes from Dnipropetrovsk, spoke Ukrainian haltingly.

In a sign of change, Mr. Zholdak notes that Mr. Kuchma reverts to surzhik
very rarely these days; a language tutor helped the president brush up on his
boyhood Ukrainian. "If he can free himself of surzhik, let's hope Ukraine can
free itself too," says Mr. Zholdak, who also hosts a radio program.

"I guess I'm an optimist," he says. "I can talk about all these problems
openly on the radio. I can say the government is robbing us, and we can say
who, when and for how much."

Then the affable writer stops and recalls how Mr. Gongadze put provocative
articles about the government on his Web site, Ukrainian Truth, and wound up
in a shallow forest grave near Kiev.

******

#13
BBC Monitoring
Russian Greenpeace activist downbeat on spent nuclear fuel, Kursk operation
Source: NTV, Moscow, in Russian 0400 gmt 24 Jul 01

[Presenter Denis Soldatikov] Russian Prime Minister [Mikhail] Kasyanov starts
his working visit to Finland today. This afternoon, he will meet his Finnish
counterpart, Paavo Lipponen. This is a preparatory visit. In September this
year, [Russian President] Vladimir Putin will pay a visit to Finland.

The burial of waste nuclear fuel is one of the issues to be discussed by the
prime ministers. Recently, the government of Norway said it was ready to take
part in financing radioactive waste removal programmes - in particular, from
the Kola Peninsula, where the major Russian Northern Fleet nuclear waste fuel
storage facility - Andreyev Bay - is located.

The Greenpeace-Russia movement coordinator, Ivan Bykov, is live on air today.

[Passage omitted: greetings]

Do you know where it is planned to take the radioactive waste from Andreyev
Bay ?

[Ivan Bykov, speaking from the Rossiya Hotel studio] Spent nuclear fuel
should be taken to the Mayak combine in Chelyabinsk Region. One trainload
with eight so-called nuclear reactor cores [Russian: aktivnaya zona] has
already been sent there this year. However, taking into consideration that
some 250 [nuclear-powered] submarines cores are being stored at the Kola
Peninsula without any idea what to do with them, then eight is just a drop in
the ocean.

[Presenter] Do techniques for the safe transportation of nuclear fuel exist
today?

[Bykov] We are not aware of any safe techniques for transportation nor safe
and reliable technologies for processing spent nuclear fuel, either civilian
or military. A safe solution for spent nuclear fuel does not exist at all.

[Presenter] In that case what is the meaning of this operation to transport
[spent nuclear fuel] from the Kola Peninsula to Chelyabinsk Region?

[Bykov] The meaning is very serious. The fact is that some 30 nuclear-powered
submarines [stationed] at the Kola Peninsula are non-operational. In
practice, it means that they just may sink. Thus [the idea is] to remove
spent nuclear fuel from such submarines and take it away in order not to
damage the sea. This is a very important and serious task and it should be
solved by every means possible.

On the other hand - and it is very important - the first thing Norwegian
experts said when they were in Russia several months ago was not that spent
fuel be removed but - you will be amazed - that an ordinary roof be built
over the so-called dry storage facility for the spent fuel. It was just lying
there on the ground like that.

[Passage omitted: Russian and Norwegian experts agree on impossibility of
immediate removal of all fuel]

[Presenter] And, finally, another important issue. Practically every day
environmental specialists check the radiation level at the site of the Kursk
sinking. Do you know anything about the results of these checks?

[Bykov] We know nothing at the moment about any abnormally high radiation
levels in the Kursk area. However, the important fact is that neither the
public nor we -professionals - know if the state environmental expert
assessment of the sub lifting operation was carried out. According to Russian
legislation, this is a part of the obligatory procedure. It's quite unclear
what could happen with the submarine when it is lifted, if environmental
specialists have not checked what might actually happen [as heard].

[Passage omitted to the end: farewell greetings]

*******

#14
strana.ru
July 23, 2001
Academician Velikhov: Kursk reactor will not be damaged during sub lifting
operation
Kursk must be removed from the seabed

One of the leading nuclear physicists in Russia, the Director of the
Kurchatov Institute, Academician Yevgeny Velikhov, is confident that the
Kursk's atomic reactor will not be damaged during the operation to lift the
submarine from the bottom of the Barents Sea.

In an Interfax interview, Velikhov noted that the sub lifting operation
"would be substantially milder than the explosion that occurred on board the
Kursk."

"If nothing happened to the reactor at the time of the explosion, then
nothing will happen to it while the submarine is being brought to the
surface, although, of course, there are quite a lot of problems," the
academician remarked.

He underscored the fact that utmost attention was being given to problems of
ensuring ecological safety during the lifting operation. So far, he pointed
out, we have no information confirming there is some kind of radiation at the
site of the stricken sub.

The entire lifting operation should be carried out under strict control,
including by the ecological service so that nothing (bad) happens. The
ecological service of the Defense Ministry as well as specialists from our
Institute are to participate in the radiation monitoring part of the
operation. Experts from the Rubin design bureau have outlined all the
measures that will be carried out in this respect.

The scientist is convinced that the submarine must be removed from the
seabed. "There are general rules: wherever it is possible we must not leave
debris that could some time in the future be sources of danger for our
descendants. And from that point of view, I am in favor of carrying out the
Kursk lifting operation," Velikhov emphasized.

******

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