July 27, 2001

This Date's Issues:   5367 • 5368

Johnson's Russia List
#5367
27 July 2001
davidjohnson@erols.com

[Note from David Johnson:
DJ: Let me clarify something. The only reasons I take people off JRL is if they ask me to or if e-mail repeatedly bounces
from their e-mail address, i.e., apparently does not get through.

1. AP: Rice, Russians Discuss Missiles.
2. BBC Monitoring: Ekho Moskvy, US security chief reaffirms need to amend ABM Treaty.
3. BBC Monitoring: Ekho Moskvy, Russian official wants economic-for-ABM concessions. (Kokoshin)
4. Luba Schwartzman: ORT Review.
5. Moscow Times: Boris Kagarlitsky, Chubais Lamp Is Not a Good Guiding Light.
6. The Independent (UK): Patrick Cockburn, A ten-day ride to Moscow for the Dear Leader who doesn't fly. (Kim Jong Il)
7. RIA: RUSSIAN SCIENTISTS CREATE MATERIALS WITH UNKNOWN PROPERTIES.
8. Reuters: Russian army cracks down on media in Chechnya-NTV.
9. RIA: MEMORANDUM ON RUSSIA AS MARKET ECONOMY PASSED TO AMERICAN REPRESENTATIVES.
10. Interfax: Opinion poll shows fewer Ukrainians now in favour of union with Russia.
11. Interfax: Russian opinion poll reflects ambivalent attitudes to China.
12. Reuters: U.S. O'Neill upbeat on Russian economic reform.
13. therussianissues.com: Mysterious Woman Paralyzes Major Oil Company. By now LUKoil has already lost $50ml. because of the court order.
14. Vremya MN: Boris Reznik, Russia's Unhappy Image.
15. Interfax: Russia's Putin says enclave could become part of Europe. (Kaliningrad)]

*******

#1
Rice, Russians Discuss Missiles
July 26, 2001
By JUDITH INGRAM

MOSCOW (AP) - Setting a timetable for strategic arms talks, President Bush's
national security adviser and her Russian counterpart on Thursday both said
they wanted to move from confrontation to cooperation - then refused to budge
from their tough positions.

Washington will proceed with tests of a new missile defense system,
Condoleezza Rice said, while Russia's Security Council head Vladimir Rushailo
said Moscow will insist on long and laborious negotiations to try to salvage
the 1972 Anti-Ballistic Missile Treaty that forbids such systems.

``The new threats that we face ... won't wait and we've agreed to work very
hard over the next several months,'' Rice said to reporters after she and
Rushailo met with President Vladimir Putin.

She added that Bush and Putin would have proposals before them when they next
meet, in Shanghai, China, in October.

Rushailo, however, said the process would be drawn out.

``This work calls for a long period of time .... I'd like to remind you of
the words of President Putin that the national security of the Russian
Federation should be maintained,'' cautioned Rushailo.

Russian officials say abandoning the ABM treaty would destroy the foundations
of global security, leading to a new arms race. But Bush's administration
contends the treaty has outlived its usefulness, preventing the United States
from developing defenses against potential nuclear threats from such nations
as Iran and North Korea.

``The treaty itself is an impediment,'' Rice said.

She said the U.S.-Russian discussions were no longer about whether the United
States would move forward with its missile defense plans, but how. The U.S.
Defense Department announced earlier this month that it would start
construction of a testing site in April.

``Our testing program is designed to give us the most effective system, not
to stay within the frame of the ABM treaty. That has not changed,'' she said.

However, because Moscow is a signatory to the ABM, ``we have to work out
arrangements with the Russians if we want to move beyond the ABM treaty,''
Rice said.

Earlier this week, Putin and Bush unexpectedly announced that talks on
missile defense would be linked with talks on cutting strategic nuclear
weapons. Deputy Russian Foreign Minister Georgy Mamedov said that Putin had
repeated his proposal to cut nuclear warheads on both sides to 1,500, but
Rice said no specific numbers had been discussed.

Rice said she had also raised U.S. concern about press freedom in Russia and
Moscow's use of ``heavy-handed tactics'' in Chechnya, which she said ``breeds
extremism.''

Putin also met Thursday with Treasury Secretary Paul O'Neill and Commerce
Secretary Donald Evans, who were following up efforts by Bush to revitalize
economic cooperation with Russia.

At a news conference later, O'Neill rejected suggestions that U.S. economic
support was dependent on Russia's dropping its opposition to the missile
defense system. ``I think these relationships need to move forward on every
possibly front,'' he said.

Putin said that Bush's view that the United States no longer regards Russia
as an adversary should improve economic ties with the West.

``What President Bush said during his European tour is extremely important
for us, including from the economic point of view,'' Putin said on RTR state
television.

Both U.S. Cabinet officials promised to provide U.S. support for Russia's bid
to join the World Trade Organization.

O'Neill said that the United States is ``going to be as helpful as we can be
in response to what the Russian side wants us to do to help them gain early
access to WTO.''

*******

#2
BBC Monitoring
US security chief reaffirms need to amend ABM Treaty
Source: Ekho Moskvy radio, Moscow, in Russian 1535 gmt 26 Jul 01

US National Security Adviser Condoleezza Rice has reaffirmed the USA's view
that the 1972 ABM Treaty is outdated and needs to be amended to meet the
challenges of the post-Cold War ear. In an interview with Russia's Ekho
Moskvy radio on 26 July, the second day of her visit to Moscow, Rice said the
USA was seeking a new framework for relations with Russia, which she said
should be pursued in broader terms than was possible in the Soviet era. She
denied, however, that Russia was being offered increased economic cooperation
in exchange for flexibility on armaments. The following is the text of the
interview:

[Correspondent] Mrs Rice, can it be said that your meetings in Moscow have
been productive?

[Rice, in English to Russian translation] Yes, this is primarily a
continuation of the dialogue which the presidents began in Ljubljana and
continued in Genoa. We mapped out quite a tight timetable for subsequent
consultations. They will begin in August at expert level, at the level of
deputy defence secretary on our side and deputy chief of the General Staff on
the Russian side. This will be in the first week of August, and after that a
meeting of the defence ministers is planned. Beyond that, there will probably
be more meetings of experts. This really is a busy timetable and this was
really the main aim of my visit here.

[Correspondent] Has any deadline been set for these talks?

[Rice] There is no such deadline, but the US government has stated clearly
that we intend to get down to developing tests of missiles needed for
antimissile defence. Sooner or later, and sooner rather than later, such
tests will inevitably come into conflict with the limits imposed by the ABM
Treaty.

There were reports of such tests in February. I think no-one could give you a
precise date. The fact that the ABM Treaty contains very tough restrictions
means that virtually any move towards testing of what are called antimissile
systems may mean violation. We do not want to be accused of noncompliance
with the treaty. We thus consider that maximum flexibility should be shown
and that there must be a move forward from the ABM Treaty, both in terms of
making the testing of antimissile systems possible and as concerns the very
essence of Russia-USA relations. These also need to develop and change.

[Correspondent] What is to be the finale of these consultations: signing a
new formal treaty, amending the existing treaty or concluding some sort of
gentlemen's agreement?

[Rice] We are open to any options as to the form. We are not going to state
to the Russian government that only this thing or that are acceptable. In
fact, the formula for an agreement is also something to be determined in the
process of the consultations. The main thing for us, the crux of the matter,
is the new framework for our relations as a whole, while the formula for any
agreement is to be determined by the process.

[Correspondent] Have you outlined the American vision of this framework to
the people you have talked to in Moscow?

[Rice] I tried to put this framework over to them as seen by President Bush.
He sees this framework as a very broad one. As the president said in Warsaw,
our relations are developing and are leading towards Russia becoming
increasingly close to Europe, becoming integrated in Europe.

The political liberalization of Russia is a another very important point. It
is important that there should be freedom of the press, that there be
citizens' rights, freedom of assembly and the right to act according to the
individual's will. It is also important that the liberalization of the
economy should also continue. We are convinced that political and economic
liberalization are inseparable.

But there are also such aspects of our relations as cooperation in the sphere
of regional security. We are already cooperating successfully with the
Russian Federation in the Balkans and this is not the only example. We will
find new areas for such cooperation. Our cooperation in the field of
economics is also important and we have every reason to suppose that Russia
really can reach its potential if liberalization continues and if investments
come in. So this framework is very broad.

But in the strategic sphere a number of new threats have to be recognized,
and in order to fight them we have to bring the system of treaties which we
have inherited into line with the challenges of the times, the post-Cold War
era. Cuts in strategic armaments are necessary but we need new measures to
prevent the proliferation of weapons, and also cooperation in the fight
against terrorism.

[Correspondent] The US finance and trade ministers came to Moscow at the same
time as you. Is this a coincidence, or is it a sign to Russia that you are
ready to offer a trade-off, promising Russia an expansion in economic ties in
exchange for a more flexible position on armaments?

[Rice] I would say that it is a happy coincidence. For me this is an
opportunity to give a signal that the USA can conduct its relations with
Russia in broader terms than just the argument over nuclear problems. In our
relations with the Soviet Union, in spite of several areas of cooperation,
the main thing was to prevent a nuclear clash. What we want to say today is
that there are many other areas for broad cooperation with Russia. But we
don't intend to engage in trade-offs, we want to develop all areas of
cooperation with Russia, and economic cooperation is one of the most
important areas.

[Correspondent] Are you happy with the talks? Will they, in your view, be
able to be continued according to a packed agenda?

[Rice] I regard the talks as successful. I liked it here in Moscow very much.
I would have stayed longer with pleasure. I like Moscow very much. The talks
were intensive and, I think, fruitful. We have established a strict schedule
for consultations and we will move forward on the basis of this schedule. I
think the spirit that took shape in the course of the presidents' meeting in
Ljubljana and Genoa will help us achieve substantial progress very, very
soon.

[Correspondent] To conclude, I will ask you to address our listeners in
Russian.

[Rice, in Russian] I am very happy to be here in Moscow. I like Moscow very
much. I need to say that I have not practised my Russian now and I talk less
and less. However, I promise that when I return to America I will practice
and perhaps when I return to Moscow it will be possible to speak only in
Russian.

[Correspondent] Thank you, we are going to take you at your word.

*******

#3
BBC Monitoring
Russian official wants economic-for-ABM concessions
Source: Ekho Moskvy radio, Moscow, in Russian 1515 gmt 25 Jul 01

Russia's former Security Council chief has called on the USA to make economic
concessions in exchange for ABM-related arms talks. Interviewed on the Ekho
Moskvy radio on 25 July, Kokoshin welcomed the proposal to reduce the number
of warheads down to 1,500 but added that Russia may find it hard to maintain
even that level of warhead equipment. He linked US economic concessions, with
Russia's arms talks initiatives and called on Bush and the US Congress to
grant Russia the most favoured nation status. The following are excerpts from
the radio interview. Subheadings have been inserted editorially.

1,500 warheads one too many

[Presenter] Today we have in the studio of "Personally yours" deputy of the
State Duma and former secretary of the Security Council Andrey Afanasyevich
Kokoshin... Are Russian-US relations entering a so-called honeymoon period
after the recent summit?

[Kokoshin] I should say that we need no honeymoon. We have seen from our
experience, and this is proven by history, that such honeymoons are always
followed by something bad.

[Presenter] A divorce, for instance.

[Kokoshin] Yes, either a divorce or our partner may want to strangle us
during an embrace. Our partner is so big and is indeed the only remaining
superpower. It is better not to fall into its arms, in the first place. It is
better to keep some distance from them, to make sure that our interests are
reckoned with. It is better not to fall into its arms, as was the case during
the times of [Andrey] Kozyrev's foreign policy in the early 1990s.

[Presenter] So, if not a honeymoon - you said we should avoid it - what has
been going on recently after all? Russia has had to resign herself to the
fact that it is no longer a top-level superpower, and that it now has to
follow US initiatives.

[Kokoshin] Unfortunately, we have long ceased to be a superpower in many
respects. Even the Soviet Union could hardly maintain this title. It was just
about a superpower in military terms, of course, both due to its nuclear and
non-nuclear capabilities, and in a whole host of fields in the economy,
science and education. We enjoyed our prestige in the world thanks to those
spheres. But Russia remains a superpower unfortunately just in the nuclear
sphere, because of very significant reductions in numbers, and, above all,
because of a decline in the quality of our general-purpose forces, which we
now have to restore. It is very important for us today to retain certain
positions in this sphere as well, vis-a-vis the USA, and at the same time to
use our superpower status in the nuclear sphere as a pillar for a strategic
balance in the world to secure our own economic interests. If we do not
secure our economic interests and do not work persistently to increase our
national wealth and to develop science and technologies at any cost, we will
fail to take our deserved place under the sun this century.

So, I think that we should not simply try to get certain concessions in the
ABM treaty, which is a high-profile issue today, we would then get a new
agreement on reducing strategic offensive weapons down to 1,500 or lower,
which would even be better since it will be difficult for us to have even
1,500 warheads in our arsenals. By the way, one should always have more, but
even 1,500 warheads is an enormous number...

But if we keep pace with the Americans, if we have another treaty - START-3,
then the agreement will legally acknowledge the equality of our positions,
which is not to the liking of many people in the USA, as they have left us
far behind in the economy, in political influence and especially in financial
strength, whereas Russia plays no role yet on world financial markets. The
position of the considerable number in the US Congress - the Republican Party
which has seized positions on the Hill in Washington - is that they want to
withdraw from all bilateral accords, to become completely free in choosing
their national military and political policies, and thereby burying all those
agreements which took decades of very hard labour to reach. Some of our
experts are even beginning to like this position. [Advisor to the US defence
secretary] Richard Perle, once a well-known extreme opponent of missile
defence and strategic stability issues, tries to prove in today's Izvestiya
that it is necessary to renounce and dismantle all the agreements, as they
are a legacy of the Cold War.

Arms inspections good but detestable

[Presenter] Do you, as a specialist, think they are out-of-date now?

[Kokoshin] You know, of course, they were the products of the Cold War and of
a very complicated negotiating process. We ought to be grateful to those who
held the negotiations, beginning from Andrey Andreyevich Gromyko, his
deputies, whom I knew and know very well, people from the Defence Ministry,
from the KGB, from the defence department of the [Communist] Party's Central
Committee and the defence industry, who worked on those agreements. I think
that they are not out-of-date, they are still the main basis guaranteeing
strategic stability and predictability in international relations, as a
whole. Admittedly, these agreements are not simply about the numbers of
warheads, carriers or types of carriers. They [agreements] set out a very
complex and detailed procedure for monitoring the agreements, including
inspections in localities. I have to say inspections are a very nasty
procedure. When I was first deputy defence minister, my colleague [Vladimir]
Kolesnikov, head of the General Staff, and I could not stand these
inspections with Americans coming and poking their noses in our affairs. But
we took special pleasure in sending our own inspectors there. Because they
used to save us a lot of money which otherwise we would have to spend on
recovering (words indistinct).

[Presenter] We have not heard anything about these inspections recently.
There have been no public reports about them. Are they still going on?

[Kokoshin] Yes, they are continuing. They are now part of the routine. People
have even forgotten about what used to be a novelty and unusual only 10-15
years ago. These inspections, incidentally, serve to monitor agreements on
conventional weapons. They have created an unusually high level of
predictability in the behaviour of the sides. And we need them especially now
because our possibilities for satellite reconnaissance depend on money, too.
We have very good technical resources but the cost of everything is very
high.

Camouflage agreements questioned

The Americans have more money. But I can assure you, too: if we renounce
these agreements and stop complying with these measures, including the ones
banning various types of camouflage, that is, ways of hiding ballistic
missile bases from the other side's so-called national technical means of
control, we will in fact be able to hide so much and at such a cheap cost
that no gigantic investment in technical resources would help them track down
these bases.

Unfortunately, they have not yet fully understood this in Washington. The
current administration are still trying to find out how serious all those
agreements are. They have become of course very complex and labour intensive.
A new person who has just come into power will find it hard to make head or
tail of it all. But there are good professionals there, too: for instance,
Condoleeza Rice, who came here today, Colin Powell who knows a lot about
these issues, Cheney, the former defence minister and now the vice-president,
and many others. They know a lot. The main feeling among the Republicans was
that they were the most powerful and the strongest nation and so let us get
rid of [changes tack] It was more important for them to get rid of the ABM
Treaty than to create national missile defence.

Arms talks linked with demands for US economic concessions

[Presenter] But aren't we proposing another treaty instead of it.

[Kokoshin] It is not that we are proposing another treaty. I think we have
made a number of tactically important moves. For instance, we have proposed
that Lord Robertson should discuss the ABM issue (word indistinct) within the
framework of the agreement which was signed in 1997, on the demarcation of
strategic and nonstrategic antimissile defence. But now what we are talking
about is some modification of the base agreement. A new joint reading and
protocols for the treaty. The deployment of antimissile defence is not yet at
issue. There is still a long path of trials ahead of us although the recent
trials are described as a big success. But they were preceded by so many
failures. Conditions for the development of strike technology have been made
so tough that the architecture of missile defence is (?not yet clear). Nor
must we forget that the US Senate has a Democratic majority now. [Passage
omitted: goes back to discussing US elections] So we must not forget the
position of the Democrats, which has recently been outlined by former
President Carter. Therefore, what we are facing are tough prolonged and
difficult talks. But the main thing is that we must not forget our economic
interests. There should be no direct linkage de jure but we must definitely
get the US administration's clear backing for granting us the most favoured
status nation, the status of a country with a market economy, and their
backing for wide-scale guarantees that the State American Bank - Eximbank -
will provide us with credits for our major investments. That is a minimum
that we can get because this is even more important for us than some strictly
paramount technical issues...

*******

#4
ORT Review
www.ortv.ru
Compiled by Luba Schwartzman (luba7@bu.edu)
Research intern at the Center for Defense Information
Research fellow at the Institute for the Study of Conflict, Ideology and
Policy at Boston University

HEADLINES,
Thursday, July 26, 2001

- A mass rally was held in Minsk today to protest recent disappearances of
people, including ORT operator Dmitrii Zavadskii.
- On the eve of the second round of the Nizhegorod oblast' gubernatorial
elections, Gennady Zyuganov accused the authorities of spreading rumors
[concerning the prospective move of the oblast' capital to Saratov or
Samara].
- Russian Interior Minister Boris Gryzlov officially presented the new
head of the Moscow Region's Main Directorate of Internal Affairs today.
He took the opportunity to criticize the Moscow police for covering up
crimes and for not working hard enough in general.
- President Putin is personally following the progress of restoration work
in Yakutia. At today's meeting with the members of the relevant
presidential commission he demanded that the work be carried out quickly,
but well.
- Eleven children in the cancer ward of the Khabarovsk hospital have died
over the past week and a half. There are rumors that the deaths were
caused by a new, untested drug.
- The Stavropol regional court sentenced Natalya Konibeda to 18 years in
prison. She was convicted of acting on the orders of Chechen fighters to
blow up a bus stop in Nevinnomyssk.
- The Russian Federation Security Council discussed the problems facing
the Kaliningrad oblast'. It will not be made a new, eighth, federal
district, but a new and complex program has been worked out.
- President Putin met with U.S. National Security Advisor Condoleezza
Rice, Finance Minister Paul O'Neill, and Trade Minister Donald Evans
today. On the same day, Kim Chen Ir, the leader of North Korea, a nation
branded a rogue state by the US, arrived in Russia. Preparations were
kept secret, and security around Kim is very tight. The Kremlin
officially acknowledged his visit only minutes before he crossed the
border.
- President Vladimir Putin has signed an order delineating the separation
of powers between federal and republic authority in Chechnya.
- Russian Foreign Minister Igor Ivanov announced today that Russia is
prepared to carry out all of the demands of the World Trade Organization.
- Vyacheslav Tikhomirov, commander of the Russian interior ministry
forces, visited Yekaterinburg to familiarize himself with the
battle-readiness of the Ural okrug troops. He expressed satisfaction with
the state of affairs and awarded medals to 19 soldiers and officers.
- Deputy Chief of the Russian General Staff Yury Baluevsky has denied
reports of large-scale fighting near the Chechen settlement Starye Atagi.
- Three people were hurt in today's explosion at a Ryazan' market. A
woman shopper noticed a suspicious object under a car, which exploded when
she and a nearby guard tried to get it out. Investigators are trying to
figure out whether this was a terrorist attack, or an act aimed at a
member od a criminal group.
- Extreme heat in North Ossetia is threatening the well-being of the
residents.
- Forest fires in Yakutia rage on. About 50 separate starting sites have
been noted.

*******

#5
Moscow Times
July 27, 2001
Chubais Lamp Is Not a Good Guiding Light
By Boris Kagarlitsky

When you buy a refrigerator the vendor, if he is a good one, will tell you
how long the particular make in question will retain the cold if the power
goes off. And you don't have to be a resident of the Far East's Primorye
region to come across this phenomenon: Blackouts are spreading throughout
the country.

There is one consolation, however — we aren't the only ones.

When I first wrote about the problems in California on the pages of Novaya
Gazeta, readers responded with letters of disbelief. Surely this kind of
thing couldn't be happening in the United States? To this day some of them
still don't believe it. Long before the difficulties in California, the
same problems had occurred in Brazil. And they are very familiar to the
residents of Kazakhstan. Everywhere the same thing happens: First the
privatizations, the liberalization and de-regulation of the energy sector
and after a while — off go the lights.

In his capacity as head of Russia's energy systems, Anatoly Chubais
explains to his fellow citizens that the blame lies with thieving local
officials and isolated errors. He also says the liberalization process
hasn't been carried through to the end. If you hack up a company and sell
off its most valuable pieces, then everything will magically sort itself out.

One could say that, on a planet-wide scale, an expensive and not
particularly successful experiment has been imposed. After all, the
privatization and deregulation models differed for each country, as did the
degrees of corruption. When I am told that Russian officials steal, I have
no doubt whatsoever that this is true. But when I come to California I hear
cries of foul play against the directors of energy companies.

This is not a case of isolated errors or the peculiarities of one model or
another. If one and the same result is repeated in various situations, then
this means that the principle, the strategy itself, is bankrupt.

This cannot be avoided in Brazil, Kazakhstan or even in the U.S. The
difference is how society reacts. In Brazil the electricity blackouts cause
mass concern. In the U.S. the claims against energy companies are being
considered by the courts. And Russia? In the Primorye region the governor,
who had no direct connection with energy policy, has been fired and a
replacement selected who is in no way better than his predecessor.

Basic common sense should tell us that running the national energy system
like a small private business is no less foolish than incorporating a small
shoemakers workshop into the centralized state planning system. But
politics has no need for common sense — it has its own interests. And that
is why even a clear case of policy failure does not constitute an argument
against continuing that policy.

President Putin tells the nation that the previous years' reforms have
failed to improve the lives of the population and that this is bad. But
then the authorities discuss a new packet of reforms founded on exactly the
same principles as the previous ones. You don't have to be a prophet to
predict that if this program is implemented, life will not get any easier
or happier.

Chubais has expressed himself clearly: Those that can't afford electricity
must get by without it. And no one asks how prices are set, why wages are
still miserly and how, despite the low wages, our product is still not
competitive. Alas, we don't hear these questions raised or any answers
given at government meetings.

Boris Kagarlitsky is a Moscow-based sociologist.

*******

#6
The Independent (UK)
27 July 2001
A ten-day ride to Moscow for the Dear Leader who doesn't fly
By Patrick Cockburn in Moscow

North Korea's mysterious leader, Kim Jong Il, does not like to fly, so
yesterday he began his official visit to Russia by rattling across its
far-eastern frontier on a sealed armoured train that will take more than a
week to reach Moscow.

The journey will be secretive. Russian police cleared hundreds of
passengers from the platform at the station in the far-eastern city of
Ussuriysk moments before Mr Kim's dark green 21-car Japanese-built express
cruised by at 25 miles an hour. Two separate locomotives had already come
down the track ahead of Mr Kim's train "in case there are mines", according
to police from the Russian FSB security service.

This is the third time Mr Kim, who is 59, is known to have travelled abroad
as leader. When he visited Beijing twice last year he also travelled by
train, although news of his trip was kept secret until he returned home.
The North Korean leader's train is expected to take about 10 days to make
the 5,800-mile journey across Siberia and into the Russian heartlands.

Mr Kim was invited to visit by President Vladimir Putin when the Russian
leader travelled to North Korea last year. The trip has added significance
because of the presence in Moscow of Condoleezza Rice, America's National
Security Adviser, who was talking to Mr Putin yesterday about the proposed
US missile shield, intended to guard against a nuclear attack by "rogue
states" such as North Korea.

Mr Kim's train, which is staffed by 140 North Koreans, crossed into Russia
at the border crossing of Khasan. Here, a special pavilion was built in the
1980s for a visit by Kim Il Sung, the father of Mr Kim, who died in 1994
and who shared his son's dislike of air travel.

Russian television showed footage of Mr Putin's representative in the
Russian far east greeting Mr Kim on the railway platform with the
traditional bread and salt. A woman handed him some red roses. She was
reportedly the same woman who, as a Communist Young Pioneer, had presented
flowers to Kim Il Sung a gener-ation ago. Mr Kim the younger, dressed in an
open-necked black tunic, accepted the roses graciously.

The train journey on the Trans-Siberian is going to be longer than usual.
This is because Mr Kim is planning some sentimental tourism with trips to
places his father visited. While the details of Kim Il Sung's career are
shadowy, he is believed to have crossed into the Soviet far east after
fighting as an anti-Japanese guerrilla in the 1930s. Mr Kim, the present
leader, may even have been born in 1942 in Khabarovsk, one of the cities
through which his train will pass.

Russian spokesmen admit they do not know Mr Kim's schedule. Igor
Kolomeitsev, the Russian presidential spokesman in Khabarovsk, said:
"Sometime the train will arrive at a hut and Kim will give an order,
saying, 'Stop, Kim Il Sung spent the night there.' And the train will back
up."

Aside from these stop-offs, Mr Kim is not known to have any plans to make
official visits to any of the cities on the Trans-Siberian apart from Omsk.
The governor of this industrial city in Siberia said Mr Kim would stop
there and visit the Transmash tank plant, which manufactures the T-80
battle tank, some 33 of which have been bought by North Korea. He may also
visit the local aerospace plant.

The Trans-Siberian railway, completed in 1904, is still the most famous
train journey in the world. The track runs north of the Chinese and
Mongolian borders before skirting the southern end of lake Baikal – one of
the most attractive parts of the trip – and through the Russian city of
Irkutsk. The route passes through western Siberia, the disappointingly low
mountains of the Urals, and across the central Russian plain to Moscow.

There is no continuous motor road across Siberia, so heavy cargo between
European Russia and the Far East often goes by rail. Russian officials
would like to see a railway linking North and South Korea, which would
enable it to offer the Trans-Siberian as a route for South Korean exports
to Western Europe.

*******

#7
RUSSIAN SCIENTISTS CREATE MATERIALS WITH UNKNOWN PROPERTIES

Moscow, 26th of July. /from RIA Novosti correspondent Eduard Puzyrev/. A
group of Russian scientists headed by Valerian Sobolev, Director of the
Volgograd Institute of Materiology under the Russian Academy of Natural
Science, has made it possible to create the materials with structures which
were unknown before and which provide them with astonishing properties.

According to Valerian Sobolev they have designed a unit that produces such
materials with a 100 percent repeatability. "The structures that cannot be
explained by modern chemistry are formed during the production process", the
Scientist reported.

Solid materials /based on, for example, silicon dioxide with additives/ may
obtain the strength of metal while having weight several times less than
metal. Or they can be magnetically charged and, when combined with a
conducting material, generate electricity.

In his words, these tiny materials will be used as "pocket electric power
plants" and energize all the household devices. These "power plants" can be
also manufactured for the industrial needs and, when united into blocs, they
generate electricity replacing the habitual fuel - oil, gas, coal and nuclear
fuel.

The discoveries of Russian scientists can totally change the technological
processes of the manufacturing of metals, building and construction materials
necessary for the creation of submarines, surface ships, aircraft and
spacecraft.

A new method of generating the low-temperature plasma has been invented. It
is based on the formation of unusual structures. "This invention makes the
industrial manufacturing of superconductors on the basis of the new plasma
generating units quite possible, and it will allow us to assemble the engines
for the wingless aircraft that will fly like the so-called UFO," the
academician believes.

Sobolev pointed out that there were many offers from famous foreign firms as
regards the discoveries made by the Russians and their practical application.
"But we would prefer that these discoveries were used in our own country,"
the scientist stressed.

*******

#8
Russian army cracks down on media in Chechnya-NTV
July 26, 2001

MOSCOW (Reuters) - The Russian army clamped down on reporters in Chechnya
Thursday for reporting too much bad news from the region and said it was
setting up an alternative military broadcasting studio, Russia's NTV
television said.

The army decision to impose restrictions on the media came after Armed Forces
Chief Anatoly Kvashnin criticized reporters Wednesday night in the town of
Shali, eight miles southeast of regional capital Grozny, for focusing purely
on bad news from a republic devastated by two wars since 1994.

"You are not doing a very good job and therefore we have decided to set up
two (media outlets) of our own. ... We will have a military television studio
broadcasting here," Kvashnin said.

"Why are you always so eager to report on military operations? ... You are
working for the sake of war and we are working for the sake of peace," he
said, urging reporters to talk more about the return of civilian life to
Chechnya.

Russian forces have nominal control over most of Chechnya, but rebels still
kill soldiers daily in bomb attacks and ambushes. Several local pro-Moscow
officials have been murdered in recent weeks and at least 100,000 Chechen
refugees in neighboring Ingushetia remain unable or unwilling to return.

NTV showed Fyodor Asalkhanov, head of the Interior Ministry press center in
Khankala, a major military base on the outskirts of Grozny, saying
journalists would henceforth have to be accompanied by press service
officials.

Asalkhanov did not say who would decide what was newsworthy.

"We usually agree on this," he said. "If our interests coincide, then we go
together with journalists and prepare material on the relevant subject," he
said.

"As far as we, Interior Ministry people, are concerned, if journalists
accredited in Khankala prepare materials on police-related topics, they
should leave the town accompanied by a member of the staff of the Interior
Ministry's press center."

But, according to NTV, the three press centers in Khankala have only three
cars available, only one of which can be driven out of town.

*******

#9
MEMORANDUM ON RUSSIA AS MARKET ECONOMY PASSED TO AMERICAN REPRESENTATIVES

MOSCOW, JULY 26. /From RIA Novosti's Marina Gradova/ -- The Russian Ministry
of Economic Development and Trade has passed to American colleagues a
memorandum recognising Russia as a market economy. This was said by Russian
Economic Development and Trade Minister German Gref following a meeting with
U.S. Treasury Secretary Paul O'Neill and Commerce Secretary Donald Evans.

The memorandum contains a thousand pages with answers to all questions of
concern to the American side.

Russians and Americans will now have to jointly prepare the memorandum for
consideration by the Congress and recognising Russia as a free market
economy.

Gref also said that at the meeting with O'Neill and Evans they discussed
problems of bilateral relations between Russia and the United States and
outlined timeframe and procedure for settling some of these problems.

Next week Russia will prepare and pass to the USA a schedule of events
related to Russia's entry in the World Trade Organisation, said German Gref.
He said, the American colleagues back this initiative and are willing to
speed up that process.

******

#10
Opinion poll shows fewer Ukrainians now in favour of union with Russia
Interfax

Kiev, 26 July: The number of supporters of the union with Russia and Belarus
has decreased by 3 per cent in Ukraine over the past four years, according to
an opinion poll held in June by the Kiev International Institute of Sociology
together with the Kiev Centre for Political and Conflict Studies.

The poll involved 10,475 Ukrainian residents.

Regarding the principles on which Ukrainian-Russian relations should be
based, 29.6 per cent of the respondents said that Ukraine and Russia should
form one state, compared to 32.6 per cent before the previous parliamentary
elections in December 1997.

In June 2001 57.9 per cent of those polled said that Ukraine and Russia must
be independent and friendly states with an open border, without visas and
customs barriers (up 6 per cent from December 1997).

The number of those who think that Ukrainian-Russian relations must be
similar to relations with other countries, with closed borders and with
customs barriers and visas, has not changed over the past four years and
remains at 10.7 per cent.

The final result of the poll is that 10 years after the proclamation of
independence, about 70 per cent of the respondents think that Ukraine must be
an independent state (this figure slightly increased since 1997), while the
share of respondents who support the idea of a union with Russia has
decreased.

*******

#11
Russian opinion poll reflects ambivalent attitudes to China
Interfax

Moscow, 26 July: Thirty-one per cent of Russians believe that China will be
Russia's ally and yet another 15 per cent feel it will be Russia's friend in
the 21st century.

Interfax obtained these statistics from the All-Russia Centre for Public
Opinion Study on Thursday [26 July]. They came from a representative poll
carried out among 1,600 residents of Russia on 23 July.

Another 21 per cent of respondents hold a neutral view, regarding China
neither as an ally nor a foe.

Sixteen per cent look at it as a potentially dangerous neighbour, while 3 per
cent are convinced it will become Russia's adversary.

The poll also showed that more than half of Russians (56 per cent) think the
high profile of Chinese firms and workforce in tapping Siberian and Far
Eastern wealth will be dangerous for Russia, and 24 per cent believe it will
do Russia good.

******

#12
U.S. O'Neill upbeat on Russian economic reform
By Glenn Somerville

MOSCOW, July 26 (Reuters) - U.S. Treasury Secretary Paul O'Neill said on
Thursday after meeting Russian President Vladimir Putin that he was very
optimistic Russia was headed in the right direction to attract investment and
build its economy.

"We saw nothing but reasons to be optimistic and encouraged today," O'Neill
told a news conference. The U.S. Treasury chief said he found it "very, very
encouraging that the building blocks for a system that will encourage capital
formation and capital employment are coming along."

O'Neill turned aside a reporter's question on whether corruption was an
impediment to Russia's economic future. He said that Putin and his government
"seem as determined as any leaders...to make corrections and do it quickly."

He also cited progress in passing a bill to curb money laundering as a sign
Russia was taking steps to be more open.

On his way to Moscow, O'Neill had said Russia needed to demonstrate its
reforms were being put into practice in order to woo back U.S. and European
investors.

O'Neill, Commerce Secretary Don Evans and National Security Adviser
Condoleezza Rice were in Moscow as part of a Bush administration initiative
to pursue arms control and economic goals broached directly by Bush and Putin
earlier this year.

All three U.S. cabinet officials were at the Kremlin for meetings with Putin
on Thursday afternoon.

RUSSIA "ON RIGHT PATH"

Both Evans and O'Neill said the Russian government's efforts to push through
economic reforms showed it was on the right path to attract investment,
though it has much to do yet.

"My sense is that the direction is right," O'Neill said.

"I believe from what we hear directly from President Putin and the other
people we engaged with, they know what they want to do, they know what's
needed in order for both capital to generate in this country, to stay here,
and for capital from outside to come here."

O'Neill said a key reason for the visit to Moscow was "to show our
seriousness of purpose in building bridges and links between the Russian
society and the American society, especially around the issues of economics
and finance."

Evans, who will lead a delegation of U.S. businessmen back to Moscow in
October, said the two countries were creating a "Russian-American Business
Dialogue" made up of corporate chiefs from the two countries. It is to
discuss individual trade and other issues that each should pursue and to
recommend specific actions for each government.

"We're not interested in just endless meetings and endless dialogue," Evans
said. "We're interested in results and continuing to build on what I have
really come to see as great progress this fine country has made in opening up
its economy, taking important steps in transparency, good government, tax
reform over the last couple of years," Evans said.

NO STEEL TALKS YET

One potentially sensitive topic -- curbing excess steel capacity -- did not
come up, O'Neill said, though U.S. officials have said they consider Russia a
country that maintains inefficient old steel mills in production.

O'Neill said overcapacity in global steel output had existed for 50 years,
but said so far talks aimed at voluntarily curbing output were only at the
stage of identifying the problem.

The U.S. Treasury chief said the United States was willing to do whatever was
necessary to help Russia enter the World Trade Organization. Russia is one of
the last large states outside the WTO and has indicated it wants to join by
2002 or 2003.

"We are going to be as helpful as we can be in response to what the Russian
side wants us to do to help them gain early access to WTO," O'Neill said. He
added there was work to do to define objectives and timetables but
emphasized: "We did not come to in any way cause any delay or impediment to
the quickest possible accession of Russia into the WTO."

U.S. officials in the past have noted that Russia must demonstrate it has a
functioning system for collecting customs and must ensure copyrights and
other intellectual property are protected for companies doing business in
Russia.

O'Neill suggested a clear flow of information on the operations of state
banks -- making their lending decisions more transparent -- would also be
required under WTO rules.

In response to a question, O'Neill said a U.S. economic slowdown had
"implications for Russia," but noted that, equally, an anticipated U.S.
pick-up next year would be a benefit.

******

#13
therussianissues.com
Mysterious Woman Paralyzes Major Oil Company
By now LUKoil has already lost $50ml. because of the court order
July 26, 2001
By Nikolai Ulianov, Strana.Ru observer

Russian newspapers for July 26 write about a scandal related to the biggest
state-run oil company, LUKoil. According to the papers, on July 24 the
Transneft company (a monopoly that transports oil across Russian and the CIS
counties) received an order from a Ryazan district court that bans Transneft
from accepting any documents signed by LUKoil president Vagit Alekperov or by
his deputies. Reuters reports that the order was carried out because of a
complaint submitted by Retkino villager Irina Yegorova. The woman is said to
have several shares in LUKoil. She also claims that she found a number of
drawbacks in LUKoil's contracts with Transneft. Journalists failed to find
the claimant at the address stated in the court order.

Newspapers stress that it's likely that behind Yegorova there is some more
powerful body, although they haven't yet discovered it. They also haven't
been able to discern the real motives of the party that is fighting the oil
giant.

Vedomosti says that experts are lost in regards to who could benefit from
Yegorova's intrigues. However, Valery Nesterov from the Troika Dialogue group
has noted that LUKoil's relations with Transneft are strained. He recalled
that LUKoil, jointly with another oil giant, Rosneft, was opposed to advanced
payments for Transneft's transportation services. Furthermore, Nesterov said
that Transneft had set its sights on obtaining a 20% stake in the
Kharyaginsky project. He noted that LUKoil also wants to buy this stake in
the project.

Among versions of reasons for the scandal, Kommersant mentions strained
relations between the two companies' top managers: Transneft's Semen
Veinshtok and LUKoil's Vagit Alekperov are far from being friends. As one
high ranking official from one of the oil companies has said, Veinshtok used
to work for LUKoil, but having left it for Transneft, started working mainly
for the presidential administration. Not long ago, Transneft announced its
plans to start extracting oil from the Timano-Pechora region, a region which
traditionally belonged to LUKoil.

Kommersant named another LUKoil counterpart that could be behind Yegorova's
action - the oil company Severnaya Neft'. The company is managed by Andrei
Vavilov, a former deputy to the Finance Minister. LUKoil used to be
considered one of the main applicants for the Val Gamburtsev oil deposit.
However, Severnaya Neft' won the contest to extract the oil there in March
2001. From the data available to Kommersant, the situation around the contest
has unexpectedly changed recently. After Boris Yatskevich's resignation as
Natural Resources' Minister, the new Minister Vitali Artuhov is said to be
thinking of reviving the question.

Newspapers say that by now LUKoil has already lost around $50m as a result of
the delay caused by the court order. Plus, there could be fines for the
tankers' downtime in seaports and violation of terms with foreign
contractors.

*******

#14
Reznik discussion of corruption in Russia, includes commentary of
scandal over loss of USD 450 million, sale of helicopters from rapid reaction
forces as scrap.

Vremya MN
18 July 2001
[translation for personal use only]
Article by Boris Reznik: "Russia's Unhappy Image"

As is well known, the international non-governmental organization
"Transparency International" included 91 countries in its 2001 corruption
index. Russia was in the top 11 most unfavorable countries in this
regard. Does it deserve it? The editors asked the deputy chairman of
the Duma Information Policy Committee and member of the parliamentary
anti-corruption commission Boris Reznik to answer this question.

I believe it is entirely deserved. I do not know how corruption is
fought in other states, but as for Russia, we actually only simulate the
campaign, while in fact we do nothing-that's the truth. I can say this
with confidence because of my experience of working in the national and
Duma anti-corruption committees. We prepare documents which expose
financial abuses, but as a rule our investigations have no consequences
whatsoever. I am not speaking about all cases, but only about the
enormous number of cases which have been widely publicized.

Now, for example, our commission has sent a deputy's inquiry to the
General Prosecutor's office in the case of former Deputy Finance Minister
Andrey Vavilov. Several corruption cases have been associated with his
name. One of them was the sadly famous story of the Swedish "Noga"
company: Russian officials are accused of stealing 128 million dollars,
and it is said that Vavilov had a hand in it. As often happens, the
case has bogged down in red tape. And the company, where it can, is
attempting to impound Russian property abroad-these facts are commonly
known. But I am very upset by the fact that instead of unequivocally
proving the non-involvement of the Russian side in such a serious
allegation, our law-enforcement people and authorities are trying to
circumvent the essence of the case, putting the emphasis on secondary
details: the wrong order was issued, the wrong property impounded. But
about the case-whether they stole or not-silence.

Just as there is no response to questions about the disappearance of
450 million dollars from the military department-the case has dragged on
for many years now. Again the name of Vavilov figures in it, with a
group of bureaucrats. The military procuracy is investigating, but does
all it can to avoid saying what stage the investigation is in. But I do
not remember a single noisy case that has been brought to a conclusion.
I had occasion to write about how the frames of air-capable cruisers were
shipped from Sovetskaya Gavan under the guise of ferrous metal from the
Far East. The scrap lists were signed by all the admirals that exist in
the Pacific Fleet, as well as by their Moscow chiefs. If you believed
the paperwork, these were allegedly empty shells of ships, the "guts"
having been long ago removed and eliminated. Chance intervened in the
case: a young customs official, out of professional curiosity,
apparently, climbed on board one of the ships and found oiled weapons,
the latest models, stowed under mats, and radar sets with
instructions-these were cargoes worth hundreds of millions of dollars.
Not to mention more than 450 km of cable, valued at much more than the
cost of scrap metal. These had not been removed, according to the
admirals, because there was no opportunity. Allegedly money was not
allocated for it because it was all being given for next to nothing to
North Korea as one lot. This outrage was discovered. Military
counterintelligence filed criminal charges and turned the case over to
the procuracy, which failed to find the culprits.

Or: 18 helicopters were shipped from the Far East as scrap metal.
Prior to this they had undergone major repairs, new engines were
installed, and they were sold to North Korea for a pittance. These were
combat helicopters, the best from the rapid-reaction group. I published
two articles and criminal charges were filed, but they were halted and
archived with a standard resolution: the culprits could not be found.
I publicly named all the thieves: the chief of ground troops aviation,
the aviation commander of the Far Eastern Military District, but none
tried to sue me, because I had the documents.

Recently the Duma anti-corruption commission investigated the case of
former Minister of Nuclear Energy Yevgeniy Adamov. It was proven and
documented, not by us but by the special services, that Adamov had
accounts abroad worth many millions of dollars (and that on a salary of 8
thousand rubles). A Russian-American company supposed to be engaged in
nuclear development was registered at his home address. It was headed
by Adamov's wife. At the Kurchatov Institute, which he once managed-and
this was an especially top-secret enterprise-warehouse facilities
intended for storage of special materials were used to store Turkish,
Vietnamese and I don't know what other consumer goods. Adamov himself
has American insurance, which allows him to obtain U.S. citizenship at a
moment's notice. The file was sent to President Putin. But much to
our consternation, at the ceremony introducing the new minister, suddenly
Adamov turned up next to the head of state. It was a real shock to me.

We are now looking into very major abuses in the State Reserve-an
organization which has colossal material valuables in the event of war or
natural disasters. What haven't they gotten up to there-from the theft
of corn to petroleum products, while at the same time the troops are fed
rotten meat, causing mass illness. Criminality of the first water, but
instead of criminal charges being filed against Chief Yusupov, he is made
minister of fuel and energy. He departs, leaving one of his men in his
place.

But no one is interested in these facts-not the law-enforcement
organs, not the president's administration. I repeat-in Russia they
continue to simulate an anti-corruption campaign. In fact the procuracy
has not brought a single case to its conclusion. And indeed-who would?
Both the State Duma anti-corruption commission and the Security
Committee acknowledged I was completely right in connection with the
investigation into the activities of the so-called procuracy development
fund. Through it, the "unblinking eye" took ten percent "commissions"
from all cases-civil and aborted criminal. They got them also from the
territories-half of the funds collected by this means in the provinces go
to Moscow. And with this money they acquire luxury apartments, cars,
houses. Do they have time to look into corruption? Can the legal
folks not know what they are doing? All of these facts are of a type.
Any person in our country could throw that into the faces of the
gentlemen procurators-in what way are you better than us?

*******

#15
Russia's Putin says enclave could become part of Europe
Interfax

Moscow, 26 July: Russian President Vladimir Putin has called for modernizing
Kaliningrad region's economy.

The region's problems must be tackled by economic tools, he told a Russian
Security Council meeting today.

The region's economic development is far from that of the most advanced
regions, while the investment level is half the country's average, Putin
said.

Decline is visible in nearly all industries in the region, Putin said. As a
consequence, living standards there are only about 70 per cent of those
throughout the country. The dire economic situation is favourable for the
spread of tuberculosis, drug addiction and AIDS, and for the crime rate,
particularly in the economic field, he said.

The federal centre keeps the region in the focus of its attention, but the
end results of these bureaucratic endeavours are negligible, Putin said.

It is time to rethink the concept of the region's development in light of new
European realities and the new potential of the Russian economy, Putin said.
Kaliningrad Region may serve as a testing ground for interaction between
Russia and Europe, he said.

When its neighbours join the European Union, Kaliningrad Region may become an
enclave in a united Europe, Putin said.

This situation has numerous disadvantages, but they can be turned into
advantages, Putin said. "This approach could serve the key national interests
of this country," he said.

All Russia's ministries and services must thoroughly coordinate their
activities in the region's life support, Putin said. A lack of coordination
has repeatedly resulted in negative consequences, and the recent introduction
of customs duties in the region is one case of this, the president said.

********

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