Johnson's Russia Lit #6019 12 January 2002 davidjohnson@erols.com A CDI Project www.cdi.org [Note from David Johnson: 1. AP: Oil Co. Wants to Buy TV Rights. 2. AP: Russia Seeks New Arms Pact With U.S. 3. AFP: Russian military refuses to halt security sweeps in Chechnya. 4. Peter Lavelle: Untimely Thoughts - Smart, smarter, outsmarted? (re Putin in 2002) 5. The Times (UK): High risks and rewards in Russia. Mark Atherton seeks the safest method to explore the Moscow markets potential. 6. Transitions Online: Vladimir Kovalev, Russian Customs, Old and New. Where does a washing machine become pasta? The answer is--or at least was-- on Russia's borders. 7. New book: MAO, MARX, AND THE MARKET: Capitalist Adventures in Russia and China by Dean LeBaron & Donna Carpenter. 8. NTV news summmary. 9. BBC Monitoring: Russian minister's tour confirms loss of influence in Central Asia - paper. 10. Rossiyskaya Gazeta: Interview with Sergey Kortunov, Pavel Zolotarev, and Boris Makarenko, participants in the Experts' Club discussion. "The Glass Is Half Full or Half Empty. What Stands Behind the Rapprochement Between Russia and the West"] ******* #1 Oil Co. Wants to Buy TV Rights January 12, 2002 By ANGELA CHARLTON MOSCOW (AP) - After persuading a court to shut down Russia's largest independent television network, a subsidiary of the country's biggest oil company said Saturday it wants to buy the channel's broadcasting rights. Russia's top arbitration court on Friday ordered the closure of TV6, ending a closely watched eight-month legal battle and dealing the latest blow to Russian media freedom. TV6's feisty journalists are among the government's fiercest critics. The ruling came in response to a bankruptcy lawsuit by Lukoil-Garant, a pension fund that is owned by oil giant Lukoil and holds a 15 percent stake in TV6. Lukoil-Garant - itself minority-owned by the government - demanded the station be shut because it failed to make a profit. TV6 maintains that it is profitable despite earlier financial woes. After the victory in court, Lukoil-Garant said Saturday it wanted to bid for the station's broadcasting license - and suggested it would hire back some of TV6's journalists and give them partial ownership. TV6 lawyers said its broadcast license should be annulled after the liquidation, which must be carried out by May. ``The fund is ready to join efforts with the TV6 staff for participation in this tender (for the license) and, in the case of victory, hand over a considerable package of shares to the personnel for joint work to create a new image for the channel,'' Lukoil-Garant said in a statement. If it wins the broadcast rights, Lukoil-Garant said it would ``take into account first of all the interests of TV viewers and observe the principles of freedom of information.'' TV6 officials could not be reached Saturday for comment. The TV6 staff includes some of Russia's most prominent journalists, a group that had defected in disgust from NTV television when it was taken over by natural-gas giant Gazprom last year after a bruising legal fight. The journalists charge the NTV and TV6 takeovers were orchestrated by the Kremlin to punish them for critical coverage. The Kremlin has denied involvement, but both battles prompted international concern about Russian President Vladimir Putin's commitment to media freedom. In Washington, White House press secretary Ari Fleischer said Friday that the administration was ``disappointed'' by the decision to close TV-6. Analysts warned the ruling would prompt self-censorship among Russian journalists and harm local television stations that cooperated with TV6. NTV had been owned by tycoon Vladimir Gusinsky, and TV6 is majority-owned by magnate Boris Berezovsky. Both men were involved in shady privatization deals in the 1990s and had good relations with the Kremlin under Boris Yeltsin but have since lost favor. Both are abroad avoiding criminal prosecution they say is politically motivated. ****** #2 Russia Seeks New Arms Pact With U.S. January 12, 2002 MOSCOW (AP) - Russia expects a formal accord with the United States on deep nuclear weapons cuts to be reached by May or June, a Russian general leading talks with U.S. officials next week said Saturday. ``The central issue of the Washington consultations will be the development of a new agreement between Russia and the U.S. on the reduction of strategic offensive arms,'' Col. Gen. Yuri Baluyevsky told reporters in Moscow, according to Russian news agencies. The agreement should be ready by the time President Bush visits Russia in late May or early June, said Baluyevsky. ``It should be a legally binding document what will clearly outline the mechanism of controlling the process of reduction,'' he said. Bush pledged in November to cut the U.S. arsenal to 1,700-2,200 warheads, and Russian President Vladimir Putin responded by saying Russia would reduce its stockpile to 1,500 warheads. Each country is now allowed 6,000 nuclear warheads under the 1991 START I treaty. Putin has pushed for a formal treaty on the new cuts, but Bush has balked. In a reconciliation gesture, a senior U.S. official said Thursday that the Bush administration would be willing to codify cutbacks with a statement or even a treaty, provided there would be no tortuous Cold War-style negotiations. Baluyevsky heads a delegation going to Washington to work out details of the cuts Monday and Tuesday, and the talks are expected to be tough. Russia has bristled at the Pentagon's plan to downsize American nuclear arsenals by putting weapons in reserve rather than destroying them. Baluyevsky said the U.S. decision to withdraw from the 1972 Anti-Ballistic Missile Treaty would also be discussed. After years of Russian efforts to prevent such a move, Bush announced in December that the United States is withdrawing from the treaty within six months so that it can build a national missile defense. Putin called the decision a mistake but said it would not threaten Russia's security. Baluyevsky said that Russia would present a formal reaction to the U.S. withdrawal within six months. ****** #3 Russian military refuses to halt security sweeps in Chechnya January 13, 2002 AFP The Russian military refused a demand by human rights groups that it halt so-called "mopping-up operations" in Chechnya amid mounting evidence of abuses by federal troops during a recent 10-day security sweep. Commander of Russian forces in the North Caucasus, General Vladimir Moltenskoi, told a meeting with Memorial and other Russian human rights groups that rebel activity made such measures indispensable, ITAR-TASS reported. The human rights representatives had asked the military to stop security sweeps and blockades of towns and villages. "At night the bandits lay mines on the roads, and unless we cut off localities, if a bandit group has entered somewhere, the special operation there will be useless," General Moltenskoi said as quoted by the news agency. Russian federal forces this week wound up a sweep through Chechen towns, including Argun, saying they had killed 92 rebels. Human rights organisations led by Memorial have detailed a wide array of abuses -- reports that Washington has deemed credible -- including arbitrary killings, beatings and hostage taking. Russia has moved to take advantage of its alliance with the United States in the war on terrorism, branding the Chechen rebels terrorists. Federal forces were sent into the breakaway republic on October 1, 1999 but have failed to take control of the territory, and though tentative contacts with the rebels were established last September, no sign of a peace process is in sight. ****** #4 From: "Peter Lavelle" Subject: Untimely Thoughts Date: Sat, 12 Jan 2002 Peter Lavelle: Untimely Thoughts - Smart, smarter, outsmarted? (re Putin in 2002) The year ahead will be no picnic for Russia in general and Putin in particular. This is not because we should expect anything particularly disastrous to happen. I, unlike a number of other analysts, do not expect a repeat of the 1998 financial collapse. The challenge will stem from the two areas. Repeating the stellar macroeconomic performance of last year is hardly likely - expected international commodity prices makes this a virtual impossibility. The second is the discernable increase in expectations by most Russians, echoed by the political elite as well. This combination may put Putin and his government on the defensive during the year. In sum, this year will most likely be a task of discourse control. Or in media terms, success will be determined by who manages the "meaning of progress". Progress will have to be refined to include other benchmarks other than macroeconomic indicators. Putin and his people will have to work particularly hard not to loose the momentum of the last 18 months. Actually, Putin's politics is only about momentum. The question "Who is Putin" is now and always has been irrelevant. "What is Putin" is far more germane. Very much like Clinton, Putin has chosen a politics of constant campaigning. This fit well with the American electorate of the 1990s where the media greatly determined the meaning of the message as well as its ultimate success. At this juncture, it is difficult to discern if this is effective for Russia. Clearly, the political function of the Russian media differs from its American counterpart. American administrations negotiate with the media, the Russian one appears to be more inclined to dictate. The communist period tells us that the definition of stupidity is the inability to learn. The media, for all its failings, on occasion teaches us a thing or two. A free (or at least a more free) media is to the President's advantage moving forward. What made 2001 of interest is not merely a successful year in terms of the numbers, but the triumph of presentation and perception - form outdistanced content by a long shot. The discourse of "movement and change" is now hegemonic. This mode of political discourse made sense as the juggernaut of reform packages were developed by the Cabinet and passed by the Duma. While much remains to be done, there are justifiable expectations that last year's reforms should start to pay dividends. Fruition from last year's projects mostly likely will impact the perception of the present year's agenda. This will remain the case for the balance of Putin's present term as well. Essentially, in tune with the constant campaigning strategy, Putin now has a record to defend. Putin has firmly established the necessity of reform and restructure. This is not only his agenda, but also the way he publicly presents the nature of Russian politics. He has also, as a result, firmly established what many Russians now come to perceive what the economist Thorstein Veblen called "stables of decency". Stables of decency are more than expectations. Expectations can, for the most part, be indexed in terms of macroeconomic success or failure. Stables of decency are much more psychological and relative; their social significance defines status, not necessarily real income. The Putin electorate enjoys some of the amenities that appear to define Russia's convergence with the west; i.e. mobile telephones, foreign travel, and other perceived luxuries. In an economy where social mobility remains limited, indexing these stables of decency may be the best public opinion poll available to the political elite. The nature of political rhetoric has changed and is changing. In terms of political discourse, the rhetoric of power is in the process (at least formerly) of being replaced by the rhetoric of representation. I use the word formally due to the fact that the 'Putin Call-in Show' may have been just that - a show. Nonetheless, this is where the illusory civil society project may find an opening. Precedent demonstrates greater representation can alleviate perceived material and status depravation. This may be Putin's trump card or the makings of his demise. Meaningful reform cannot become a reality with the participation of civil society. Reaching out to the masses can be risky as well as highly profitable. The most gapping whole in Putin's reform-restructuring project is a meaningful recognition of civil society. If he needs to keep the momentum of his program of reform on track, civil society just may be the vehicle he needs most. Unfortunately, most of Russia's political elite will fight him tooth and nail if he attempts such a strategy. The interests of the ruling bureaucracy is a mirror antithesis if society's interests. Eventually Putin will have to choose for Russia. Putin assumed the helm of state as a smart man with determination. Last year he demonstrated that he is smarter than at least the conventional political wisdom. This year, let's hope he doesn't outsmart himself. Putin needs to avoid the mistake Stolypin made a century ago: economic reform is not a substitute for, rather than accompaniment to, political reform. Peter Lavelle Head of Research IFC Metropol Moscow, Russia plavelle@metropol.ru ******** #5 The Times (UK) 12 January 2002 INVESTMENT High risks and rewards in Russia Mark Atherton seeks the safest method to explore the Moscow markets potential RUSSIA has long held a fascination for European investors, but only the brave should venture to its stock market — no matter how tempting the prospects may seem. After years of deprivation, when public sector workers went unpaid and the elderly did not receive pensions, Russians are at last beginning to see a rise in their standard of living. The economy grew by 5 per cent last year following an 8 per cent expansion in 2000. This has fed through to the stock market. Moscow was one of the best performing stock markets in 2001. With a rise of 56 per cent, it was beaten only by Zimbabwe. But the market is still off its peak in the late summer of 1997 — before the Russian Government defaulted on its debt payments and foreign investors fled. They are returning, although gingerly. The lure is the vast mineral and oil resources in this enormous country, which is spread across two continents. If Russian companies can exploit these resources, the nation could prosper again. Douglas Helfer, a director of Foreign & Colonial’s emerging markets team, says: “Russia is a country where the potential risks and rewards for investors are both very great. Shares are still very cheap, selling on under four times earnings, which is half the average for emerging markets.” However, investors should be in no doubt about the risks of investing in Russia. Mr Helfer says: “The economy and the stock market are heavily dependent on the performance of oil companies, so if the oil price falls below 14 dollars a barrel, that could cause serious problems. “The stock market is very volatile. There are not many shares traded and the ones that are tend to go up and down very steeply. The market may have risen by more than 50 per cent in 2001 but it fell by more than 70 per cent in 1998 and lost 90 per cent of its value between October 1997 and September 1998. Currency risk also has to be taken into account. In 1998 the rouble was devalued, causing a collapse of confidence among investors. The possibility of another devaluation has to be considered, though the Russian Central Bank now has significant reserves and oil revenues provide a steady source of foreign exchange. “Although President Putin has ushered in an unprecedented period of political stability, the outlook remains uncertain. On top of that, there are still concerns about the level of corruption and the lack of a proper legal framework for businesses.” Partly because of these negative factors and partly because they are wary of recommending a single country fund, financial advisers tend to suggest gaining exposure to Russia through a more geographically diverse fund. James Calder, of Bestinvest, the independent financial adviser (IFA), says that investors wanting direct exposure to Russia are going to struggle to find a suitable fund. “There aren’t many to choose from. Brunswick runs a Russian growth fund based in the Cayman Islands; Barings has a New Russia fund based in Luxembourg, while Flemings runs two Russian funds based in Luxembourg and Jersey. British investors tend to steer clear of offshore funds because they usually have less regulatory protection.” As a safer bet he picks out Baring Emerging Europe investment trust, a UK-regulated, broadly based Eastern European fund that has 35 per cent of its money invested in Russia. It also has about 22 per cent invested in both Poland and Hungary and 9 per cent in the Czech Republic, all of which are poised to join the European Union within the next three to five years. Klaus Bockstaller, who heads the team running it, says: “The fund offers a broad exposure to the markets of Eastern Europe. We still believe Russia offers a lot of potential, even after its strong performance last year. “In the case of Poland, Hungary and the Czech Republic, the key theme is convergence with the economies of Western Europe and likely membership of the EU within three to five years.” The fund’s performance has been good — but volatile. In the year to December 1 it rose by 18.2 per cent, while over three and five years it has risen by 77.1 per cent and 107.2 per cent respectively. ****** #6 Transitions Online www.tol.cz January 11, 2002 Russian Customs, Old and New Where does a washing machine become pasta? The answer is--or at least was--on Russia's borders. by Vladimir Kovalev Vladimir Kovalev is a correspondent for the St. Petersburg Times. ST. PETERBURG, Russia--Ports and border crossings throughout northwestern Russia have been jammed with trucks and ships after federal customs officials decided to crack down on the transformation of products on Russia's borders with Scandanavia and the Baltic states. Prior to the end of the year, flowers were becoming grass, chicken legs were turning into full-grown turkeys, and--in an audacious leap of imagination--washing machines were morphing into pasta. Now, at least in one part of Russia, that may be changing. At the start of 2001, tax duties were simplified and the previous seven tax bands replaced with four. That may have made life simpler, but the differences in tariffs--the bands are 5, 10, 15, and 20 percent--and the categorization of products continued to encourage widespread and large-scale falsification of documents. One company, a customs spokesman revealed, even tried to pass off 17,000 tons of coffee as toilet paper in an effort to halve customs duties. Customs officials in Moscow decided enough was enough and launched an anti-fraud campaign before the winter set in, though only in the northwest. “Due to the large number of violations discovered during the inspection, a decision was made on 24 October to search all transport trucks carrying goods from what were identified as risk groups,” said Yevgeny Vensko, a spokesman for customs authorities in the northwest. At the same time, the authorities suspended the head of the Baltics customs section at St. Petersburg's sea port, Alexander Puchkov, and dispatched inspectors to replace Vladimir Shamakhov, head of the North-West Customs Office, and his deputy, Mikhail Prokofiev. Both had resigned, reportedly for health reasons. Some Russian political analysts have interpreted the tougher line adopted in the northwest as a part of a plan by President Vladimir Putin to appoint his people to key state positions. Shamakhov's replacement, Vladimir Vyunov, was the former deputy to the president's representative in the region. Whatever the politics, the economic results have been startling since customs officers began carrying out item-by-item checks on shipments of coffee, household appliances, furniture, tires and some other products. According to federal authorities, 30 percent of goods were falsely labeled. Prior to the crackdown, Mikhail Vanin, head of the Federal Customs Committee, was asked how much money was being lost. “I hate to think about it. I will name exact figures only to the president,” was the reply quoted by the news agency Interfax. The authorities now believe that the 13 land and sea entrance points where the checks are being implemented--several in St. Petersburg port, and the rest across the regions of St. Petersburg, Kaliningrad, Murmansk, and Karelia--were losing up to $200 million annually because of false customs declarations. “Since the more stringent inspections started, customs duties collections have increased significantly,” said Irina Skibinskaya, a spokeswoman for the Federal Customs Committee. “I can’t give you any numbers yet, but it’s clear now that collections will be much higher than North-West Customs initially planned.” Another source indicated that, when the campaign was launched, the Federal Customs Committee had ordered the customs authorities in the northwest to collect an additional 1 billion rubles (about $33.6 million) in 2001. According to the International Association of Cargo Importers (IACI), duties collected at Russia's checkpoints account for roughly 30 percent of the entire national budget. A TRUCK DRIVER'S NIGHTMARE While there may be smiles and bonuses in the customs office, truck drivers and importers are suffering. “This is just a nightmare,” said Valter Velsman, head of the St. Petersburg-based IACI. “They search 50 percent of all trucks coming to the border, which means they have to be fully unloaded and then reloaded." At two checkpoints, the results have been huge queues, sometimes stretching 15 kilometers, on the Finnish side of the border. This is making life difficult for villagers close to the border. Lidia Benetska, who lives near the crossing point in Valimaa, complains that her car was damaged as she tried to squeeze past the long line of trucks. More significantly, the perfume boutique where she works is losing money. Tourists are also incensed. “The other day I met some tourists from Germany who had just arrived from Russia. They were tired and outraged, saying that they don’t ever want to go back to Russia after spending six hours waiting to be checked on the Russian side,” said Nadezhda Helge, who owns the perfume shop. The biggest losers, of course, are the freight companies. Velsman said that losses per vehicle have been about $200 per day, while the total cost to the transport industry has been about $500,000 since the new regulation was introduced. Some days in November, according to Lasse Koskela, duty chief of the Valimaa checkpoint, there were up to 400 trucks standing in a line, waiting to be allowed to enter Russia. “That's no big surprise for me. I’ve seen how they work,” was the reaction of Sergei Ivanov, a truck driver stuck in an overloaded parking lot on the Finnish side of the border, near Valimaa. He said he had moved at an average speed of five kilometers a day over the past two days. “You pull up to the checkpoint, and there’s nobody there. One has just left, another is having tea and a third is off just walking around somewhere,” Ivanov said. Workload, rather than working habits, is blamed by customs spokesman Vensko. “We have only 75 percent of the staff we need," he said, and in the winter months sickness is also taking a toll. Whether the reason is sloth or understaffing or both, Velsman of the IACI believes the authorities are not using the full capacity of the checkpoints. “The best cargo checkpoint in Europe is located in Torfyanovka," he said, "but instead of having all eight lanes open, only one, two or sometimes three work. They can inspect 1,300 trucks a day, but handle only 250.” That capacity is sorely needed. According to other figures from the IACI, 250,000 trucks crossed the border at Torfyanovka in 2000, and that figure had been due to rise by 20 percent before the new inspections, suggesting that the flow of trucks over the border has dropped by more than two-thirds. He appears to be right, at least in some places. In recent weeks, some bottlenecks have eased a little as more lanes were opened. In late December, officials claimed that waiting times were down from 72 hours to 24 hours at Valimaa and to 48 hours at another crossing point, in Brusnichnoye. “The number of trucks passing through customs has increased from 500 to 900 a day,” said Vensko. EVEN WORSE IN PETERSBURG In contrast, however, the situation in the St. Petersburg seaport has worsened. Ships wishing to dock were being turned back in December, with the port almost out of storage space, according to PKT, one of the largest container cargo operators in northwestern Russia. Passing through customs was taking 12 days, rather than the usual five, the company reported. “The capacity of the storage lot is 8,500 containers, and we have 9,715 standing here at the moment. So instead of two levels there are three in some places, which makes it more difficult to process the cargo and slows done all the work,” said Alexander Svetlichny, director of the port's container terminal. Eighty percent of containers with goods on the watchlist are now subjected to item-by-item searches, up from 55 percent before 24 October. But Tatyana Ogorodnikova, the manager of a local cargo company, Baltic Transportation Systems, said the situation looks typical to her. “These are recurring problems for the port. There were always delays at the port linked to processing automobiles, cargo, and so on,” she said. Svetlichny fears the checks could hamper the port's development. Speaking just before the year's end, he said 80 percent more cargo--or 340,000 20-foot equivalent units (TEUs)-- had passed through the port than in 2000, while storage capacity had increased by 25 percent. The port has ambitious plans to raise the volume of cargo to 1.6 million TEUs by 2010. “Many foreign companies have asked us ... to handle more cargo, but we’ve been putting them off because we have no space. This new [customs] policy won’t help,” Svetlichny said. Others prefer to look backwards for hope. "Everything is going to be fine as soon as inspectors from Moscow leave the checkpoints,” claims a member of the International Association of Cargo Importers. “Customs will work the same way it did before [they] showed up.” ******* #7 "Adventure capitalist Dean LeBaron is the Indiana Jones of Finance. Follow his escapades in emerging markets and get an insider's view of the birth of capitalism in Russia and China. You'll be amused, entertained, and instructed. A must read." --Bill Miller, CFA, Chief Executive Officer, Legg Mason Funds Management, Inc. MAO, MARX, AND THE MARKET Capitalist Adventures in Russia and China by Dean LeBaron & Donna Carpenter The Russian and Chinese markets are perhaps the two greatest dramas in our era as those two state-controlled economies took a leap towards a free market economy following the demise of their communist and socialist regimes. The world-shaking change of their vastly different transitions to free markets is immensely important to current and future politics and finance. Russia and China have potential as two of the largest markets in the world, and investing in them is both critical and perilous. MAO, MARX, AND THE MARKET: Capitalist Adventures in Russia and China (Wiley; January 2002; $27.95; Cloth) is a unique firsthand account of the free market transformations in Russia and China from an investment legend. Sprinkled liberally with photographs, this engaging and thorough history of a modern free market revolution chronicles the experiences of investment visionary and maverick Dean LeBaron as one of the early institutional investors in Russia and China. Dean LeBaron's venture into these two markets, through his company Batterymarch Financial Management, combines practical business advice with important political and cultural lessons. An intimate account of one capitalist explorer during the great economic transformation, MAO, MARX, AND THE MARKET captures the suspicions and friendships, the opportunities and fumbles, and the basic lessons and glorious technologies of these superpowers. Through anecdotes, insights, and predictions, LeBaron takes readers through the precepts, pitfalls, and profits associated with investing in emerging markets and the triumphs and tribulations of transforming state-run economies to free markets. From the character of the people to the quality of their leadership, this book explains how business is best conducted in these emerging markets. MAO, MARX, AND THE MARKET prepares readers to invest in Russia and China, and beyond, by revealing the "variables" that can play into these markets. Detailing his struggle to create the "Soviet Companies Fund" in Russia during the early nineties, LeBaron offers candid advice and encouraging warning as to what to look for in Russia as economic obstacles fall by the wayside and the government becomes comfortable with Western investors. Turning to China, LeBaron provides an intriguing and successful case study with Batterymarch's profitable "Equity Fund of China" investment. The economic futures of Russia and China may not be clear, but the firsthand advice in MAO, MARX, AND THE MARKET is - take the knowledge and experience of Dean LeBaron and get a head start in locating and successfully investing in emerging markets. About The Author: Dean LeBaron is an investment futurist. He founded Batterymarch Financial Management in 1969 and led the firm's pioneering advances in the mid-1970s in the application of computer technology and modeling techniques, first in the U.S. market and then in the international and emerging markets. LeBaron is also author of Dean LeBaron's Treasury of Investment Wisdom: 30 Great Investing Minds and Dean LeBaron's Book of Investment Quotations, both published by Wiley, and Ins and Outs of Institutional Investing, published by Nelson-Hall. Donna Carpenter is an accomplished and skilled business writer with several books to her name. MAO, MARX, AND THE MARKET Capitalist Adventures in Russia and China by Dean LeBaron and Donna Carpenter John Wiley & Sons, Inc. Publication Date: January 2002; $27.95; Cloth; ISBN: 0-471-15315-X Wiley books are available at your local bookstore or by calling 1-800-225-5945. In Canada, call 1-800-567-4797. ----- Dean LeBaron's Virtual Book Party! You're invited to a first . . . a virtual global book party. For one week beginning January 23, 2002, we'll have an online presence at www.deanlebaron.com/bookparty celebrating John Wiley & Sons, New York, December 2001 publication of a trilogy: o Mao, Marx & the Market by Dean LeBaron and Donna Carpenter o Dean LeBaron's Treasury of Investment Wisdom by Dean LeBaron and Romesh Vaitlingam o Dean LeBaron's Book of Investment Quotations by Dean LeBaron, Romesh Vaitlingam, and Marilyn Pitchford Like a conventional book party, you'll be able to view and send messages to the authors and other partygoers you meet on the active party bulletin board. But there will be no specific physical place, or a specific time, other than the one-week span of the party. We expect the conversation to be lively, global, insightful, and fun. Dean and his co-authors will be available throughout the week, often online, to discuss current conditions, the books, or anything else. After all it's a party-although somewhat more like a partyline-and a number, or perhaps all, of the 30 investment gurus profiled in Treasury of Investment Wisdom will drop by to join the conversation. We encourage you to have coffee, nibbles, soft drinks or something stronger while you're attending the party . . . we will. Please join us at this unusual, precedent setting event. In the name of partygoers, we will make contributions to Russian and Chinese charities. Where? www.deanlebaron.com/bookparty When? January 23 - 29, 2002 ******* #8 NTV news summary January 11, 2002 The following is a transcript of the main news broadcast at 1900 on the Segodnya Program. The Presenter is Pyotr Marchenko The situation in the Krasnodar region is nearing crisis. Specialists from the Emergency situations Ministry are about to arrive in the region now swamped by floods. The local authorities have authorized the use of military helicopters that are to bomb ice jams and release backed-up water in the Kuban river. Hundreds of houses have already been flooded in the town of Temryuk. Local residents are being evacuated. -------------------- There is no case against Alexander Voloshin. Prosecutor General's office is just doing its routine inspection work, prompted by a parliamentary inquiry that was filed by several State Duma deputies. State Prosecutor Vladimir Ustinov has agreed to meet journalists to brief them on the story. -------------------- The TV6 company is to be liquidated. The Supreme Arbitrary Court has reiterated that decision today. The verdict is final and not to be appealed. The channel's lawyers say the ruling, though unjust and political, will nonetheless be carried out. They still hope to win in the Constitutional Court and even in the European Human Rights Court. Comments by Tatyana Ilyana. <> ---------------------- A new scandal is flaring up in North Osettia two weeks before the presidential election. The fate of Sergey Khetagurov, one of the main candidates for the presidency, is at stake. He can be withdrawn from the presidential bid. Large crowds of people gather in the streets in his support though the verdict hasn't been voiced yet ------------------------- Secretary of State of the Russia and Belorussia Union Pavel Borodin has joined in a discussion on Moscow sharing some of its responsibilities as a capital with St-Petersburg and proposed to declare St-Petersburg the capital of the Union state. According to Borodin, such a decision will suit both those who stand for raising Petersburg's status and those who don't want Moscow to lose its status as a capital. ------------------- US new military facilities in Kyrgyzstan and Khazahstan are frantically being prepared to host the American contingency taking part in an anti-terror operation in Afghanistan. ------------------ Any time now a plane with 20 captured fighters of Al-Qaida and Taliban on board will land in Cuba. Unprecedented security measures are being taken at the Guantanamo military base. Hundreds of American special forces men are stationed there to guard the captured fighters. CNN reports the construction of the prison to be used hasn't been completed yet so it's quite possible that the fighters will have to sleep on the floor. The future of the arrested men still remains unclear. The Pentagon doesn't have exact information on whether the fighters will face an International Court Martial or whether they will be sent back home where their fate will be ruled under local laws. -------------------- Tensions between India and Pakistan are running high. India General headquarters has made a public statement today that national army leaders are considering the possibility of a limited nuclear war with the neighbor country. Clashes between the troops on both sides have resumed today in the border state of Kashmir. Meanwhile policy-makers in Delhi and Islamabad are looking for a way out to settle the crisis. ------------------- The Bolshoi Theatre has found itself involved in a huge scandal. The theatre administration has received a message from Israel saying two ballet groups were to go there on a planned tour. The news turned out to be quite unexpected for the Bolshoi theatre which didn't plan any such tours. -------------------- Anatoly Kornukov, commander-in chief of the Russia air force, has filed his resignation today. Under the military service law top senior officers are to retire at the age of 60. An exception can be made only by the President's direct order as it was with the Defense minister Igor Ivanov. In this particular case Vladimir Putin is expected to sign the resignation papers in the near future. ----------------------- Criminals accused of assaulting expensive cars owners have been arrested in Moscow. The militia don't exclude the possibility that amongst those arrested were those who mugged and robbed Michael Zhvanetsky, the famous writer. The satirist has already identified one of the assaulters, the ones who on January, 5 snatched his brand new Mercedes jeep, money and his famous leather brief case. ----------------------- An energy crisis has struck near Moscow. A military station only a dew dozens kms away from Moscow that used to belong to the air force elite is literally freezing. Pilots that have fought wars live in apartments without heating which they call caves. Our reporter Alexei Ivliev has just returned from the Stupino garrison. ****** #9 BBC Monitoring Russian minister's tour confirms loss of influence in Central Asia - paper Source: Kommersant, Moscow, in Russian 11 Jan 02 Russian Foreign Minister Igor Ivanov's visit to two Central Asian states has yielded protocol statements but little of apparent substance, confirming that Russia has yielded influence to the West in the region, writes the Kommersant newspaper. The following is the text of the report by Yuriy Chernogayev, published on 11 January under the headline "The Central Asia we have lost - Igor Ivanov concludes visit to Tashkent early". Subheadings have been added editorially: Tashkent: Yesterday [10 January] Russian Foreign Minister Igor Ivanov took off for Moscow 90 minutes early at the end of his visit to Tashkent, without appearing at a previously planned news conference. The explanation given was that the minister was in a hurry to complete the preparations for President Putin's visit to Poland. In actual fact it was simply that Mr Ivanov had nothing to tell journalists about the results of his Central Asian tour. Cool reception in Turkmenistan There has been increasing talk in Central Asia lately about how Russia has lost the initiative in the region and surrendered it to NATO and the Americans. The diplomats and journalists accompanying the minister on his trip around Central Asia have seen for themselves that this is precisely the case. The attitude to Russians as representatives of a power that once played a key role in the region has changed. As soon as we got to Asgabat [Turkmen capital] airport, the Russian journalists were fleeced of 135 dollars for visas, even though a visa has always cost Russian Federation citizens 30 dollars. In conversation with the journalists customs people unobtrusively made it plain that Russia is now only one of many countries with which neutral Turkmenistan cooperates and no more than that. The news conference in Asgabat following Mr Ivanov's talks with President Saparmyrat Nyyazow was a mess: first Mr Nyyazow answered questions from journalists, then Igor Ivanov delivered an official statement about the coincidence of the sides' positions "on all questions" - from the division of the Caspian to the war against terrorists. Uzbek president: What has Russia got to offer? The situation was repeated in Tashkent. Immediately after arriving in the Uzbek capital towards evening on 9 January, Mr Ivanov set off for President Islam Karimov's Great White Palace. For almost three hours the Uzbek president and the Russian minister talked without any witnesses present, with neither a secretary nor the waiters who are supposed according to protocol to change the water for the interlocutors being allowed in. The Russian diplomats left pining in an adjoining room stuck to their brief and described the conversation as "very important", insisting that "its results will be a defining factor in the immediate future". It became known through an information leak, however, that President Karimov was trying to get an answer from Mr Ivanov to the question of what Russia can offer the Central Asian countries today, now that NATO is setting up its own military bases in Uzbekistan, Kyrgyzstan and Tajikistan and paying cash for them. At the end of the conversation the Uzbek president and the Russian minister embraced and came out to face the television crews. Mr Karimov looked confident and stern while Ivanov tried, as it were, to look cheerful. In front of the cameras the Russian minister said only that Russia and Uzbekistan had "reaffirmed our strategic partnership". At the airport Mr Ivanov did not say a single word to the waiting journalists. One Russian diplomat summed up the results of the Russian Foreign Ministry head's talks in Central Asia like this: "Eternal friendship is not bankable and it does not earn interest". ****** #10 Analysts View Russia's Current Rapprochement With West, US; Further Prospects Rossiyskaya Gazeta 9 January 2002 [translation for personal use only] Interview with Sergey Kortunov, Pavel Zolotarev, and Boris Makarenko, participants in the Experts' Club discussion, by Vitaliy Dymarskiy and Vladimir Bogdanov; place an date not given: "The Glass Is Half Full or Half Empty. What Stands Behind the Rapprochement Between Russia and the West" "Only two sorts of people are really interesting: those who know everything about life and those who know nothing about it..." -- The Picture of Dorian Grey, by Oscar Wilde The past year was marked by the unprecedented rapprochement in Russia's relationship with the West, particularly the United States. Many politicians from the two countries believe that the remaining differences in certain areas, including such important ones as strategic stability, are no longer viewed as an insurmountable obstacle to the general progressive development of cooperation. From the Kremlin and the White House, we can increasingly often hear statements that we have finally entered a road leading not only to partnership-like but also allied relations. Is it really so? Are we not falling into yet another euphoric trap, engaging in wishful thinking? Sergey Kortunov, vice president of the Foreign Policy Association; retired Major General Pavel Zolotarev, president of the Interregional Public Foundation in Support of Military Reform; and Boris Makarenko, deputy general director of the Center for Political Technologies, who participated in the first session of the Experts' Club in this year, are reflecting on this matter. [Rossiyskaya Gazeta] Let us start our session with the already classic question asked by many in recent months: What do the new relations between Russia and the West contain more: tactics or strategy? The old truth says that in big politics there are no friends but national interests. The declaration made by President Bush on 13 December 2001 on the unilateral withdrawal of the United States from the 1972 ABM Treaty confirms this truth. So, what is it: a marriage of love or convenience? [Kortunov] It seems to me that the antiterrorist coalition is not a strategic alliance but an exclusively working body tackling a specific task. It is a long way to the strategic alliance. We should keep in mind one important circumstance: If a decision is made to make a radical turn in our foreign policy -- and this is exactly what our experts believe is happening -- this turn is impossible to do without consultations with the parliament, the main political forces in the country, and society. It is simply impossible to carry out by a decision of one person only -- the president, for example. I think we are yet to hold many discussions to find out to what extent it is tactics or strategy and how close we are going to move to the United States. So far, everything stays with the limits of the antiterrorist coalition. [Zolotarev] It is fashionable now to deliberate on in what world we live, monopolar or multipolar. It seems to me that we are at a stage where we have a firmly established monopolar system in which the United States plays a dominant role, and that country naturally wants to strengthen it. There should be no monopolar or multipolar world. A multipolar world is an even more volatile condition. The only stable condition of a self-developing system is bipolar. In any case, the present situation is temporary. The United States, as the single leader, needs a counterweight. It is Russia that can serve as such a counterweight. Notably, as an opponent, it can play quite a significant role first of all in an alliance with Europe. Therefore, I would rather not speak about a strategic or tactical line of the rapprochement with the United States. [Makarenko] I think the question of whether it is a strategy or tactics can only be answered when we have analyzed the entire background of events. I would venture to give a tentative answer: It is neither a strategy nor tactics it is a pretext for moving in the direction in which we have been unable to move forward for a long time. Both objective and subjective factors prompted us to turn toward the West. Putin assessed the 11 September events as a unique pretext for opening the "window of opportunities," as the Americans say. The president used this opportunity. However, one can see active opposition against this course in the press, in certain segments of the Russian elite, although our society as a whole views it differently. According to the latest polls, 82 percent of Russians approve of Putin's foreign policy line. Our Center conducts its own sociological surveys, the so-called focus groups. Immediately after 11 September, the rapprochement with the United States was not welcomed because the Russians suddenly started to like that country. That was for completely opposite reasons. Earlier, Russian society had an inferiority complex for 10 years. The 11 September events showed the whole world, including our people, that the United States is not invulnerable and that other can hit it badly. [Rossiyskaya Gazeta] What is the correlation between foreign and domestic policies? It stands to reason that the strategy and tactics in this sphere should be determined not single-handedly by the president but only through consultations with all political forces of the country. But with his high popularity rating, does Putin need it? After all, he can ignore the political elite, turning directly to public opinion. [Kortunov] Then, the following question arises: Why do we need the parliament? What can happen inside Russia? It is a cardinal question. The big reform was started by Mikhail Gorbachev, not Vladimir Putin. We have already stepped several times on those rakes of reforms. I am talking about the euphoria over rapprochement with the United States and strategic partnership. Some time ago, Zbigniew Brzezinski published a famous article in which it called this partnership premature. As a result, we got nothing but additional irritants in our relations, such as NATO's eastward expansion and the ostentatious pullout of the United States from the AMB Treaty. [Makarenko] I think that certain irritation is building up in different segments of military and political power because of that. This irritation may continue to build up, which may have a negative impact on the president's positive attempts to balance out foreign and domestic policies. [Zolotarev] The structures connected with the vertical hierarchy of power and, consequently, Vladimir Putin's internal policy are being strengthened now. I see no particular problems for the president in this area. The main threats come from the economic condition of our country. It is a much more difficult and serious issue. [Rossiyskaya Gazeta] "They have not learned anything" -- Does this phrase, said by Talleyrand about the Bourbon dynasty almost 200 years ago, apply to the Washington Administration? [Makarenko] The withdrawal of the United States from the ABM Treaty brings to naught all the previous systems of control over nuclear arms. This naturally poses a question: What next? The arguments that we are not enemies and are not going to attack each other with nuclear arms are understandable to everyone but this is not the language that a control system speaks. Of course, our military officials, diplomats, and experts understand why the United States has pulled out of the ABM Treaty. There is one but, however! A different form, less insulting for Russia, could have been chosen. In international politics, national pride remains a very important factor. [Kortunov] Security is a sacred thing, it is not for sale. In my opinion, we bungled the talks on the fate of the ABM Treaty. Specifically, this is evidenced by the uncoordinated declarations made by our government. Putin went to Washington with a clear position that the treaty is a cornerstone of strategic stability. But before his trip, literally one day before his arrival in Washington, Defense Minister Sergey Ivanov issued a declaration admitting that the treaty is a holdover from the Cold War. Naturally, that was a signal encouraging the other side to act more resolutely. As for strategic stability, it has acquired a completely different dimension. After 11 September, all realized that mankind is now faced with completely new challenges and threats, which naturally influence strategic stability as well. Therefore, it would not be quite right, I believe, to say that the ABM Treaty is a cornerstone of strategic stability. If we want to move to genuine partnership, we should be talking not about the ABM Treaty but about the situation of mutual deterrence and we should change this situation in the first place, which means go beyond the limits of deterrence. [Zolotarev] I would agree with Sergey Kortunov when he speaks about a contradiction that needs to be resolved. It is a contradiction between the absence of political reasons to rely on nuclear arguments and the fact that we are at the same time forced to maintain our nuclear arsenals in the condition of readiness for mutual destruction. We are forced to do so due to the organizational and technical measures that were undertaken back during the creation of this system. We are the captives of the weapons that we created, which must be trained on someone due to their amount. Paradoxically, however, we do not have enough targets. According to the studies conducted recently in the United States, it is enough to have 51 charges to destroy Russia. [Kortunov] Theoretically, France, too, can wipe out the United States with its nuclear arms. Ideally, before liquidating nuclear arms, we could try to attain the same relations between Russia and the United States as those between France and the United States. It would be an interim stage on the way to full elimination of nuclear arms. [Makarenko] Let us recall the old formula: What is NATO for? To keep America inside, Germany at the bottom, and Russia away. It is increasingly hard to keep Germany at the bottom of NATO. America is still successfully kept inside even though this is beginning to give the Europeans a headache. That was clearly visible after the operation in Kosovo, when the Europeans realized that they would not have conducted this kind of operation without the Americans. It was exactly when the plans to create the European defense potential were stepped up. But what should be done with Russia? Even big European countries, let alone the smaller ones, are not ready to accept our country as an equal partner. [Rossiyskaya Gazeta] Should Russia look in one direction only, at the West? What role do you see for the Chinese factor? [Zolotarev] Russia certainly cannot be oriented at one direction only. Its policy has many vectors. As for China's role on the international arena as a whole, I do not think that country will ever claim any leading role on a global scale, it is not in keeping with Beijing's traditions. [Kortunov] The rapprochement with the West will not ensure the creation of a firm international security system. As we are invited to the Western security system, we should still keep in mind that it is a Euro-Atlantic model. Meanwhile, Russia is a Eurasian country, which is why an ideal option for it would be to build a Eurasian, not Euro-Atlantic security system. The former, however, cannot be built without such states as China or India. [Makarenko] I hope that our politicians have grown out of short pants, the "short pants" being a desire to play the "Europe vs. the United States" game. It stands to reason that there are contradictions and they should be tactically used. However, the Euro-Atlantic system should not be tested for endurance this way -- it only angers both Europe and the United States. [Kortunov] Naturally, the issue of Russia's entry into NATO is arising. But, as Churchill once said, if Russia joins NATO, that would eliminate the entire rationale of this organization. [Rossiyskaya Gazeta] Let us go back to the beginning of our conversation: the antiterrorist coalition. It is clear that the alliances of this kind, which are based on a common enemy, are temporary. The anti-Hitler coalition existed until May of 1945 and then was followed by the Cold War. Is this not what may happen in our case after the antiterrorist coalition has carried out its task? Do its members have common long-term interests? [Kortunov] It seems to me that only the countries with similar political systems can be allies. We are currently only moving toward the model designed by the West. When we build truly mature democracy, which would not only be of representative type but also supported by civil society, then we would probably be able to talk about a strategic alliance or a union with the West and the United States. [Zolotarev] What is going on now is a struggle with consequences but not at all with causes. If you analyze the reasons for the growing international terrorism, you will see that they are connected in particular with the legacy left by secret services. Notably, the Western legacy proved to have more staying power. Why? Because the West relied specifically on the ideology of extremist trends in Islam. Meanwhile, our ideology disappeared. The other factor: the process of globalization, which bred transnational corporations. They, too, may encounter situations requiring reliance on military force, which they do not have. The methods of international terror may prove quite acceptable for them. [Makarenko] Let me compare the current globalization processes to the era of the 1940-60's, when the international system of colonialism collapsed. It fell down when two value factors came into play. On the one hand, there was a rise in national self-awareness and the national liberating movement, which was largely prompted by the European civilizing mission. On the other hand, the Western liberal projects reached a point in their development where forcibly retaining other territories and other nations became perceived as something indecent and inadmissible in terms of values. At present, the processes of globalization already force the West to think whether terrorism may be caused by a wide gap between the rich and the poor. [Rossiyskaya Gazeta] Suppose terrorism has been radically curtailed, if not eliminated. Do Russia and the West have no other common interests? [Kortunov] First of all, it is an economic interest. Therefore, now that we have already declared that we are integrating into the liberal project there is an issue of pace and forms of this integration. You can integrate based on equal partnership or as a supplement for raw materials. [Zolotarev] The conflicts between states are already history. At present, mostly internal conflicts take place. Therefore, not a single European country tries at present to create Armed Forces that could independently resolve some serious tasks, even in a local war. Only as part of a coalition. They save their resources this way. Thus, I do not think any military foundation for a union here. Different times have come. [Makarenko] Both Europe and we need peace in the Balkans. Both Europe and we need the Middle East conflict to be settled down. Both Europe and we find the totalitarian nature of the Saddam Husayn regime unpleasant. This constitutes a foundation for cooperation and competition at the same time. Sometimes, this competition can be quite harsh. Besides, Russia and the West have very different views on methods of resolving these problems. [Rossiyskaya Gazeta] Many thanks for participating in the work of the Experts' Club. It seems that we can make one conclusion: In recent months, the "glass has become rather half full," not half empty, in relations between Russia and the West. *******