Johnson's Russia List #6021 14 January 2002 davidjohnson@erols.com A CDI Project www.cdi.org [Note from David Johnson: 1. The Times (UK): Michael Binyon, Moscow demands new arms treaty with US. 2. The Independent (UK): Patrick Cockburn, Collapse of Georgia is ignored by the world. 3. Moscow Times: Valeria Korchagina, Berezovsky: I Will Prove FSB Is Tied to Blasts. 4. Vek: FLOW OF STATE FUNDING WILL BE COUNTED. 5. Interfax: Russia about to displace France from top three arms exporters. 6. Obshchaya Gazeta: TWO YEARS AT THE HELM. Political analysts look at Putin's first two years in power. 7. Novoye Vremya: VOTING RIGHTS FOR GOOD YEOMEN. The trends in Russia's voting patterns and preferences. 8. Michael Heath: Boris Jordan/NTV. 9. Jürgen Roth): New book, Der Oligarch: Vadim Rabinovich bricht das Schweigen. (The Oligarch: Vadim Rabinovich Breaks the Silence) 10. Chicago Tribune/AP: Baltic drinkmakers brew trouble for Coke. (kvas) 11. Beverage World/DPA: Moscow Wants Its Vodka Back. 12. The Globe and Mail (Canada): Geoffrey York, Presence of U.S. in ex-Soviet nations raising Russian ire. 13. BBC Monitoring: Russia seeks to strengthen influence in Central Asia - Kazakh report. 14. Reuters: Diamond chief triumphs in scandal-hit Siberia poll.] ****** #1 The Times (UK) 14 January 2002 Moscow demands new arms treaty with US FROM MICHAEL BINYON IN MOSCOW RUSSIA is demanding that Washington sign a new arms control framework, and warns America that its hard line on Russia is undermining support for President Putin’s pro-Western policies. Angered by the timing and manner of President Bush’s announcement last month of the US withdrawal from the 1972 Anti-Ballistic Missile (ABM) Treaty, Moscow is calling for a Russian-American “treaty on mutual security” to replace it. The Russian delegation arrived in a sour mood in Washington yesterday to begin talks at the State Department today on signing a formal accord with America on deep cuts in missiles and warheads agreed by the Presidents at talks on Mr Bush’s Texas ranch. It wants a legally binding document in place by the time Mr Bush visits Russia, and will also insist that recent White House proposals to store rather than destroy US missiles are unacceptable to Moscow. General Yuri Baluyevsky, heading the delegation, is likely to take a firm line with Douglas Feith, the US Under-Secretary of Defence. Russia wants the new “treaty on mutual security” to specify the political and military partnership between the two countries, allowing Moscow some of the status of an equal superpower inherent in the ABM treaty. The Americans are likely to show little interest in this proposal, although Washington has talked vaguely about codifying arms cuts with a statement or even a treaty, if there are no tortuous Cold War-style negotiations. Russia believes that, with the war in Afghanistan all but over, the US is less concerned about keeping Moscow on board. A series of critical remarks about Russian policy have wounded the Kremlin and raised fears that the Administration is reverting to the unilateralism evident before September 11. In particular, Russia has bristled at the State Department’s denunciation last week of “overwhelming force” and human rights violations during recent Russian engagements in Chechnya. It also considered Washington’s call for the continued independence of TV6, the last Russian television station not under government control, an attempt to meddle in the legal case surrounding the bankruptcy of the station. Moscow is also angry that Washington has kept Russia on a blacklist of states with a poor record on the spread of weapons of mass destruction. The list, published by Mr Bush last week, keeps Russia in the third of four categories, imposing tough restrictions on the sale of high technology. “We would like to hope that, in the light of the new strategic relationship announced by the President of the United States and the President of the Russian Federation, the American Administration would reconsider this discriminatory decision,” the Foreign Ministry said in a sharply worded statement. Russia fears that little has been gained from helping the US in the wake of September 11. It has done much that America wanted, but the ABM treaty has been discarded and the forces of several Nato countries are now on the soil of former Soviet republics. ****** #2 The Independent (UK) 14 January 2002 Collapse of Georgia is ignored by the world By Patrick Cockburn in Moscow In the depths of the Pankisi Gorge, a natural fortress in the mountains of northern Georgia shielded from the outside world by its sheer rock walls, kidnappers are holding an Orthodox monk and demanding $1m (£690,000)for his release. The kidnapping has provoked a public outcry and highlighted the disintegration of Georgia. Demonstrators gathered last week at the entrance of the gorge, which is controlled by Chechen battle commanders, to protest against the abduction of Father Basili Machitadze. They are demanding the Georgian government reassert its authority over the Pankisi, which is among several large enclaves in Georgia that is no longer under central government control. Kidnappings are not uncommon in Georgia, but Father Basili, a hermit, has become a popular figure since he was taken by gunmen on 19 November. In addition to the 50 protesters, three Orthodox monks have been holding a vigil at the mouth of the gorge to demand his release. Nobody quite knows who is holding him – though the most likely candidate is one of three Chechen military commanders with bases in the Pankisi – but his kidnapping and the inability of the government in the capital, Tbilisi, to do anything about it is only the latest symptom of the fragmentation of Georgia, a nation of five million, which has rapidly gathered pace over the past three months. While international attention has been focused on Afghanistan, Georgia has slithered towards disintegration. It has been a patchwork of competing authorities since soon after independence 10 years ago. Abkhazia, an enclave on Georgia's Black Sea coast, won effective independence in 1993 after a savage little war. South Ossetia, an impoverished region in northern Georgia, had done the same after heavy fighting a year earlier. No peace treaties have been signed with either of these breakaway regions. Tbilisi is technically in a state of war with both. As things fall apart on the periphery of Georgia there are also signs that the centre will not hold. Georgian politics have always been rough. Last July Georgi Sanaya, one of the best- known journalists in the country and news presenter for the commercial Rustavi-2 television channel, was shot dead. The same television station was at the centre of a crisis in October. A politically inspired raid by the tax police on its studios led to thousands of demonstrators taking to the streets and the Georgian President, Eduard Shevardnadze, sacking his government. The former Soviet foreign minister, 73, says he will stay until his term expires in 2005 but he is looking increasingly beleaguered. Georgian governments tend to see the hand of Russia behind many of their difficulties. The kidnapping of father Basili underlines that the Pankisi Gorge is one more part of the country where the government has lost control. But while foreign governments and media remain absorbed by Afghanistan the disintegration of the country shows little sign of evoking outside interest. ******* #3 Moscow Times 14 January 2002 Berezovsky: I Will Prove FSB Is Tied to Blasts By Valeria Korchagina Staff Writer Boris Berezovsky, speaking shortly after a court ruled for the liquidation of his TV6 television, said Friday that he was preparing to release evidence that Federal Security Service were behind apartment bombings in 1999 that killed more than 300 people. "I am currently preparing a package of documents that I will certainly make public to prove that it was the special services that organized the explosions in Moscow and Volgodonsk. And they were preparing another explosion in Ryazan," Berezovsky said in pre-recorded interview broadcast on the Ekho Moskvy radio station. Berezovsky first said he had knowledge about an FSB connection to the apartment bombings in December. Berezovsky, a one-time Kremlin insider who has since fallen out of its favor and become an outspoken critic of President Vladimir Putin, insisted that the decision to liquidate TV6 was a political game aimed at shutting down independent media. "The authorities are simply afraid to hear the truth about their crimes and are acting rather logically, by trying to smother all sources of information that contradict their position," he said. "This is not an economic argument between companies, it is pure politics." Berezovsky said the ruling against TV6 was the latest sign that the Kremlin is following a policy of getting rid of independent television and other media outlets. "This is a follow-up to what happened to ORT. It is a continuation of what happened to NTV. And now it is TV6's turn," he said. Berezovsky gave up his 49 percent stake in ORT about a year ago after complaining for months that he was under Kremlin pressure to do so. NTV was taken over in April by Gazprom. In an interview published in Kommersant on Saturday, Berezovsky warned that the Kremlin would clampdown on other free press. "Next in line will be newspapers and magazines. ... There cannot be half-authoritarian power in Russia. If a vertical power structure is under construction, then it could eventually become identical to the one in Stalin's time," Berezovsky said. ******* #4 Vek January 11, 2002 FLOW OF STATE FUNDING WILL BE COUNTED [from WPS Monitoring Agency, www.wps.ru/e_index.html] Central Election Commission head Alexander Veshnyakov and Chair of the Auditing Commission chief Sergei Stepashin recently signed an inter-departmental agreement on sharing information resources. The reseources in question are the state-controlled Vybory computer system, and the Auditing Commission's IT and telecommunications systems. Veshnyakov said long ago that the expensive ($2.9 billion) Vybory system will not only count votes, but various state structures could use it for their own purposes. The Central Election Commission has already concluded similar agreements with the Duma, the Emergencies Ministry, and the Supreme Court. However, the agreement with the Auditing Commission has a special signficance: the law on political parties is coming into effect, and it stipulates state funding for the election campaigns of some parties. Stepashin announced, "We audit all organizations that use even a kopeck of state money. That is when we can use the Vybory system, which enables us to quickly and precisely find out for what purposes the state money was used. It will also help calculate the sum of unaccounted money that was used in the course of the campaign." ******* #5 Russia about to displace France from top three arms exporters Interfax Moscow, 11 January: Judging by 2001's results, Russia may rise to third place among arms exporting countries after the United States and Britain, leaving France behind, expert from the CAST think tank Maksim Pyadushkin has told Interfax. Foreign currency proceeds for exports of Russian arms and military technologies amounted to 4.4bn dollars in 2001 which is a record figure for Russia, he said. In 2000, they were 2.84bn dollars. Pyadushkin quoted preliminary estimates as saying that in 2001 Russian arms deliveries were worth 3.6bn dollars, down from 3.68bn in 2000. He said that the share of Rosoboroneksport in overall deliveries is estimated at 3.2bn dollars and in foreign currency proceeds at about 4bn. According to Pyadushkin, last year Rosoboroneksport delivered some 30 Su-30MKK fighter-bombers and 10 Su-27UB trainers to China, a batch of Su-24 front-line bombers to Algeria, over 40 T-90 tanks to India, one Zubr hover landing craft to Greece. It also upgraded a submarine of the Kilo class for the Indian Navy. The Russian aircraft-making corporation MiG, which has the right to conduct independent foreign trade deals, delivered military hardware worth 150-200m dollars in 2001, up from 100m in 2000. Pyadushkin said it delivered MiG-29 air superiority fighters to Eritrea, Burma and Yemen. The Antey concern, another major arms trader, delivered four Tor-M1 (SA-15) short-range surface-to-air missiles to Greece. Its overall exports are estimated at 150m dollars, the expert added. The foreign currency proceeds of the Tula-based Instrument Building Design Bureau in 2001 barely exceeded 100m dollars. This money came from the United Arab Emirates under a 2000 contract for the Pantsyr-S1 wheeled air defence missile/gun system. The Reutov-based Machine-Building Research and Production Association is believed to have made 30-40m dollars in 2001 under the BrahMos joint project with India to develop supersonic anti-ship cruise missiles, Pyadushkin said. During 2001 the Kolomna Machine-Building Design Bureau also earned about 30-40m dollars in the framework of a 2000 deal for the delivery of several hundred Igla portable surface-to-air missiles (SA-18 Grouse), he said. Pyadushkin said that in the next few years Russian foreign currency proceeds from arms trade may be crippled by the US policy of lifting restrictions on arms deliveries to several countries, including India and Yugoslavia, which are traditional importers of Russian military goods. ****** #6 Obshchaya Gazeta No. 2 January 10, 2002 TWO YEARS AT THE HELM Political analysts look at Putin's first two years in power Author: not indicated [from WPS Monitoring Agency, www.wps.ru/e_index.html] THE SECOND RUSSIAN PRESIDENT IS NO LONGER AN UNKNOWN QUANTITY. THERE IS ENOUGH INFORMATION TO IDENTIFY VLADIMIR PUTIN AS A CERTAIN TYPE OF LEADER. WE ASKED SOME LEADING RUSSIAN ANALYSTS FOR THEIR VIEWS: LILIA SHEVTSOVA, VLADIMIR RYZHKOV, IGOR BUNIN, AND ALEKSEI KARA-MURZA. Question: What are Putin's priorities: power, reforms, cooperation, subordination? Igor Bunin, General Director of the Political Consulting Center: Putin's presidency is clearly divided into two phases. In the first phase the main objective of the new leader was consolidation of the power around Kremlin, which started from establishment of federal districts and the Federal Council reform. The balance of successes and failures of this period was overall quite favorable for the present president. Pro-presidential majority formed in both parliamentary houses, which guarantees fast passing of law drafts presented by the government and the presidential administration. The executive power hierarchy works quicker and better. The remaining "resistance centers" are of no danger for the president's initiatives. In spring 2001 the second phase of Putin's presidency started. He began a series of institutional reforms in the economy, the lawful and social spheres: tax, budget, pension, and court reforms, the new Labor Code, the housing and natural monopolies reforms. According to the majority of experts, the first results of these reforms have also been positive. Since autumn 2001 there have been signs of the third phase on the activities of Putin's administration. The most evident of these signs is an attempt to form new relations with Western countries. Besides, the Kremlin has been actively cooperating with loyal corporative business organizations and non-commercial civil formations. Finally, the conflict inside Putin's team that formed in 2000 made the "personnel issue" burning. The Russian elite has not unanimously accepted the new foreign political course of the president: the military are especially concerned about it. This does not mean that the army is likely to rebel, but the president will have to take new moods in consideration and to adjust his plans, including his plans for renewing the elite. Aleksei Kara-Murza, a Moscow State University professor: The main thing the president has been busy with for the past two years has been reinforcement of his personal authority. Some call it "strengthening of the state", however, I cannot see any state institutions that have become stronger under Putin. The government is still a "technical" government, the parliament has even lost its influence, courts and prosecutor's offices fully obey the Kremlin. I can agree that the state machine is easier to operate now, but its ability to efficiently work automatically has rather fallen. Question: What is the political role of the president: a modernizer, a conservative, or a restorer? Lilia Shevtsova, senior analyst with the Moscow Carnegie Center: Of course, he is a modernizer, besides, he acts within the framework of the Russian tradition. The essence of this tradition is a triad: first, reforms from the "top", second, using of the Western resources, and third, preservations of autocracy. Paradoxically, but Putin's modernization is simultaneously a chance and a threat for Russia. The chance is that having overcome the lethargy of 2000 the president made two breakthroughs: he restored the economic reforms and turned the country towards the West. What is the threat of Putin's modernizations? The threat is that he is again trying to reform Russia without involving the civil society in the process. Thus, the current reforms work for bureaucracy and the tycoons and preserve stagnation and parasitical structures. Russia is able to really integrate into the western world only on the basis of the system of common values, which demands decisive changes in the Russian interior life. Meanwhile, bargaining of the Russian elite that requires paying for every step towards the West demonstrates that the Russian ruling class is not ready to consider cooperation with the West as a cooperation meeting Russian national interests. So, the western train is likely to miss our station again. Aleksei Kara-Murza: In short, Putin is an autocratic pro-western modernizer of the Peter the Great type. In Russia modernizations of this type were often accompanied by "squeezing" interior social processes. Europe is not only a market economy, total computer literacy, discipline, and order - it is also developed parliamentary system, multi-party system, human rights, civil control of the authorities, and so on.... Unfortunately, the Russian president does not demonstrate such a complete and entire perception of the European culture. Choosing his personnel on the basis of personal faithfulness, uniting them in a loyal corporation are not European techniques. And the defectiveness of such a system is its reversibility. It is sadly successively repeated in Russia - it may be called an algorithm of Russian modernizations. Question: What is Putin's ruling style: he is a democrat, an autocrat, a federalist, or a unitarian? Vladimir Ryzhkov, Duma deputy: Apparently, Putin is not a complete democrat. Over the two years of his presidency the number of freedoms has reduced - it is a fact. For instance, today the Kremlin directly or indirectly controls five of six national television networks, while the last independent television company is being purposely annihilated. The presidential administration almost fully controls both parliamentary houses. The top authority is more and more clearly demonstrates its intention to establish a corporative state, when various social groups form loyal corporations "at the initiative from the top". The MediaUnion was established for journalists; the State Council was established for regional leaders; tycoons received the Russian Union of Entrepreneurs and Industrialist; small businesses are united in the OPORA organization. The recent Civil Forum held in Moscow was an attempt to unite non-commercial public unions in a controllable corporation. The logic of forming the Russian party system is the same. Thus, we can see a number of steps that lead us in the opposite direction from the democracy. I cannot call Putin a federalist either. Over the past two years the country has greatly turned into a unitarian state. The political reform initiated by the president - establishment of federal districts, the new order for forming the Federation Council - deprived the regions of the most part of their political influence, while the reform of budgetary relations reduced their economic independence. I think that the basis of Putin's trend for authoritarianism and centralism is not a banal wish for absolute power but his disbelief in efficiency of democracy and developed federalism. Frightened by Yeltsin's chaos Putin has obviously overestimated the threat of real opposition and exaggerated the danger of regional separatism and "harm" if the independent media. He must be sincerely convinced that only concentration of the power in one hand will allow to extricate the country from the crisis. However, this is an illusion: recently we witnessed another "fight under the Kremlin carpet", when the new presidential team fought against the "old-timers". Apparently, an authoritarian leader is unable to prevent conflicts between commercial, political, group and personal interests even in his surrounding. An open political system when the authority is dispersed and controlled by independent civil institutions is much more efficient than closed, hierarchical-bureaucratic systems. Question: What is Putin's character: is he a leader, a manager, a romantic, or a pragmatist? Lilia Shevtsova: Putin is evolving. However, it is mostly noticeable by his behavior on the international arena - he is acquiring diplomatic gloss, relaxedness, becomes "reactive". On the contrary in the interior politics he is still diffident and suspicious - this leads to his willingness to lean on only familiar people. He obviously avoids open politics and open conflicts. Does he depend on someone? Undoubtedly, but his dependence of people and groups is a result of lack of experience and the aforementioned diffidence. At the same time the fact that Putin has managed to suppress the elite demonstrates that he is developing the power instinct, and the power teaches to be firm. Putin's behavior after September 11 events in the US proved that his reaction and choices can be intuitively correct and distinct. Has Putin completely become a leader? So far his political fate has been favorable to him. He has managed to become a guarantee of the country's survival. However, time will say whether he will be able to become the Leader of the Breakthrough. His present position of an arbitrary, who is trying not to break the balance in favor of some elite grouping is rather inconvenient: sooner or later the president will become a hostage to some clan or a web of shadowy relations. The only way to avoid it is to leave the shade, using the public support if necessary. The paradox is that Russian society is more prepared than its ruling class for deep transformations. (Translated by Arina Yevtikhova) ******* #7 Novoye Vremya No. 1-2 January 6, 2002 VOTING RIGHTS FOR GOOD YEOMEN The trends in Russia's voting patterns and preferences Author: not indicated [from WPS Monitoring Agency, www.wps.ru/e_index.html] AN INTERVIEW WITH DMITRY ORESHKIN, HEAD OF THE MERKATOR RESEARCH CENTER AT THE GEOGRAPHY INSTITUTE OF THE RUSSIAN ACADEMY OF SCIENCES. HE DISCUSSES RUSSIA'S POLITICAL GEOGRAPHY: THE SO-CALLED "RED BELT" OF PRO-COMMUNIST REGIONS, AND CONTROLLABLE ELECTIONS. Question: You have commented on all "significant" elections. Television viewers usually see you with a map of Russia in the background, which is painted different colors depending on political preferences of the regional residents. Did you coin the term "red belt"? Dmitry Oreshkin: It is sad to see the "red belt" term being modified. At first, it was the area to the south of Moscow: the Kursk, Penza, Lipetsk, Orel, Bryansk, Voronezh, and Belgorod regions - all red. Another traditionally communist area was the Baikal region; also the Chita and Amur regions, and the neighboring autonomous republics. Then, more communist supporters appeared in the south of Western Siberia: the Novosibirsk region, the Kemerovo region, where coalminers had been very pro-democratic at first, but after certain events they turned pro-left. So at present the majority of Russians, including the south of Siberia and the European part of Russia, are very conservative. Now, the term "red belt" is so wide that it is senseless to use it, as it means nothing. Question: Do you mean the political map has radically changed? Oreshkin: I would say it is not the map that changed, but its perception. At present I am mostly interested in the map of election freedoms. There are regions where people vote in accordance with European style: they vote for Mr. A or Mr. B depending on what he promises, whether they like him or not. But there are also regions where all the residents unanimously support Mr. A only because the local authorities support him. Here is my favorite example: at the regional presidential elections in the Republic of Kabardino-Balkaria there was only one candidacy - of incumbent President Valery Kokov. Overall, voter turnout in that republic was 97.7%, and 99.4% of them voted for Valery Kokov. Question: Are no-alternative elections possible in Russia? Oreshkin: Well, as you see, they are, though all this violates the federal constitution. Question: But there was no scandal.... Oreshkin: There was not, all was quiet. And what do you think of the victory of Murtaza Rakhimov in Bashkortostan despite the special decision of the Supreme Court of Russia that withdrawal of his two leading rivals from the elections was illegal? It is very indicative for that time, as the main things was who Bashkortostan would support during the federal elections. For some time Bashkortostan supported Gennady Zyuganov, however, after Rakhimov decided that Zyuganov was the wrong person to support (no matter what the residents of the republic thought), he turned to Luzhkov and supported him as ardently as he had supported Zyuganov before. In fact, it was a realization of the toughly controlled election scenario. Question: What do you mean when you say "toughly controlled elections", "there is no alternative"? Do you mean that people have no alternatives in their minds or that the elections are in fact falsified? Oreshkin: Actually, I mean both. Falsification is a judicially term, and I must give evidence that the elections are falsified. However, this is not my work, I only analyze statistics. And statistics cannot say whether the elections were falsified or not. On the other hand, the statistics can say with 0.999 probability that the event in question could not have been diverted by chance - there was some purposed impact. I cannot say what kind of influence it was: there might be extra bulletins or people might love their leaders so much, as in example with Kokov. Obviously, it cannot happen in reality that 98% of voters come to the election polls. So I call all regions where there is unanimity, high attendance, monolith voting, controllable. Question: What is this "Election freedom" map on the wall? Oreshkin: We call it politely - the map of electoral culture. Look, the most notable are: Dagestan, the North Caucasus overall, Kalmykia, Bashkortostan, Tatarstan, the Komi-Perm Autonomous district, the whole North, Tuva, Buriatia, the Chita region. As a rule the most controllable are autonomous republics. Of course, objectively they differ from one another, but they all are reputed for too high attendance, too monolithic character of elections, for too high number of invalid bulletins. As is known, a large number of invalid bulletins is an indirect sign of their previous adaptation - which means falsification is highly likely. In any case, these are not free elections. I do not want to say that in all the other regions the elections are not ruled and are absolutely democratic. They are ruled by means of the media. In these terms it is possible to say that the elections in Russia are controlled by means of different methods: European-like (through the media) and Asian-like (when the authorities simply explain to people who to vote for). Question: Zyuganov always mentioned Dagestan as an example of falsified elections. What is the outcome of the story? Oreshkin: This story brightly characterizes the political culture of the society. Neither Zyuganov not the victors of the elections are interested in bringing the story to the end. It is still the Soviet logic: the elites are bargaining and secretly agree: we have evidence that several hundred thousands votes were falsified in the regional presidential elections; however, the general victory, for instance the victory of Vladimir Putin at the presidential elections, is undoubted. Consequently even if the Communists have evidence that the elections were falsified, it may receive either PR means or an image of a shallow loudmouth. As a result, they consider it tactically more profitable to have compromising materials on the ineffective election system and President Putin in order to use it in the behind-the- curtain bargaining. It is also very easy to collect compromising materials on the Communist Party in Tatarstan and Bashkortostan that supported them. Thus, the situation mutually reflects the real balance of forces in the elites. Elections are an honest mirror of the condition of the society. Question: Speaking about the latest regional elections of Putin's period, is there anything outstanding? Oreshkin: The elections are more real now. You may believe it or not, but for the first time the competition is serious in republics of the Russian Federation. Before, the rivals were the president of the republic and some absolutely obvious artificial alternative in the form of deputy fishery and hunting minister. Another question is that present fights are still not signs of civil society, as the rivals are various elite groupings. However, the fights are rather serious: in the Komi republic, in Karelia; in Dagestan the fight turns into a war - thanks God the leader is not elected there but appointed by the State Council of the republic. If there were direct elections, there would be firing in the republic. Cynically, but it is doubtful whether electoral democracy is a good thing for all territories. If there were real democracy in some places, this would immediately cause inter-clan collisions. I mean there are still people who live in some different political spaces. From my experience I know that democracy is the blessing that must be deserved. In Russia it is an imported blessing: many territories are ready to perceive it, but many are not. Question: Did establishment of federal districts influence the election model somehow? Oreshkin: Yes, the regional elections became more severe. Another peculiarity is that the elections are very tough now as they are divided into very big money and political influence. It is closely connected to the third peculiarity: appearance of tycoons on the regional level. They were suppressed on the federal level: they all moved to regions, and now some are elected as leaders there, others are promoting their people to the regional power. Graphic examples are Evenkia, where there are only 13,000 of voters and it is easy to contact almost everyone; Koryakia, Chukotka, where there are only a dozen thousand voters in each. LUKoil oil company is very actively and successfully participates in regional elections; moreover it does not care of the color of the candidate at all. The company needs places with oil - it is a purposed corporative strategy: it is necessary to control the largest regions to support it business. And the elections are the means to lobby its interests. It is very sad, as the voters are at best invited to stamp the results of the agreement between tycoons' structures. On the other hand, there is a positive thing as well: at least they need to address the electorate, while before no one had remembered about the people at all. Question: Not a very encouraging progress. Oreshkin: The issue is that the development of regions is very different and we, the advanced city residents are concerned about the absence of bourgeois rights and freedoms. While the matter is that Moscow is a post-industrial society and it compares itself with London and Paris, while Udmurtia is solving qualitatively different issues. Question: Currently, speaking about regional elections, they mention electoral technologies more than the candidates. Oreshkin: Electoral technologies are good and bad: the regional authorities have learned electoral techniques and are not afraid of the elections any longer. At first, the elections raised panic in the authorities: some voters, who you do not know, despise and do not understand must decide your fate. Now all is clear again: you need to invest some money, some influence, some control of the media, you need to get rid of the rivals and you have all you need. The voters, especially the advanced ones, are awfully disappointed as they realize that their opinion hardly means anything. As a result, they are unwilling to vote at all. We are still uninterested in democracy. Finally, the tycoons have their own interest in the elections, and they are realizing them. They say in the West that people vote with their wallets; in Russia people still vote with their hearts: today they like Zhirinovsky, tomorrow they will like Putin, but money has nothing to do with this, consequently, the majority of voters have nothing to lose in the elections. Paradoxically, the better people will live, the more popular the left parties will be. It is generally believed that the middle class will support the right - I believe they will support the left, as the proprietor's psychology has not formed in Russia yet. Question: Does that mean that the Russian elite will turn to Zyuganov? Oreshkin: The elite has rejected the Communist ideals for good. It needs a state capitalistic development scenario, which would allow them earn big money and live to their pleasure. Nonetheless, Zyuganov's electorate has not reduced, but even slightly increased. Now, no the easy-to-rule provinces support him, but city residents: disappointed teachers, doctors, the military, who do not want the communist system to restore but hope that Zyuganov would suggest a social-democratic alternative. In these terms, present situation of the communist party is very interesting: the intelligent communists realize it is necessary to re-orient, but the majority is unwilling to reject their classical rhetoric. At the same time the right are currently too busy with competing with one another: a small part of them are in the Duma, while the rest are making money and do not attend elections. They will go to vote only when they feel an obvious restoration threat. Question: What is our party of power? Are their any foreign analogues of this, or is it a Russian invention? Oreshkin: Our parties of power is a distanced analogue of Latin American Juntas, very distances - there the Junta is also connected with business, but the technique of capturing the authority is different: the military take the responsibility of the coup d'etat and forming the new elite. While we use the elections for this. If think about historical examples, we can recollect the War of the Red and White Roses. They also called themselves parties, though in fact, they were feudal groupings that fought for exerting influence at court. Here is the same: peasants are staring at knights breaking each other's necks. At the same time, peasants develop in good yeomen, if use English terms. So we are these yeomen. (Translated by Arina Yevtikhova) ******* #8 From: "Michael Heath" Subject: Boris Jordan/NTV Date: Sun, 13 Jan 2002 It now seems clear that Boris Jordan has received the go-ahead from the Kremlin to buy NTV from Gazprom. I am wondering if anyone on the list can explain how this would work for an American citizen, in light of last year's changes to the media law, which, if I recall correctly, limit foreign ownership in to 30 percent. Would it involve a shell company? Changes in the media law ? Something else? ******* #9 From: Merhaba@t-online.de (Jürgen Roth) Subject: new book Date: Sun, 13 Jan 2002 Hello David, here I send you a short description of my new book, which might be interest also to your audience. Best regards Jürgen Roth book review "Russian Mafia" Roth, Juergen Der Oligarch: Vadim Rabinovich bricht das Schweigen (The Oligarch: Vadim Rabinovich Breaks the Silence) Hamburg/Wien: Europa Verlag, 2001 299 p. (Language: German) Subject, Methods, Database: An autobiography of Vadim Rabinovich, Ukrainian oligarch, written by German investigative journalist Juergen Roth, who injects an occasional third-person comment. Content: Oligarchs are business tycoons who got rich from privatizations after the collapse of the state planned economy in the Soviet Union. One of them is Rabinovich who agreed to a series of interviews with Roth in 1999 and 2000. Vadim Rabinovich is born in 1953 to jewish parents in Kharkov, Urkaine; his father an army officer, his mother a physician. His life in the Soviet Union is determined by the laws of survival in an economy of shortage, the limits set on private initiative, and anti-semitism which blocks certain career paths for jews. At times Rabinovich is on top when he demonstrates his talents in social activities or in the procurement of scarce resources, at times he has to suffer the harshness of the system. In the military-where he is put in charge of procuring rare goods for his unit-he gains deep insights into the inner workings of the Soviet shadow economy. Back in civilian life, as foreman of a brigade of construction workers, he builds a small fortune with the illicit sale of building materials until in 1980 he is arrested and convicted on charges of misappropriation of state funds. Due to internal quarrels within the public prosecutor's office, Rabinovich is released and goes into hiding. Instead of laying low, however, he starts new businesses in manufacturing and selling crystal glas and calendars. Eventually, Rabinovich is caught again and spends the following years in prisons, forensic hospitals and forced labor camps. In the Gulag he manages to earn the respect of both his fellow inmates and the prison guards. For the first time Rabinovich finds himself in the position that will be characteristic of his later life as an oligarch: forming a bridge between professional criminals and the legal authorities. It is not before 1991, long past the advent of glasnost and perestroika, that Rabinovich is set free. After several failed attempts in various lines of business his breakthrough comes with trading nonferrous metals. Already in 1992, however, he withdraws because, as he claims, things have become too tricky with many plants being taken over or extorted by criminal groups. During the following years, Rabinovich works for Nordex, a company alleged of being involved in money-laundering activities. He arranges Russian oil-deliveries to the Ukraine in exchange for other goods. In 1995 Rabinovich leaves Nordex to establish his own consulting firm that offers services to Western companies interested in investing in Eastern Europe. At the same time he buys himself into the media business. His bad reputation stems from the business and private contacts Rabinovich keeps to dubious businessmen and outright criminals. However, he feels wrongfully accused and the victim of a smear campaign: "Look in what a situation I am in. Can't you understand what is really going on. On one shoulder I have the American and Ukrainian security services and business competitors, on the other shoulder there are all kinds of bandits and criminals. I have to try to come to an arrangement with both sides to stay in business and to stay alive. That's why I have to maintain relationships with all these forces, whether I like it or not" (p. 239). The basic elements of the system Rabinovich sees himself a part of are personal ties connecting entrepreneurs who operate in an economy of various shades of gray and who at one time seek assistance from groups of criminals while at other times they ally themselves with the government in their pursuit of personal profit and power. Roth's conclusion: Rabinovich is a person with many faces, a generous sponsor of jewish culture in the Ukraine, a ruthless, self-confident and successful businessman, but one who is aware of the conflict between profit seeking and social responsibilities towards the poor. One label, however, according to Roth is completely inappropriate, that of a powerful "godfather", a Ukrainian "capo di tutti capi". Assessment: Juergen Roth is known for his sensational books. "The Oligarch" is not one of them. Rabinovich's account, it seems, has helped Roth to free himself to a considerable extent from the usual stereotypes characteristic of journalistic treatments of crime and adventure capitalism in Eastern Europe. Though Rabinovich may not reveal everything, in fact a lot remains in the dark, this book is still a very vivid and plausible depiction of the conditions in the former Soviet Union. Overall evaluation: "The Oligarch" is an enormously important book for understanding the interconnection between politics, business and crime in the former Soviet Union. The subjective perspective of Vadim Rabinovich grants new insights and contradicts commonly held views, even though not the whole truth may have come to light. (C) Klaus von Lampe, all rights reserved. ******** #10 Chicago Tribune 13 January 2002 Baltic drinkmakers brew trouble for Coke By J. Michael Lyons Associated Press RIGA, Latvia -- During the communist era, people in the Soviet republics lined up at sidewalk kiosks to quench their thirst with kvas, a cloudy brown concoction with a similar texture and taste of dark beer, minus the alcohol. The drink nearly disappeared after the breakup of the Soviet Union, but now it's back. And it's at the center of a marketing war between local companies and the behemoth of the world soft-drink marketplace, Coca-Cola Co. Not everyone is happy that kvas has become a mass-produced item. "It's nothing more than cola," grumbles Vyacheslav Shamarin, who nevertheless brews a mass-market kvas. The drink used to be made from locally grown rye, beet sugar, yeast and stale bread. It had a short shelf life, so it couldn't be bottled, and street vendors sold it by the glass. Today, kvas producers use a syrupy concentrate imported from Germany, and the drink is pasteurized and sold in bottles. Many fans of the drink say they preferred Soviet-era kvas because it tasted fresher and was more authentic. While quality may be open to debate, what isn't is the impact kvas has had on the regional drink market in recent years. After the Soviet Union dissolved at the end of 1991, Latvia's new health laws banned its sale on the street, and post-Soviet economic disruptions forced kvas factories to close. For most of the 1990s, kvas virtually disappeared in this Baltic state of 2.4 million people. Coke moved in and quickly dominated the market with its popular carbonated soft drinks. Local drinkmakers struck back in 1998 by introducing a kvas that could be bottled and launching aggressive advertising campaigns. Kvas is also cheaper, at about 30 santims, or 48 cents, for a 1.5-liter bottle--about half the price of Coke. In just three years, kvas rebounded to account for more than 30 percent of Latvia's soft drink market, researcher AC Nielsen Latvia says. Coke watched its market share fall from 65 percent to 44 percent and had losses in Latvia of about $1 million in 1999 and 2000. Similar trends have occurred in the two other Baltic republics and in Russia. "Some older consumers shifted from Coke to kvas, which they became accustomed to during Soviet times," said Aki Hirvonen, Coke's Baltic marketing manager. Unable to beat the kvas producers, Coke joined the competition, or rather started buying it up. It purchased several kvas brands from the Baltics to Siberia, refitting some plants to produce kvas along with its standard soft drinks. Last year, for instance, Coke bought the most popular kvas brand in neighboring Estonia, where the drink is known as kali. Linnus Kali made 60 percent of the 2 million gallons of kvas sold in Estonia in 2000. An increasingly cramped market has forced producers to diversify. Gutta, a Latvian juicemaker, now sells vitamin-enriched kvas aimed at children and a sugarless kvas "light" for dieters. It also changed the name of its first kvas brand to "Klassik," reminiscent of how Coca-Cola renamed its original cola Coke Classic. "We are on the same playground as Coke and we have to have the same tools when we go into the stores and try to sell," said Gutta's general manager, Uldis Ronis. Shamarin complains that all the posturing undercuts the traditions of kvas, which dates back 1,000 years to when Slavic hunters began fermenting boiling water and stale bread. "Kvas" derives from a Russian word for "sour." "You can't carbonate wine and call it champagne," Shamarin said. Shamarin oversees kvas production for Kok and Co., a condiment producer that started making the drink three years ago. Squeezed into a white frock stained brown with kvas, he won't reveal his recipe but insists it is the closest version of the real thing left in Latvia. But he concedes the kvas he produces is pasteurized, too, giving it a slight mass-produced flavor. And his firm did recently succumb to competitive pressures and start making what Shamarin calls "healthy" kvas. "The kids love it," he says. Leaning in, he sheepishly reveals its appeal: "More sugar." ****** #11 Beverage World January 8, 2002 Moscow Wants Its Vodka Back Deutsche Presse-Agentur Russia's national drink, vodka, must remain a matter of state, as far as Moscow is concerned. For one major reason: it is a lucrative source of income. So the Russian state is making an all-out effort to restore its one-time monopoly on the production and sale of the high-powered beverage. And Moscow hopes this time to make amends for the blatant mistakes which Russia and its corrupt officials had made after the dissolution of the former Soviet Union. In those communist-era days, the Soviets' monopoly on liquor was in the hands of the foreign trade organisation Soyuzplodoimport. When communism collapsed in 1991, and along with it the central command economy system, there began the period of what experts called the "primary accumulation of capital". Gigantic state concerns were broken up and mostly privatised. Soyuzplodoimport was among them, first converted into a share corporation of the same name, and later renamed Plodovaya Kompaniya. A great many smaller companies also sprang up to produce wines and liquors. Many produced illegally in order to avoid paying taxes, and ultimately the state was no longer in control of the liquor market situation. In the year 2000, Moscow set up the state-owned Rosspirtprom company which was to control the state's shareholdings in 89 liquor distilleries. In addition, their products were marked with special revenue stamps to prove their legal origin. But it did not take long before illegally-distilled liquor, adorned with faked revenue stamps, was flooding the market. Even today, about half of the alcohol consumed in Russia derives from illegal production facilities. The enjoyment of these drinks proves fatal for thousands of people each year. Meanwhile a heated dispute erupted between a number of individual companies and the state over the rights to well-known vodka brands which once had been the pride of the Soviet Union and its liquid calling card abroad - names like Stolichnaya, Moskovskaya and Limonnaya. In 1997, Plodowaya Kompaniya, as the legal successor to Soyuzplodoimport, handed over the rights to these brands to a so-called closed share company by the not quite identical name - with an "o" missing - called Soyuzplodimport. Last October, the Russian superior court of arbitration suspended the point in Plodowaya Kompaniya's incorporation making it the legal successor to Soyuzplodoimport. This made it illegal for the company to sell the brands belonging to Soyuzplodimport. Soon after, the Russian patent office Rospatent re-registered 43 brands and put them under the control of the state, represented by the Agriculture Ministry. But a few days later, Soyuzplodimport got 26 of the brands back. According to Soyuzplodimport spokesman Sergei Boguslavski, a district court at Rostov on the Don River has prohibited the Agriculture Ministry from using the brand names awarded it by the patent office. This ruling was issued after a company shareholder filed suit. Soyuzplodimport general director Andrei Skurichin thundered that the patent office action awarding assets of his company to the ministry was the "first step towards nationalisation of private property". He said it could not be ruled out that the authorities would attack other companies in the same way and announced that he would seek help from President Vladimir Putin. But the Agriculture Ministry has now filed a counter-suit, and Farm Minister Alexei Gordeyev said the state had a right "to win back what under the law belongs to it". He said that the current value of the Stolichnaya label was worth "hundreds of millions of dollars", whereas the original sale of the rights to the 43 brands to the private company was a package deal of a mere 300,000 dollars. ******* #12 The Globe and Mail (Canada) 14 January 2002 Presence of U.S. in ex-Soviet nations raising Russian ire By GEOFFREY YORK MOSCOW -- Dozens of U.S. warplanes are landing at airports in Central Asia, symbolizing the collapse of Russian power in a region dominated by Moscow for centuries. For the past decade, Moscow has fiercely guarded its traditional sphere of influence in the former Soviet republics of Central Asia. But the United States is establishing bases in three of the former Soviet republics as part of its antiterror campaign. Russia's military and political elite are increasingly unhappy with the growing U.S. presence in Central Asia, but most analysts acknowledge that Moscow is too weak to prevent it. "It will be difficult for the Russian elite to reconcile itself to this, but Russia is not strong enough to do anything except express its discontent," said Yevgeny Volk, a Moscow political analyst. "It will be a source of long-term tension between Russia and the United States." Last week, about 200 U.S. troops began building a barracks for a base on a 15-hectare site at an airport near Bishkek, capital of Kyrgyzstan. U.S. cargo planes, fighter jets and refuelling planes will use the airport, and the troops are building accommodation for 3,000 soldiers. Up to four U.S. planes land at the airport every day. A Pentagon official said the U.S. presence "is going to be longer than temporary." Washington has stationed about 2,000 troops at the Khanabad airbase, near the Uzbek capital, Tashkent. And it has Tajikistan's approval to use an airfield at Kulyab, 300 kilometres south of the Tajik capital, Dushanbe. Russian parliamentary speaker Gennady Seleznyov voiced the concerns of many when he criticized the U.S. presence. "It is not desirable that permanent U.S. bases be established in Central Asia." A Russian newspaper warns that the United States had "stormed" into Central Asia. It says Russian Foreign Minister Igor Ivanov was obliged to visit the region last week "to probe how far Russia is behind the United States in the drive to influence Central Asian states." Russian President Vladimir Putin, enjoying an 80-per-cent approval rating in opinion polls, has nudged much closer to the United States recently. He has accepted the U.S. bases in Central Asia, adopted a conciliatory stance on the U.S. antimissile defence system and announced the shutdown of Russian bases in Cuba and Vietnam. Many top members of the Russian military elite are infuriated by these moves and by the U.S. presence. More than 20 retired generals and admirals signed a letter of protest against the base closings. ******* #13 BBC Monitoring Russia seeks to strengthen influence in Central Asia - Kazakh report Source: Kazakh Television first channel, Astana, in Kazakh 1510 gmt 13 Jan 02 Russia seeks to strengthen its influence in Central Asia, Kazakh TV has suggested, commenting on Russia's activities in the light of the first meeting of the foreign ministers of Shanghai Cooperation Organization member states in Beijing on 7 January and Russia's parliamentary delegation's visit to Kazakhstan between 8-11 January. Russia's delegation was led by Gennadiy Seleznev, the chairman of Russia's State Duma. "Russian deputies said that they had arrived in Astana to strengthen [Kazakh-Russian] interparliamentary relations. However, conversations which took place during the visit revealed that they had some other ideas as well. Russia seems to be longing to restore its influence in Central Asia since Moscow has stepped its political activities in the region. "We clearly noticed this at an extraordinary meeting of [the foreign ministers] of the Shanghai Cooperation Organization [SCO] member states. Russian Foreign Minister Igor Ivanov said that the countries located beyond the boundaries of the region should not be involved in political affairs in Central Asia. Russia seems to have the idea of making use of the SCO in order to strengthen its influence in the region. Immediately after leaving Beijing, Igor Ivanov paid a visit to Turkmenistan and Uzbekistan. The fact that he visited neutral Asgabat [capital of Turkmenistan], which is not involved in any military affairs and Tashkent [capital of Uzbekistan], which the USA is sympathizing with, sheds light on many things. "The fact that Russia has stepped up its activities in order to strengthen its influence in Central Asia was also noticeable during a visit to our country by a delegation led by Gennadiy Seleznev. It is true that an exchange of ideas on strengthening the two countries' interparliamentary relations took place during the visit. However, in reality, conversations focused on a different issue. Since journalists were not allowed to attend some meetings, their results were not fully publicized. However, we heard the following from Seleznev. Seleznev said that Russia's parliament was ready to speed up the ratification of agreements on the military testing sites which Russia is leasing from our republic. Our neighbour wants to bring together the testing sites and strengthen the military management," the television said. The report was broadcast in Kazakh TV's weekly round-up programme, "Mezgil" (Time), on 13 January. ******* #14 Diamond chief triumphs in scandal-hit Siberia poll By Tara FitzGerald MOSCOW, Jan 14 (Reuters) - A diamond magnate and Kremlin favourite swept to victory on Monday in a scandal-stained vote in Russia's Siberian diamond region, consolidating President Vladimir Putin's drive to bring regional fiefdoms into line. The Central Election Commission said Vyacheslav Shtyrov, head of the diamond monopoly Alrosa, had scooped more than 59 percent of the Yakutia gubernatorial vote on Sunday, while businessman Fedot Tumusov took around 34 percent. The contest had been dogged by controversy for months linked to court cases against candidates, press smear campaigns and the withdrawal of incumbent Mikhail Nikolayev under Kremlin pressure in favour of Shtyrov. Nikolayev, who had headed the vast territory since 1991, bowed out of the race in December after Moscow officials and the Central Election Commission chief made it clear they wanted him to drop his bid for a third term. Nikolayev originally resisted Moscow's pressure, hitting back through the local courts. But Putin drove the final nail into Nikolayev's coffin when he invited him and Shtyrov to the Kremlin together -- and then gave the diamond tycoon an award for his handling of the billion-dollar industry. Nikolayev finally withdrew and threw his support behind Shtyrov. TURNOUT BOOSTED BY FREE HANDOUTS Turnout in the election was more than 75 percent, well above the 50 percent minimum required, and boosted in part as voters were offered the chance to win a car or a television and buy cheap groceries if they went to the polls. Interfax news agency quoted Tumusov's campaign headquarters as saying they planned to challenge the election outcome in court. Losing candidates in regional elections regularly take such action, but results are rarely changed. Yakutia is one of 89 Russian regions and the diamond-rich Siberian territory spans three time zones. Alrosa is the world's second largest diamond producer after South Africa's De Beers. Provincial leaders amassed huge powers under Putin's predecessor Boris Yeltsin, often having wide control of the mineral wealth buried under vast swathes of the country. But the new Russian leader has reined them in by taking on powers to sack them, appointing federal envoys to oversee them and kicking them out of the upper house of parliament in Moscow. Under Putin, the governor of the Pacific coastal Primorye region, once considered among the most powerful of all regional bosses, was forced to step down. And last year, election officials struck the incumbent governor of the Kursk region, Alexander Rutskoi, from the ballot on the eve of a poll, citing campaign irregularities. Rutskoi called himself a victim of Kremlin meddling. ******