Johnson's Russia List
#6095
24 February 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org
[Note from David Johnson:
1. Washington Times: Bill Gertz, Russia's nuclear arms deemed vulnerable.
2. UPI: Russia celebrates Defender's Day.
3. Andrei Sitov: Re: Olympics.
4. Arnold Beichman: Re: 6094-Keller.
5. Greg Smith: 6094 /Keller.
6. Barron's: Erin Arvedlund, Russkie Business. In the post-Enron era, Russian
companies don't look so bad.
7. National Geographic: Fen Montaigne, Russia Rising. (excerpt)
8. AP: USOC head blasts Russia for `anti-American' Olympic protests.
9. RIA Novosti: Cold War at the Olympics in Salt Lake City.
10. Wayne Merry: WINTER SPORTS, THE "KURSK", AND THE INSTINCT TO LIE.
11. The Electronic Telegraph (UK): Rush into Russia. British businessmen are
marching into the once devastated industrial heartland of Moscow. Neil Bennett
went to see the Russian resurgence.
12. TimeEurope.com: Yuri Zarakhovich, Moscow's Passing Fads. For the Russian
élite, thin is the new fat.
13. The Sunday Times (UK): John Harlow, ‘Depressed’ FDR handed Stalin victory
at Yalta.]
*******
#1
Washington Times
February 23, 2002
Russia's nuclear arms deemed vulnerable
By Bill Gertz
The system used to protect Russian nuclear weapons is "stressed" by military funding shortfalls and is vulnerable to an "insider" who could circumvent nuclear-missile launch controls, according to a U.S. intelligence report.
The report to Congress also said thieves have stolen an unknown amount of weapons-grade nuclear fuel over the past decade.
"Russia employs physical, procedural, and technical measures to secure its weapons against an external threat," the unclassified report says. "But many of these measures date from the Soviet era and are not designed to counter the pre-eminent threat faced today — an insider who attempts unauthorized actions."
An unauthorized or accidental missile launch is "highly unlikely" as long as the current safeguards are enforced and the central political authority exists, said the report by the National Intelligence Council, an analysis arm under CIA Director George J. Tenet.
Yesterday's release of the 12-page report comes as the Bush administration has warned that terrorists are seeking to develop nuclear, chemical and biological weapons, possibly using stolen nuclear material.
Russian President Vladimir Putin has said that since September 11 security has been increased at nuclear-weapons storage sites and that "terrorists have not acquired Russian nuclear weapons," the report said. It also said security at Russia's nuclear-power plants has been increased as a result of Moscow's war against Chechnya.
The report said that, "we are concerned about the total amount of material that could have been diverted over the last 10 years."
There have been published reports indicating that al Qaeda terrorists have attempted to purchase stolen Russian nuclear arms on the black market.
Among the incidents identified in the report are:
•Theft in 1992 of 1.5 kilograms of enriched uranium from the Luch Production Association.
•Theft of 3 kilograms of enriched uranium from Moscow.
•The 1998 theft from Chelyabinsk province of an amount of nuclear material to produce a nuclear device, according to a Russian nuclear official.
Current warhead-security efforts are aimed at preventing threats "from outside the country," the report said, and "may not be sufficient to meet today's challenge of a knowledgeable insider collaborating with a criminal or terrorist group."
Col. Gen. Igor Valynkin, the Defense Ministry official in charge of warhead storage, stated in August 2000 that "there have been no incidents of attempted theft, seizure, or unauthorized actions involving nuclear weapons."
"Even with the enhancements, security problems may still exist at the nuclear-weapons storage sites," the report said. One Russian military officer told a Russian television station in August that security at warhead-storage facilities was lax, including personnel shortages and broken alarm systems.
The report said the United States is working with the Russian government to increase the safety and security of nuclear-related facilities, infrastructures and personnel.
According to the report, Moscow currently has fewer than 5,000 strategic nuclear warheads, but will reduce its strategic forces to around 2,000 warheads because of funding problems and aging systems.
******
#2
Russia celebrates Defender's Day
MOSCOW, Feb. 23 (UPI) -- President Vladimir Putin laid flowers at the Tomb of the Unknown Soldier near the Kremlin walls Saturday as Russia paid respects to officers and servicemen who contributed to the country's military past.
The importance of this day, known in post-Soviet Russia as the Day of the Defender of the Fatherland, has been underlined last December by the Russian parliament's decision to declare Feb. 23 a day off nationwide, de facto inaugurating a new holiday.
The new name of the holiday was picked with particular care as Russia's post-Soviet reformers tried hard to find one that would help avoid associations with the Soviet Union.
During Soviet rule, Feb. 23 was regularly observed as the Soviet Army Day marking the Feb. 23, 1918, clashes between the Red Army with German troops near the cities of Pskov and Narva in northwest Russia.
In January 1918, Leo Trotsky issued a decree to found the Red Army, but it was the Feb. 23 battles that later became associated with the holiday honoring one of the world's greatest armies.
In Soviet times, the day was mostly filled with lavish receptions at the Defense Ministry, while on a more mundane level women presented men with gifts in what seemed to be the Soviet men's counterpart to Women's Day, which celebrates the ladies on March 8.
However, up until this year, Feb. 23 did not have the status of an official holiday.
Last December, Russian lawmakers endorsed the proposal of pro-Putin legislator Oleg Kovalyov to declare the date a national holiday and grant the nation a day off.
Since Feb. 23 fell on Saturday, lawmakers decided that businesses and stores will be closed on Monday.
After remembering Russia's dead heroes, Putin held talks in the Kremlin on Saturday with Vladimir Govorov, the chairman of Russia's War Veterans Committee and the vice president of the World Federation of War Veterans.
The president discussed with Govorov the problems related to the work of Russia's war veterans organizations, as well as provision of social benefits for needy veterans.
In line with the longtime tradition, the holiday was marked by the Russian leftist parties' march that took supporters of Gennady Zyuganov down Moscow's main thoroughfare, Tverskaya Street.
The marchers kept walking to the monument of Russia's military leader Georgy Zhukov where they were addressed by Zyuganov.
The Communist leader congratulated "everyone in whom there beats a soldier's heart."
Zyuganov lamented over the sorry state of the Russian army, criticizing the efforts to reform the military.
"The Russian army has never been in such a difficult and dramatic situation as now," Zyuganov said.
"The best human resources are being squeezed out of the army, the best officers are leaving armed forces because of their miserable salaries."
The economic turmoil of the post-Soviet Russia in the early 1990s dealt a heavy blow to the military as the government sharply reduced generous budget funding, bringing military personnel on the verge of poverty and prompting thousands of officers to quit their service.
Moreover, poor living conditions and notorious cases of widespread physical abuse of younger soldiers by senior servicemen scared away thousands of conscripts as the number of draft dodgers increased tenfold.
On Saturday, Zyuganov and his supporters called for a "halt of disintegration" in the military, slamming Russia's leaders and demanding the ouster of Putin's government.
The sole incident of Saturday's march took place in Tverskaya when ultranationalist Vladimir Zhirinovsky, surrounded by a host of his bodyguards, tried to join the Communist marchers.
The crowd gave Zhirinovsky a hostile reception, shouting insults and obscenities and banging the poles of their flags on his chauffeur-driven Mercedes.
Zhirinovsky attempted to play down the conflict, yelling in return "I'm with you," but the crowd grew even more menacing as some of the marchers charged toward Zhirinovsky in what seemed to be an imminent brawl.
Zhirinovsky's bodyguards and police drove back the attackers and helped the leader hop into his car, which immediately sped from the scene.
******
#3
From: WashTASS@aol.com (Andrei Sitov)
Date: Sat, 23 Feb 2002
Subject: Re: Olympics
Dear David:
Re Olympic controversy that now has even the American ambassador in Moscow
worried. It seems to me that the main point of the Russian allegations of
bias can be refuted (or confirmed) rather easily.
If it can be shown that leaders and medal favorites of other teams were
subjected to the same kind of doping control as some of the Russians (i.e.
required to give blood right before start time or informed of negative
results of previous tests when no substitution was possible) then the Russian
complaints are obviously groundless. If not, one has to ask whether the
Russians in fact were subjected to "special treatment". I am not very
knowledgeable about sports so I'd be grateful for examples - either pro or
contra.
Also, it seems to me that a panel of independent judges can even now review
all the performances of figure skating contenders (and not just the ones that
NBC thinks we ought to be watching) and make an informed decision as to
whether medals had been awarded correctly. Personally I think no judging
calls made during competitions should be reversible as a matter of principle.
Finally, I feel that IOC President Rogge has botched his first Olympics by
bowing to the pressure of public opinion and allowing the competition to
degenerate into a sort of Cold War rivalry. Aside from other things it has
unfortunately reflected badly on Russian (and not only Russian) attitudes to
the US. I believe Rogge's head should roll.
Sincerely,
Andrei Sitov
ITAR-TASS Bureau Chief in Washington
*******
#4
Date: Sat, 23 Feb 2002
From: Arnold Beichman
Subject: Re: 6094-Keller
In re Bill Keller's report about McDonald's in Russia, I have another
version to explain the chain's popularity. Some years ago, I was taxiing
with a Russian friend through central Moscow and saw a long, long line
winding its way around what was probably the first of the hamburger chain.
I wondered aloud why Muscovites should be spending the equivalent of a
day's wages for a food item that was nothing more than an old Russian dish
my mother made called a "cutlyet." Ah, said my friend, it was not the
hamburger they were buying, it was something else. When they got their
hamburger and paid for it, the girl at the cash register spoke a single
word to the customer, a word rarely heard at the time in most Moscow
restaurants. She said: "Spasibo."
*******
#5
From: SFPalladin@aol.com (Greg Smith)
Date: Sat, 23 Feb 2002
Subject: 6094 /Keller
As a customer of Russia's McDonald's for almost a decade, I believe some of
Keller's observations are on target. My first visits to the Pushkin store in
November of '92 saw a store staff the seemed to be trying to "get" customer
service but somehow, weren't succeeding. Fast forwarding to last October, I
found the young people at new outlet on Nevsky in St. Petersburg friendlier
and more efficient than some of their counterparts in San Francisco. One
delight is how the kids will work with foreigners with no (or in my case my
half-baked, broken) Russian to get the order taken, money collected and food
delivered.
However, Keller's last paragraphs raise the issue of the tremendous,
(growing?) gap between life in the two major cities and much of the rest of
the country. This is one of the major differences between Russian and
western society that, I suspect, will have to be resolved if for the country
to successfully integrate into Europe.
*******
#6
Barron's
February 25, 2002
Russkie Business
In the post-Enron era, Russian companies don't look so bad
By Erin E. Arvedlund
Here's the difference between American and Russian corporations: In Russia, they now disclose that officers may be crooks who have been in jail -- before the companies sell shares. In the U.S., you find out the bigwigs are crooks only after they bankrupt the company and cash in their shares.
This role reversal was symbolized by the initial public offering of Wimm-Bill-Dann, a profitable Russian food concern. And the revelation of the unsavory reputation of one of the company's officers apparently did little to deter investors, who bid up the shares 16% in their first trading day on the New York Stock Exchange.
But the Wimm-Bill-Dann IPO was significant in another sense; it showed Russia had regained the footing that was lost following the country's default and devaluation in 1998. Will Russia now make the move from Wild West wunderkind to a mature market?
The answer seems to be a qualified yes. Investors are in the midst of re-rating the Russian market. The country's benchmark RTS Index is up more than 60% since October and was up 81% in 2001. Renaissance Capital, a local Russian investment bank, holds a yearend target for the RTS of 400, implying an upside of about 40% from current levels.
Value managers can't help but be entranced. Even after gaining 300% in the last three years, the Russian market trades at six-to-seven times prospective earnings. Some Russian oil concerns trade at just four times earnings, versus around nine times earnings for emerging-market oil companies and 22 times earnings for international majors.
Both the micro- and macroeconomic situation has improved. Russian President Vladimir Putin's radical flat tax (13% for individuals and 24% for
corporations) rivals proposals from Steve Forbes, and should push up collections to help keep Russia's budget in the black. Russia's economy grew by 8.3% in 2000, according to Russian Prime Minister Mikhail Kasyanov, while the IMF says growth was 5.8% in 2001, and it projects 3.6% growth in 2002.
The fiscal situation also has turned around. For three years in a row, the nation's budget has been in the black, with last year's surplus totaling about 2.5% of gross domestic product. And helped by relatively firm oil prices, Russia's external accounts also have moved into the plus column. "Instead of chronic current account and budget deficits, lawlessness and frankly, obscene corporate behavior, Russia has surpluses and marginally less obscene behavior by management," says Ian Hague, portfolio manager with the Firebird Fund, a New York-based hedge fund investing in Russia.
True, Russia still depends on energy sales, which account for 16% of gross domestic product and a third of federal budget revenues. Every $5 drop in the price of a barrel of crude costs Russia about 1% of GDP, and a sustained decline in oil prices would threaten Putin's political standing. But Russia's government is banking on oil prices staying above $14 a barrel
-- $6 below its current level -- before the budget moves into deficit, says Ruben Vardanian, president of Moscow brokerage Troika Dialog. Yet Russia's stock market may have finally decoupled from oil prices, according to Igor Kostikov, chairman of the Federal Commission for the Securities Market, Russia's version of the U.S. Securities and Exchange Commission.
But perhaps even more important, recent events may have marked a geopolitical watershed. "September 11 made Russia a part of the West," contends Third Millennium money manager John Connor, whose fund invests in Russian equities.
But is Russia going to become a real economy with property rights and the rule of law? Shareholder rights until recently were a joke, and the 1998 debt default and ruble devaluation exposed macro risks. Plus, the recent good performance is relative: the RTS fell 96% from October 1997 to October 1998, and has yet to recoup that loss.
But compared to Enron, Russian corporations don't look so bad. With its IPO, Wimm-Bill-Dann, a profitable juice, dairy and canning concern, became only the fourth Russian company to list on the NYSE, following telecommunications concerns VimpelCom, Rostelecom and Mobile TeleSystems, but beating Russian energy giants such as Lukoil.
In its prospectus, Wimm-Bill-Dann revealed its officers are also the owners of Trinity, an automobile and casino company that "has been the subject of speculation in the Russian press with respect to possible links with organized crime." But Wimm-Bill-Dann represents one of the few investor plays on the country's domestic recovery. With 36% of the nationwide juice market, and 45% in Moscow, the biggest juice-consuming region, Wimm-Bill-Dann posted sales of $492 million in the first nine months of 2001, versus $465 million in the whole of 2000. Its net income reached $31.6 million for the first nine months of 2001, as compared to $21.4 million in 2000.
Oil giant Yukos, some investors say, is the poster child for improving corporate governance, better protections for minority and foreign shareholders and the rising prominence of Russia as a non-OPEC oil producer. Yukos mediated a dispute last year between foreign shareholders and Volga Shipping, formerly majority-owned by Yukos, after Volga Shipping tried to get out of a charter agreement.
Yukos illustrates how Russia has emerged as a two-tier market. "Large and serious companies of a certain scale are starting to see it's in their interest to treat shareholders properly and adopt Western-type corporate governance practices," Calvey says. It doesn't hurt that oil companies like Sibneft and Yukos have adopted a generous dividend policy. Yukos is still cheap, trading at around 4.5 times last year's earnings, says Grantham Mayo Van Otterloo partner Arjun Divecha, an emerging-markets portfolio manager and a Yukos shareholder.
But there are only a dozen or so of such large, liquid and progressive companies. And better treatment for shareholders isn't universal. Although Surgutneftegaz is by far the lowest-cost oil producer, some foreign investors have taken issue with the way it calculates net profits.
Alexei Miller, the Putin-installed head of Gazprom, the world's largest gas supplier, is just now trying to reverse several years of alleged asset stripping by old managers into a holding company called Itera. Investors are still indignant at blue-chip Lukoil, which last year bought over 1,000 Getty Petroleum gas stations in the U.S., and whose grand plan is to one day own a Western refinery and emerge as a vertically integrated oil company.
"We still haven't gotten our year 2000 dividend paid out from Lukoil," gripes Firebird Fund's Hague, a Lukoil shareholder. And the recent addition of ChevronTexaco Vice Chairman Richard Matzke and Franklin Templeton Investments fund manager Mark Mobius to Lukoil's board "does nothing to remedy that," he adds. "Back in the 1990s, Lukoil had a reputation of being marginally more friendly to investors. Now they've been overtaken by other Russian companies and are playing catch-up."
Apart from buying a limited number of stocks to take advantage of a maturing Russia, there are mutual funds like Templeton Russia Fund and the Pilgrim Russia Fund, the best-performing U.S.-based emerging-market fund over the last three years, with returns of 56% a year.
Russia's once-reviled bond market is enjoying a renaissance as well. Last week, Standard & Poor's revised its outlook for Russia's sovereign debt to positive from stable. S&P had raised its rating a notch to single-B-plus in December. Moody's rates the debt Ba3, just three notches down from investment grade.
But the currency remains a worry. "If they don't get ahold of ruble inflation, in two years it will be a problem," says Divecha.
Liu-Er Chen, portfolio manager of the Evergreen Emerging Markets Growth Fund in Boston, is deeply troubled by Russia's banking system -- or lack thereof. "For an economy to have sustainable development, you need a developed financial system." Chen owns UES, or Unified Energy Systems, Russia's electricity provider, "not because I understand the fundamentals
-- nobody can figure them out -- but because it's a proxy on the Russian economy." He also owns Vimpelcom and MTS, which "aren't cheap, but their growth is high."
And what of the prospects for Wimm-Bill-Dann? Its chairman and other controlling holders sold 3.1 million shares of their own stock in the IPO, reaping $60 million -- not unusual but not viewed as a vote of confidence by U.S. standards. Investors are also watching the company's acquisition strategy, and how the relationships between suppliers and Wimm-Bill-Dann entities that purchase raw inputs appear on the bottom line.
Kim Iskyan, an analyst at Renaissance, recommends investors sell if the stock reaches 25 a share, from a recent 21.
As for the revelations about a corporate officer's criminal record, Iskyan adds, "Wimm-Bill-Dann, like any other Russian company, may find speculation about wrongdoings or corporate governance violations can hit its share price as hard as any concrete proof would."
At least in Russia, investors aren't paying for any presumption of innocence.
*******
#7
Excerpt
National Geographic
November 2001
Russia Rising
By Fen Montaigne
Photographs by Gerd Ludwig
Clambering from the collapse of the U.S.S.R., Russia has emerged a decade later with four-star restaurants, cybercafés, Santa Claus, and social ills. Can it speed its halting progress?
Get a taste of what awaits you in print from this compelling excerpt.
A decade has passed since the U.S.S.R. ceased to exist, and during that time the Russian people have been subjected to nothing less than an economic and social revolution. Three-quarters of state enterprises have been fully or partly transferred to individual owners in a corrupt privatization drive. The Soviet social safety net has been shredded, and articles about the woes and impoverishment of the Russian people could fill volumes. But as a seven-week trip around Russia earlier this year showed, shoots of new life are springing up throughout the country.
Most of Russia’s economic activity is centered in Moscow, where a sizable middle class has emerged. Yet vibrant businesses also have taken root in many other cities, including Novosibirsk, Nizhniy Novgorod, St. Petersburg, Samara, and Yekaterinburg. Often the most successful enterprises are in spheres of activity that scarcely existed in the Soviet Union, such as computer software, sophisticated food processing and packaging, restaurants, and advertising. Ironically, the collapse of the ruble in 1998—which made imports prohibitively expensive—boosted domestic production. That increase, coupled with higher prices for Russian oil and gas, has at last halted the country’s economic slide; the economy grew by 5 percent in 1999 and by 8 percent in 2000.
That said, the financial success stories—and the middle-class workers affiliated with them—are still islands in a sea of stagnation. The official salaries of most Russian workers hover around a hundred dollars a month, although many earn some undeclared income on the side. An estimated 20 million of Russia’s 145 million people live below the official poverty line of $31 a person a month. Tax evasion is epidemic, and an estimated 25 to 40 percent of the economy is conducted underground. And every year a tiny layer of super-rich Russians—fearful of general instability and a shaky banking system—ships an estimated 20 to 25 billion dollars out of the country to foreign banks, much of it from the sale of Russia’s abundant natural resources.
Still, to focus solely on the myriad of problems is to ignore what has been accomplished in a mere decade. And, as I have discovered after a dozen years of writing about the former U.S.S.R. and being whipsawed by bouts of optimism and pessimism, you must be able to hold in your mind the dichotomy of the two Russias. One is a place of well-educated, hard-working people slowly building a humane society and the other a land where a worn-out populace endures corruption and a lack of decent civil institutions. The question is, will the second Russia overwhelm the first, or will the new Russia ultimately prevail?
Russia Rising
Field Notes From Author
Fen Montaigne
Best
By far the most gratifying aspect of reporting this story was the time I spent looking into the emergence of a new Russian economy, one unconnected with the Soviet era and relatively free of the much publicized corruption in Russia. Before I set off on my initial reporting trip in January 2001, I knew I wanted to spend a significant amount of time with educated young people in Russia’s larger cities. It didn’t take long to recognize a robust middle class of urban professionals not only in Moscow but also in cities far away from the capital, such as Novosibirsk. Space constraints prevented me from writing about numerous young Russians building the new economy, from the writers at the BBDO advertising agency crafting television ad campaigns to the entrepreneurs who had opened a thriving, three-screen “multiplex” cinema in the industrial Ural Mountains city of Chelyabinsk. Much of my goal in this story was to see where Russia was heading in the coming decades. If the country’s urban elite is any indication, there is reason for hope.
Worst
The grimmest moment of my seven weeks in Russia was the day I spent in the Moscow city court system. The corruption, the lack of respect for the rights of the defendant, the physical decay of the courthouses—all of it testifies to the enormous task of rebuilding Russia’s institutions. It’s no wonder that the thriving sectors of Russia are those that have sprung up in the decade since the collapse of the Soviet Union. They’re not weighed down by the past.
Quirkiest
I spent an afternoon in the surgical department of a provincial hospital in Omsk as I reported on the beleaguered medical system. Dressed in scrubs, I wandered freely back and forth between threadbare operating rooms, watching as surgeons removed stomachs and gall stones or stitched a disc of bone back onto a patient’s head. The surgeons were bright and seemed competent, but the dingy, tiled operating rooms and aging equipment served to underscore a truth about Russia: It still hovers somewhere between the First World and the Third.
Russia Rising
Field Notes From Photographer
Gerd Ludwig
Best
Novosibirsk has changed substantially. I went there several years ago for an assignment on the Trans-Siberian Railroad, and the city was really dead. At that time I met Eric Shogren, an American who had opened the only pizza place in town. Now it’s a franchise! He also opened the New York Times Club, a successful rock-and-roll and Blues club. It’s open every day from 9 p.m. to 4 a.m., and it became a hangout for us. Eric was a great contact. He’s involved in several charities and introduced me to a number of Russian business people. He’s an easygoing guy who was familiar enough with Russia and National Geographic to understand what I needed.
Worst
I got permission to follow the press corps and photograph Vladimir Putin during the German chancellor’s visit to St. Petersburg. At one point about 50 of us rushed into a press conference. It’s typical in that kind of situation to find a position and put your camera down as a placeholder. I found a good spot, but someone near me complained that I was blocking his way. So I decided to look for another place that wouldn’t obstruct anyone’s view. I put my cameras in my place, but when I returned one was missing. The room was very crowded, and I asked several colleagues if they saw anyone push the camera aside. But no one saw anything. It was gone. I couldn’t believe that my camera and lens were stolen at an international press conference! When I reported the theft to the police, all they could tell me was that such incidents had happened at these events several times.
Quirkiest
Siberia was extremely cold. One day I was shooting outside in temperatures of minus 60°F (-51°C), not counting windchill. When we got back into the car and started to drive, the whole vehicle began to rattle. “What’s wrong?” I asked. It turned out that the bottom of the tires had frozen flat. We had to endure a lurching ride for about five minutes until they thawed back to their original shape.
*******
#8
USOC head blasts Russia for `anti-American' Olympic protests February 23, 2002 By LARRY SIDDONS
SALT LAKE CITY (AP) - The president of the U.S. Olympic Committee accused Russia's top Olympic official Saturday of waging an ``anti-American'' crusade in a string of protests over results at the Winter Games.
Vitaly Smirnov, an IOC executive board member, was upset by a poorer-than-expected medals showing by Russian athletes and turned his displeasure to the host country, USOC president Sandy Baldwin said.
Saying that ``every games needs a little drama,'' Baldwin said the protests from such countries as South Korea and Canada over figure skating, skiing and speedskating were part of the Olympics and helped attract attention around the world.
But the Russian protests, including an aborted threat to pull out of Salt Lake City, were another matter, she said.
``I haven't felt, except for the Russians, that it was anti-American,'' Baldwin said. ``That was unfortunate. It doesn't have anything to do with the athletes, the referees or the United States.
``I think we may be seeing a lot of Mr. Smirnov's feelings about a shift in fortunes of Russian athletes.''
Russia has won 15 medals in Salt Lake City, half the U.S. total.
A visibly upset Smirnov denied Baldwin's accusation.
``It's not anti-American,'' he said. ``No! The answer is no! She's wrong!''
Smirnov said he had personally praised American preparations and management of the games, including telling Salt Lake Organizing Committee chief Mitt Romney that these were among the best games he has seen in 31 years on the IOC.
``I congratulated him for fine Olympics,'' Smirnov said. ``This is a very well-organized Olympic Games. The Russian team and myself have nothing, no criticism, for the United States or SLOC.''
Smirnov has been a frequent visitor to the United States and generally a moderate voice in East-West sports discussions, even at the height of the Cold War. He said those who question Russia's motives should look at a worldwide picture.
``What sometimes is seen as extraordinarily good can be seen otherwise in other countries,'' Smirnov said. ``I have to explain the opinion from our part of the world.''
He said he would talk with Baldwin about her statement, made to reporters after her first meeting as an IOC member.
The exchange was the latest development in what have become the Games of Protest, starting with anger over judging that gave Russia's Elena Berezhnaya and Anton Sikharulidze the gold in pairs figure skating. The IOC later awarded duplicate golds to Canada's Jamie Sale and David Pelletier, a decision the Russians unsuccessfully protested and blamed on Western media influence.
``We have enacted a very dangerous precedent with that awarding of medals,'' Smirnov said.
The Russians then were denied an appeal to award a duplicate gold to Irina Slutskaya, who finished second to American Sarah Hughes in women's figure skating. They also complained about judges' action in a hockey game they won over the defending champion Czech Republic.
But aside from remarks by coach Slava Fetisov that referees with a North American bias helped the United States beat his team 3-2, none of the Russian criticism was aimed directly at U.S. athletes or administrators. The women's skating appeal boasted of Slutskaya's performance but did nothing to denigrate Hughes.
Still, that appeal seemed to irritate Baldwin.
``The criticism of the judges was misplaced in their votes for Sarah, although Irina skated beautifully,'' she said. ``I don't take it personally. The United States doesn't take it personally.''
Smirnov said the Russians were ``disappointed with some of the federations'' that run the sports at the Olympics. He said that when his nation complained that a blood test administered by the international ski federation just before a cross-country relay cost it a medal when superstar Larissa Lazutina was disqualified, it did so on behalf of the fans - including Americans.
``The titlist was not allowed to compete,'' he said. ``I think the spectators, who traveled to see our champion compete, were cheated.''
******
#9
Cold War at the Olympics in Salt Lake City
22 February 2002
Moscow
Valery ASRIYAN, RIA Novosti
The Salt Lake City Winter Olympics will undoubtedly go down in history as one of the most scandalous. The latest "focus" of the judges - the removal of the Russian ladies' relay team, who were the clear favourites for the title - has finally discredited both the Olympics and the organisers. Five-time Olympic champion Larissa Lazutina was removed from the race right before the start, leaving the Russian team no chance to replace her. The judges simply took a sure gold away from the Russians.
Doping is used by the weak - those who doubt their own strength. The Russian skiers, especially the "queen of skiing" Larissa Lazutina, have no such doubts and they do not need to use any stimulants. So, on the face of it, the judges' decision is a clear provocation, which has caused a storm of indignation throughout the sporting world.
Of course, doping must be fought. However, it now seems that this fight is being used by judges to eliminate those people from competition who they do not want, for some or another reason, to see win. Leading Russian biathlete Pavel Rostovtsev had so much blood taken from him before his event that he could not race at full speed and stood no chance of fighting it out for a place among the medals. It is a rarity that such a large blood sample is taken and this speaks volumes about the judges' bias when they conduct the procedure.
The fact that the current politicised nature of the Olympics and the clearly anti-Russian bent already became clear at the opening ceremony. Five-time Olympic champion Erich Heiden was not chosen to light the Olympic flame. Instead, preference was given to the 1980 US ice hockey team, which was only famous for beating, with some fortune, the allegedly invincible Soviet squad at the 1980 Lake Placid Games. This clearly shows Salt Lake City's intention to host the event under the slogan, "Beat the Russians!" Since professionals have begun to compete in the Olympics and the Games themselves have turned into one great highly profitable commercial project, the heritage of the modern Games' founder, Pierre de Coubertin, who insisted on fairness, has been to a great degree lost. In reality, the Olympic oath, which the sportsmen and the judges take at the opening ceremony, is ignored. The former promise to compete fairly, while the latter swear to adjudicate no less so. Unfortunately, the oath, as the current Olympics have shown, is a mere formality, above all, for the judges. Although they are often called servants of justice, many of them blatantly lack the impartiality needed for the job.
The scandals started with the pairs skating competition. The Olympics had never seen the like of it before. The hysteria that was whipped up by the Canadian and US media around the allegedly unjust gold medal for the Russian Yelena Berezhnaya - Anton Sikharulidze pair led to an unprecedented revision of the results. Consequently, a second set of gold medals was given to the Canadian pair, Jamie Sale and David Pelletier. Then there was the dubious decision to award a place on the podium to the French pair, Marina Anissina and Gwendal Peizerat, when the Russians, in this case Irina Lobacheva and Ilya Averbukh, performed, at least, no worse. There was no outcry on the part of the North American media. Irina Slutskaya also did not win the gold medal due to the fault of the judges. She got the silver, even though she was obviously better than the American Sarah Hughes.
The judges' lack of objectivity also meant that Russian Olga Koroleva did not win a medal, though she performed her programme faultlessly in the final. None the less, she only finished fourth. The Russian delegation's protest produced no result. If one also remembers the protest lodged by the South Korean delegation, when Kim Don Sung was disqualified for no comprehensible reason after winning the short track event (the gold medal then went to an American), and that of the Lithuanian skaters, then it becomes clear that the lack of objectivity is to blame for the athletes' irritation and this, of course, told on the results.
The US does not particularly shine at the Winter Olympics and, as a rule, trails the Russians in the medal table. So, it appears that the Salt Lake City hosts have decided to take revenge for previous failures by calling not so much on the abilities of the athletes, but the lack of impartiality of the judges. Maybe they think they have succeeded. However, this is nothing more than an illusion. The price for this revenge is the total destruction of the ennobling Olympic ideals, sacrificed in the interests of selfish political dilettantes.
There have been too many "dark stains" in the current Olympics. The famous Japanese writer, Masayuki Tanaki, has stated that "the Salt Lake City Games are an attempt to show off American imperialism in the cultural sphere." It's difficult to argue with him.
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#10
From: "Wayne Merry"
Subject: WINTER SPORTS, THE "KURSK", AND THE INSTINCT TO LIE
Date: Sat, 23 Feb 2002
Russian whining about their showing at the Winter Olympics represents many things (hurt national pride, one more example of how far Russia has fallen, inflammatory journalism), but above all it reflects the same institutional reaction to public embarrassment we saw in the "Kursk" disaster. Then it was the navy and defense establishment; now it is the sports federation and Russian Olympic Committee. In both cases the nomenklatura instinctively resorted to the same tried-and-false methods: lie and point the finger of blame at foreigners.
Disputes are nothing new to an Olympics. There was cheating and vote rigging even in ancient times when the games were part of a religious festival. Every modern Olympics will leave its share of frustrated expectations and "what if?" issues. Russia, however, shows how much the dead hand of Soviet thought still permeates the ruling elite by elevating judgment calls on an ice rink to the level of national conspiracy mania and resorting to the single word most in need of purging from the Russian
vocabulary: "provocation!"
In the "Kursk" disaster, the lies about foreign submarines colliding with the doomed vessel have now been largely abandoned, while some of the truth is coming out. The men of the "Kursk" were killed by institutional negligence and criminal disregard for their safety, even in the newest and most modern unit in the fleet. While the dead sailors are now officially treated as heroes, it is not hard to imagine the admirals were relieved there were no survivors, for dead men supposedly tell no tales. The families were initially subjected to official abuse. Only the attention of the Russian media forced some compensation for next of kin and a proper investigation.
In the Winter Olympics, Russian expectations were simply unrealistic, given the current state of sports facilities and even of nutrition in that country. Generally, a country that gets near the upper rankings in the Winter Games is one that could, and even has, hosted the competition on its own territory. Where would Russia conduct a Winter Olympics, one might inquire, Grosny? The former chief training site for winter sports in Almaty is now beyond use for Russian athletes, and is a rusting ruin anyway. Most of Russia's finest winter sportsmen and sportswomen either work in the West and return to join the national team for big international competitions or have simply written Russia off and now compete under the colors of their new countries (with striking success). Who is to blame? Why, the West and America, to be sure!
The Russian performance at Salt Lake City has, to this amateur observer, been quite good considering the state of Russian athletics. In comparison with other former socialist countries and with traditional powers in winter sports, the Russian record is a tribute to the dedication of a few
under-supported athletes.
Not good enough, however, for the sports bureaucrats who still think of athletic competition in terms of storming the plan and quantitative results at any cost. Short of accusing their own athletes of "wrecking" and sending them to the Gulag, the best institutional self-defense to deflect questions about their own performance is to proclaim an anti-Russian conspiracy and to threaten a walkout (at no cost to the officials, as only the competitors would be hurt).
Truly pitiful is the indication that Vladimir Putin has learned nothing from the "Kursk" disaster about the compulsion of his own institutions to lie. He lashed out at the IOC for doing its job correctly (for once) and promptly pointed an accusatory finger at the American National Hockey League for supplying the referees at Salt Lake City. Someone should inform the Russian president that all but one of the twenty-two men on the Russian national ice hockey team play in the NHL, as do just about all the Americans and Canadians, plus plenty of others. The Russians at Salt Lake City are playing before the same referees as in their day jobs and, in several cases, against their own NHL team mates. Is this a conspiracy or the simple fact the NHL is the hegemon of the game? Putin should realize that, without the NHL to provide employment and practice for Russia's best hockey players, Russia might not even be able to field a team capable of taking the ice at the Olympic level.
Why do so many of Russia's best go West? The money? Certainly, and what is wrong with top-quality people getting top dollar? Better them than the
oligarchs. But it is not just the money, any more than income was the
reason for all the defections of athletes, dancers, musicians, writers and others during the Soviet period. The young Russians who go to the West today do so for self-fulfillment and for respect.
The sports nomenklatura in Moscow notoriously treats athletes as little better than trained animals. When Russia's finest performers work in the West they are accorded the status of the stars they are; when they work at home they are exploited for maximum short-term advantage and to hell with the human consequences for the athletes. Anyone who wants to know what it is like should take a look at Maya Plisetskaya's biography, but don't imagine things have changed much. Humiliation and abuse at the hands of arrogant and ignorant officials remain for Russia's athletes, as they do for Russia's naval personnel.
Putin should ask himself what his circumstances would be had he dedicated his life to judo rather than practice it as a hobby. The answer might tell him why Russian skaters spend their time between Olympics in the West. If anything, it is striking that so many top-class Russian athletes devote the time and effort to winning medals for a country that gives them so little respect.
Wayne Merry served six years at the US Embassy in Moscow and is now a Senior Associate at the American Foreign Policy Council in Washington.
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#11
The Electronic Telegraph (UK)
24 February 2002
Rush into Russia
British businessmen are marching into the once devastated industrial heartland of Moscow. Neil Bennett went to see the Russian resurgence
THE crowds are bustling around Orehovo-Borisovo market in a slate grey suburb of Moscow despite the bitter wind and ear-numbing cold.
The kiosks around the market's edge are doing a brisk trade, their windows filled with hundreds of cigarette packs and beer bottles. Brands such as LD, Sobranie and Prima jostle for prime position against hundreds of others while among the beers Baltica stands proud, the nation's favourite in its new-found love affair with the brown bottle.
The scene could not look more Russian as the housewives, babushkas and harassed security men jostle by. But, unlikely as it seems, these kiosks are tiny outposts of British commerce. Sobranie, LD and Prima are all produced by Liggett-Ducat, part of Gallaher. And Baltica is the chief prize won by Scottish & Newcastle when it announced its £1.2bn acquisition of Hartwall, the Finnish and Russian brewery group, 10 days ago.
Gallaher and Scottish & Newcastle are two of a growing number of British companies that have invested billions of pounds in Russia. They are scrambling to tap a vast consumer market only years after the country was regarded by the world as a bankrupt and perennial economic failure, a political laughing stock and home to countless gangsters and robber barons.
But politically, commercially and economically, Russia has been transformed in the past four years. Liggett-Ducat's factory on the edge of Moscow is a showcase example of the advances being made in consumer industry. Popular misconception conjures up an image of a stained brown smokestack, where grim comrades shovel throat-searing tobacco into gummy paper.
Nothing could be further from the truth. It is a state-of-the-art plant, turning out more than 50bn cigarettes a year, making it one of the largest facilities in the world. Liggett-Ducat moved into it less than three years ago and has used it as the platform for a massive increase in output and a determined drive to cater to the increasingly sophisticated tastes of Russian smokers.
Today the plant even holds the world record for packing the highest number of cigarettes by a single machine in 24 hours, more than 22m. Gallaher was an early investor in Russia. It acquired Liggett-Ducat in 2000, only just after the economic chaos of 1998.
But Nigel Northridge, the chief executive, said it was emboldened by the benefits of such a modern factory and the prospect of top-line growth from an emerging market. "If you look at Russia through the eyes of the BBC you see a very different Russia than if you are there. It's a sophisticated market," he says.
It wasn't always so. Stewart Hainsworth, the general director of Liggett-Ducat, has been in Russia since the bad days. A former accountant at Coopers & Lybrand, he had the grisly task of auditing the company in 1996. When he reported to the Brooke Group, its then owners, that it was almost bust, the US executive said: "If you're such a smartarse, why don't you come and run it yourself?"
He did, and the first two years were spent fending off creditors and combating corruption on a massive scale. He fired 150 managers at a stroke, almost half the management, when he discovered that as many as 3bn cigarettes a year were disappearing.
Worse was to come. At one point a supplier pulled a gun in his office when he hadn't been paid and said: "You have a personal problem!". Hainsworth paid him and made sure they never did business again.
Hainsworth says those days feel like a different lifetime now, as he surveys a vast map planning Liggett-Ducat's expansion. The group's cigarettes are on sale from Murmansk to Vladivostok, a consumer empire across 5,000 icy miles and seven time zones, a market of more than 140m people, in which an estimated 45 per cent are smokers.
The turning point was the acquisition by Gallaher in 2000. The British company immediately invested £40m in the plant. Since then it has offered central purchasing and management support to enable the business to accelerate its expansion.
The price is a high one. Gallaher expects Liggett-Ducat to generate a 20 per cent return over the medium term. That means by 2004 it has to be making a profit of £70m a year. While analysts expect it to hit that target, it is a tall order.
Fortunately, these days the only contact the company has with gangsters are the very occasional bungled attempts by local hoodlums to extort some protection cash when it opens a new sales offices. When the villains are politely reminded who Liggett-Ducat is and who owns it, they disappear rapidly. Significantly, Liggett-Ducat has banned weapons on its sites and does not use armed guards anywhere.
Gallaher has been joined by a growing band of other consumer businesses keen to tap the Russian market. BAT is one of Gallaher's main rivals in Russia. In confectionery Cadbury Schweppes has invested $140m in a new factory, while Unilever has spent more than $200m on a range of projects in both food and detergents.
S&N is paying dearly to take a half share in BBH, Hartwall's main asset, since the Russian beer market is growing at an astonishing 30 per cent a year.
Meanwhile, the oil majors have known about the attractions of Russia's vast energy reserves for years. Shell is poised to commit up to $8bn to develop a vast gas field off Sakhalin in the east, while BP plans to increase its stake in Sidanco, an oil company in which it has 10 per cent.
BP has suffered from bitter wrangling over Sidanco as its partner tried to asset-strip the business. BP fought its corner and protected its investment. Recent reports that it is considering increasing its stake demonstrate the group's growing confidence in Russia's commercial infrastructure.
All this cannot be described as a flood, like the desperate stampede into China five years ago, but it is certainly more than a trickle and promises to expand further.
Simon Smith, the commercial councillor at the British embassy, has been charting the progress. "There is an increasing level of inquiries from people who are talking about real investment plans and proposals. The big message for potential investors is the political stability. Until Yeltsin departed you could be dealing with one government team one week and they would be gone the next.
"Here you see a whole range of sectors where the market is underdeveloped but where the consumer's tastes and preferences have developed enormously in 10 years and will do again in the next 10."
The impetus to make Russia an acceptable place to do business comes, like so many things these days, from the top. President Putin wants to do everything in his power to make his country attractive for inward investment. And his power stretches a long way.
As a result, Russia now has an extremely attractive tax regime for overseas businesses. Unlike China, it is easy to own 100 per cent of a business. Corporation tax runs at just 24 per cent and there are generous capital allowances. Income tax has fallen to 13 per cent, and is a flat rate for everyone. It has also become far easier to turn profits into hard currency and remit it back home. The withholding tax is only 13 per cent.
To witness an embodiment of the new Russia, we travel to the Duma, the national Parliament that is only a short step from Red Square and Lenin's tomb. Here is Viktor Aleksandreyovich Semonov, one of the rising stars of Russian politics whose beliefs are a space age away from his embalmed neighbour.
Semonov is one of Russia's new rich, an entrepreneur whose interests stretch from building vast greenhouses to growing turf and selling garden woodchips. He has entered politics to further the interests of commerce.
"The political risks in Russia have practically fallen to zero because Russia has entered the international economic market. There are no excuses for Russia to fall back. There will be no more October revolutions," he says. "There is a Klondike, a gold rush for business in our country. We have so many places where you can put your efforts.
"There are more risks to do business here but the opportunity for profit is huge." He is right about the difficulties and risks. Russian bureaucracy still entangles every corner of personal and commercial life, even though Putin has vowed to root it out. The love of forms and form-filling is deep rooted.
But the market is tempting. Sir Brian Stewart, the chairman of Scottish & Newcastle, says Russia ranks well below China and India on the risk spectrum, which is why the company is prepared to commit so much more capital compared with those other markets. "Russia is very proud of its traditions, but it wants to be part of the developed world."
He adds though that the Russian consumer refuses to be talked down to, which is why Russian brands like Baltica are popular rather than US or European imports.
In cigarettes too, the Russian consumer tends to prefer home-grown brands. The basic cigarette is Prima, which retails for just R2.5 (6p) a packet. The task for Gallaher is to persuade consumers to upgrade to Virginia and American blends, which sell for R10 to R30.
So far Gallaher has built up LD into its most successful brand. Now it is aiming even further up the price ladder by launching Sobranie Classic, a brand designed in Britain but being test marketed in Russia. If it works, Northridge admits it could become a global brand for the group since Gallaher owns the rights to the Sobranie name worldwide. Just for good measure, it has registered LD worldwide too.
So Russia has become a crucible for the development of the rest of the group, turning the traditional idea of colonial consumerism on its head. Liggett-Ducat, along with Austria Tabak which Gallaher bought last year, will be the driving force behind the group's intention to move into new markets. It is looking hard at the former Yugoslavia, the Baltic states, Romania and Poland.
Meanwhile, Liggett-Ducat is spreading its influence around the East, most recently into the Ukraine where it has bought another cigarette factory. "I want to be able to walk from Galway to Vladivostok across markets in which we have a presence. The idea is to join up the dots, but we have learnt the best way is to grow gently," says Northridge.
It is a bold ambition but when you stare at the vast map of Russia on Hainsworth's wall, in which Britain appears as a tiny island in the top left hand corner, it is hard not to become a little imperialist.
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#12
TimeEurope.com
February 21, 2002
Moscow's Passing Fads
For the Russian élite, thin is the new fat
BY YURI ZARAKHOVICH, MOSCOW
"Once President Putin publicly praised [Press] Minister [Mikhail] Lesin for having lost 20 kilos," writes the Komsomolskaya Pravda daily, "the entire political élite rushed to gyms and diet clinics. Who would mind his slender body being noticed by the President himself?"
Earlier this month, Putin proclaimed sports a national priority. When the President says "jump!" his officials have to play ball — literally. RTR, the Russian State TV channel, now regularly shows civil servants working out at stadiums and gyms. The most conspicuous so far has been the footage of Nizhni Novgorod Regional Governor Gennady Khodyrev jogging along the Volga River embankment in his city. At the sight of the approaching boss, a stout official, dressed in a heavy sheepskin coat and fur cap, started jogging too, his briefcase jerking rhythmically in hand. Following the Leader has traditionally been de rigueur for any Russian official worth his salt. To put this Russian phenomenon in a Western context, just imagine that all the American civil servants bought saxophones once President Bill Clinton moved into the White House and swapped them for fishing tackle once President George W. Bush replaced Clinton.
Under Stalin all officials, from Politburo members down to mere apartment block managers, wore army type jackets and boots, worked nights, and slept through late noon, since that's what Stalin himself did. Under Khrushchev, an ambitious official had to wear a Ukrainian-type, embroidered shirt under a rumpled suit, enthuse about experiments like planting corn above the Arctic Circle, and make a lot of grammatical mistakes. Under Brezhnev, officials sought to look decently portly and dignified, to speak slowly and inarticulately, and to espouse a general air of mild indulgence. The order of the day was live and let live — meaning their own families and clientele, that is. Under Andropov, life got harsher: one was supposed to report to office on time and sit at one's desk through the entire working day.
The real shock came under Gorbachev: not only did officials have to stay sober on the job, but the Boss started showing up with his wife at public functions! Under Yeltsin, life got simpler again. As long as one could enjoy a steam bath, hold a tennis racket, and drink to capacity, one could look forward to both a career and a fortune. To pursue the same goals these days, Russian officials have to feign European airs, wear their watches on the right wrist, affect public modesty — and work out. Vodka and tennis rackets are out, skis and judo robes are in.
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#13
The Sunday Times (UK)
February 24, 2002
‘Depressed’ FDR handed Stalin victory at Yalta
By John Harlow, Los Angeles
A PSYCHIATRIST who has studied the medical records of Franklin D Roosevelt, one of the greatest American presidents, claims he gave up a large area of eastern Europe to Joseph Stalin in the final stages of the second world war because he was gripped by clinical depression.
The research by Alen Salerian, a former chief psychiatric consultant to the FBI, challenges the view of historians who maintain that even during the last months of his struggle against circulatory disease and polio, Roosevelt remained realistic about what he could wrest back from the Soviet armies occupying much of Europe.
Salerian’s work supports the view privately expressed at the time by Winston Churchill, Roosevelt’s ally at the Yalta conference in February 1945, when the continent was divided up, that a stronger American president could have saved Czechoslovakia and perhaps Hungary from Russian domination.
Salerian, who bases his conclusions on a reinterpretation of scant medical records and witnesses’ recollections, said “FDR” had suffered a recurrence of depression that had struck after he contracted polio in 1921. Charles Bohlen, a White House aide, reported that, shortly before Yalta, he had seen Roosevelt in a daze in the Oval Office for 30 minutes with spittle on his lips.
The president, who died two months later during his record fourth term in office, should have stood aside at Yalta for Harry Truman, his vice-president and eventual successor, Salerian claims. “I have studied reports brushed into the corners by Roosevelt’s political heirs for the past half-century, looking at them as a psychiatrist,” Salerian said. “It was irresponsible for Roosevelt to represent our country at Yalta, and his illnesses may have had terrible consequences.”
Andrew Johnsson, a history lecturer at the University of Southern California, is preparing his own study of Roosevelt’s legacy. “Churchill could not understand why his old ally allowed so much to slip away at Yalta,” he said. “That Roosevelt was both mentally and physically weak at Yalta explains a lot.”
Other historians disagree, saying the military positions of the Soviet and American armies determined the line of what was to become the iron curtain. “There are unanswered questions about his health but I do not think his judgment and mental clarity were in doubt,” said Professor David Woolner, director of the FDR archives at Marist College in New York.
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