Johnson's Russia List #6355 16 July 2002 davidjohnson@erols.com A CDI Project www.cdi.org [Contents: 1. AP: Russia Makes Little League Series. 2. Reuters: Russia's trickle of ownership disclosure thickens. 3. Interfax: Russia to privatize over 1,000 companies in 2003. 4. Kommersant-Vlast: RENDER UNTO CAESAR. (re strana.ru) 5. Moskovsky Komsomolets: Aleksandr Budberg, THE END OF POLITICS. Relations between business and government are changing. 6. Dow Jones/AP: Georgia Holds Chechen Suspected Of 1999 Russian Bombings. 7. gazeta.ru: Chief of Kremlin staff gets recharged. (re Voloshin and UES) 8. The Russia Journal: John Helmer, Do fewer energos mean fewer thieves, bigger theft? 9. Moscow Times: Boris Kagarlitsky, Going Further Off the Rails. (re railroad privatization) 10. Reuters: Jobs for generals sign of Russian power struggle. 11. pravda.ru: REVOLUTION IN RUSSIAN SPORTS? 12. Vek: Avtandil Tsuladze, THE IMAGE-MAKERS VERSUS THE IDEOLOGUES. What happens when reality catches up with political image-making. 13. Vek: Andrei Ryabov, YABLOKO AND THE VACUUM. No merger or alliance for the Union of Right Forces and Yabloko. 14. Gazeta: RUSSIAN EXPERTS COMMENT ON THEIR RELATIONS WITH STATE AUTHORITIES. 15. Reuters: EU says won't bow to Russia over Kaliningrad. 16. Moscow Times: Alexei Pankin, Lackluster Lesin Pulls His Punches. 17. Dow Jones/AP: European Court Says Russian Jail Conditions Violate Rights. 18. Interfax: Russian Cabinet cautious over amnesty of fleeing capital. 19. Luba Schwartzman: ORT Review.] ******* #1 Russia Makes Little League Series July 15, 2002 SOUTH WILLIAMSPORT, Pa. (AP) - A team from Moscow has defended its European title to become the first team to qualify for the 2002 Little League World Series. The Khovrino Little League beat CSS Electro Botosani Little League of Botosani, Romania, 1-0 in Sunday's Europe Region championship game. The Russian team went 9-0 and outscored its opponents 82-13 in the European tournament. Also competing at Kutno, Poland, were teams from Poland, Bulgaria, Germany, Austria, Lithuania and Georgia. The Little League World Series starts Aug. 16 in South Williamsport, with the championship game scheduled for Aug. 25. The Moscow team will open Aug. 17 against the Asian champion. ******* #2 Russia's trickle of ownership disclosure thickens MOSCOW, July 15 (Reuters) - Russia's sprawling Sistema holding company on Monday became the country's second industrial power to reveal its ownership after years of speculation about fortunes amassed by a clique of financiers and industrialists. The biggest shareholder in Sistema, whose prize asset is top Russian cellular operator Mobile TeleSystems <MBT.N>, is Chairman Vladimir Yevtushenkov with 75.97 percent, the Vedomosti and Kommersant newspapers reported. Sistema detailed its shareholder structure in a report to the Federal Securities Commission following a restructuring of its holdings in various subsidiaries. The company's press office confirmed the ownership reported in the papers but could not provide the report. "This is part of our reorganisation, a step required by the rules for share issues," a Sistema spokeswoman said. "This is part of the structural changes, which are happening in preparation for entering foreign capital markets." Analysts estimate the value of its assets at more than $2 billion, the spokeswoman said. Sistema officials said the holding company would try to float its stock in the West but declined to name a date, the newspapers reported. Many Russian companies have declared ambitions to become respected names on world capital markets and have embarked on corporate governance and image-polishing campaigns. Last month YUKOS Chief Executive Mikhail Khodorkovsky revealed he controlled 36 percent of Russia's second-largest oil producer with a market value of around $20 billion. Newspapers labelled him Russia's first public billionaire. AMASSING AN EMPIRE Over the past decade, Sistema has bought assets at government auctions, created other companies from scratch and invested in impoverished science and technology companies. "I don't feel like a billionaire, because all this money is tied up in assets in working companies," Yevtushenkov told Vedomosti. Other major shareholders include four of Sistema's senior managers, who each own between 2.9 percent and 4.8 percent, the newspapers reported. Another 2.19 percent belongs to Raison International Corporation, a private company. Sistema is the largest stakeholder in MTS, a New York-listed cellular operator with around four million users and a market cap of $2.95 billion. MTS's other strategic investor is Deutsche Telekom. Sistema also controls Moscow fixed-line phone company MGTS , which is aiming for an initial public offering. Following the restructuring, the company now holds 56 percent of MGTS directly, Vedomosti reported. Part had been held by the Moscow Committee for Science and Technology, which is controlled by Sistema. Sistema also has an oil extraction business with 13.5 million tonnes of proven reserves, a chain of petrol stations, an information technology firm, a retail business, real estate and development assets, a large insurance firm and Intourist, the former Soviet travel agency. ******* #3 Russia to privatize over 1,000 companies in 2003 MOSCOW. July 15 (Interfax) - The Russian government plans to sell stakes in more than 600 joint stock companies and privatize almost 450 wholly state owned (so-called unitary) enterprises next year. Government sources told Interfax that about 45% of the government share packets earmarked for sale in 2003 are minority stakes that do not exceed 25% of charter capital; 40% are stakes of 25% to 50%, 12% are stakes of over 50%, and 2% are 100% stakes. The government plans to sell stakes in more than 80 oil and gas companies next year. These sales are expected to be the main source of budget revenue from privatization. They include almost 0.1% of shares in Yukos, about 5% of Slavneft, less than 0.001% of Sidanko, almost 3% of Samotlorneftegaz, and about 1% of the East Siberian Oil Company. The planned sale of a 17.8% stake in the Magnitogorsk Metallurgical Combine (MMK) will virtually complete the privatization of the iron and steel industry. ******* #4 Kommersant-Vlast July 9, 2002 RENDER UNTO CAESAR [from WPS Monitoring Agency, www.wps.ru/e_index.html] On July 23 the Effective Policy Foundation (FEP) announced the transfer of all Internet projects associated with Strana.ru to the All-Russia State-owned television and Radio Broadcasting Company (VGTRK). There had long been rumors that Strana.ru was established in 2000 using money provided by sources close to the Kremlin. Now this theory has been developed: the "structures" took the new media away from FEP as soon as Strana.ru was promoted enough. In early summer 2001 Internet projects of the foundation were deprived of funding. FEP failed to find a buyer for an openly pro-Kremlin media and was forced to transfer the project to the main client, the state. However, the result of the transaction is of greater importance: now there is a full-value state-owned news website. According to Nielsen/NetRatings research company, by now the number of Internet users in Russia has grown to 4.5 million people, most of whom are voters. ******** #5 Moskovsky Komsomolets July 13, 2002 THE END OF POLITICS Relations between business and government are changing Author: Aleksandr Budberg [from WPS Monitoring Agency, www.wps.ru/e_index.html] POLITICS - IN THE FORM WHICH BECAME CUSTOMARY DURING THE 1990S - IS GRADUALLY DEPARTING FROM BUSINESS. CERTAIN STEALTHY, CREEPING CHANGES, WHICH ARE CONTINUING AND GATHERING FORCE, MAY BE PUTIN'S MOST IMPORTANT ACHIEVEMENT DURING HIS FIRST TWO YEARS IN POWER. Putin's time in power had not been marked by any major shake-ups, "fateful decisions", or other earth-shattering events. Life goes on, rather quietly, and sometimes there's the impression that nothing much is happening. At the same time, if we stand back from the day-to-day flow of events and take a look at the changes which have already taken place, it seems that many of them would be called historic under any other president. The best illustration of this is Russia's accession to the World Trade Organization (WTO). Essentially, this question has already been decided. The arguments over conditions, timing, and so on will continue for at least another year; but they don't change the main point. Russia will become a member of the WTO. This will entail vast changes - not only for specific enterprises or industry sectors, but for the political situation in Russia. For example, no longer will our members of parliament be able to think up laws and amendments of their own, based solely on the interests of particular lobby groups. They will have to coordinate their enthusiastic proposals with international law and economic obligations assumed by Russia. It will be even harder for the oligarchs. The rules of the game will become much more transparent for everyone. Even for the largest companies, it will become much more difficult to have an "exclusive" relationship with the state. It's no secret that at present, some oil companies are taxed at half the rate of others. Once Russia joins the WTO, our international partners will have every reason to define such "tax breaks" as a form of state support for certain enterprises. Such support can draw fines running into billions of dollars. It's possible to list many such changes. Of course, they're all yet to come; but let us look at changes which have already taken place. The main change - and it is hard to overstate the importance of this - is the very fact that Russia is joining the WTO. Even though a great many oligarchs - who are usually called the virtual masters of all Russia - have spoken out against this decision, applying direct and indirect pressure to the government and the president. In the pre- Putin Russia, they would have undoubtedly succeeded, but now they have not. State interests have gained the upper hand over the interests of a large group of tycoons. This represents a change which is truly historic. It cannot be said that politics has completely disappeared from business. Undoubtedly, the behind-the-scenes aspect of it remains. The best evidence of this can be seen in Slavneft and Rosneft, the state- owned oil companies. The grubby scandal over Slavneft raged on for several months, with the extremely influential clans of Roman Abramovich and Sergei Pugacheve clashing in a battle to control Slavneft's financial channels. In the end, the decision was made at the very highest leve. As a result, Abramovich retained his position; and he was only able to do this thanks to his political connections. In this sense, politics has not vanished from business, of course. However, it is no longer possible to do what was done in the Yeltsin era: to organize anything like the auctions of state assets used as security for loans, for the purpose of having a significant influence on domestic and foreign policy. We would like to believe that this will never again be possible. Maybe this is why new "techniques" have started to be used; new ways of "interacting with the state". Now that a group of former Rosneft executives is trying to extract a couple of hundred million dollars from the state, the term "greenmailing" has come into use. In other words, corporate blackmail. Some group or other buys a 15-20% stake in a company and rapidly starts to blackmail that company's executives. There are threats of dismissals, extraordinary shareholder meetings; state resources may be used, in the form of law enforcement agencies; and so on. The aim is to sell shares for many times their market value; to force the victim-company to pay up in order to be left alone. Interestingly enough, this trick works best against state organizations - since apparently the executives are less reluctant to part with state money than they would be with their own money. This seems quite different from anything in the past; it used to be the case that corporate blackmail was only practised by large companies against smaller companies. In the end, it all came down to disputes between "protectors". Nobody ever blackmailed large state- owned companies with powerful connections in the security structures. Now, all of a sudden, this has become possible. Strangely enough, it's a good sign. Of course, blackmail is wrong; but the very fact that a word such as "greenmailing" has come into use is a sign that Russia is changing rapidly. After all, even in the West there are scavenger- companies which specialize in this business. Of course, there is also the example of Gazprom; the assets stolen from this company are literally being forced out of the clutches of their present owners, with the help of the state. But Gazprom is too much of a special case. It's too important for the federal budget, and too much has been stolen from it - at least $15-20 billion. Even here, there is often the need to pay out large amounts in protection money. Thus, politics - in the form which became customary during the 1990s - is gradually departing from business. Of course, it will never be completely gone. Big business will always be linked to government. Nevertheless, the mechanisms of this interaction are growing more complex. The Slavneft saga has shown that even the prime minister can't take decisive action in such cases. That which used to be quite normal and ubiquitous only two years ago has now become impossible. And these stealthy, creeping changes, which are continuing and gathering force, may be Putin's most important achievement during his first two years in power. (Translated by P. Pikhnovsky) ******* #6 Georgia Holds Chechen Suspected Of 1999 Russian Bombings July 15, 2002 DOW JONES NEWSWIRES TBILISI, Georgia (AP)--The Georgian Security Ministry has detained a Chechen man suspected of involvement in the 1999 apartment bombings in Russia , the Georgian television reported Monday. The man, identified as Ruslan Beshayev, was detained Sunday in the village of Daba Ureki on Georgia's Black Sea coast, Georgia's national Channel One and private Rustavi-2 television stations reported. Beshayev lobbed a hand grenade at Security Ministry officers who came to arrest him, but one of the agents caught the grenade and threw it away. The explosion injured Beshayev's wife and another woman who owned the house where he was staying, the television reports said. After searching the house, the officers found a large number of explosives and identification papers for names of Radishchev and Khalilov, which made Beshayev's real identity uncertain, the television reports said. Beshayev was put in a Security Ministry jail in Tbilisi. The ministry's spokesman Paata Gomelaruri confirmed that Sunday it arrested "a man suspected of having committed grave crimes in another country," but made no further comment. The Russian authorities have blamed Chechen separatists for a series of apartment building explosions in Moscow and several other Russian cities which killed about 300 people in 1999. The bombings provided a justification for launching a second military campaign in the breakaway region. Relations between Russia and Georgia have long been sour over Moscow's allegations that Georgian authorities have been sheltering rebels from Chechnya. Georgia has refused to let Russian forces flush the rebels out, and instead invited some U.S. military instructors to train Georgian soldiers in anti-guerrilla tactics. ******* #7 gazeta.ru July 15, 2002 Chief of Kremlin staff gets recharged By Ivan Chelnok The first meeting of the board of directors of the Russian energy monopoly RAO UES following the recent shareholders’ meeting has re-elected the chief of presidential administration Aleksander Voloshin as its chairman and immediately decided on an extraordinary shareholders’ meeting. The first meeting of the board of directors of the all-Russian energy grid after the annual general shareholders’ meeting took place on Friday. The newly appointed board of directors had to elect the chairman and the deputy chairman. Hardly anyone expected anything sensational. Again, the chief of presidential administration Aleksander Voloshin will head the board of directors. Vice-premier and Finance Minister Aleksei Kudrin, who has already worked in UES as a chief financial officer, was elected Voloshin’s deputy. This time, the team of managers of the energy monopoly got a loyal board of directors with loyal leaders. Regardless of the political disagreements between Voloshin and RAO UES’s CEO Anatoly Chubais, their views on economics are rather close. Voloshin has supported the restructuring of the company from the very beginning, but suspended it from time to time, as Chubais’s political activity became overzealous from the presidential administration’s point of view. There was another routine question on the board of directors’ Friday agenda. The board studied suggestions on the enlargement of the corporation’s daughter companies during the process of reforms. It was decided that the daughter companies would grow by means of affiliation with mainline and distribution networks, and wholesale and territorial generating companies. There are two possible models of putting the plan into life. The first includes reorganization by amalgamation while the other provides for the creation of a holding with the subsequent exchange of the daughter companies’ shares for shares of the main holding company. The board of directors has charged the corporation’s reforming committee to draft ''a detailed procedure of enlargement applied to every category of assets and stating the order and terms of decision making for every stage'', so that later the managers could consider ''the question of membership in the enlarged wholesale generating companies, the order of forming and creating the territorial generating companies, and regional mainline and distribution companies.'' Unlike Friday’s meeting of the board of directors, the next one promises to be interesting. The managers have resolutely decided to conduct an extraordinary shareholders’ meeting after Voloshin urged such a move at the recent annual shareholders’ meeting. The problem is that RAO UES’ minority shareholders have got a little worried by the fact the new company rules do not contain restrictions on daughter companies selling their own daughter companies (or RAO UES’ ‘granddaughters’) without a sanction from the mother company’s board of directors. The shareholders noticed this nuance shortly before the annual meeting and therefore had no time to make the corresponding corrections in the agenda. The shareholders, as well as the board of directors (with the exception of the managers), simply overlooked this point. Now Chubais can magnanimously announce the necessity to ''introduce amendments to the company charter that will give broader powers to shareholders and the board of directors''. These amendments are to be considered and prepared by the next session of the board of directors. Therefore, the extraordinary shareholders meeting will take place this autumn. ******* #8 The Russia Journal July 12-18, 2002 Do fewer energos mean fewer thieves, bigger theft? By JOHN HELMER There are 72 regional electricity-producing utility companies – energos, for short – in the state-controlled holding known as Unified Energy Systems (UES), run by Anatoly Chubais. None in Russia can be confident in predicting the outcome of the so-called reform of the power sector, except that Chubais and the government say they are committed to reducing the number of energos from 72 to 10; subtracting transmission business from each remaining energo, or gencos; creating new companies to buy, sell, and transmit power along the nation’s grids; and zeroing out the tariff-fixing electricity commissions of Russia’s regions, by centralizing that power in one federal body. There are as many theories of what this process is meant to accomplish as there are interests in making profits out of buying electricity cheaply, and selling it dearly. I like Larry Woelk’s. He is a veteran of the freight-forwarding industry in the United States, and he recently wrote a brief paper explaining why the global transportation system is "so leaky it is amazing that there isn’t considerably more stolen out of the supply chain." The Woelk Theory is that "the primary reason why there is not more theft is that there is only a limited number of thieves to go around." As the man who administered property theft – oops, privatization – in Russia since 1991, Chubais’s new plan for the electricity sector might be considered progressive, if it means reducing the number of thieves stealing from the state’s power resources, and if Woelk’s theory holds for Russia. The question to be debated in parliament – and ultimately to be decided by President Vladimir Putin – is whether, in the special circumstances of Russia, fewer hands on the electricity supply chain mean less stealing. Or, to consider Chubais’s record as the administrator of voucher privatization and loans-for-shares, do Russian conditions turn the Woelk Theory on its head, so that it reads: to limit the amount of stealing in Russia, it is necessary for thieves to compete. The fewer the number of thieves, the more they steal, and the greater the aggregate of their larceny. Chubais recently said that he would deliver this month a detailed document that would describe for the next three years "not only the ownership structure, but all the basic economic parameters of [power] industry restructuring. Everything will be described and based on figures, not just words." The distinction Chubais makes between figures and words is of passing interest. It’s a reminder that during his time in government he admitted to securing multi-billion-dollar loans from the International Monetary Fund with nothing but words, knowing the state books were rigged to allow the funds to disappear. But let’s imagine we are able to see into the future that Chubais has calculated. Suppose there are 10 gencos, a handful of independent energos, three or four transcos, and one regulator. Remembering that the objective of the new system is to generate profit for fewer stakeholders, how can we tell when a so-called market price isn’t a theft from one pair of hands to another? And how does the so-called market created out of the new gencos and transcos assure there will be fewer thieves stealing less than they do now? Lucky for us, the power market of the great state of California helps us answer these questions. Or, to be more accurate, civil and criminal investigations of power trader Enron have revealed how the California electricity market was manipulated, government regulators deceived, prices driven upwards, and huge profits generated for a group of corporate insiders. Corporate memoranda written inside Enron released publicly last month illustrate how the trader was able to buy low-priced electricity where it was in surplus and sell it where it was in heavy demand in California, at a huge markup. The scheme did not violate market rules at the time, although it is now clear the transactions involved conspiracy to rig supply and demand imbalances, creating shortages with false information, and deceiving regulators with phony records. If Enron’s management had not come under investigation for accounting scams intended to create the appearance of profits, and to hide losses, boosting share prices and executive pay, the electricity fraud might not have been discovered. That is to say, those who knew the California power problems were the result of a profit-making conspiracy would not have seen the proof of their suspicions. Allowing our minds to move forward in California, and backwards in Russia, let’s look at the figures for the 72 energos last year. Overall, UES has reported there was 30 percent revenue growth on the back of a 31 percent increase in electricity tariffs. Demand for electricity did not change. Of the 72 individual energo results, 30 reported losses which, as you all know, is the difference between costs and revenues. No surprise – the loss-making energos are concentrated in the far eastern regions of Russia, where fuel and generating costs are relatively high compared to the rest of the country, while the capacity of consumers to pay higher rates is relatively low. No surprise either – the most profitable energos, such as Lenergo and Tyumenenergo, are located in regions where fuel supply is abundant and relatively cheap. Looking more carefully for evidence of theft – oops, discounted power transfers – you can see that in those regions where the major consumers of electricity are aluminum smelters, Krasnoyarsk and Khakassia, the net profits and profit margins of the energos are minuscule. Krasnoyarskenergo, which supplies power to the Russian Aluminum smelter at Krasnoyarsk, reported net profit for the year of $1 million, and a margin of 2 percent. Not shown on the books is Krasnoyarskenergo’s court claim for $100 million in unpaid electricity charges owed by Russian Aluminum. Geography and geology make a difference in the underlying balance between supply and demand for energy. But as Russia aims to be a single political entity, not 89 regions, 72 energos, or 10 gencos, it is up to the political leadership, not the power managements, to decide whose interests should be served by the way electricity is distributed across the land. A good many of these politicians are elected; Chubais is not. The question that Russian politicians, as well as voters, should consider as they pore through the fine print of the electricity reform plan is whether Chubais’s record for serving the public trust is any better than Enron’s. ******* #9 Moscow Times July 16, 2002 Going Further Off the Rails By Boris Kagarlitsky The privatization of the railroads is underway. Why? The answer is so simple even a Neanderthal could understand it: If the government owns something, it has to be privatized. At a conference in Washington once I asked an American economist, who had delivered a paper on the success of reforms in one of Russia's regions, what he considered to be the criteria for determining the success of privatization. He said that he had only one criterion -- the number of privatized enterprises. Following this approach, privatization is pretty much guaranteed to succeed. "But what if we introduce some additional criteria," I said. "Like determining how privatization affects production, prices, profit and employment. Or finding out if consumers are satisfied." "Somehow that never occurred to us," the economist said. Too bad. If economists had thought about these issues they would understand why more and more people in Russia regard private property with deep skepticism, and why the transfer of state-owned property into private hands is seen as nothing short of theft. There's nothing simpler than labeling critics of privatization as defenders of the old regime who would send us all back to a totalitarian hell. And there's really nothing more ridiculous than a government trying to provide women with fashionable footwear, or a meeting of the ruling party's central committee devoted to bringing in this year's harvest. The problem is that in 10 to 15 years people will laugh in the same wry way at the current attempt to fix our rail system by entrusting it to private entrepreneurs. In search of a suitable model, Western-oriented Russians turned to the experience of Britain, an experience that in Britain itself now evokes not laughter but tears. Britain's railways monopoly was privatized and broken up in order to promote competition. The track became the property of one company, while the trains became the property of a number of operating companies. As might have been expected, trains soon began jumping the tracks and crashing into one another. News reports of the dead and injured in railway accidents came to resemble reports from the Middle East. Average train speed slowed to a pace not seen since the reign of Queen Victoria. Behind the mechanical problems lie economic and social ones. Not all routes are equally profitable, for instance. But closing routes that operate at a loss means inconvenience for passengers and financial ruin for entire cities. Following privatization, the owners of railway companies in most countries soon began asking their governments for subsidies to keep the trains running. And they got them. Otherwise many lines would have been closed for good. The left is not alone in calling for renationalization of the British railways these days. Even some commentators at the Financial Times contend that since transportation networks cannot survive without financial support from the government, it makes more sense to return them to the public sector. But admitting the failure of privatization would spell political suicide for politicians. All this and more still lies in store for Russia. In fact, the plan is to carve our rail network into even smaller pieces than the British did. Russia is a much bigger country, after all. It has enormous sweep and scale. And this applies in equal measure to the disasters that will, almost certainly, ensue once the promised reforms are implemented. When privatization is completed, we will be told, as always, that we've headed down the wrong road, but that it's too late to turn around. The results of reform, you see, are irreversible. And that's just the railroads. Imagine what fun it will be when they break up the country's power grid, complete housing reforms, and introduce new rules for telephone service providers. When all these grand enterprises are finished, a quarter of Russia's population might well wind up without electricity, phone service or transportation. Nothing out of the ordinary, if you think about it. Most of the world lives in similar conditions. Why should Russians be any different? The top 10 percent of the population won't be affected, and somebody will surely get rich off the whole mess. Faith in the omnipotence of the market's invisible hand is no better than faith in the guiding role of the party. But it's even more dangerous when ideology is driven by financial gain. If the stars come out each night in the heavens, somebody must need them to do so, Vladimir Mayakovsky once wrote. And if the railroads are being privatized, you can be sure someone's going to profit. Boris Kagarlitsky is a Moscow-based sociologist. ******* #10 Jobs for generals sign of Russian power struggle By Jon Boyle MOSCOW, July 15 (Reuters) - The impending arrival of two generals in senior government posts threatens Russia's reforms and will further strengthen the hand of the military in the government machine, defence analysts warned on Monday. Reports say General Vladislav Putilin has been named to a senior post in the Economic Development and Trade Ministry run by liberal reformer German Gref, adding to the 125,000 serving officers experts say are in government or civil service. "When a professional economist is transferred to a security ministry, it raises no questions. But in the opposite case, it's a much more dangerous symptom," the Nezavisimaya Gazeta daily said in a front page article on Friday. "In the near future, people with epaulettes will appear in key posts in the Ministry of Finance and the central bank," it said, without citing sources. General Vitaly Azarov had been named to the social affairs department of Deputy Prime Minister Valentina Matviyenko, it added. The Defence Ministry said on Monday Putilin had been released from duties as deputy chief of the defence staff, but did not say what his new job was. Government officials declined to confirm whether the three-star general had a new post. "There has been no appointment of General Putilin as Mr Gref's deputy so far," Sergei Saukh, spokesman for the Economic Development and Trade Ministry, said by telephone. Some Moscow economists said the fog surrounding Putilin's future signalled less a sinister "Soviet" resurgence of the military in government than a battle between defence chiefs and cabinet liberals for the president's ear. But Russian defence analysts said reformers now clearly faced an uphill battle to shake up the defence ministry which, despite a decade of market-style reforms of the economy, remains an unreconstructed bastion of conservatism largely opposed to President Vladimir Putin's pro-West policies. "STALINIST STATE" "Putilin has been put there to militarise the economy, because this is a very Stalinist country," independent Russian defence analyst Pavel Felgenhauer said. "And a lot of people benefit from the system, because they can steal anything they wish. It's better than Enron," he said, referring to the financial scandal surrounding the collapsed U.S. energy corporation. "If a Russian entity is part of the mobilisation plan, you can't bankrupt it, because that breaks the mobilisation plan. "That means industry is very much trying to keep this system of mobilisation of industrial potential alive, because that is a guarantee that they can do basically anything, write any ridiculous IOUs, steal money." Putilin's apparent task will be to overhaul Soviet-era plans to switch Russia's industrial capacity to defence production in time of war. Liberals want to reduce the capacity available for switching to military production to one-tenth of its current size, a move fiercely resisted by the top brass. Alexander Golts, an independent defence expert, told Reuters that Russian firms had to set aside five to 30 percent of capacity for wartime production, a huge distortion in a country now trying to run its economy along Western lines. "It's absolutely clear that there is a very big struggle in the top circles. If Gref had been consulted he would never have said he had no idea about Putilin's appointment," Golts said. Tom Adshead, political analyst at Moscow's Troika Dialog investment house, said he believed liberals around Putin were bent on cutting the military down to size, and that the military were trying to foist their man on Gref. "But I'm not sure this move with Putilin is a sign of the creeping power of the military," he said. "If Gref's ministry is still denying it, it means the order hasn't yet been signed. It may well be that there's still a fight going on. "The golden rule is that the first person to go public in any institutional fight is normally the loser," he added. (Additional reporting by Robert Eksuzyan) ******* #11 pravda.ru July 15, 2002 REVOLUTION IN RUSSIAN SPORTS? A kind of split has occured among Russian sports' top officials. This fact gives hope that the peaceful idyll formed among Russian sports authorities within the several past years will finally come to its end. It is perfectly evident that Russia is steadily losing its positions at Olympic games and world championships, and the defeats are rather painful for us. Indeed, the scandalous failure at the 2002 Salt Lake City Olympic Games and Russia’s bad luck at the 2002 Korea-Japan FIFA Cup made the majority of Russians unhappy. However, Russian sports officials are astonishingly calm regarding this fact. President of Russia’s Football Union Vyacheslav Koloskov is always smiling with his ready-made answers to any questions. However, it is of no use to mention any names in connection with the situation with Russian sports. It would be better to mention now famous Soviet hockey player Vyacheslav Fetisov, the man who is expected to bring new ideas into Russia’s sports. Vyacheslav Fetisov was recently appointed president of the Russian State Sport Committee. Chairman of the Russian Olympic Committee Leonid Tyagachev said in an interview to Novaya Gazeta today: “Vyacheslav Fetisov started his activity on the post with prompt changes.” Tyagachev obviously dislikes the open letter sent by Vyacheslav Fetisov to President Putin to initiate the structure of Russian sport management. For example, he suggests that the leading role of the Russian Olympic Committee in sports management should be reduced; in addition, more new organizations, All-Russia sport confederation, Association of Professional Sports, and the Council for Physical Culture and Sports, attached to the RF president should be set up. Leonid Tyagachev thinks that such measures will result in a split among sport officials; if the initiative is realized, Russia’s sportd can be given up for lost, he says. The letter by Vyacheslav Fetisov was published in the Kommersant Russian newspaper on July 5 under the title “Vyacheslav Fetisov to Restore the Soviet Power in Sports.” Later, Fetisov told journalists his ideas about Russian sport development. The Russian State Sport Committee Chairman, as quoted by Russia’s RTR Vesti TV program, thinks that for successful development of Russian sport a legislative basis is to be adopted first of all. The law on sports in force was adopted in 1999; it is now slightly effective. To make the law work, either amendments are to be made or the document is to be completely altered. In Fetisov’s words, there is practically no power vertical in the sports and physical culture spheres. But such vertical is necessarily to be created. A Committee for physical culture and sport attached to the RF president is to become one of the two elements in the process of the vertical creation. Fetisov thinks that personnel problem is of top priority in Russia’s sports. “50% of success depends upon coaches. Nowadays, 20,000 Russian specialists apply our methods working abroad. Our objective now is to get these specialists back to Russia,” Vyacheslav Fetisov says. Another problem that is also crucial for development of Russian sports is financing. Athletic equipment at youth sports schools and the lack of sports constructions in Russia leave much to be desired. Fetisov thinks that financing of some sectors in the sports sphere is to be doubled. For the successful development of Russian sports sphere, a transparent system of relations between patrons of sport is to be created to know the ways of financing distribution. On the whole, as Vyacheslav Fetisov says, the scope of problems is endless. To solve all of them, mentality of the Russian people is to be stirred up, in other words, it is necessary to wake “the Russian bear in sports” that is currently sleeping quietly. Russian football commentator Vasily Utkin thinks that Vyacheslav Fetisov will be able to help Russian sports revive; he is now probably slightly aware of the way how to do it, but he is sure to learn more in the process. “To my mind, Fetisov is rather cautious now, because he is gradually getting into so many problems of Russian sports.” In Utkin’s words, the future plans of Fetisov are all of an administrative nature; he wants to make the Russian State Sport Committee a department of which initiatives and instructions are really effective for Russian sport and the country on the whole. Today, the government considered a plan on work and concept of the Russian State Sport Committee developed by Fetisov; results of the discussion will be published later. Some people say that the new initiative is just another reshuffling in the Committee, but let us hope that every new idea that appears will be effective and useful for the Russian sport. Sergey Stefanov PRAVDA.Ru Translated by Maria Gousseva ******* #12 Vek No. 22 July 12, 2002 THE IMAGE-MAKERS VERSUS THE IDEOLOGUES What happens when reality catches up with political image-making Author: Avtandil Tsuladze [from WPS Monitoring Agency, www.wps.ru/e_index.html] DEMAND FOR A NEW IDEOLOGY IS RIPENING IN RUSSIAN SOCIETY, AND THE IMAGE-MAKERS WILL RETREAT TO MAKE WAY FOR THE IDEOLOGUES. THE NEXT PARLIAMENTARY AND PRESIDENTIAL ELECTIONS ARE LIKELY TO BE A TRIAL BY FIRE FOR RUSSIAN PARTIES AND POLITICAL LEADERS. Although the political season is officially over, preparations for the election campaign of 2003 are in full swing. Techniques for the next parliamentary and presidential elections were discussed at two forums in Moscow last week: the fourth annual "New Election Techniques" conference, and a meeting between Central Election Commission (CEC) officials and representatives of the leading national media. While the CEC officials informed the journalists about the details of revised electoral legislation, the political consultants discussed specific ways and means of capturing clients in the Russian market, which has shrunk considerably due to greater political stability and an overall strengthening of the state hierarchy. First conclusion made by the political consultants: the new electoral laws have been written in such a way that the regime can, if necessary, interpret them as it sees fit. This does not involve any malicious intent; it is extra insurance, in case any fringe parties get too many votes. Leonid Kirichenko (from the Image Contact group) considers that in such circumstances it would be reasonable and justified for the regime to interpret the laws to suit itself. It would be as if, for example, someone in Germany had thought of falsifying the election results in 1932. Second conclusion: nationwide parties and political leaders, regardless of political shade, are losing popularity in the regions. This affects the Communist Party, United Russia, and the right-wing parties. Evgenii Minchenko (from the New Image agency) says the results of regional elections have shown that the charisma of federal politicians (including the president) is difficult to transmit to the regional level. Techniques have replaced politics; meanwhile, the people have grown weary of being spectators at somebody else's lavish celebration. In order to be successful, political blocs and parties will have to start getting a grasp of social welfare issues, defending group interests (of health workers, teachers, and so on), the interests of a specific region or territory, or of Russian industry. There is clear evidence to support this: President Putin has the best image of all. According to Igor Bunin (Political Techniques Center), nothing threatens Putin's magic popularity rating at present. His popularity is based on three factors: a favorable comparison with his predecessor; the focus of all public hopes and expectations on the figure of the president; and the fact that no alternative to Putin is available. And since there's no alternative, rationalizations will be found for any mistakes Putin makes. Therefore, the president will be the key figure in the next elections, the mark against which everyone else will be measured. According to Ella Pamfilova, the "PR bludgeon" is now striking hardest at young, promising politicians, not permitting them to rise through the ranks. So what we have is a dated, ageing range of political figures who are no longer capable of attracting voters. The most pessimistic of all is Sergei Kurginian, head of the Experimental Creative Center. He says Russia is losing the image battle. In global terms, this battle is currently being won by Islam, which is even ahead of the United States. Already, Russia has seen the phenomenon of "Russian Islam" (when ethnic Russians convert to Islam). It's a dangerous delusion to believe in Russian society's characteristic tendency to calm itself and orientation toward stagnation. On the outside, the political process has become less turbulent; but this only means the energy has moved to lower levels. And every period of stagnation is followed by one of perestroika. Thus, the political consultants are experiencing the same feeling as Russia's political elites: the feeling of being at a loss. On the one hand, the situation appears stable and predictable. On the other hand, there is a sense of alarm and the terror of the unknown. This fear is generated by the lack of any clear ideological orientation points in society and in government. Political PR in Russia has reached its limit. It can't go any further. A vivid example of what results from naive faith in the omnipotence of PR is the creation of the Party of Life. A party with no policies, no public support base - it's a symbol of a global cul-de-sac for 1990s-style politics. Demand for a new ideology is ripening in Russian society, and the image-makers will retreat to make way for the ideologues. The next parliamentary and presidential elections, for all their drama and complexity, are likely to be the test laboratory for a new image of Russia, and a kind of trial by fire for Russian parties and political leaders. Those who pass the test will shape the nation's image for many years to come. (Translated by Arina Yevtikhova) ******* #13 Vek No. 22 July 12, 2002 YABLOKO AND THE VACUUM No merger or alliance for the Union of Right Forces and Yabloko Author: Andrei Ryabov [from WPS Monitoring Agency, www.wps.ru/e_index.html] YABLOKO IS PREPARED TO REPLACE THE UNION OF RIGHT FORCES AS THE SUPPLIER OF PERSONNEL FOR THE ECONOMIC BLOC IN THE CABINET, AND AS A SOURCE OF IDEAS FOR THAT BLOC. AND FOR THIS PURPOSE, YABLOKO NEEDS NO PARTNERS, LET ALONE ALLIES. SO THE CURRENT TALKS ON COOPERATION ARE GOING NOWHERE. The latest round of talks about campaign cooperation between the Union of Right Forces (URF) and Yabloko has led to much discussion of what form this cooperation may take - from joint support for candidates in single-mandate districts to all the democratic parties uniting behind one presidential candidate. As in previous years, there is a marked level of skepticism about a pre-election alliance between these parties being possible at all. It seems that any moves toward unification have less chance of success than ever before; even though it would appear that reality demands unification among the democratic parties. Their electoral niche is narrowing - and one major reason for this is that some democratic voters are moving over to the pro-government party in the political center. Both of the right-wing parties face a serious risk of not making it past the five-percent barrier in the Duma elections. However, there are also some fairly substantial arguments against unification. The main problem is that the partners are at different political stages, so to speak. The URF has been having some serious problems lately. Its version of the bill on alternative civilian service failed to pass the Duma. This is a significant defeat for the URF; if the bill had passed into law in the liberal form proposed by the URF, the party would have scored some major political points for the parliamentary campaign, and would have been justified in counting on attracting millions of votes from conscription-age youths and their families, especially in the big cities. The URF's position in the executive branch isn't problem-free either. The standing of Anatoly Chubais, often called the unofficial leader of the URF, has been destabilized by the president's direct criticism of Russian Joint Energy Systems policy and the postponement of debate on a package of bills relating to electricity sector restructuring. The position of Herman Gref, the Cabinet's leading reformer, seems likewise unstable. Even Deputy Prime Minister and Finance Minister Alexei Kudrin has recently faced some harsh criticism from business leaders and the government. Although Gref and Kudrin are not members of the URF, they are very close to it in ideological terms. They are considered to be implementing URF policies within the government. Ever since some members of the URF's ideological nucleus quit the party - experienced democratic activists and human rights activists - the URF has become much more sensitive to fluctuations in the political environment. Under the circumstances, it would be a sensible decision for the URF to strengthen its position by forming an alliance with an ideologically similar political force. Yabloko is in a different situation. After marking time for a while, this party has re-emerged in the political arena with what is essentially a new platform - constructive cooperation with the regime. Obviously, those who assume that the regime is entirely satisfied with having a two-party system - United Russia and the Communist Party - are wrong. As ever, the Kremlin's political strategy includes dialogue and cooperation with Russia's remaining liberal politicians and other liberals, fairly influential within Russia and abroad. For a long time, the URF was the Kremlin's major right-wing partner; but now this party is losing ground. Politics, like nature, abhors a vacuum. Yabloko is apparently trying to fill the gap. Of course, Yabloko will never become the regime's junior partner in the fullest sense of the term, since this party's ideology rules out compromises where its basic principles are concerned. However, Yabloko is prepared to replace the URF as the supplier of personnel for the economic bloc in the Cabinet, and as a source of ideas for that bloc. And for this purpose, Yabloko needs no partners, let alone allies. That's why all the current talks and negotiations represent nothing more than paying tribute to summertime PR. Yabloko and the URF, the partners in this dialogue process, have diametrically opposed interests at present. (Translated by Arina Yevtikhova) ******** #14 Gazeta No. 122 July 2002 RUSSIAN EXPERTS COMMENT ON THEIR RELATIONS WITH STATE AUTHORITIES Vyacheslav NIKONOV, president, Politics foundation: At present Russia boasts a less bureaucratic decision-making mechanism, as compared to the Soviet period and other countries, whose practical experience I know. Well-known persons tackle economic issues; their list includes top Government officials, the Prime Minister and Minister of Finance Alexei Kudrin. The National Security Council is responsible for military-political issues. Meanwhile foreign-policy issues are tackled by presidential aide Sergei Prikhodko and Foreign Minister Igor Ivanov. The presidential administration deals with purely political objectives. All categories of state leaders ask expert advice in one form or another, but these consultations are not systematic. Andrei RYABOV, member, academic council, Carnegie Center's Moscow bureau: Strategic-planning requirements depend on specific clients. Strategy used to be the main state-power prerogative until 1997. The epoch of great problems and great prospects gave way to the epoch of political technologies, which act in line with narrow tasks, say, establishing a controllable State Duma. However, the goals of such work and its consequences seem to be irrelevant. Gherman Gref's Center of Strategic Studies has failed to provide any new ideas since the late 1980s. Strategic thinking tends to wither on the vine when no strategy is required. The state needs effective PR campaigns and technologies; the concerned managers can accomplish specific objectives -- the conduct of regional elections, weakening federal territories and ways of dealing with mass-media bodies -- more effectively. This is not the prerogative of expert checks. Our experts often turn into propagandists at this stage. However, independent experts diagnoze specific problems alone; meanwhile other people should cope with them. Valery TISHKOV, director, Ethnology Institute: We have inherited a system of analytical reports in the decision-making field; such reports lack any ideological bias today. Social-study expert checks have now emerged; meanwhile the distance between science and politics has vanished into thin air. It's impossible to run society without independent scientific expert checks. However, society doesn't operate in line with scientific laws alone. What we need is a procedure for choosing such expert checks. Yevgeny VELIKHOV, president, Kurchatov Institute national R&D center: A favorable situation has now emerged for our science and strategic national tasks in the context of global political difficulties. Still it's not very good to say this. Any country, which lacks adequate science, can't turn out competitive products. We need science and education; this, too, constitutes a serious strategic task. Society must be sure that it wants this, and that it's being mobilized accordingly. Therefore it would become possible to deal with strategic security tasks. We now have to pay 7-8-fold greater taxes on intellectual property, which accounts for a negligible share of our GDP, than we do on crude oil and natural gas. Serious changes have to be implemented at every level. Gleb PAVLOVSKY, president, Effective Policy fund: The expert-center market is the client's market. The Russian state hasn't yet become such a client. Where can we discuss specific threats and real-life trouble-shooting scenarios? This seems to be the most painful issue of them all. Those PR experts, who are being cursed by all and sundry, became the first to tackle a number of tasks, which were not made public. I'm talking about social threats facing the regime, as well as military and terrorist threats. All these issues must be discussed in a tough and straight-forward manner behind the scenes, that is, among experts. Current state authorities, which pay too much attention to tactical aspects, think they are too competent. They find it too difficult to pose any specific task before some "outsider" project manager, preferring to address such problems on their own. Consequently, certain reforms and bills are not analysed well enough. Moreover, any criteria for analyzing the quality of expert checks are lacking. If we assume that business success is one such criteria, then we can see that the Kremlin has already had its share of such "experts." Traditional science can't be trusted either. Administrative expert checks are unable to catch up with the President; the Foreign Ministry is a case in point. Any model for interacting with "outsider" project managers replete with different views and different specialities still has to be elaborated. Marat GELMAN, deputy ORT general director: Indirect influence seems to be quite effective in some cases. I'm talking about influence through trust in this respect. Naturally enough, an expert, who is trusted by an administrator, influences the decision-making process. He should do this in the client's interests because this is seen as an ideal scenario. Nonetheless, he can do this in his own interests or those of some other client. Behind-the-scenes influence should not be overlooked either. The entire national decision-making process resembles the economy, comprising various structures, the coordination of interests, as well as behind-the-scenes operations reminiscent of the "black-market" economy. I'm talking about behind-the-scenes research here. Our leaders are not used to reading texts, information documents and analytical reports. This means that they are being subjected to verbal influence on the part of their advisers, wives, daughters, friends, former school-mates, etc. Peter SHCHEDROVITSKY, president, Center of Strategic Research: People responsible for making decisions at different administrative tiers, the state-administration tier included, don't use available knowledge. Nor do they want to do this. As a result, any decision-making process becomes either impossible or counter-productive. Institutions of state authority should discard administrative methods in favor of specific projects and situational games, subsequently perceiving knowledge as a result. Any strategy implies the scale of specific actions, the choice of the relevant movement's vector, as well as synchronized efforts. Sergei BELANOVSKY, science director, Niccolo-M political consultative-services center: State authorities are being influenced by various multi- level lobbyist groups, including experts. They are trying to play it sly in their own favor; nonetheless, they can examine certain issues skilfully enough. It would be a mistake to repeat that lobbyists have monopolized all influence on the corridors of power. State authorities are trying to rely on managerial information in real earnest. Meanwhile their cost-effective performance can be assessed by their expert position on specific issues. However, our state authorities are ineffective in terms of this parameter. This country lacks any economic-expert community as a sum total of independent experts. No one, but top-level officials and oligarchs, has access to expert knowledge. However, this ruling elite is unable to effectively digest information and to chart its own political and economic line. This can, among other things, be explained by conflicting interests and low morals. ******* #15 EU says won't bow to Russia over Kaliningrad By Gareth Jones BRUSSELS, July 15 (Reuters) - The European Union cannot back down in its row with Moscow over visa-free travel for residents of Russia's Kaliningrad enclave after the wealthy bloc enlarges into eastern Europe, EU diplomats said on Monday. Kaliningrad will be cut off from mainland Russia when the EU expands in the next few years to take in Poland and Lithuania, whose territory surrounds the Baltic port of 1.3 million people. The EU says Kaliningrad residents will then need visas to travel overland to Russia proper because Poland and Lithuania will be part of the Union's open-borders "Schengen" zone. Russia sees this as an unacceptable violation of its citizens' rights. "There is a feeling in Russia that if Putin bangs the table loudly enough and speaks to (British Prime Minister Tony) Blair, to (French President Jacques) Chirac...then he will get what he wants," said an EU diplomat close to the Kaliningrad talks. "But this is not the case," he added. "President Putin is being badly advised and will have to back down. The (Russian) foreign ministry should not have put him in this position," the diplomat said. EU officials fear that Kaliningrad, already beset by organised crime, disease and poverty, could pose a serious threat to EU security after enlargement, which is due to take place in 2004. Kaliningrad, the former German port of Koenigsberg, was seized by Soviet troops in 1945. COMPROMISE SOUGHT The EU's favoured solution entails the issuing of multiple re-entry visas and the construction of more border posts to ease transit conditions. But it says the visa requirement remains non-negotiable and has categorically ruled out a Russian proposal for "visa-free corridors" or sealed trains between Kaliningrad and Russia, saying this evokes unhappy historical memories in Europe. "What is important to us is the integrity of our borders and the integrity of our legal system," the EU diplomat said. The 15 EU member states have asked the European Commission to come up with a solution to the problem in September, three months before the scheduled conclusion of enlargement talks with Poland, Lithuania and eight other candidate countries. Last week, Putin said he believed a compromise was possible but not "at the expense of...the rights of our citizens." The EU diplomats reacted cautiously to Putin's weekend appointment of Dmitry Rogozin as his new special envoy for Kaliningrad. Rogozin, head of the Russian parliament's foreign affairs committee, is known as a nationalist. "Of course it is entirely a matter for the Russian side (whom it appoints)...If they send somebody who talks turkey, then we are ready to talk turkey back," said the diplomat. Another diplomat suggested that Rogozin's appointment could be an effort by Putin to defuse any possible Russian nationalist criticism of a perceived "sell-out" over Kaliningrad. The EU stands ready to help fund the provision of international passports to the majority of Kaliningrad citizens who do not possess one, the diplomats said. They added that 70 percent of Kalingrad residents have never visited Russia proper. The Commission, the EU's Brussels-based executive, has committed 40 million euros to the Kaliningrad region for economic, environmental and other projects, the diplomats said. The next round of talks between EU and Russian officials on Kaliningrad have been scheduled for July 23 in Brussels. ****** #16 Moscow Times July 16, 2002 Lackluster Lesin Pulls His Punches By Alexei Pankin Recently I came to understand two important things. First, the press is the fourth branch of power in this country and a force that the government has to reckon with; and second, that standing up for freedom of speech as a universal value and right is not among the chief priorities of our authorities. Here is how it happened. In February 2001, Press Minister Mikhail Lesin publicly promised that he would release a report on violations of press freedoms in the United States. The Russian and international press treated the announcement as nothing short of sensational. Month after month went by and there was still no sign of the report. Everyone seemed to have forgotten about the minister's promise and I must have been just about the only person who did not tire of terrorizing him. Last June, I wrote a letter to the Press Ministry requesting information about the fate of the report and then reminded people of Lesin's promise in a column in The Moscow Times. The first anniversary of the unfulfilled obligation was noted in an editorial in the March edition of Sreda. But silence was the only answer forthcoming. June arrived and I found myself in Lesin's office, invited for an interview on the landmark Media Industry: Directions of Reform conference. "Where is the report, Mikhail Yuryevich?" was my opening question. "It is completed. We simply haven't published it yet," was the answer. The minister bent over his computer and in a flash I was holding in my hands a diskette containing the long-awaited report entitled "The U.S. Media -- Problems of Free Speech." "Do with the report as you see fit," were the minister's parting words. I saw fit to publish it in the July issue of Sreda. Thus, under pressure from the press, an important government document found its way into the public realm. So what of the report itself? The text, which covers 11 magazine pages, starts with a preamble, in which contradictions in legislation governing the media are analyzed, as well as ways in which laws contravene international pacts and conventions. This is followed by sections on "Monopolization of the Media," "Corporate Censorship -- Self-Censorship," "Blind Spots," "Cliches and Double Standards" (about American journalistic habits), and "Journalists up Against Violence and Lawlessness." The final conclusions, to those of a more democratic bent, will come across as somewhat toothless: "The question of whether or not free speech exists in the United States can be answered in the affirmative. "Legislatively, journalists are generally well protected. "Economically, media pluralism is protected less well than in most other developed countries. "Journalists' protection from violence and police arbitrariness, as elsewhere in the world, cannot be fully guaranteed." The report was written before Sept. 11. Since then, the timidly critical voice of the Russian government has been joined by a loud chorus of Western human rights organizations, accusing the U.S. authorities of trying to limit freedom of information. Perhaps now Lesin is ready to offer more radical criticism? But no, nothing of the sort. "I was in America last fall," he said. "And I saw that no one was ordering anyone to do anything. The mass media simply understood the extent to which they could rock the boat. They therefore took the decision themselves to adopt a consolidated position, in order to calm the public. "And in America there are organizations," he added disapprovingly, "which were very harshly critical of the fact that the mass media supported the government, president, and in essence, the people in this way." President George W. Bush, it seems, will now be able to sleep soundly at night. Our government did not and does not intend to fight seriously against infringements on freedom of speech in America. Alexei Pankin is the editor of Sreda, a magazine for media professionals (www.internews.ru/sreda) ******* #17 European Court Says Russian Jail Conditions Violate Rights July 15, 2002 DOW JONES NEWSWIRES STRASBOURG, France (AP)--Europe's top human rights court condemned conditions in a Russian jail Monday, upholding a complaint from a former prisoner held for five years in an overcrowded, vermin-infested cell. The European Court of Human Rights ordered the Russian government to pay costs and damages totaling EUR8,000 to Valery Kalashnikov, a banker who was jailed in 1995 while awaiting trial on embezzlement charges. "The severely overcrowded and unsanitary environment and its detrimental effect on the applicant's health and well-being ... amounted to degrading treatment," the court said. Kalashnikov said he was forced into a cell with 24 prisoners who had to sleep in shifts to share just eight beds. He claimed the television and cell light were never turned off and the only toilet was in full view of his cellmates and prison guards. The cell in his detention center in the Pacific coast city of Magadan was overrun with ants and cockroaches, he said. There was no ventilation and it was stiflingly hot in summer and very cold in winter, Kalashnikov said. A panel of seven European judges unanimously upheld Kalashnikov's complaint that his conditions of detention constituted "inhuman or degrading" treatment banned by the European Convention on Human Rights. The judges also found that Kalashinikov's four-year pretrial detention violated the convention guarantees that hearings and trials be held "within a reasonable time." The court welcomed measures already taken by Russian authorities to improve conditions at the Magadan detention facility and noted that there had been no "positive intention" to humiliate or debase the prisoner. Kalashnikov was first detained in June 1995, convicted in August 1999 and released under an amnesty in June 2000. Russia's Interfax news agency quoted a Russian representative at the court, who acknowledged financial restraints sometimes led to lower standards in Russian detention centers, but said reforms were underway to improve the situation. "The problems have also begun to be solved and Russia's legal system has become firmly based on European standards," Pavel Laptev was quoted telling the agency. Laptev regretted that the judges had not visited Magadan to see conditions for themselves, but he said Russia would abide by the court's ruling. Russia signed up to the European Convention on Human Rights when it joined the Council of Europe in 1996. ******** #18 Russian Cabinet cautious over amnesty of fleeing capital MOSCOW. July 15 (Interfax) - An amnesty of the capital illegally moved out of Russia should not be expected to change Russia's economic situation in any dramatic way, a source in the Russian Cabinet told Interfax on Monday. "If an amnesty is declared, about $4 billion a year can be repatriated if the experience of our closest neighbors is anything to go on," the source said. At least the same amount could be expected to return to the country's economy from the world's most popular offshore area by improving the investment climate in Russia, he said. "If the money was stolen and then taken out of Russia in flagrant violation of the law, we cannot tell the culprits to pay today's debts and live happily ever after," the source said. This kind of amnesty may significantly harm the country's image, in particular in dealing with the Financial Action Task Force on Money Laundering (FATF), he said. The Cabinet is involved in the public discussion of this idea, but has not made any proposals or drafted any documents, the source said. The proposals made on that subjects by certain senior officials should be regarded as non-professional views, he said. "Neither the top officials of the ministries in charge of the policy in this field nor the prime minister have made their views on this issue known," he said. An amnesty of capital would not make sense unless obvious advantages outweigh the negative consequences, the source said. The return of capital itself is a serious matter, too, the source said. This can happen when the tax burden is further decreased, he said. The return has effectively started, chiefly from large offshore areas, the source said. Still, in the first half of the year $300 million to $400 million more was removed from than brought into Russia in the first half of the year, he said. On the other hand, more money was brought in than taken away in the second quarter of the year, he said. ******* #19 ORT Review www.ortv.ru Compiled by Luba Schwartzman (luba7@bu.edu) Research fellow at the Institute for the Study of Conflict, Ideology and Policy at Boston University HEADLINES, Monday, July 15, 2002 - The construction of the Plesetsk Cosmodrome began 45 years old today. - The European Court of Human Rights has ruled that Valery Kalashnikov's rights were violated by the Russian Criminal Court and the prison system. He will receive compensation for his suffering. - The relatives of the passengers of the TU-154 that was shot down by a Ukrainian missile are demanding compensation from the Ukrainian government. A special governmental commission will represent their interests. - Terrorism Adam Dekkushev has been detained in Georgia. He is accused of participating in the 1999 Moscow and Volgodonsk apartment bombings. - Zaituna Bulasheva, the director of a boarding school for orphans in the Republic of Komi and the Industrial Arts teacher at the school have been convicted of abuse. On Bulasheva's orders, the teacher added bars and a metal door to a bathroom. Some of the students spent as much as 3 days in the punishment area. Bulasheva and the teacher received 3.5 and 3 years probation, respectively. - The Russian Cabinet reviewed a relief program for Russia's southern regions. About 30% of the houses damaged by the flooding in the area have been restored; hundreds of children from the regions have been sent to summer camps. Graduating students will receive privileges in the college admissions process. - Over 100 universities across Russia will begin admitting students on the basis of a nation-wide general exam. - University living allowances will be doubled as of September 1st, 2003. - A military inspection service will be formed within the Defense Ministry by September 15th. Lieutenant General Aleksandr Lukin will head the service. - Russian border troops have seized 215 kilograms of heroin on the Tajik-Afghan border. - A powerful shrapnel bomb was set off in the yard of a Vladivostok office building. Investigators suspect that the president of Nord-M, who was getting into his car at the time of the explosion, was the intended victim. Several other people were hurt -- four were hospitalized with severe injuries and one died at the hospital. - Unidentified men desecrated the walls of the Russian Orthodox Church in Haifa, Israel. The building was covered with slogans like "Satan was here," and "Get out." - Search-and-rescue efforts continue in Taimyr, where a helicopter carrying 21 crew members and geologists has been missing for five days. Investigators suspect that the pilots became disoriented in the rain and heavy fog. - The widow of Border Troops General Vitaly Gamov will receive her 7th skin transplant operation. Investigators suspect that Gamov's apartment was set on fire on the orders of the illegal fishing mafia. ****** Web page for CDI Russia Weekly: http://www.cdi.org/russia Archive for Johnson's Russia List: http://www.cdi.org/russia/johnson With support from the Carnegie Corporation of New York and the MacArthur Foundation A project of the Center for Defense Information (CDI) 1779 Massachusetts Ave. NW Washington DC 20036