Johnson's Russia List #6397 12 August 2002 davidjohnson@erols.com A CDI Project www.cdi.org [Contents: 1. Financial Times (UK): Anatol Lieven, The road to riches discredited. 2. Moscow Times editorial: Would a Windfall Tax Do Justice? 3. Moscow Times: Matt Bivens, At the Coal Face. 4. Wall Street Journal: Guy Chazan, Pulp-and-Paper Mill Shows Flaws of Russia's Capitalism. 5. Arthur McKee: Putin's man at the Post?/6396. 6. Lois Dupey and Robert Jaeger: re 6369-Vershbow's Speech. 7. Los Angeles Times: Helene Elliott, Harried by the Mob? Reputed crime boss' alleged attempt to rig Olympic skating may be tip of iceberg for international sports. 8. Wall Street Journal: Guy Chazan, Russia Denies Peace Corps Visas Amid Domestic Political Pressure. 9. The Russia Journal/Prime-Tass: Experts worried about Russia. 10. Financial Times (UK): Andrew Jack, Mutual fund blow to Russian markets. (Templeton) 11. The Sunday Herald (UK): Revealed: US plea to Kremlin to invade Romania over bomb. In 1989 James Baker met Soviet leaders to ask them to overthrow an east European state to oust dictator Nicolae Ceausescu. Gabriel Ronay uncovers a cold war secret. 12. UPI: Turkmenistan celebrates Melon Day.] ******* #1 Financial Times (UK) 12 August 2002 The road to riches discredited By Anatol Lieven Latin America's economic crisis has intellectual implications which extend far beyond that continent. It sounds the death-knell of "transitionology", the belief that by following a simple set of universal rules, countries all over the world can in a short space of time make the transition to democracy and the free market. This mantra is now intellectually dead, though it will doubtless live on in the mouths of politicians, pundits and diplomats. What we are left with is history, with its many winding paths and lack of final destinations. There was always something odd about the degree of belief invested in such an ideological and teleological framework of analysis. In its main outlines, transitionology has resembled the modernisation theory of the 1950s and 1960s. Indeed, they were developed in similar circumstances. Modernisation theory was meant to help the newly independent former colonies of European powers to develop in a western direction and reject Communism. Transitionology was meant to do the same for the former Soviet empire. But by the time the Soviet Union crumbled, the former European colonies had decades of experience to show that there is nothing inevitable about such progress, and no universal rules that can bring it about. Of the former European colonies, many have experienced some development, but only a tiny handful have joined the developed world. A considerable number in Africa have experienced not progress but catastrophic decline, with steep falls in living standards and services, and in some cases the complete collapse of the state. Similarly, the former Communist dependencies in central Europe and around the Baltic have achieved great progress (though this by no means applies to their entire populations). Other states such as Russia are experiencing uncertain recoveries from very steep declines, while some, in the Caucasus and central Asia, have experienced what amounts to radical demodernisation. None have sunk to African levels, but some are a great deal further from the developed world than they were in the 1980s. Even Russia and Ukraine stand no chance of real integration into the west in the foreseeable future. Latin America is a particularly striking example of the triumph of hope over experience. Several states have achieved very real progress, and are of course vastly richer than they were a century ago. But very few indeed have achieved western standards of living and levels of democracy. Argentina was probably closer to such a breakthrough a century ago than it is today. Millions of Mexicans continue to risk their lives by illegal immigration to the US. How many times in the course of that century have we heard of one Latin American country or another instituting a bold economic reform programme and experiencing an economic miracle? And how many times have we seen that economy collapse into crisis again as a result of an external economic shock, mass domestic unrest, or both? How many times have we seen countries move from dictatorial rule to democracy and back again? How many times has democracy proved only a facade for an incompetent and greedy oligarchy? For that matter, how many of these democracies have made a real difference when it comes to the brutish treatment of the poor by the police, the courts and the bureaucracy? Despite all the works on this subject, a general theory of capitalist development, valid across widely different cultures, remains a distant dream. There is also no clear-cut or universal relationship between democracy and development, or for that matter between dictatorship and development. Arguments derived from central Europe forget that these societies were already close to the west before being conquered by Communism, and that after 1989 both democratic and free market reform derived a unique extra political charge from the nationalist desire to escape from the hated Russians and to join the west. In this context, the possibility of European Union and Nato membership has provided an incentive which also cannot be replicated elsewhere: a clear badge of having arrived in the west, and one which could be gained only by genuine and successful reform. The EU accession process has also led to comparatively large amounts of western aid to central Europe and, more importantly, aid that has been strictly controlled. We are however unlikely to be able to encourage reform in Pakistan or Peru by telling them that this will lead to escape from the Russian empire and to membership of the EU. Objectively, the centres of successful capitalism remain today what they were 100 years ago: western Europe, its overseas white colonies and its immediate European periphery; and Japan. Since 1945, to this group have been added two former Japanese colonies already developed under Japanese rule - South Korea and Taiwan - and a handful of international entrepots such as Singapore. Some of the south-east Asian states and parts of China may be heading in the same direction, but they are very far indeed from arriving at stable market prosperity, let alone stable democracy. And thanks to the cold war, at key moments parts of east Asia benefited from a uniquely favourable attitude on the part of the US: not just in terms of massive flows of aid and military spending, but more importantly the openness of America's markets to their exports. This is not to suggest that the free-market reforms of the past decade were mistaken, and that a swing back to leftwing populism would produce better results in Latin America or elsewhere. Of course, some of these reforms were monstrously inequitable in their effects and should be modified; but the real lesson is bleaker and more tragic. Latin America over the past century suggests rather the old comparison of human polities to a sick man on a bed, continually changing his position in an effort to find relief from his pain, and always finding only a temporary respite. Nor should this be a matter for smug self-congratulation on the part of the developed world. No economic or political system is eternal and 100 years from now, this unhappy picture may be true of the west as well. ******* #2 Moscow Times August 12, 2002 Editorial Would a Windfall Tax Do Justice? Despite Boris Berezovsky's best attempts to persuade us otherwise, there is in fact little evidence to suggest that President Vladimir Putin is really intent on nationalizing all of the country's national resources as part of a ploy to install a full-fledged authoritarian regime. The reality is almost certainly much more mundane and can be summed up in one word: elections. With less than 18 months to go to the parliamentary elections and just over 18 months until the presidential election, there have been a number of tell-tale signs that the election season is already getting under way. A couple of examples from last week: Gazprom's reported decision to postpone sale of its media holdings (NTV, etc.) until after the 2004 presidential election is clearly a political decision, rather than a financially motivated one as officially stated; and the president's well-publicized call for regional governments to publish their public sector wage arrears in the press. The proposed amendments to the subsoil resource law submitted to the government by Putin aide Dmitry Kozak at the end of July, which caused such a carfuffle, seem to be driven by a similar logic. In a nutshell, the Kozak proposal effectively envisages raising oil, gas and metals companies' royalty payments -- although by how much and whether permanently or as a one-off measure, remains unclear. The quid pro quo is that production licenses are to be put on a stronger legal footing. Aside from Putin's innate caution, it is highly unlikely that he would want to rock the oligarchs' boat too much in the run-up to elections. A study released last week provided a timely reminder of the concentration of wealth (and consequently power) in this country: Taken together, the eight largest private business groups -- whose core business, in most cases, is natural resources -- have considerably higher revenues than the federal government. It is precisely these groups that would bear the brunt of any increase in natural resource royalty payments. Putin, since hounding Berezovsky and Vladimir Gusinsky out of the country and making it known to the oligarchs that he would not countenance direct political interference, hasn't seriously encroach upon powerful private sector interests. The most plausible explanation is that Putin is planning to levy a one-off "windfall tax" on the natural resource sector -- the amount to be determined, presumably, through the usual process of bargaining between big business and the government. Such a move would allow Putin to kill two birds with one stone: First, squeezing the oligarchs would undoubtedly be a popular move with the man on the street and allow Putin to put some distance between himself and them in the run-up to elections; and second, it would generate additional revenue (a ballpark figure being batted about is several billion dollars) in a year when the budget will be strained both by electoral exigencies and the peak period in foreign debt repayments. So, would a windfall tax be a good thing? It would certainly go some way to redressing the injustices of the cheap sell-off of energy and metals companies in the early and mid-1990s (and has a "respectable" precedent in the Windfall Tax on privatized utilities levied by the British Labour government upon coming to power in 1997). The downside, however, is that it would be a rough kind of justice (as indeed was the case with Labour's Windfall Tax), hitting not just the core shareholders of these companies, most of whom acquired their assets on the cheap, but also outside shareholders who never benefited. Among the latter would be a large swathe of the country's nascent middle class as well as foreign equity investors. ******* #3 Moscow Times August 12, 2002 At the Coal Face By Matt Bivens WASHINGTON -- Here are some stories this summer about coal miners that have not made international headlines: On June 20, a Virginia coal miner was crushed between a mine car and a beam. On May 21, a mining electrician in Kentucky electrocuted himself. On April 10, a West Virginia miner was killed in a roof fall-in. So far 17 American miners have been killed on the job this year -- a "safer-than-average" rate. Accidents kill somewhere from 30 to 60 American miners every year. Check out the official accident reports, called "Fatalgrams," at www.msha.gov/fatals/fab.htm -- but keep in mind two things: • The death toll from electrocutions, cave-ins and such is dwarfed by that of Black Lung, a respiratory disease caused by breathing in coal dust. The U.S. Centers for Disease Control says 2,000 American miners a year die from Black Lung. Coal miners also collect about $500 million annually in health benefits from the federally-funded Black Lung Fund. • Mines in Russia and Ukraine are, on average, about three times deeper and at least 10 times as dangerous as those in America. (A rule of thumb: from one to three post-Soviet coal miners, or about 400 a year, die for every 1 million tons of coal mined.) In 1995, I visited a mine outside of Rostov. I'm not claustrophobic, and I've had occasion to see some bad things. But never before or since the day I went down that Russian mine have I been more frightened -- nor more bewildered as to why people would keep doing something so insane. On the surface, I talked with semi-retired miners. Black Lung had left them sucking shallow gasps and clutching inhalers. Ruined and broken at age 40, some as consolation were drawing their pensions while moonlighting in the mine administrations. The World Bank's famous coal restructuring plans -- where the bank lost hundreds of millions but shrugged and kept lending -- were conditioned on an end to these miners "double dipping" with salaries and pensions. Later, a kilometer underground, I waded through calf-deep water (and ducked under a naked 600-volt wire overhead). I wriggled sideways between a mine wall and a long row of cars (and froze amid a roar of confused shouting as more cars banged into the back of the train, smashing all the cars together and nearly taking off my arm). I crawled for long stretches to watch in by-now abject, animal terror as coal was mined -- basically by causing a coal cave-in, then trucking out the debris. The morning after I woke up feeling as sore as if I'd been beaten with baseball bats. I found myself asking the miners, over and over, why anyone would be a coal miner. This was during the first Chechen war, and even putting aside Black Lung, being a miner had all the risk (and none of the reward) of being a private at the front. Why do it? It's a question that has been asked for far too long. Stephen Crane, George Orwell -- just about anyone who comes into contact with the reality of mining freaks out that anyone is still a miner. I was reminded of this by the recent Ukrainian mine accidents (and President Leonid Kuchma's suggestion the mines be closed); and again when I saw the nine rescued Pennsylvania miners, $150,000 checks in hand from Walt Disney for their story rights, all to a man insisting they'd never go back into a mine. My opinion -- written, alas, on a computer powered by coal -- is that no one ever should. Matt Bivens, a former editor of The Moscow Times, is a Washington-based fellow of The Nation Institute [www.thenation.com]. ******* #4 Wall Street Journal August 12, 2002 Pulp-and-Paper Mill Shows Flaws of Russia's Capitalism By GUY CHAZAN Staff Reporter of THE WALL STREET JOURNAL KORYAZHMA, Russia -- Guards in combat fatigues patrol the corridors. Buses block the entrances. Sentries with red armbands smoke in huddles, debating when the next enemy attack will come. Kotlas Kombinat has the feel of an armed encampment under siege. It is, in fact, a pulp-and-paper mill, one of the biggest in Russia , and the focus of a bitter property dispute involving one of Russia's most powerful businessmen. Russian capitalism has long been subject to violent ownership fights. Armed men in ski masks break down office doors to install new managers, as the old ones barricade themselves in their boardrooms. Factories turn into battlefields as riot police scuffle with workers. There were hopes that President Vladimir Putin, who came to power promising a "dictatorship of law," would put a stop to this. But, old habits die hard. Many of Russia's corporate raiders still use loopholes in the law, a malleable court system and even the threat of armed force to take on their opponents. The man vying for control of Kotlas is metals magnate Oleg Deripaska, whose investment company, Base Element, promotes itself as a model of transparency, openness and commitment to "international norms of economic behavior." Mr. Deripaska, co-owner of OAO Russian Aluminum, the world's second-largest aluminum producer, declared an interest in the Kotlas mill last month, when he announced plans to create a huge forest-products company. As a first step, he said he and his partners had already acquired a 61% stake in Kotlas, one of Russia's three largest pulp and paper mills. But Kotlas's former owner, ZAO Ilim Pulp Enterprise, disputes that claim. Ilim -- Russia's largest pulp producer, with sales forecast to top $1 billion (€1.03 billion) this year -- claims Mr. Deripaska's takeover and the acquisition of the 61% stake were illegal. "It's not just that the bully wants to take our ball, he wants the whole bloody playground," says Frank Graves, a Canadian who serves as Ilim's chief operating officer. The dispute began in April, when an obscure minority shareholder of Kotlas filed a suit against Ilim Pulp in a local court in the Kemerovo region of Siberia, more than 2,000 kilometers away, claiming the company hadn't met its investment obligations. Ilim officials say they were given no notice of the suit, and had no opportunity to organize a defense. The court found in the shareholder's favor, awarded about $113 million in damages against Ilim, and as collateral sequestered its stock in Kotlas. The 61% of shares in the mill were promptly seized and handed over to Russia's State Property Fund, which sold them for a little more than $100 million to Base Element, a bank owned by influential St. Petersburg banker Vladimir Kogan, and a small investment company linked to Mr. Deripaska, Continental Management. On July 5, the new owners met at a chicken factory outside St. Petersburg to elect a new management team and board. Four weeks later, three of their representatives, accompanied by a court bailiff, went to take over the mill. They were backed by two busloads of guards from a local security firm, who waited in Koryazhma for orders. But they found their path blocked by railway wagons and timber trucks parked on the mill's access roads, and by Kotlas's own private security force of 70 guards. When they finally reached the factory offices, they were told they were "closed for cleaning." The new owners' representatives retreated to a Koryazhma hotel and sent their small private army home. They haven't returned. Executives at Base Element were furious. "Kotlas is a part of Russia where Russian law does not apply," says Konstantin Remchukov, a company executive and a close adviser to Mr. Deripaska. "The local authorities have effectively been privatized by" Ilim Pulp. This isn't the first time Mr. Deripaska's business practices have drawn attention. Last year, a group of former competitors filed charges in a U.S. district court seeking damages of $3 billion against Russian Aluminum for alleged murder, bribery, fraud and money laundering. Russian Aluminum has repeatedly rejected the allegations as untrue. The new owners of Kotlas insist they acquired their stake fairly, and have condemned what they call Ilim's "illegal occupation" of the plant. "It's absolutely criminal what they're doing there," says Yuri Sverdlov, Kotlas's new chairman. Ilim's claim -- that the new owners are planning an armed assault -- is "fantastic and absurd" Koryazhma, the sleepy town of 44,000 that is home to the mill, doesn't know quite what to make of the dispute, as the two sides trade insults and accusations in the local media. Many of the 10,000 who work at Kotlas are pulled off regular duties to man patrols. "We don't know whom to trust," says Yuri Kislitsyn, a timber loader. Mr. Deripaska and his associates reject Ilim's claims that they had anything to do with the minority shareholder's lawsuit in Siberia, a region where many of Mr. Deripaska's business interests are concentrated. "I don't even know who he is," Mr. Sverdlov says. Changes to Russian law effective this month require shareholders involved in commercial disputes to bring proceedings to a court of arbitration in the region where the company is based. The changes mean "there'll be fewer opportunities for people in ski masks to seize control of a company," says Veniamin Yakovlev, chairman of Russia's supreme court of arbitration. Meanwhile, Ilim has vowed to fight what it calls an "illegal, carefully premeditated assault by predatory corporate raiders." It hired U.S. lawyers and public- relations consultants, and even asked Mr. Putin to intervene. Base Element says it is trying to find a "civilized solution" to the dispute but insists Ilim must first abide by the court rulings against it. In Koryazhma, the workers' attitudes range from apathy to confusion. "In the end, we don't care who owns the plant, as long as they pay our wages," Yuri Kislitsyn says. "I don't really get all the politics." ******* #5 Date: Sun, 11 Aug 2002 From: Arthur McKee <wamckee1@yahoo.com> Subject: Putin's man at the Post?/6396 Was it just me, or did it seem that Peter Baker's article in Sunday's Post seem like it could have been written by Putin's mythmakers at the Kremlin? The thrust of the article suggests that without the strong arm of the state (i.e., censorship and arrests of political enemies) foreigners" (who Baker, unlike the Post's headline writer, correctly specifies s generally being eople of Caucasian ancestry) will come under attack by jackbooted thugs. Who nows, maybe the thug who elebrates Hitler's birthday as his own will become Russia's Hitler? At least, that is the question that Baker leaves us with -- a question that strengthens the Kremlin's hand not only against the far right, but against his opponents more generally. While the crimes Baker carefully describes are real and frightening, as are the David Duke-inspired Russo-Nazis, surely it could not have hurt to include a bit of context: that Putin's past comrades in arms at the KGB funded Pamiat' to make Soviet communism seem to be the lesser of two evils, that the first candidate to become Russia's Hitler, Zhirinovsky, has essentially been laughed off the political stage as a clown, that the groups that Baker talks about have no more followers as a percentage of the population than do similar groups in the US. Yes -- Russia is less stable, and ethnic violence is proabably more likely to spark a conflagration than in the US. But at the very least these points should be made explicity. Otherwise the Post's readers might come away thinking just what the Kremlin wants them to -- and as Putin's order becomes more entrenched, this is something to be worried about. ******** #6 Date: Sun, 11 Aug 2002 From: LOIS J. DUPEY, ldupey@oz.net ROBERT N. JAEGER, rnj@jaegerdesigns.com Subject: re 6369-Vershbow's Speech Dear David, Please allow just a brief comment, if you would be so kind, on the recent remarks of the Honorable Ambassador Vershbow at the Moscow School of Political Studies (printed in JRL #6369 7/25/02): The Honorable Ambassador's speech was a very important and valuable statement of the U.S. government's perspective on the current state of The U.S.-Russia relationship. It seems appropriate to emphasize when considering the Ambassador's statement, that a reader always consider the source and context of the remarks. While the Ambassador, thankfully, did not "think twice and say nothing" in good diplomatic fashion, he is a professional and did speak in formal, diplomatic language for this public statement. Given that context, one must expect that he would not be particularly speculative. In this specific case, the result seems to be a surprisingly neutral view of the severity of the problems faced by Russia and the USA, both independently and together. The Ambassador pointed out in a very articulate way a set of challenges faced by most countries in the 21st century. These include greater trans-national linkages and cross-border flows of money, goods, travelers, information, disease, crime, WMD concerns and terrorism. He also enumerated additional challenges specific to Russia, including unstable border states, current domestic economic problems, a very uneven distribution of wealth, and the high likelihood of major internal disruptions due to the actions of external states. The Ambassador also succinctly pointed out a range of Russian domestic issues of even greater significance. He mentioned the dramatic increase of HIV and other disease (in some areas exceeding levels in southern Africa), the decline in life expectancy and low birth rates leading to a projected 20% to 30% decrease in population in one generation, and the continuing problems of Chechnya, hatred and intolerance, and civilian human rights violations. Sadly, he did not specifically mention 'excess deaths', or the devastating rise of discarded children and youth. Should a critical number of these challenges not be substantially mitigated in the nearest future, the result could be conditions not unlike those leading to the first and second revolutions, or the great depression. Such grave internal disruptions on the near term ‘event-horizon ’ cannot be prevented from having a similarly great impact on our relationship and on the USA. With respect to the structure for the future, the Ambassador was equally eloquent; "But the determining factor will not be law, but the attitudes of the Russian people to questions of power, freedom, tolerance, and of the kind of country in which they wish to live. Laws can be distorted or ignored, but this is much harder if people believe - and insist - that the law be followed, and the spirit of the law, too." Thus, the responsibility for massive change in Russia is clearly placed on the least capable and most poverty stricken population in the equation. We must not forget leadership's historically critical role in ‘guiding’ the attitudes of the population (leading by example) in all of these questions. The necessity for maintaining predictable, acceptable governance, therefore, may be seen as vital to our own security. The Ambassador continued, affirming that the US-Russia relationship is crucial for us. So, where do we as policy makers, counselors or countries, go? The Ambassador wrote "Now, the most reliable means of ensuring the stability and prosperity of Eurasia is for there to be a Russia that is itself stable and prosperous; a Russia that is content with the international economic and political system because it participates in that system and feels that its voice is heard; a Russia that maintains normal relations with its neighbors based on mutual respect and mutual advantage, rather than on the hegemonic policies of the imperial past; and a Russia that is an effective partner - indeed, an ally - in dealing with the global challenges I mentioned earlier. These are our overarching goals for U.S.-Russian relations." The combination of the above mentioned immediate threats from internal and external players combined with a possibility of internal collapse, any of which could be lethal, was presented without solution. Additionally, the goals the Ambassador has set forth, above, were not presented with any suggested paths or mechanisms to achieve them. This seems to leave us with a very wide gap between the tremendously unstable present and stable, predictable, desirable future. The statement of this dilemma will come as no surprise to any JRL reader. The clear question following the above description is, 'where do we go from here?' If the attainment of these, or similar, goals is actually a national priority, then methods and paths may be designed to bridge the gap, using national and international means. Such objectives might be well-served by quickly implementing, on a large scale, detailed and coordinated programs to empower enterprise development that benefits local communities. Such programs would, if effectively organized by knowledgeable professionals with a track record in the area, make it far less likely for a young woman to be conned into prostitution or slavery, or for a young man to engage in drug trafficking for want of any other viable economic options, or for a man or woman to engage in IV drug use (the main method of HIV infection in the FSU) to escape an unbearable present. Removing the economic conditions that provide easy recruiting grounds for all organizations operating outside of the law, criminal and terrorist, is the most important joint goal that we can have in a partnership. Poverty reduction implemented through enterprise development is the only known long-term solution to the challenges enumerated in the Ambassador's remarks. Such programs require creative approaches and new players that are not wedded to past or present policy failures. That such programs are critical is perhaps not apparent to government policy makers on either side, given the euphoria over what is mistakenly perceived in the West to be unequivocal indicators of a rosy picture of Russia's marking economic progress since 1998. The positive impact of "four straight years of economic growth and steady growth in real income" is surely mitigated by the dramatic and well documented increase in poverty in Russia (and even more so in neighboring former republics) during the period since 1998. As far as the foreign investment climate is concerned, one author can say from personal experience that it is now possible for foreign companies to protect their rights more or less effectively through the Russian courts. A culture of the rule of law (let it be the dictatorship of law, in President Putin’s words) has taken hold in a positive way. Especially, given Mr. Putin's commitment to economic and judicial reform, and increased control over untaxed economic outflows from regions, the investment and taxation climate are very positive by comparison with the early 1990s. This does not, however, excuse foreign companies from operating without consideration or acknowledgement of local conditions and the psychology of a foreign culture. An optimal approach would be for the U.S. government to provide even a tiny fraction of the assistance it provides domestic producers to those American firms that wish to empower economic development in Russia or its neighboring regions in cooperation with Russian companies. Moreover, such assistance, were it to be offered on an openly competitive and transparent basis, ESPECIALLY TO SMALLER American companies with a dedicated commitment to the U.S.-Russia partnership, would contribute to a desirable, new business environment. Changes necessary for economic development, poverty elimination and trans-boundary threat reduction could be facilitated in this way, thus empowering stability throughout the region. Thus, a very direct connection is made between the Ambassador's descriptions of present and future with a solution set understandable to American citizens and politicians, alike. After all, we benefit from expertise and firms which evolved from the CCC and other programs of the 1930's, when our domestic future was not rosy, either. The current US domestic economic model encourages public-private partnerships at all levels of society, with demonstrated successes. Emphasis on this model in the FSU, with small, dynamic, private international groups partnered with official groups and firms in countries of need would likely yield similarly desirable results. Affirmation of this philosophy in words and actions on the part of U.S. officials would go a long way toward increasing mutual trust, based on evidence of desirable performance, and overcoming dangerous misperceptions currently fermenting as a result of other events in the relationship. These events include the perception of a threat from NATO enlargement, and other issues inherent in converting our bilateral security relationship from that of cold war confrontation to warming commercial partnership. These are only some of the concepts and actions that might be considered priorities. No doubt, some are under discussion, but this is certainly not apparent to many observers on either side. Thank you very much for the opportunity to comment. ****** #7 Los Angeles Times August 11, 2002 Harried by the Mob? Reputed crime boss' alleged attempt to rig Olympic skating may be tip of iceberg for international sports. By HELENE ELLIOTT, Times Staff Writer His friends know him as Alik, a businessman who launched himself into the orbit of athletes and entertainers like a satellite. Alimzhan Tokhtakhunov would get player-guest passes for the French Open tennis tournament at Paris' Roland Garros, giving him access to off-limits lounges. He befriended Ukrainian tennis player Andrei Medvedev, who gave him a Mercedes-Benz, and Russians Marat Safin and Yevgeny Kafelnikov. He also was an agent for soccer players, among them goalkeeper Ruslan Nigmatullin of the Russian national team. He liked to live well—he owned houses in Italy and France—and he liked to party, as documented by Russian TV coverage of a 1999 Paris fete whose guest list included NHL star Pavel Bure, Olympic ice dancer Marina Anissina and Russian singer Alla Pugachyova. He was often photographed with Josif Kobzon, a singer known as "the Russian Frank Sinatra." Dark-haired, stocky and not very tall, he doesn't stand out in a crowd. Vladimir Geskin, deputy editor in chief of the respected Russian sports magazine Sport Express, said colleagues consider him "a rather interesting man personally. He's a good storyteller.... He's the kind of person who likes to be near something interesting." A card shark and gambler who operated on the fringes of the law, he found fertile ground in post-Soviet Russia and its far-flung sister republics, where government can't or won't provide basic services. "You're looking at places where the rule of man is stronger than the rule of law," said Sarah Mendelson, senior fellow at the Center for Strategic and International Studies, a nonpartisan institute that focuses on international policy issues. "Corruption is a part of everyday life from top to bottom." Law enforcement officials and those who study crime know Tokhtakhunov as "Taivanchik," or Little Taiwanese, a nickname given him because of the Asian cast to his features. They believe he's a heavyweight who has been involved in illegal arms sales, drug distribution and stolen-car sales. All of which might someday be considered a mere prelude to an alleged crime that has shaken the Olympic movement less for its brazen nature than its implications. In an unexpected twist to an investigation sparked by suspicions that he was laundering money, Tokhtakhunov was charged July 31 in federal court in New York with conspiring to fix two figure skating events at the Salt Lake City Winter Olympics. Described in the criminal complaint as "a major figure in international Eurasian organized crime," he allegedly tried to bribe skating judges and officials to carry out a vote-swapping deal that would give Russian-born Anissina and her French-born partner Gwendal Peizerat the Olympic ice dance gold medal. What he wanted was a visa to return to France, which had expelled him because officials there suspected he had ties to Russian criminals. Born in Uzbekistan, he went to Moscow in the 1970s and met reputed criminals at a Uzbekistan-themed restaurant there. He reportedly had French, Swiss, Israeli and German passports when he was arrested at his Italian home in Tuscany, where he lived with his third wife. "That a Russian can fix the Olympics when Russians fix sports events all the time is not unlikely," said Louise Shelley, director of the Transnational Crime and Corruption Center in Washington and author of more than two dozen books and articles on international organized crime. "To our way of thinking, it might seem illogical. To their way of thinking, it's not," added Shelley, who knew Tokhtakhunov's nickname and believes him to be a crime boss. "It's a question of how you make things work. What is he going to do to change his position when he wants to live [in France] and has real estate investments there? The French haven't been doing so well in the Olympics and there's corruption in their visa process and people are aware they can find holes. It doesn't seem so entirely strange." U.S. and Italian authorities have transcripts of wiretaps in which he allegedly discussed the fix with "a female ice dancer," her mother, and other conspirators. Tokhtakhunov and Anissina have denied wrongdoing, as have French and Russian skating officials. "I've spoken to several people who are specialists in figure skating and they never heard of such a man before," Geskin said. "From my point of view, it's impossible for someone who is not in figure skating to make this [happen]. Maybe sometime he said something about this. He could talk lots, but I'm not sure he could do something. Officials in figure skating in Russia I know, some people say they never heard of him.... In criminal circles, he is a real man, but not in sports." But what if those circles overlap? Rules flew out the window when the Soviet Union broke up and its former republics were thrown into economic chaos. "Communism vaporized and the only people left standing were KGB [secret police] operatives implanted in the capitalistic West, and empowered criminals," author Jeffrey Robinson wrote in "The Merger: The Conglomeration of International Organized Crime," published in 2000. "They were the ones who stepped in to take over." Hockey players who flocked to the NHL to make their fortunes, tennis players and other athletes became natural targets of extortion in the lawless society. "There are so many areas of intersection between sports and organized crime," Shelley said. "Five years ago, I was on '60 Minutes' talking about sports and [illegal sales of] nuclear arms. It was being done through a karate club. Sports people are the only ones allowed out of the country easily." The Olympics long ago lost any pretensions of purity, and ice dancing in particular has been a swamp of scandals. Figure skating appeared to have hit bottom early in the Salt Lake Games, when French pairs judge Marie-Reine Le Gougne said she had been pressured to vote for Russians Elena Berezhnaya and Anton Sikharulidze over Canadians Jamie Sale and David Pelletier. She later changed her story, but Sale and Pelletier were awarded duplicate gold medals. The case was thrown open again by allegations that Tokhtakhunov had plotted to get the French judge to vote for the Russian pair in exchange for a Russian ice dance judge's vote for Anissina and Peizerat. International Olympic Committee President Jacques Rogge declared himself appalled and said the results could be recalculated if the allegations were proven. The U.S. Figure Skating Assn. called for the International Skating Union to form an independent ethics board to review the matter. Although figure skating insiders professed shock, the idea that an Olympic event could have been fixed—or that a criminal or criminal group could have been involved—was no such breach of faith for outsiders. "It's naive to assume professional sports is untouched by this," said Mark Heeler, assistant director of the Nathanson Centre for the Study of Organized Crime and Corruption at Canada's York University. "I don't think it's entirely surprising. It's not unknown in the sports world in the past. It's probably a product of figure skating being such a lucrative business. The popularity of figure skating has grown in the last decade. It makes more sense now from an organized crime perspective." Said Mendelson, "Why would you think it would be outlandish? Of course it's totally possible. Everything we know about the Olympics suggests there's a fair amount of corruption. It's news, but the story to me is corruption in the Olympics, not that the Russian Mafia is involved. "The Olympics are about politics and they have been for a long time. Politics is ultimately a struggle over resources. That Russia is involved is symptomatic of the corruption [in Russia] and in the Olympics." Tokhtakhunov is known to have associated with reputed crime figures, including the singer Kobzon. But it's unclear whether he's tied to what is loosely called "the Russian Mafia," which experts say isn't exclusively Russian and isn't very structured. Robinson called Russia "a full-fledged mafiocracy," with more than 12,000 criminal organizations that have nearly 100,000 members. "There are no pyramid organizational structures, no family ties to unite them, no commission to oversee their activities," he wrote. "Instead, these groups are more like collections of friends and associates who band together for certain crimes, going their own way for others. As a group they may target a specific industry, or just hold onto a specific territory. The term they use is 'zones of influence.' " Alleged incursions into sports by mobsters are impossible to document because fear scares most athletes into silence. But mobsters' existence is well enough known for former German tennis star Boris Becker to have planned to fight a paternity suit last year, after he'd had a sexual encounter with a Russian model in the broom closet of a London restaurant, by claiming the Russian Mafia had stolen his sperm. He scrapped that defense when he admitted paternity and settled before trial. In a more serious vein, Robinson lists NHL players Alexander Mogilny, Vladimir Malakhov, Oleg Tverdovsky and Alex Zhitnik as having been targeted for extortion by reputed mobster Vyacheslav Sliva in the 1990s. He also linked Viacheslav Fetisov, a distinguished player who coached Russia's Olympic team at Salt Lake City, to a company that allegedly laundered money for Vyacheslav Ivankov, a reputed crime kingpin now in jail for extortion. Fetisov was chairman of a company owned by Ivankov, known as "Yaponchik"—little Japanese—but denied any illegal activities. "The NHL took its time before admitting there was a problem," Robinson wrote. "And then, a 15-month investigation by the United States Senate suggested that the extortion of Russian players in the NHL was more widespread than the league was willing to 'fess up to. Since then, Senate investigators have spoken about extortion of Russian basketball players in the NBA and Russian tennis players on the professional tour." NBA spokesman Brian McIntyre said his league knew of no threats against its Eastern European players or threats by the Russian Mafia. Details magazine and a "Frontline" TV documentary produced by PBS and the Canadian Broadcasting Corp. also found links between NHL players and suspected Russian criminals. They also questioned Bure's relationship with Anzor Kikalishvili, labeled a top crime boss by the FBI. Bure called him a friend and denied he had been blackmailed or had paid protection money. NHL spokeswoman Bernadette Mansur said league executives investigated the extortion rumors and found only two proven cases, neither of which involved mobsters. She also said NHL security personnel have toured training camps each year since 1993 to warn players about associating with people they don't know. "There was no instance of any involvement or intelligence about any ties with the Russian Mafia," she said. Mogilny paid $25,000 to silence threats from countryman Sergei Fomitov in 1994, but Mansur said Fomitov was a friend, not a crime figure. Tverdovsky was a target in 1996 when his mother, Alexandra, was kidnapped in Kiev, Ukraine, and held for $200,000 ransom. A former coach of Tverdovsky's was arrested for allegedly ordering accomplices to kidnap her. "I was worried about these things at the time," said Tverdovsky, who was recently traded by the Mighty Ducks to New Jersey. "Usually, when this kind of stuff happens, it was serious people. If that was the case with me, I don't know how it would have ended. In my case, it was a group of people who tried to make easy money. They didn't know what they were doing. That made it easier for [them to be caught].... "I think it is way better now. The country is changing from those times seven, eight years ago when things were out of control. The country is being put back together." Yet, fears remain. Duck forward German Titov lost his father and brother within five months during the 2000-01 season after each died in what he said were "falls from a balcony," although he didn't use the word "suicide." Beyond that, though, he was reluctant to discuss what had happened. Said a Russian player who requested anonymity, "You can't go to Russia and ask these questions. If you do, you don't come back." In the meantime, Tokhtakhunov sits in a Venice, Italy, jail, proclaiming his innocence and vowing to fight extradition to the United States, which will prolong a resolution of the case. "It was maybe a little surprising he was involved in figure skating," the Nathanson Centre's Heeler said, "but maybe making inroads there is easier than in other sports.... It will be interesting to find out later how many people are involved." And whether this was the Olympics' first brush with alleged criminals. Shelley, traveling in Europe last week, said newspapers there gave the story extensive coverage and ran pictures of Tokhtakhunov with reputed mobsters. "The Olympic process has been so corrupt," she said. "There needs to be a lot more oversight of organized crime and the Olympics." Times staff writer Chris Foster contributed to this report. ****** #8 Wall Street Journal August 12, 2002 Russia Denies Peace Corps Visas Amid Domestic Political Pressure By GUY CHAZAN Staff Reporter of THE WALL STREET JOURNAL MOSCOW -- The U.S. Peace Corps is scaling back its operations in Russia after the authorities denied visas to almost half its volunteers. Peace Corps spokeswoman Ellen Field said the organization was "very disappointed" that 30 of 64 volunteers on two-year assignments weren't allowed back into Russia for their second year of service. She said a new group of 62 volunteers scheduled to arrive in Russia next month will now be redirected to other countries. The Peace Corps has 7,000 volunteers serving in 70 countries, involved in clean-water, health and teaching projects. Since it was established by U.S. President John F. Kennedy in 1961, more than 165,000 Americans have joined the Peace Corps, serving in 135 nations. Jeff Hay, the Peace Corps' Russian director, said 700 Peace Corps volunteers have worked in Russia since 1992, mainly teaching English and business. He said the organization receives 150 requests a year from all over Russia for its volunteers. Russia's relations with the U.S. have blossomed since President Vladimir Putin threw his support behind the U.S.-led war against terror in a move that signaled a full-scale realignment of Russian foreign policy toward the West. But within Russia , mistrust of foreigners lingers. Mr. Hay said articles have recently appeared in Russia's regional press accusing volunteers of being spies and ridiculing the organization as a scheme for bringing down U.S. unemployment figures. He said some regions, such as Nizhny Novgorod and Udmurtia in central Russia , have recently pulled out of the program. A Russian Foreign Ministry spokesman refused to comment on the visa issue. "The authorities are not required to provide any explanation for why a visa has been denied," said Vladimir Godina. Last year, several foreigners working for nongovernmental organizations, many of whom had been active in Russia for several years, were barred from re-entering the country. Among them were employees of environmental groups like Greenpeace and charities running schools and orphanages for refugees in Chechnya. The new tougher policy on visas has coincided with a flurry of spy trials targeting academics and businessmen with ties to Westerners. ******* #9 The Russia Journal August 9-15, 2002 Experts worried about Russia Prime-Tass With the United States clearly in a recession, Latin America sliding into a deep crisis and Asia feeling the jitters of a global crisis, Russia still stands out on the world economic scene as nearly a success story. The country is paying off its foreign debt on time, plans no new foreign borrowings next year and still expects the economy to grow this year around 4 percent. But not everything is so bright, economists are saying, pointing to the slowing growth, declining investments and the first signs of fiscal problems. The cure is deeper and faster reform, they say. But with looming parliamentarian and presidential elections in 2003 and 2004 respectively, it appears that there is lack of political will to make the painful decisions needed to push the reforms forward. "The number of warning lights that have started flashing in the last several months is concerning, despite the apparent health of the basic ratios," Roland Nash, head of research with Renaissance Capital investment bank, said commenting on Russia's latest macroeconomic figures. "First and most widely recognized, slowing growth. Industrial production growth has fallen from 5.5 percent in the first half of 2001 to 3.1 percent in the first half of 2002. While recovery in the service sector has partly disguised this in the GDP figures, headline growth is down to 3.7 percent in the first half of 2002 from 5.3 percent last year." Unlike in other emerging markets, in Russia economic growth is fueled mostly by the energy sector, which has been benefiting from relatively high commodity prices on the global market. "The current growth mechanism is not sustainable in the long term," Troika Dialog investment bank commented in the most recent economic report. "In this regard, Russia is at crossroads: if it can modify the existing growth mechanism, then higher and more sustainable growth rates are perfectly plausible in the long term. If not then growth is likely to continue its decline," the report added. Most of investments attracted into Russia in the last few years went into the development of mineral resources or came from the energy sector. With commodity prices volatile and generally falling, it is not surprising to see investments declining as well. While domestic investment rose 18 percent in 2000 and 15 percent in 2001, in the first half of this year investment rose only 2 percent. "The level of direct investments remains appallingly low," Peter Westin, senior economist with Aton investment bank said. "So far Russia has attracted about $22.4 billion in accumulative foreign direct investments, which comes to about $150 per capita, compared to over $2,000 per capita for countries like Hungary, the Czech Republic and Estonia. For many observers this remains somewhat puzzling, as Russia has enjoyed several years of economic and political stability," he added. Westin also said despite upbeat statements by Russian officials about capital coming back into Russia, capital flight remains high. In the second quarter this year, it amounted to $2.7 billion, which is a reduction from the first quarter's $3.5 billion, but 15 percent above the first quarter 2001 level. According to Westin, since 1994, $114 billion or almost $800 per capita has left Russia. Westin said: "President Putin recently called for the government to consider the implementation of amnesty for individuals bringing money back from foreign held assets. However, amnesty alone will not accomplish this. The indisputable prerequisite for halting capital flight and attracting flight capital back in large numbers is the creation of investment opportunities and an improved investment climate." The strengthening ruble is also hurting the economy, analysts said. "With real appreciation at 8 percent a year and wage increases at 20 percent – add to this increased utility tariffs – Russian companies either have to sacrifice profits or price themselves out of the market," Peter Lavelle, a Western economist based in Moscow, wrote recently in The Russia Journal. "The latter increases inventories and lowers demand – and eventually lowers industrial output. The incentive to delay payments is obvious." For the first time since the 1998 devaluation, the non-payment and barter deals are again becoming serious problems. But in many respects Russia is doing better than some of its emerging market peers. In July, the Standard & Poor's international ratings agency upgraded Russia's sovereign long-term local and foreign currency ratings to BB- from B+. At the same time, Standard & Poor's affirmed its single-B short-term local and foreign currency sovereign credit ratings on Russia. The outlook on the sovereign's ratings has been revised to stable from positive. According to Standard & Poor's, the stable outlook reflects the expectation of sustained prudent fiscal and debt management, and further progress in reform implementation. Russia is now standing two notches below investment grade and this helps Russian companies to borrow abroad at relatively cheap rates. "A positive development with a negative twist is the increase in capital in the second quarter brought in by non-financial private enterprises, amounting to $4 billion compared to $2.5 billion in the second quarter last year. About half of the inflow was in the form of foreign loans taken by Russian companies," Westin said. "The fact that Russian companies are able to acquire foreign loans is clearly a product of increased transparency and corporate governance. However, the negative aspect of the increase in foreign loans to Russian companies is the lack of access to domestic financing." Banking reform still has to get off the ground, considering that only 3 percent to 4 percent of capital investments are financed by bank loans. Investors are also concerned about slow progress of structural reforms, the restructuring of gas giant Gazprom and UES power grid monopoly, as well as the full implementation of production sharing agreements. Reforms have begun in key areas including tax, the natural monopolies, land, labor market and deregulation of economy. But the results may fail to impress, analysts said. "Certain regulations were found to be inconsistent, requiring a number of amendments to be passed, some of which have and effect of creating instability and hampering the business climate," Troika Dialog said. "The presence of unreformed public administration has also impeded the general reform process. "The government has been ordered to develop concept for administrative reform by end 2002, but with the 2003 budget already formulated, actual restructuring is unlikely to start before 2004. As a result, progress on reforms through end 2002 and 2003 is likely to be gradual and growth rates moderate." ******* #10 Financial Times (UK) 12 August 2002 Mutual fund blow to Russian markets By Andrew Jack in Moscow Franklin Templeton, one of the world's largest fund managers, is poised to sell off its Russian domestic mutual funds business, in a blow to the country's fledgling equity markets. The decision represents a disappointment for the company, one of the longest established and best-known franchises within Russia since the mid-1990s, as well as an indictment of the slow development of the industry. It comes in spite of President Vladimir Putin's stated commitment to liberal economic reform and the recent launch after long delays of pension reforms that are set to increase considerably the scope for the creation of a domestic fund management industry to help invest employees' long-term savings in equities. Mark Mobius, head of Templeton's emerging markets fund, stressed that his company would continue to invest extensively in Russia on behalf of its global clients through its global and specialist funds, but that the time was not right for its involvement in the domestic mutual fund industry. "There are so many other things to do in Russia, it just did not make sense to keep it going," he said. "It's too early for us. I am not saying there is no potential and there is no question that pension funds will grow, but Russian houses are better prepared to handle them. Our role when Russians are ready will be to invest globally for them," said Mr Mobius. Templeton, which is believed to be negotiating a sale of its funds to other groups including Moscow brokerage UFG, is the latest foreign manager to cut its involvement in the sector, following others such as CSFB. However, several Russian institutions, including Alfa Bank, Troika and UFG, have recently been strengthening their teams. ******** #11 The Sunday Herald (UK) 11 August 2002 Revealed: US plea to Kremlin to invade Romania over bomb In 1989 James Baker met Soviet leaders to ask them to overthrow an east European state to oust dictator Nicolae Ceausescu. Gabriel Ronay uncovers a cold war secret The 'last secret of the cold war,' divulged by a former top Kremlin leader, reveals that President George Bush Senior was just as determined as his son Dubya to use armed force to oust a dictator who had furtively obtained a dirty atom bomb in 1989. Just as George Bush Junior has his sights set on Iraq's Saddam Hussein, Bush Senior urged Moscow to unleash the Red Army to rid Romania of the dictator Nicolae Ceausescu. After the peaceful velvet revolutions in Eastern Europe resulting in the rapid fall of communism in East Germany, Hungary, Czechoslovakia and Bulgaria, the tyrant Ceausescu grimly clung to power and set his murderous Securitate secret police on the peaceful demonstrators in Timisoara and Bucharest. As thousands were being shot in the unequal street battles in December 1989, Bush Senior's hands were tied: however much he wanted, he could not intervene militarily in the backyard of the Soviet Union. The Yalta agreement had made that impossible. Washington's moral outrage against the West's then favourite hate figure forced Bush Senior to send James Baker, his secretary of state, on a secret mission to Moscow to urge the Kremlin to intervene militarily in Romania. Soviet military interventions in East Germany in 1953, in Hungary in 1956 and in Czechoslovakia in 1968 had earned Russia the evil empire epithet coined by President Reagan, Bush Senior's predecessor in the White House. In bestowing this epithet, reminiscent of Bush Junior's axis of evil label, Washington occupied the moral high ground. Yet here was the champion of democracy and torch-bearer of human rights urging the Soviet Union to invade a presumably equally evil communist dictator. For President Gorbachev, this was an unpredictable turn of events . Admittedly, Ceausescu was a dangerous and unstable dictator. But he posed no real threat to the US. Nevertheless, Bush Senior decided that the tyrant must be removed by armed force. Shortly before Christmas 1989, Baker flew to Moscow to ask Eduard Shevardnadze, the then Soviet foreign minister, to invade Romania. 'The Kremlin was startled,' revealed Shevardnadze, speaking for the first time about the US's invasion call in the Georgian capital of Tbilisi. Shevardnadze is now the president of independent Georgia and is apparently not bound by the rules of secrecy of former top Soviet officials. He told President Iliescu of Romania during his state visit to Tbilisi last month that, 'in 1989, the Kremlin firmly rejected the suggestion of my American counterpart that the Soviet Union should intervene militarily in Romania'. He added that Russia had repudiated the Brezhnev Doctrine of limited sovereignty, which -- not unlike the US's Monroe Doctrine -- gave Moscow a fig leaf of legality to intervene anywhere in the Soviet bloc where allegedly socialism was in danger. The veracity of 'the last secret of the cold war' was confirmed by a spokesman of President Iliescu in Bucharest. 'At a moment in time which was decisive for our national destiny, and when thousands of Romanians were being killed and wounded in the people's uprising against the Ceausescu dictatorship, the Georgian-born foreign minister of the Soviet Union firmly rebutted his American colleague's suggestion of a Russian invasion of Romania. We thank him for it now,' the Romanian presidential spokesman said. Recently, the Sunday Herald uncovered incontrovertible proof that, shortly before his overthrow and execution, Ceausescu's scientists had developed a nuclear capability. With its east European empire in terminal crisis, the Kremlin was alarmed but reluctant to act. Washington wanted military action. Ever since the bloody overthrow of Ceausescu, during which Moscow-backed communists like Ion Iliescu, Romania's present president, were deeply involved, there have been rumours that in the last days of Ceausescu's rule Romania had the technological know-how to produce atomic weapons. A recent report by Russia's FSI external intelligence service, based on the secret archives of the KGB, confirms communist Romania's nuclear capability. The report, obtained by the Bucharest daily Ziua, reveals a hitherto unknown facet of Ceausescu who, in his heyday, was a signatory to the nuclear non-proliferation treaty and a vociferous opponent of arms of mass destruction, be they in the East or in the West. In 1985, while publicly backing the West's unilateral nuclear disarmers, he ordered a crash nuclear arms programme with no expenses spared even though Romania was bankrupt. Four years later, he had his weapon of mass destruction. In May 1989, scientists at Romania's secret nuclear research centre at Pitesti, disguised as a chemical plant, crossed the nuclear threshold and produced 2lbs of arms-grade plutonium sufficient for a dirty atom bomb. However, the Balkan dictator had joined the Rogue States' Nuclear Club with the help of US technology and aid, provided by the US to Romania to discomfit the Soviet Union. Ceausescu's nuclear ambition only got off the ground with the help of enriched uranium supplied by America for research purposes to Bucharest, and a Triga-II nuclear reactor, also of US origin, according to the FSI report. ****** #12 Turkmenistan celebrates Melon Day ASHGABAT, Turkmenistan, Aug. 11 (UPI) -- Residents in the former Soviet republic of Turkmenistan attended festivities Sunday to celebrate Melon Day, a holiday that aims to revive the country's millennia-long tradition of melon growing, Russia's RIA Novosti news agency reported. President Saparmurat Niyazov decreed in 1994 to establish a national holiday that would boost the image of Turkmenistan as one of global leaders in melon growing. Today, the Central Asian nation, which has a population of 4.5 million, is mostly known for its extensive oil and gas reserves and its president who possesses almost unlimited powers and enjoys a personality cult rivaling those of former Soviet leaders Lenin and Stalin. To a savvy botanist, however, Turkmenistan is the home to a number of rare varieties of melon first, and only then a one of world's most authoritarian regimes. Turkmen archeologists assert the history of melon-growing in the region dates as far back as 4th century B.C., RIA Novosti said. The fact is witnessed by the melon seeds discovered at the ruins of the ancient city of Gyaur-Kala, which existed at the time. According to RIA Novosti, one of Turkmenistan's most famous selectors Durda Nepesov grows at least 100 different sorts of melon on his own plot of land. Throughout the country, the number of varieties of the crop reaches 400, the report added. The figure is even more impressive because 80 percent of the country is occupied by the Kara Kum desert. Ak-tak, Bakharman, Garrygyz, Gulaby, Bareng, Zamna, Subkhany are only a handful of trademark names of various sorts of melon that through centuries have earned Turkmenistan the nickname of the sweetest place on Earth. Ancient history books keep record of Arab traders who gave money, gold and even lands in exchange for imports of Turkmen melon. Today, melon -- as well as watermelon and gourd -- is grown chiefly in the Chardzhou and Tashauz provinces. These three crops combine for a total of over 215,000 tons produced annually on plantations spreading over 23,000 hectares (56,810 acres) of land. Hot, sunny weather and long summers contribute to one of Turkmen melon's most distinctive features -- high sugar content, which touches 18 percent. The revival of melon-growing is part of the Turkmen government's program to revitalize its agricultural sector, which has been given the task of providing the country with all basic food staples by 2005. Once the chief supplier of melon to the markets throughout the former Soviet Union, Turkmenistan suffered as the Communist-led empire collapsed. The union's disintegration dealt a heavy blow to the struggling economies of former Soviet provinces as transportation tariffs skyrocketed, urging farmers and other agricultural workers to give up long-distance deliveries and sell their produce locally. ******* 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