Johnson's Russia List
#6562
21 November 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org

[Contents:
  1. AFP: Russian lawmakers change election rules to keep small parties out.
  2. AP: Putin Urged to Reject Law Amendments.
  3. Interfax: Russian political scientist suggests Saddam could become 
US ally. (Sergei Markov)
  4. Voice of America: Peter Heinlein, Danish to Hold Public Debate on 
Chechnya.
  5. Moscow Times: Anders Aslund, How Russia Was Won.
  6. Moscow Times editorial: Russia Needs an Alliance of Its Own.
  7. In the National Interest: Damjan de Krnjevic-Miskovic, Russia, Iraq and 
Resolution 1441.
  8. Moscow News: Grigory Yavlinsky, "Good Tsar" as a Risk Factor.
  9. gazeta.ru: Nord-Ost inquiry fails to impress Putin.
  10. pravda.ru: Stalin's UFOs. Joseph Stalin insisted that the USSR outpace 
America with its space program.
  11. The Prague Post: Michael Mainville, Russia seeks alliance support. 
Moscow wants NATO approval of campaign against Chechen rebels. 
  12. RFE/RL: Zamira Eshanova/Antoine Blua, NATO: Central Asian Presence 
Underscores Ties.
  13. AFP: Russia seeks to track down Chechen missiles.
  14. Reuters: Citibank opens Moscow branch, targets middle class.
  15. Kommersant: Foreign Miniter Igor Ivanov, WHAT WORLD DO WE NEED?
  16. RIA Novosti: SHANGHAI COOPERATION ORGANIZATION: A CAT LEARNING TO CATCH 
MICE.] 

*******

#1
Russian lawmakers change election rules to keep small parties out 
November 20, 2002
AFP

Russian lawmakers changed the rules on elections Wednesday to make it harder 
for smaller political parties to enter the lower house of parliament by 
raising the minimum share of votes required from five to seven percent. 

The change, which was strongly backed by President Vladimir Putin's 
administration, won by a 274-58 vote and will go into effect in the 2007 
State Duma parliamentary elections. 

Condemned as anti-democratic by human rights groups, the bill must still be 
approved by the Federation Council upper house of parliament, where a 
favorable vote is seen as a formality, and be signed by Putin before coming 
into force. "We are frequently being accused of being anti-democratic, but 
there is nothing anti-democratic about this legislation at all," said one of 
the bill's authors, Andrei Isayev, who represents the main pro-government 
block called United Russia. 

"The new barrier still takes into account that at least four different 
parties must be represented in parliament at any one time," he observed. 

The election change is aimed at keeping smaller parties out of parliament and 
is likely to help pit forces allied to Putin against the weakened Communist 
Party, which remains the Duma'a largest despite being consistently outvoted 
by the pro-Kremlin majority. 

Putin, like his predecessor Boris Yeltsin, has no political party affiliation 
although a clutch of centrist factions have united behind the Kremlin to form 
what the media brands "the party of power" that has assembled into the United 
Russia group. 

Their leaders include Moscow Mayor Yury Luzhkov, Mintimer Shaymiyev, the 
influential president of the semi-autonomous republic of Tatarstan, and 
Sergei Shoigu, Russia's longest-serving government minister. 

Even one of Putin's main opposition forces, Grigory Yavlsinsky's Yabloko 
party, voted for the measure Wednesday amid apparent calculations that they 
are likely to sneak past the seven percent barrier at the next vote. 

"We think this is an anti-democratic bill, but it will only go into effect in 
2007 and there are some other useful amendments in this measure, so we 
decided to vote for it," the Yabloko party's deputy head Sergei Ivanenko 
said. 

The move has also been backed by the Communists, who are gambling on winning 
more seats from an election change that marginalizes their smaller leftist 
opponents. 

Russia's new voting rules maintain many of the earlier arrangements: half of 
the 450 Duma seats will be decided in regional elections, and the other 
through party lists reflecting a national proportional representation of 
votes cast for candidates linked to the various parties. 

A 25-percent turnout is required for the Duma elections to be recognized as 
valid, and a vote is to be held every four years on the second Tuesday of 
December. 

The next Duma elections have been scheduled for December 14, 2003, and the 
presidential vote for March 14, 2004, an election in which Putin is running 
as an overwhelming favorite. 

But the Duma took several other steps to accommodate Putin's express wish to 
limit the number of parties that appear on the election ballot and which, in 
earlier elections, stood in large numbers. 

The parties will now only be registered in elections if they have established 
offices in a majority of Russia's 89 regions. 

However parties that do qualify for the Duma vote will see their funding from 
the federal budget triple from two to six billion rubles (around 200 million 
dollars). 

******

#2
Putin Urged to Reject Law Amendments
November 20, 2002
By ERIC ENGLEMAN

MOSCOW (AP) - Russia's leading news organizations, including state 
television, urged President Vladimir Putin on Wednesday to reject tough new 
restrictions on terrorism coverage adopted by parliament following the Moscow 
theater siege.

Amendments passed by both houses of parliament - and awaiting Putin's 
approval - would prohibit the news media from reporting any information seen 
as hindering anti-terrorist operations and would ban the broadcast or 
publication of rebel statements.

Thirty organizations, including Russia's two main state-controlled television 
channels and their independent rivals, signed a letter to the president 
urging him to reject the measure.

Critics say the restrictions are an attack on free expression and would be 
open to abuse, since it's not clear who would evaluate the coverage, what 
standards they would use or how violations would be punished.

``We agree that some of the actions of journalists and mass media 
organizations during the latest terrorist act in Moscow were incorrect,'' the 
letter said.

But the restrictions would result in the ``elimination of objective coverage 
of events,'' said the letter, signed by an array of news outlets, publishing 
houses and free-speech groups.

The head of Putin's own human rights committee, Ella Pamfilova, also called 
on the president to reject the restrictions, saying they could ``seriously 
affect the rights and liberties of citizens.''

Lawmakers passed the amendments following the Oct. 23 raid of a Moscow 
theater by Chechen militants.

Russian special forces stormed the building three days later, killing 41 
militants. At least 128 hostages also died from the effects of a narcotic gas 
used to knock out the rebels.

The amendments would prohibit news organizations from revealing tactics used 
in operations such as the storming of the theater or covering the people 
involved. They would also ban the airing of statements by militants or 
``propaganda or justification of extremist activity.''

Many journalists say the restrictions could be used to shut down any news 
organization that irks authorities. They also complain that the restrictions 
could be used to further restrict coverage of the war in Chechnya - which 
Russian officials routinely refer to as a ``counter-terrorist operation.''

The amendments ``make it possible for coverage of any event, as our lawyers 
say, to be declared anti-government,'' said Alexei Venediktov, editor in 
chief of Echo of Moscow radio.

During the theater siege, authorities complained to Echo of Moscow after it 
aired a live interview with a hostage-taker and posted the text of that 
interview on its web site. Officials also briefly shut down a Moscow 
television station during the crisis, accusing it of broadcasting information 
of possible escape routes for the hostage-takers.

Russian Press Minister Mikhail Lesin, who met with journalists Wednesday who 
signed the letter to Putin, did not reveal Putin's plans but said the 
government and media need to work together to draft new media regulations for 
``emergency situations.''

``The sooner we draft them, the easier it will be for the media to work,'' he 
said.

*******

#3
Russian political scientist suggests Saddam could become US ally  

MOSCOW. Nov 19 (Interfax) - Iraqi President Saddam 
Hussein could become a tactical ally of the United States under certain 
conditions, Director of the Institute for Political Studies Sergei Markov 
has said 
   Markov told Interfax on Tuesday that this might happen in the event of 
a sharp surge in the radical Islamic movement in a neighboring Arab 
country, for instance, Saudi Arabia, where the Saudi monarchy may be 
overthrown by more radical Wahhabites. 
   "This is quite a viable option if we remember that many analysts 
called Pervez Musharraf's regime in Pakistan with its nuclear bomb and 
Saudi Arabia's regime with its money and control over vast oil resources 
the main target of the September 11 attacks," Markov said 
   He noted that "the Iraqi president holds a strong hatred towards 
radical Islamists, whose movement he earlier literally uprooted in the 
country." The political expert stressed that Hussein might become a key 
member of the anti-terrorist coalition against Islamists. 
   "Thus, should a sharp surge take place in the radical Islamic movement 
in the Middle East, the United States and Iraq would have a common enemy, 
while Washington would need an ally in the face of the Iraqi leader," 
Markov suggested, adding that, in this situation, the United States would 
abandon its plans for action against Baghdad. 
   Commenting on the current situation, he suggested that a war will 
unlikely begin in Iraq within the next few months (the arrival of 
international weapons inspectors will delay it), although Hussein's 
ouster seems unavoidable today. 

*******

#4
Danish to Hold Public Debate on Chechnya
Voice of America
November 20, 2002
Peter Heinlein
Copenhagen

The Danish capital, Copenhagen, will host a public debate on Chechnya
Friday. The gathering comes less than a month after Denmark infuriated
Russian authorities by allowing a world congress of Chechen exiles to be
held, days after Chechen rebels seized a Moscow theater. This second
meeting will be held in the Danish parliament.

The Danish Socialist People's Party is sponsoring the day-long debate,
along with a loose-knit group organized to support the detained Chechen
envoy Ahmed Zakayev. Mr. Zakayev, an actor who served as minister of
culture in the Chechen government headed by separatist leader Aslan
Maskhadov, was arrested last month in Copenhagen after Russia requested his
extradition on terrorism charges.

Socialist People's Party chairman Holger Kogh Nielsen says the Friday
debate is being held to keep the Chechen issue in the public eye as Danish
authorities consider the merits of the Russian extradition request. 

Among those scheduled to participate are at least one member of the lower
house of Russia's parliament, representatives of a Russian anti-war group
known as the Soldiers' Mothers' Committee, and actress Vanessa Redgrave, a
friend and supporter of Mr. Zakayev.

A court ruling on the Russian extradition request is expected next week.
Danish officials said Tuesday the evidence sent by Moscow to support the
request was insufficient, and contained inconsistencies in translations. A
justice ministry official said the Russian documents do not fulfill the
formal requirements under the European Convention on extradition. He said
the ministry has asked Russian authorities for further clarification.

The request is based on allegations that Mr. Zakayev committed crimes from
1996 to 1999, during the time he served in the Maskhadov government. That
government was later dismissed by the Kremlin, which declared its election
invalid and installed its own pro-Moscow administration. 

*******

#5
Moscow Times
November 21, 2002
How Russia Was Won
By Anders Aslund  
Anders Aslund, a senior associate of the Carnegie Endowment for
International Peace and author of "Building Capitalism: The Transformation
of the Former Soviet Bloc," contributed this comment to The Moscow Times.
 
Four years ago, Russia was riveted by a horrendous financial crash. Today
that is difficult to believe. The standard judgment now is that this was
precisely the wake-up call that the country needed. 

Russia is not only a very stable economy but also a remarkably dynamic one.
After three years of average economic growth of 6.5 percent per year, the
worry is that economic growth will stop at 4 percent this year. The budget
is in surplus; trade and current account surpluses are huge, and the
government's external debt has fallen below 40 percent of GDP. Seldom has a
crisis been resolved more successfully.

Strangely, in his much-hyped new book, "Globalization and Its Discontents,"
the Nobel prize-winning economist Joseph Stiglitz has a chapter titled "Who
Lost Russia?" Stiglitz's answer is the International Monetary Fund and the
U.S. Treasury Department, which encouraged Russia to pursue the policies of
the "Washington consensus," involving price and trade liberalization,
financial stabilization and privatization. His overall judgment is "that
Russia's kind of ersatz capitalism did not provide the incentives for
wealth creation and economic growth but rather for asset stripping" -- a
statement that is soundly contradicted by the current reality. 

Stiglitz complains that the IMF compelled Russia to undertake excessively
radical market reforms, but objective measurements undertaken by the
European Bank for Reconstruction and Development show that Russia carried
out its reforms far slower than the early reformers in Central Europe and
the Baltics. Reforms were impeded by the Communists and their allies in the
State Duma. Only after Russia's reforms had advanced sufficiently far did
they breed economic growth, and the August 1998 crisis helped the country
cross the critical threshold.

While Stiglitz accuses the IMF of complete failure in the financial crisis,
the IMF action appears a remarkable success in hindsight. Russia's problem
patently was an excessive budget deficit of about 8 percent of GDP. To
finance it, the government took too many domestic and foreign credits,
which was the main cause of the August financial crash. 

Stiglitz argues that the exchange rate was grossly overvalued, but in fact
Russia never had a current account deficit. Another alleged problem was tax
collection, but the government has persistently collected one-third of GDP
in taxes -- exactly the U.S. level. 

Instead, the real budgetary problem was the enormous, corrupt subsidies
handed out to enterprises, and the main regulatory problem has been the
arbitrary and lawless extraction of taxes.

In the summer of 1998, Russia had a reformist government under Prime
Minister Sergei Kiriyenko. Together with the IMF and the World Bank, his
government concluded a radical economic crisis program. The IMF issued a
first loan of $4.8 billion, showing that it was serious about helping
Russia. Alas, although the country was on the brink of disaster, the
parliament refused to adopt the necessary fiscal legislation. 

The gravediggers consisted of three powerful groups: the "oligarchs,"
regional governors and the Communist Party.

As a consequence, the state's finances had become untenable by August 1998.
The IMF and the U.S. Treasury concluded that the political mandate for the
necessary fiscal tightening was absent and refused to provide more funds.
The government defaulted on its domestic debt and devalued sharply, and
society was dealt a tremendous shock. At first, it appeared as if market
reforms were over, as several Communists entered the government -- but soon
the tables were turned. 

The oligarchs lost both money and reputation, and have since been distanced
from central power. The regional governors, who were rightly perceived as
the kingpins of corruption, have since lost half their financial resources
to the federal government. The Communist Party felt the political wind
before the December 1999 parliamentary elections and adopted a market
economic program, but even so it lost badly in the elections. For the first
time, the parliament emerged with a solid reformist majority, which has
driven reform ever since.

Immediately after the crash, the government had little choice but to cut
public expenditures -- essentially the huge enterprise subsidies -- as all
sources of financing had dried up. By insisting on payments in real money,
the government swiftly reduced barter. 

The new parliament and newly-elected President Vladimir Putin seized on
this wave of market economic sentiment, undertaking one fundamental reform
after another. They introduced a flat personal income tax of 13 percent and
a corporate profit tax of 24 percent, undertook judicial reform, legislated
private ownership of land and adopted new banking laws, a new labor code
and much more. Surprise, surprise, it turned out that capitalism worked in
Russia as well.

Today, it is all too evident. The financial crash of 1998 taught Russia the
necessary lesson. It demonstrated how socially costly it is to abandon the
narrow path of good economic policy, and a broad market economic consensus
has penetrated the Russian mind. 

In effect, the Kiriyenko-IMF program of July 1998 has been implemented ever
since, and the results are impressive by any standard, showing that a
market economy can work wonders in Russia as well. The country has returned
two-thirds of the credits it received from the IMF. 

Many economists have disputed the importance of speedy privatization, but
the Russian economic expansion is entirely driven by private enterprises
with concentrated ownership. 

The original form of privatization, which is Stiglitz's main preoccupation,
appears ever less significant, as many corporations have changed hands many
times (because private property can be transferred through sales or
bankruptcy). The emerging conclusion is, on the contrary, that it does not
matter how an enterprise is privatized -- no strategic restructuring
appears possible before its privatization.

*******

#6
Moscow Times
November 21, 2002
Editorial
Russia Needs an Alliance of Its Own

Seven nations will be officially invited to join NATO on Thursday,
expanding the world's most powerful military alliance, which was originally
set up to counter the Soviet threat, to stretch hundreds of kilometers
along Russia's borders.

All but one of the prospective members (Slovenia) used to be Soviet turf.
Three are former members of the now defunct Warsaw Pact, while another
three used to be republics within the Soviet Union. "As a matter of fact,
the Warsaw Pact is becoming part of NATO," U.S. President George W. Bush
noted before departing for Prague.

Of all former Warsaw Pact members, only Russia will remain outside NATO.
Yet Moscow's reaction to the latest expansion has been low-key, especially
when compared to the critical salvos fired during the previous wave of
eastern expansion. 

The reason for such a phlegmatic reaction to the fact that NATO will now
stand only 100 kilometers from St. Petersburg is clear. Never before have
relations between post-Communist Russia and the West been better. But these
relations are mostly based on the personal chemistry between President
Vladimir Putin and his friends George and Tony. All three are popularly
elected leaders and one can only hope that relations will remain as cozy
and productive when their terms in office end.

But rather than rely on the personal friendship of leaders who come and go,
the United States and its allies should work to anchor Russia to the West
on a sustainable institutionalized basis.

One way to institutionalize this relationship would be to empower the Group
of Eight, since it seems unlikely that Russia will either ask for an
invitation to join NATO or be offered one. Russia has an equal voice in the
G-8 and would welcome a transformation of this largely rhetorical club into
a powerful alliance with rapid-reaction capabilities to battle terrorism,
contain proliferation and mediate conflicts, such as the one between
nuclear-capable India and Pakistan, before they evolve into a war.

The establishment of a security alliance on the basis of the G-8 was first
proposed in the wake of 9/11 by a trio of foreign policy experts: Graham
Allison, director of the Belfer Center for Science and International
Affairs at Harvard University; Sergei Karaganov, chairman of the presidium
of the Council on Foreign and Defense Policy, in Moscow; and Karl Kaiser,
director of the German Council on Foreign Relations, in Berlin.

They also suggested that such an alliance could be used to bring China,
whose economic ascent has sent nervous jitters across the world, into the
fold. Perhaps it's time to give this idea some serious thought.
 
*******

#7
From: Nikolas Gvosdev (gvosdev@nationalinterest.org)
Sent: Wednesday, November 20, 2002 
Subject: In the National Interest/de Krnjevic-Miskovic on Russia, UN, Iraq

Russia, Iraq and Resolution 1441
By Damjan de Krnjevic-Miskovic
Damjan de Krnjevic-Miskovic is a Washington-based columnist for the Russian
daily Izvestia and a fellow at the Karic Institute for Strategic Studies
and Development in Belgrade, Serbia.

With the unanimous passage by the Security Council of a tough and intrusive
mechanism of inspections and failure-to-comply consequences on Baghdad, the
world has poised itself to disarm Iraq. After weeks of speculation, Russia
chose to side with America against Iraq. Yet all was in doubt until the
final minutes. In the end, President Putin held onto the policy clearly
established by his foreign minister, Igor Ivanov, in these pages, namely,
that "Russia would not allow any potential disagreements over Iraq to
interfere with the progress of the Russian-American relationship", adding
that both regimes shared the view that "an Iraq possessing WMD would pose a
threat to global security, especially if such weapons found their way into
the hands of terrorists or extremists." (Cf.
http://www.inthenationalinterest.com/Articles/vol1issue3Ivanov.html) 

As such, Putin's choice was rooted in a realization that siding with
America against Iraq (despite strong pressure from narrow-minded domestic
commercial interests and Cold War nostalgics) amounted to a defense of
Russia's national interests. This choice is perfectly in line with the
fundamental strategic choice of his presidency to abandon Russian delusions
of geopolitical grandeur and plunge Russia headfirst into cooperation and
integration with the West.

Putin saw months ago that America probably would have attacked Iraq with or
without his country's support (as well as that of France and other members
of the UN Security Council). He also saw that the United States would
choose to go it alone only after a Security Council veto. This meant that,
at least for now, Colin Powell and his brand of realpolitik has won the day
over the Administration's neo-conservative hawkish unilateralism. Putin's
strategy was to make sure Powell would prevail, so as best to take careful
advantage of the healthy conservatism that was at play in Bush's strategic
thinking9for maximum benefit to Russia's national interests.

Putin's diplomatic brinkmanship constituted the Kremlin's strongest signal
yet to the Bush Administration that, in its view, Washington had gone too
far in its flirtation with a general doctrine of pre-emption. In Putin's
and Igor Ivanov's assessment, the September 2002 National Security Strategy
was in truth an argument for the broad power of waging preventive war
against any perceived enemy, no matter how distant the actual threat may
be. Foremost, Putin was making it clear to the White House that Russia did
not accept such an international security doctrine.

At the same time, Putin signaled with his country's vote that in the
specific case of Iraq, the insistence upon an unprecedently intrusive
inspections regime is acceptable. Disarming Iraq, by force if necessary,
before the appearance of more weapons of mass destruction, is a strategic
imperative for both countries and the rest of the civilized world.

Resolution 1441 declares that Iraq is in "material breach of its
obligations" to the 1991 Gulf War cease-fire agreement with the United
Nations. This means that the cease-fire is no longer valid as a matter of
international law. That being said, 1441 "afford[s] Iraq [`] a final
opportunity to comply with its disarmament obligations" by setting up an
"enhanced inspections regime" that is designed implicitly to fail9if we
assume that Saddam Hussein has not taken a figurative walk on the road to
Damascus.

Resolution 1441 effectively ends with a "warn[ing]" that "serious
consequences" (i.e. the use of force) can result without the necessity of a
further resolution authorizing its use. This means that as early as the
waning days of December (23 December is the date by which the inspectors
must begin their work and can begin to verify the accuracy and completeness
of Iraq's list of programs to develop and deliver WMD and such, itself due
8 December), Iraq could find itself facing the imminent use of American and
allied force. The cease-fire will have been understood as being
definitively broken and hostilities could resume without legal impediment.

War is still avoidable and I pray it can be avoided; but if it comes, and
come I fear it will, it will not have arisen in the name of America's
previously stated objective to change the Iraqi regime into a successful
desert democracy (something without historical precedent), but rather
because of the international community's commitment to destroy the
multiplying tools of tyranny, instability and insecurity. This would be in
line with what men like General Charles Boyd have been saying for a while:
"what is worrisome about Saddam Hussein, however, is not Saddam Hussein
himself. It is Saddam Hussein in possession of weapons of mass
destruction." (See his remarks in In the National Interest at
http://www.inthenationalinterest.com/Articles/Vol1Issue1/Vol1Issue1Boyd.html) 

By not vetoing the resolution, Russia has granted to the United States and
Great Britain the right to organize a coalition of the willing the moment
Iraq obfuscates or equivocates. The resolution therefore fully supports
Washington's claim that Iraq has brought this conflict onto itself. Russian
support acknowledges that this time, the political will in the White House
to see the thing through to the end is present.

The vote signals that Putin understands that had Russia not joined America
at this critical juncture, the Security Council would have become
irrelevant, making it easier for the United States to initiate actions
Russia and other powers might have considered unilateralist adventurous
expeditions. Exercising the Russian veto, in other words, was neither in
Russia's national interest nor in America's. An America moderated by allies
and partners, and thus more inclined to take seriously Westphalian
principles, is to be welcomed by Russia and Americans concerned with their
country's possible slip toward an "empire of democracy."

In short, Russia's acquiescence and even support for this war will renew an
international security climate built on the rational principle of
realpolitik, with stability, the balance of power and the war on terror as
its centerpieces.

******

#8
Moscow News
November 20-26, 2002
"Good Tsar" as a Risk Factor
By Grigory Yavlinsky
  
This article was finished several days before the Nord-Ost tragedy. The 
hostage stand-off and everything that happened around it shook society. Yet, 
in less than a week the requiem gave way to political bravura. The country 
was swept by a wave of flag-waving and even militarist hysteria that drowned 
any calls for a sober analysis of the political situation. Meanwhile, far 
from disappearing, the need for such analysis has become even more pressing.
Unofficial Economy

Russia has yet to put in place an economic mechanism representative of a 
democratic market economy. Russia's economy today is a mixed economy - not, 
however, in the sense in which this term is used in economics, but in a 
rather specific meaning: an economy wherein the very logic of economic 
behavior is mixed. It is capitalism and not quite capitalism or, in a way, 
not capitalism at all. It is not a rule-of-law democracy nor is it the 
criminal free-for-all as it might appear at times. It is a society that has a 
little bit of everything - the force of law, the force of custom, political 
arbitrariness, and crime. Society lives according to some time-serving 
notions - that is to say, an array of rules that defy common logic and are in 
a state of flux.

Many relations and institutions, incompatible with the modern ideas of an 
effective market economy, that have existed in Russia since Soviet or even 
pre-Soviet times, are not so much a relic of the past as a full-fledged 
element of the current economic system. A symbiosis of corrupt bureaucracy 
and opaque business practices is still the determining factor in the use of a 
substantial part of national resources. The country's budget, even if now 
placed on a far sounder foundation than before the 1998 crisis, remains 
dangerously predicated on the financial status and bargaining positions of 
one or two dozen companies in the raw-materials and infrastructure sector 
exploiting the nation's natural resources and at the same time being 
virtually outside public control. Meanwhile, the ostensible well-being in the 
banking sector hinges to a very large extent on disingenuous methods of 
financial accountability and control.

Bureaucracy is unofficially supported with large chunks of the "shadow 
budget" formed by oligarchic structures that in return obtain executive 
decisions which bring them incomes hundreds of times as large.

On the micro-level, economic activity in Russia is not a consistent 
transition from a totalitarian-state command economy to a "normal" Western 
society, but rather an odd mixture of diverse types of institutions and 
relationships - modern and traditional, market and pre-market, legal and 
illegal, civilized and based on outright violence, and so forth.

Ask any Russian businessman what laws he lives and operates by, and, if he is 
sincere, he will not be able to formulate a clearcut answer - first of all, 
because there are no uniform rules in Russia whose observance would enable a 
businessman (or, for that matter, any socially active citizen) to count on 
success and a relative measure of security. In some areas he acts on the 
basis of official law, in some he relies on force, in some he trades on the 
inertia of accustomed relationships, and in some he simply gropes for a form 
of conduct adequate to the circumstances by the seat of his pants.

A stagnant social system of a corporate-criminal type with an extremely 
inefficient segmented market and without a mechanism for long-term 
reproduction and augmentation of economic resources is becoming for 
present-day Russia a more realistic prospect than its alternative - a state 
based on the rule of law with an open, dynamic economy and a responsible 
political and economic elite.

Furthermore, this system has intrinsic stability: It is capable not only of 
self-reproduction but also of a measure of development, as evidenced by the 
relative success stories of the past three years. Formation of a substantial 
stratum of influential people and groups with vested interests deriving 
considerable personal benefit from it has greatly consolidated the system. 
Virtually the entire Russian elite is, in one way or another, beholden to the 
existing setup and cannot destroy it without direct or indirect damage to 
itself.

This concerns not only the top level of state and government officials or the 
so-called oligarchs - old or new. Groups of interests whose interaction is a 
key factor in the current patterns of economic activity are only partially 
linked with official power structures on different levels. The main 
prerequisite enabling this or that group to participate in shaping economic 
practices is effective control over particular resources - economic 
territories, elements of infrastructure, able-bodied population, and monetary 
resources.

Interest groups can be based on different principles - territorial, 
industrial, corporate, clannish, etc. They can have different degrees of 
internal integration and various forms of specific organization. These can be 
official power bodies or semiofficial structures, including public monopolies 
on different levels, or large private enterprises or various financial 
structures with a specific share of participation by the state or criminal 
gangs.

For all the diversity of their forms, these structures have two basic things 
in common: effective control over the principal economic resources and the 
predominantly extra-economic character of this control. The key element of 
this control is the physical ability to facilitate or impede the use of 
resources to derive income. Importantly, this control is based not so much on 
legally acquired property rights as on the possibility to coerce those who do 
not recognize the group's right to control a particular area.

Another distinguishing feature of such structures is that their members very 
rarely derive income directly from the use of economic resources. They 
typically confine themselves to delegating the right to use these resources 
to other organizations, and are content to receive rental income (in the form 
of various contributions, bribes, fees, regular or irregular tributes, and so 
forth). This is not to say, of course, that all top level officials without 
exception accept bribes or embezzle public funds. The system is so built as 
to allow administrative resources to be used in more ingenious, non-criminal 
ways. True, this does not alter the essence of the phenomenon, which consists 
in deriving income not from productive activity but through affiliation with 
a particular corporate community.

In recent years, the economic system which evolved in the Yeltsin era has not 
only consolidated but also acquired a stability, which makes it possible to 
formulate its basic socio-political characteristics.

1. A substantial, if not predominant, role of informal relationships: a 
colossal gap between existing laws and economic reality.

The economic "game" follows its own rules that have evolved in the past 
decade and are more or less faithfully obeyed, on pain of "spontaneous 
sanctions," by all players. That said, the norms of official economic law 
apply insofar as they do not come into conflict with the unofficial norms of 
economic behavior. The aggregate of these rules plus economic activity based 
on these rules is fairly accurately reflected by the term "unofficial 
economy," which accounts for approximately one-half of Russia's GDP (the more 
common term "shadow economy" is somewhat narrower since it mainly points to 
evasion of official registration procedures, accountability, and taxation).

2. A special place assigned to the system of unofficial coercion.

The unofficial economy requires an unofficial system of enforcement. Not only 
the economy, but also society and the state begin to live according to some 
unwritten rules, when citizens (especially the socially active part of 
society) and even official power agencies act not by law or other legal 
enactments but on the basis of personal relationships, precedent, coercion, 
and other suchlike things. As far as major economic interests are concerned, 
an entity's ability to push through a particular decision or action amid 
confrontation with some opposing interests is oftentimes the only factor that 
counts (a semblance of legality may or may not be ensured). Coercion in this 
case can come in the form of administrative resources or control over the 
market or over its players or outright violence (criminality), but in any 
event it is based on the unofficial "right" of superior power: Might makes 
right.

3. The state does not - moreover, is essentially unable to - act as an 
impartial arbiter in economic disputes and guarantor of execution of 
contracts. The latter function has to be assumed by economic entities 
themselves, relying exclusively on their own power or the power of their 
sponsors.

4. Trust between economic entities is at a minimum level.

Because fulfillment of obligations is guaranteed not by the state machinery 
but by the economic players' own capabilities, the system is affected by a 
chronic lack of trust. Property owners and businessmen do not trust the state 
while state power bodies do not trust business. Banks do not trust clients, 
while clients do not trust banks and enterprises do not trust their creditors 
and partners. The population at large does not trust anybody at all and is 
deeply convinced that if has not been cheated today, this is only because it 
was cheated yesterday or is going to be cheated in a big way tomorrow.

5. The need to use own resources to enforce discharge of obligations and the 
reliance on unofficial "law" breed an oligarchic structure of the economy 
wherein at least 70 percent of GDP is somehow or other controlled by two to 
three dozen business structures in which decisions are made by several 
hundred individuals constituting Russia's business and administrative elite.

6. In the context of this system, property rights in general and private 
property rights in particular are not absolute. Neither law abidance nor even 
compliance with unwritten rules can guarantee property against "re-division" 
or seizure by an economically, politically, or administratively stronger 
entity. With real control over a given territory, branch of industry, 
infrastructure, etc., particular interest groups easily appropriate property 
rights with regard to particular assets, using, among other things, 
submissive arbitration courts, false bankruptcies, subversion on the part of 
administrative agencies or "employees collectives," and so forth.

(To be continued)

*******

#9
gazeta.ru
November 20, 2002
Nord-Ost inquiry fails to impress Putin 
By Yelena Shishkounova  

The public commission set up by the liberal Union of Rightist Forces (SPS)
earlier this month to look into the deadly October theatre crisis in Moscow
has established that the main cause of death among the Nord-Ost hostages
was the criminal negligence of officials in charge of organizing medical
care immediately after the rescue operation. Vladimir Putin has told SPS
leader Boris Nemtsov, however, that the conclusion contained nothing he
didn’t already know. 

Late on Tuesday afternoon the political council of the SPS – the party’s
governing body – reviewed the conclusions reached by the public commission
for investigating the rescue operation. 

Since its formation the commission has held seven sessions and met with the
rescuer workers and experts who took part in the liberation of those held
captive by a group of Chechen rebels in a Moscow theatre building,
threatening to blow themselves up unless Russia stopped the war in Chechnya. 

As Eduard Vorobyov, the head of the commission, told his colleagues on
Tuesday, some of the experts had agreed to answer the commission’s
questions only on condition of anonymity. 

According to Vorobyov, the main conclusion drawn by the commission was
that: ''The chief cause of the numerous deaths among the hostages rescued
during the storming was the criminal negligence of the state officials in
charge of organizing timely medical treatment for the victims, their
transportation to the hospital, as well as the general coordination of
activities to rescue people after the storming.'' 

In the course of its work the commission detected 12 serious flaws in the
organization of first aid treatment, including the government’s failure to
inform the doctors of the type of gas the security services used to
neutralize the hostage takers, and to organize the timely and professional
treatment of victims. 

In support of the commission’s conclusions Vorobyov offered the
participants of the political council and the press to watch a short piece
of video footage, edited on the basis of pictures filmed after the
storming. The footage showed how the hostages were literally dragged out of
the theatre building. Another picture showed a bus, in which half-dressed,
seemingly dead people were sitting, with their heads thrown back. ''This is
how more than 100 people were transported,'' Boris Nemtsov commented. 

The most heated debates flared up when deciding on whether the results of
the commission’s work should be forwarded to the prosecutor’s office. ''At
the previous council session we did not agree to send those documents to
the prosecutor’s office,'' Nemtsov said. 

''If we do, we will have to divulge names,'' Irina Khakamada agreed with him. 

Yelena Mizoulina objected, saying that there was no need to divulge names
during the initial inquiry and at any rate the prosecutor’s office should
give an answer first. 

''I would not lower myself and write to [Prosecutor General Vladimir]
Ustinov: ‘Dear sir, have you, by any chance, noticed that 120 people
died?’,'' Boris Nadezhdin said sarcastically. 

Eventually, the council ruled against sending the papers to the
prosecutor’s office. The Secretary of the Union of Journalists offered to
publish all the documents though, and then the prosecutor’s office can
probe the publications if it wants. After the majority of SPS members
approved that proposal, Yelena Mizoulina still continued to insist that the
commission’s conclusion ought to be sent to the Prosecutor General’s
Office, to which Nemtsov answered: ''Such is the will of the political
council.'' 

As Nemtsov explained to Gazeta.Ru, there is no sense in forwarding the
documents to the prosecutor’s office. According to him, for an official
investigation to be launched, presidential support is needed, while ''he,
as it seems to me, does not wants it''. 

The right-wingers’ leader reported the results of the commission’s work to
the president on November 14, after Putin’s meeting with the Duma faction
leaders. ''He said that the information was close to what he knew, and
added that it should be left to the Prosecutor General’s Office to handle.'' 

Incidentally, when the rightists first announced they were launching an
investigation into the Nord-Ost rescue operation, they threatened that if
the Kremlin failed to pay heed to them, the results of the inquiry would be
made public. ''So, this is the information you threatened to publish. And
what if the Kremlin had listened?'' Gazeta.Ru asked Boris Nemtsov. 

''I never believed it would,'' the rightist leader answered.  

*******

#10
pravda.ru
November 19, 2002
Stalin's UFOs 
Joseph Stalin insisted that the USSR outpace America with its space program

Almost simultaneously with the USA, in the middle of the 20th century, the
USSR tabooed everything connected with UFO crashes. Immediately, the next
day after one of the first UFO crashes, in Roswell (the state of New
Mexico, U.S.A.), on June 2, 1947, General Roger Romay, commander of the 8th
American Air Brigade, declared that the incident was a mere crash of a
weather balloon. That was the very beginning of a campaign of mass
disinformation. 

Your average American citizen believed the general’s statement for several
dozens of years, as they considered it really incredible that an UFO might
really have crashed. However, the Soviet leadership headed by Joseph Stalin
didn’t believe Romay’s lies at all. 

The USSR believed that the story about a weather balloon crashing was just
an attempt to hide the truth. The military unit that recovered the remains
of the UFO was believed to be America’s best trained Air Force unit. This
unit took part in super secret nuclear missions (it was this group that
dropped the nuclear bombs on Japan); pilots of this group tested new planes
and were experienced enough not to confuse a weather balloon with an UFO. 

In order to clear up the situation, Joseph Stalin ordered three Soviet
scientists to research data obtained by the KGB in the USA and define to
what extent such mysterious objects were dangerous for the Soviet Union.
These three men were talented mathematician Mstislav Keldysh, chemist
Alexander Topchiyev, and physician Sergey Korolev. 

In order to assess the situation, the scientists recommended that Stalin
organize special investigations of similar phenomena. As a result, a number
of programs to study UFOs were launched in the USSR. At that time, the
programs were secret, and the West didn’t know about them. It was only
recently that the West has learned about these programs. 

Until the end of the 1990s, there were seven Soviet research institutes and
about ten secret military departments of the Soviet Defense Ministry that
studied UFO phenomenon. All of them were attached to a secret department of
the KGB, which created by Yury Andropov. 

In 1948, on Stalin’s order, the first sample of an UFO was brought to the
Moscow region. Famous Soviet archeologist and artist and journalist
Sukhoveyev described the events that preceded this event. 

“My father had been a digger in archeological expeditions for many years.
Long before the Great October Revolution in 1917, famous archeologist
Khvoika found a small silver device during archeological digs in Kiev near
the place where the Chaikovsky Conservatory is currently situated. 

The scientist ordered the crew to dig as deep as possible around the
discovery. The land from the dig site was taken away in pails for a week.
The Kiev governor was invited to the site. The governor carefully watched
everything and ordered the find to b buried. He said that some time was
required before the discovery could be dug up and examined. 

Indeed, the object was very unusual. 

Archeologist Khvoika told himself that the “discovered ancient space
rocket” was a sign of an ancient civilization. 

The father of journalist Sukhoveyev had dealings with this rocket after
WWII once again. When workers demolished ruins in 1948, they came across
the mentioned mysterious object. The find was dug up, cut into pieces, and
loaded onto trucks. The parts were taken to a secret testing area in the
Moscow region. The father of the journalist was sent there as well as an
expert in ancient languages; he was to translate the inscriptions inside
the space ship. It was the Sanscrit language, which is now a dead language. 


The construction of the rocket was actually very complicated; it was
practically impossible to understand it. Sergey Korolev, the head of the
scientific group researching the mysterious device, admitted that it was a
very difficult task to investigate the rocket. However, the Soviet
scientists managed to understand some of the rocket’s secrets; the
discoveries came in very useful later, when Soviet space technology was
created. 

Joseph Stalin personally controlled the project and completely relied upon
Sergey Korolev’s research. Joseph Stalin insisted that the group of Soviet
scientists must successfully complete their research and take the lead over
the Americans’ space program. 

Anomalia.ru 
Translated by Maria Gousseva 

*******

#11
The Prague Post
November 20, 2002
Russia seeks alliance support 
Moscow wants NATO approval of campaign against Chechen rebels 
By Michael Mainville 
MOSCOW, RUSSIA 

Russian officials are still making disapproving noises about NATO's expansion 
plans, but experts say their agenda at the Prague summit will be an 
altogether different topic: Chechnya. 

"There will not be the hysterical reaction that there was three years ago in 
the first NATO expansion [into Eastern Europe], said Andrei Piontkovsky of 
the Moscow-based Center for Strategic Studies. "The Russians have moved on to 
more important things." 

Instead, the focus in meetings between Russian and NATO officials will be 
Russia's ongoing war in its breakaway southern republic. 

Experts said Russia will be looking for NATO leaders to endorse and even 
support the Kremlin's military operations in Chechnya at the NATO summit in 
Prague, Nov. 21-22. 

Russian troops were first sent in to Chechnya to put down a separatist 
rebellion in 1994, with some rebels calling for the establishment of an 
Islamic state in the majority Muslim republic. A shaky peace agreement signed 
in 1996 fell apart three years ago after a series of devastating apartment 
bombings in Russia were blamed on Chechen rebels. 

President Vladimir Putin, who rose to power on promises to crack down on 
Chechen rebels, has shown no signs that he is willing to relent. Russia 
refuses to say how many troops are operating in Chechnya, but estimates put 
the figure at between 70,000 and 100,000. 

Troop reduction canceled 

Earlier this fall, Russian officials announced they were planning to reduce 
the number of troops in Chechnya but canceled the plans following the seizure 
of a crowded Moscow theater by Chechen rebels Oct. 23. 

The militants held hundreds hostage for 57 hours until Russian special forces 
stormed the building. The siege ended with the deaths of 128 hostages and 41 
rebels, with most of the hostages killed by a toxic gas used to incapacitate 
the militants. 

"The attack on Moscow caused panic, so Chechnya is the real issue now. ... 
NATO expansion now seems irrelevant," said Pavel Felgenhauer, an independent 
defense analyst in Russia. 

Russia reacted with outrage in 1999 when three former Warsaw Pact countries 
-- the Czech Republic, Poland and Hungary -- joined NATO. 

As it became clear over the last two years that NATO would invite up to seven 
new members to join -- including the former Soviet Baltic states of Estonia, 
Latvia and Lithuania -- Russia's protests intensified. 

Officials said the expansion of NATO to the country's borders could only be 
explained if Russia was perceived as a threat. 

But now the expansion plans are expected to pass with hardly a ripple of 
protest from Moscow. Officially, Moscow still opposes the plan, which is the 
reason Putin will not be attending the summit. 

But experts said Foreign Minister Igor Ivanov, who has been sent in Putin's 
place, will have little time to worry about expansion. 

"Russia will say, "'We believe this is the wrong move. OK, let's move on,'" 
Felgenhauer said. 

What Russia will be seeking at the summit, experts said, is a statement from 
NATO leaders in Prague declaring that Chechen militants are terrorists. 

They will also look for concrete support, such as cutting off the funds of 
Chechen groups and arresting and extraditing those Chechens in the West that 
Russia has designated as enemies. 

NATO-Russia relations were given a boost earlier this year with the creation 
of the NATO-Russia Permanent Joint Council, which gave Russia what many 
categorize as an associate membership in the alliance. The council's goal is 
to tackle "areas of mutual interest," such as anti-terrorism, arms control, 
missile defense and search-and-rescue operations. 

In a recent meeting with Putin in Brussels, NATO Secretary-General George 
Robertson indicated that NATO might be ready to back Russia on Chechnya. 

"The desperate and criminal acts used by the hostage takers in Moscow a few 
weeks ago underlines the seriousness of the situation faced by Russia," he 
said. "It is also becoming increasingly clear that there are international 
terrorist elements involved in the insurrection in Chechnya." 

No agreement on Chechnya 

Still, officials are hoping Ivanov will have more success than Putin in 
rallying support for Russia's cause among European leaders. 

A recent European Union-Russia summit in Brussels failed to produce agreement 
on Chechnya, with European officials again calling on Russia to seek a 
political solution to the crisis. 

European leaders have also condemned Russia for alleged human-rights abuses 
in Chechnya. Independent human-rights groups have accused Russian forces of 
carrying out illegal arrests in Chechnya and targeting civilians. A few weeks 
ago, Amnesty International said it had credible reports of torture, rape and 
extrajudicial executions carried out by Russian soldiers. Putin has in turn 
accused the West of ignoring human-rights abuses by separatists. 

The meetings in Brussels were marked by Putin's vitriolic comments about the 
Chechen rebels. At a joint news conference with EU leaders, Putin declared 
that the militants' goal was to "kill all non-Muslims, all cross-bearers." 

He also caused a stir when answering a journalist's question about the 
Russian military's alleged attacks on civilians in Chechnya. 

"If you want to become a complete Islamic radical," he said, "and are ready 
to undergo circumcision, then I invite you to Moscow. We're a 
multidenominational country. We have specialists in this question as well. I 
will recommend that he carry out the operation in such a way that after it 
nothing else will grow." 

A spokesman for the Russian president later said Putin was tired and under 
stress when the statement was made. 

*******

#12
NATO: Central Asian Presence Underscores Ties
By Zamira Eshanova/Antoine Blua

Central Asia is not expected to play a major role in the Prague NATO summit 
tomorrow and Friday, in spite of the presence of three Central Asian 
presidents in the Czech capital this week. The NATO agenda is already full 
with expansion, funding, and developing new capacities to fight terrorism. 
Nevertheless, Central Asian officials hope to use the summit as a way to 
underscore their ties to the alliance.

Prague, 20 November 2002 (RFE/RL) -- While the focus of this week's NATO 
summit in Prague is the alliance's expansion into Eastern Europe, among other 
issues, leaders from Central Asia are keen to keep their countries in the 
alliance's spotlight.

Central Asia has sent no fewer than three presidents to the summit: Islam 
Karimov of Uzbekistan, Nursultan Nazarbaev of Kazakhstan, and Imomali 
Rakhmonov of Tajikistan. Turkmenistan and Kyrgyzstan are sending defense and 
foreign ministers.

Yves Brodeur, a NATO spokesman, told RFE/RL that the presence of the Central 
Asian leaders shows how important the event is for the region. "Central Asian 
countries find in this summit a privileged forum where they can interact with 
the heads of states and governments of member countries, [and] where they can 
discuss their problems in the area of security. And they can also express 
their expectations from NATO -- from the Atlantic alliance -- in terms of 
support we can provide them. It is really a forum to exchange ideas that 
leads to cooperation programs. So Prague will be important for them," Brodeur 
said.

All five Central Asian states are members of NATO's Partnership for Peace 
program, which provides members with tangible assistance and training.

Sharif Rahimov is Tajikistan's ambassador to Belgium, NATO, and the European 
Union. He said his country, which joined the Partnership for Peace in 
February 2002, is keen to develop ties to NATO quickly. "Really, [Partnership 
for Peace] is about cooperation for peace. This is about cooperation in the 
fight against terror. And this cooperation involves military planning and 
[training for] emergency situations. Tajikistan, almost every year, has an 
earthquake or heavy rains. At the same time, we cooperate on clearing mines, 
which is a result of the [1992-97] civil war," Rahimov said.

It's not clear how much of a role Central Asia will play at the two-day 
summit. Alex Vatanka, from the publication "Jane's Sentinel" in London, 
pointed out that the agenda is weighted toward finance issues and cooperation 
between the United States and Europe, not Central Asia. "The big debate is 
between Washington and its European NATO allies about defense expenditure and 
the role Europe should play in assisting Washington. So there isn't anything 
to my mind set out to be achieved at this summit in relations to NATO-Central 
Asia ties," Vatanka said.

Ties between NATO member countries and Central Asia have strengthened since 
the 11 September 2001 terrorist attacks in the United States and the war in 
Afghanistan that followed. U.S. and other NATO-member troops are now 
stationed in all Central Asian countries except neutral Turkmenistan.

The close engagement of the Central Asian states in the war on terrorism has 
raised concern among international human rights activists, who are calling on 
NATO not to turn a blind eye to human rights violations. But NATO is not 
expected to use the Prague summit to make a push for human rights in Central 
Asia.

Mohammad Solih, a leader of the opposition Erk (Freedom) Party of Uzbekistan, 
said he would like to see organizations like NATO put more pressure on 
Central Asian governments to meet basic standards of democracy. "Current 
regimes in Central Asia, particularly in Uzbekistan, are not meeting their 
people's even basic demands. In fact, they are not taking into account 
people's wishes, [but they are] making policies that are against the people's 
will. Despite that, we, as a democratic opposition, are always saying we 
support Central Asia's integration into the international community. At the 
same time, however, as we have been constantly repeating, the Western 
countries should see how regional regimes are increasing their repression 
against people in the name of fighting terrorism and stability and take 
appropriate measures to stop it," Solih said.

Brodeur said NATO is trying to establish a dialogue with the Central Asian 
countries to promote the alliance's standards on democracy and the rule of 
law. But he said it's a very long process. "This is an exchange forum that 
permits us to help these countries to reform their military institutions, for 
instance. But it also allows us to help them integrate certain values common 
to us -- important values -- here at NATO, such as the control of the 
military by civilians, the rule of law, the respect for minorities," Brodeur 
said.

Stephen Blank, a professor at the Strategic Studies Institute in the U.S. 
Army War College, said he believes through expanded contacts with NATO, the 
Central Asian societies will feel increasing pressure to reform. "NATO is 
clearly moving in the direction of becoming an organization of crisis 
management and collective security, which can only benefit Central Asia. But 
NATO will also demand -- what the EU will demand too -- major changes in the 
way Central Asian governments and militaries do business, if they're going to 
have a closer relationship," Blank said.

Blank said this process will be helped along as the countries' militaries 
become more transparent, accountable, and professional. 

(Iskandar Aliev of RFE/RL's Tajik Service contributed to this report.)

******

#13
Russia seeks to track down Chechen missiles
November 20, 2002
AFP
 
Russia asked former Soviet republics to check their ground-to-air missile 
stocks after some of the weapons fell into the hands of Chechen separatists.

Defence Minister Sergei Ivanov told his counterparts from the Commonwealth of 
Independent States (CIS) that missiles from Soviet stockpiles remained in the 
Baltic states, the Caucasus and Central Asia when the Soviet Union collapsed 
in 1991.

"Many armaments including Igla ground-to-air missiles were left on the 
territories of the newly independent states when the Soviet Union collapsed. 
Records of their serial numbers were carefully compiled at the time, enabling 
us to establish where the fighters received the missiles from," Ivanov said.

"Munitions remained in the Baltic states, the Caucasus and Central Asia," 
Ivanov added, as reported by RIA Novosti news agency.

The Baltic states of Estonia, Latvia and Lithuania are not members of the 
CIS, a loose grouping of 12 of the 15 former Soviet republics.

Chechen separatists have used the shoulder-held ground-to-air missile 
launchers to shoot down Russian military helicopters in the war-torn republic 
on several occasions as part of the ongoing conflict in Chechnya which 
continues to claim lives on both sides.

Ivanov said notes had been sent to the CIS and Baltic states "requesting them 
to take an inventory of their air defence missile systems," Interfax reported.

In August, an Mi-26 helicopter hit by an Igla missile crashed into a 
minefield near Russian military headquarters a few kilometres (miles) east of 
Grozny, causing the death of 118 officers and servicemen, the biggest single 
loss on the Russian side since the beginning of the present conflict in 
October 1999. 

"We should do everything possible to ensure that weapons which remained in 
the CIS and Baltic countries after the Soviet Union's collapse do not fall 
into terrorist hands," Interfax reported Ivanov as saying.

Russia has become more forceful in asserting that separatism in Chechnya can 
be classed as terrorism since last month's seizure of a Moscow theatre with 
hundreds inside, by Chechen fighters.

Moscow has also said it wants to strengthen ties with the Georgian 
intelligence service as Russia wants a role in hunting down Chechen rebels it 
accuses Tbilisi of sheltering on its territory. 

The CIS defence ministers resolved to improve coordination of military 
activities and the exchange of information as part of a joint defence concept.

"Ensuring national security requires improved military cooperation and the 
development of military integration," the ministers said in a written 
statement.

Separately, Ivanov said that defence ministers of the subset of CIS members 
states who have signed a Collective Security Treaty (CST, comprising Armenia, 
Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan) had decided to 
reinforce their rapid deployment force in Central Asia. 

"We believe that this grouping should be reinforced by enhancing its mobility 
in accordance with existing challenges and threats," Ivanov said, as quoted 
by the ITAR-TASS news agency. 

The force comprises troops from Russia, Kazakhstan, Kyrgyzstan and Tajikistan.

Russia and its former Soviet allies have been concerned in recent years over 
a resurgence in Islamic militancy on their southern rim. 

Ivanov noted that the CST currently has a Russian-Belarus grouping on the 
western rim of the CIS, a Russian-Armenian grouping in the south, and a 
collective rapid deployment force in the central Asian region.

*******

#14
Citibank opens Moscow branch, targets middle class
By Andrew Hurst

MOSCOW, Nov 20 (Reuters) - U.S. banking giant Citibank <C.N> said on Wednesday it was launching a range of 
retail banking services in Russia, using the phone and the Internet to reel 
in clients from the fast-growing middle class.

Citibank, which opened its first Russian branch in Moscow on Wednesday, is 
one of the first global banks to enter the retail market in a country where 
many distrust banks and prefer to keep cash stuffed under their mattress or 
in a jam jar.

"We have one of the most recognizable brands in banking and Russians are 
impressed by big brands," said Jean-Paul Votron, chief executive for central 
and eastern Europe for Citigroup, the financial services group which owns 
Citibank.

Citibank said it would offer Russian clients rouble and dollar account 
facilities, overdrafts, personal loans and debit cards, but initially no 
credit cards or mortgages.

Votron, in Moscow for the launch, said it was hard to predict how fast 
business could grow, but said Citibank was hoping to leapfrog local 
competitors with less experience of on-line banking.

Austria's Raffeisen group has a small branch network in Moscow and St 
Petersburg, while Dutch-based financial group ABN AMRO  also takes 
deposits.

Citibank, which has established a large corporate business in Russia with 
more than $1.1 billion in loans on its books, hoped quickly to win clients by 
plugging them into its worldwide Internet banking services, said Votron.

"Ten years ago a bank branch could accommodate 5,000 customers," Votron told 
Reuters. "(Today) you can get as many clients as you want on the Internet or 
on the phone. The number of bank clients per branch becomes totally 
irrelevant."

CITIBANK SEEN EXPANDING

Votron and other Citibank managers declined to say whether the bank had plans 
to open any more branches, but a rival banker said he believed Citibank 
already intended to expand its retail business in Russia.

"My impression is they are taking this very seriously. What they are showing 
is the first phase," said the banker, who asked not to be identified.

Allan Hirst, Citibank's President in Russia, said the cost of establishing 
the branch ran to "several million dollars.

"We operate off global platforms and that enables us to ensure the same level 
of standards and service quality all over the world. Much of the investment 
was to convert our systems so cyrillic language is available," he told a news 
conference.

Russian clients will be able to log on to a Russian language web site to 
conduct banking operations.

Analysts say no foreign bank can possibly hope to match the branch network of 
state-owned savings bank Sberbank, which has 20,000 offices scattered 
throughout Russia's vast territory and accounts for three quarters of all 
retail deposits.

But Citibank and others are hoping they can persuade young Russian 
professionals in Moscow and St Petersburg to bank with them rather than throw 
in their lot with Russian state and private banks competing aggressively to 
win clients.

Nandan Mer, Citibank Russia's consumer business manager, said the bank would 
establish a network of ATM machines in Moscow allowing customers to make 
deposits.

Mer said clients would have to prove they received a regular salary but 
otherwise there was no minimum deposit requirement.

The head of British-based HSBC's  Moscow operation, Richard Tickner, 
said he believed foreign banks could successfully target savers who do not 
have bank accounts.

"You need to get money from under the mattress rather than taking it away 
from Sberbank," said Tickner. HSBC plans to conduct an appraisal next year on 
whether to launch its own retail operation in Russia.
   
******

#15
Kommersant
No. 210
November 20, 2002
[translation from RIA Novosti for personal use only]
WHAT WORLD DO WE NEED?
The NATO summit that will open in Prague on November 21 
will give the green light to the bloc's enlargement. Russia no 
longer sees this as a threat to its security. The world around 
Russia has changed dramatically and so did Russia's foreign 
policy. Igor IVANOV, Foreign Minister of Russia, writes about 
its goals and tasks in new conditions in an article for 
Commersant.
     
     There is a question that is being energetically discussed 
in Russian society, for understandable reasons. What should the 
strategic goal of our foreign policy at the current stage be? 
We have an answer to this question. We had it two and a half 
years ago when the foreign policy concept of Russia was 
elaborated under the guidance of President Vladimir Putin. The 
essence of this major document can be put in a few words: 
foreign policy must facilitate the strengthening of national 
security, create maximally favourable international conditions 
for the economic and social development of the country, and 
firmly uphold the interests and rights of Russia's citizens. 
     To consistently fulfil this task, we should also know what 
world Russia needs for this. There is an answer to this 
question:
we need a fair and safe world. 
     Today Russia can patiently, step by step create such a 
world jointly with other members of the international 
community. This is not a dream but reality and necessity. But 
this also entails hard daily work. Has it become easier to do 
it? This is what I would like to tell you on this score.
     
     				The Time of Harvest
     
     Russian representatives who are daily involved in foreign 
policy feel changes in the tone and mood of their discussions 
and even debates with partners. The thing is not just that the 
world has become safer for Russia and no country is threatening 
Russia now or acting as its adversary. There is more to it. I 
mean the growing desire of partners to cooperate with Russia, 
something we did not see before. They listen to Russia 
carefully and are prepared to come to an agreement with it. 
     We see the signs of changes in the attitude of our 
partners even in the areas that are dotted with problems, where 
disputes seem to have become fiercer than they were during the 
Cold War.
But this is an illusion. The essence of these disputes has 
changed.
     Today the mood for confrontation with Moscow and cold 
rejection, which we sensed in the 1990s, is being replaced by 
understanding of the arising of new community of powers and 
attempts to find solutions to problems. 
     The best proof of this is the solidarity of the world 
community with the actions of the Russian authorities to 
release hundreds of hostages taken by Chechen terrorists in 
Moscow. 
     It has become apparent now that the horrendous terrorist 
act in Moscow is a link in the chain of crimes committed by 
international terrorists in Indonesia, the Philippines and 
other parts of the world in the past few months. It has showed 
once again that terrorism is a global threat and can be dealt 
with only by concerted efforts. 
     Another example is the Kaliningrad issue. Owing to the 
specific geographic location of the region, the solution of its 
problems depends on external factors. Of special significance 
is the ensurance of maximally free movement regime. The most 
delicate aspect for Russia is the preservation of free 
communication between the region and the rest of Russia. Thanks 
to the new climate that is developing in Russia-EU relations 
and the readiness of our partners to take Russia's opinion into 
account at the recent Russia-EU summit, a solution suitable to 
Russia has been found to the issue of Kaliningrad transit, 
which does not put in question Russia's sovereignty of the 
Kaliningrad Region and protects the right of Russian citizens 
to free movement between different parts of the country. 
     This is only two of the multitude of examples of the new 
foreign policy situation that it favourable for Russia, a 
situation which we have been working for the past few years to 
create. The time has come to gather in the harvest from the 
grain we planted at that time. And we are happy with the 
approach of the harvest time, both in the sphere of relations 
with Europe (in particular the EU and NATO) and in 
Russo-American relations, not to mention our closest partners - 
the CIS countries, China and India. 
     
     				   In the Same Boat
     
     What has precipitated the currently growing mutual 
understanding of the powers? Was it only the common enemy - 
terrorism?
     Of the multitude of factors that are encouraging new 
international understanding, I would point out the growing 
interconnection of the world, in particular its economy. This 
would have happened even without the threat of terrorism. The 
governments are coming to see more clearly that all of us, 
despite differences in attitudes, cultures and ideologies, are 
in the same boat. The world is connected with currency and 
stock exchanges, pipelines and commodities flows. A crisis in 
one country immediately spreads to another. On the other hand, 
prosperity is also moving quickly across the borders. 
     As for terrorism, I would like to point to only one aspect 
of what is going on in the world. I mean the understanding of 
nearly all countries that terrorism not only claims lives or 
damages the health of its victims but also kills hopes for 
economic prosperity. 
     During the tense months of the autumn of 2001, we had an 
intense exchange of opinions about tragic events with our 
colleagues in the Arab world, China, the EU and India. We were 
unanimous in that we must join forces to fight terrorism also 
because the blow at the USA and its economy amounted to a blow 
at the economy of all other countries. This reality was one of 
the factors that allowed us to create the counter-terror 
coalition practically overnight. 
     We sensed the same accord at the recent UN General 
Assembly in New York, which I attended. It showed the unity of 
opinion of most countries that agree that unilateral and hasty 
or egoistic military actions in contravention of the UN Charter 
threaten everyone and everything, including the economy. We 
certainly meant the situation around Iraq. It was a widespread 
opinion that unsubstantiated and destructive steps can not only 
lead to the death of people but also damage many countries, 
including in the Middle East and Europe, and even the USA 
itself. 
     The adoption of resolution 1441 by the Security Council 
and the agreement of Iraq to allow international inspectors 
back into the country put off the threat of war and gave the 
green light to a comprehensive settlement of the Iraqi problem, 
including the lifting of sanctions. 
     
     				Tomorrow Begins Today
     
     The current developments in the world are extremely 
important, as we see the rise of a new world order of the 21st 
century. That the world is changing quickly and radically is 
apparent. And these changes are deeper even than the ones we 
saw after the Second World War. Some people may think that we 
are witnessing a spontaneous process whose participants do not 
know what tomorrow will be like but only know what they want it 
to be.
They say we cannot influence the result. 
     We don't think so. We believe that it is our efforts 
today, the efforts of Russian diplomacy that determine many 
elements in the creation of the new world. Russia is making a 
befitting contribution to the creation of the new world. Its 
weight and potential on the international scene make it 
indispensable for the solution of basic problems, as proved by 
our daily work. 
     One of the key reasons for this is the common values we 
share with many leading powers and the existence of vast 
opportunities for reaching mutual understanding. 
     I would like to remind you in conclusion that the issue of 
the new world order is an issue that casts a bright light on 
the importance of the UN as the only organisation that can 
balance the interests of different countries and pave the way 
into a fair future. The UN is indispensable in this 
interconnected and globalising world, where more problems arise 
that can be resolved only collectively. I believe that it is in 
the UN that the world's countries can find correct answers to 
new challenges. 
     
******

#16
C O M M E N T A R Y SHANGHAI COOPERATION ORGANIZATION: A CAT LEARNING TO
CATCH MICE 

MOSCOW, 20 November. /RIA Novosti political observer Dmitry Kosyrev/. On
Saturday a meeting of the council of foreign ministers of the Shanghai
Cooperation Organization (SCO) will be held in Moscow. Probably the most
important thing its participants will be able to point out is a normal
business-like course of work to establish powerful, capable mechanism of
the Shanghai Cooperation Organization. And that happens at the background
of the similar ministerial meeting in January last year in Beijing when the
matter was raised, if my memory serves me right, rather categorically: to
be SCO or not to be at all? 

In summer 2001 prior to terrorist acts of 11 September and prior to
overthrow of the Taliban regime in Afghanistan this Organization was
thought to become a collective response of Russia, China, Kazakhstan,
Tajikistan, Kirghizia and Uzbekistan to the terrorist threat at the
junction of common borders. Defeat of the Taliban and emergence of American
military bases in Central Asia forced SCO enthusiasts to ask themselves the
question: Were they late? Was SCO not needed any longer? 

Today the question is not debated and objectives of the ministers arriving
to Moscow are more simple, namely: to "check time", to see if there are
minor political problems to obstruct daily work of the organization carried
out simultaneously by a great number of departments. Thus the mechanism of
work and the agenda of the meeting are being developed concurrently by
Prosecutor General's offices of 6 SCO participants, ministers of transport,
economy, even culture and prominent entrepreneurs who gathered together at
the recent investment symposium on power engineering in Shanghai. This
picture of work to create secure and prosperous Central Asia supported by
the Russian-Chinese partnership (and that's how the SCO formula looks like)
is far from being exhaustive. 

The litmus test for what is happening is behavior of representatives of
Uzbekistan, the country which was the last to adhere to the SCO idea and
the least enthusiastic at its constituent summit in June last year in Saint
Petersburg and also after it. It was enough to get acquainted with the
behavior of the official Uzbek propaganda joyfully fulminating against
"centuries-old Russian colonialism" and becoming irritated on occasion of a
discussion of American military presence in the region. It seemed so that
even after SCO establishment on 7 June Tashkent was prepared to throw its
membership in the organization into the furnace of the new Uzbek-American
strategic friendship and affection. Well, presently Uzbekistan's behavior
is also different. 

To a greater extent Americans themselves are to be to blame for that. Till
the present moment they failed to propose to their new Central Asian
friends anything similar to those economic investment projects discussion
of which is being initiated in SCO. And Americans do not have even a
blueprint of an organization similar to the diversified organization with
multiple programs and plans being formed in SCO. They only got general
statements and fixed amounts as payment for military bases. 

At the same time the standard part of those statements made by US guests on
a visit to Central Asian capitals became "democratization of local
regimes." On the contrary neither China, nor Russia, not to mention other
SCO members were never interested in "classical" American political
culture: total demonstrative democratization of all states, sometimes
forced one. "Classical culture" which brings a number of problems to
different American administrations in the whole world. 

Moreover, it is impossible to say that Americans really decided to make
changes of Central Asian ruling regimes the objective of their regional
policy. Talks about that are all too similar to general rhetoric to cover
empty space in formulation of such regional policy. The desire in general
to preserve newly obtained military bases in Central Asia together with
general "presence" is available but for what purpose and how- the Bush
administration has not decided that yet and nobody knows when such a
decision is going to be taken. 

That is why many Central Asian power structures at the moment are,
seemingly, of the opinion that it is necessary to work with all partners
simultaneously, including fanning their competition. Two cats to catch mice
are better than one, and the spirit of competition between them will
negatively affect only mice. 

The matter is who really, Russia, or China, wishes to oppose Americans in
Central Asia or they are quite ready to cooperate with them. 

Certainly, the SCO driving force is cooperation between Russia and China
and the threat of Islamic fundamentalism from Afghanistan has still
remained a very serious threat for the two states. But Russia made its
choice when it lifted its objections to American bases in the region more
than a year ago . It was an exchange of its very doubtful from the
reliability point of view "sphere of influence" in Central Asia for quiet
real earnings from reduction of the fundamentalists' threat. By the way,
several years ago Russian ruling circles were of the opinion that the CIS
mechanism was enough to protect southern borders from a terrorist threat.
But life proved that the threat turned out to be more serious that it
seemed earlier. 

Many people in Moscow proceed from the notion that the threat is still so
great that without further support granted by Russia, China and local
governments neither Americans nor anybody else is capable of solely hold
sway in the region even if they eventually wish so. At the same time SCO
may become the mechanism to assist the USA to participate in the common
struggle against terrorists. 

*******

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