Johnson's Russia List
#6575
27 November 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org

[Contents:
  1. Interfax: Putin comments on reasons why he vetoed media law amendments.
  2. ABC News: Russian police deny foiling Putin assassination plot.
  3. Vek: Vladimir Kozlov, RUSSIAN VOTERS LOSING THEIR APPETITE FOR ELECTIONS.
Will legal methods be effective in raising voter turnout at elections?
  4. Luba Schwartzman: TV1 Review.
  5. Izvestia: Dmitry Litovkin, THE DEFENSE MINISTRY HAS LET OUT A SECRET.
A five-point star to return to military units' banners.
  6. Moscow Times: Alla Startseva, Alarm Bells Ring Over Slow Pace of Reforms.
  7. Moscow Times: Joseph Stiglitz, Rewriting History. (re Aslund/6562)
  8. Moscow Times: Angela Stent, Whither the U.S.-Russian Partnership?
  9. Nezavisimaya Gazeta: Maxim Glikin, A GREAT RESETTLEMENT OF PEOPLE FROM
THE CAUCASUS. Chechens have become the third-largest ethnic group in Russia.
(re census and minorities)
  10. Vremya MN:  Yevgeny Satanovsky, LESSONS OF DUBROVKA. The Chechen war
cannot just be ended: it can be won or lost.
  11. Reuters: U.S. imposes travel ban on Belarussian leader.
  12. Reuters: Oil price uncertainty casts shadow over Russia.
  13. Wall Street Journal: Jeanne Whalen and Thaddeus Herrick, Four Russian
Companies Plan Arctic Port to Speed Oil to U.S.
  14. The Globe and Mail (Canada): Carolynne Wheeler, Russia must protect
aid,
Graham says.
  15. Arabicnews.com: Russian plan to topple Saddam Hussein to prevent US
occupation of Iraq.
  16. Interfax: Over 500,000 Russian prisoners sick - Justice Ministry.
  17. Moscow News: Sanobar Shermatova, Tajik Snub to Russia? The former
Soviet
republic seems to be keen to dump Russia as its chief ally in favor of the
United States.
  18. RIA Novosti: CYRILLIC RECOGNIZED SINGLE GRAPHIC BASE FOR ALL OFFICIAL
LANGUAGES OF RUSSIA'S NATIONAL REPUBLICS.
  19. Russia Business List: Tom Adshead's Political weekly.
  20. Reuters: Prodi says Ukraine, Russia should not join EU.]

*******

#1
Putin comments on reasons why he vetoed media law amendments

MOSCOW Nov 27 (Interfax) - President Vladimir Putin sent a letter to the
speakers of the two chambers of parliament explaining why he decided to
veto amendments to the law on media and anti-terrorism.
   "The legal proposals do not fully reflect the current situation in the
fight against terrorism and do not help ensure the security of citizens
during counter-terrorism operations," the letter reads.
   The letter was sent to State Duma Speaker Gennady Seleznyov and
Federation Council Speaker Sergei Mironov and was published in the
Rossiiskaya Gazeta newspaper on Wednesday.
   The president specified that the amendments "do not clarify the
responsibilities of the mass media and its representatives in providing
coverage of terrorist activities and counter-terrorism operations; they
also do not detail the related restrictions. There is also no mention of
punishment in the event of their violation," according to the letter.
   Thus, Putin concludes that if this federal law is adopted, "this would
not only fail to make the fight against terrorism more effective, but may
also create preconditions for imposing unjustified restrictions on
citizens' rights to information."
   The president believes that "additional guidelines are needed to
regulate the media's work in an emergency, under martial law and in
providing coverage of natural and industrial disasters."
   "In light of the aforementioned circumstances, I suggest giving serious
additional consideration to the federal law as a top priority," the letter
reads.

********

#2
ABC News
November 27, 2002
Russian police deny foiling Putin assassination plot

Moscow police are denying media reports of a plan to assassinate Russian
President Vladimir Putin on his way back from work late Tuesday local time.

According to Russian media reports, police discovered three boxes
containing 40 kilograms of explosives on a road President Putin was to take
to drive to one of his residences outside Moscow.

But the secret services discovered the plot and he took another road as
police were looking for the explosives.

However, a Moscow police spokesman has denied the reports.

"It is not true that police discovered Tuesday three boxes with 40
kilograms of explosives on the Rublyovo-Uspensk Road," Kirill Mazurin said.

The FSB intelligence agency and the Kremlin have refused to comment on the
reports.

*******

#3
Vek
No. 42
November 22, 2002
RUSSIAN VOTERS LOSING THEIR APPETITE FOR ELECTIONS
Will legal methods be effective in raising voter turnout at elections?
Author: Vladimir Kozlov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
VOTERS HAVE BECOME MORE RATIONAL, OBSERVERS HAVE BECOME MORE
EXPERIENCED AND CRITICS HAVE BECOME MORE AGGRESSIVE. BUT ELECTIONS
STILL REMAIN THE MAJOR ACHIEVEMENT OF THE RUSSIAN STATE SYSTEM OVER
THE PAST FEW DECADES. THE PROBLEM OF LOW VOTER TURNOUT COULD BE VERY
SIGNIFICANT IN 2003 AND 2004.

     For candidates, the most important result at elections is the
percentage of total votes cast. The winners don't actually care how
many voters go to the polls. However, the absolute significance of a
victory is directly connected to voter turnout: the higher the
attendance, the more legitimacy an election will have.
     If the results of Russian elections are assessed using this
method, it becomes clear that few winning candidates have secured the
support of over 50% of the electorate. At present, only about 12
regional leaders out of 87 have won the votes of over 50% of all
registered voters (this year, the heads of Tuva and Kalmykia dropped
out of the list). Of the 225 Duma deputies elected in single mandate
districts, only two of them have this level of support: Iosif Kobzon,
elected in the Aginsk Buryat autonomous district, and V. Sokhov of
Kabardino-Balkaria. The Communist Party (CPRF), which won the last
Duma elections, gained the support of only 15% of Russia's total
registered voters.
     Even at presidential elections, when there is much talk of
nationwide support, there hasn't been a single case of the 50%
legitimacy barrier being exceeded.
     Boris Yeltsin is still the record-holder, with 42.8% gained in
1991. During the second round of the 1996 elections, he gained the
support of 37% of the electorate in Russia, whereas in 2000 Putin was
supported by 36.3%. The latter figure obviously doesn't correspond
with the present level of confidence in the president, which regularly
exceeds 50%, as opinion polls done by the National Public Opinion
Research Center (VTsIOM) show; nor the proportion of poll respondents
who approve of his actions - almost 80%, as VTsIOM polls indicate.
However, Russians are cautious about these polls, and elections alone
can show the real level of support.
     Since almost nobody doubts that Putin will win in the first round
of the 2004 elections, the legitimacy level seems to be the key issue
here. The minimal objective is likely to be ensuring that voter
turnout and the percentage of votes in Putin's favor exceed the
figures of 2000. At the same time, exceeding the legitimacy barrier
(i.e. 55 million votes in favor of Putin rather 39.7 million) is
likely to become the maximal objective. This alone would ensure
nationwide support and absolute legitimacy. Is this a realistic
prospect? As it seems at the moment, the result won't be a problem,
even though the increase should be 20% at least - as can be seen from
opinion polls, which show high results in a period between elections,
when no campaigning is done and state resources are not being
employed. In comparison to the last cycle, voters will be offered a
much stronger Putin and weaker rivals. The political background and
socio-economic situation in Russia will be more favorable, barring any
unforeseen developments.
     Voter turnout could be the problem, although the required
increase in voter turnout is only 5%. No evidence of increasing
electoral activity is available at present. Out of 20 single-mandate
districts where Duma elections have been held over the past three
years, in six of them the elections have been declared invalid due to
insufficient voter turnout. For the very same reason, breakdowns of
elections for regional legislatures have been registered in dozens of
electoral districts and 16 regions. The average voter turnout in
gubernatorial elections has barely exceeded 50% over the last few
years.
     Voters turn out when it's a tough battle and the result is hard
to predict. Voters are scared off by too much scandal, as well as by
indifference on the part of the authorities and election organizers;
not counting the "managed" regions, where voter turnout is high at all
times - but fortunately, such regions do not decide the overall
picture.
     It is the predictability of the presidential elections that might
cause a low voter turnout. For the next Duma elections, however, voter
turnout doesn't seem to be a concern. Indeed, the battle for the top
place - between the CPRF and Unity, and for the third place - between
the Union of Right Forces, Yabloko and the LDPR - will be intense.
Moreover, for the latter parties, the drama will be developing on the
edge of the 5% barrier. Simultaneous elections for 14 regions and 15
regional parliaments - including such electoral monsters as Moscow,
Bashkortostan, and the Kemerovo and Rostov regions - is aimed at
stimulating voter turnout and motivating the regional elites.
     This harbors a paradoxical danger for the presidential elections.
It will be strange if more voters turn out for the Duma elections,
which the people dislike, than for the presidential elections. Could
this be a reason to restrain voter turnout at the Duma elections? It
is very unlikely, since a high voter turnout is an advantage for the
centrists, although strategists at the Presidential Administration
will take care to hold back a significant part of their resources
until the more important election.
     The utmost efforts will be made in March 2004, since there will
be fewer objective factors favoring higher voter turnout. No real
struggle could be admitted at the presidential elections by
definition. Unlike the president's campaign team, the electorate is
slightly worried about the result which Putin, the winner, will
obtain. Voters are unlikely to be fascinated by the struggle for third
place or second place, which is less likely thus far. The communists
pose no serious threat.
     Many other objective factors affecting voter turnout - for
instance, the resources of parties and rivalry between the business
structures - will be noticeably weakened at the presidential
elections. It is not ruled out that some regional leaders will
gradually slow down at the presidential elections. For some of them,
the result will be the only goal, while others might want to emphasize
their independence. It is hard to say what Yuri Luzhkov, Murzat
Rakhimov and Eduard Rossel might do if they are reelected for another
term in office.
     Let's look at the alignment for the elections in 2004, which
might significantly boost voter turnout. The terms of office of 25
regional leaders and 16 regional parliaments elapse by the
presidential elections. It is likely, however, that not all of these
regions will eagerly accept the idea of combining their elections with
the presidential election. For many regions, overlapping will work in
favor of extending the terms in office, whereas the situation with the
presidential elections is quite the contrary. Moreover, if the Duma
elections happen to be extremely scandalous, voters might lose their
wish to participate in the prosaic presidential elections of March
2004.
     Voter turnout could happen to be the most acute problem for
organizers of the presidential campaign. The successful experience of
1996 (Vote, or you lose out!) won't be of any use now. The people are
unlikely to believe the slogans. Something new is required. It's hard
to believe that a campaign to attract voters to the presidential
elections can be done properly, especially in the light of the
evidently weak census campaign. The organizers don't seem to believe
in 100% attendance either; otherwise, why would they demand
introduction of compulsory participation in the next census, which
will only be held a decade from now? It seems the authorities intend
to carry out a repeat census, in accordance with new rules, in the
regions where response rates were particularly low.
     Quite possibly, the idea of compulsory voting has occurred to the
people responsible for voter turnout. However, this is not a threat
for us so far. According to the Constitution, participation in
elections is a right, rather than a duty. Thus, organizers of the
elections will have to seriously consider non-trivial mechanisms for
raising voter turnout, in order that the increase should not seem
suspicious - as in 2000, when journalists noted a rise of almost 1
million in the number of voters within the four months between the
Duma elections and the presidential elections.
     Voters have become more rational, observers have become more
experienced and critics have become more aggressive. But elections
still remain the major achievement of the Russian state system over
the past few decades.
(Translated by Andrei Ryabochkin)

*******

#4
TV1 Review
www.1tv.ru
Compiled by Luba Schwartzman (luba_sch@hotmail.com)
Research Analyst, Center for Defense Information, Moscow office

HEADLINES
Tuesday, November 2, 2002
- Ten Chechens, residents of Grozny, were detained in Poland as they tried
to cross the border with Germany.  They were seeking refugee status in
Poland.  Over the weekend, six other Chechens were detained on the border
between Poland and the Czech Republic.
- Russian President Vladimir Putin chaired a meting of the Defense Ministry,
held to review the results of the year.  President Putin noted the need for
closer cooperation between the army and the security organs.  He said that
this was especially important in view of the extent to which international
terrorism has become a part of global politics.
- Akhmed Zakaev will be held by Danish authorities for 9 more days as they
review the question of his extradition to Russia.  Robert Adelkhanyan, the
head of the International Law Directorate of the Russian General
Prosecutor's Office, declared that additional evidence proving Zakaev's
involvement in terrorism was sent to Danish authorities.  The evidence
included testimonies of Chechen separatist leader Salman Raduev.
- The European Court has taken back its recommendation to Georgia not to
extradite 8 Chechens currently held by Georgian authorities to Russia.
- The international association of the television archives of Russia, the
CIS nations and the Baltic states was held in Moscow.
- Days of Yakutia are being celebrated in Moscow with a fair and a festival.
- Russian Prime Minister Mikhail Kasyanov is in Salendehad for a two-day
trip dedicated to the problems of the Far North, including the integrated
exploration and development of the Arctic regions.
- The Industrial Committee met to discuss the new edition of the Law on the
Media.
- Representatives of Russian special services played for journalists a tape
recording of Aslan Maskhadov's address, which shows that there is growing
discord among Chechen rebel commanders.
- Thousands f Kazan residents and delegations from other republics and
Oblasts gathered to bid their farewells to legendary pilot Mikhail Devyatyi.
  A street in Kazan and a future cadet corps will be named after him.
- An investigation of yesterday's assassination attempt against Turkmen
President Saparmurat Niyazov is underway.  Turkmen special services have
already detained 16 suspects, four of whom are natives of Georgia.
- President Putin met with King of Jordan Abdullah II to discuss bilateral
cooperation, including cooperation in the military-technical sphere as well
as the situation in Iraq and Palestine.
- A new factory, producing packaging materials, will be opened in Grozny,
providing 500 jobs for Grozny residents.  Several other large factories will
be opened in the next few months.
- The Kapitan Danilkin ship returned to Moscow after a supply trip to the
polar regions.
- In a charity event sponsored by United Russia, Sergei Rychkov, a
journalist from Cherepovets, will cross 17 Russian cities dressed as Santa
Claus and carrying presents for Russian children who wrote letters to Santa
Claus.  To ease his journey, he will me made an honorary traffic policeman.
- Thousands of residents of the Maritime region will remain without water
and heat this winter season.

******

#5
Izvestia
November 27, 2002
THE DEFENSE MINISTRY HAS LET OUT A SECRET
A five-point star to return to military units' banners
Author: Dmitry Litovkin
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE PRESIDENT HAS ATTENDED A MEETING HELD BY THE DEFENSE MINISTRY'S
LEADERSHIP. HE STATED THAT THE MILITARY MUST MAKE DEFENSE SPENDING
TRANSPARENT. FOR THE FIRST TIME IN THE HISTORY OF THE DEFENSE
MINISTRY, THE MEDIA WERE PERMITTED TO LISTEN TO THE DEFENSE MINISTER'S
REPORT.

     Defense Minister Sergei Ivanov said a meeting of the Defense
Ministry's leadership: "Society has the right to know how the state
spends taxpayers' money, otherwise it is most unlikely that the people
will support the reform of the Army." All generals, admirals and
commanders-in-chief, President Vladimir Putin, leaders of other
security ministries, and speakers of both houses of parliament
attended the meeting. For the first time in the history of the Defense
Ministry, the media were permitted to listen to the defense minister's
report.
     Vladimir Putin said at the meeting: "Many vexatious incidents and
emergency situation have happened this year. But I'd like to note that
in general society's confidence in the Army increases. The state has
revised potential threats and passed a coordinated National security
conception. Servicemen's money allowances have increased by 60% to
80%. Of course, this is not enough to say that servicemen's social
status has improved. Your task (the president addressed generals and
officers in the hall) is to make military spending transparent. If our
troops do not have everything in which leading military powers take
pride our efforts are worthless." After that Sergei Ivanov took the
floor. He emphasized that the international situation is very
difficult and noted that "international terrorism, local military
conflicts, and proliferation of mass destruction weapons" have
remained the main threats for Russia. At the same time, he noted that
a fully-fledged war against Russia is out of the question. After that
he focused on finalizing the results of 2002. Ivanov said that
Russia's strategic force has received six Topol-M ballistic missiles;
the Defense Ministry has put 19 satellites to orbit (seven of these
are purely military satellites), repaired one nuclear submarine, and
renovated 21 warships of the Russian Navy. He also said that this year
every pilot has flown 20 to 22 years (13 hours in 2001), but noted
that this fact must not mislead people regarding their actual skills.
He noted that as a result of the final inspection 47% of military
units of the Russian Army have received "good" and "satisfactory"
marks. Only eight military units have received "unsatisfactory" marks.
The minister said that the state defense order has been fulfilled. The
Army has received 340 models of new weapons and military vehicles
(unfortunately, the Army has received only single models). The
minister reported that 531 servicemen have perished and 20,000 people
have been injured as a result of crimes and incident in the Armed
Forces over ten months of 2002. Sergei Ivanov focused in his speech on
every branch of the Army, military district, and fleet. He noted that
"Russia's strategic force guarantees nuclear containment at the
minimum sufficient level". The minister expressed concern about the
situation in Russia's general purpose forces: "Only a few general
purpose units are capable of coping with their tasks".
     At the end of his speech Ivanov addressed Vladimir Putin on
behalf of the defense Ministry's leadership and veterans of the Armed
Forces. He asked the president to revise provisions of the law on the
flag and return a five-point star to military units' banners. Putin
supported the idea. Speakers of both houses of the parliament Sergei
Mironov and Gennady Seleznev nodded their approval.
(Translated by Alexander Dubovoi)

*******

#6
Moscow Times
November 27, 2002
Alarm Bells Ring Over Slow Pace of Reforms
By Alla Startseva
Staff Writer

The economy will start shrinking as early as 2004 if the pace of reforms
doesn't accelerate, Deputy Economic Development and Trade Minister Arkady
Dvorkovich warned Tuesday.

Dvorkovich's comments echo those of a growing number of economists who say
the writing is on the wall -- after record 10 percent growth in 2000, the
pace halved last year and is now just 4 percent.

"With economic growth of 4 percent, we will not last long," Dvorkovich told
a business forum. "In two to three years we will have a slowdown or even a
recession if we don't work hard."

The same sentiment has been expressed recently by everyone from President
Vladimir Putin to economists, but no one has an easy answer.

Compounding the problem is the uncertainty over oil prices, fueled by
worries of possible U.S. military strikes against Iraq. Russia is already
too dependent on oil -- the IMF said this week such dependence makes
long-term stability impossible -- and the government is redoubling its
efforts to wean the economy off petrodollars.

But while many basic structural reforms, like the flat income tax, have
been implemented, more technical reforms like overhauling the banking
sector and legal system are proving more time consuming than originally
thought. Dvorkovich said the government wants 10 years of 6 percent to 8
percent growth from 2006, but this won't be possible without attracting
huge investments and undertaking a radical modernization.

If it wants sustainable growth, the government must cut its expenditures by
nearly a third, Putin's top economic adviser, Andrei Illarionov, said Tuesday.

He said the government should cut spending to 25 percent of GDP from the
current 35 percent.

If the ratio remains as it is now, economic growth will average 2.9 percent
a year through 2015, according to Illarionov's Institute for Economic
Analysis. But if spending drops to 25 percent of GDP, growth would average
a whopping 8.9 percent, he said.

By contrast, if spending swells to 40 percent of GDP, the economy would
grow just 0.2 percent over the period, Illarionov said.

Prime Minister Mikhail Kasyanov said Monday that the government considers
lowering the tax burden the most important factor in sustaining growth.

"The government is working from the assumption that tax reform is the main
factor ensuring stable economic growth," he said.

The state is taking "painful steps to lower its spending" by streamlining
its operations to get rid of "excessive functions," he said.

Dvorkivich said the government could spend 30 percent less then it does and
still meet its obligations, a move he said would allow tax cuts.

Yevgeny Gavrilenkov, senior economist at Troika Dialog, said that while the
government understands the problems and knows how to solve them, reforms
simply are being implemented too slowly.

He said the country has no choice but to accelerate reforms and cut
expenditures because "there is no other way" to sustain growth.

"It was Adam Smith who said that for an economy to grow it needs low taxes,
good laws and no war," said Vladimir Mau, rector of the Academy of the
National Economy.

*******

#7
Moscow Times
November 27, 2002
Rewriting History
By Joseph E. Stiglitz
Joseph E. Stiglitz is professor of economics and finance at Columbia
University. He was the recipient of the 2001 Nobel Prize in economic
science. Previously, he served as chairman of President Bill Clinton's
Council of Economic Advisers and as chief economist of the World Bank. His
book "Globalization and Its Discontents" will be published in Russian in
the spring. He contributed this comment to The Moscow Times.

Anders Aslund, in his article "How Russia Was Won," has written another
remarkable piece, trying to explain that the recent "success" of Russia is
due to its following more faithfully the advice of the International
Monetary Fund and the U.S. Treasury Department -- just as the poor
performance prior to that was due to its failure to follow that advice
sufficiently faithfully. He argues that the growth of the country since the
1998 financial crisis bears testimony to the fact that he and the IMF are
correct, and that the interpretation provided in my recent book
"Globalization and Its Discontents" is wrong.

Russia's performance since the crisis has been impressive -- but the
country's GDP is still almost 30 percent below where it was at the
beginning of the decade. At 4 percent growth per annum, it will take Russia
another decade to get back to where it was before the beginning of
transition. Remember, the move from communism to a market economy was
supposed to increase economic prosperity. A two-decade transition
depression/recession, during which poverty and inequality increased
enormously, while a few have become very wealthy, can hardly be called a
victory. And the longer run prospects are far less rosy than Aslund would
suggest: With investment a mere 10 percent of what it was in 1990, even if
that investment is better allocated, how can growth be sustained?

Russia did finally achieve a modicum of success when it broke away from the
IMF program that Aslund supports so strongly. The IMF did not want Russia
to devalue, and provided billions of dollars to help it avoid devaluation.
The high exchange rate and high interest rates that were necessary to
sustain it in the absence of capital controls had strangled the economy.
Before the devaluation, I recall conversations with the U.S. deputy
treasury secretary -- the United States effectively dictated IMF Russia
policies, so his views were important -- together with some top Russian
academicians. These academicians, as well as many economists at the World
Bank, thought that there was excess capacity, and that the IMF/U.S.
Treasury policies were destroying the economy.

The IMF and U.S. Treasury worried that any change would restart inflation,
that there was little or no excess capacity. This was a remarkable
confession: Evidently, they believed that their policies, in the space of
just a few years, had destroyed more than 40 percent of the country's
capacity, something that no war had ever done. They shunted aside
micro-data from Russia which showed that there was in fact excess capacity,
just as they ignored the World Bank's analysis of debt dynamics, which
showed that the proposed huge new IMF loans -- even if not misused due to
corruption -- would not succeed in restoring growth of the economy and
would only leave the country more in debt. A few at the top of the IMF, and
especially the U.S.-appointed first deputy managing director, actually
seemed to convince themselves that the programs would work, although to
their credit, many in the IMF, including its chief economist, seemed to
recognize that this was simply another example of lending motivated more by
politics than economics.

The results were as I, and the World Bank economists, had predicted: The
1998 bailout did not work, the devaluation did work. There was enormous
excess supply; import substitution started to take place, even in the midst
of the turmoil. Imports in the year after the crash were down nearly 50
percent relative to the year before the crash, and while some of this
decrease reflected the decline in the overall economy, much of it was due
to a switch from buying foreign food, clothes and other goods to
Russian-made ones. Later, of course, higher world oil prices gave further
impetus to the economy. Profits generated provided funds for expansion,
even when the banking system (which had never done much of what banking
systems are supposed to do -- i.e., provide finance for the creation of new
enterprises and the expansion of old) was slow to recover. Capital controls
were imposed, and instead of looking for the best opportunities for
investment in New York, those with money looked for opportunities at home.

Yes, the market economy can provide incentives for wealth creation. But
unfortunately, under the preceding years of IMF programs, the market
economy with high interest rates, illegitimate privatizations, poor
corporate governance and capital market liberalization had provided
incentives for asset stripping. Growth was caused by the change in the
economic environment, a change that Russia made for itself, over the
objections of those like Aslund and the IMF.

Aslund has another interpretation: The crash was a wake-up call; the new
reformist parliament elected in December 1999, in tandem with the reformist
administration of President Vladimir Putin that took over in 2000, lowered
tax rates, undertook judicial reform, legislated private ownership of land,
adopted new banking laws -- in short, did all the reforms that they should
have done, and hey presto, growth took off, just as the reformers had said
it would all along.

There are two problems with this interpretation. The first is that growth
began before these reforms were in place. Even with the turmoil of default
and devaluation, even with the usual 12 to 18-month lag in impact of
devaluation, Russia was growing by 5.4 percent by the end of 1999. And
second, there can be a long gap between legislation and meaningful reform.

Some of the reforms, like those in taxation, were important mainly because
they added to the dynamism already present in the economy. (At the
overvalued exchange rates, before oil prices started to increase, even with
tax reform, there would have been no profits in the critical oil sector to
tax. Any squeezing of that sector would have simply further dried up funds
for investment.)

If Aslund's story made any sense, as the reforms actually get implemented
and solidified, growth should be taking off, not declining -- especially
given the high oil prices. Analyses that begin by looking at economics
rather than ideology and wishful thinking can explain the decline before
1998, the robust growth afterward, and the more recent slowdown. There has,
for instance, been a real exchange rate appreciation -- and just as one
would have predicted, it has had adverse effects on growth.

Aslund's ideology shows through most clearly in his final passage. He
argues that the form of privatization does not matter and asserts that "no
strategic restructuring appears possible before its [an enterprise's]
privatization." These were the central tenets of the IMF/U.S. Treasury
program. But they were wrong. Theoretical and empirical research at the
World Bank and elsewhere, including the examples of Poland and other
countries that took different approaches, has shown that restructuring is
possible before privatization; that how privatization occurs does make a
difference, both in the short and long run. Privatization without good
corporate governance typically does not lead to faster growth. It does,
however, lead to a whole host of problems.

In the long run, we should be concerned not just with the pace of economic
growth but with the kind of society that is being created. To Aslund,
evidently, the concentration of ownership in Russia is of no concern, so
long as it generates growth. Before the so-called reformers, there was
another vision of a market economy based on greater equality, using the
power of markets to bring riches not just to a few but to all of society.
That the Russian transition did not achieve this is perhaps not a surprise
-- it was nowhere in the vision of these reformers. But their view of
economics was so tilted, so ideologically driven, that they even failed in
the narrower objective of bringing about economic growth. What they
achieved was a remarkable decline. No amount of rewriting history will
change this.

*******

#8
Moscow Times
November 27, 2002
Whither the U.S.-Russian Partnership?
By Angela Stent
Angela Stent, director of Georgetown University's Center for Eurasian,
Russian and East European Studies, served in the U.S. State Department's
office of policy planning from 1999 to 2001. She contributed this comment
to The Moscow Times.

Last week's summit between Presidents George W. Bush and Vladimir Putin
outside St. Petersburg followed what has now become a familiar pattern in
the post-Sept. 11 U.S.-Russian partnership: warm personal relations between
the two presidents; strong agreement on the need to combat the dangers of
terrorism arising from Islamic fundamentalism; commitment to expand
economic relations; and acknowledgement of disagreements over a range of
issues, including NATO enlargement and the future course of action in Iraq.
Friday's summit, however, also included strong, perhaps unexpected, words
from Putin about the role of two U.S. allies, Saudi Arabia and Pakistan, in
aiding and abetting terrorism -- remarks which elicited no public American
response.

Bush's visit to Petersburg highlights Russia's continuing importance for
the United States in its anti-terrorist campaign. Russia has, so far, been
more important than NATO in assisting the U.S. war in Afghanistan. Despite
the feel good rhetoric of last week's Prague NATO summit, two major
problems were evident: Unless NATO reforms and enhances its military
capabilities, its future role with 26 members of widely divergent military
strengths is in doubt.

Moreover, most European governments question the need for regime change in
Iraq. Then there are the broader disagreements between the "old" NATO
members (as opposed to the prospective members who are currently more
pro-American) and Washington over a range of political and economic issues.
Thus, the conventional wisdom that the transatlantic alliance is
qualitatively different from the much more tentative U.S.-Russian
relationship is no longer self-evident. Today, Russia shares with America a
more traditional view of the role of military force than Europeans, who
question the wisdom of using military means to combat terrorism, as opposed
to dealing with its root causes. Russia has also adjusted better than the
European Union to the role of a preponderant America, perhaps because its
international ambitions are more modest than those of an EU seeking a more
assertive foreign policy profile.

So far, the new U.S.-Russian partnership is based on a limited bargain: In
return for Russia's support for the U.S. anti-terrorist campaign, which
includes robust intelligence-sharing and U.S. military access to Central
Asian bases, the United States has offered economic incentives, including
energy cooperation and accelerated WTO entry, and has remained virtually
silent about Russia's domestic situation, including the war in Chechnya.

This partnership, however, needs fresh impetus. Without a more
forward-looking agenda, it could stagnate or deteriorate, if the United
States and Russia continue to disagree over issues involving Russia's ties
to Iraq, Iran and North Korea. U.S.-Russian ties must have a stronger
foundation than a common enemy. There are several areas where Russia and
the United States have compelling reasons to cooperate, areas that could
provide a firmer basis for a partnership based on mutual interest.

WMD Proliferation: Russia and the United States share an interest in
limiting proliferation not only of nuclear, but also of biological and
chemical materials. Questions about Soviet-era stockpiles of these
materials remain, and there is much that both sides can do together to
prevent them from falling into the wrong hands.

European Security: The NATO-Russia Council offers a new start for
NATO-Russia relations and is working better than many had initially
expected on issues such as counter-terrorism, theater missile defense, and
search-and-rescue operations. The council should focus more on Russian
military reform, encouraging Russia's military to interact more intensively
with NATO counterparts and pursue new thinking on security cooperation in
Europe.

Security in the Post-Soviet Space: If the anti-terrorist campaign is to
achieve any lasting results, the powers in the region will have to
cooperate with the United States to jointly pursue peace in Eurasia. The
United States and Russia should work with China, the Central Asian states
and as many other regional powers as are willing and able to establish a
new framework for security in the post-Soviet space. Russia should work
toward being a guarantor of stability in this area, together with its other
partners. There is no more zero-sum game in Central Asia. The coming risks
of succession crises and potential instability in Central Asia cry out for
partnership, not rivalry.

Energy Cooperation: The October Houston Energy summit and its aftermath
have reinforced the importance that the Bush administration attaches to
promoting greater U.S.-Russian energy cooperation. While Russia cannot
replace Saudi Arabia as a supplier, its impressive increases in oil
production and its potential to supply more oil to the world market and gas
to Europe have reinforced its significance in an uncertain energy world.

The Middle East: Russia's interests in the Middle East have changed
dramatically in the past decade. Moscow's credibility as a more even-handed
player in the Arab-Israeli conflict has risen over the past few years and
today Russia exercises its influence in the new "quad" format, with the
United States, EU and UN. While America remains the key broker in this
area, Russia could play a more active role under the right conditions.

New Security Issues: Despite the current preoccupation with traditional
security issues, Western relations with Russia will become increasingly
focused on non-traditional questions beyond terrorism, such as infectious
diseases, trafficking in humans and drugs, and organized crime, that
threaten our security and aid and abet terrorism. The United States and
Russia must intensify their cooperation in resolving long-term problems
whose impact reaches well beyond Eurasia.

Working together in these areas will take time and effort. But it will form
the basis of a longer-term and broader-based U.S.-Russian partnership. It
will create structures that will ensure a denser network of ties between
the two countries and their populations. In the new, uncertain world,
Russia and America face the threat of global terrorism and unconventional
warfare together. They will need each other as partners for much of this
new century.

*******

#9
Nezavisimaya Gazeta
November 27, 2002
A GREAT RESETTLEMENT OF PEOPLE FROM THE CAUCASUS
Chechens have become the third-largest ethnic group in Russia
Author: Maxim Glikin
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE PRELIMINARY RESULTS OF THE RECENT NATIONAL CENSUS HAVE INDICATED
THE NECESSITY OF CORRECTING RUSSIA'S ETHNIC POLICIES. IT TURNS OUT
THAT SOME ETHNIC GROUPS ARE ON THE VERGE OF EXTINCTION IN RUSSIA,
WHILE THE NUMBERS OF OTHERS ARE GROWING.

     The Caucasus is coming to Russia, while Russia is leaving the
Caucasus. This is a conclusion drawn on the basis of the preliminary
results of the recent national census. We asked Ethnic Affairs
Minister Vladimir Zorin to comment on these results. It turned out
that the layout of ethnic groups in the Russian Federation has
changed. Ethnic Germans have disappeared from a dozen major cities.
Mr. Zorin thinks that their place will be taken by Armenians and
Azerbaijanians. Chechens (over a million) have drawn closer to ethnic
Russians (around 120 million) and Tatars. There are no official
reports regarding the census, and it is most unlikely that they will
appear in the near future. However, the president and the government
have already seen the general picture. Vladimir Zorin said that the
president ordered him to revise the concept of Russia's ethnic policy.
     It turned out that population decline is not very substantial.
According to Zorin, the total number of people living in Russia is
145.1 million, "which is 2 million more that statisticians said and 7
million more than some experts predicted". In general, Russia is not
in a demographic pit.
     Vladimir Zorin said with pride: "We have not lost a single ethnic
group!" According to him, all ethnic groups registered by specialists
in ethnology and anthropology are present in the results of the 2002
population census. There are over 190 ethnic groups in Russia (70 more
than in 1989, when the Soviet government compiled a list of "legal"
ethnic groups).
     It is possible that the results of the 2002 census will pour balm
on the wounds of fighters for privileges and preferences for ethnic
minorities. The list of such groups has been expanded from 45 to 60.
Many ethnic minorities are on the verge of extinction. For instance,
there are only 179 Oracs in Russia (and probably in the world). In
other words, supporters of special federal programs for northern
regions (such as former Chukotka Governor Alexander Nazarov) have
received an additional trump card. Vladimir Zorin hints that the
government will increase support for territories inhabited by ethnic
minorities. He said that a range of figures shows the necessity of
supporting these territories: low living standards, poor education,
and lack of knowledge of the ethnic or Russian language.
     The results of the census are connected with Russia's new ethnic
policy. The majority of experts say that the former concept, passed in
1997, does not meet present requirements. The policy should be
corrected, and many experts say that the government must strengthen
the role of the Russian ethnic group and the Orthodox Church as the
dominant faith. According to our sources, the Duma committee for
ethnic affairs has already prepared bills on the Russian ethnic group
and on the foundations of the state's ethnic policy. These bills may
be submitted to the Duma by New Year.
(Translated by Alexander Dubovoi)

******

#10
Vremya MN
November 27, 2002
LESSONS OF DUBROVKA
The Chechen war cannot just be ended: it can be won or lost
Author: Yevgeny Satanovsky
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
AFTER THE RECENT HOSTAGE-TAKING AT THE THEATER CENTER IN MOSCOW, THE
GOVERNMENT AND SOCIETY MUST UNDERSTAND THAT IT IS NECESSARY TO WIN THE
WAR AGAINST TERRORISM. OTHERWISE, WE WILL SIMPLY CEASE TO EXIST, SINCE
NO ONE HAS ANY FUTURE IN A COUNTRY WHERE TERRORISM HAS WON.

     Only recently, the Chechen war seemed to be far away. Politicians
and journalists were boosting their ratings, some were embezzling the
state's money under the cover of this war, and there were many
arguments over whether to withdraw troops from Chechnya or not. But
hostage-taking at the Theater center in Moscow turned the situation
around: now the war is close to us and we are fighting it.
     Those who understand things are ware of the fact already that
this war cannot be finished: it can be won or lost. A loss does not
necessarily mean a cessation of bloodshed in this case. Separation of
Chehcnya or organization of whatever number of states on its territory
do not imply cessation of explosions in Russia.
     We are accustomed to learning by our own blunders. It is better
to learn by errors of someone else of course. For instance, in 1967,
Israel defeated Arabs in the war unleashed by them and occupied their
territories. It has been suffering from troubles caused by these
territories since then. Arab territories have been neither adjusted to
Israel nor separated from it. People living there work exclusively in
Israel, and it their free time they arrange terrorist acts there.
Don't you see parallels? Chechnya was practically independent after
the Khasavyurt agreements. Israel is a small country, but Russia is a
big one and may not care about the international community in
principle. But the main point is that the more independence
Palestinians had, the more peaceful Israeli civilians fell victims of
terrorist acts. There are people who can build states and there are
other people who can shed blood for the sake of their independence.
People who cannot build anything in principle are fighting mainly
peaceful civilians, since during wars against the Army they might die
themselves. This happens both in Chehcnya and Palestine.
     The West, especially Europe, demands that Israel should withdraw
its forces from Palestine. It does not notice Palestinian terrorists
for some reason. The West, especially Europe, also demands that Russia
should give independence to Chechen terrorists. Even during the events
in the Theater Center, CNN was calling them "dissidents". However, it
is profitable for Europe to ally with the Arab world for the sake of
oil and flirt with its own Moslem extremists buying their calm at the
expense of other countries. After all, it is not a problem of Europe
if Russia and Israel will remain on the world's map. The first Chechen
war caused an outburst of disgust in Russia. The intelligentsia
sympathized with the Chechen people, and common people were
indifferent to the problem. The first change in the mass mentality was
caused by the Budennovsk events. Those who could think and wanted to
buried the idea of Chechnya's independence then and there at the
moment of the capture of the maternity hospital. Freedom is not gained
by taking prisons hostage. The second signal was the tragedy in
Moscow.
     Baraev's raid on the Theater Center means that the war has become
a people's war.
     The events at Dubrovka have outlined a simple truth: there are no
fronts or rears in the war against terrorism, for any city may become
the frontline in this war. However hard we might berate the
government, it is clear that we can either win this war together with
this state or lose it and cease to exist together. No one has a future
in a state where terrorism has won. Afghanistan under the Taliban has
demonstrated this.
     At the same time, it is necessary to remember that the best
allies of terrorists providing them with personnel are Russian left
ultra-patriots appealing to banish all Chechens and representatives of
other Caucasus nations from the country. The same concerns our
security agencies. Brave professional Colonel Budanov by his personal
example has brought up more gunmen than Khattab and Basaev put
together.
     The government of tiny Israel thinks it the prime task to protect
its own citizens. There is no more important task for the Russian
government today as well. It should protect Russians, Chechens, and
representatives of all other nations against violence and chaos of all
forms, especially terrorism. Both the government and the society
should understand that we have no other way out.
(Translated by Kirill Frolov)

*******

#11
U.S. imposes travel ban on Belarussian leader

WASHINGTON, Nov 26 (Reuters) - The United States on Tuesday banned
Belarussian President Alexander Lukashenko from entering the country in
protest at the expulsion of European rights monitors, State Department
spokeswoman Lynn Cassel said.

"The United States imposes this extraordinary measure in view of the
continuing erosion of human rights and democratic principles in Belarus,
specifically the forced shutdown of the Advisory and Monitoring Group of
the Organization for Security and Cooperation in Europe based in Minsk,"
she said.

The measure also applies to seven other high-ranking government members and
is identical to a visa ban all European Union members, except Portugal,
imposed on Nov. 19 in protest at human rights abuses.

Lukashenko expelled the observers of the Organization for Security and
Cooperation in Europe after the organization said his reelection last year
was fraudulent. The West has accused him of cracking down on opponents and
stifling the media.

U.S. relations with the ex-Soviet state are worse than with any other
European country.

Cassel said in a written statement the United States would monitor the
situation in Belarus in deciding how long the visa ban should continue.

"In this regard, we would welcome the return of the Advisory and Monitoring
Group to Minsk. Belarus must undertake a policy of political liberalization
and respect for human rights if it hopes to improve relations with the
international community and end its self-imposed isolation," she added.

Cassel did not name the seven Belarussian officials.

*******

#12
ANALYSIS-Oil price uncertainty casts shadow over Russia
By Andrew Hurst

MOSCOW, Nov 26 (Reuters) - As Russia cruises towards a fourth full year of
oil-fuelled growth since a 1998 financial collapse, a lingering worry is
gnawing at the confidence of financiers, business leaders and brokers.

Could the price of the black gold which is the lifeblood of this vast
nation's economy suddenly collapse in the wake of a United States-led strike
on Iraqi leader Saddam Hussein?

And would Russia then be forced into a humiliating rerun of the debt default
and dizzying rouble devaluation it experienced four years ago?

Such a scenario appears unlikely.

"If oil prices fall sharply, it will be a problem for Russia," said Kaspar
Bartholdy, Chief Emerging markets economist at CSFB's London office.

The impact of an oil price meltdown, if it happens, is likely to be a lot
less traumatic than in 1998 but could still stop economic growth in its
tracks and hit a consumer and retailing boom.

Moscow has made no secret of its concerns that a U.S.-led war in Iraq and a
surge of western oil companies into the country could bring the price of oil
tumbling down, delivering a body blow to a buoyant economy.

But with central bank foreign exchange reserves at an all-time high of $47.7
billion, a floating exchange rate and a current account surplus running at
$21.1 billion, Russia is much better placed to shoot the rapids than in 1998.

"Russia has not been accumulating distortions for two or three years like it
had in 1998 when everything collapsed suddenly," said Evgeny Gavrilenkov,
Chief Economist at Moscow-based finance house Troika Dialog.

"In 1998 Russia had a fixed exchange rate and poor fiscal discipline. They
now have a (fiscal) surplus and above all the exchange rate regime is
different and can adjust," he said.

A HOUSE BUILT ON A SURPLUS

Russia's new-found fiscal solidity has helped earn the country a relative
safe haven status among emerging countries while many countries flounder in
regions such as Latin America.

Russia could ride out a relatively short-lived oil price fall without too
much pain but the longer prices stay low, the higher the toll on the
country's economic health.

"I don't see any fiscal problem or currency problem for one year," said
Gavrilenkov. Russia will have built up a reserve of $6 billion by the end of
the year to help it meet a peak of $17 billion in debt service payments in
2003.

Next year's budget, now making its way through the State Duma, the nation's
legislative assembly, predicts 2003 growth of up to 4.3 percent if oil prices
average $21.5 a barrel and of 3.5 percent if they average $18.5.

Nobody is quite sure exactly what level of oil prices delivers growth in
Russia but most economists believe the economy will slide into recession if
prices sink below $15 for any length of time.

"It's strictly a function of how deep it (the oil price) falls and how long
it stays low and also how violently people's expectations affect capital and
investment flows," said the World Bank's Chief Economist in Russia, Christof
Ruehl.

"There will not be a sudden collapse. It's a system built on a budget
surplus, it is not a house of cards as before."

A sharp slowdown in the economy would put a brake on investment flowing into
the oil industry, which is almost entirely in private hands, and bring a fall
in fiscal revenues.

President Vladimir Putin would then be faced with the unpalatable choice of
having to slash public spending or to borrow to plug any gap in state
finances as he prepared to run for re-election in 2004.

"Clearly they are much worse off if the oil price falls but it is difficult
to see a payments crisis occurring without spectacular mismanagement," said
CSFB's Bartholdy.

*******

#13
Wall Street Journal
November 27, 2002
Four Russian Companies Plan Arctic Port to Speed Oil to U.S.
By JEANNE WHALEN and THADDEUS HERRICK
Staff Reporters of THE WALL STREET JOURNAL

Four of Russia's biggest oil companies are planning to build a $1.5 billion
Arctic oil port that could eventually help ease U.S. reliance on Mideast
oil by supplying as much as 10% of American crude imports, company
officials said.

The announcement Wednesday of the preliminary agreement comes just days
after President Bush and Russian President Vladimir Putin pledged to
strengthen energy ties. The U.S., contemplating possible military action
against Iraq that could destabilize an already tense Middle East, is eager
to increase oil deliveries from Russia , an increasingly friendly ally that
currently supplies less than 1% of U.S. oil imports. Russia is the world's
second-biggest oil exporter but sends most of its crude to Europe.


Plans for the Russian port in the northwestern town of Murmansk are still
at an early stage. The companies haven't yet arranged financing or
conducted a feasibility study but will sign a memorandum of understanding
declaring their intentions to pursue the project, officials at several of
the firms said. The port and a 935-mile pipeline leading to it would be
ready by 2005 at the earliest and could export as much as one million
barrels of oil a day.

U.S. officials welcomed the accord but cautioned that the port wouldn't be
built in time to compensate for any sudden shortfalls in Mideast oil
supplies tied to a war in Iraq, where Russia has business interests, many
oil-related. "It's naive to think that if that happened Russia could
somehow save us," said one U.S. official. Still, Washington is keen to
gradually increase supplies from Russia over time. "We see Russia as
playing a pivotal role in global energy security," Secretary of Energy
Spencer Abraham said during a visit to Moscow this summer.

Energy policy was a big focus of last week's 90-minute meeting in St.
Petersburg between Messrs. Bush and Putin, U.S. officials said. The
presidents issued a joint communique vowing closer cooperation between
their two countries, and Mr. Bush stressed the importance of developing
internal Russian laws that better protect foreign investors, officials
said. In the communique, the two leaders said they "strongly support the
efforts" of Russian and U.S. corporations to "identify new and mutually
beneficial commercial opportunities."

Washington wants more than increased Russian oil imports out of its new
energy relationship with Moscow. It is equally keen to open Russia's vast
oil reserves to U.S. investors, a goal still proving elusive despite talk
of growing energy ties. U.S. companies have been reluctant to invest there
because of shifting tax codes and regulatory policies and have called for
binding legislation before investing more money in the country. Conoco
Inc., for example, which recently merged with Phillips Petroleum Inc.,
invested $400 million in a 1991 joint venture with two Russian companies: a
subsidiary of Lukoil and Rosneft. While the project has produced more than
90 million barrels, ConocoPhillips says constantly changing tariffs and tax
laws have made the project only marginally profitable.

After a long post-Soviet slump, Russia's oil industry has been on the
rebound in recent years, boosting investment and sharply increasing output.
Production is growing much faster than Russia's ability to export the oil,
requiring construction of new pipelines and ports. Washington has said it
is prepared to help finance construction of Russian export infrastructure.

But, flush with cash after several years of high oil prices, Russian
companies oppose giving up their market to outsiders and continue to block
passage of legislation that would protect overseas investors.

U.S. energy officials visited the Moscow offices of OAO Lukoil, the oil
giant leading the Murmansk project, during the Bush-Putin meeting, and a
Lukoil spokesman said that warming U.S.-Russian political ties are
encouraging the Russian companies' commercial aim of boosting exports.
"This is a private project, of private oil companies, but I think all of
our companies are mindful of supporting the [Russian] government ... and
activity in the political sphere without doubt helps promote economic
ties," he said.

The route across the ice-bound Arctic to the U.S. is considerably shorter
than the distance from the Persian Gulf to the U.S. And unlike the rest of
Russia's mostly shallow ports, the Murmansk terminal would be located in
deep enough water to handle the kind of supertankers that make
trans-Atlantic voyages economical for Russian producers. In the early
1980s, the Soviets considered building an oil terminal in Murmansk, a
seaport on the Barents Sea, but deemed it too dangerous because a fleet of
nuclear submarines was already in the port. The subs have since been moved.

The steep expense of the Murmansk project is forcing Russia's normally
cutthroat companies to cooperate and share costs for the first time. Oil
tycoons who have spent years battling one another for control of Russia's
formerly state-owned oil reserves are scheduled to sign the agreement at a
news conference Wednesday. Set to attend are Vagit Alekperov, president of
Lukoil; Mikhail Khodorkovsky, chief executive of OAO Yukos; Evgeny
Shvidler, president of OAO Sibneft; and German Khan, executive director of
Tyumen Oil Co.

Together, the firms produce more than half of Russia's daily output of
eight million barrels of oil. Russia exports about 5.1 million barrels of
oil a day.

Extra ports would make the Russians more competitive with Saudi Arabia, the
world's largest exporter with an average of 6.13 million barrels a day
between January and September. But in the short term, Saudi Arabia has much
greater influence on oil prices because it has spare production capacity of
as much as 2.5 million barrels a day. Russia already is producing and
exporting oil at full throttle.

The Organization of Petroleum Exporting Countries, which cut production
last year to support prices, has been ignoring its quotas and leaking
considerably more oil onto the market. The result: Prices have hovered at
about $30 a barrel, even amid jitters over a possible war with Iraq,
relatively low inventories and the onset of increased seasonal demand.

This year, U.S. domestic crude-oil production has averaged 5.8 million
barrels a day, according to the Energy Department's Energy Information
Administration. U.S. oil imports, meanwhile, have averaged nine million
barrels a day for the year, according to the EIA, though they surged in
October to 9.4 million barrels daily.

In the meantime, the business climate remains unpredictable. Earlier this
month, ChevronTexaco, Exxon Mobil and other involved in an oil pipeline
running from the Caspian Sea to Russia's Black Sea coast were thrown for a
loop when Russia's federal energy commission threatened to put the private
export pipeline's tariffs under state regulation. That matter remains
unresolved.
-- Greg Hitt contributed to this article.

******

#14
The Globe and Mail (Canada)
November 26, 2002
Russia must protect aid, Graham says
By CAROLYNNE WHEELER
Special to The Globe and Mail

MOSCOW -- A promise made by Foreign Minister Bill Graham to give Moscow up
to $1-billion (U.S.) over the next decade to clean up its decaying store of
nuclear, chemical and biological weapons will hinge on Russia's ability to
prove the money will not fall prey to corruption or legal disputes.

On his first trip to Moscow as Foreign Affairs Minister, Mr. Graham told a
press conference yesterday that a "modest" pledge of $5-million for the
disposal of chemical and biological weapons was just a step toward the much
larger contribution and would serve as a template for future deals.

With 40,000 tonnes of chemical weapons under its control, Russia has
pledged to destroy its arsenal, the world's largest, under the 1997
Chemical Weapons Convention. It also has a cache of broken-down nuclear
submarines, spent nuclear fuel and weapons-grade plutonium that officials
have warned is at risk of falling into the hands of terrorists.

The first chunk of Canadian aid is to be used to speed up construction of a
chemical-weapons-destruction plant in the Ural Mountains, where a large
stockpile of toxic agents, including sarin gas, is believed to be located.
Russian officials said that work on the plant, one of three planned for the
country, has been slow due to a lack of money.

Mr. Graham also met yesterday with Atomic Energy Minister Alexander
Rumyantsev, and according to the Russian news agency Interfax was close to
announcing another $100-million to help dismantle nuclear submarines.
Canadian officials refused to confirm the amount. The greater pledge of
$1-billion is Canada's share of a $20-billion project to assist Russia,
agreed to at the G-8 summit in Kananaskis in June.

The United States initially committed half the amount, and asked other
member countries to divide up the remaining $10-billion.

Last month, U.S. undersecretary of state for arms control John Bolton told
a U.S. Senate committee that many G8 countries have had "serious
difficulties" in delivering the promised aid because of conflicts over
liability protection, exemption from taxation and access to work sites.

Donor countries don't want to be held accountable for accidents that may
occur during sponsored cleanups, nor do they want donations to be subject
to a tax that could range from 10 to 30 per cent.

Mr. Graham said in an interview that the $5-million Canadian deal required
lengthy negotiations on transparency and accountability, and that future
talks could face similar delays.

Another Canadian official added: "We aren't going to spend a dime on
nuclear submarines until the issue of nuclear liability is resolved."

"Today our strategy of how to complete the task of disarming is perfectly
clear -- what technologies to use, how, where and what to build," Zinovy
Pak, the official who signed the latest Canadian agreement, said recently.

"Problem No. 1 today is a lack of certainty in funding from both the
Russian budget and the budgets of donor countries."

Sergei Molochkov, lead researcher in Canadian policy at Moscow's
U.S.-Canada Institute, said he is not surprised by the delays over
liability and transparency when such a quantity of dangerous materials is
at stake.

"It would be absolutely absurd if you pump money in without any guarantee
that every dime goes to the point," he said.

However, Mr. Molochkov added that if the world drags its feet, the danger
that weapons will fall into terrorist hands will grow.

******

#15
Arabicnews.com
November 27, 2002
Russian plan to topple Saddam Hussein to prevent US occupation of Iraq

The Paris- based al-Watan al-Arabi magazine said, according to
well-informed sources, that the military and intelligence leadership in
Moscow had prepared a plan to topple the Iraqi President Saddam Hussein by
a military coupe or an assassination operation in order to protect the
Russian interests in Iraq and the region and to block plans of an American
occupation of Iraq.

In its recent issue, the magazine said that the higher Russian leadership
decided to pursue a new strategy that stems from the fact that Washington
will topple Saddam Hussein, but the Russian interest require a plan that
achieves this objective without leading to Russia losing of its historical
influence and economic interests in Iraq.

A well- informed source stressed that the said plan was held in top secrecy
and full seriousness and on the ground that the plan of the military coupe
has no relation to the military coupe plans previously prepared by the CIA;
A plan which is based on an experience of years of military and
intelligence cooperation between Baghdad and Moscow and tons of the archive
of the Russian intelligence.

The magazine said that the scenario of the successful Russian coupe will be
carried out at the hands of persons which are very close to the Iraqi
President and are able to have access to him, adding that the Russian
national security council took a decision to topple Saddam Hussein in order
to protect and ensure the Russian interests in Iraq and the region.

*******

#16
Over 500,000 Russian prisoners sick - Justice Ministry

MOSCOW. Nov 27 (Interfax) - The Russian criminal correctional system is
turning into a prison medical organization, Deputy Russian Justice Minister
Yuri Kalinin stated.
   About 500,000 prisoners are suffering from various illnesses, including
serious ones, Kalinin said at a press conference in Moscow on Wednesday.
More specifically, 90,000 have an active form of tuberculosis,
200,000-300,000 suffer mental disorders, 102,000 are drug addicts and
72,000 are alcoholics, he said.
   The most acute problem is an increasing number of prisoners with HIV,
the deputy minister said. Over 36,000 individuals with HIV are behind bars
in Russia today, he said.
   The state allocates significant funds for treating sick prisoners; 700
million rubles have been disbursed for treating tuberculosis in
penitentiaries this year, which is double the amount set aside in 2001,
Kalinin said.
   Furthermore, the European Bank for Reconstruction and Development is
expected to extend a $48 million loan for five years for these purposes, he
said.
   The 2003 budget sets a prisoner's daily food ration at 25 rubles, or 60%
of a solder's daily ration, Kalinin said.
   Until recently, he noted, Russia spent about 60 kopecks for prisoners'
daily food rations.

******

#17
Moscow News
November 27-December 3, 2002
Tajik Snub to Russia?
The former Soviet republic seems to be keen to dump Russia as its chief
ally in favor of the United States
Sanobar Shermatova

If the reports about Tajikistan's change of heart are true, they may hint
at a totally new setup emerging in the south of the CIS.

The first report said Dushanbe had been secretly negotiating with the
United States joint patrolling of the Tajik-Afghan border. This is a
serious allegation, that must be refuted if false. But official Dushanbe -
despite its endless assurances of eternal friendship with Russia - has
failed to respond to the report. It was U.S. Ambassador to Dushanbe
Franklin Huddle who dismissed the report as fiction.

Speculation on that issue was fuelled by another conflict between Moscow
and Dushanbe. Russian Defense Minister Sergei Ivanov announced that the
seven portable Igla surface-to-air missile systems seized from Chechen
gunmen had come from Tajikistan. He made that announcement at a session of
defense ministers of the signatories to the Treaty on Collective Security,
held in Moscow on November 20. How could the Chechens have got hold of the
weapons, Mr. Ivanov asked his Tajik counterpart Sheral Khairullayev.

By way of a first warning, Moscow deported a group of Tajik migrant workers
from Moscow region's construction sites.

According to unofficial figures, there are a million or so Tajiks working
in Russian cities on whose remittances their families back home depend. One
million is about a fifth of the entire population of Tajikistan. Should
Russia shut off its labor market to that republic, the jobless migrant
workers could destabilize the situation in their homeland. Moscow could
establish quotas on workforce from the CIS countries as a means of putting
pressure on the Tajik government.

The background for Moscow's move is events that Tajik politicians say point
to a redivision of spheres of influence in the republic. After years of
seeming tranquility, leaflets are appearing in which anonymous authors
accuse the Tajik president, Emomali Rakhmonov, of having let his clan usurp
power to the detriment of his associates. The president's "clan" are
apparently people who hail from his native town of Dangara, plus his close
relations, including his sons-in-law.

Some MN sources have confirmed that the republic's opposition forces are
banding together. Thus, a month ago ex-Soviet government officials and KGB
officers began to set up "discussion clubs" in Tajikistan's northern
districts, which at one time formed part of the opposition to the present
government. These meetings could hardly have escaped the notice of the
republic's top politicians.

Against that complex political backdrop, Dushanbe has been trying to
demonstrate that it is free to choose between Russia and the United States
as an ally. Last year, when the war in Afghanistan was at its height,
official Dushanbe negotiated with the U.S. the granting of Tajikistan's
military airfields for use by American forces; the Russian forces were to
be told to quit the airfields to make way for the Americans.

The airfields ultimately remained under Russian control - after Moscow made
certain concessions to Dushabe. It is quite possible that Dushanbe - in the
hope of making Moscow still more amenable - had deliberately leaked
information about a joint border outpost with the U.S.

Thus, the Tajik regime is seeking to capitalize on the Russian-U.S. rivalry
for spheres of influence in Central Asia.

*******

#18
CYRILLIC RECOGNIZED SINGLE GRAPHIC BASE FOR ALL OFFICIAL LANGUAGES OF
RUSSIA'S NATIONAL REPUBLICS

MOSCOW, November 27th, 2002 /from RIA Novosti correspondent Arina
Sharapova/ -- On Wednesday the Federation Council (Upper House of the
Russian Parliament) has approved amendments to the law "On the Languages of
the Peoples of the Russian Federation," which recognise Cyrillic as a
single alphabetic graphic base for Russia's official language and the
official languages of its republics.

According to Federation Council First Deputy Chairman on the Federal
Affairs and Regional Policy Valery Kadokhov, "the introduced bill fills in
the gap in the legislation, preventing cases of non-coordination in the
field of state governing, economy and information due to the difference in
written languages." The law is called upon to register "the existing
uniformity of print for writing official and business documents", Kadohov
noted.

Heated debate accompanied the Federation Council hearings on the amendments
to the law on the languages of the Russian peoples. Despite the fact that
the Upper House ad hoc committee pronounced in favor of the bill,
representative of Tatarstan Rafgat Altynbayev opposed the amendments. He
believes that "the law contradicts the Constitution which states that the
Republics are entitled to institute their own official language." Karelia's
representative also spoke against the law saying that the Constitution of
the Russian Federation grants the right to preserve and learn native
languages. He added that Cyrillic lacks certain characters used by some
Russian peoples. According to him, "the adoption of the law will destroy
native languages." Utmurtiya's representative Victor Shudegov spoke in
favor of the law. He believes that the law does not infringe upon the
rights of the Russian peoples. Vice versa "it protects native languages
constitutionally." He warned those who oppose the introduced bill that a
whole generation which knows only the graphic basics of Cyrillic will have
to re-learn, and, as a result, young people will not be able to write or
read.

******

#19
From: Ben Aris 
Date: Wed, 27 Nov 2002 16:09:13 +0300
Subject: [RusBizList] RBL448 -- Nov 27
Russia Business List
#448
Wednesday, November 27, 2002

11. Tom¹s Political weekly
Troika: Tom Adshead
27/11/02

The friendly meeting between Bush and Putin, after the NATO meeting in
Prague, is a sign that the two leaders have decided to hitch together the
foreign policies of Russia and the US, even if they are headed in different
directions in the long term.

Russia would prefer that the US not invade Iraq, but seems to accept that
there is no point in trying to stop it.

The government met last Thursday to discuss army reform, but the bigger
event took place on Tuesday, when Putin met with Defense Minister Sergei
Ivanov. This was a public show of support by Putin for Ivanovís efforts to
create a professional army, which is being thwarted by both the military and
the government.

The reform of the state bureaucracy has also been slowed to a crawl by
government opposition. On Friday, the presidential administration made a
stealth move on this front, sending some key bills to parliament and
publishing a presidential decree with a timetable for reform of the civil
service. The general aim is to increase the salaries of government
officials, but it is not clear where the financing for this will come from
and if there will be a stick to go with the carrot.

Putin received Bush in Tsarskoye Selo, one of the most beautiful czarist
estates near St. Petersburg. With each new state visit, Putin seems to find
a new venue which needs upgrading; by the time he leaves the presidency, he
will have done a lot for the St. Petersburg historic buildings preservation
industry. The meeting was meant to happen in Kaliningrad, to show NATO that
Russia has a presence in the Baltics, too, but Bushís plane is too big to
land there.

Putin expressed no reservations about support for the UN resolution on Iraq,
despite the fact that his defense minister is on record as saying that there
is no link between Iraq and terrorism. It does not really matter why the US
is going to attack; all that matters is that they will and Russia will not
object. It is not clear what Russia will get in return, but Bush did say
that he recognized that Russia has economic interests in Iraq and he would
ensure that these were protected.

The other interesting shift in tactics is that both Russia and the US are
starting to turn up the heat on Saudi Arabia. Putin pointed out that 16 of
the 19 hijackers on September 11 came from Saudi Arabia and said that they
need to pay attention to the sources of funding for terrorists.

The desire to wean the US off Saudi oil is strong, but there is not a lot of
progress in increasing the part that US firms will play in increasing
Russiaís oil output. It may be that one plan is to give Russia a major role
in extracting Iraqís oil, which will keep all sides happy, but will mean a
low oil price, once hostilities are over.

LUKoil and Tatneft are the two Russian companies with existing projects in
Iraq. Meanwhile, two of Putinís major domestic projects were resurrected
last week. Putin had a very prominent public meeting with his defense
minister to discuss military reform and the deputy head of his
administration finally showed some progress on administrative reform.

Army reform

The government was meant to have prepared a concept on the transition to a
professional army in July, but has done nothing. This is a classic
bureaucratic response by people who want to change nothing and we suspect
that Putinís public show of support for Ivanov was intended as a sign of his
displeasure at this obstruction. Putin has publicly supported having a
professional army and Ivanov is one of his most trusted allies; he has
himself been continually frustrated by the military which has formed an
alliance with the bureaucracy to stop reform.

The military does not want reform, because it will clip its wings; there is
a whole industry based on helping young men avoid the draft and if the draft
is abolished, then these people will have to find productive employment. The
bureaucracy is helping, because they do not like to see any reductions in
the bureaucracy and also because a professional army will need more money.
So no doubt Ivanovís juniors in the Defense Ministry are complaining that
they are still waiting for numbers from the Finance Ministry (or Labor
Ministry, or whatever) and these ministries are complaining that they are
still waiting for some key memo from the Defense Ministry; in this way, you
can stall pretty much anything for up to six months. This gets tacit support
from Prime Minister Mikhail Kasyanov and hence the need for a public
demonstration of support.

Ivanov presented his concept of military reform to the government on
Thursday and although nothing really changed as a result (the cabinet still
thinks that the document needs more work), at least this is now on the
agenda and presumably the various ministries have concrete timetables. The
government has said that it will think about abolishing the draft, when the
armyís core is professional; it knows that this is not going to happen any
time soon, but at least there is now a public deadline.

Boris Nemtsov, head of the liberal Union of Right Forces, claims a victory
in getting the government to agree to his version of military reform, but
this is not clear, given that Nemtsov has failed to reduce the conscription
period from two years to six months. In fact, the generals tend to give a
mocking laugh when asked about reducing the conscription period; they will
fight this one to the grim death and that is something that the Russian army
is good at.

Nemtsov does claim to have been successful in reducing the reform period
from 2005_11 to 2004_07. If this is true, it is very important, because it
means that military reform has to happen during Putinís second presidency,
rather than being left to his successor. However, deadlines are not very
important in Russia and if the military can regain some political weight,
then these periods will shift. But Putinís public support for Ivanov looks
like a signal that he wants the process to move forward.

In separate, but related news, the Volgograd regional Duma has voted to
rename their city Stalingrad, in honor of next yearís 60th anniversary of
the battle. They have sent the question up to Putin to decide; this is not
the first time that this has been debated and it will be interesting to see
how the president deals with it. Local veterans want it, because it honors
their memory and that of their dead friends. Local businessmen want it,
because they find that it helps them to sell their city to foreign
investors, to whom the name Volgograd means nothing.

On the one hand, Stalingrad was one of the Russian peopleís finest hour and
it is strange that the city is no longer on the map. On the other hand,
there is a good reason why the Soviet Union expunged Stalin from its memory
after his death. In general, Russia has got a lot better at dealing with its
past and the debate on this kind of issue is an important part of the
formation of the national conscience. It is probably too early to rename
Volgograd, because there are too many people who are still alive whose lives
Stalin destroyed.

But do not interpret this kind of debate as more evidence of the Russians
embracing the bad old days. They are never going completely to reject their
past, in the way that the Germans have, and in general it is better to
remember than forget.

Administrative reform

Administrative reform is another project which Putin signaled early in his
presidency, but which has seen little progress. This aims directly at
over_regulation and corruption and, not surprisingly, has met with no
cooperation from the government. One of the first things that Putin did as
president was to ask his government to create an inventory of the
governmentís functions, with a view to reducing the number of these
functions. To date, the government has still not delivered and is still
discussing a concept which would decide what shape this inventory might
take.

On Friday, Dmitri Medvedev, deputy head of the presidential administration,
announced a package of laws on administrative reform which has been sent to
the Duma and a presidential decree outlining the structure of this reform.
The basic idea is to make working for the government more prestigious and
there is also talk of increasing the wages of civil servants to the same
levels as their counterparts in Europe. It is hoped that this will make
bureaucrats worried about losing their jobs and so less likely to indulge in
corruption, if there is a real legal system out there to catch them.

It is good to see that there is progress on this and that Putin aims to
start next year, rather than wait until after the 2004 presidential
elections. And yet we have the suspicion that the bureaucrats will see off
these reforms, just as they have seen off so many others. Putin is taking a
very soft approach to this, probably because he knows that a head_on attack
will be directly rebuffed and is trying to do it by stealth. The court
reforms are an important part of this and they are a long way from taking
effect.

On the other hand, progress is so slow that it is hard to see Putin making
any serious progress even in the five years that he has left as president
and this increases the risk of backsliding. Unless he receives an
unprecedented person mandate from the 2004 elections, it looks to us like
the process of government reform will be beyond him and we have to hope that
he will be succeeded by someone with the same ambitions. At the moment, the
most likely successor is Kasyanov, which is not encouraging, in this
direction at least.

*******

#20
Prodi says Ukraine, Russia should not join EU

AMSTERDAM, Nov 27 (Reuters) - Former Soviet republics such as Ukraine have
no place in an enlarged European Union and Russia is just too big to join,
European Commission President Romano Prodi said in an interview published
on Wednesday.

Ten mostly ex-communist countries are due to wrap up accession talks with
the EU next month and to join in May, 2004. They include Poland, which has
a long border with Ukraine and Belarus, and the three Baltic republics
which share borders with Russia.

"It is important that we now ask ourselves what will happen after this big
expansion. Where does Europe end? The Balkan countries will join, they
belong. Turkey is officially a candidate, that is clear. But Morocco or
Ukraine or Moldova? I see no reason for that," Prodi told Dutch daily De
Volkskrant.

"We need to talk about our criteria. The fact Ukrainians or Armenians feel
European means nothing to me. Because New Zealanders feel European too," he
added.

Prodi said Russian President Vladimir Putin had asked him on a recent visit
to Brussels about potential Russian membership of the Union.

"I told him straight away clearly: no, you are too big," Prodi said.

Russia has not said publicly it would like to join the wealthy bloc, though
the 15-nation EU is already its largest trade partner -- a fact to be
reinforced by eastern enlargement.

Prodi told Reuters this month that his long-term vision was for an enlarged
European Union surrounded by a "ring of friends" from Russia to Morocco,
with which it would share everything except membership.

The 10 countries due to join the EU in 2004 are Cyprus, the Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Bulgaria and Romania aim to join in 2007. Turkey has yet to open negotiations.

*******

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