| JRL #7289 ~ under construction | Simple Text - Entire Issue |
#1 - JRL 7289
Vremya Novostei
August 14, 2003
PUBLICITY FREAKS
Russian, British, and American secret services put on a show Was the widely
publicized operation by secret services of three
countries a sham?
Author: Andrei Zlobin, Nikolai Poroskov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
ABOUT FIVE MONTHS AGO A CERTAIN HEMANT LAKHANI, A BRITISH CITIZEN,
BEGAN SEEKING CONTACTS WITH THE UNDERWORLD IN ST. PETERSBURG. HE
WANTED A CONSIGNMENT OF PORTABLE MISSILES AND PLASTIC EXPLOSIVE TO
SELL IN THE UNITED STATES. SECRET SERVICES WERE ALERTED AND HE WAS
PLACED UNDER SURVEILLANCE.
Terrorists planning an action against the United States almost
succeeded in bringing a Russian Igla portable SAM launcher into US
territory. This is the gist of all reports provided by news agencies
around the world. Had the terrorists succeeded, they might have fired
on President George W. Bush's Air Force One or killed dozens of
passengers on an ordinary jetliner. The villains were rendered
harmless by the efforts of former ex-enemies and now partners - the
intelligence services of Russia, the United States, and Britain.
The case developed in a manner quite typical of Russia nowadays.
About five months ago a certain Hemant Lakhani, a British citizen,
began seeking contacts with the underworld in St. Petersburg. He
wanted a consignment of portable missiles and plastic explosive to
sell in the United States. Secret services were alerted to the
foreigner's activities and he was placed under surveillance.
The smuggler did get his portable launcher - from the FSB. The
system was rendered inoperable in quite a subtle manner and was
actually harmless. The buyer never suspected anything. He had the
launcher shipped to the United States and followed it. This was where
the British MI-5 took up the case. The Americans were alerted and
briefed as well. Lakhani was arrested in Newark, New Jersey. He was
caught red-handed selling the dummy Igla for $100,000 to an FBI agent
posing as an Al Qaeda buyer. His accomplices, three Afghans, were
arrested in New York at the same time, charged with money laundering.
The launcher itself was found at the Baltimore port, listed in the
documents as medical equipment of some sort.
There is something fishy about this whole incident. Secret
services found out absolutely all there was to know about Lakhani.
They know that he is not a prominent arms dealer. In fact, he cannot
be even viewed as an arms dealer because nothing is known about his
involvement in any other incidents. Neither is he connected with
terrorist organizations.
Under the circumstances, "playing" with the smuggler as long as
the secret services did was hardly worthwhile, says a veteran counter-
intelligence officer we approached for comments. The result of the
whole operation, Lakhani's arrest, could have been accomplished right
in St. Petersburg. And if he was allowed to leave Russia with a dummy
launcher, the secret services could at least have given him a chance
to sell it to real terrorists rather than an FBI agent. There is also
something illogical about the man's hasty arrest near Newark airport
particularly when the launcher itself was at a port. It is common
knowledge that the secret services are jealous of their achievements,
because they usually necessitate some information on either successes
or failures. In this particular case, the involvement of the British
MI-5 was not exactly necessary. Russian and American secret services
could have easily done without it.
In short, there are many illogical details in the whole saga,
particularly when it is regarded as an example of how secret services
prevent clandestine arms deals and exports. Everything makes sense,
however, if we assume that all this was a carefully orchestrated
publicity stunt. Was it a coincidence that FSB public relations chief
Sergei Ignatchenko flew to Washington as soon as Lakhani was detained?
Confronted by camera crews, he called the operation "a new phase in
development of cooperation between secret services" and added that
"this is the first such operation since the Cold War." Ignatchenko
pointed out that cooperation between Russian, American, and British
secret services has been revived "in accordance with the agreements
made by our leaders."
The PR move will also benefit the US Congress, lobbying for a
bill to install anti-missile defense systems on all 6,800 passenger
planes in America. The latest operation was the first response to the
concerns of G8 leaders about the proliferation of portable missiles.
The CIS Council of Defense Ministers shares this concern too.
Portable SAM launchers are a brilliant combination of high
precision and simplicity of use. The weapon is perfect against planes,
helicopters, and even guided missiles. It works on the principle "fire
and forget". Portable SAM launchers have been in use since the late
1960s and not only in wars and conflicts. Colombian drug cartels
successfully used Russian SAM launchers against American transport
helicopters carrying government troops.
Three helicopters (one of them carrying 118 people) were shot
down in Chechnya in the second campaign alone. Two Russian SAMs were
fired at an Israeli passenger plane in Kenya last November. A similar
SAM was fired at an aircraft in Saudi Arabia. Portable SAM launchers
are essentially a weapon of the 21st century. Something better than
dummy missiles and agent provocateurs are needed to fight their
proliferation.
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#2 - JRL 7289
Boston Globe
August 14, 2003
Arms sting ameliorates US-Russia relations
By David Filipov, Globe Staff
MOSCOW -- The sting that caught a British citizen allegedly trying to sell a portable Russian-made antiaircraft missile in New Jersey provided a welcome boost for the US-Russian relationship as well as a much-needed victory for both countries' security services in the war on terror.
But Russian analysts said yesterday that the arrest of Hemant Lakhani, who apparently thought he was smuggling into the United States an SA-18 Igla missile that would be used to down commercial aircraft, will do little to stem the burgeoning black market trade in the deadly weapons in the former Soviet Union.
Russia's counterintelligence agency hailed the sting as the result of improved cooperation with the intelligence services of its former Cold War adversaries, Britain and the United States.
"It is the first time such an operation has been carried out since the end of the Cold War, when our special services acted in confrontation with each other," said Sergei Ignatchenko, chief spokesman of the Federal Security Service -- the main successor of the former Soviet KGB.
Ignatchenko told Russian Television in Washington that improved intelligence ties among former adversaries have yielded "positive results" in the effort to prevent illegal arms sales.
But Yevgeny Volk, head of the Moscow office of the Heritage Foundation, a conservative Washington-based think tank, said the sting would have no effect on the illegal trade in shoulder-fired Russian-made missiles.
"This market is very large, and it is not just connected to international terrorism," Volk said in a telephone interview. "To control it within the former Soviet Union is harder than conducting a sting operation."
The portable Igla is the antiaircraft weapon of choice not only for international terrorists, but insurgent groups in Central Asia and the Caucasus. Chechnya's separatists in particular frequently boast that they purchase such weapons from Russian military units; the rebels may have used an Igla to down a Russian military helicopter last August, killing 118 troops.
Ivan Safranchuk, director of the Moscow office of the Washington-based Center for Defense Information, said that Georgia, the strife-torn Caucasus nation, has turned into a major center for illegal sales of the missiles. Georgia inherited large stocks of shoulder-fired missiles when the Soviet Union broke up in 1991.
The Igla system is light enough for a single man to carry and fire, but deadly enough to down helicopters as well as larger, faster aircraft during takeoff and landing, Safranchuk said.
"If a terrorist sits not far from an airport, it will be easy to shoot down a plane," he said.
Russian President Vladmir Putin, who backed the United States following the Sept. 11, 2001, attacks, has long insisted that Russia and the West cooperate on arms proliferation. In June, Russia's defense minister called on former Soviet republics to implement stricter controls on exports of shoulder-fired missiles.
The operation was revealed ahead of a summit expected this fall between Putin and President Bush. Putin, whose army is bogged down in Chechnya, has struggled to claim victories in his declared war on terrorism. However, Putin did receive a boost from the United States on Friday when Washington declared a senior rebel commander, Shamil Basayev, a terrorist and a threat to US national security.
Volk termed Lakhani's arrest "a symbolic event" that provided good news for a US-Russian relationship that has suffered since Moscow's public fallout with Washington and London over the war in Iraq.
Russian intelligence agencies helped provide information on Afghanistan before and during the war against the Taliban, but US and Russian spies continue to compete as adversaries in other areas. The United States has also expressed concern about Russian cooperation with Iran's nuclear program, and Washington accused Russian companies of providing weapons to Saddam Hussein's regime in Iraq.
"Both the US and Russian leadership have to show that cooperation is ongoing," Volk said. "They have to show that there is progress."
According to Russian counterintelligence officials and a criminal complaint filed against Lakhani yesterday, US and Russian authorities were able to work together on the complicated sting over a 5-month period that spanned the worst tensions over Iraq. The Russian news network NTV reported that Putin gave personal approval for the most sensitive part of the operation, the arrival in Russia of an FBI agent posing as the weapon's buyer.
Lakhani paid $85,000 to a Russian agent posing as a corrupt midlevel representative of a Russian defense factory near St. Petersburg. Russian agents eventually provided an inert missile that was shipped to the United States disguised as medical equipment. Lakhani was arrested when he tried to retrieve it at a Newark hotel.
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#3 - JRL 7289
State Dept. Says Renew Passports Early
August 13, 2003
WASHINGTON (AP) - Some countries require holders of U.S. passports to get them renewed, if they are within six months of expiring, before issuing visas, the State Department said Wednesday.
``The practice is pretty common,'' said Stuart Patt, a spokesman for the State Department's Consular Affairs Office, ``and has been for years.''
He said the United States has the same requirement when it issues visas to people abroad coming here.
``We check to see that they have six months remaining on their passports,'' he said.
Patt was asked about reports that Russia was among countries insisting that six months remain on a U.S. passport before it will issue a visa.
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#4 - JRL 7289
Foreign investment in Russia rises 51.3% in H1
MOSCOW. Aug 13 (Interfax) - Foreign investment in Russia totaled $12.66 billion in the first half of 2003, up 51.3% year-on-year, the State Statistics Committee reported Wednesday.
Foreign direct investment totaled $2.53 billion, or 20% of the total, and was up 35.3% from the first half of 2002. Investment of $862 million went into capital (6.8%, an increase of 8.7%), $862 million in loans received from foreign co-owners (6.8%, up 12.7%), and $798 million in other direct investment (6.3%, up 170%).
Foreign portfolio investment amounted to $38 million (0.3% of the total, down 81.1% on the first half of 2002), including $36 million in stocks and shares, down 67.3%, and $2 million in company debt instruments, down 98.1%.
Most of the foreign investment in the first half came from Germany ($3.14 billion), Britain ($2.05 billion), Cyprus ($1.57 million), Virgin Islands ($1.06 billion), Switzerland ($643 million), the Netherlands ($692 million), the United States ($458 million), and France ($406 million).
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#5 - JRL 7289
Gazeta
August 14, 2003
THE POOR GETTING EVEN POORER TOO FAST
The subsistence minimum rise is twice the inflation rate
Some opinion poll data on the poverty line and inflation rates
Author: Natalia Biyanova, Maria Selivanova
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
DESPITE PROMISING ECONOMIC INDICATORS, THE ARMY OF THE POOR IN
RUSSIA IS NOT BEING REDUCED; IT AMOUNTS TO ALMOST A QUARTER OF THE
POPULATION. LATEST FIGURES FOR THE POVERTY LINE ARE: 2,338 RUBLES A
MONTH FOR ABLE-BODIED ADULTS, 1,629 RUBLES FOR THE ELDERLY, AND 2,119
RUBLES FOR CHILDREN.
YESTERDAY THE GOVERNMENT OFFICIALLY RAISED THE SUBSISTENCE MINIMUM IN
THE SECOND QUARTER OF THE YEAR FROM 2,047 TO 2,137 RUBLES A MONTH, OR
4.4%. THE INFLATION RATE FOR THE PERIOD AMOUNTED TO 2.6%. IT MEANS
THAT THE SPENDING BY THE LEAST PROSPEROUS RUSSIANS (WHO SPEND THEIR
INCOME ON BARE NECESSITIES ONLY) INCREASE AT ALMOST TWICE THE RATE OF
SPENDING BY WEALTHY RUSSIANS. DESPITE PROMISING ECONOMIC INDICATORS,
THE ARMY OF THE POOR IN RUSSIA IS NOT BEING REDUCED; IT AMOUNTS TO
ALMOST A QUARTER OF THE POPULATION.
Yesterday government set the subsistence minimum for the second
quarter at 2,137 rubles a month.
THE POVERTY LINE WAS 2,338 RUBLES A MONTH FOR ABLE-BODIED ADULTS,
1,629 RUBLES FOR THE ELDERLY, AND 2,119 RUBLES FOR CHILDREN.
COMPARED TO THE FIRST QUARTER OF THE YEAR, THE SUBSISTENCE MINIMUM
ROSE BY 4.4% WHILE INFLATION AMOUNTED TO 2.6%.
It means that spending by the poor (those who spend their income
on food and little else) is increasing at almost twice the rate as
spending by all other Russians. After all, inflation means price rises
for all goods and services including real estate, cars, luxury items,
and home appliances. But the subsistence minimum includes the minimum
set of foodstuffs and services.
ACCORDING TO THE STATE STATISTICS COMMITTEE, ALMOST A QUARTER OF
RUSSIAN CITIZENS (23%) ARE LIVING BELOW THE OFFICIAL POVERTY LINE.
While the subsistence minimum is set at 2,137 rubles, 0.4% of
Russians have an income of under 500 rubles a month, 1.5% between 500
and 750 rubles, 2.7% between 750 and 1,000 rubles, 8.2% between 1,000
and 1,500 rubles, 9.9% between 1,500 and 2,000 rubles.
COMPARED TO LAST YEAR, THE NUMBER OF RUSSIANS WITH INCOMES UNDER 2,000
RUBLES A MONTH FELL BY 2.5%, BUT THE SUBSISTENCE MINIMUM ROSE: THAT
IS, THE SITUATION REMAINED MORE OR LESS THE SAME.
The situation may change with GDP growth. "When the GDP grows,
real incomes increase too," explained Antonina Kovalevskaya, an expert
with the Fiscal Policy Center.
THE SUM TOTAL OF REAL INCOMES DID INCREASE BY 920 BILLION RUBLES IN
THE LAST TWELVE MONTHS.
According to the State Statistics Committee, nominal incomes grew
by 30.8% between January-May 2002 and January-May 2003, while real
incomes (i.e. counting inflation) rose by 14.3%.
MEANWHILE, POLARIZATION OF INCOMES BETWEEN THE WEALTHIEST AND THE
POOREST HAS BEEN INCREASING BY THE YEAR. IN THE FIRST SIX MONTHS OF
2003 THE 20% POOREST ENDED UP WITH ONLY 5.5% OF ALL INCOME. A YEAR AGO
THEIR SHARE AMOUNTED TO 5.7%.
"A dramatic differentiation of income is typical of Russia,"
Kovalevskaya said. "The GDP is increasing all right, but it is divided
unevenly, which is usual for developing countries." All this means
that the number of the poor in Russia is not going down. Countries rich and poor
The World Bank divides all countries into four categories from the
point of view of income levels: low income (up to $1,000 a year per
capita), medium low (up to $3,000), medium high (over $3,000), and
high (over $20,000). Russia is in the second category, with a
subsistence minimum of $70 a month and average per capita income of
$1,750. Belarus ($50 and $1,290 correspondingly) and two other CIS
countries - Kazakhstan and Turkmenistan - are in the same category.
The majority of CIS countries including Ukraine are in the low income
pigeonhole. Annual per capita income in Ukraine is $720 with the
subsistence minimum amounting to $66. The Baltic states and most East
European countries are in the medium high category. Western Europe,
Japan, the United States, and Canada comprise the high income
category. In the United States, the average annual income amounts to
$34,280 and the subsistence minimum is $400 a month.
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#6 - JRL 7289
The Korea Times
August 14, 2003
Baikal - ‘Pearl of Siberia’
By Hong Soon-il
Lake Baikal in Siberia has been a subject of curiosity since my childhood because weathermen often said the cold fronts that sweep across the Korean peninsula originate from the area. More recently, the huge lake in southeastern Siberian Russia, just north of Mongolia, is renowned as one of the earth’s most impressive natural wonders and its proximity to vast natural resources including oil, gas, coal and timber.
Thus, I could not resist an opportunity to take a group tour to the lake, the largest of Eurasia. We flew to Irkutsk via Vladivostok and reached a hotel overlooking the lake after an hour’s drive from the airport down a road lined with endless rows of birch.
Simply looking around the lake is overwhelming. The majestic expanse of Baikal in August is ringed by forested shores, which are surrounded by jagged mountain peaks. Coming to the shore, people are amazed by the crystalline waters that are so transparent that stones some 40 meters below the surface can be seen.
Even more astounding are the color metamorphoses on the surface. The water, reflecting the changing angles of the sun, moving clouds and mist coming from the forest, changed in shade from blue-white or silver-gray to cobalt blue or slate black. The changes reminded me of a similar phenomenon I saw years ago at Cheonji, the Heavenly Lake atop Mt. Paektu on the Chinese-Korean border and that Koreans revere as a sacred place.
But then, the sheer size of the lake is beyond comparison. Baikal, the deepest lake in the world (1,637 meters), is as large as one third of South Korea and is estimated to hold almost one quarter of all the freshwater on earth, an amount that would need all the rivers of the world combined pouring in and would take an entire year to fill. The lake, long regarded by the natives as the ``blue eye of the universe,’’ is now aptly dubbed the ``pearl of Siberia.’’
The region is home to an enormous variety of plants and animals, many of which are found nowhere else in the world. Likewise, it is the heart of numerous legends and traditions, especially the many Baikal spirits that are centered on shamanism, attracting a wide range of anthropology studies.
From ancient times, shamanism has served as the spiritual mainstay for most of the Ural-Altaic peoples in northern Asia, a religion based on the belief that unseen forces of gods, demons and ancestral spirits control the visible world. Some anthropologists claim Korea today highlights a post-modern shamanism, representing the oldest stratum in its folk culture despite its industrial development and the centuries-long infusion of Buddhism, Confucianism and Christianity.
There are nearly a dozen ethnic minorities or tribes living in the region that encircles Baikal. Notable among them are the Buryats of Mongolian decent who declared sovereignty in 1990, taking advantage of weakening Soviet control, to found a republic of their own within the Russian Federation.
Buryat nationalism has surged to entail a rapid revival of shamanism and affinity with Mongolia, both of which were suppressed by the Soviets. This nationalism is imbued in part with a myth that the Lake Baikal basin is the cradle of the Mongolian race. One legend has it that Genghis Khan, the Mongol conqueror of a large part of Eurasia in the early 13th century, is buried at Olkhon, an island in the lake.
It is interesting to find many shamanistic relics around the lake that closely resemble Korea’s, including changseung (totem poles), sotte (poles signifying prayer for good harvest) and seonangdang (an altar for a village guardian deity). Probably because of the similarity and the legends about the origin of Mongolian peoples, there is a group of Korean scholars who have attempted to trace the roots of the Koguryo (37 B.C.-A.D. 668) who ruled northern Korea and a sizable portion of Manchuria, back to the Baikal basin.
On the other hand, the region, like other parts of Siberia, is endowed with abundant natural resources. Of particular interest are massive oil reserves in mid-east Siberia, which are estimated to hold 10 billion barrels, more than all known reserves in the United States including Alaska.
A heated diplomatic contest is presently underway between China and Japan to win Russia’s consent to build an oil pipeline starting from Angarsk, near Baikal, to a point that better meets their respective interests. While Beijing wants the pipeline connected to the northeastern Chinese city of Daqing, Tokyo hopes to take it to Nakhodka, a port facing Japan.
South Korea also has a stake in the project to have an extension from either pipeline to run through the Korean peninsula, together with its ambitious program to connect an inter-Korean railway to the Trans-Siberian Railroad, although these hopes are overshadowed for the time being by the tensions over North Korea’s nuclear weapons development.
Siberia is no longer a vast wasteland. It is an immense land of promise with
its enormous industrial potential, cultural diversity and natural wonders. What
is needed to develop the industrial resources and cultivate the cultural and
tourism assets is an international perspective to balance the efforts of
Russians and ethnic minorities.
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#7 - JRL 7289
Russia Could 'Follow US Route' on Turkmenistan Sanctions
Rossiyskaya Gazeta
12 August 2003
Report by Vladimir Berezovskiy:
"Turkmenbasy Finds Himself Among the
Refuseniks"
As our newspaper reported yesterday, US President George Bush has produced an unpleasant surprise for officials in Asgabat. In a letter addressed to the speaker of the House of Representatives he has announced that from now on Turkmenistan will be subject to the Jackson-Vanik amendment to the 1974 trade law.
Let us recall that the Americans originally introduced the amendment against the USSR, which was obstructing the mass emigration of Jews to Israel. Since 1992 US presidents have souncded the retreat on this clearly obsolete legal nonsense, taking the view that the situation regarding the freedom to emigrate was fine as far as the former Soviet republics were concerned.
The first indication of differences between Asgabat and Washington was observed when Turkmenistani President Saparmyrat Nyyazow, claiming neutrality, refused to allow his airfields to be used by the "flying fortresses" that bombed Afghanistan. Then there was the scandal surrounding the 25 November 2002 attempt on the Turkmenistani leader's life in which a US citizen turned out to be involved. In response the Americans launched a campaign to accuse Asgabat of human rights violations.
Officials in Asgabat realised that the storm clouds were gathering and tried to dispel them by means of new trade deals with the Americans. But all to no avail. A few days after a contract worth $130 million was concluded with Boeing for the purchase of a new aircraft for the president of the "sunshine" republic, George Bush announced the introduction of economic sanctions against Turkmenistan.
It is quite possible that the Americans will give Asgabat a dressing down at the fall session of the United Nations. They have trump cards available. The point is that, despite opposition from Russia, Armenia, and Ukraine, the UN Commission for Human Rights gave a majority vote to a resolution on the situation in Turkmenistan couched in harsh, accusatory tones.
Typically, in the "combat actions" now launched against Asgabat the Westerners headed by the Americans are actively deploying the case that Russians and representatives of other national minorities are being oppressed. It is open to question, of course, how sincere their concern is. But it will do our countrymen no harm, one imagines, even though recently appointed Russian Ambassador to Turkmenistan Andrey Molochkov has stated that there are no problems in that connection.
On the contrary, Bush's move can only be to our advantage. As Andrey Kokoshin, head of the Duma Committee for CIS Affairs and Relations with Fellow Countrymen, has stated, the agreement with Turkmenistan on abolishing dual citizenship is now "hardly likely to be ratified without the Turkmenistan side's reversal of a number of unilateral decisions". The problem is broader than that. "It has to be a question of protecting the rights of the Russian-speaking population as a whole", the deputy believes. "We are extremely concerned about the situation with regard to Russian schools in Turkmenistan", A. Kokoshin said, "and with regard to the Russian-speaking population's right to have (its own) public organizations, newspapers, and radio and television programs. We are talking about the free retransmission of television and radio broadcasts from Russia and about the distribution of Russian newspapers". The committee head did not rule out the possibility that Moscow would follow the US route and introduce economic sanctions against Asgabat.
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#8 - JRL 7289
pravda.ru
August 13, 2003
Gorky Park, Remake
Russia's most popular park celebrates its 75th birthday
The Tatar cemetery, the city dump, the Neskuchny Sad v this is the territory
of 100 hectares where the Culture Park appeared in Moscow in 1928.
Four years before the park appeared, the cemetery and the dump were liquidated, part of trees of the Neskuchny Sad were cut down. The cleared territory was first occupied by the all-Russian exhibition of agricultural products and artisan works, later a park was laid out there. It opened on August 12, 1928. Visitors could see the Green Theatre, a cinema hall in the open air, a dance pavilion called "The Dance Island" and a parachute tower. In winter, Moscow's best skating rink was made in the Culture Park.
In the early 1930s the park was called after famous Soviet writer Maxim
Gorky. In the mid-1930s a path lined with gypsum figures appeared in the park;
the figures were made by the best sculptures of the Soviet Union. A sculpture
called "The Girl with an Oar" by Ivan Shadr became the most popular
figure in the park collection. Vera Volosina, the woman who posed for sculptor
Ivan Shadr for the figure died in WWII; the statue itself was destroyed in an
air raid in 1941. Military technique will be introduced into the park during
WWII. Right after the war construction of Koleso Obozrenia (the Big Dipper) was
started in the Gorky Park.
The part of the city is a favorite recreation site of Muscovites and guest; about two million people visit the park every year. This is the first place in Russia where mass side-shows appeared. The famous Koleso Obozrenia has become one of Moscow's symbols.
There are exhibition pavilions, artificial ponds, sports grounds and dance pavilions in the park; meetings and concerts are regularly held there. The territory of the park was several times chosen for making films, for example the popular Soviet detective Place of Meeting Cannot Be Changed with brilliant Vladimir Vysotsky in the main role.
The 75th anniversary of the Gorky Park will be widely celebrated with a dramatized parade during the festivities dedicated to Moscow's birthday, at the beginning of September.
Based upon publications in the Russian press
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#9 - JRL 7289
pravda.ru
August 13, 2003
Is Russia's Communist Party at War with itself?
To have his social and economic program realized, Sergey Glazyev is ready to
make a block with anyone
The second column of patriots is finally taking form. A new coalition of left patriotic forces will be formed irrespective of a decision passed by the Communist Party leadership, Sergey Glazyev, the leader of the Russian Communities Congress and a co-chairman of Russia's People Patriotic Union said at a press-conference on August 11.
According to Sergey Glazyev, creation of this block may be announced at the beginning of the next week. He said that in addition to the Communist Party the coalition may also include the Labor Party, the Democratic Party and other parties and organizations that have been already sent an appeal to set-up an election block for the forthcoming parliamentary elections in December. Sergey Glazyev hopes to get a response to his appeal within 10 days.
Since the start of spring this year, Sergey Glazyev has attempted to form a block of left patriotic forces. However, this idea has yet to be supported by the Communist Party leadership. Gennady Zyuganov and Co. are still insisting that the creation of such a coalition is possible only under the banner of the RF Communist Party. The Communist Party will pay a heavy price if it does not join other parties on the left, Sergey Glazyev repeats again and again. In his last publication, Sergey Glazyev explained that the left forces may fail during the parliamentary elections because of the reluctance of the Communist Party to give up the ambitions.
Sergey Glazyev says that judging by the political arithmetic, when a party is isolated like the Communist Party in Russia, it will hardly win over 100 mandates in the State Duma. "At the same time, the number of our potential supporters allows us to hope for majority of seats in case of a coalition of people's patriotic forces is created and a convincing election campaign is carried out. If creation of this coalition is frustrated, many of our supporters will either give up participation in the elections or vote against all candidates, or give votes to some fake party put forward by our opponents. It is obvious that the party of power will go to the elections in several columns: it is already known that the United Russia, the People's Party, the Liberal Democratic Party, the Union of Right-Wing Forces (SPS) and the Party of Life will participate in the elections. These structures will play on patriotic motives and scare the electorate with a "communist revenge". In fact, the self-isolation of the Communist Party will let these parties make a political trick and deceive millions of voters.
This can be prevented only with the creation of a coalition of the people's patriotic forces. This should be an electoral block. If this attempt fails, the coalition can be created in the form of united electoral associations using the same program for work with different groups of voters. This will save many electors from more political blackmail and deception; this will bring more of our supporters to the Duma. This is the only way out of the deadlock where the people's patriotic forces are being kept down."
Being a pragmatic person, Sergey Glazyev doesn't want to be in an open conflict with Communist leader Gennady Zyuganov. He supposes that the main problem of it is the fact that Gennady Zyuganov is now particularly anxious about recommendations of political technologists who tell him it is undesirable to break up the communist electorate. "Our main problem is that some leaders of the Communist party won't shoulder the problem of block creation," Sergey Glazyev explains. At that, he once again emphasizes that he has no "political discrepancies with Communist leader Gennady Zyuganov; some discrepancies only concern the strategy of the election campaign." What is more, Sergey Glazyev says that "majority of the Communist party members support the increase of the party influence. The political position of the party is not determined yet. In any case, an election block is to be formed."
As it turned out, Gennady Zyuganov doesn't accept any ultimatums or appeals;
the Communist leader told journalists how he saw the situation. He thinks that
it is the Presidential Administration with Alexander Voloshin and Vladislav
Surkov at head that pushes Sergey Glazyev for creation of an alternative left
patriotic block. The Communist party leader says: "Leaders of 20 patriotic
organizations have already singed an appeal for the creation of a wide political
union around the Communist party on the eve of the forthcoming parliamentary
elections. A unified electoral roll is being formed now. As for Sergey Glazyev,
he must choose for himself in which electoral block he will participate. He is
aware of the propositions of the Communist party." Gennady Zyuganov
mentioned that some time ago Sergey Glazyev was a member of Yegor Gaidar's
democratic government and later he participated in parliamentary elections in
the structure of the Russian Communities Congress together with Dmitry Rogozin
and General Alexander Lebed. The Communist party leader warns that "all
quickly formed political columns appear to mislead the communist
electorate."
The statement of Gennady Zyuganov means that the communist leader is increasing the stakes. What he says mostly refers not to Sergey Glazyev but to Voloshin and Surkov.
Unlike Zyuganov, Glazyev has made a decision. To have his social and economic program realized, he is ready to create a block with almost any group. It is interesting that the Kremlin is in fact ready to support him. The authorities quickly perceived the attitude of the society and added it to its arsenal. Have a look at newspaper headlines that mention a pre-revolutionary situation in the country, speak about oligarchs and their enormous fortunes, about the poor population, and so on. Struggle with poverty is one of the top-priority tasks for the nearest years. At least, this is what the Russian president said in his last state of the nation address.
What does it mean? It means that the next structure of the Duma will be the
left forces, where social guarantees and protection of human rights will be the
key issues. At least, these ideas will be declared. In this case, energetic
Sergey Glazyev may be useful for President Putin.
Dmitry Litvinovich
********
#10 - JRL 7289
Argumenty i Fakty
August 13, 2003
THE PRESIDENT AND THE OLIGARCHS
Including the public in the dialogue between business and government
Author: Avtandil Tsuladze
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE EXISTING "AGREEMENT" BETWEEN THE OLIGARCHS AND THE PUTIN REGIME
HAS BECOME OBSOLETE, SINCE IT DOES NOT TAKE THE PUBLIC INTEREST INTO
ACCOUNT. PUTIN HAS A CHANCE TO INITIATE THE DEVELOPMENT OF A NEW,
AMENDED AGREEMENT. OTHERWISE, RUSSIA FACES THE PROSPECT OF POLITICAL
CONFLICT AND UPHEAVALS.
The notorious oligarchs are an especially prominent part of Boris
Yeltsin's legacy to Vladimir Putin. Thanks to their close relationship
with the political authorities, these people became the owners of
choice morsels of state property overnight. In time, some of them
started moving away from the "sovereign's" control, aspiring to the
role of independent politicians. Their excessive interference in state
administration led to the default of 1998. A year later, the Yeltsin
regime that had given rise to the oligarchs ended.
Putin started out as president by "equidistancing" the oligarchs
who didn't want to give up their habit of "steering" the state. As a
result, the oligarchs who didn't fit in with the system - Boris
Berezovsky and Vladimir Gusinsky - were pushed out of the country,
while oligarchs who fitted into the system joined the Russian Union of
Industrialists and Entrepreneurs (RUIE). Virtually all of Putin's
first term in office has passed under a tacit agreement between the
oligarchs and the regime: there will be no revision of privatization,
on the condition that the oligarchs do not interfere in public
politics. At his third expanded press conference, Putin even called
for the term "oligarchs" to be dropped in favor of "big
business."
However, in the lead-up to elections, it has proved impossible to
sustain the fragile balance between business and government. One of
the oligarchs started speaking too loudly about his political
ambitions - and his company started having problems.
TRIAL BY ELECTIONS
The elections are a stability test for the Putin regime. Part of
the test is a breakdown of the "agreement" between business and
government. It has happened because the public interest was not taken
into account in that agreement between the Kremlin and the oligarchs.
But as elections approach, politicians are forced to heed public
opinion and correct their course of action accordingly. And the public
greatly dislikes the oligarchs. Most people think their fortunes are
illegitimate, ill-gotten gains. Thus, the "agreement" of 2000 is
hopelessly obsolete. A new agreement is needed, one that takes the
public interest into account. Rather than a dialogue between business
and government, there should be a trilateral configuration: the
public, business, and government.
Putin currently represents the public. The overwhelming majority
of Russian citizens trust Putin. However, he also represents the
regime. In order to overcome this duality, political parties should be
included in the process of shaping a new "agreement", as
representatives of the public. Putin's main support in society at
present is the United Russia party.
NEW RULES OF THE GAME
The trilateral configuration of the public, business, and
government needs to generate some new rules of the game. In
particular, this should involve making business more socially
responsible; and separating business from government; and protecting
business from state intervention; and legalizing capital (by means of
an amnesty, for example); and so on. In the end, everyone would
benefit. Unless this is done, we can expect political conflict and
upheavals, and another economic crisis. To paraphrase Marx and Engels:
"A specter is stalking Russia, the specter of civil war..."
For the moment, it is only a specter. In reality, things aren't
that bad yet. There is every chance of achieving a new "agreement"
between business, government, and the public without disrupting
political stability or provoking another crisis. On one side of the
balance we have the dubious legitimacy of large fortunes, a vast
amount of compromising evidence against the oligarchs, and the rising
political influence of the security and law enforcement agencies. On
the other side there are the goals of accelerating economic growth (at
least doubling the GDP within a decade), attracting foreign
investment, and closing the gap between Russia and the West. In order
to achieve a balance, we need to reach a historic compromise: to find
a new formula for cooperation between business and government, one
that serves the public good.
(Translated by P. Pikhnovsky)
*******
#11 - JRL 7289
Novye Izvestia
August 14, 2003
EXPENSIVE LEGACY
Russians are negative about the role of Mikhail Khodorkovsky and other
oligarchs in history
Millionaires, billionaires, and public opinion
Author: Alexander Starostin
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE POLISH WEEKLY VPROST PUBLISHED A RANKING OF THE RICHEST PEOPLE
IN CENTRAL AND EASTERN EUROPE RECENTLY. THE WEALTHIEST IS MIKHAIL
KHODORKOVSKY OF YUKOS - WITH A FORTUNE ESTIMATED AT $8.3 BILLION.
Around 60% of the people on the Vprost list are Russian.
Moreover, the Menatep and YUKOS companies are described by Polish
researches as the structures that produce billionaires more often than
anyone else. Together, they account for five billionaires, all five
known as Khodorkovsky's closest associates.
The YUKOS list may be divided into two parts - millionaires and
billionaires. The billionaires include Khodorkovsky himself, Vasily
Shakhnovsky ($1.15 billion), and Leonid Nevzlin ($1.1 billion). The
millionaires includes the currently jailed Platon Lebedev ($800
million), Vladimir Dubov ($800 million), Mikhail Brudno ($600
million). In fact, there is nothing truly sensational about the
material in the Polish weekly. All ratings list Khodorkovsky among the
richest people in the world ,and his associates among the very
wealthy.
It is a different matter that another publication of a rich list
once again raises the question of how they managed to make their
fortunes in the first place. The question is particularly captivating
in Khodorkovsky's case. Firstly, it took an average Russian only
several years to become a billionaire. Secondly, the tycoon himself
does not see it as anything extraordinary. No wonder Arkady Volsky of
the Russian Union of Industrialists and Entrepreneurs commented once
that $8 billion in a decade was way too much. Public opinion is with
Volsky. Judging by a poll done by the ROMIR Monitoring service
recently, 80% of respondents in Russia believe these large fortunes
were made dishonestly and only 6% think that they were made
legitimately. Even 72% of business owners among the respondents are
convinced of the illegal origins of large private fortunes in Russia.
In fact, the source of Khodorkovsky's and his associates' wealth
is common knowledge even though Khodorkovsky prefers it forgotten. The
fortunes in question are owed to the state - or rather to the people
who channelled state property into the needed directions and those who
wanted it in their own hands for bargain prices. Menatep bought a 78%
stake in YUKOS for $350 million. At approximately the same time Arco
(n American company) bought a 7.99% stake in LUKoil for $340 million.
In other words, an almost identical package cost the Americans ten
times the price the Russians paid. It may be added as well that YUKOS
produced about 34 million tons of oil in 1995. Almost 8 million tons
were exported, and Urals crude went at $16-17 a barrel then. This
alone earned YUKOS at least $940 million. It follows that the state
received for a 78% stake in YUKOS approximately the sum the company
earned in five months from exports. Selling crude oil to foreign
countries, YUKOS earned over $3 billion in 2002 alone. It may be added
as well that the sale of YUKOS by tender was mostly financed by the
state because Menatep used budget funds from its bank accounts. It
follows that the state ended up with just a meager sum in the long
run.
It is hardly surprising therefore that Russians are not exactly
endeared to Khodorkovsky. The ROMIR Monitoring agency says that 74% of
respondents take a negative or partially negative view of the role of
oligarchs in the history of Russia in the last decade; 77% share the
same opinion with regard to oligarchs and their role in this decade;
and 77% of respondents believe that the outcome of privatization
should be revised, in full or at least to some extent. In other words,
they dislike the way Khodorkovsky ended up owning YUKOS. It should be
mentioned that the redistribution of property and assets is supported
by the respondents who call themselves business owners (77%) and
managers (88%). Last but not least, 57% of respondents would not mind
seeing big companies prosecuted by the state.
All this makes the attention of law enforcement agencies centered
on YUKOS and Menatep top executives logical and natural. It is a
different matter entirely that attempts are made to present the
actions of the Prosecutor General's Office as political, or to scare
the general public by tales of mass unrest sparked by revision of the
outcomes of privatization. All this is understandable. Some of those
who are trying to scare the public have participated in privatization
too. They must know that revision would affect them directly. (Translated by A.
Ignatkin)
*******
#12 - JRL 7289
Financial Times (UK)
August 13, 2003
Yukos affair has Russia's oligarchs squirming in their seats
By Andrew Jack
On the rooftop terrace of his central Moscow office, the chief executive of a bank interrupts a conversation to take a call on his mobile phone.
"No one knows exactly what is going on. We are all speaking," says the executive, after talking to a colleague on the significance of the eight criminal investigations into the oil group Yukos.
Russian businessmen may still be going on their summer holidays this month but some are leaving for shorter periods or feeling more nervous in the wake of the Yukos investigations, opened at the start of July. The affair has sent waves of discomfort across the business community after a period of growing stability under President Vladimir Putin that has helped boost domestic growth and investment.
The exact causes of the investigations against Yukos remain unclear but many fear the consequences of action by the federal prosecutor against one of the country's biggest and most successful companies.
While there remains controversy around the cut-price sales to insiders of many state assets during the 1990s, singling out Yukos and imprisoning two of its officials has left many suggesting a political element to the action.
With no clear condemnation or visible intervention so far from Mr Putin, other businesses are becoming concerned about the risk of copycat actions in their own regions from the local authorities.
"We have already heard of some cases of local companies coming under fresh pressure in the wake of the Yukos affair," says Nikolai Tonkov, head of a branch of the Russian Union of Industrialists and Entrepreneurs in Yaroslavl, north of Moscow. "That includes tax inspections but also hints at re-examining privatisation deals."
A senior Kremlin official was at pains earlier this month to stress that while the action against Yukos may not have happened by chance, it is not the work of Mr Putin.
But the absence of intervention by the president suggests either that he supports what is taking place or that he is too weak to intervene and stop it.
A fresh campaign against Russia's oligarchs, such as Mikhail Khodorkovsky, the head of Yukos who acquired substantial wealth from cut-price insider sales of state property during the 1990s, is likely to prove popular with electors in the build-up to a parliamentary vote this December.
It is more debatable how effective the conflict will prove in providing a more equitable distribution of former state assets.
But what is striking in the latest scandal is the low-profile reaction from other large companies. When Vladimir Gusinsky, the media tycoon, was arrested in 2000 and top executives in the petrochemicals group Sibur were held in jail the following year, leading businessmen quickly issued public statements condemning the action. Mr Khodorkovsky has received no such support.
Personal rivalry and even jealousy of Yukos' success in boosting its image and market capitalisation over the past three years may be part of the explanation. But a number of businessmen argue that Mr Khodorkovsky was too open in his political ambitions, including support for anti-Kremlin parties.
"The question in a few weeks will not be whether we support Khodorkovsky or not but whether we can refrain from criticising him," says one of his rivals. "He spoiled the personal contract with the president," he adds, in a reference to the tacit agreement proposed by Mr Putin in 2000 that the Kremlin would not revisit the privatisations of the 1990s but that powerful businessmen would stay out of politics.
The question for Russia's political future is at what stage the country's leadership - still focused on the centralisation of power after the conflicts within its regions over much of the past decade - will consider itself ready to accept opposition groups with big corporate backers.
Business is more concerned about the effect of the Yukos affair on future activities. In a recent interview in Yukos' modern Moscow headquarters, Mr Khodorkovsky appeared indignant and unnerved - but also defiant. Downstairs, a series of reworked Soviet propaganda-style posters greet visitors with messages such as "The plot against Yukos", "Yukos will be free", and "The general prosecutor is destroying Russia's economy".
Many of Mr Khodorkovsky's colleagues - and those in other companies - may be
hoping that the holiday period will allow for a period of reflection on both
sides, and a way to defuse the conflict that helps restore the country's fragile
business confidence. If the outcome is more ambiguous, it leaves open the risk
of future arbitrary attacks on targets.
********
#13 - JRL 7289
The Times (UK)
August 13, 2003
American victory deals blow to Russian rip-offs
Clem Cecil in Moscow
Russia had never been shy of ripping off Western brand names until Alec Gallup flew to Moscow to win an important ruling against two Russian companies trading under his surname.
In a blow to Russia's "fake market", the Gallup Organisation, the US polling company, has won a ruling banning two companies from using its name until a trial is held to decide a trademark dispute.
Moscow has already produced a "Burger Queen", now closed more due to the quality of its burgers than a copyright issue, and a "Tanya Grotter" book, a take-off of Harry Potter. There is even an advertising company registered as The Time's in Moscow.
The Gallup name was first used erroneously in Russia in 1994 when a Finnish company called Suomen Gallup set up TNS Gallup Media, TNS Gallup Ad Fact and TNS Gallup St Petersburg, which later closed down.
Alec Gallup, 75, the vice-chairman of the company founded by his father, whose polls are used in every US presidential race, flew to Moscow for the court hearing last week.
He told the Moscow Times: "Can you imagine what would have happened if you had done something like that with Coca-Cola or a major brand of that kind? We just could not believe what these people were doing."
Happy to have protected its name for the time being, the Gallup Organisation plans to open an office in Moscow in the near future.
Big businesses in Russia have been dealing with trademark disputes ever since communism fell and the market became a lawless playground for entrepreneurs struggling with an influx of foreign imports.
A first-time visitor to Moscow could imagine he had landed in a warped version of a Western city. Having picked up a copy of Afisha, which bears an uncanny resemblance to London's Time Out magazine, he could make his way to Shokoladnitsa, a Russian version of Costa Coffee, where punters could well have their noses deep in the Tanya Grotter book, although J. K. Rowling has won an injunction halting its sale. The story of Afisha magazine is equally opportunistic. Its founder, Andrew Paulson, was in negotiations with Time Out for more than a year to launch Time Out Moscow. On the eve of the contract signing he disappeared, only to reappear a year later wielding the glossy first edition of Afisha.
His magazine was rich in the know-how he had gleaned from Time Out's London office and his magazine is now the biggest-selling entertainment guide in Moscow. It also publishes a series of travel books very like Time Out's guides.
Other entrepreneurs have been canny enough to profit from the pitfalls in Russia's post-communist market. One Siberian firm launched a soap powder immediately after the economic crash in August 1998, called "Normal Washing Powder". Its packaging was identical to the "Normal Washing Powder" used in a Procter & Gamble television advert as a comparison to the powder under promotion.
The "Normal Washing Powder" was in a plain white box, which appealed to Russians who had been hit by the crash and lost their faith in fancy Western labels.
********
#14 - JRL 7289
Financial Times (IK)
August 13, 2003
Editorial
Russia and Kyoto: Moscow must stop blowing hot and cold on global warming
The world is waiting for Russia to make up its mind about the Kyoto protocol. Ratification by Moscow is all that is needed now to bring the agreement to combat global warming into effect. Vladimir Putin and his ministers have said for months that they intend to give it the green light. Yet they remain evasive about exactly when.
From the standpoint of rational economic self-interest, their hesitation is hard to understand. For Russia, the agreement is a one-way bet. The country would need to make no cuts in its emission levels and stands to gain as much as Dollars 10bn (Pounds 6bn) a year from trading emission permits internationally. The more Moscow delays, the longer it denies itself this potential windfall.
The explanations appear largely political. One may be in-fighting between warring camps in the Russian government, some of which view the protocol as a threat to their traditional power bases. If so, that is scarcely an advertisement for Mr Putin's ability to impose his will on the bureaucracy.
Russia may also hope that, by playing hard to get, it can gain diplomatic leverage - particularly over the European Union, the protocol's greatest champion. Moscow certainly has a long shopping list of demands. They include early entry into the World Trade Organisation, freedom to renegotiate partnership agreements with EU accession countries and visa-free travel by its citizens to the EU.
Brussels should stand firm against attempts at horse-trading on those
issues: each needs to be dealt with on its merits - particularly WTO accession.
This is not a political favour, nor one that the EU alone can bestow. Unless
Russia subscribes fully to detailed WTO rules and obligations, neither it nor
the organisation will profit much from its admission.
By ratifying the Kyoto protocol without delay, Moscow would earn international kudos. It would restore political momentum to a project that has yet to recover from the US decision to pull out. It would also prevent this year's planned conference on climate change turning into a sterile stocktaking exercise and enable serious talks to be launched on how to take the Kyoto exercise further.
That will, admittedly, be a formidable endeavour - and not only because of lack of US participation. Leading developing countries are determined to resist emissions limits that would cramp their economic growth. India is insisting that this principle must be central to any future agreement. Brazil wants to go even further, saying countries' emissions curbs should be based on their historic pollution records, a proposal that would place a heavy burden on industrialised economies.
Striking a balance between stricter curbs and geographic inclusiveness will not be easy. It may well prove impossible. But until Russia stops sitting on the fence and joins other countries in ratifying the protocol, the international community will not be in a position even to start tackling it.
********
#15 - JRL 7289
Moscow News
August 13-19, 2003
The August 1998 Specter Haunting Us?
Yakov Urinson, deputy board chairman, Unified Energy System
The debt default of August 1998 was not something out of the blue; the environment in which it occurred had been evolving for a long time. The whole thing started in 1994, when the government made an absolutely correct move and stopped using the money-printing machine to cover the budget deficit; instead, it started borrowing on the internal and external money markets. But then it "forgot" that it had agreed with the lenders that it would eliminate its budget deficit and repay the loans it had taken out. As a result, it amassed a critical mass of those borrowings, which led to the financial crash of August 1998, triggered by the countrys failure to repay the external lenders.
A repetition of that mistake is impossible today. In contrast to 1998, the state budget is running a surplus. Whats more, the country has over $60 billion in gold and foreign-exchange reserves, which means it can cope with its debt obligations.
Today, however, there are two main dangers, among others. First, we have no real guarantees of private property protection because our judiciary is malfunctioning. Second, there are all manner of attempts to review the results of privatization.
The clearest signal of danger to appear on the stock market is the Yukos case. Even if it is resolved in a most satisfactory manner, with the president announcing that he has punished all guilty of the stock-market slump and that there will be no repeat of such misconduct, the economy will still have a black eye. Because it has been moving in one direction for three years, and the Yukos case has turned back the clock.
The danger of a stock-market crash is real today. Its consequences for the economy can be as disastrous as those of the 1998 debt default. And while that default ultimately led to an economic recovery, a crash now would drive us into an impasse.
Viktor Gerashchenko, former chairman of the Central Bank:
I dont feel inclined to make a macroeconomic assessment of what happened five years ago. I will only say that at the time I was working at the International Moscow Bank. And despite the fact that Chubais, Dubinin and some other top people who were intoxicated with success assured us that all was well in the economy, we at the bank saw the situation differently, and we steered clear of GKO treasury bills. Thats why we were not so hard hit as other commercial banks by the default.
We should not scare people with the shadow of the past; instead, we should try to put them at their ease. The Central Bank has enormous gold and foreign-exchange reserves, which are said to be more than enough. The government too has hedged itself with a stabilization fund, cash from which can be used to weather out any nonstandard situation. True, I dont know how this fund will be used; lets hope rationally.
Well, Im not expecting a default - the economic prerequisites for that are lacking. Even if a truck crashed into the vaults of the Central Bank, nothing terrible would happen. We would just print new money without doing great damage to the economy.
Oksana Dmitriyeva, deputy chairperson of the State Dumas Budget Committee:
Apparent in todays economic policy are certain elements similar to those that had led to the 1998 debt default. As in those days, a policy of strengthening the ruble is being pursued. The ruble is getting stronger by nine to ten percent a year instead of depreciating in line with inflation. Five years ago, the ruble was overvalued like today. My belief is that the strong-ruble policy was erroneous at the time, just as it is wrong today. Incidentally, the policy of unjustifiably strengthening the ruble harbors a threat of its devaluation.
Default basically means failure to pay ones debts. Today we are duly paying our foreign debt, spending colossal sums of money for this purpose. But at the same time we are building up a new pyramid to replace the GKO one. I mean the pyramid connected with pension reform; it is being built by the budget itself as it borrows money from the Pension Fund. This is incomprehensible!
I dont think we are on the brink of a slump - the margin of safety obtained by our economy thanks to high world oil prices is too great for that. However, our economic policy is as flawed as ever. If a barrel of oil cost not $26 but half as much, the consequences would be similar to those of five years ago.
Yevgeny Gavrilenkov, chief economist with investment company Troika-Dialog:
I believe that during the next couple of years at least we will see no repetition of the 1998 debt default. The authorities are pursuing different monetary and budgetary policies today. In 1996-1997, our budget was running a huge deficit, and the state needed tons of money to cover it. At the same time, the state was pursuing a tight monetary policy with a fixed ruble exchange rate. This jacked up the price of money sharply, at times sending interest rates on currency to 100%. This made debt servicing extremely expensive. And low oil prices further aggravated the situation.
Nothing of the sort is happening today. Ours is a policy of a floating exchange rate. Even if world oil prices fall, our economy will not undergo sharp fluctuations. It is feared, however, that the state will increase its interest-free expenditures, which have anyway been going up over the past few years. Besides, the state distributes these resources less efficiently than the private sector. Should this tendency continue, it will threaten the economy, even though the 2004 budget is being drawn up in a way that will keep its expenditure side from swelling in real terms.
The main threat to the economy now is the political intrigues against big business, which are negatively impacting on the investment climate. Objectively speaking, the majority of economic agencies and the economic authorities too do not want to see a deepening of this conflict. The period of instability may last several more months, and then the situation will normalize.
*******
#16 - JRL 7289
The Russia Journal
August 12, 2003
The worse, the better?
Prophecies of gloom and doom be damned – the Yukos scandal will not make a
dent in Russia's investment potential
By Ajay Goyal
I can claim the sad distinction of having made a correct – and dark – prediction in 1996. As Russia’s "market" boomed, I packed my bags, cashed out and ran.
Despite the exuberant atmosphere generated by pundits exhorting the faithful to plunge into the abyss, the bleak reality had a stronger hold on me than the pull of false euphoria.
Today, we have a different, almost inverted, kind of hysteria that has been whipped up by the political and prosecutorial pressures on Mikhail Khodorkovsky’s Yukos: Many are calling it an end to Russia’s economic renaissance.
But there can be no better time to invest in Russia than in this window of opportunity, only a year away from what seems like a near-certain re-election of President Vladimir Putin.
Returning in the aftermath of the 1998 crash, I knew it was a great time to invest. Now, things are even better, because what is bad for the oligarchs is good for the markets, just as what is bad for the people is good for them.
If I were an equity investor, now is when I would invest, and, yes, I would buy into Yukos. The current scandal will serve to inject some sense into the young, brash owners of the company and make them focus on business, build value and stay away from political games.
But Yukos is an exception among listed Russian companies as a long-term prospect for investment. I would stay away from buying into most of them: There are better catches out there.
The Russian oligarchs are used to attaining ownership of whatever effectively free-of-charge privatized industry comes their way by means of politicking, bribery, embezzlement and back-room deal making. Then, they usually control the company as long as it is possible to manage its cashflow, do transfer pricing and move capital into offshore accounts. The minimum amount of money necessary to keep the industry afloat is brought back in, but that’s about it – there is no attempt at real value-building.
Yukos has been one of the dozen or so exceptions among the oligarch-controlled businesses: It is a genuinely well-run enterprise. But Khodorkovsky’s financial mothership, Menatep, was not. Khodorkovsky’s and Platon Lebedev’s Menatep Group has the blood and grue of some rough deals in its claws, and cleaning it up will cost a lot of money. But, eventually, Yukos’ owners will work out a political compromise that might see some additional cash outflow from the company or its offshore subsidiaries this year – but no more.
It is important for the prospective investor to remember that there are few large Russian companies that deserve his or her money. One has to look for the rare enterprise that managed to fall into the hands of true entrepreneurs. Few of these companies are on investors’ radar screens, unfortunately, because they are well-run small- and mid-size industries – and Western money has been following the blood trails of privatization, not its success stories. Real entrepreneurs are too busy doing business to bed image-makers.
If the Kremlin has decided to clip the political ambitions of some members of the oligarchy, it can only benefit the market, economy, foreign investors and consumers. The chaebolization of the Russian economy has hindered the development of new industry. Oligarchs have been able to keep protectionist policies in place, forcing poor-quality goods on Russian consumers. But, in the last three years, Putin’s administration has made very decisive steps towards creation of a civilized legal space. With a good economic and legal framework already in place, the Russian economy is ripe for investment, and great opportunities lie with new industrial enterprises – not in cavorting with thieves.
No foreign venture or unpoliticized business has seen any signs of a shift away from the generally amiable business atmosphere that the government has been working toward. It would be silly to let the paid-for hysteria of a few pundits wean business away from the remarkable opportunities presented by the Russian market.
*********
#17 - JRL 7289
San Francisco Chronicle
August 14, 2003
Other players counting on Putin to prevail on Pyongyang
Kremlin diplomats shuttle ahead of 6-way negotiations
Anna Badkhen, Chronicle Staff Writer T
Moscow -- As part of President Vladimir Putin's determination to keep Russia a major geopolitical player, the Kremlin is emerging as a key force in trying to coax volatile North Korea to the negotiating table.
On Wednesday, Russian diplomats in Moscow met with envoys from both North and South Korea in an attempt to lay ground for the approaching six-way talks aimed at defusing the North's standoff with the United States over its nuclear program.
Responding to persistent requests by the Bush administration that the Kremlin persuade North Korea to come to a settlement, Russian diplomats shuttled between South Korean envoys in one Russian Foreign Ministry building and North Korean envoys in another.
Just how much influence Russia can exert over its secretive, Stalinist ally remains to be seen, analysts say. But the Kremlin -- reduced to a sideline role in the Middle East, a region in which it long had clout -- is eager to use the North Korea stalemate to show that it can still play a key diplomatic role.
Diplomats who emerged from Wednesday's meetings did not say whether they had made any progress in finding a compromise ahead of talks scheduled for Aug.
27 in Beijing that also involve the United States, China and Japan. The Russian Foreign Ministry would say only that the parley with the North Koreans had been held in a "sincere" atmosphere.
In a separate statement, though, Deputy Foreign Minister Alexander Losyukov said that Russia and China might offer North Korea security guarantees as part of an overall settlement "if guarantees established by the United States fail to meet North Korea's expectations to the full."
Russia, which shares a 10-mile border with North Korea not far from the major
Pacific port of Vladivostok, has repeatedly said that it wants a
nuclear- free Korean Peninsula. The Kremlin believes that security guarantees
for Pyongyang could solve the current crisis.
History shows that the Soviet Union was responsible for the nuclear genie migrating to North Korea in the first place. The Soviets began training North Korean scientists in nuclear research in 1956 and built the North's Yongbyon nuclear plant nine years later.
Today, however, the Russian government sees things differently. Any military action on the Korean Peninsula that might involve nuclear weapons terrifies Moscow, since nuclear fallout in Russia's Far East would most likely cost hundreds of thousands of lives.
"Russia is concerned about its own safety, the safety of its citizens," said Vadim Tkachenko, an analyst with the Russian Academy of Sciences' Center for Korean Studies. "We are interested in a nuclear-free Korean Peninsula, because that region is extremely combustible and will continue to be so for some time."
The latest North Korean crisis erupted in October, when Pyongyang admitted to pursuing a clandestine nuclear weapons program, reneging on a 1994 nuclear freeze. It then expelled international atomic energy monitors and withdrew from the Nuclear Non-Proliferation Treaty.
North Korea has since claimed to have reprocessed 8,000 spent nuclear fuel rods at Yongbyon, and Washington believes it has extracted enough weapons- grade plutonium for one or two nuclear bombs.
Pyongyang says it will take a nonaggression pact with the United States to dissolve the 10-month dispute over its nuclear program. "As long as the U.S. insists on its hostile policy toward (North Korea), the latter will not abandon its nuclear deterrent force," the hard-line communist government reiterated Wednesday.
Washington hopes that Putin can use the rapport he has established with North Korea's reclusive ruler, Kim Jong Il, to persuade the North to back away from the confrontation.
Earlier this year, the North Korean dictator approved the construction of a Russian Orthodox church in downtown Pyongyang -- a symbolic gesture analysts believe was aimed at pleasing Putin, a devout Christian. Putin is also the only world leader to have a direct phone access to Kim, said Alexander Pikayev, a Moscow expert at the Washington-based Carnegie Endowment for International Peace.
"Russia is the only country with which Pyongyang has good relations," Pikayev said. "That's something Russia can bring to the negotiating table."
But good relations are about the only influence Moscow has over Pyongyang anymore, said Vadim Tkachenko, an analyst with the Russian Academy of Sciences' Center for Korean Study.
The Soviet Union was once North Korea's main political and military backer and trading partner. But trade between Russia and North Korea has dropped from an annual $1.5 billion before the Soviet collapse in 1991 to about $115 million a year in the past few years -- a decline analysts blame mainly on Pyongyang's dire economic crisis and its unpaid debts to Russia, with which it no longer shares an ideology.
China, which has displaced Russia as North Korea's main trade partner and interlocutor, now holds far greater sway over Pyongyang.
Still, Russia sees new economic opportunities if the Korean Peninsula can be stabilized.
The Kremlin has been negotiating with Pyongyang for years over a $3.3 billion project to link Western Europe to the enormous South Korean deep water port of Pusan via the Trans-Siberian and Trans-Korean railroads, and this summer, the two Koreas finally linked their railroad tracks. Although the North Korean part of the track needs to be thoroughly renovated and expanded to make it viable, the project could potentially bring to Russia billions of dollars a year in transit fees.
Russia is also eyeing the construction of a pipeline to carry gas from its Siberian fields to North Korea and beyond. Russia views China, Japan and South Korea as growth markets for its energy, and building a pipeline through North Korea would make it easier to sell to those countries.
It should be remembered that a fiasco resulted the last time Russia tried to persuade North Korea to curb its weapons program, in 2000. First, Putin triumphantly announced that Kim had agreed to give up his ballistic rocket program if Russia would launch civilian satellites for Pyongyang. Then, Kim said it was all a joke and a misunderstanding.
"Of course, Kim Jong Il can listen to Russia's position," Tkachenko
said. "And then he can go do whatever he wants."
*******
#18 - JRL 7289
Transitions Online
www.tol.cz
August 14, 2003
Giving Peace No Chance
Moscow should be reining in an arbitrary, xenophobic bureaucracy that attacks
civil society. Instead it is giving it free rein.
by Nickolai Butkevich
Nickolai Butkevich is Research and Advocacy Director at the Union of Councils
for Jews in the Former Soviet Union.
WASHINGTON, United States--At this very moment, one of the most respected NGOs in Russia’s regions is in court, facing closure. Its alleged crime is minor; its real offence is the support of minority rights in an area of Russia where for the past few years immigrants have come under particularly strong pressure from the authorities.
In mid-July, officials in the southern Russian region of Krasnodar called on the School of Peace’s offices in Novorossiysk and told its founder and director Vadim Karastelyov that his organization had broken the law and would be disbanded. The School of Peace currently has only one founder, instead of three as the law requires. There had originally been three and, when two left, Karastelyov had informed the authorities. The Justice Ministry told him not to worry about it.
As it turned out, there was reason to worry. This, it seems, was another of those vaguely written, sometimes mutually exclusive legal clauses that govern Russian NGOs and other organizations and that the authorities ignore until it meets their political purposes. Eventually it became clear why they had suddenly decided to pore over legal minutiae. Why do you publicize problems facing Meskhetians and other migrants, Karastelyov was asked. And who are your contacts among employees of international organizations? They then demanded to know who had invited him to come to Washington D.C. in November 2002, when he attended an Amnesty International conference.
The answer to the question of why the School of Peace is interested in the Meskhetian Turks and other minority groups is clear from one of its two principal aims: to foster interethnic tolerance. (The other is the protection of children’s rights.) And the Meskhetian Turks are a group that has suffered particularly from intolerance. An ethnic group deported en masse by Stalin in 1944 from Georgia to Central Asia, many Meskhetian Turks fled to the Krasnodar region in southern Russia in 1989 after being driven out of Central Asia by an explosion of interethnic violence. There, they were joined by refugees from other conflict zones, many of them from the relatively nearby Caucasus. In all, the region has hundreds of thousands of people displaced by the break-up of the Soviet Union. The region’s governor, Aleksandr Tkachev, claims there are one million refugees in a region of five million inhabitants.
They are now facing a possible third mass expulsion. In March 2002, Governor Aleksandr Tkachev singled out all Armenians, Georgians, and Meskhetians as fit for deportation, declaring that: “You can tell a legal migrant from an illegal migrant by their last names, specifically by their suffixes. Last names that end with -yan, -dze, -shvili, and -ogli are illegal, and so are those who bear them.”
The regional press has fallen into line, promoting a witch-hunt mentality against migrants.
So far, deportations from Krasnodar have been limited to an unknown number of Roma detained in multiple police sweeps and two Kurds. Perhaps daunted by the large expense a mass deportation of immigrants would entail, the regional authorities are clearly attempting to make life in Krasnodar intolerable for the new arrivals. Meskhetians and other minorities are being denied the right to pensions, medical care, and education; even their marriages are not recognized as legal.
These are racist laws. They are also against Russia’s laws. Under federal legislation, those living in Russia at the time of a new citizenship law in 1992 are Russian citizens. In other parts of Southern Russia, that right has been recognized and Meskhetians have, for the most part, been registered. Only Krasnodar continues to prevent them from claiming residence.
The Krasnodar authorities have gone further than bureaucratic pressure. They have encouraged vigilante Cossack organizations to intimidate and assault migrants in the hope that they will leave. The attitudes and methods of the Krasnodar authorities may be spreading. A television report aired in mid-July from the neighboring region of Rostov reported that, though “the animosity between the Cossacks and Meskhetian Turks in the Rostov region has not grown into an open armed conflict yet,” it could become “another flashpoint” in southern Russia “if the federal center does not deal with this problem.”
In this climate, the School of Peace’s advocacy on behalf of Meskhetian rights has been seen by local officials as extremely provocative, even subversive.
Other NGOs that have reported on the anti-migrant policies of the Krasnodar authorities have also been harassed.
The Krasnodar Human Rights Center, an organization that works on a wide variety of human rights issues, not just the rights of migrants, narrowly escaped being shut down when the Supreme Court on 22 July ruled that a Krasnodar court’s order suspending the Center’s work was invalid. Unfortunately, the Supreme Court sent the case back to the same lower court rather than make a final ruling on the matter, raising the possibility of yet another bruising legal fight for the Center’s survival.
And on 31 July, Karastelyov’s wife Tamara--who herself heads the Novorossiysk Human Rights Committee--was interrogated by district prosecutors, who asked her to explain why her organization was advocating for Meskhetian rights. Karastelyova’s organization was the main source of a report in May in the newspaper Izvestiya, which described a mass outbreak of anti-minority violence in the village of Kholmskoy this April.
PANDERING TO XENOPHOBIA
All this should be enough for observers and politicians to be worried. But what makes this localized intolerance all the more disturbing is that Moscow, instead of seeking to halt Krasnodar’s policies, has added to the pressure against the Meskhetian Turks and has become increasingly supportive toward the region’s general policies against immigrants.
Last July, the Federation Council, the Russian parliament’s upper house, passed a resolution blaming Krasnodar migrants for “creating a threat to the national security of the country” and calling for “the immediate repatriation to Georgia of the Meskhetian Turks, who are temporarily living on the territory of the Russian Federation.” (Never mind that Georgia doesn’t want them either.)
A year later, on 25 July, Interior Minister Boris Gryzlov visited Krasnodar and called for the deportation of unregistered migrants. “I believe it should be done in full measure also here, in the Kuban [another name for Krasnodar],” the minister said. “I think the actions by the Krasnodar territory administration and police are correct. They are tough, but objectively necessary.”
Also this July, the Supreme Court ruled that a law setting quotas for migrants in the neighboring Stavropol region could stand, potentially setting the stage for even more anti-migrant legislation in Krasnodar.
It is actions like this that in July prompted 28 prominent Russian human-rights advocates and journalists to issue a strongly worded statement arguing (with specific reference to the closure of TVS, Russia’s last independent television station) that “the elements of civil society that are being built in the country are actively being ousted by so-called controlled democracy, which is being controlled and clumsily and without talent.”
Rather than spur the racist actions of the Krasnodar authorities, which are increasing inter-ethnic tension in the region to dangerous levels, the central government should take a stand on the side of the law and demand that Meskhetians and other long-term residents of Krasnodar be immediately registered and given the full rights of Russian citizenship.
It should also prevent the persecution of human rights organizations such as the School of Peace. This persecution is a prime example of the real threat to Russia’s security, which is not migrants, but an arbitrary, xenophobic bureaucracy that attacks civil society, to the detriment of all the country’s citizens
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