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Johnson's Russia List


March 3, 1998  
This Date's Issues:    2089   2090

Johnson's Russia List
3 March 1998

[Note from David Johnson:
1. Darrell Slider: Small Business/Middle Class in Russia.
2. The Moscow Tribune: John Helmer, THE DEATH OF KINGS.
3. Reuters: NATO expansion faces first U.S. test.
4. Reuters: Yeltsin brings loyal ally into Russian govt.

5. Journal of Commerce: Bruce Barnard, Baltic region on 
verge of economic renaissance.

6. Krestyanskiye Vedomosti: RUSSIAN COUNTRYSIDE FACES MAJOR 

7. The Electronic Telegraph (UK): Alan Philps, Kremlin chiefs 
lose bodyguards.

8. Financial Times (UK): Chrystia Freeland, Yeltsin: Ministerial 
musical chairs continues.

9. Interfax: Russian Military: Iraq Got Mass Destruction Weapons 
>From West.

10. Interfax: Over 2 Mln Russians Use Drugs Regularly - Interior 

11. Interfax-Argumenty i Fakty: Ilya DOROFEYEV, CASPIAN BONE OF 

12. AP: Turkey-Caspian Oil Pipeline Backed.
13. Kyodo: Russia sees no reason to return disputed islands.
14. Novye Izvestiya: The Ninth Wave. (Re Caspian oil). 
15. Laura Belin: New on the RFE/RL web site.]


Date: Mon, 2 Mar 1998 
From: "Darrell Slider (GIA)" <>
Subject: Small Business/Middle Class in Russia

Dear David,

Harley Balzer's comment that recent Yeltsin pronouncements define the
middle class too narrowly is reasonable, but I think he has gone too far 
in criticizing Yeltsin's advisors (Nemtsov is the point man on this) for
their emphasis on expanding the role of small business. The fact is that
the only way to bring about a rapid growth in Russia's puny middle
class is to facilitate business start-ups. 

This realization is not new to Russian policymakers. Already in March
1990 the Soviet parliament passed a law allowing private ownership of
small factories and other enterprises and a Committee for the Support of
Small Entrepreneurship was set up within the USSR Council of Ministers'
State Commission on Economic Reform. Funds were also allocated to
stimulate the creation of small business. The Russian government
continued along this path, creating a Department on Ownership and
Entrepreneurship under the State Antimonopoly Committee. In June 1995
Yeltsin upgraded the department to a State Committee for Assisting and
Developing Small Business. (Both the department and the State Committee
were headed by Viacheslav Prokhorov until November 1997, when he was
replaced by Irina Khakamada.) Substantial federal resources have been
devoted to supporting small business in recent years, though questions
have been raised about where the money went and the Ministry of Finance
has done its best to keep the funds from being spent.

Ironically, the elevated status for government support of small business
coincided with the start of a decline in that sector. There had been
a rapid expansion of the small-scale, private sector until 1995, spurred
by the collapse of state-owned enterprises and budget-dependent 
organizations such as research institutes. The total number of small,
privately owned enterprises decreased from 896,000
in 1995, to 877,000 in 1996, and 842,000 at the beginning of 1997.
(these are Goskomstat figures) 

What lies behind these overall numbers is a striking differentiation by
region that helps to understand the reason for the drop. (The complete
data and argument appear in my article "Russia's Market-Distorting
Federalism" in the October 1997 issue of Post-Soviet Geography and
Economics.) In about 10 regions there has been a continued expansion
of small enterprises over the 1995-97 period, most notably in St.
Petersburg, Tiumen' and Nizhnyi Novgorod. In most other regions,
including Moscow, there has been a substantial decline. In a few regions,
such as Orenburg and Kursk, there have been virtual massacres
of small enterprises--a decline of over 50 percent.

What this demonstrates is that federal policy and laws are not as
important as regional economic policies and conditions. Unfortunately,
most regional leaders (perhaps they might be labelled "local
scoundrels"?) feel threatened by market reforms they can't control and are
especially hostile to small private businesses. The attitude of local
elites is reflected in onerous local taxes, registration requirements,
inspections, "shakedowns", etc. Of course, little has been done to
protect local entrepreneurs from non-governmental criminal groups either.

As I understand it, Khakamada and Nemtsov are promoting new policies
that will simplify taxation and reduce bureaucratic oversight of small
businesses. Khakamada brings to her post both a well-known public image
and an entrepreneur's perspective. What remains to be seen is whether she
and Nemtsov are capable of framing policies that will not be ignored or
undone by regional elites.

Darrell Slider
Professor of Govt & Int'l Affairs
University of South Florida SOC 107 
Tampa, FL 33647


The Moscow Tribune
March 4, 1998
>From John Helmer in Moscow
Let's sit down on the ground and speak of the deaths of kings. Nicholas II's,
for example.

The last of Russia's tsars didn't deserve human rights. That's the way it is
with kings who claim their appointments come from God. The divine
right of kings, which the last of the Romanov dynasty didn't give up,
even when he announced his abdication from the throne in 1917,
supersedes such human rights as the right to trial for alleged crimes,
and even, in special circumstances, the right to life. Nicholas lost 
that right when the Czech Legion of the royalist Army came close enough to 
Yekaterinburg to rescue him from his Bolshevik jail. 

Edvard Radzinsky has made popular but bad history out of confusing Nicholas's
divine right with a human one, and reversing cause and effect, so that
his executioners become the embodiment of evil, and Nicholas a human
victim on his way to sainthood. 

As history and as theology, this deserves to be dismissed. Proving which
human beings the bones of Yekaterinburg belong to has equally little to do
with history or with theology. Burying them in one place or another
shouldn't make any difference, except to tourist revenues. Neither the
English nor the French king, who lost their heads in the revolutions of
their people, are venerated for what they did in life, nor for 
the fact that they died. 

Kings can't be victims like ordinary mortals. It may be that it's easier 
for them to enter the Kingdom of Heaven, because God chose them in the first 
place. But that should make it all the harder for them to enter as saints. 
Nicholas II just didn't try hard enough, and dying wasn't good enough.

On this point, the Russian Church is doing everybody, including rational 
people, a favour by denying the saint's remains the authenticity they
require for veneration. In the face of all the DNA evidence, this sounds 
stupid. But it isn't scientific -- read human -- evidence that concerns
the Church. The priests believe that the Bolsheviks, mindful of
the special divinity the tsar and his family claimed, and the Church
preached, destroyed every human trace of them. That's why the Church has 
such deep doubt about venerating a human object that might be a fake -- and 
a fake perpetrated by atheists and Jews to boot!

You can see why the Bolsheviks couldn't leave Nicholas to chance,
any more than Oliver Cromwell could have preserved England's King Charles,
or Robespierre the French king. What is fatal in those circumstances for 
kings is also, like the divine right of succession, fatal for their women
and children. 

But if the Bolsheviks weren't as methodical as the latest investigations
suggest, the Church can't be satisfied with anything less than the
certainty of belief. That's not particularly rational. But neither is
sainthood, the veneration of relics, or the divine right of kings. By
investing the bones with religious skepticism, the Church is helping
to strip their burial of theological significance. What happens next is
purely political.

Imagine for a moment what might have happened if Nicholas, or any of
his children, had survived the civil war, and gone to live in some
European resort. Would Adolph Hitler have persuaded him to bless the
Nazi invasion and head the Russian Liberation Movement? If he'd been killed
fighting in Russia on the German side, would that have made him more
venerable, Church-wise? Maybe he would have survived, and ended up in the 
United States -- a Hollywood king to be exploited for Cold War propaganda.

What would the Church think if the 130-year old bones of Nicholas
were interred in an American cemetery, after death from natural causes? No
doubt it would be easier to rebury him in the Cathedral of St
Peter and St Paul, as the government plans to do in July. But that would be 
as a politician, not as a saint. That's all Nicholas deserves.


NATO expansion faces first U.S. test
By Jackie Frank 

WASHINGTON, March 2 (Reuters) - NATO expansion is on track for U.S. approval
this month, starting with the expected clearance on Tuesday in the Senate
Foreign Relations Committee of the first new members from the former Warsaw
Committee chairman Jesse Helms, Republican of North Carolina, made the
expansion of the alliance to include Poland, Hungary and the Czech Republic
his first priority for the year and expects it to be completed this month. 
Senate Majority Leader Trent Lott said on Monday that while he favored
approval of NATO expansion to include those former Warsaw Pact governments,
debate in the full Senate next week must allow lawmakers to voice their
legitimate concerns. 
``I think we should pass it and do it in a reasonable time. But you've got to
allow senators a chance to be heard on it,'' the Mississippi Republican said
at a news conference. A two-thirds vote is required for ratification of the
The three countries were approved for entry into the alliance last December.
They cannot be admitted until the parliaments of all existing 16 NATO members
ratify the move. 
But once those three are admitted, it may be more difficult for others to
admission to the alliance. Several lawmakers and prominent Americans have
called for a moratorium on further expansion. 
France and Italy pressed unsuccessfully last year for the inclusion of
and Slovenia in the first round of NATO enlargement. Russia is expected to
resist membership for the once Soviet-ruled Baltic states of Estonia, Latvia
and Lithuania. 
A senior member of the Senate Armed Services Committee, Republican Sen. John
Warner of Virginia, plans to introduce a resolution calling for a three-year
moratorium on further expansion of NATO. 
What he called a ``strategic pause'' in new membership would begin on the
formal date of entry for Poland, Hungary and the Czech Republic. 
Warner said time was needed to integrate the three into the alliance and
assess the cost and impact of the enlargement, and whether U.S. security
interests were being stretched too thin. 
The uncertainty of the cost to the United States, and the debate over
burden sharing are expected to draw the most attention during the debate.
Estimates have ranged from $1.5 billion to $125 billion over 10 years, Warner
A further concern involves possible changes in the relationship with Russia
resulting from bringing former Eastern Bloc nations into a formal alliance
with the West. Of the former Warsaw Pact countries, only Russia has not
applied for entry to NATO. 
Several prominent Americans have joined in opposing the expansion. An unusual
alliance of groups on the political left and right has protested that the cost
for the United States is too great. 
In speeches on the Senate floor, lawmakers have questioned whether the U.S.
public would support the use of troops to defend nations in eastern and
central Europe. 
Clinton administration officials noted that this round of NATO enlargement
would add 200,000 troops to the alliance, which they argued would make Europe
more stable and erase the artificial lines between East and West drawn after
World War II. 


Yeltsin brings loyal ally into Russian govt
By Timothy Heritage 

MOSCOW, March 2 (Reuters) - Russian President Boris Yeltsin appointed one of
his most trusted allies, top security official Ivan Rybkin, as a deputy prime
minister on Monday and removed his long-serving nuclear energy minister. 
Yeltsin also named new ministers of transport and education to fill vacancies
created when he dismissed three cabinet members on Saturday after weeks of
criticism of the government. 
But he again ruled out major changes under a gradual reshuffle which has
underlined his power over the cabinet but left his economic reform team and
their policies intact. 
Asked about his decisions, the 67-year-old president told reporters: ``What
reorganisation of the government? Well, ministers come, ministers go.'' 
Yeltsin has made clear his reform chiefs will stay, despite repeatedly
expressing his dissatisfaction with the government and forcing it to defend
its performance at a special meeting last week at which it admitted making
Rybkin, a former communist, is one of seven deputy prime ministers. There are
also two first deputy prime ministers. 
He became a Yeltsin ally as speaker of the lower house of parliament from
to 1995, and has remained loyal as secretary of the president's advisory
Security Council and top negotiator with separatist Chechnya since October
He replaces deputy prime minister Valery Serov and takes over his job
overseeing relations with the other 11 former Soviet republics in the
Commonwealth of Independent States. 
The appointment of such a prominent and loyal ally to this post reflects
Yeltsin's discontent with the slow pace of economic integration with other CIS
states and underlines his decision to make the Commonwealth a priority this
``He proved himself very well over Chechnya,'' Itar-Tass news agency quoted
Yeltsin as telling Russian journalists in the Kremlin after talks with Prime
Minister Viktor Chenromyrdin. ``You can trust him.'' 
Rybkin's successor at the Security Council was not named. 
The Kremlin said Yeltsin had removed Viktor Mikhailov as nuclear energy
minister, a post he had held since 1992. 
The president did not name his successor or explain the move, but it could be
connected with his age. Mikhailov was 64 last month and Tass said he had been
keen to retire. 
Tass said Yeltsin had named Sergei Frank as transport minister and Alexander
Tikhonov as education minister. Both were deputies to the ministers sacked
with Serov on Saturday. 
The official announcement contradicted earlier Russian news agency reports
which had suggested another deputy minister, Yuri Mikhailov, would become
transport minister. 
Yeltsin has changed his government line-up several times since his second
presidential term began in 1996. But he has persisted with economic reforms
which are showing signs of success although many Russians have found them hard
to endure. 
The opposition communists, who want a coalition government, said Saturday's
dismissals had been overdue but regretted the reshuffle had not gone further. 
Gennady Seleznyov, a communist who is speaker of the lower house of
parliament, said he was ``astonished'' by the changes. He said Economy
Minister Yakov Urinson in particular should have been sacked over the
government's ``failed'' economic policy. 
Despite surviving the reshuffle, the two main economic reformers, first
premiers Anatoly Chubais and Boris Nemtsov, suffered one indignity. Yeltsin
removed their personal bodyguards and those of 10 other officials to cut
In a separate move on Monday, Yeltsin approved a government decision to bury
the remains of Russia's last tsar on July 17, exactly 80 years after Nicholas
II and his family were murdered by Bolshevik revolutionaries. They will be
interred in the former imperial capital St Petersburg. 


Journal of Commerce
March 3, 1998
[for personal use only]
Baltic region on verge of economic renaissance
With political changes, dream of a trade bloc may come true
The gap between living standards among countries in the area offers big 
opportunities for trade. There is also a move toward pan-Baltic energy 

LONDON -- The Baltic jigsaw is finally fitting into place.
As recently as the late 1980s, the Baltic shoreline was a dangerous 
outpost of the Cold War. Finland was cowed into neutrality by the Soviet 
Union. Estonia, Latvia and Lithuania were Soviet republics. Poland was 
in the final death throes of communism, and Germany's Baltic coastline 
was disfigured by barbed wire, mines and armed watchtowers that kept its 
two societies apart.
Today, the Baltic region is on the verge of an economic renaissance 
propelled by remarkable political changes.
Finland is now a member of the European Union, Estonia and Poland start 
negotiations to join the bloc in April, Germany is united, Latvia and 
Lithuania are independent states. And Russia is more interested in trade 
than tanks.
Old dreams of creating a regional trade bloc are no longer pipe dreams. 
The Council of Baltic Sea States, largely dormant since its 
establishment in Copenhagen in 1992, is being taken seriously.
There is even movement in Russia, where the official economy will grow 
for the first time since the collapse of communism in 1991. And the 
fastest-growing region is around St. Petersburg, one of the biggest 
markets in the Baltic region.
And that means business for the Baltic Sea ports. In 1990, only 35% of 
Russian trade went through Baltic ports, including St. Petersburg. By 
1997 this had risen to 45%.
Meanwhile, the Russian gas giant, Gazprom, is investing heavily in new 
gas pipelines into Finland to connect with the Nordic grid and pipelines 
to continental Europe. Another pipeline passes through Belarus and 
Poland into Germany.
A distinct Baltic Rim market is emerging with 50 million consumers in 
Denmark, Sweden, Finland, the three Baltic states and the Polish, German 
and Russian Baltic provinces.
A natural fit exists, according to economists, who point to close 
proximity of extremely wealthy and relatively poverty-stricken nations. 
Finland boasts gross domestic product per capita of about $22,400, while 
Estonia, a short ferry ride across the Gulf of Bothnia, has only $3,240. 
The gap is even bigger between Denmark, at $33,400, and Latvia, the 
poorest of the three Baltic states, with $2,450.
This yawning gap between wages and living standards offers big 
opportunities for trade, investment and economic growth. Wage costs in 
the east Baltic are only a tenth of the German and Nordic level, though 
educational levels are similar. Estonia has set the pace in attracting 
foreign manufacturers, while its Baltic neighbors and northwest Russia 
are still getting accustomed to western standards.
But change is in the air. The 11 leaders of the Council of Baltic 
States, who held their second meeting in January in the Latvian capital 
Riga, gave political support to plans to create a pan-Baltic oil, gas 
and electric power links to be financed and built by private companies.
The aim of the project is to increase energy efficiency and open up the 
region to Norwegian energy resources. This would reduce the current near 
total reliance of Poland and the Baltic states on gas supplies from the 
former Soviet Union.
Setbacks have occurred in the region. For example, Estonia's high 
inflation has put pressure on the link between its currency and the 
mighty Deutsche mark. Tiny Latvia got its first taste of globalization 
when Kellogg Europe announced plans to close a cereal plant in Riga. 
Meanwhile, Western investors still tell horror tales about doing 
business in St. Petersburg.
But Western businessmen are still packing hotels across the Baltic, 
sensing a new market is about to be born. In its latest annual review, 
the European Bank for Reconstruction and Development in London remarked: 
"It is possible that in 20 years time, some of the world's tiger 
economies will be found in the (former communist) region."
And despite the current difficulties, some analysts reckon the Baltic 
will boast its share of tigers. 


>From RIA Novosti
Krestyanskiye Vedomosti, Nos. 7-8
February 1998

Last year 3,000 copies of a 345-page book entitled "The
Russian Agrarian Policy Concept Over the 1997-2000 Period" were
printed by Moscow's Vershina (Top) publishing house. 
This monograph was prepared by a large team of authors
headed by full-time member of the Russian Academy of
Agricultural Sciences Yegor Stroyev.

As of 1995, people in the "retirement-age" category
accounted for approximately 35 percent of the entire Russian
rural population. The average life expectancy for men is 57
years and the average life expectancy for women totals 71
* * *
The number of agricultural laborers has been increasing
over the last five years just because other Russian economic
sectors now offer less impressive employment opportunities. At
the same time, owing to natural competition, more and more
jobless people are being registered in the Russian countryside.
This country had suffered from latent unemployment inside the
so-called "traditionally agricultural national regions", i.e.
the North Caucasus, Volga-region republics and Siberia.
However, such unemployment can no longer be concealed. For
example, 20 percent of Daghestan's entire active population
don't have any jobs.
* * *
The Russian countryside is now marked by more impressive
social stratification. A rather insignificant category of
well-to-do farmers, i.e. managers of all levels and
businessmen, has asserted itself in this country. At the same
time, the so-called lumpen proletariat accounts for up to 40
percent of the entire rural population.
* * *
This country's plough-lands total 131.6 million hectares,
requiring substantial investment for the sake of their
cost-effective performance. As much as 28.2 percent of all
local plough-lands boast high acidity levels well in excess of
maximum permissible levels; 20 percent of such lands are
susceptible to water erosion; and another 10.3 percent are
located on salinated soils and salt lakes.
The Soviet Union had created an artificial disproportion
between the grain sector and fodder production; that
disproportion has pre-determined the destruction of meadows and
grazing grounds. Right now, about 33 percent of all natural
fodder grounds have turned into swamps and marshes that are
covered with bushes.
* * *
Production of voluminous fodder requires approximately 120
million hectares of land (that is, 54 percent of all local
farmlands), including 36 million hectares of plough-lands and
84 million hectares of natural fodder grounds. Natural
resources still remain to be developed adequately enough; in
this connection, more than 66 percent of the plant-raising
sector's entire output (including about 70 percent of all grain
harvests) are being fed to animals.
* * *
Pasture fodder accounts for up to 44 percent of all fodder
consumption in countries boasting a well-developed agrarian
sector; however, the respective Russian share is just 12
* * *
FAO experts estimate that Russia and other former Soviet
republics are not going to weather the current agro-industrial
crisis before the year 2010.
The Washington-based food policy international institute
believes that Russian per-capita agricultural output won't
reach the 1990 level by the year 2010.

That institute's experts also think that vast
agricultural-depression areas will appear in most CIS regions.

(Abridged from the monograph "The Russian Agrarian Policy
Concept Over the 1997-2000 Period". )


The Electronic Telegraph (UK)
3 March 1998
[for personal use only]
Kremlin chiefs lose bodyguards
By Alan Philps in Moscow 

TWELVE of Russia's leading government officials are to be deprived of 
their bodyguards in a cost-cutting exercise, President Yeltsin decreed 
The bodyguard is the most visible sign of status in modern Russia. 
Bankers and leading businessmen are surrounded by them when on foot and 
are boxed in by cars with blue flashing lights when travelling by road.
The Kremlin spokesman said that the state could no longer afford to pay 
for bodyguards for 11 deputy prime ministers and the deputy head of the 
presidential administration. The most visible effect of the measure will 
be to deprive the two leading reformers, Anatoly Chubais and Boris 
Nemtsov, the deputy prime ministers, of their bodyguards. Both men said 
last year that they had received threats in connection with their 
attempts to modernise the economy.
Bodyguards will be kept by Viktor Chernomyrdin, the Prime Minister. 
Mikhail Gorbachev, the former Soviet president, who is as hated in 
Russia as he is admired abroad, will also keep his close protection. Of 
all people in public life, he needs a bodyguard; in 1996 he was punched 
by drunken man who blamed him for the loss of his job.
The case for maintaining bodyguards for members of the government is 
less clear. While businessmen, bankers and police are shot almost daily 
in Moscow, political assassinations are virtually unheard of.
The effectiveness of bodyguards is also being called into question: the 
murder rate shows there is no shortage of professional killers in Russia 
who can fell a victim from a rooftop with a sniper rifle, or pump a few 
bullets into him at short range with a hand gun.
Some bankers more attuned to Western ways have tried to escape the 
loutish Soviet legacy and dispense with bodyguards. But old habits die 
hard and a powerful suite of burly men is required to make a splashy 
entry into a Moscow night club.


Financial Times (UK)
3 March 1998
[for personal use only]
Yeltsin: Ministerial musical chairs continues
By Chrystia Freeland in Moscow

The game of musical chairs in the Russian government continued yesterday 
when President Boris Yeltsin appointed Ivan Rybkin, previously head of 
the influential security council, as a new deputy prime minister.
Mr Rybkin, who will replace one of three ministers sacked at the 
weekend, will oversee Russia's relations with other former Soviet 
Analysts viewed the move as a boost for Boris Berezovsky, a powerful 
Russian financier who once served as Mr Rybkin's deputy at the security 
council and who retains close links with his former boss.
Yesterday Mr Yeltsin also fired Viktor Mikhailov, nuclear energy 
minister. His removal is likely to be welcomed by the west and liberal 
officials in the government, who have been troubled by his staunch 
support of Russia's military-industrial complex.
The new ministerial appointments, which did not touch on the crucial 
economic or security portfolios, were seen as part of the president's 
broader effort to show the country who is in charge.
Since he became leader of the Russian Federation at the height of 
perestroika, Mr Yeltsin has entrenched his authority by keeping his 
subordinates constantly off-balance and nurturing conflicts between 
warring groups of ministers and aides.
Yesterday's changes are simply part of the usual, volatile climate in 
the Russian government.
As Mr Yeltsin told reporters, when asked if the minor reshuffle 
signalled a broader cabinet overhaul: "What reorganisation of the 
government? Ministers come and ministers go."
"Boris Yeltsin has yet again reminded everyone that he is the most 
powerful man in the country and that everyone depends on his policies, 
and on his whims," said Sergei Markov, director of the Institute of 
Political Studies, a Moscow think-tank.
The president granted Mr Rybkin the cabinet post in part because of his 
handling of Russia's delicate relationship with Chechnya. By moving to 
the former Soviet republics portfolio, Mr Rybkin will shift to a less 
prominent, but perhaps equally frustrating, job.
Since the collapse of the Soviet Union, Russia has periodically stated 
its hopes of developing closer ties with other former republics. But, in 
practice, economic and political connections have steadily eroded.


Russian Military: Iraq Got Mass Destruction Weapons From West 

MOSCOW, March 2 (Interfax) - Neither Russia nor former the USSR have sent
weapons of mass destruction to Iraq "for considerations of principle," Gen.
Alexander Kotelkin, former chief of the Russian arms export company
Rosvooruzheniye and currently first deputy head of the Russian Foreign
Economic Ties Ministry, said in an interview on the TV-6 channel Sunday. 
According to Kotelkin, Western countries have supplied chemical and
biological weapons to Iraq. 
"Perhaps now it would make sense to bring up the issue with the U.N.
Security Counsel to find out who precisely has shipped components for
weapons of mass destruction to Iraq," said the deputy minister, who will
leave his post soon through a ministerial staff reduction. 
Voicing satisfaction with the peaceful solution to the Iraqi crisis,
Kotelkin suggested that the United States "will not stop at that." 
He said it is possible that future actions against Iraq might be prompted
by some Soviet-made sea mines that might be detected near the U.S. ships
deployed in the Persion Gulf. There are allegations that such mines were
acquired by Iraq at one time. 
Kotelkin believes Russia should cash in on the situation with Iraq. "We
are being waited for in Arab countries, among them Gulf states," the general


Over 2 Mln Russians Use Drugs Regularly - Interior Ministry 

MOSCOW, March 2 (Interfax) - Over 2 million Russian citizens use narcotic
drugs regularly, nearly 4 million have tried them and over 400,000 are addicts. 
Col. Gen. *Vladimir Kolesnikov*, first deputy interior minister and
deputy chairman of the government commission on prevention of drug abuse and
sales, said so in State Duma hearings Monday. 
The hearings have been organized by the Duma Health Protection Committee. 
The number of addicts is increasing in nearly every region and this
raises the incidence of drug-related crimes, Kolesnikov said. It was nearly
185,000 in 1997, a 91% increase on 1996. 
A total of about 50 tonnes of illegal drugs was confiscated in 1997, the
Interior Ministry reports. 
The forecast is not good, Kolesnikov said. Experts believe that the
number of addicts, especially among young adults and minors, will increase
and so will the proportion of hard drugs. The drug lords will become
entrenched in the economy and this will increase corruption, he said. 
The organizers of the hearings say that the spread of drug abuse must be
stopped, in particular through tough steps. The law on narcotic and
psychedelic drugs which will take effect April 15 must play a positive role
in this, they say. 


>From RIA Novosti
Interfax-Argumenty i Fakty, No. 8
February 1998

The dispute over Caspian oil has still not subsided. Some
experts believe that Caspian oil resources are comparable to
those of the Persian Gulf. Others doubt this greatly and think
the countries bordering on the Caspian Sea--Russia, Azerbaijan,
Turkmenistan, Kazakhstan and Iran--are exaggerating their role
as oil suppliers in search of additional investments. However,
there is no doubt that in the coming decade the Caspian Sea
will remain one of the main world centers in the struggle for
oil, mainly because the legal status of the Caspian Sea, taking
into account the changes in the region, is still absent.

The Main Issue Is How to Divide?
Russia considers the Caspian Sea a closed water reservoir,
and not only in geographic terms. In the opinion of the Russian
leadership, the legal status of the sea should be determined by
all the five coastal states and by them alone. As it was stated
by President Boris Yeltsin, our country does not object to oil
resources being exploited by foreign companies, but this should
be done under the jurisdiction of the coastal states.
Unfortunately, there is no agreement on the issue among
the neighboring states. President of Kazakhstan Nursultan
Nazarbayev said the dispute over the Caspian Sea may turn the
region into the second Balkans.
Azerbaijan and Kazakhstan insist on dividing the sea into
sectors along a middle line. Until recently, Russia and Iran
considered the best solution to be one in which only areas of
the 45-mile zone would come under the jurisdiction of one or
another state, while the rest of the sea would be used by all
the coastal states.
The leadership of Turkmenistan has repeatedly stated that
both versions suit it. Nevertheless, during the recent visit to
the republic by Iranian President Sayed Mohammad Khatami and
Foreign Minister Kamal Kharrazi the sides decided to set up a
commission to solve the problem of dividing the Caspian Sea
along the middle line. A similar decision was made at the end
of last year by Turkmenistan together with Azerbaijan, and
already in February 1998 the Foreign Ministers of the two
countries, B. Shikhmuradov and G. Gasanov, noted definite
progress in the talks.
Why do Azerbaijan, Kazakhstan and now Turkmenistan prefer
the "sectoral" version of dividing the Caspian Sea? One gets
the impression that the three former Soviet republics have
decided to come to terms with each other and with Iran and to
present Moscow with a fait accompli. In the opinion of
President of Kazakhstan Nursultan Nazarbayev, the main oil
resources have been discovered in the sectors of Azerbaijan,
Kazakhstan and partially Turkmenistan, while "no oil has been
found on the Russian shelf." The proposal on the 45-mile zone,
made by Russia in November 1996, gives it a share of the pie
and the right to veto oil projects in the central part of the
Caspian Sea, in which the cost of explored oil is about 4
trillion dollars. "If Russia had oil in the Caspian Sea, it
would have behaved quite differently," Nazarbayev assures.
It is another matter that the economic expediency of
pumping oil across Russian territory makes the neighbors reckon
with Moscow's opinion. In early January, the Caspian Pipeline
Consortium (CPC) practically agreed with the Russian federal
bodies on the pipeline project and, according to V. Stanev,
General Director of the CPC-Russia company, it started working
on a feasibility study of the project. The laying of the
pipeline will begin this year, right after the ground work is
completed. In the opinion of the President of Chevron, the
Tengiz-Novorossiisk route is the shortest, most economical and
safest for pumping oil to the world market.
The CPC, it will be recalled, was established in 1992 for
laying a 1,580-kilometer pipeline linking the Tengiz deposit in
western Kazakhstan with the new Novorossiisk terminal on the
Black Sea coast. The pipeline's capacity will be 67 million
tons of oil a year. Its construction is planned to be completed
in 2000. The consortium comprises the US's Chevron, Mobil and
Oryx, the Russian-American LUKArco joint venture, the
Russian-British Rosneft-Shell joint venture, Italian AGIP,
British Gas, and Kazakhoil. The shares of the founding
governments of the CPC are distributed as follows: 24 percent
belong to Russia, 19 percent to Kazakhstan and 7 percent to

The scandals that erupted following the announcement of a
series of tenders for exploiting off-shore oil and gas deposits
show that there are profound contradictions among all the
participants in the Caspian association.
Early in 1997 Turkmenistan claimed possession of the Azeri
and part of the Chirag deposits, which were considered
Azerbaijanian and had been handed over by that republic to
foreign companies for oil production. According to Terry Adams,
President of the Azerbaijan International Operational Company
(the operator of the project), the funding of the foreign
consortium in the Azeri-Chirag-Gyuneshli (ACG) project amounted
to about 1 billion dollars over the past 18 months alone, and
the operational company will spend 50 million dollars more on
creating a Georgian export corridor.
The contract on the joint exploitation and distribution of
the oil produced at the ACG deposits was the first oil contract
concluded by Azerbaijan with the consortium of foreign
companies late in 1994. Since the participants in the
project--Amoco, Pennzoil, Unocal, Exxon, SOCAR, British
Petroleum, RamCo, LUKoil, Statoil, TPAO, DELTA, and
Itochu--represent all the world leaders in fuel and energy
production, the conflict automatically grew to global
In summer of that year, Azerbaijan signed a contract with
Russia on the main commercial principles of exploiting the
Kyapaz (Serdar) deposit, which obviously did not suit
Turkmenistan, for it considered the deposit to be its own.
Finally, Kazakhstan is protesting against the Russian
tender for exploiting the Kurmangazy deposit in the northern
part of the Caspian Sea. Last December, the Russian Ministry
for Natural Resources conducted a tender, which was won by
LUKoil. By a government decision made on December 19th, it was
to be given a license for the right to prospect and produce oil
within the bounds of an area stipulated in the tender.
According to the leader of the Caspian working group at the
Foreign Ministry, D. Merzlyakov, Russia had repeatedly been
requested to cancel the tender. It replied that, according to
the present status of the region, Russia, as well as
Kazakhstan, may be involved in economic activity in any part of
the Caspian Sea.
Thus, Moscow practically renounced the principles declared
last April in the joint statement signed in Alma-Ata by Boris
Yeltsin and Nursultan Nazarbayev. According to the statement,
none of the Caspian states should conduct any work in the sea
before its status is finally determined.
However, after the insistent protests of Kazakhstan, a
special provision was added to the government decision, saying
that the bounds of the areas fixed in the tender may be
extended if inter-governmental agreements on the Caspian status
are concluded.
So, every Caspian state wishes to get its portion of the
oil pie and does not want to share it with any of its
neighbors. But this does not bring any of them closer to a
mutually beneficial, compromise decision on the status of the
Caspian Sea. So long as the status is not determined, more
misunderstandings may be expected in the area.

Last-Minute News
According to the Kazakh Ambassador in Russia, T. Mansurov,
at the consultations held by Russian and Kazakh experts in
Astrakhan, the sides "have agreed on delimiting the
Kazakh-Russian part of the Caspian bottom on the basis of
equidistant opposite points on the shore, while the common use
of the water surface will be preserved." At the same time, he
stressed that the Convention on the legal status of the Caspian
Sea adopted by all the coastal states should become "the major
document regulating all the main questions of regional
cooperation in the sea." Mansurov added that "the Russian
Federation and Kazakhstan have proposed conducting similar
bilateral talks with the other countries of the region to
coordinate the positions of all the five Caspian states."
So, Russia and Kazakhstan seem to have agreed on the
version of dividing the Caspian shelf along a middle line. What
does this mean--a final renouncement by Russia of its former
positions or a political maneuver necessary in the
confrontation of "one against all," or a peculiar attempt to
win an ally over to its side? As a matter of fact, a compromise
solution on the Russia-Kazakhstan line has only been made on
the level of experts. It is still a long way to a final
definition of the Caspian Convention provisions.


Turkey-Caspian Oil Pipeline Backed
2 March 1998

ISTANBUL, Turkey (AP) - Oil-producing countries of the Caspian Sea declared
their support Monday for a pipeline through Georgia and Turkey as one of
several routes to carry their oil to Western markets. 
The joint declaration by Azerbaijan, Turkmenistan, Kazakstan, Turkey and
Georgia came at the conclusion of a two-day meeting here of their foreign
ministers at the urging of the Turkish government, which saw it as a first
positive step. But the producers kept their options open, not ruling out other
Turkey has long campaigned for a pipeline running from Azerbaijan's
capital on
the Caspian, Baku, through Georgia to the Turkish Mediterranean port of
``I'm sure this project will be implemented, but it would be wrong to assume
it is a done deal at this stage,'' said Turkish Foreign Minister Ismail Cem. 
The declaration was still a partial victory for Turkey which was worried that
the Baku-Ceyhan route would be ruled out. Its chances looked bleak just a year
Russia has been the strongest competitor, vying for pipelines to go through
its territory as well. The first oil from Azerbaijan started flowing through a
limited capacity Russian pipeline last fall. 
Turkey and Russia have recently softened their rhetoric against each other on
the pipelines, saying they can both benefit from the riches of the Caspian
reserves, estimated to be second only to the Middle East's. 
Oil from the Russian pipeline, terminating at the Black Sea port of
Novorossiisk, is shipped by tankers through the narrow Turkish straits. Turkey
has voiced strong concern about the environmental dangers posed by increasing
tanker traffic. 
The declaration acknowledged ``the need to ensure effectively the safety of
navigation'' through the straits. 


Russia sees no reason to return disputed islands

TOKYO, Feb. 28 (Kyodo) - Russia has decided there is no legal basis in the
country's Constitution or in other domestic laws to mandate the return of
disputed islands to Japan, Russian government sources said Saturday. 
The government envisages the conclusion of a bilateral peace treaty without a
settlement of the dispute, a far cry from the Japanese government's position
that the resolution of the territorial issue should be central to any treaty,
the sources said. 
The islands in question -- Etorofu, Kunashiri, Shikotan and the Habomai group
of isles -- lie northeast of Japan's northernmost main island of Hokkaido. The
former Soviet Union seized the islands when World War II ended in 1945. 
In unofficial summit talks in the Siberian city of Krasnoyarsk in November,
Japanese Prime Minister Ryutaro Hashimoto and Russian President Boris Yeltsin
agreed to exert their utmost efforts toward concluding a peace treaty by 2000
on the basis of the 1993 Tokyo Declaration, in which the two countries agreed
to seek a treaty through the resolution of the territorial dispute. 


>From Russia Today press summaries
Novye Izvestiya 
The Ninth Wave 
The final round in the fight for oil and influence in the Caspian region
has begun, the daily wrote. 
The stakes are extremely high, as they affect the interests of about 15
countries and the results will shape the geopolitical situation in the
region for years to come. 
In October, the Azerbaijani International Operational Company will
finally announce its export route. It will either be from Baku to the
Russian port of Novorossiisk or to Turkey. By 2005, annual oil transport
through the route will reach 35-40 million tons. 
The daily wrote that the Azerbaijani government has favored the route to
Turkey. This is basically due to political reasons -- Azerbaijan turned away
from Russia to Turkey and the U.S. after a scandal with illegal supplies of
Russian weapons to Armenia. 
An anti-Russian pipeline coalition has formed around the Caspian Sea oil.
Each member of the group is looking to decrease its dependence on Moscow for
energy, the daily wrote. This includes Kazakhstan, Turkmenistan, Uzbekistan,
Moldova, Romania and Ukraine. 
Russian authorities did not note this in time, and have only recently
come up with a proposal to construct a 300-kilometer trans-Balkan pipeline
from Burgas (Bulgaria) to Alkesandropulos (Greece). According to analysts,
this project would be much cheaper than the pipeline to Turkey. 


Date: Mon, 02 Mar 1998
From: "Laura Belin" <> 
Subject: new on the RFE/RL web site

Just a short note to let JRL readers know that the paper I gave at the
AAASS conference last November, on political bias and self-censorship in
the Russian media, is available on RFE/RL's web site. The paper discusses
why media outlets have become dependent on financial and industrial groups,
and how those financial ties have affected media coverage. Here is the

Also, my colleagues Floriana Fossato and Anna Kachkaeva are in the process
of updating their study of Russian media empires, which attracted a lot of
interest last fall. I will let you know when their new reports have been
posted on our web site.


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