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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

July 22, 1999    
This Date's Issues: 3402 3403   


Johnson's Russia List
#3403
22 July 1999
davidjohnson@erols.com

[Note from David Johnson:
1. New video documentary from the Center for Defense Information:
Can America Work With Russia?
2. AFP: Former PM To Pen Post-Soviet Book. (Chernomyrdin) 
3. Reuters: Russia tax police say crimes solved ``drop in ocean''
4. NTV: Lebed Says Timely Elections Bad for Yeltsin Camp.
5. Kommersant: Stepashin Has Found A Prosecutor General For Yeltsin
THE ONE THAT SUITS BORIS BEREZOVSKY.

6. Ed Crane: Acting on Hough Proposal.
7. DJ Peterson: Significance of the Pasko case.
8. The Guardian (UK): Tom Whitehouse, Russian roulette with the mafia. 
The criminal element targets a rare area where success makes money.
(Sports).

9. St. Petersburg Times: Brian Whitmore, Sobchak Saga a Case Study in 
Juridical Failure.

10. Boston Globe: David Filipov, In Russia, an alcohol revolution 
brewing. (Beer)

11. PRNewswire: Helsinki Commission Vice Chairman Calls for U.S. Critical 
Leadership' in The Fight Against Organized Crime and Corruption in the OSCE 
Region.

12. Komsomolskaya Pravda: Virus Threat to All of Russia Estimated.
13. Ben Aris: 10 reasons to invest in Russia now.
14. The Russia Journal: Is it time to begin investing in Russia?] 

******

#1
New video documentary from the Center for Defense Information:
Can America Work With Russia? 

Examines impact of war in Yugoslavia on US-Russian relations. Kosovo is but
one of many flashpoints for deadly conflict that lie close to the border of
the former Soviet Union. Yet U.S. efforts to work with Russia to avoid
conflicts have been generally bungled. Are there advantages to a new, more
cooperative relationship with Russia? 

Will be shown in Washington DC area on Sunday July 25
Channel 32 WHUT 12:30pm

Featured experts:
Jonas Bernstein--Jamestown Foundation/Moscow Times
Fritz Ermarth--former chairman, National Intelligence Council
Dale Herspring--former naval officer and State Department official
Michael McFaul--Stanford/Carnegie Endowment
Alexander Pikayev--Carnegie Moscow Center
Brent Scowcroft--former national security advisor to President Bush

VHS tapes of half-hour program can be ordered from CDI for $29:
1-800-CDI-3334
Or send email to Moon Callison:
mcalliso@cdi.org

Transcripts of program and interviews plus information
about other videos on Russia will be available at:
http://www.cdi.org/adm/1246/

These are the best up-to-moment videos on Russia and US-Russia relations
and are ideal for educational uses.

********

#2
Former PM To Pen Post-Soviet Book

MOSCOW, Jul 22, 1999 -- (Agence France Presse) Former Russian prime minister 
Viktor Chernomyrdin announced Wednesday he was busy at work on a personal 
account of Russia's post-Soviet period, ITAR-TASS reported.

"These are not memoirs. It is rather my understanding of the events in which 
I participated in 1992-1999," he said in a telephone interview from his 
vacation spot in the Black Sea resort of Sochi.

Chernomyrdin served as prime minister for nearly six years under Russian 
President Boris Yeltsin before being sacked in March of last year.

He went on to play a weighty diplomatic role in the Kosovo crisis earlier 
this year as Russia's special envoy in international negotiations.

The founder and former leader of the Our Home is Russia political bloc, 
Chernomyrdin has in the past expressed his intent to run in next year's 
presidential race.

With characteristic ambiguity, the veteran politician hinted again at his 
ambitions in Wednesday's interview.

"The main character in the book is not yesterday but tomorrow," he said. 
Former Russian prime minister Viktor Chernomyrdin announced Wednesday he was 
busy at work on a personal account of Russia's post-Soviet period, ITAR-TASS 
reported.

"These are not memoirs. It is rather my understanding of the events in which 
I participated in 1992-1999," he said in a telephone interview from his 
vacation spot in the Black Sea resort of Sochi.

Chernomyrdin served as prime minister for nearly six years under Russian 
President Boris Yeltsin before being sacked in March of last year.

He went on to play a weighty diplomatic role in the Kosovo crisis earlier 
this year as Russia's special envoy in international negotiations.

The founder and former leader of the Our Home is Russia political bloc, 
Chernomyrdin has in the past expressed his intent to run in next year's 
presidential race.

With characteristic ambiguity, the veteran politician hinted again at his 
ambitions in Wednesday's interview.

"The main character in the book is not yesterday but tomorrow," he said. 

********

#3
Russia tax police say crimes solved ``drop in ocean''

MOSCOW, July 22 (Reuters) - The head of Russia's tax police, one of the 
government's main weapons in filling its coffers, said on Thursday it was 
doing well in finding tax cheats but was uncovering only a small share of the 
crimes being committed. 

Russia has consistently had problems gathering enough taxes to fill its 
budget gaps and the lack of revenues was one of the main reasons for an 
August 1998 financial crash. 

``The results from the first half of the year show that we are on the right 
track,'' tax police chief Vyacheslav Soltaganov told a news conference. 

He said 6,000 cases of tax evasion were uncovered in that period, slightly 
less than the number for the whole of 1998. 

But he added: ``The figure of 6,000 tax crimes in Russia is in my opinion a 
drop in the ocean.'' He said the tax police hoped to boost this figure as by 
as much as six times this year. 

He said that the tax services efforts had added an extra 4.8 billion roubles 
($197.9 million) to the budget in 1999, compared with total expected revenues 
of 236 billion this year. 

Soltaganov also said that 99 percent of people did not pay the entire amount 
of tax they were due and that the tax police was working in particular with 
individual tax payers. 

He said three times more tax evasion offences were uncovered with individual 
tax payers in the first half of 1999 than for the whole of last year. 
($1-24.26 Rouble) 

********

#4
Lebed Says Timely Elections Bad for Yeltsin Camp 

NTV
July 20, 1999
[translation for personal use only]

{Presenter Tatyana Mitkova] The governor of 
Krasnoyarsk Territory, Aleksandr Lebed, finished his visit to the 
Autonomous Republic of Ajaria [Georgia]. [passage omitted: presenter says 
that Lebed said on Georgian TV that he had not announced that he would 
stand for Russian president]. 
[Presenter] Tbilisi's reaction to Lebed's visit to Batumi was more than
cool. 
Here is our Georgian colleague, Nugzar Kereselidze, with the details. 
[Correspondent] Observers think that insufficient preparation, particularly 
as regards protocol, marked Lebed's visit to Ajaria with a range of 
misunderstandings. 
As soon as he arrived in Batumi, as he greeted the chairman of the 
Supreme Council of the Autonomous Republic of Ajaria, Aslan Abashidze, 
Lebed called him the president of Ajaria. [passage omitted: correspondent 
says cadets from Krasnoyarsk are on holiday in Ajaria; Georgian President 
Eduard Shevardnadze is shown criticizing the visit - see Kavkasia Press 
Tbilisi 19th July 0950 gmt] 
[Correspondent] However, none of the hitches prevented the regional leaders 
from the 
two countries from establishing successful business contacts and signing 
an agreement on cooperation. People in Krasnoyarsk will be drinking 
Georgian tea, enjoying citrus fruits from Ajaria and spending their 
summer holidays on the Black Sea coast. Lebed and Abashidze also set up a 
joint airline with direct flights so that they don't tire themselves out 
flying and spend too much. The prices will be several times cheaper than 
at present. 
The two regional leaders were also unanimous in their criticism of the 
central authorities, each restricting himself to criticizing his own 
president. 
[Lebed, addressing news conference] A new state institution called the 
Family [Boris Yeltsin's entourage] definitely exists, written about using 
upper case in the papers. You must have seen papers like this; they write 
"the Family". 
There's nothing about this institution in the constitution, but in reality 
it exists, dominates, dictates and suppresses. 
There is a lot behind them which makes a normal timescale for the 
elections impossible for them - for parliament and president. 
It is, then, premature to discuss the elections and who will win. 
Whoever makes it to the starting block will. 
[Correspondent] It's hard to say how Tbilisi's irritated reaction to the 
visit 
affected the timings of Lebed's visit to Ajaria, but he didn't stay in 
Batumi this evening for Abashidze's official birthday dinner. 
[Video showed the visit] 

********

#5
Russia Today press summaries
Kommersant
22 July 1999
Stepashin Has Found A Prosecutor General For Yeltsin
THE ONE THAT SUITS BORIS BEREZOVSKY
Summary
According to Kremlin sources, on Friday President Boris Yeltsin will meet 
with Vladimir Ustinov, deputy prosecutor general for Northern Caucasus, to 
offer him the post of acting Prosecutor-General.

Prime Minister Sergei Stepashin suggested Ustinov for the job, guaranteeing 
his loyalty to the "family" and decisive measures against Caucasus militants, 
the daily wrote.

For the almost half a year since Yeltsin dismissed Yury Skuratov, the 
prosecutor's office has worked without a real leader. Formally, Yury Chaika 
was acting chief prosecutor, but in reality he did not make any decisive 
moves.

Besides, the Kremlin was unhappy that the investigation of Aeroflot and 
Mabetex continued after Skuratov's dismuissal, the daily suggested. The 
Kremlin needs a new acting prosecutor general, though it does not hope that 
its candidate will be confirmed by the Federation Council.

Ustinov is known to have good connections in the police and the FSB. He is 
also known to be absolutely loyal to financial magnate Boris Berezovsky. 
Berezovsky will benefit from this appointment, because Ustinov may finally 
close the Aeroflot case. However, they will not be able to extinguish the 
international scandal over corruption among top Russian officials, the daily 
concluded.

*******

#6
Date: Wed, 21 Jul 1999 
Subject: Acting on Hough Proposal
From: Ed Crane, Academy on Civil Society <civilsociety1@yahoo.com>

In #3401-14 Hough has shifted an overly personal debate to an important
proposal for cooperative initiative to bring together different
perspectives and take a new institutional/incentives design view of the
way forward for the Russian economy. While institutions like the IMF
are not likely suspects, the twin institution, World Bank, and its
Chief Economist, are good suspects. Let's do it! Now what about the
Russians? Can we focus some attention on what should happen to fulfill
the constructive thrust of this proposal, one way or another? Any
takers?

******

#7
Date: Wed, 21 Jul 1999 13:49:52 -0700
From: DJ Peterson <djp@rand.org>
Organization: RAND, Santa Monica, California
Subject: Significance of the Pasko case

The significance of the Grigorii Pasko decision cannot be underestimated, and
it gives one hope about the development of civil society in the Wild East.

In many ways his plight has been much more difficult than that of Alexander
Nikitin in St. Petersburg. Nikitin has a well known lawyer and a strong
relationship with the Bellona Foundation, which have pursued savvy and
aggressive media and advocacy campaigns on his behalf--resulting in support
from environmentalists and human rights advocates in Russia, Europe, and the
US, as well as the Norwegian government and the OSCE (see
www.bellona.no/e/russia/nikitin/). Nikitin also benefits from the geographic
proximity and more open political climate of St. Petersburg. This contrasts
with the remoteness of Vladivostok, the great influence of the Pacific Fleet
there, and the prevailing xenophobia and national security culture of the Far
East. Moreover, to the best of my knowledge, neither the Japanese TV company
which broadcast his footage nor activists in Japan have vigorously advocated
on behalf of Pasko. Finally, to many, Pasko's case was perceived to be weaker
given his perceived commercial relationship with the TV company.

Interestingly it was a Pacific Fleet judge who acquitted Pasko of treason and
espionage AND he referred several charges of misconduct by the prosecution to
the head of the FSB division for Pacific Fleet. (During the trial, FSB
officers could not explain some apparently forged signatures and why the
alleged secret documents were listed as evidence they found in Pasko's
apartment but later appeared in his case folder and they pointed fingers at
the lead investigator.) Given the prevailing situation, Pasko's lesser
convictions appear to be pretty brave on the part of the judge. (Pasko,
boldly, stood on the deck of a navy ship shooting video of personnel dumping
radioactive waste into the Sea of Japan.) Meanwhile, several civil judges in
St. Petersburg, as well as the Constitutional Court, have allowed Nikitin to
be charged with espionage for the eighth time.

DJ Peterson
Assoc. Policy Analyst
The RAND Corporation
Santa Monica, California

*******

#8
The Guardian (UK)
21 July 1999
[for personal use only]
Russian roulette with the mafia 
The criminal element targets a rare area where success makes money
Tom Whitehouse in Moscow

The worst injuries sustained by Russia's sportsmen and women are rarely 
inflicted in action. Since the breakdown of the Soviet Union, a disturbing 
pattern of violence has ravaged the country's leading figures - and the 
problem is getting worse. 

Denis Tyurin is lucky. The 19-year-old Russian ice hockey player is making a 
good recovery after being stabbed by unknown criminals in his home town of 
Lipetsk last month. Doctors are predicting his return to the ice in time for 
next season. 

His international colleague Maxim Balmochnykh, who plays abroad for Disney's 
Anaheim Mighty Ducks near Los Angeles, can sympathise all too well. Last year 
he survived a similar stabbing before resuming his career. Mafia hitmen were 
blamed in both cases. 

The list of crime continues. Oleg Veretennikov, Rotor Volgograd's leading 
football player, was sprayed with acid in broad daylight last year. Also 
injured in the attack was his two-year-old daughter. Igor Malkov, a former 
Olympic speed-skating champion, had his arm broken, apparently because, like 
Veretennikov, he resisted an attempt at extortion. 

Two years ago Valentin Sych, then head of the Ice Hockey Federation of 
Russia, took a swipe at his mafia-controlled rivals in the federation. 

"They're the biggest thieves," he said. "All they are concerned with is 
lining their own pockets. Our hockey is now so corrupt I don't see how we can 
ever clean it up." He was murdered shortly afterwards. 

Other incidents are common: Larisa Nechayeva, the general director of Spartak 
Moscow, was shot dead over a soured business deal; the retired ice hockey 
luminary Grigory Velizhanin was beaten to death in Ekaterinburg, and the 
youth hockey coach Valentin Markov slain in a car-jacking in the same city; 
Nikolai Nikitin, the chairman of SKA St Petersburg, died with his bodyguard 
in a hail of bullets; and last week the son of Valdimir Goryunov, the Rotor 
Volgograd president, suffered severe head wounds in a beating and is now in a 
coma. 

Not surprisingly the likes of Anna Kournikova and her boyfriend Sergei 
Fedorov, another ice hockey star, choose to live in exile. All of Russia's 
most talented sporting stars move abroad as soon as they get the chance - 
unless the criminals get to them first...

"A sportsman is at greatest risk of attack if his plans to move abroad to 
earn more money are leaked before he goes," says Vassili Utkin, a sports 
commentator for NTV television. "That's when he is most likely to be asked 
for cash and threatened unless he hands it over." 

Even in exile, however, sports players are not free from Russian crime. The 
mother of Oleg Tverdovsky, a Ukrainian playing for the Mighty Ducks, was 
kidnapped in her home three years ago. A photo of her in handcuffs was sent 
to the ice hockey player in America with a demand for Ł125,000. In a rare 
instance of Russian police success, her kidnappers were caught as they tried 
to move her to Moscow. 

The mafia is not behind every attack, though. Rising street crime is also to 
blame. Russia's swimming champion Alexander Popov, after his Olympic 
successes in Atlanta three years ago, flew to Moscow for a few days to see 
his friends and family rather than return immediately to his new home in 
Australia. He was stabbed in the lung after an argument with a melon seller 
on Moscow's streets. 

Kournikova's latest advert for Adidas plays on her success in overcoming such 
adversity. But the bleak and dangerous images it shows all come from the 
modern Russia she has left behind. As a tennis prodigy in the Soviet Union's 
twilight years Kournikova briefly lived in a country without mafia and 
knife-wielding melon sellers. 

Sport's criminalisation is in no small part down to President Boris Yeltsin. 
For it was he who created the national sports foundation, designed to ensure 
that the sporting success of the Soviet era would continue apace. 

At the time Yeltsin, Russia's most famous amateur tennis player, was 
congratulated for his generosity when he granted tax exemptions to the 
foundation in 1993. 

These allowed it to import alcohol and cigarettes tax-free, creating profits 
that he hoped would be invested in Russia's continued sporting prosperity. 
Instead it was an irresistible magnet for rival mafia gangs seeking a share 
of the sports foundation's enormous profits. 

Its director, Boris Fyodorov, narrowly survived an attempted assassination in 
1996. He later resigned and presumably took his knowledge of the ministry's 
infamously dodgy dealings with him to the grave two months ago when he died 
in suspicious circumstances. 

Sport's association with crime means it is no longer the bastion of national 
pride it was in the Soviet era. Though sports journalists bemoan some exiled 
players who are reluctant to come home to represent their national team, they 
also show sympathy and understanding. Kournikova's alleged pursuit of an 
American passport provokes a sigh rather than a fit of patriotic anger. 

But Russian sport, despite all its problems, continues to enjoy international 
success and can just about hold its own against the old Cold War enemy. 
Overwhelming economic collapse has produced only a minor slip in 
international sporting rank. 

Given the mafia's grip on Russian sport, the continued success of sportsmen 
and women appears paradoxical. In fact, the well-publicised criminal interest 
in sport simply underlines its growing appeal as a route to wealth. When a 
sportsman suffers a mafia-style attack, it endorses his material success. 

"These days neither children nor their parents look upon sport as a hobby," 
says Vassili Utkin. "Now it is considered a good career which could feed the 
whole family." 

*******

#9
St. Petersburg Times
July 20, 1999
Sobchak Saga a Case Study in Juridical Failure 
by Brian Whitmore

WHEN ex-mayor Ana toly Sobchak returned to St. Petersburg last week, he said 
that he had "nothing to answer for and nothing to fear" from a four-year-old 
investigation into corruption in his administration.

"The fact of my return is itself witness to an improvement in the political 
climate in the country," he said upon arriving at Pulkovo Airport.

The next day prosecutors announced that they had no plans to arrest or indict 
Sobchak. Moreover, Interfax last week reported - citing anonymous law 
enforcement sources - that Sobchak received "guarantees of personal immunity" 
from the Prosecutor's Office.

Many of the charismatic ex-mayor's opponents claim that his return without 
fear of arrest or indictment is probably related to his friends in high 
places. Vladimir Putin, Sobchak's former deputy mayor, is today head of the 
Federal Security Service, the powerful successor to the Soviet KGB. Sergei 
Stepashin, another St. Petersburg local and close Sobchak ally, is now 
Russia's prime minister.

For his part, Sobchak has always claimed that the famous criminal probe, 
alleging that he benefited from shady real estate deals while in power, was 
the handiwork of his political foes - specifically naming Alexander 
Korzhakov, a KGB veteran who was, until 1996, President Boris Yeltsin's 
all-powerful chief of Kremlin security. Korzhakov, according to media 
reports, was one of the main backers of Gov. Vladimir Yakovlev's successful 
campaign to unseat Sobchak in 1996, and several independent analysts say that 
the investigation was nothing more than pre-election tactics.

Whoever is right, Sobchak's saga speaks volumes about the sad truth of 
criminal investigations in Russia - that they are little more than political 
weapons and that personal contacts matter more than the rule of law.

If Sobchak is innocent, the case should never have gone as far as it did. If 
the allegations are true, it shouldn't matter who is prime minister and who 
is running the FSB today - the case should go to trial.

And sadly, the Sobchak affair is far from an isolated incident. Remember the 
corruption case against tycoon and Kremlin insider Boris Berezovsky?

In April, when Berezovsky's archenemy Yevgeny Primakov was prime minister, 
the infamous oligarch was accused of money laundering. Stepashin, who was 
then interior minister, Russia's top law enforcement officer, said openly 
that he would ignore a warrant for Berezovsky's arrest. When Primakov was 
fired in May and replaced by Stepashin, the charges mysteriously vanished.

Or what about Yevgeny Nazdratenko, the thuggish governor of the Primorsk 
region in the Russian Far East? Nazdratenko's fortunes seem to rise and fall 
depending on who holds the keys to the Kremlin gates.

When Nazdratenko's ally Korzhakov was the Rasputin of the moment, the 
Primorsk governor had free reign to pillage his region and intimidate his 
political opponents. When, after Yeltsin's 1996 re-election, Korzhakov was 
fired and "young reformer" Anatoly Chubais became Kremlin chief of staff, 
Moscow began a full court press against Nazdratenko. Yeltsin accused him of 
"short-sighted policies that led to people's suffering" and tried to strip 
him of his powers. When Chubais fell from grace, Nazdratenko again had a free 
hand. 

*******

#10
Boston Globe
July 22, 1999
[for personal use only]
In Russia, an alcohol revolution brewing 
By David Filipov

MOSCOW - Elvira the country singer serves up a refreshing glass of ''Chuvash 
Bouquet,'' known for its apple-like aftertaste. Next door, Igor from the 
Volga unleashes heavy barrages of ''Stalingrad Strong'' to a line of willing 
victims. Not far away, the godmother of Russian Beverage is doling out dark, 
mysterious quaffs of ''Black Prince.'' 

It's cold. It's popular. And it's not vodka. Beer is on a roll in Russia, and 
may even be making inroads on vodka's once unassailable place as Russians' 
favorite libation. 

Here at the Great Moscow Beer Festival, it is easy to see why. Russian 
brewers are serving notice that they can produce quality beers at reasonable 
prices and in dozens of varieties.

This may seem surprising in a land where, just a decade ago, beer was 
unloaded off the back of an unrefrigerated truck and sold on the street in 
unlabeled bottles. Thirsty consumers ignored the sour taste and the sediment 
to chug the warm beverage on the spot.

''Soviet brewers knew people would buy it anyway,'' said Dr. Valeria Isayeva, 
laboratory chief at the Russian Research Institute of Beer Brewing, 
Non-Alcoholic Beverage and Wine Producing Industry. ''They can't get away 
with that now.''

These days, Muscovites still suck down brewskies on the street - no law 
against that here - but they are quality brews with attractive labels. 
Consumption, which dipped in the early 1990s as people laid off the bad old 
stuff, is on the rise.

''Beer consumption is definitely growing,'' Isayeva, sort of the godmother of 
the industry for her institute's control of brewing standards, intoned as she 
poured a schooner of Black Prince, an intoxicatingly heavy dark beer.

There is talk that the beer boom is beginning to ferment unrest in the 
region's alcohol hierarchy: Young Russians are shifting from vodka to beer, 
and a similar shift to suds is well under way in Poland, another former 
Communist country of vodka-lovers.

''I now like beer for most social occasions,'' said Artur Vasilyev, sipping a 
Stalingrad as he tried to explain his hop to hops. ''Vodka is good only when 
you need to get stinking drunk.''

Russians on average drink only about 20 quarts of beer a year - seven times 
less than other Europeans. But since last year's financial collapse, demand 
for locally brewed beer has skyrocketed, and industry analysts say the 
potential for growth is enormous. That has lured international beermakers to 
Russia, forcing Russian breweries to improve their product.

Beer-making technology has allowed smaller breweries to pop up all over 
Russia. One example is the delicious ''Chuvash Bouquet'' made in a 
microbrewery in the Volga River city of Cheboksary, and served by Elvira 
Timofeyeva, who sang a beer-drinking song in her native Chuvash tongue.

Powering the brew boom are foreign companies, like the Scandinavian 
consortium which in 1992 took over and refurbished a St. Petersburg brewery 
and came up with Baltika, the country's best-selling beer and the closest 
thing Russia has to a national brand. An Indian-Belgian company named SUN 
Interbrew is challenging Baltika's dominance. And Turkey's Efes brewery and 
South Africa Breweries, the world's fourth-largest beer maker, have each 
recently opened breweries in Russia.

Their brands, like Zolotaya Bochka (Golden Barrel), have scored an instant 
hit among younger Russians with catchy ads. The ''Bochka'' ad shows a close 
up of four guys drinking beer on a beach with Jimi Hendrix's ''Little Wing'' 
playing in the background; when the camera zooms back, you see that it's not 
a beach they're sitting on, but a sand-filled boxcar on a moving train. ''We 
should meet more often,'' the announcer says as Hendrix's guitar goes 
ballistic.

Even though these companies are foreign-owned, Russians identify them as 
national brands because they are locally produced. The losers are imports, 
which appeared in the early 1990s but have been all but muscled out of the 
market.

Of course, a thriving beer industry will not help Russia's significant 
problems with male life-expectancy, alcoholism and such. Or maybe it will.

''We have a lot of alcoholics in Russia,'' Mayor Yury Luzhkov, himself a 
teetotaler, said at the festival's opening ceremony. ''Well, in ancient 
times, they cured alcoholism with beer.''

*******

#11
Helsinki Commission Vice Chairman Calls for U.S. Critical Leadership' in The 
Fight Against Organized Crime and Corruption in the OSCE Region

WASHINGTON, July 21 /PRNewswire/ -- "It is essential that we provide critical 
leadership in combating organized crime and corruption, if genuine democracy 
and market economies are to take firm root in the OSCE countries," said 
Commission Vice Chairman Sen. Ben Nighthorse Campbell (R-CO) at today's 
hearing on bribery and corruption in the OSCE region. "While valuable work 
has been undertaken by a number of multilateral organizations, including the 
OECD, the stakes are such that combating organized crime and corruption must 
receive priority attention from the U.S. Government."

"Additionally, the comprehensive nature and membership of the OSCE make it 
ideally suited to contribute to this effort. If the OSCE could make a major 
contribution in promoting military transparency and openness during the Cold 
War, as it did, then certainly it should be able to undertake a similar 
effort in the economic dimension, especially in such OSCE countries as Russia 
and Ukraine," said Campbell.

Senator Campbell also discussed his recent trip to St. Petersburg, Russia, 
where he co-chaired the U.S. Delegation to the 54-nation OSCE Parliamentary 
Assembly. "While in St. Petersburg, I had an opportunity to sit down with 
U.S. business representatives to learn from their first-hand experiences and 
gain a deeper insight into the obstacles they face abroad and at home. Most 
importantly, the OSCE PA adopted amendments I sponsored underscoring the 
importance of combating organized crime and corruption in the OSCE region. A 
key element of that package was my proposal for the convening of an OSCE 
ministerial meeting to pursue practical forms of cooperation in this 
endeavor," he said.

"Clearly, an essential ingredient in the fight against bribery and corruption 
is political will. No amount of technical assistance will be effective if 
the necessary political will is absent. Accordingly, I intend to urge the 
Administration to make combating organized crime and corruption a priority 
agenda item when the presidents and prime ministers from the 54 OSCE 
participating States hold their summit meeting later this year in Istanbul," 
said Campbell.

Also testifying before the Commission was Commissioner Assistant Secretary of 
Commerce for Market Access and Compliance Patrick A. Mulloy who pointed out 
that the eradication of bribery and corruption in international commerce has 
been a key U.S. trade objective for many years. "Bribery impedes trade and 
hurts our economic interests by providing an unfair advantage to those 
countries which tolerate bribery of foreign officials," he said, pointing out 
that his department's report to Congress on the implementation of the OECD 
Antibribery Convention provides detailed evidence of the problem. Mulloy also 
enumerated a series of U.S. and multilateral initiatives that have been 
undertaken to address crime and corruption in international trade.

Also testifying were: Dr. John Sullivan, Executive Director, Center for 
International Private Enterprise (CIPE); Dr. Louise Shelley, Director, 
Transnational Crime and Corruption Center, American University; Lucinda Low, 
Esq., Member of the Board of Directors, Transparency International USA; and, 
Mr. Peter Grinenko, owner of Staysafe Research Corp. Copies of their 
testimonies are available from the Commission.

"Forging an effective partnership between governments, the business 
community, and civil society in the OSCE region will prove crucial if we are 
to meet the formidable challenges of fighting corruption and establishing a 
level playing field for international business," concluded Senator Campbell.

SOURCE Commission on Security and Cooperation in Europe 

*******

#12
Virus Threat to All of Russia Estimated 

Komsomolskaya Pravda
20 July 1999
[translation for personal use only]
Unattributed boxed item: "Virus Threat to All of Russia Estimated" 

At the Russian Federation Ministry of Health's 
department of state sanitary- epidemiological oversight we were told that 
scientists in the laboratory of the local public health and epidemiology 
service have confirmed that Congo-Crimean hemorrhagic fever is creating 
an uproar in Rostov Oblast. But only the Moscow Institute of Virology can 
issue the final verdict. The results of an expert examination conducted 
there will not be known for a week at best. 

However, the public health and epidemiology service reassures us that the 
fever is transmitted only by transfusion of infected blood and close 
contacts, so the disease has not spread beyond Rostov Oblast. According 
to specialists at the public health and epidemiology service, the 
appearance of the pair of patients just when the fever was occurring in 
Stavropol is "a completely different story." The two sad sacks were 
infected independently rather than by their Rostov "colleagues" in 
misfortune. 

Congo-Crimean infection is transferred mainly by ticks. It is therefore 
usually 
contracted in forest steppe areas. Risk areas where carriers of the 
disease can be found are southern Russia (Rostov and Astrakhan oblasts 
and Krasnodar and Stavropol krays) and Ukraine and Uzbekistan. In the 
estimation of the public health and epidemiology service, there is 
virtually no chance of the fever reaching Moscow and the forest areas 
surrounding Moscow. For that to happen, a person with the disease (such 
people generally cannot even stand up) would have to travel to the Moscow 
area and be bitten by a local tick that would then have to bite a 
Muscovite. Fortunately, "tick season" is on the decline in July. 

*******

#13
Date: Thu, 22 Jul 1999 
Subject: 10 reasons to invest in Russia now
From: "Ben Aris" <ben@glasnet.ru>

I am confused and I would be interested to know what readers of JRL think:
are things as bad as they seem?

The economic situation over the six months of 1999 has not been as bad as
was expected. Inflation is relatively low, exports have been rising and
Russia is running a healthy trade surplus. Russian firms are experiencing a
boom as they either fill the gap left by the absence of imports, or increase
their exports capitalising on their improved competitiveness handed them
from a cheap ruble. And high international oil prices are bringing money to
the state coffers (although this probably wonąt impact the economy for
another nine months). The Russian economy has responded to devaluation in
the way a "normal" country would ­ something that we love to assume Russia
is not.

What is more, the businessmen I have talked to in Moscow say that business
is not as bad as they had expected. Crisis has forced some real competition
on companies who have become concerned with cost-effectiveness and
efficiency in way that they never have before. Distribution is still
difficult and much of the progress of the last years has been undone. But
the companies say that crisis has been good as it has cleared out all the
small and ineffective firms. A de facto restructuring has occurred in nearly
every sector, leaving behind leaner and fitter companies.

Admittedly Moscow is, as ever, the special case. According to the city
government Moscowąs share of the national turnover in consumer goods has
grown from a quarter of the total to a third ­ evidence more of a slip in
the regions than anything wonderful about Moscow.

On top of this, relatively few firms have pulled out. Investment is still
low but while total investment has fallen by about 40% (according to some
estimates) direct investment has only fallen by 20% (ditto).

Below is a note from Goldman Sachs listing "10 reasons to invest into Russia
now." In the financial circles this note has met with a certain amount of
skeptism, but I think there is an argument to be made along these lines.

Best Regards
Ben Aris


>From Russia with Love: 10 Reasons to Buy Russia Today

Often, a view on Russia's markets or economy becomes a fundamental
discussion of whether this enigmatic land will "make it". From the euphoria
of 1997 to the depression of late 1998, that discussion is impossibly
difficult and overly emotional. This note aims to steer well clear of the
debate. We acknowledge that the country has many, many problems; but this is
a statement of why we continue to expect both the Russian economy and assets
prices to improve.

>From early this year we have been bullish on both. But their performance has
been considerably better than expected. We expect that great performance to
continue. This is why. First, we summarise our fundamental views on Russia
into ten reasons for buying Russian assets now. In the second section, we
translate this view into a discussion of which assets to buy, given present
levels of prices and uncertainties. We conclude that the best value lies in
the more "risky" assets: Prins (preferred to IANs), MinFins, equities, local
rouble debt, and longer-dated Eurobonds over shorter ones.

1. It's growing. For the first time in decades the Russian economy is really
growing. May industrial production was up 6.1% yoy, to its highest level
since Sept. 1995. We expect 1999 growth of 7.8%. This growth is not sparked
by government, or CBR, pump-priming. Instead it is self-generated growth, as
private industrial companies take advantage of the great trading conditions.
2. It's competitive and decentralised. The rouble's collapse (it has fallen
75%) has led to massive gains in companies' competitiveness. Exporting firms
are now making huge profits. Producers of goods for domestic markets have
full order books. The privatisations and decentralisation of the Yeltsin
years are now paying off - the State no longer takes it and spreads it
around.

3. A big shift from consumption to savings. The crisis has given a huge
knock to real incomes and consumption. Consumption was down 20% yoy in
April. Investment, however, was down just 1.1%. The current account has
swung massively positive (we forecast a surplus of 9.7% of GDP in 1999), so
increasing savings markedly. Savings will later turn to investment. The
period in which the country leveraged itself to finance current consumption
has ended.

4. Export volumes and prices climb. Reserves grow. Dry freight shipping out
of Russian ports was up 30% in May yoy. Oil and gas prices are climbing back
above last year's levels (crude is up 15% yoy today). Reserves grow. In May,
before debt service payments on state debt, the CBR bought $1.9 billion -
reserves grew to $11.9 billion. We forecast them at $16.6 billion year-end.
All leading to a firm rouble. We forecast 26 Rb/$ year end, 29 Rb/$ end
2000.

5. A functioning credit system is at last emerging. Cash rich exporters are
lending and investing up and down the production chain to suppliers and
purchases, in what seems like the early signs of a functioning cash credit
system. Before they were lending to the government. See our Weekly Focus of
June 11.

6. Barter declines and arrears' growth slows. The improvement in corporate
health and the relaxed monetary policy has engendered an increase in
payments settled in cash, and a slowdown in the growth of arrears. In the
easier macro environment restructuring can be more easily achieved.

7. The budget gets better. Over the course of the 1990s the budget problems
have slowly improved. The collapse of the exchange rate has given this a
great boost. Revenues are easier to collect and are increasing. Real
expenditures (about 60% of government non-interest expenditure is wages)
have collapsed. The result is the best budget performance in decades.

8. The IMF is about to agree a program; and now we have the G8. The IMF
program is near completion, easing debt payment pressure. The Russia/Soviet
debt divide - the "Finesse" - has been accepted (see our report of February
16). Western governments talk of a "final" rescheduling in H2 2000. The
newspapers, and corridors of power in Western capitals, discuss the need for
engagement. The G7 becomes the G8.

9. Decent government; the consensus has changed. The appointment of
Stepashin as PM is positive as it increases the probability of a
pro-Western, pro-reform president being elected in 2000 (see Weekly Focus
May 21). While still volatile, wild and corrupt, the aftermath of the crash
has proved that Russian politics - and crucially the Russian establishment -
has changed in the last years. Private property and relative openness are
here to stay, whoever wins the polls.

10. Outside Russia, gloom persists; from here it looks great. Many folk,
still stunned by the crash of August, see the Russian glass three-quarters
empty. But this country has suffered worse - Russians are a resilient bunch.
>From Moscow the glass looks a third full and getting fuller. No doubt it will
be smashed again, but before then it will be filled and then drunk. Enjoy it
as it fills up.

Home tel: +7 095 249 6267
Home fax: +7 095 240 6345
mb. +7 095 784 9503
ben@glasnet.ru

******

#14
The Russia Journal
www.russiajournal.com
July 19-25, 1999
Is it time to begin investing in Russia?

Ivan Koptev, shop tourist and vendor: 

"Well, rumors are circulating that the ruble will go down again. What will 
happen to imports then? I cannot even imagine. I have already been forced to 
close two out of my five kiosks. So far, I have managed to stay afloat as I 
look for domestic goods to replace those normally imported from Turkey and 
Poland. I have found a good jersey supplier in Smolensk. He uses imported 
equipment and his raw materials are half domestically made and half 
foreign-made. His jersey is better than the Polish but inferior to the 
Italian, and it is cheaper thanks to no customs duties. But if the 
authorities impose some new tax, my business will be dead. People have become 
poorer now?"


Sergei Magnitov, financial director of Prommoloko, dairy company: 

"In my opinion, it is worthwhile for those with capital, however substantial, 
to try to invest in new projects. We used to sell various imported consumer 
goods and managed to accumulate some money. Then, as our sales decreased, we 
sold all that we had and started thinking about how to invest the money. 
After three months of thinking, we decided to invest in food production. We 
bought several facilities in the country's southern areas, installed new 
equipment, including packing lines, and hired personnel. Thanks to the 
crisis, this was rather inexpensive - labor has become cheaper, especially in 
the southern regions. We kept our savings in hard currency, so we only 
benefited from the crisis. In a word, my opinion is that now is the right 
time for investing."


Veronika Moiseyeva, director general of the Imageland PR agency.

Q: What is your opinion of the state of Russia's investment market?

"Investment in post-Soviet Russia, just like market reform, in fact, is still 
very similar to the Cheshire Cat from Lewis Carol's Alice in Wonderland: We 
see the smile, but there is no cat. Investment here is a mirage, an illusion: 
There are no investments, and yet we see them. That is why the answer to the 
question of whether there is any point in investing in Russia's economy at 
the moment depends fully on factors seemingly unrelated to business - such as 
the personal philosophy, opinion and temper of those polled. 

"Why is it that Soros got himself involved in a multibillion dollar gamble 
with the Svyazinvest holding company two years ago, while Warren Buffet does 
not even want to hear about Russia? Because Buffet is pragmatic to the bone 
and Soros - despite his reputation in international business circles - is an 
impulsive romanticist, emotionally attracted to Russia in addition to his 
financial interests.

"Russia's main problem in terms of investment is the fact that, even though 
the country has ensured technical conditions for various sorts of investment 
- in principal, you can either play with blue chips on the stock market like 
Gazprom or invest directly in industrial production and services - there is 
no actual guarantee mechanism to secure your investment. Instead, there are 
vague personalized guarantees, incomprehensible to a European or an American 
- such as a governor's word of honor or a presidential or mayoral decree. But 
these statesmen's political opponents in other branches of power can declare 
these guarantees illegal or invalid at any time.

"Investing in present-day Russia is virtual Russian Roulette: Your success 
depends on your luck and the power of chance. That is why I recommend 
choosing unimportant yet safe ventures, such as blue chips on the stock 
market. Russian monopoly giants had their stakes fall so low last August - by 
an average of 70 to 80 percent - that they are only likely to grow in the 
next two or three months, until they reach their limit of two-thirds of their 
pre-crisis rates."

Q: What are the Russian investment market's prospects?

"They are mainly related to the political situation, which will remain 
unstable in the near future. So we can only talk of long-term prospects.

"The investment climate will not change until after the presidential and 
parliamentary elections; the business barometer will keep showing 'dull' 
until the end of the century. 

"Impatient types, however, may give it a try in regions where a few 
progressive regional leaders are trying to create local investment guarantee 
frameworks at their own risk. At the moment, Governor Prusak of the Novgorod 
Region has succeeded more than any of his colleagues.

"Thus, while short-term prospects are bleak, long-term ones are quite 
definite. Russia is potentially the second most promising emerging market 
after China. 

"Communists will not win in the forthcoming elections: They are afraid of 
their own possible victory. Theirs is to hold a mighty opposition - not 
supported, however, by business circles, which lean toward the right wing and 
the centrists. That is why the 2000 elections will give power to 
authoritarian Russian bureaucrats with relatively liberal political views. 
Having won the elections, they will simply have to fashion a viable 
investment guarantee system in Russia. In chess, they call it 'forced moves.'

"In other words, the next six months will be a perfect time for long-term 
investment, resale-oriented purchases. And some have already taken to it. The 
American Capital investment group, headed by Kia Jurabchian, recently bought 
76 percent of the Kommersant publishing Co. 

"If you can afford freezing $24 million for 12 to 18 months in order to win a 
200 to 300 percent gain in the future, you might want to try it before prices 
go up this winter."


Dmitry Ignatiev, deputy tax minister: 

"There is a need to improve Russia's investment climate. Among the negative 
factors, I would name the complicated political situation, inconsistencies in 
the legislation and the absence of important laws, including in the sphere of 
taxation. Also, there are various fiscal limitations and administrative 
restrictions imposed by the authorities. Nevertheless, I believe, the 
situation may gradually improve if no turnaround political moves are made. 
One of the most important tasks is to win back investor confidence in the 
stock market and banks."


Oleg Vyugin, first deputy finance minister: 

"We are strongly bound by the limits set in the law 'On the 1999 State 
Budget.' Now that the practice of holding two separate ruble/dollar trading 
sessions at the Moscow Interbank Currency Exchange has been cancelled, and 
some liberalization has been done regarding the "C" account operations by 
foreign investors, some changes may be expected to occur. Still, political 
factors cannot be disregarded, for they influence investors' moods. I believe 
some invigoration may occur in the next year, however, it may be quite minor."


Alexei Bachyurin, Metallinvest bank dealer: 

"To a certain extent, investments in Russia are of a speculative nature, 
therefore they cannot be viewed as long term. For example, now that oil 
prices are on the rise and the ruble is expected to fall again, many players 
on the stock market are inclined to transfer capital from electricity 
companies to oil blue chips. This indicates that no serious investors have 
come to Russia so far, and likely they will not come before the elections.


Marina Vasilieva, the World Bank's chief of foreign relations: 

"I believe the investment climate in Russia will improve if the Russian 
government and Central Bank sign a joint statement and the IMF board of 
directors resolves to grant Russia a loan. Naturally, this will serve as a 
signal for foreign investors to reconsider their attitude about investing in 
Russia."

********

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