April 16, 2000    
This Date's Issues: 4459• 4460  • 

Johnson's Russia List
#4460
16 August 2000
davidjohnson@erols.com


[Note from David Johnson:
1. AP: Capsule Inches Toward Sunken Sub.
2. AFP: Russian press accuses navy of playing with submariners' lives.
3. AFP: Families of Russia's stranded submarine crew living "in hell"
4. New York Times: Aleksandr Pikayev, A Navy in Need.
5. Moscow Times: Yulia Latynina, In Kemerovo, a Glimpse of Our Future.
6. Tate Ulsaker: Western Press Sells Disinformation to the West.
7. St. Petersburg Times: Anna Shcherbkova, Why Can't We Simply Ask Our 
Questions.
8. Segodnya: THERE WILL BE NO HOT AUTUMN, BUT CONTRADICTIONS WITHIN 
PRESIDENT'S ENTOURAGE MAY INTENSIFY. (Interview with Igor Bunin)
9. National Review: John Dizard, AL GORE'S CROWNING FOREIGN POLICY 
ACHIEVEMENT.
10. International Herald Tribune: Gareth Evans, Central Asians Need 
Help Now to Head Off Conflict.
11. RFE/RL: Michael Lelyveld, Putin May Be Ready To Probe Gazprom.
12. Reuters: CIS heads to focus on security and economy at summit.
13. Bloomberg: Troika Dialog's James Fenkner on Gazprom, UES, Putin.]

*******


#1
Capsule Inches Toward Sunken Sub
August 16, 2000
By BARRY RENFREW


MOSCOW (AP) - Rescuers in an underwater escape capsule inched through 
swirling sand and strong currents Wednesday, fighting to reach a crippled 
Russian nuclear submarine on the sea bottom with 116 sailors trapped inside.


Attempts to latch on to one of the submarine's cargo hatches were being 
frustrated because the current was rocking the rescue capsule, making it 
difficult to steer, said navy Capt. Igor Babenko. Rescuers were only able to 
see a few inches through the muddy water even though they had searchlights, 
he said.


Britain on Wednesday flew a mini-submarine to Norway in preparation to assist 
in a rescue effort if Russia asks for help, the British Defense Ministry 
said. So far Russia has rejected any foreign assistance in the rescue effort.


The Russian navy was determined to continue what was at least a fifth rescue 
effort with the escape capsule, but the weather in the Barents Sea was 
deteriorating Wednesday afternoon with high winds and waves buffeting rescue 
ships, Babenko said.


Deputy Prime Minister Ilya Klebanov said Wednesday there was no sign of life 
aboard the submarine, but that this did not mean that there were no survivors.


President Vladimir Putin said the situation was critical, and everything was 
being done to try to reach the Kursk. About 20 ships were taking part in the 
operation.


The British LR5 mini-submarine was flown to Vaernes Airport near Trondheim, 
Norway, to be nearby if a Russian call for help came.


``As of yet, there has been no formal request for assistance from the 
Russians and this pre-deployment in no way presupposes any request from the 
Russians will be forthcoming,'' said a Ministry of Defense spokesman, 
speaking on customary condition of anonymity.


``But obviously it's in everybody's interests to be able to respond quickly 
if they do request assistance,'' the spokesman said.


The LR5 is operated by a three-person crew and is capable of holding 16 
passengers. It has enough life support to allow crew members to stay 
submerged for 4 1/2 days.


The mini-submarine may be able to connect to the Kursk's hatch via a ring on 
the underside of the LR5's casing, but it was not known whether the rescue 
vehicle - designed to assist NATO vessels - would be compatible with the 
Russian vessel.


Navy officials told The Associated Press on Wednesday that the Kursk went 
missing Saturday, despite official statements that it was lost Sunday. The 
alarm was sounded after the Kursk failed to make a scheduled radio contact 
Saturday and it was found Sunday, said the officials, who asked not to be 
named.


A U.S. Navy submarine monitoring Russian naval exercises in the area heard an 
explosion Saturday that appeared linked to the Kursk, U.S. officials said in 
Washington on Tuesday.


The latest rescue attempt involved a larger, more powerful capsule called the 
Bester, and it was hoped it would be able to better handle the swift currents 
on the sea floor, officials said.


A smaller rescue capsule that tried four times during the night to reach the 
submarine was forced back to the surface after running out of oxygen, navy 
officials said. Its batteries were being recharged and the two capsules would 
work in turns, they said.


``We always hope for success,'' said navy spokesman Capt. Igor Dygalo. ``But 
as our work overnight showed, we discovered several negative factors.''


The navy has had no communication with the submarine since it sunk during the 
weekend and officials said they had no idea about conditions inside the Kursk.


The head of the navy, Adm. Vladimir Kuroyedov, said Wednesday that he was 
more confident about the chances of success and said rescue operations would 
continued until at least Friday.


``Now I am feeling more confidence that the operation to rescue the Kursk's 
crew will yield a result,'' he told the ITAR-Tass news agency.


But Kuroyedov said nothing had been heard from inside the Kursk despite 
earlier reports of sounds.


``It is necessary to take account of the psychology of submariners - when 
they know that rescue capsules are hovering above them, they keep silent,'' 
he was quoted as saying by ITAR-Tass.


Kuroyedov said earlier that the situation was ``extremely grave,'' with the 
crew expected to run out of oxygen Friday. Navy officials said water appeared 
to be leaking into the submarine.


The submarine suffered extensive damage after an explosion in the torpedo 
compartment at the front of the vessel, but the cause was not clear, the navy 
said. The submarine's conning tower was damaged and protective covers of two 
missile tubes on the vessel's right side were missing, it said.


Even if the capsules successfully dock with the sub and sailors can enter it 
and find survivors, the craft can hold only 20 people at a time. Officials 
say bringing it to the surface could take up to seven hours, a slow rise 
required to prevent the potentially crippling or fatal decompression sickness.


Rescuers could also try to raise the submarine using giant pontoons, 
Kuroyedov said - a seemingly impossible prospect because the flooded craft 
weighs some 20,000 tons. Another proposal called for raising the submarine to 
a vertical position so part of it protruded from the water.


Russia refused offers from the United States and Britain to send trained 
rescue personnel and equipment even though the Russian navy lacks 
sophisticated rescue gear. Navy spokesman Dygalo said coordinating the rescue 
with other countries would take too much time and ``we cannot afford to waste 
it.''


Officials said the Kursk's two nuclear reactors had been switched off and it 
was not carrying nuclear weapons.


Russian nuclear submarines have been involved in a string of accidents in 
recent decades. The Navy, like the rest of the Russian military, is 
desperately short of money and performs almost no maintenance on its ships.


********


#2
Russian press accuses navy of playing with submariners' lives


MOSCOW, Aug 16 (AFP) - 
Russia's press Wednesday accused the admiralty of playing with the lives of
116 sailors trapped in the crippled Kursk submarine, saying navy chiefs had
refused NATO help to avoid staining their reputation as a naval power.


"The admirals think that if a Russian submarine is saved with the help of
foreigners it will be a political catastrophe," said an official at naval
headquarters, quoted by the daily Segodnya.


The same source told the paper that "no right-minded official would demand
NATO's help. Only the president can take the decision to ask NATO for aid."


The reports came as Russia's military press agency AVN said Moscow had
finally accepted western offers of help in rescuing the men trapped in the
nuclear-powered submarine at the bottom of the Barents sea.


A British rescue mini-submarine was headed Wednesday for the area where the
submarine was stranded at the bottom of the Barents sea in Arctic waters
between Russia and Norway, it said.


Britain's defence ministry, however, said the mini-submarine was early
Wednesday still on standby in Scotland.


The deputy chief of naval staff Alexander Pobozhi was also due to meet NATO
officials to discuss ways of saving the stricken sailors from suffocation,
the Interfax news agency said.


A government official had told Segodnya that Russian President Vladimir
Putin would "only give the green light to ask for specialist foreign aid if
all other avenues are exhausted and the lives of the sailors are in danger."


The official said that naval chiefs and the submarine's designers feared
for their jobs, given the "ambiguity in their reports, between the
pessimism about the outcome of the operation and their optimism about the
means at their disposal."


The daily Vremya Novosti accused high-ranking officials of not shouldering
their responsibilities.


It said deputy prime minister Ilya Klebanov, in charge of the inquiry
"promised the crew would be evacuated while stressing that it was the
responsibility of the northern fleet."


It added: "The ghost of dismissal is haunting the offices of high-ranking
fleet officials. Their subordinates have to ask their bosses for approval
for the smallest technical decision concerning the Kursk," which Moscow
says sank Sunday.


"The Soviet ideology still weighs heavily on the chiefs' thinking: their
subordinates can die but they must save their precious military hardware,"
said the daily Nezavisimaya Gazeta.


Kommersant said there were no batteries to generate oxygen on board the
submarine.


"The commander of the fleet, faced with a lack of batteries, decided to let
his submarine leave without them," the daily said.


********


#3
Families of Russia's stranded submarine crew living "in hell"


MOSCOW, Aug 16 (AFP) - 
Describing their lives as "hell", the families of the 116 Russian sailors
trapped in the crippled submarine at the bottom of the Barents Sea struggle
to cope with the stop-start drama of the undersea rescue, with barely a
shred of information to draw comfort from.


"The worst thing is the lack of information," said Galina, whose
frigate-captain husband Viktor Belogunya is among those trapped at a depth
of 100 metres (300 feet) beneath the stormy northern sea.


She said on Sunday, when the navy first admitted there was a problem, the
sailors' families "really went through hell."


"There are only rumours. Each television news report is like a stay of
execution," she said, quoted by the daily Kommersant.


The Russian RTR television channel on Wednesday broadcast a report on the
families of the sailors marooned on the Kursk nuclear-powered submarine,
showing the distraught relatives gathering at the naval base of Severomorsk
from across Russia.


"I came with hope," said Yyacheslav Shchevinsky, the father of an officer
on board the Kursk who arrived at the base Wednesday from the Baltic city
of Saint Petersburg.


But he realised there was "little chance" of the crew being saved.


"The temperature (on board the submarine) has dropped, we do not know if
they have enough warm clothing, the oxygen reserves are running low and
there is no contact with them," said Shchevinsky, who himself served 22
years on Russian submarines.


Oxygen reserves will last until Friday, according to navy chief Vladimir
Kuroyedov, quoted by the ITAR-TASS news agency.


Another attempt to rescue the men failed Wednesday after a Russian mini-sub
was prevented from docking with the Kursk by rough seas.


ITAR-TASS quoted sources in the northern fleet as saying that Russian naval
rescue ships have detected no further acoustic signals from inside the
Kursk submarine since early Wednesday.


A team of psychologists has been drafted into the village of Vidyayevo,
close to the northern naval base, where dozens of the sailors' families live.


The residents of the Vidyayevo "hope and cry", said village school teacher
Yekaterina Nikolayevna.


"We are told to keep on holding out. We are, but whenever we turn on then
television it all starts again. It is unbearable," Galina said.


The Russian media has said that several young conscripts are on board the
Kursk. 


The chief of staff has set up a telephone service for the families of the
sailors to allow them to receive any news as soon as it comes out.


*******


#4
New York Times
August 16, 2000
[for personal use only]
A Navy in Need
By ALEKSANDR A. PIKAYEV 
Aleksandr A. Pikayev is an arms control expert at the Moscow Center of the
Carnegie Endowment. 


MOSCOW -- The story of the Russian nuclear submarine sunk at the bottom of
the Barents Sea with a 116-man crew is terrifying, but it should not be a
surprise, especially to the Russian navy. 


Though the submarine, the Kursk, is one of Russia's newest, and though the
details of what went wrong are still sketchy, the only surprise is that
this is Russia's first serious submarine accident in more than a decade. 


The Russian military, which has been deteriorating for many years, is now
running on a mere $5 billion a year, in contrast to the $300 billion the
United States spends annually on defense. From this meager allowance,
Russia's commanders must pay 1.2 million soldiers and maintain one of the
two largest nuclear arsenals in the world. 


The result is a Russian navy that by many accounts cannot properly take
care of its ships or submarines. According to reliable reports here,
routine maintenance is rare and, when it is done, it is not always handled
properly. 


Submarines often break down and spend most of their time at military bases.
Crew members are unable to conduct routine military exercises. The skills
and qualifications of the officers have eroded, and young sailors, usually
raw recruits, don't gain necessary experience. Officers are paid poorly,
frequently less than $100 a month, if they are paid at all. Moonlighting is
common, meaning that they probably pay divided attention to their primary
duties. 


Russian officials said that the Kursk was carrying no nuclear weapons and
that its reactors were shut down. 


Since the Soviet collapse, the Russian navy has taken approximately 180 of
its nuclear subs out of service. But it has been unable to dismantle more
than 100 of them. Those vessels are kept afloat near their former bases or
their dismantlement sites -- two-thirds in the north of Russia, on the Kola
Peninsula and the White Sea, and one-third in East Asia, the Sea of Japan
and Kamchatka. The subs are largely deserted, some reportedly without
security, even though highly radioactive reactor cores remain on board. 


The magnitude of the problem is considerable. The vast majority of
decommissioned submarines have two reactors each. Therefore, one or more of
the 200 reactor cores could conceivably sink, sooner or later. Already at
least one decommissioned sub has sunk -- fortunately, any reactor cores had
been removed. 


Certainly, the Russian government has mismanaged the stockpiles it
inherited from the Soviet Union. But it is more than Moscow's problem. 


Any accident could result in the contamination of Pacific and Arctic waters
with radiation, and ocean currents and migrating fish could spread it. 


Norway is just 30 miles away from one of Russia's largest sites for
decommissioned submarines in the Barents Sea, and Alaska shares the Bering
Sea with Kamchatka. 


For more than five years, the United States, Japan and Norway have given
Russia money to help dismantle nuclear submarines. But dangers still exist,
and efforts aimed at preventing further accidents should be accelerated. 


Russia inherited huge foreign debts from the Soviet Union -- about $80
billion. Moscow cannot pay this debt in full. Would it not be fair to
forgive part of the debt under the condition that the saved money be spent
on dismantling the remaining nuclear submarines? 


This solution would also solve another problem. 


Europeans, who benefited the most from the end of the cold war, have not
financed their fair share of the Russian disarmament. The
debt-relief-for-disarmament option would change the situation; the bulk of
the Russia debt is owed to European nations. And it is Europe, where the
fear of another Chernobyl is the greatest, that has the most interest in
seeing the old submarines dismantled.


*******


#5
Moscow Times
August 16, 2000 
INSIDE RUSSIA: In Kemerovo, a Glimpse of Our Future 
By Yulia Latynina 


Last week, the Federal Security Service said it had uncovered a plot against 
Kemerovo Governor Aman Tuleyev. Implicated in the incident was Alexander 
Tikhonov, a former candidate for governor of the Moscow region and world 
athletic champion. Tikhonov is closely linked with the Metallurgical 
Investment Co., or MIKOM. The firm's owners, brothers Mikhail and Yury 
Zhivilo, invested heavily in Tikhonov's campaign, and their Moscow offices 
were duly searched. 


The rise and fall of MIKOM serves as an illustration of the maxim in 
Ecclesiastes about the vanity of all things in general f and of the nation's 
oligarchs in particular. 


Until recently, the Zhivilo brothers were the uncrowned kings of the Kemerovo 
region. Their holdings included the Kuznetsk Metallurgical Combine, the 
Novokuznetsk Aluminum Plant and various coal mines. 


But it seems their ambition led to MIKOM's demise. They treated the region's 
bureaucrats like servants, and Sergei Kuznetsov, the manager of the Kuznetsk 
Metallurgical Combine, announced that he would be the region's next governor. 
He ran afoul of Tuleyev, and their strained relationship involved the absurd: 
When MIKOM chartered a flight to send its higher-ups to a soccer match of the 
Novokuznetsk team Metallurg, Tuleyev asked for a list of all those intending 
to go f and no one was permitted to fly out. 


Then Siberian Aluminum, headed by Oleg Deripaska, began making noises about 
MIKOM's holdings. MIKOM was subsequently run out of the Kemerovo region. The 
Novokuznetsk Aluminum Plant was bankrupted, and the director of the Kuznetsk 
Metallurgical Combine was removed after a raid by police sent in by Tuleyev. 
Finally, MIKOM was forced to sell its coal reserves for a song. 


And now we hear of allegations that these ostensibly base capitalists f the 
brothers Zhivilo, who were run out of the region f had plotted toget rid of 
Tuleyev. We should applaud the Siberian security forces for this fine work. 
But think: Not one high-profile murder case has been solved f not Dmitry 
Kholodov's, not Vladislav Listyev's. And suddenly, the authorities discover a 
murder that has yet to take place. Until now, no leader of the nation's 
regions (with the exception of Chechnya's Dzhokhar Dudayev) has been killed. 
But it looks like Tuleyev was set to follow Dudayev. 


Still, Tuleyev's death would have changed little for the Zhivilo brothers. 
They saw their main antagonist as Siberian Aluminum, not Tuleyev. 


Indeed, there was no need for the Zhivilo brothers to devise an attempt on 
the governor's life, but this story has greatly helped the brothers' 
competitors. After all, the Zhivilos are still trying to win back their 
property and were actually able to seize a huge shipment of Novokuznetsk 
aluminum in St. Petersburg. 


Now Mikhail Zhivilo, with a warrant out for his arrest, won't have time to 
think of lawsuits for winning his property back. 


When MIKOM was taken over, the Kemerovo region was something like a testing 
ground. For it was here that experiments were conducted on seizing factories, 
control of which was then relayed to the center. These experiments then 
became known as "the war against the oligarchs." 


If you want to know what's going to happen in the nation's capital six months 
from now, look at what's going on now in Kemerovo. Hunting for property is 
like drug use: You go from the soft stuff to the hard; from the tax police to 
open battle. 


Everyone may simply chuckle when the prosecutor general accuses Vladimir 
Potanin of underpaying by $140 million for his share in Norilsk Nickel. But 
if Potanin is accused of planning to pick off the prosecutor general, no one 
will be laughing. 


Yulia Latynina writes for Sovershenno Sekretno. 


*******


#6
From: "Tate Ulsaker" <directinfo@russiamail.com>
Subject: Western Press Sells Disinformation to the West 
Date: Wed, 16 Aug 2000 


Dear David,


There is a lot of western press now selling the idea that Muscovites are on
edge, afraid, or in some way have changed their lives due to the most recent
bombing. I don't believe it is true. I take exception to it simply because
it leads people to believe what is just not true, simple as that.


Let's take a closer look at the Sun's own Matthew Fisher and his August 13th
article entitled: "Jittery Muscovites are living on the edge". I don't
believe that Muscovites are "jittery" or "living on the edge" at all. If
just one person who lives here in Moscow tells me that the following
supposedly first hand account of Muscovites by Mr. Fisher is anywhere close
to being correct and objective, I will swim across the river Volga after
lighting my pants on fire.


Matthew begins with his lead sentence: "When this sprawling, brawling
capital gets anxious, so do I." then continues saying that the bombing
"...has the entire city on edge." Then he justifies it with "...all
conversations just now seem to begin and end with talk of the bombing" and
then explains how the entire city is thinking with "And almost everyone
spits out...[the attack] ...is the bloody work of the Chechens." and then
sums up how he and the rest of the city are coping with "...like most
Muscovites, I have been spending a lot of time lately wondering about my
personal safety."


Wow! I am amazed that we are both in the same city, or are we?


My assessment is that Mr. Fisher is selling cheap fears to a gullible
western press or he needs to renew his vigor for finding an accurate angle
from which to enlighten his readers.


*******


#7
St. Petersburg Times
August 15, 2000
MARKET MATTERS
Why Can't We Simply Ask Our Questions
By Anna Shcherbkova 
Anna Shcherbkova is the St. Petersburg bureau chief for Vedomosti business 
newspaper.


THERE are some questions I hate, and one of them is "What do you need this 
information for?" For example, imagine you are interviewing the manager of a 
company producing something harmless like cosmetics or toilet tissue. You 
would think the representative of such a customer-oriented enterprise would 
be happy to tell the press about their past and current business. Instead, 
when questioned about revenues, investment or shareholders, many become 
instantly cautious - as if they are sharing a military secret with you. "What 
do you need this information for?" is the question (rather a curious 
question, it seems to me, to ask a journalist at all).


It's becoming increasingly clear, that one of the essential problems for 
business journalists is the lack of business transparency. The examples of 
open-minded public, and particularly press, relations exist, but are more 
exceptions to the rules, while information about the operations of a majority 
of enterprises are unavailable to both the press and the public.


This is why business success stories are so rare in our press - the 
entrepreneurs are afraid to boast about their achievements. This is not the 
result of superstition but of the Tax Inspectorate and organized crime - both 
institutions are looking for rich business people in order to make them 
poorer.


Therefore I am able to understand why secrecy has became such a strong habit 
in Russia's business community. I also understand that the businesses that 
don't maintain a degree of transparency for the public and press will not be 
able to attract any external investment and are restricted to using their own 
profits for further development.


In that case, public relations should be seen as a sort of test of the 
company's maturity for serious investment. Those companies whose ADR or GDR 
are circulating on the foreign exchanges are bombing editorial offices with 
their news releases. The companies that have received and are receiving 
investment from foreign organizations (mainly the European Bank for 
Reconstruction and Development or some state-owned investment funds at 
present) also have nothing to hide from the public.


Privatized factories have already grasped that the more people (read possible 
investors or consumers) who know about their existence and their products the 
better.


The situation is not hopeless for Russia's banks that survived the financial 
disaster; they are now concerned about their public image and they are 
looking for new investors. Still, they limit the amount of available 
information. The most difficult cases are the state-owned enterprises, which 
are traditionally very conservative and small private factories which never 
dreamed of attracting external investors.


Unfortunately, the majority of the transparent entities are concentrated in 
Moscow, where the big money flows. So that damned question (see above) will 
be asked here, where I work and live, again and again. But I don't want 
people to feel sorry for me as my work is not made too difficult by their 
tight-lipped behavior. There are a lot of sources of information available to 
both myself and my colleagues.


I think people should feel sorry for these companies, which without 
transparency are unlikely to attract external investment and, therefore, 
likely to have problems developing their businesses.


*******


#8
Segodnya
August 15, 2000
[translation from RIA Novosti for personal use only]
THERE WILL BE NO HOT AUTUMN, BUT CONTRADICTIONS WITHIN 
PRESIDENT'S ENTOURAGE MAY INTENSIFY
A hundred days since Vladimir Putin's inauguration have 
provided the occasion for an interview given to Segodnya's 
analyst Alexei MAKARKIN by Igor BUNIN, director-general of the 
Centre for Political Technologies. The subject discussed was 
causes of the conflict between the President and elites and 
what Russia can expect in the coming autumn. 

Question: What is behind the radical first steps taken by 
Vladimir Putin as president?
Answer: Any President coming to succeed Boris Yeltsin 
would have faced the need for a "new political project" 
designed to take the country out of its systemic deadlock. So 
other possible claimants (Primakov, Luzhkov and Chernomyrdin) 
would sooner or later have entered into conflict with the 
elites formed during the Yeltsin regime. It is a different 
thing that the conflict would have been less radical because 
all of them belonged to the "core" of the elite. Putin was on 
the periphery of the elite, and was rather late in joining the 
federal elite. Besides, there is an objective reason for 
radicalism - a sharply rising public demand for a strong and 
effective administration, one associated with the figure of a 
president. 

Question: Are we in for a hot political autumn?
Answer: I doubt if the autumn is going to be very hot, 
because Putin's margin of strength is great enough. It is only 
in the liberal section of society and the elite, as pollsters 
show, that there is a growing wariness and reluctance to accept 
authoritarian tendencies. But even among liberals there is no 
definite rejection of Putin's policy. Rather they are expecting 
the President to tone down the ambitions of security bodies. 

Question: It means the President can continue with his 
reforms calmly...
Answer: There going to be no hot autumn does not imply 
that things will remain quiet. And it is not even a matter of 
threatened terrorist acts, as of problems inside the Kremlin. 
Now that the opposition to the "Putin project" has been largely 
neutralised contradictions within the winning camp may 
intensify.

Question: Is not this conclusion suggested by a possible 
dismissal of Mikhail Kasyanov?
Answer: These rumours are only one of the components of 
undercover struggle going on between different groups around 
the President. There are at least three of them. The Family, 
power structures, and Liberals. The Family, moreover, is least 
of all interested in a further radical breakup of the Yeltsin 
structure.
And that is understandable - it has already done its mission:
continuity of administration is assured, and competitors have 
been weakened. So it is not ruled out that the interests of the 
Family and of the two other ingredients of Putin's entourage 
may diverge seriously. Kasyanov is believed to be close to the 
Family and so his position now cannot be called firm. 

Question: Liberals and power structures. What do they have 
in common?
Answer: Both see in a strong state a tool for implementing 
their plans. "Technocratic-minded" Liberals have been dreaming 
since the early 90s of a strong efficient administration which 
would allow them to carry out reforms without having to look 
over their shoulders at opponents. As for power structures, 
they need allies to assert themselves in a new political 
reality.

Question: How long can their alliance last?
Answer: Until power structures show a desire to play an 
independent role in the economy. For among these structures 
there is a strong following favouring a "mobilisation economy" 
incompatible with Liberalism. So these two groups may have an 
ideological conflict, but if anything not this autumn. 


******


#9
Date: Mon, 14 Aug 2000 
From: "John Dizard" <dizard@msn.com> 
Subject: Fw: gore's russian legacy


National Review
July 24, 2000
AL GORE'S CROWNING FOREIGN POLICY ACHIEVEMENT
By JOHN DIZARD 


Al Gore can rightly claim that he's had more hands-on foreign policy
experience than George Bush. True, the experience --- his leading role in
the making of our Russia policy --- turned out to be a disaster, but as
his spin team will remind you, these are all old charges. The charitable
interpretations of Gore's Russian initiative would have to be that he is a
complete incompetent who had no idea what he was doing, or that he was
incorrectly medicated over the past eight years. A more realistic analysis
would be that he turned that famously detail oriented mind of his to
finding the Russians with whom he would be best able to empathize. They
turned out to be the dozen or so leading criminals in the country, of whom
the most distinguished was Viktor Chernomyrdin, the longest serving Prime
Minister of the Russian Republic and one of the richest civil servants of
our time, if not indeed the richest. 


At this point the half-smart foreign policy think tank people will murmur
that it's a mean world out there, you can't make an omelette without
breaking eggs, etc. etc. And if the people Gore sponsored made their
fortunes in the process of creating a post-communist Russian renaissance
for which we would get some of the credit, then we could cut them some
slack on the ethics questions. But that's not what happened. Gore's friends
robbed Russia of everything they could steal in the middle of the worst
depression experienced by any country in the twentieth century. Oh, and
they robbed us blind as well, which helped cause the financial crisis and
near-world-meltdown of 1998. 


"Russia" here isn't some blob on a map, but a hundred and fifty million
mostly poor people, who not only got a lot poorer under the administration
of his friends, but died early in large numbers or were born sick to
parents unable to give them decent care. Had the not-so-great demographic
trends of Soviet Russia continued through the last decade, there would be
about three million more Russians than there are now. The complicity of the
U.S. government in this process of robbing from the sick and poor will
come back to haunt us. The United States had an enormous fund of goodwill
among the Russian people at the end of the cold war, which is arguably one
of the reasons it ended ---we were seen to stand for good. They don't think
that now. To be fair, we have managed to curry the favor of well-placed
Russian gangsters, but they're not really the people you can count on. 


The Gore apologists --- both the official ones, such as Leon Fuerth, his
foreign policy advisor, and the semi-official ones, such as David Hoffman ,
the Moscow correspondent of the Washington Post ---- have internally
contradictory defenses for Gore's complicity with the Russian mega-criminal
class. The first is, what choice did we have. As Fuerth was quoted by
Hoffman, " Is the idea supposed to be that we should have boycotted the
government of Russia for five years, because that was Chernomyrdin's time
in office -or deal with him?"


This is the first defense --- the false choice. Of course the U.S.
Government has to "deal with" the governments with which it has diplomatic
relations. If the official counterparties are notorious criminals such as
Chernomyrdin, then the dealings are correct, practical, and cool. Gore went
far beyond that. He made Chernomyrdin a partner in a sort of
Renaissance-Weekend-meets-world-government thing called the
Gore-Chernomyrdin Commission. This wasn't some hidden " back channel" low
profile operation --- Gore and Chernomyrdin were out there on the Charlie
Rose Show, mooning over each other like 17 year olds, if 17 year olds had
translators. One of the great successes of the Commission was a 1993 deal
to recycle Russian bombs through the U.S. reactor fuel market --- it was
one of the subjects of the Charlie Rose appearance. 


That doesn't look so good now. Integral to the uranium swords for
ploughshares deal was the creation of the U.S. Enrichment Corporation,
which involved the U.S. government selling its uranium enrichment plants to
the public in a "privatization" deal. The deal, which the old Gekko column
in National Review tagged as a rip-off, resulted in a company with a
collapsing bottom line and share price. To rescue USEC, the management
announced in June that it would have to close a plant in Portsmouth, Ohio
(a swing state--oops) and cancel the money losing uranium purchase
contract with the Russians --- so much for the famous deal. 


The Gore apologists' response would be "who could have foreseen that at
the time?" The answer is -everyone else in the uranium industry, since you
can forecast uranium demand and contract expirations fairly accurately.
Unfortunately, Gore, Fuerth, and their comrades figured that spin would
turn into reality.


That brings us to the next defense of Gore's policy ---and this one is even
more convoluted. Basically, Gore's handlers and apologists argue that he
knew all along that corruption was a problem in Russia. "Anyone who deals
with Russia at all understands this is a problem that is widespread. It was
on the Commission agenda." On the other hand, Gore asserts that he doesn't
know if the allegations about Chernomyrdin's own corruption were true. Like
the other patrons of a mob restaurant after a hit has taken place, he
didn't see anything or anyone. 


So let's see ---everyone knows corruption is a problem (the dead body is on
the floor of the restaurant) , but nobody knows if Chernomyrdin might have
anything to do with it (none of us saw anything happen). 


The patrons of the restaurant have an understandable motive ---they don't
want to wind up fertilizing some Jersey wetlands. But Gore has the Secret
Service to protect him. Could it be that he really didn't know what was
happening?


In a word, no. A friend of mine was visiting Chernomyrdin's own Imperial
Bank -every civil servant should have their own bank ---one afternoon in
the heyday of the Gore-Chernomyrdin alliance. He found the officers and
directors in a state of confusion. A bomb had gone off in front of the bank
that morning, and it was understood that one of their business
counterparties was sending them a message. But the bank was involved in so
many shaky deals with other criminals that they didn't know which deal was
at issue. They'd been sent a message they couldn't understand. That's the
kind of thing that happens when, like Chernomyrdin, you do business with
just about anyone who will pay you a $1 million fee just for a hearing. 
Chernomyrdin's main power base was Gazprom the natural gas monopoly and the
biggest company in the country, over which he exercised direct control all
the time he was Prime Minister. He and his partner, Rem Vyakirev, used it
to set up a parallel financing system in competition with the foreign loan
-domestic banking system scam run by another Gore client, Anatoly Chubais.


Chernomyrdin made hundreds of millions, if not billions, from his end of
the rackets. The operation of these systems was familiar to tens off
millions of Russians. Among them, it is to be hoped, were one or two in
contact with the CIA. 


But they would have been informing a brick wall. Gore, through Fuerth, had
forbidden the CIA to investigate any corruption charges against
Chernomyrdin. When even the New York Times found out about this, Gore and
Fuerth flat out lied about their role in suppressing intelligence. 
Chernomyrdin formally quit his post at Gazprom in June, presumably to take
a well earned rest after his decade of heroic exertion on behalf of his
bank account. The Russian people can hope that Gore will have the future
leisure to join him in for card games and shuffleboard. 


******


#10
International Herald Tribune
August 16, 2000
Central Asians Need Help Now to Head Off Conflict
By Gareth Evans
The writer, a former Australian foreign minister, is president of the 
International Crisis Group, whose recent report on Central Asia is available 
at www.crisisweb.org. He contributed this comment to the International Herald 
Tribune.


BRUSSELS - Recent reports of Afghan-trained rebels clashing with government 
forces in Uzbekistan are further warning of serious trouble looming in 
Central Asia. Conflict has been brewing for some time, particularly in 
Uzbekistan, Tajikistan and Kyrgyzstan, and in the Ferghana Valley where they 
intersect.
Popular expectations after 1991 for more pluralistic politics or for 
representative government have been seriously frustrated. The standard of 
living for large sections of each population has been falling now for 15 
years. And there are political forces already mobilized to exploit any 
outburst of popular discontent.


In Tajikistan, the peace settlement that ended a civil war is now under 
threat, with the government retreating from its power-sharing commitments and 
proving unable to integrate all opposition militias into its armed forces. 
The rate of political assassinations rose in the first half of this year and 
formal power structures have proved largely irrelevant to the daily political 
processes.


Kyrgyzstan enjoys considerably better circumstances than Tajikistan, but 
extreme poverty and unemployment raise the prospect of localized trouble. 
Afghan-originated trade in drugs and guns also undermines order in more 
vulnerable areas. 


An incursion by Tajikistan-based terrorists last August and the consequent 
air attack by Uzbekistan on a target inside Kyrgyzstan have aggravated a 
pervasive sense of insecurity. Fighting between government troops and Islamic 
militants from Uzbekistan is reported to have left up to 95 dead last weekend 
on a pass in Kyrgyzstan. 


Uzbekistan, though stronger and wealthier than either Tajikistan or 
Kyrgyzstan, also faces deteriorating social and economic conditions. The 
government's draconian responses to several terrorist incidents and to the 
underground Islamist opposition are aggravating a sense of grievance in some 
communities.


Uzbekistan views the relative weakness of Kyrgyzstan and Tajikistan as 
justification for a robust, sometimes chauvinist conception of its regional 
security responsibilities, and this is not helping overall stability.


The Ferghana Valley is of particular concern. Living standards there are 
depressed and continue to deteriorate. The size of the Uzbek community in the 
parts of the valley belonging to Kyrgyzstan and Tajikistan provides 
considerable potential for ethno-nationalist provocation.


Any new crisis in Tajikistan, Kyrgyzstan or Uzbekistan is more likely in the 
first instance to be localized and of a humanitarian nature. But there is 
sufficient grievance, insecurity, mistrust and perceived vulnerability to 
take seriously the prospect that a riot, a border clash or a terrorist 
incursion could rapidly transform itself into widespread civil unrest or 
interstate military confrontation.


The governments of the three states have not ignored these problems. 
Responses have included welfare arrangements, education, administrative 
reform and language policy. After years of poor regional cooperation, or even 
of hostility toward regionalism, the three governments have joined with the 
other two Central Asian states, Kazakhstan and Turkmenistan, in a renewed 
commitment to regionalism. 


But overall they lack the vision, personnel and resources to prevent a 
conflict. And the help offered by outsiders is not enough to fill the gap.


The International Crisis Group believes Japan and China have a special role 
to play. Their emerging strategic interests in the region suggest they will 
save themselves a lot of pain and money if they act now. The governments and 
communities of Central Asia are certainly in need.


******


#11
Russia: Putin May Be Ready To Probe Gazprom
By Michael Lelyveld


An investigation of dealings between Russia's Gazprom and the Itera Group has 
raised new questions about profits from the country's state-owned resources. 
President Vladimir Putin has pledged to reform Russia's energy sector, but he 
has yet to shed light on its biggest monopoly. 


Boston, 15 August 2000 (RFE/RL) -- After months of speculation, there are 
signs that Russian President Vladimir Putin may be ready to crack down on the 
mysterious dealings of the state-owned gas monopoly Gazprom. 


The Financial Times reported last Friday that Russia's state accounting 
chamber has been investigating a huge transaction by Gazprom's marketing 
partner Itera in the arctic region of Yamalo-Nenetsk. 


According to a report by the state auditing agency, the regional 
administration sold 66 billion cubic meters of gas to Itera, apparently 
without charging a profit, after Gazprom paid the gas to the region's budget 
as a tax.


Itera then reportedly sold the gas through affiliates at rates that were in 
some cases more than 40 times the purchase price. An Itera official said the 
report did not reflect the charges that were paid to Gazprom for use of its 
pipelines, but the official did not say what the company's profit was. 


The auditing investigation by Yuri Boldyrev, one of the founders of the 
Yabloko party, has been trying to answer a central question about Gazprom. 
Why does it channel so much of its business through Itera, a company with 
corporate offices in the United States.


Itera, whose offices are in the southern U.S. city of Jacksonville, Florida, 
has long been a focus of unanswered inquiries. The Financial Times called the 
company's ownership a "closely guarded secret." An Itera vice president has 
now promised to publish a list of shareholders in a matter of weeks.


But Itera, which was started in 1992, has already spawned 120 subsidiaries 
and affiliates. Previous plans have called for some to become independent. It 
is unclear whether the disclosures will include all the Itera entities. The 
Financial Times cited widespread suspicions that Itera is secretly owned by 
"Gazprom's management or their relatives." 


The complexities of the gas deal with Yamalo-Nenetsk appear to have much in 
common with the transfer pricing schemes that have been used by many Russian 
enterprises as a legal way to avoid taxes. Under the schemes, enterprises 
that face high taxes can sell their goods at low prices to related companies 
or distributors that enjoy tax exemptions or lower rates. 


While it is unclear whether the transfer of gas through a regional government 
fits the same pattern, the arrangement could have huge consequences for 
Russia and benefits for Gazprom, its biggest taxpayer. The amount of gas 
handled by Itera under the 1997 deal with Yamalo-Nenetsk equals one-tenth of 
Russia's production and five times the amount used annually by Turkey.


According to Itera, the company is supplying gas to 11 former Soviet 
republics. But there have been few details about its profits from doing 
business with Gazprom, or the costs and benefits to the Russian treasury. 


Because the government owns 38 percent of Gazprom, it could be expected to 
benefit even if the company found a way to save on its tax payments. But if 
Gazprom has been shifting assets to reduce both its taxes and profits, the 
state may be the big loser, unless it can collect from Itera instead. 


More investigations of Gazprom may be needed to convince Putin's critics that 
his campaign against corruption is more than a pressure tactic against 
political enemies. Last March, former Prime Minister Sergei Stepashin, the 
head of the State Duma's Corruption Commission, pledged to Western audiences 
that Putin would examine energy monopolies and introduce competition. So far, 
his moves regarding Gazprom have smacked more of manipulation than reform.


In June, Putin succeeded in ousting former Prime Minister Viktor Chernomyrdin 
as Gazprom's chairman. Former Deputy Prime Minister Boris Fyodorov, who has 
vowed to investigate Itera, was also named to the board. But so far, few 
details of the ties to Itera have emerged. In his recent confrontation with 
oligarch Vladimir Gusinski, Putin pressured Gazprom to recall its loan to the 
Media-Most group. The government has forced Gazprom to raise its tariffs and 
increase collections in what may be the early stages of energy-sector reform. 
But in relations with other former Soviet republics, Putin appears to view 
Gazprom as little more than the instrument of Russian power and influence 
that it as always been.


Despite the speed of many Putin initiatives, he has so far been slow to take 
on the hidden interests of Gazprom, one of the government's biggest reform 
problems and the one over which it should have the most control. Yuri 
Boldyrev's audit may have started the process, but only Putin may have the 
power to follow it up. 


*******


#12
CIS heads to focus on security and economy at summit
By Dmitry Solovyov

KIEV, Aug 16 (Reuters) - The leaders of a loose alliance of 12 ex-Soviet
states hold an informal summit in Ukraine's Black Sea resort of Yalta later
this week to discuss security and economic problems on their bumpy road to
closer ties. 


Despite a planned concert, a sea trip and a generous dinner in a luxurious
palace, the talks set for Friday and Saturday are likely to be overshadowed
by bloody regional conflicts, terrorism, huge debts and slow integration. 


At their previous summit in June, leaders of the Commonwealth of
Independent States agreed unanimously to boost economic ties and efforts to
fight terrorism and extremism, but experts say concrete results are slow in
coming. 


Russian President Vladimir Putin, who currently chairs the CIS, was
originally expected to hold a number of separate talks with other leaders
on topical security and economy issues. 


But it is unclear whether Putin will stick to his initial programme, amid
the drama of a Russian nuclear submarine which sank over the weekend
trapping 116 sailors inside. 


SECURITY TO DOMINATE TALKS 


The presidents of the Caucasus states of Azerbaijan and Armenia, which are
locked in a decade-long dispute over Azerbaijan's mountainous enclave of
Nagorno-Karabakh governed by separatist ethnic Armenians, are expected to
meet for talks. 


``The meeting with Azeri President Haydar Aliyev is most important to us,''
Vahe Gabrielyan, spokesman for Armenian President Robert Kocharyan, told
Reuters. 


Moldova and Georgia have indicated that Presidents Petru Lucinschi and
Eduard Shevardnadze both want to meet Putin to discuss unresolved
separatist conflicts dating to the early 1990s. Russian troops have helped
keep the peace in both states. 


Putin had been scheduled to meet the leaders of Kyrgyzstan, Uzbekistan and
Tajikistan, which have faced an uprising of Islamic rebels on their common
border this month, but Uzbek President Islam Karimov decided on Monday not
to attend. 


Economic issues will also be on the agenda at a time when high oil prices
are helping Russia recover from its 1998 crash. Ukrainian President Leonid
Kuchma has said he will discuss with Putin Ukraine's debts for natural gas
supplies. 


``There are many problems, especially in the energy sector. We are hanging
in mid-air in this respect,'' Kuchma said. 


Belarussian leader Alexander Lukashenko, who seeks to forge a ``union
state'' with Russia, has chided Moscow for the slow pace of integration
efforts. His press service said he had postponed talks with Putin until the
end of the summit. Turkmen President Saparmurat Niyazov, who likes to show
off his independent role in regional politics and the CIS in general, will
not come to Yalta because of a ``busy work schedule,'' but Kazakh President
Nursultan Nazarbayev will attend. 


******


#13
Troika Dialog's James Fenkner on Gazprom, UES, Putin: Comment

Moscow, Aug. 16 (Bloomberg) -- The following are comments by James Fenkner,
an equity strategist at Moscow-based brokerage Troika Dialog, on OAO
Gazprom, Russia's natural gas monopoly, RAO Unified Energy Systems,
Russia's monopoly power utility, and Russian President Vladimir Putin. 


On Gazprom: 


``The most attractive (stock) now is Gazprom. Gazprom is probably one of
the worst run companies in Russia, which is no mean feat. 


``The changes over the next 12 months could really motivate the share
price,'' Fenkner said. The most important possible change would be the fall
of the ring fence, the legal barrier between American Depositary Receipts
and the local shares, making it impossible to buy the underlying shares and
convert them into ADRs or vice-versa. 


``That has been a limit to investment in the company and allowed management
to run things to their own personal advantage.'' 


If the barrier between ADRs and common shares falls that could cause ``a
change in Gazprom management: either a change in the incentives of the
current management or a change in the actual management team to one that is
interested in shareholder value,'' he said. 


``If these two things happen, I think the value of Gazprom will be unlocked. 


``We are reaching the end of Soviet era management, with Rem Vyakhirev
saying he will retire in May 2001.'' 


On RAO Unified Energy Systems, Russia's monopoly power utility: 


``The key to unlocking the value of UES is raising tariffs. Unless tariffs
are raised, value will be not realized. I think this issue with UES is
ongoing. There is a dialog that has to take place. 


``UES is the most traded stock in Russia. Minority investors have been
petitioning to do a lot of things and they should be congratulated for
their work. They have forced the management to raise tariffs. Not everyone
is satisfied, but that rarely happens.'' 


On President Putin: 


``We have been really positively surprised. We had a couple of scenarios
with the most optimistic having Putin as a dragon slayer slaying the
corporate governance risk at some of these companies. 


``We haven't seen that exactly, but we have yet to see everything that is
up Putin's sleeve. What we have seen is an emphasis on tax collection and
the consolidation of power. 


``We don't know what he will do with Gazprom, but I think over time we will
see the government say `we own 38 percent of this company and its not being
operated in our interests -- let's change things.''' 


*******