September 5, 2000    
This Date's Issues: 4493  4494  4495

Johnson's Russia List
#4495
6 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Reuters: Brian Killen, Russia's Valaam, more beauty than tranquility.
2. Wall Street Journal Europe: Frederick Kempe, The Riddle That 
Is Russia. (re EBRD and Gazprom)
3. Washington Post: Sharon LaFraniere, False Russian Data Risked 
Divers, Norwegian Says.
4. International Herald Tribune: Philip Bowring, For Russia and 
Japan, an Old Agenda of Unfinished Business.
5. RFE/RL: Askold Krushelnycky, In Russia, Former Soviet Bloc, 
The Ruling Clique Heads Corruption.
6. Trud: Sergei Ishchenko, GOD SAVE RUSSIA! (re disasters in 
Russia)
7. BBC MONITORING: TEXT OF BEREZOVSKIY'S OPEN LETTER TO PUTIN 
ON FREE SPEECH, ORT SHARES.
8. Reuters: Tennis-Russia may scrap Kremlin Cup.]


*******


#1
Russia's Valaam, more beauty than tranquility
By Brian Killen

VALAAM, Russia, Sept 6 (Reuters) - At the northern end of Lake Ladoga, 
Europe's largest lake, a golden cupola rises out of a rocky forested island 
that has for centuries served as an idyllic place for religious retreat. 


The ancient Saviour-Transfiguration Monastery of Valaam, which has lived 
through many periods of prosperity, decline and abandonment, is home to about 
90 Russian Orthodox monks seeking deep solitude, far away from worldly 
concerns and temptation. 


However, monks and priests with flowing black robes and long beards are not 
the only ones making the pilgrimage to this wild, and remote archipelago near 
Finland in northwest Russia, about 180 km (110 miles) from St Petersburg. 


At times, Valaam, the biggest of 53 islands, bears little resemblance to a 
place of quiet contemplation. It is home to about 500 local residents, who 
have an uneasy co-existence with the brethren, and in the summer it is a 
mecca for tourists. 


As hundreds of visitors spill out of ferries every day, it is not difficult 
to draw Biblical comparisons with the traders and money-changers who set up 
shop in the temple of Jerusalem and incurred the wrath of Jesus. 


Valaam's monastic community is easily outnumbered. Tourist guides lead groups 
around the monastery where the sound of bells and prayers mingles with a 
cacophony of shouts from teenagers playing volleyball, children's cries and 
radios blaring music. 


In days gone by, those who tried to bring alcohol or tobacco to Valaam would 
have it taken from them. One of the islands in the archipelago is known to 
the monks as ``Drunken Island'' because it has a deep ravine in which 
confiscated liquor was dumped. 


``Nobody knows how much alcohol has been thrown down there,'' said Father 
Gref, a priest visiting from the Moscow region. 


Today, in the shadow of the austere monastery, alongside souvenir stands and 
kids selling pike-perch, vodka and beer can be bought. The island has its 
fair share of drunks and obscene graffiti is another sign of an unholy local 
presence. 


VALAAM ABBOT WORRIES ABOUT DISTURBANCES 


Archimandrite Pankraty, the abbot of the monastery, said Valaam had always 
been an ideal place for believers seeking seclusion and self denial, but he 
was concerned about the modern-day distractions. 


``So many people come here now, attracted by the beauty of the place. From 
Greece, from Cyprus, from America, very many people,'' he told a group of 
visiting journalists. 


As he spoke, prayers could be heard from the cathedral, where believers, 
fervently crossing themselves, flocked on August 19 to celebrate 
Transfiguration Day, commemorating a Biblical event when Jesus appeared 
shining before his disciples. 


But dissonant voices and whistles could be heard in the distance wafting into 
the monastery through an open window. 


``Unfortunately, many people see Valaam as a place to make easy money,'' said 
the bearded Father Pankraty, referring to the commercial opportunities 
offered by the influx of tourists. 


He said the main problem was restoring the cathedral, the centrepiece of a 
rectangular complex of old, damp buildings, home to the holy relics of the 
``Valaam miracle workers'' -- Saints Sergiy and German -- dating back to 
1163. 


The restoration work has been going on for 11 years and the cathedral is 
still surrounded by scaffolding. 


``The close proximity of the local population is another problem. This is 
very difficult, very difficult,'' the abbot said, shaking his head ruefully. 


Valaam, regarded as one of the strictest monasteries in the Russian Orthodox 
Church, has survived many trials in the past, including wars, fires and 
epidemics. 


It now has the status of a special historic, cultural and nature reserve and 
is visited regularly by Patriarch Alexiy II, who first came here in 1939 and 
takes a special interest in restoration work. 


ANCIENT MONASTIC TRADITIONS REVIVED 


The monastery, about five km (three miles) from the bay where the big tourist 
ferries berth, is at the end of a dirt track through the forest along which 
monks on bicycles career at reckless speeds, perhaps in fear of missing 
evening prayers. 


Up a granite staircase, inside the monastery walls, old monastic traditions 
are being revived. In addition to long hours of prayer, the brothers spend 
their time painting icons, working in the kitchens, baking bread, doing 
carpentry, laundry, sewing, gardening, fishing. 


The Valaam community, ice-bound in winter, is self-sufficient. It even has 
its own time zone, monastery time -- aligned with Jerusalem rather than 
Russia. 


Living conditions are spartan. There is a library filled with religious 
manuscripts. Sinful light reading is forbidden. 


Some of the brothers have cellular phones. ``But they are only used in cases 
of necessity,'' said one local guide. 


The monks don't like to talk much. Some live in isolated ``sketes,'' or quiet 
cloisters in more remote parts of the archipelago. 


One of the brothers, Father Ioann, is believed to have lived for 14 years 
without saying anything. He is now buried in a cemetery adjoining the main 
monastery. 


******


#2
Wall Street Journal Europe
September 6, 2000 
[for personal use only] 
The Riddle That Is Russia
By FREDERICK KEMPE


Winston Churchill said famously in a 1939 radio broadcast that he couldn't 
predict Russia's actions because the country was "a riddle wrapped in a 
mystery inside an enigma." He could just as well have been describing the 
country's quasi-capitalist structures today.


For Western shareholders and lenders, determining a Russian company's true 
worth is often its own riddle, wrapped inside shell companies protected by 
off-shore accounts (and fear-enforced secrecy). So one can forgive some 
skepticism from investment bankers about the latest news from the European 
Bank for Reconstruction and Development.


The EBRD's new president, Jean Lemiere, will send to his board this month a 
proposal to lend $250 million to Gazprom, the Russian giant that sits on 
about a quarter of the world's gas reserves and production. But the real 
scoop is that Gazprom has agreed to enough conditions that EBRD bankers 
believe they are beginning to unravel one of Russia's greatest 
riddle-mystery-enigmas.


Some EBRD insiders predict the contemplated loan will have a "demonstration 
effect" for all future lending to the country. One even figures the EBRD 
might provide some lessons to Western governments who for a decade have been 
giving Russia far too much for what the Russians have delivered in return. 
After all, the IMF has made Russia its biggest borrower, to the tune of $13 
billion, yet the Kremlin has stood by while an even greater sum escaped the 
country through corruption, asset stripping and capital flight. The G-7, 
meanwhile, opened up its doors to a Russia that then stood against the Kosovo 
war, and launched a bloody Chechnya campaign.


Before discounting the self-deluding souls of the EBRD who think they can 
succeed where others have failed (with their paltry leverage of $250 
million), spare a moment to consider the debate--about money that would be 
the first large-scale medium or long-term syndication since the Russian 
financial crisis in August 1998. The bank's Web site says the money will 
finance environmentally friendly fixes in Russia's unified gas system and its 
transport and production facilities.


Most importantly, some $50 million of the credit will fund a comprehensive 
management information system, to be put in place by Pricewaterhouse Coopers. 
This system would allow Gazprom to make itself more transparent, providing 
semiannual reports based on International Accounting Standards, or IAS. The 
EBRD would cough up $150 million of the credit from its own account and farm 
out the rest, mostly to European banks.


The arguments against the loan aren't hard to imagine. Detractors argue that 
a company as rich as Gazprom doesn't need the EBRD and should be left to 
commercial lenders. It had, after all, some $1.23 billion in operating 
profits last year. Besides, they argue, the company is too opaque for anyone 
to be sure the credit would be spent as promised. It's clear to the critics 
that Gazprom needs EBRD money less than something far dearer in today's 
Russia: the respectability such a loan would bring with it.


One word has come up often in discussing Gazprom's loan-worthiness: Itera. 
Itera has come from nowhere to become Russia's third-largest gas producer, 
thanks largely to business cooperation with Gazprom. Gazprom insists it 
hasn't any ownership of Itera and that Gazprom officials aren't shareholders 
of any Itera company. Yet Itera -- which has an office in, of all places, 
Jacksonville, Fla. -- exists in no small part because it is developing gas 
deposits with licenses that belong in part to Gazprom. It has also acted as 
Gazprom's middleman to tough customers in Ukraine and other former Soviet 
republics who tend not to pay their bills. Itera has gained easy enough 
access to Gazprom pipelines that it could pass Surgutneftegaz this year to 
become Russia's second largest gas provider.


The question bankers want answered is whether Itera is a normal business 
relationship or rather a means of offloading Gazprom value. As William 
Browder, head of Hermitage Capital Management, wrote recently in the Journal: 
"Why should anyone believe that they would be treated fairly owning Gazprom 
shares if they can see clearly that Gazprom enters into lucrative export 
contracts worth billions of dollars to Itera, a company rumored by the local 
press and believed by many market participants to be linked to existing 
Gazprom management." Gazprom and Itera aver that they simply like to 
cooperate.


At the moment, arguments in favor of the credit are winning the day (though 
the board could still kill it or demand changes). The EBRD's mandate is to 
make money and to promote post-Soviet transition, and the bankers believe 
they can do both with this loan. They also realize that without a workable 
Russia strategy they lose a large part of the argument for their existence. 
They say Gazprom, like all other Russian companies after the 1998 crisis, 
can't find medium-term commercial financing without EBRD help. They say the 
conditions they have attached are unique: Gazprom agreed to provide IAS 
accounting and is installing systems to implement it. The EBRD is also -- for 
the first time -- making a Central European company's gas-purchase contracts 
-- those of Hungary's MOL -- collateral to the deal.


The EBRD knows Russia, and it is one of the few market participants willing 
to launch legal battles when it feels wronged. Still, EBRD bankers doubt 
they'll unravel the details of the Itera-Gazprom relationship soon, though 
they insist they'll try. At least Gazprom has agreed to discuss the issue at 
meetings later this month. It is a key point because it goes to the heart of 
the problem: Western investors and lenders seldom can be confident that 
Russian companies are worth the sum of their assets. If the EBRD is 
unsatisfied with the answers it gets, it should drop the business.


The little-known last line of Mr. Churchill's famous quote provided the 
answer to his dilemma about how to predict Russian actions: "…that key is 
Russian national interest." The EBRD has made a good start by demanding more 
of its Russian client. But in the end change will only come when Vladimir 
Putin redefines what makes a great Russia. If the president wants to become a 
world power again, he'll have to start by playing by accepted global rules. 
For its part, the West must realize that it has encouraged many of Russia's 
worst habits, and the EBRD negotiations with Gazprom are only a small 
beginning at trying to undo the harm done.


******


#3
Washington Post
September 6, 2000
[for personal use only]
False Russian Data Risked Divers, Norwegian Says
By Sharon LaFraniere


MOSCOW Sept. 5- Norwegian vice admiral involved in the effort to rescue 
118 crewmen abroad the sunken Russian submarine Kursk has alleged that 
Russian authorities imperiled his team of deep-sea divers by giving them 
false and incomplete information. 


Einar Skorgen, who headed the Norwegian rescue team, describes the problems 
in the latest issue of the weekly magazine Itogi, which is co-owned by the 
Russian media conglomerate Media-Most and Newsweek magazine. "Total 
information chaos reigned," Skorgen said. "They unleashed so much spurious 
and distorted information on us that it threatened the safety of our divers."


The Itogi article appeared as Moscow fire officials were criticizing the 
government's response to a fire 10 days ago in a landmark Moscow television 
tower that killed three people and knocked out TV service to millions of 
viewers in and around the capital. Once the flames broke out near the top of 
the Ostankino tower, officials said, firefighters waited three hours for an 
order from President Vladimir Putin to turn off its electricity--a standard 
firefighting measure. "If we had cut off the power earlier, we would probably 
have been able to localize the fire," Moscow Fire Chief Leonid Korotchik said.


Experts said the twin disasters highlight not only how poorly Russia is 
prepared for emergencies, but how likely calamities are to occur following a 
decade of shortcuts on repairs, lack of maintenance and failure to invest in 
the country's infrastructure.


Andrei Belousov, head of the Center of Macroeconomics Analysis in Moscow, 
said the country needs $50 billion to $70 billion simply to renovate its 
power stations to avoid power shortages. "The time has come," he said. "The 
infrastructure is worn out."


In the Itogi article, Skorgen contested Russia's claim that strong underwater 
currents and damage to an escape hatch on the nuclear-powered submarine's 
rear deck hindered rescue efforts. "An absolute lie," he said. "I made the 
Russians admit this."


A Norwegian deep-sea diver also disputed the description Russian officials 
gave of underwater conditions that confronted rescue teams. "As regards to 
underwater currents and poor visibility, these were not much different than 
what we were used to in the North Sea," the diver said.


At one point, Skorgen said, he was so frustrated that he threatened to call 
off the operation. But he said he was able to work out the communications 
problems with Vyacheslav Popov, the commander of Russia's Northern Fleet. 
When they did dive, the Norwegians were able to open the submarine's hatch in 
just six hours after more than a week of failed efforts by the Russian navy.


Any delay that might have resulted because of Russian reluctance to share 
information probably cost no lives, because hopes that any crewmen had 
survived aboard the submarine had faded before the Norwegian team arrived. 
Still, the Norwegian complaint adds to the impression that Russians tried to 
cover up their own bungled rescue efforts with misleading information.


The sub and TV tower disasters heightened the sense among Russians that life 
in their country is increasingly risky. When the submarine sank in Arctic 
waters, Russia had no trained deep-sea divers on hand to try to save the 
crew; instead, the navy relied on a rescue submersible that was unable to 
lock on to the Kursk's escape hatch.


A short circuit in overworked electrical wires is believed to have caused the 
fire at the 33-year-old Ostankino tower, a symbol of Soviet technological 
prowess and a popular tourist spot. Korotchik, the fire chief, said Friday 
that the circuits were hugely overloaded; other officials estimated the tower 
was working at 30 percent beyond its capacity.


The back-to-back calamities followed a long string of disasters this year 
that range from repeated ruptures in aged pipelines to building collapses. In 
a particularly dramatic accident two months ago, a worn-out crane used to 
load cargo on submarines dropped a ballistic missile on a pier at a naval 
base near the far eastern city of Vladivostok. The chemicals that spilled 
from the weapon mixed with the air to form a red toxic cloud that caused 
panic in two nearby villages.


Russia's Emergency Ministry attributes two-thirds of all accidents to poor 
quality or nonexistent repairs, according to the latest issue of the weekly 
magazine Argumenty i Facty. State statistics show 31 percent of machines and 
equipment of big and medium-size enterprises are worn out. Capital assets are 
being replaced at a slower rate now than in 1995, according to Goscomstat, 
the government's statistics agency.


******


#4
International Herald Tribune
September 6, 2000
For Russia and Japan, an Old Agenda of Unfinished Business
By Philip Bowring, International Herald Tribune


HONG KONG - On the face of it, nothing much has come of President Vladimir 
Putin's visit to Japan for talks with Prime Minister Yoshiro Mori. The two 
sides remain deadlocked on the future of the four Kuril islands occupied by 
the Soviet Union in 1945. A peace treaty is no nearer, even though in 1997 
President Boris Yeltsin and Prime Minister Ryutaro Hashimoto set a 2000 
deadline for agreement.


However, after a century of more or less open hostility, perceptions of 
mutual interests are changing. Enmity derives from the fact both countries 
were once expansionist powers. Russia, which had reached the Pacific as well 
as Central Asia and had ambitions in Manchuria, was met by a modernizing 
Japan building its own empire and which delivered a rude shock to Russia in 
the 1904-1905 war. After Japan's 1945 defeat, the Cold war entrenched 
distrust and racial antagonisms.


But now? Russia and Japan are both on the defensive. An impoverished Russia 
is trying to hold itself together and prevent the erosion of its national 
interests. A wealthy Japan worries about maintaining what it has in a future 
when China will be more powerful and U.S. protection less assured. Both have 
an interest in ensuring that an eventually reunited Korea does not become a 
Chinese satellite.


For now, Japan and Russia have sharply differing views on proposed U.S. 
missile defense. But if, as seems possible, technology does not upset the 
U.S.-Russian strategic balance, the Russians may see that any theater missile 
defense system which maintains the status quo in Northeast Asia - including 
Taiwan - is in its interest.


The two have a mutual interest also in developing Sakhalin and Russian Far 
East gas and other resources. Moscow needs to reverse the region's economic 
decline if it is to hold it in the long run as the Russian population there 
declines and Chinese move in. The Japanese need to reduce their dependence on 
energy from the Middle East and other distant sources, and in the process 
provide a counterweight to Chinese commercial expansion in the Russian Far 
East.


Russians and Japanese may in future need each other just as the British once 
needed Japan to prevent any power other than America from achieving dominance 
in the region. The Russians are at least paying Japan more attention, and 
backing its bid for a Security Council seat.


The relationship will change only slowly, because of the historical baggage. 
The time when a Russian president is strong enough at home to do a deal with 
Japan over the islands still seems far away. Japan remains locked in refusal 
to accept that it should suffer any territorial loss from the war.


Germany accepted the loss of vast tracts of territory in the east and the 
ethnic cleansing of once predominantly German-speaking areas. But Japan 
remains unwilling to accept the loss of two thinly populated and 
strategically unimportant islands.


Back in 1956, the Soviets undertook to return two islands in return for a 
peace treaty, a commitment that Mr. Putin has now reaffirmed. Japan wants 
sovereignty over all four islands, although it would allow Russian 
administration for the time being. And Japan will not accept a peace treaty 
that does not also deal with the islands.


Japanese intransigence may be a by-product of U.S. protection, which has 
relieved it from having to make hard choices. There is also the moral 
superiority gained by victory in the Cold War. But the current standoff is 
damaging to both Japan and Russia.


It is not helped by Russia's internal problems. Japanese businessmen are 
cautious, having had some bad experiences in Russia. They are particularly 
reluctant to invest heavily in resource projects with long lead times when 
ownership issues are murky and provincial authorities corrupt and unreliable. 
Mr. Putin needs to put his house in order if the economic relationship is to 
blossom.


Yet make no mistake. On the surface the Putin visit was a nonevent, but deep 
down the waters of the Northwest Pacific are on the move.


******


#5
East: In Russia, Former Soviet Bloc, The Ruling Clique Heads Corruption
By Askold Krushelnycky


Our series on the widespread corruption in post-communist societies today 
examines the relation between political power and high-level government 
fraud. RFE/RL correspondent Askold Krushelnycky reports that perhaps the most 
insidious form of corruption in transition countries occurs when those who 
govern are themselves deeply involved in corruption. 


Prague, 5 September 2000 (RFE/RL) -- The states which emerged from the former 
Soviet bloc have shed their Communist characters in varying degrees. In each 
country's case, its communist -- and pre-communist -- history has done much 
to determine how quickly it is able to implement true democratic and 
free-market reforms. Those with a shorter experience of Communist rule are 
doing better, especially when dealing with the problem of corruption.


Asked by our correspondent how he would explain the differences between the 
former republics of the Soviet Union and the former Soviet satellite states, 
one-time U.S. Ambassador to Hungary Mark Palmer said:


"Why is it different? Well, I think it's partly that these countries have had 
different stages of development. The Czechs, of course, before the Second 
World War -- the Bohemians -- had the highest per capita income in the world, 
higher even than Germany or the United States."


Palmer, who was ambassador to Budapest in the 1980s, said post-communist 
nations that had previous acquaintance with democracy and a market economy 
were finding it easier to rebuild those institutions.


"So, there was a different tradition, and it was easier to restore in 
countries like the Czech Republic, Hungary, Poland, Estonia, Slovenia. It was 
easier to get back to civil society somewhat more quickly than for Ukraine 
and Russia, which didn't have large middle classes before and didn't have 
established legal and political systems."


Palmer said that, although bureaucratic corruption existed to different 
degrees in every post-Communist country, the level of corruption involving 
the top political strata varied.


"If you look at Ukraine and Russia, there is more evidence of it (corruption) 
going to the ministerial and prime ministerial level than in places like 
Hungary and the Czech Republic and Poland." In most of the former Soviet 
republics, with the exception of the Baltic states, there is no history of 
deeply rooted democratic institutions. In Belarus and the Central Asian 
states, parliaments are largely sycophantic or toothless bodies with little 
or no power. In Russia and Ukraine, many seek to become deputies because of 
the parliamentary immunity it affords them from prosecution for questionable 
business dealings. 


Some of these corrupt parliamentarians have enriched themselves by selling 
their votes and loyalty to the highest bidder. Former Russian Interior 
Minister Anatoly Kulikov said that, after last December's parliamentary 
elections, deputies were offered $50,000 plus $5,000 per month "salary" as a 
bribe to join other parties. 


A former long-time Russian deputy from the democratic Yabloko Party, Viktor 
Gitin, described to RFERL how he was offered a $500,000 bribe in 1998 by 
associates of then Deputy Finance Minister [and now Prime Minister] Mikhail 
Kasyanov. Gitin, who was then a member of the State Duma's powerful budget 
and finance committee, said the person offering the bribe wanted Gitin's 
support over a critical decision involving thousands of millions of dollars.


"It's very easy to do. It's not that difficult to get into the Duma. It's 
always possible to arrange for a deputy or for a deputy's aide to write out a 
pass. So I was in my office in the Duma when a man came to see me, introduced 
himself -- saying that he had been working with Mikhail Mikhailovitch 
[Kasyanov] for a long time, not at the ministry, but that they had business 
affairs together -- and explained that what I was doing really upset their 
affairs. He didn't know how I would react. He offered to work out this 
problem and wrote down a number on a piece of paper, it's not the kind of 
thing you say out loud -- walls can have ears. So he wrote down the sum. And 
he said, "This is the price of the problem." 


Gitin said he refused the offer but, out of fear of what might happen, had to 
appear to agree not to obstruct the scheme.


"There's only one way out of this situation. I said thank you for the 
tempting offer, I said that I don't want to meddle in all of these affairs, 
and that I'm stepping back. That is, that I don't need the money but wouldn't 
meddle anymore in these affairs. But you can say one thing and do something 
completely different. There are ways of not openly but covertly hampering 
processes. In this situation it was necessary that I act not alone but with 
the help of my [Duma] colleagues to -- let's say, impede -- the credit. And 
they helped me, and that credit was not handed out."


Gitlin's allegations of widespread corruption in the Russian parliament have 
not been independently confirmed. Nor have legal proceedings been initiated 
against Kasyanov or his associates, or against any Duma deputy suspected of 
taking bribes.


While Russia and Ukraine say they have thoroughly democratic parliaments, 
many Central Asian leaders encourage the belief that they are the source of 
all power. Last month, for example, President Saparmurat Niyazov of 
Turkmenistan, who calls himself Turkmenbashi -- or Father of all Turkmen -- 
announced that the mayor of the capital, Ashgabat, and eight other senior 
officials, would not get their pay that month because they had not fulfilled 
their duties properly.


The decisions of this new type of oriental despots go unchallenged and, 
particularly in the oil-rich states, the potential for corrupt enrichment is 
enormous. In Kazakhstan, President Nursultan Nazarbaev recently (August) 
launched an anti-corruption drive. He publicly named local companies involved 
in oil, metals and banking, which he accused of exporting goods to their own 
foreign accounts at deflated prices in order to cheat the country of at least 
$1 billion in taxes. 


But Nazarbaev's critics asked why it has taken so long for the Kazakh 
strongman, who has led his country since independence, to recognize that all 
is not right. One Kazakh political analyst said that everyone in the ruling 
clique was linked with what he called "financial-industrial groups." 
Opposition politician Amirzhan Kosanov suggested that the true reason for the 
Nazarbaev's campaign was that some of his friends want to redistribute 
ownership of the most lucrative companies to get a bigger share for 
themselves.


While living standards for ordinary Kazakhs have been plunging, the country's 
elite has benefited from thousands of millions of dollars invested by foreign 
firms, including major oil companies. The foreign companies are seeking a 
share of profits when Kazakhstan's huge oil production potential is finally 
realized.


Swiss authorities, recently joined by their U.S. counterparts, are now 
investigating whether payments of tens of millions of dollars to Nazarbayev 
and close associates constituted corrupt payments for favors. But Nazarbaev 
is aided by the fact that the clan system in his country -- and other Central 
Asian states -- is so deeply entrenched that the kind of nepotism and 
favoritism regarded as corrupt by Westerners is often viewed as a natural 
fact of life by local people.


Ukraine also figures high on most lists of the world's most corrupt countries 
and its inhabitants, according to opinion polls, perceive their country and 
its government as riddled with corruption. Power in Ukraine, as in Central 
Asia and Russia, is concentrated in the hands of a relatively small group of 
people -- mostly former high-ranking Communist apparatchiks, with a strong 
element as well of former KGB members. Their permission is crucial to 
operating businesses, thus providing countless opportunities for corrupt 
abuse of power.


There is much circumstantial evidence -- but no firm proof -- suggesting 
corruption goes all the way to the top in Ukraine. Some of President Leonid 
Kuchma's closest associates have been implicated in massive corruption 
schemes.


The most lucrative area for corruption in Ukraine has been in the energy 
sector where natural gas -- mainly imported from Russia -- and sometimes oil 
has been siphoned off and sold privately and secretly. Those in charge of the 
energy sector are politicians or businessmen with powerful government 
connections.


Earlier this year, the then chief of the majority state-owned Neftegaz oil 
and gas company, Ihor Bakai, was forced to resign after a welter of 
accusations and evidence -- including evidence turned up by an RFE/RL 
investigation-- about his corrupt dealings. RFE/RL possesses documents 
showing bank transfers of millions of dollars by Bakai to off-shore accounts 
and two purchases of property he made -- each worth about $6 million -- in 
the names of relatives in the U.S. states of Florida and Pennsylvania. When 
Bakai resigned, President Kuchma defended him and only reluctantly let him go.


Another close Kuchma associate is his former prime minister, Pavlo Lazarenko, 
who is now in an U.S. jail facing charges of illegally laundering $114 
million. He has already been convicted on money laundering charges in 
Switzerland where investigators believed he was involved in illegal movements 
of $880 million looted from the Ukrainian economy.


Lazarenko, speaking through his lawyer, has said that Kuchma was aware of all 
the money movements and benefited from them himself. Kuchma has denied the 
accusation.


Last month (Aug 18), the state prosecutor arrested two senior members of 
Ukraine's country's powerful United Energy Systems of Ukraine company on 
corruption charges. One of those arrested is the husband of Deputy Prime 
Minister Yulia Tymoshenko, who has been getting in the way of some of 
Kuchma's closest allies. Allegedly, they profit enormously from the 
notoriously corrupt energy-sector businesses that have brought Ukraine to the 
brink of bankruptcy.


RFE/RL's Ukrainian Service Director Roman Kupchinsky believes that the arrest 
of Tymoshenko's husband is the beginning of measures to discredit her and the 
country's reformist and popular Prime Minister Viktor Yuschenko, who has 
shown a low tolerance for official corruption. Kupchinsky says: "Kuchma 
didn't just discover the extent of corruption in the energy sector -- he's 
known about it for years. It was simply convenient to raise it at this time."


Kupchinsky also notes that in Ukraine and many other post-communist 
countries, the political elites -- although corrupt themselves -- use the 
threat of prosecution for corruption as a weapon to silence former political 
allies turned critics. He calls this a variation on the old KGB method of 
gathering "kompromat" -- that is, compromising material on potential 
opponents -- to be used to blackmail them into compliance at an appropriate 
moment. 


In the next part in our series, we will look at the effects high-level 
corruption has on countries ostensibly seeking to implement democratic and 
free-market reforms. 


(RFE/RL's Sophie Lambroschini contributed to this report) 


*******


#6
Trud
September 5, 2000
[translation from RIA Novosti for personal use only]
GOD SAVE RUSSIA!
By Sergei ISHCHENKO

This country keeps suffering from floods and hurricanes 
virtually every day. Some Russian facility either collapses or 
explodes on a regular basis, too. The Kursk SSBN (Strategic 
Submarine Ballistic Nuclear) has foundered in the Barents Sea 
this past August. Add to this the latest Ostankino inferno, and 
this will have you praying to God all the time. Alas, the 
Almighty won't help us in most cases. At any rate this 
conclusion is contained in an analytical report/survey, which 
has been compiled by the Russian Emergencies Ministry's 
emergencies department.

By all looks, our Emergencies Ministry, which isn't very 
much surprised over the latest disaster spree, knows only too 
well that all of us should not relax in the near future.
Statistics should not mislead everyone either. True, the 
nationwide number of "man-made" emergencies had dwindled by 
nearly 15 percent in 1999 on the 1998 period. However, this 
trend was caused by the then recession, less substantial cargo 
and passenger traffic volumes and corporate shut-downs. In real 
life, though, the situation in this sphere is hardly improving. 
The prolonged lack of appropriations has entailed critical 
depreciation of equipment and that of the entire industrial 
infrastructure. As a matter of fact, all those ill-conceived 
economic reforms prevent local watchdog agencies from 
monitoring the performance of quite a few enterprises and 
organizations.
According to the Russian Emergencies Ministry, Russia 
faces the following main danger, e.g. apartment-house fires, 
the spewing of chemical substances into the atmosphere, 
trunk-pipeline accidents, as well as collapsing buildings and 
structures, over the entire 2000 period. Most disasters in this 
category might be caused already this December only because 
Russia's worn-out power transmission and heat supply systems 
are subjected to peak loads on the eve of the winter season. 
Ground deformations, which are caused by freezing processes and 
thaws, should not be overlooked either.
Chlorine-storage, chlorine-processing and chlorine- 
transportation facilities can also suffer as a result of major 
accidents. The situation with ammonia compounds is no better.
The Emergencies Ministry seriously doubts the safety of ammonia 
refrigerators at this country's milk-industry facilities and 
those affiliated with its meat-processing sector. Large-scale 
fires can sweep local oil reservoirs and oil-refining units, 
too.
Those, who won't be burned, can drown, the report's 
authors claim. The current state of Russia's commercial 
hydro-technical facilities leaves a lot to be desired. Owing to 
lack of timely repairs, some local dams might burst, thereby 
flooding adjacent water bodies with harmful products.
According to the Russian Emergencies Ministry, Yakutia, 
the Krasnoyarsk Territory, the Irkutsk, Kamchatka, Kemerovo, 
Leningrad, Magadan, Moscow, Perm, Sverdlovsk and Chita Regions, 
as well as the city of Moscow, "boast" the highest 
industrial-disaster risks. Meanwhile Ufa, Volgograd, 
Yekaterinburg, Perm and Dzerzhinsk can once again experience 
additional large-scale accidents entailing the atmosphere's 
contamination with harmful substances. This can be explained by 
the fact that environmentally hazardous production facilities 
are being equipped with accident-prevention systems at a 
snail's pace.
Our transport sector, the motor-vehicle fleet, in 
particular, continues to claim ever more lives. Nearly 150,000 
accidents are being annually registered along Russian roads.
Other countries apparently register just about as much.
However, the consequences of Russian road accidents are more 
tragic. 14 percent of all Russian accident victims are carted 
off to local mortuaries. Meanwhile the respective Western ratio 
is just 5 percent. Those eternally bad Russian roads, as well 
as the sorry state of our motor-vehicle fleet, must be blamed 
for such deplorable accident statistics. Mind you, 
approximately 60 percent of local vehicles have been in service 
for 8 consecutive years and even more.
Up to 60 percent of all sea-going and river-going ships 
have now expended their service life and must therefore be 
scrapped. Our ships are aged 20 years, on the average. Small 
wonder, they account for 40 percent of all accidents.
And the underwater situation is even worse. A study, which 
was conducted at the Baltic Sea's CW (Chemical Weapons) and 
ammunition burial sites throughout the 1995-1999 period, proves 
that local sediments contain more heavy metals and arsenic. 
According to the report's authors, this implies that poisonous 
substances are gradually contaminating the environment. The 
burial of chemical munitions and radioactive waste in Russia's 
northern and Far Eastern seas is fraught with the very same 
surprises. It turns out that various containers replete with 
solid-state radioactive waste (that were dumped in the Kara Sea 
some time ago) have now become depressurized. Radiation levels 
along the Novaya Zemlya archipelago's east coast tend to exceed 
background radiation levels several dozen times over. By the 
way, Stepovoi-bay radiation levels exceed background radiation 
more than 100-fold. Greater radiation levels were registered in 
the Barents Sea well before the Kursk disaster.
We should blame ourselves alone for such troubles. For its 
own part, Mother Nature can also offer numerous surprises.
Therefore we must be ready to react accordingly. Owing to 
specific global processes being registered over the last few 
years, Russia, too, can experience additional natural 
calamities this year. Barring the North Caucasus and the Black 
Sea coast, the national climate continues to get warmer.
Meanwhile the afore-said two regions keep suffering from 
increasingly colder weather and greater precipitation. At the 
same time, Asian Russia faces greater drought and forest-fire 
risks with every passing year.
And now a few words about all sorts of natural calamities.
Earthquakes: 
The main quake-prone areas, e.g. the Far Eastern, 
Caucasian and Baikal regions, are becoming more and more 
active. One should keep in mind that a major earthquake can 
sweep the North Caucasus, Dagestan, to be more exact, 
inflicting massive casualties and wrecking local industrial 
facilities.
Floods and freshets:
They mostly affect the Maritime Territory, the Sakhalin 
and Amur Regions, Buryatia, Dagestan, Kabardino-Balkaria, the 
Krasnodar and Stavropol Territories, the Astrakhan and 
Volgograd Regions. It goes without saying that Man can do 
little to prevent floods. However, some of his actions 
facilitate greater floods. The Russian Emergencies Ministry is 
really worried about the technical state of Krasnodar, 
Shapsutsky, Otkaznensky, Lyudinovsky, Chelyabinsk and Kurgan 
reservoirs. The situation is compounded by the fact that quite 
a few hydro-technical facilities at small-size and medium-size 
reservoirs don't belong to anyone, and can therefore burst.
Land-slides: 
One can say that the devil is not so black, as he is 
painted. The North Caucasus now registers fewer land-slides;
however, hare-brained land-use programs tend to aggravate such 
processes in some areas. On the whole, the report's authors are 
inclined to think that some local land-slide emergencies can 
take place this year. Nonetheless, experts find it pretty hard 
to compile a list of such areas because land-slide processes 
are no longer being monitored in Russia's Tomsk, Omsk, Irkutsk 
and Rostov regions, as well as in its Republic of Mordovia.
Shore erosion: 
The situation here is even more deplorable.
Erosion-prevention operations are nowhere to be seen at this 
stage; besides, Russia boasts quite a few worn-out dams and 
wave-breakers. Entire industrial facilities and apartment 
houses, which are located near sea coasts, rivers and 
reservoirs, might well slide into the water anytime now.
Experts are particularly alarmed that local sewer collectors 
can break apart, thus spewing contaminated water into various 
rivers. The list of the most accident-prone cities includes 
Rybinsk, Volgodonsk, Taganrog, Saratov, Tomsk and Barnaul.
Avalanches:
The outlook is rather bleak. This situation is quite 
explainable just because mountain observation stations have now 
been mothballed or even liquidated in some cases. Besides, this 
country, which has 51 avalanche-prone areas, has no agencies 
for conducting preventive avalanches. Most avalanches are 
registered over the December-May period, what with Far Eastern 
avalanches taking place throughout the March-April period. 
Meanwhile Caucasian avalanches come tumbling down every January 
and February. The avalanche-prone Davan pass in the 
Trans-Baikal district presents a headache every November.
The same can be said of the Magadan Region's mountains, 
Dagestan, Kabardino-Balkaria, the Karachai-Circassian Republic, 
North Ossetia, Chechnya and Ingushetia. Sakhalin Island's 
mountain ranges experience avalanches every December.
Natural fires:
Such fires usually occur in southern Siberia, in the 
Russian Far East, in the Trans-Baikal region, in north-western 
Russia and in European Russia's central regions. Experts 
predict fires in the Maritime Territory, on Sakhalin Island, in 
the Amur Region and in the Khabarovsk Territory by the end of 
September. Quite possibly, such fires are going to rage well 
until November 2000. By the way, man-made fires account for 90 
percent of all European Russian blazes, making up for just 60 
percent of all eastern Russian fires. And the remaining 40 
percent are caused by lightning.
On the whole, this survey is rather discouraging. God save 
Russia from an imminent collision!


******


#7
BBC MONITORING
TEXT OF BEREZOVSKIY'S OPEN LETTER TO PUTIN ON FREE SPEECH, ORT SHARES
Text of report by Russian newspaper 'Kommersant' on 5th September 


To Russian Federation President Vladimir Putin. 


Esteemed Vladimir Vladimirovich! 


Last week a top official in your administration gave me an ultimatum: I
should transfer the block of Russian Public Television [ORT] shares I
control to the state within two weeks or I could go the same way as
Gusinskiy - clearly a reference to Butyrka Prison. The reason for this
proposal was your dissatisfaction with the way in which ORT has covered the
events relating to the Kursk submarine accident. "The president wants to
run ORT himself," your representative told me. 


Following Gusinskiy's effective expulsion from the country and the transfer
of NTV to Gazprom (read "state") control, ORT is the only national channel
that is not totally dependent on the authorities. If I accept the
ultimatum, TV news in Russia will end and be replaced by TV propaganda
controlled by your advisers. 


I agree that in the coverage of the Kursk submarine accident the media
subjected you to sharp but, in my view, largely fair criticism. Your desire
to take control of the media is understandable: Next time if, God forbid,
something similar were to happen (an explosion, disaster, or scandal) there
would be nobody to criticize you, and people would learn about the events
from Western "voices" - just as in the recent past. 


It will be easier for you to rule, the people will have a quieter life, and
there will be far fewer people wanting to ask awkward questions - after
all, they will not have the powerful defence provided by mass TV coverage.
You will not have to interrupt your vacation and urgently seek money to
help bereaved families. And one fine day people may wake up to find that
they have unanimously approved the sending of the Russian Army to some
far-off country to provide fraternal aid to somebody. 


For all the shortcomings and problems that Russia is experiencing, there
are a few indisputable achievements - and the most important is that
millions of people have stopped being afraid of the authorities, while the
authorities have been forced to be accountable to the people to a certain
extent. This has become possible primarily thanks to the media that are
independent of the authorities. For the first time in many decades people
have a way of obtaining justice against policemen, bureaucrats and bosses.
Officials who have erred hide from journalists. By placing the media under
strong-arm administrative control you will bring fear back into our lives.
We will once again fear the building superintendent. And there will once
again be nowhere for people to complain. 


I must note that this is not a matter of money - as professional
provocateurs are trying to tell society. You are well aware that ORT is
very much running at a loss. The weakness of the advertising market makes
all the media loss-making. Running ORT costs 150m dollars a year. For six
years ORT's private shareholders, myself among them, have subsidized
channel one's broadcasts using funds from other profitable enterprises. 


My colleagues and I have no reason to be ashamed - thanks to our funding of
the independent media, for the first time in several years it has been
possible to create the prerequisites for civil society in Russia and to
ensure the democratic process - including two cycles of free elections,
albeit with the undoubted shortcomings inherent in any fledgling democracy. 


I do not know where you plan to find the money to maintain ORT - perhaps
from a secret- line item in the new budget, or perhaps from the same secret
Federal Security Service fund which is paying the aid to the families of
the Kursk submarine crew. It is frightening when on matters of public
importance - be they concern for orphans or the upkeep of the mass media -
the authorities have nobody to rely on apart from the special services. 


By giving me an ultimatum you have essentially asked society an important
question - do the nonstate media have the right to exist in Russia? You
clearly answered that question for yourself when you explained to the
relatives of the sailors on the lost submarine: "The television? It tells
lies.... There are people on TV who are yelling more than anyone today and
who have been destroying the army and navy for the past 10 years.... They
are now in the front ranks of their defenders.... Again with the aim of
discrediting and finally destroying the army and navy! They have stolen
money for several years and are now buying up all and sundry! And the kinds
of laws they've produced!" 


My response to you is that private capital may be self-interested and
headstrong, but it does not start wars or cover up losses; it did not cover
up Chernobyl and the tragedy of the other, Komsomolets, submarine. Private
capital does not expel peoples or eliminate class enemies. The authorities
have many ways to bring private capital under control. Russian society has
just one way today of placing limits on the authorities - the independent
media. 


I would ask you, Mr President, to stop before it is too late! Do not let
the genie of thuggish power that laid waste to our country for some 70-odd
years out of the bottle. You will not be able to control it. It will
destroy the country and you. 


Vladimir Vladimirovich, I began this letter with a reference to how an
official from your administration had given me an ultimatum. The well-known
American journalist Henry Mencken said: "To every problem there is always a
solution - simple, convenient, and, of course, wrong." To put it in
Russian: "If there are people there are problems, no people means no
problems." Threats and blackmail are unacceptable arguments for the
authorities to use in settling disputes with their own citizens. They are
proof of their weakness and bankruptcy, and therefore a danger to the whole
society. You understand me pretty well and therefore, unlike your advisers,
you will not be astonished to learn that I will not submit to diktat. 


If I were arguing in the style of your administration, then I would end
this letter here. But I have sought and found a constructive approach
towards the problem of enhancing the effectiveness of the administration of
ORT. 


Developing the idea of building civil society, I have decided to transfer
the block of ORT shares that I control to journalists and other
representatives of the creative intelligentsia to manage. 


I am confident that a similar step on the part of the state - which you
could initiate - will allow the country's first TV channel to fully live up
to its title of Russian Public Television. 


Respectfully, 
[Signed] B. Berezovskiy 
[Dated] 4th September 2000 


******


#8
Tennis-Russia may scrap Kremlin Cup
By Gennady Fyodorov

MOSCOW, Sept 6 (Reuters) - Next month's Kremlin Cup tournament is in danger 
of folding unless organisers come up with more than $1 million in prize 
money, Russian tennis chief Shamil Tarpishchev said on Wednesday. 


``If we don't find the money by October 1, then we'll just have to scrap 
it,'' Tarpishchev, president of the Russian tennis federation, told Reuters. 


``Right now we have about half of the $2,150,000 of total prize money for 
both men and women and we need to find another half for both tournaments to 
take place.'' 


The Moscow indoor event, which began in 1990, is set to combine for the first 
time this year, with both the ATP and the WTA tournaments taking place in the 
same week from October 23. 


Tarpishchev, who is a member of the Kremlin Cup executive board, blamed 
recent terrorist bombings and the country's unstable economic situation on 
the gradual decline of what claimed to be ``the premier sporting event in 
Russia.'' 


``No other regular athletic event in our country in the last decade can match 
us in terms of both the sporting level and the social gathering it 
attracts,'' he said. 


``But recent bombings in Moscow and the general state of our economy have 
scared away potential sponsors from abroad, while our own sponsors are either 
not strong enough or our tax legislature doesn't entice them to put money 
into sports. 


``We don't have, like other countries do, a law which would make sense for 
companies to advertise their products by sponsoring sporting events,'' he 
added. 


``We also face an uphill battle when trying to invite the world's top 
athletes into our country for obvious reasons. All that makes it very 
difficult, almost impossible, to run successful tournaments year after 
year.'' 


Tarpishchev said it would be a shame if the Kremlin Cup had to fold 
especially in the year when it secured the presence of the world's top two 
women players, Martina Hingis and Lindsay Davenport, for the first time. 


``It would be great to have them both here, so our fans can see them for the 
first time,'' he said. ``I hope we can pull it through.'' 


******