September 15, 2000    
This Date's Issues: 4514  4515   4516

Johnson's Russia List
#4516
15 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. The Guardian (UK): Ian Traynor, Power chief cuts off army and railway.
2. Business Week: Catherine Belton, `The Kremlin Is Making a Profound 
Mistake.' Putin's grab for TV stations could kill press freedom.
3. Moscow Times: Gregory Feifer, Zyuganov Steps Up Courtship Of Putin.
4. BBC MONITORING: RUSSIAN DUMA DEBATES KURSK, REJECTS CALL FOR 
INSPECTION OF US AND UK SUBS.
5. Washington Post: Steven Mufson, U.S.-Russia Relations Under GOP 
Microscope.
6. Interfax: RUSSIAN UNION OF JOURNALISTS CONDEMNS INFORMATION SECURITY DOCTRINE.
7. BBC MONITORING: RUSSIAN WHISTLE-BLOWER'S ACQUITTAL NO VICTORY FOR HUMAN RIGHTS - NEWSPAPER. (Nikitin)
8. New York Times: Benjamin Weiser and Lowell Bergman, U.S. Officials 
Say Bank of New York Transfers Involved Money in Russian Tax Cases.
9. Wall Street Journal Europe: Vladimri Socor, While You Wait, Why 
Not Join GUUAM?
10. 2nd annual New York Festival of Russian Films.
11. Obshchaya Gazeta: Mikhail Zadornov, RUSSIA STILL FACING RUNAWAY 
INFLATION.
12. Bloomberg: Russian TV Personality Sergei Dorenko on Free Speech.]


******


#1
The Guardian (UK)
15 September 2000
Power chief cuts off army and railway 
Ian Traynor in Moscow


Elite army units are seizing power plants, new-born babies are at risk and 
trains on the trans-Siberian railways are grinding to a halt as the Russian 
electricity monopoly gets tough with debtors. 


Unified Energy Systems, which is owed more than £5bn in unpaid bills, is 
cutting power to a number of prominent customers, plunging military bases, 
hospitals and companies into the dark. 


The "pay up or switch off" policy is due to Anatoly Chubais, the pugnacious 
Thatcherite who has run UES for the past two years. 


"Chubais is quite serious about his campaign to cut off customers and the 
government also is slowly accepting the fact that social facilities can be 
cut off, though it is very sensitive about the military," said Hartmut Jakob, 
a power sector analyst at Renaissance Capital in Moscow. 


That "slow acceptance" let a baby die shortly after birth in a hospital in 
Vladivostok in the far-east last month when the electricity was cut off. 


This week armed soldiers from a base of the elite strategic missile forces in 
Ivanovo, north of Moscow, seized the local power station to reconnect their 
barracks. 


The prime minister, Mikhail Kasyanov, said the disconnections were 
inadmissible and ordered UES to keep the military connected. The defence 
ministry was allocated £32m to pay electricity bills. 


Mr Chubais then banned power cuts to the missile forces, but the news did not 
seem to penetrate Siberia, where a base in Aleix, near the Chinese, border 
was warned that it would be cut off next week unless it paid £125,000. 


A base commander said the troops were removing rocket fuel from the missiles 
and any power cuts could trigger "an environmental disaster". UES suggested 
that the army use its back-up diesel generators. 


Two nuclear reactors were closed down, one in Sverdlovsk last week and one in 
Chelyabinsk this week, because of "faults in the regional energy system", 
though plant managers and the atomic energy ministry denied that Mr Chubais 
had ordered any power cuts. 


"There are two reasons for Chubais's behaviour: he wants to show how 
important he is and he also badly needs the money because UES has run up 
enormous debts under his leadership," a Moscow expert on the electricity 
industry, Moysei Gelman, said. 


Gennady Zyuganov, the Communist party leader, said on Wednesday that Mr 
Chubais should be jailed for his policy. 


Throughout the economic collapse of the past 10 years the energy industry has 
operated on the basis of barter rather than cash. Mr Chubais, who was a chief 
draughtsman of Russia's flawed privatisation in the early 1990s, before 
becoming President Boris Yeltsin's chief of staff and election campaign 
manager, is determined to change that. 


Last year UES collected only 30% of its receipts in cash, Mr Jakob said. So 
far this year cash receipts have risen to 62% of what UES is owed. 


The cash-strapped government is the biggest debtor. Central and local 
government owe 28% of the unpaid £5.6bn. The ministries of defence, interior 
and justice are the worst offenders. 


UES owes at least as much to its creditors, and has posted losses for the 
past three years, sullying Mr Chubais' reputation as an ardent free marketeer 
who will deliver profits to UES's shareholders. 


"I don't agree with the term cut off," he told the St Petersburg Times last 
week. "We're not cutting anyone off. We're switching on those who honestly 
pay for energy, and our policy won't change." 


The national railways are said to have made a deal with UES on the backlog of 
unpaid bills, but yesterday the trans-Siberian route was locked at the key 
hub of Krasnoyarsk in central Siberia. Power to a 50-mile stretch of the line 
was cut on Tuesday and Wednesday pending payment of £500,000. 


Mr Chubais is keen to publicise military and railway cuts, but less 
forthcoming about the schools and hospitals. 


If the tough tactics continue throughout the winter, the public will suffer. 


"Cuts in the social sector are not a large-scale phenomenon, but they're 
happening now, whereas before the authorities did not allow that to happen," 
Mr Jakob said. "They're becoming much more widespread." 


*******


#2
Business Week
September 25, 2000
`The Kremlin Is Making a Profound Mistake'
Putin's grab for TV stations could kill press freedom
By Catherine Belton in Moscow 


Vladimir Putin is stepping up his game of political hardball with Russia's 
media barons. On Sept. 7, tycoon Boris A. Berezovsky announced that, in 
response to Kremlin calls to give up his 49% stake in ORT, Russia's largest 
television network, he would bestow the voting rights for all his shares on 
a group of Moscow journalists and cultural icons. End of the government 
pressure? Hardly. Two days later, on Kremlin orders, ORT yanked a popular 
politics show anchored by Sergei Dorenko, a Berezovsky ally.
The stakes in this game are high, and the contest threatens to reshape the 
nation's television--and even political--landscape. Aside from ORT, 51% owned 
by the state, there are only two other major nationwide television channels. 
One of them, Russian Television & Radio (RTR), is already 100% state-owned. 
The other, NTV, is privately held by Kremlin critic Vladimir A. Gusinsky. But 
Gusinsky, like Berezovsky, is being squeezed by the Kremlin. He's under heavy 
pressure to hand over a controlling stake in his Media Most Holding Co., NTV 
included, to state-dominated Gazprom, the natural-gas monopoly.
The odds are increasing, then, that Putin's government will soon enjoy a 
virtual monopoly on Russia's television industry. That would give the Kremlin 
almost unlimited sway over public opinion nationwide. Although Russia boasts 
numerous muckraking newspapers and Internet sites, TV is the most important 
medium--especially in remote regions far from Moscow and St. Petersburg.
Putin's policy is sophisticated: He declares he supports freedom of the 
press, even as he seems to clamp down on it. On Sept. 12, his Security 
Council issued a new ``information security doctrine'' aimed at 
``strengthening state mass media'' and ending ``the spread of 
disinformation'' in Russia. That could lead to new laws regulating foreign 
and local media--a prospect feared by opposition politicians. ``What Putin 
has to understand is that opposition media come as part and parcel of a 
democratic society,'' says Irina Khakamada, co-leader of the liberal Union of 
Right Forces. ``The Kremlin is making a profound mistake.''
POWER PLAY. Mistake or no, the Kremlin is fed up with the media tycoons. 
Berezovsky's ORT has savagely criticized Putin's handling of the Kursk 
submarine disaster. As for Gusinsky, his NTV has been a tough critic of 
Putin's Chechnya campaign. Although the moguls are resisting the takeover of 
their businesses, it doesn't look good for them. Berezovsky's plan to hand 
over his 49% stake in ORT to a trust led by journalists could fail as the 
Kremlin plays on the public suspicion that he will continue to manipulate the 
channel from behind the scenes. Meanwhile, pressure is mounting on Gusinsky 
to cede control of his company to Gazprom, which already owns 14.3% of Media 
Most. Gazprom says it is owed a controlling stake in the holding in return 
for a $211.6 million loan it paid on behalf of the group earlier this year.
Ironically, the Kremlin is tightening its grip on the TV business just as 
it is recovering. After a slump prompted by the August, 1998, financial 
crisis, TV advertising has jumped from $150 million to $250 million this 
year. Ad execs predict annual growth of 20% to 30% over the next few years.
Putin's motives, however, are more political than economic. While he says 
he won't revive Soviet-style censorship, no one knows how far he will push 
his information policy. ``No free media means no free elections, and we could 
be faced with a type of state like [authoritarian] Belarus,'' warns 
Khakamada. Unfortunately, Putin seems to be positioning his country for a 
future like that.


*******


#3
Moscow Times
September 15, 2000 
Zyuganov Steps Up Courtship Of Putin 
By Gregory Feifer


Communist Party leader Gennady Zyuganov has further softened his party's 
traditionally harsh stance against the Kremlin, a move that observers said 
was the latest sign that the Communists have abandoned their opposition role 
following last December's parliamentary elections. 


Once one of the Kremlin's most outspoken opponents, Zyuganov said this week 
that he would back the Kremlin if Putin sacks liberal ministers and replaces 
them with members of the pro-Kremlin Unity party. He also criticized the 
media for failing to provide favorable coverage of the president. 


"The whole of our finances are in the hands of Chubais' mob," Zyuganov said 
Monday in televised remarks, speaking of power giant Unified Energy Systems' 
head Anatoly Chubais. Chubais was the chief architect of last decade's 
privatization programs that saw billions of dollars in state assets auctioned 
off for pennies to a group of reputed Kremlin insiders. 


"Putin as a leader must have his own program, his own policy," Zyuganov said. 
"If that doesn't happen, there can be as much talk as you like about a strong 
state and new policies, but it will all be nonsense." 


Zuyganov lashed out at Economic Development and Trade Minister German Gref 
and Deputy Prime Minister Viktor Khristenko for not working more quickly to 
rebuild the economy. 


Analysts said Zyuganov's recent statements built on the approach the 
Communist Party first took early this year when it teamed up with the 
pro-Putin Unity Party to divide the Duma's key committee leaderships. 


"Putin so dominates politics and popular opinion that others want to derive 
popularity from him," said Sergei Markov, director of the Center for 
Political Studies. 


"It's an attempt remind voters of himself," said Vladimir Pribylovsky of the 
Panorama political research group about Zyuganov's statements this week. "He 
wants to attract voters that moved away to support Putin." 


However, the Communist Party chief will most likely end up doing the 
opposite, Pribylovsky added. "His political tactlessness will work against 
the party. 


"'What makes the party different from others?' people will ask. 'Simply that 
it doesn't like Chubais?'" he said. 


One apparent ramification of Kremlin support has been the failure to pursue 
claims of voter fraud made by Communist Party observers monitoring 
presidential elections last March. 


"It's a very big mistake," Pribylovsky said. "It creates the opportunity to 
do that again." 


The Moscow Times on Saturday published a report compiling evidence of voter 
fraud in regions around the country during the March elections, in which 
Putin won just under 53 percent of the vote. 


"The general opinion is that Putin got 48 percent," Pribylovsky said, "and 
that votes were falsified at the end of the day to prevent runoff voting." 


But Markov said the party's reticence on the issue makes sense given its 
ideology. "Distance from the state runs contrary to Communist ideology," he 
said. "Moving closer to state power in fact removes a discrepancy." 


******


#4
BBC MONITORING 
RUSSIAN DUMA DEBATES KURSK, REJECTS CALL FOR INSPECTION OF US AND UK SUBS
Source: Russia TV, Moscow, in Russian 0700 gmt 15 Sep 00 


[Presenter] Today's plenary session of the State Duma will debate, amongst
other things, the circumstances of the sinking of the nuclear submarine
Kursk. Deputy Prime Ministers Ilya Klebanov and Valentina Matviyenko have
been invited to the plenary session. We hope to obtain more detailed
information now from our correspondent Andrey Rumyantsev. He is on the line
to the "Vesti" studio... 


Andrey, do you anticipate there will be parliamentary representation on the
commission investigating the loss of the Kursk? 


[Correspondent, reporting live from State Duma] Basically, this is their
only chance to play some part in analysing the reasons for the loss of the
Kursk. Our constitution does not make provision for parliamentary
inquiries. Even if the parliamentarians were to set up their own commission
- and the Yabloko faction is proposing just such a thing and [deputy leader
of Yabloko faction] Sergey Ivanenko is due to speak in support of a draft
resolution to this effect in 15 minutes' time - even if they do, they will
not be given access to possibly secret measures connected with the analysis
of the reasons for the disaster. Furthermore, since the constitution does
not make provision for parliamentary inquiries, not a single witness will
be able to attend the meetings of this commission of inquiry... 


Today there are four draft resolutions dealing, one way or another, with
the main issue, the loss of the submarine Kursk. I have already mentioned
the Yabloko resolution. There are three others. Two of them have been
tabled by the committee on defence. One deals with material support for the
families of servicemen and, the second is simply called "On the loss of the
submarine Kursk". This, evidently, is the one which suggests that the
parliamentarians are prepared to join the commission which the government
has already set up. 


The last and most scandalous draft resolution was tabled by Aleksey
Mitrofanov, a Liberal Democrat deputy. He proposed asking President Clinton
and British Prime Minister Tony Blair to let the deputies inspect the
submarines which may have been involved in the destruction of the Kursk.
Here is what Mitrofanov said. 


[Mitrofanov] We should make a gentle and tactful request to the president
of the USA and the prime minister of Great Britain to allow deputies to
inspect three submarines which, in the view of many military experts,
caused the Kursk accident. This is an absolutely reasonable request, in the
spirit of the new times, the spirit of new thinking and perestroika. 


[Correspondent] The deputies did not share Aleksey Mitrofanov's irony.
[Speaker] Gennadiy Seleznev was particularly outraged. There was a brief
skirmish, of the kind that is traditional for the Duma, between Seleznev
and Mitrofanov. 


[Mitrofanov, visibly agitated] I know you are Clinton's friend. You were
very happy to present him to us here. You just ingratiated yourself with
him. But you left the meeting with Putin early. That's the way you behave.
You were in a hurry to meet the Maltese prime minister - or the speaker of
the Maltese parliament. So, everything's clear. But just don't touch us
here, don't add your own comments. 


[Seleznev] I particularly do not want to touch you. 


[Mitrofanov] There's no need, no need. 


[Seleznev] That's enough. Stop. 


[Correspondent] After that, the deputies rejected Mitrofanov's motion and
this question was not included on the agenda... 


******


#5
Washington Post
15 September 2000
[for personal use only]
Abroad at Home: The State Department
U.S.-Russia Relations Under GOP Microscope
By Steven Mufson


The Cox report is dead, long live the Cox report. 


Rep. Christopher Cox (R-Calif.), who led a bipartisan congressional inquiry 
on Chinese espionage, has been retargeting his efforts toward Russia. This 
time, it won't be bipartisan.


Cox, chairman of the House Republican Policy Committee, has led a 12-member 
advisory group set up by House Speaker J. Dennis Hastert (R-Ill.) to 
scrutinize the Clinton administration's record on Russia. The 12-chapter, 
209-page report (including footnotes) is due to be released Wednesday.


"We start from the obvious fact that if we could put ourselves back in 1992, 
none of us would have wished for the outcome in 2000," Cox said yesterday in 
an interview. "The Russians certainly are not happy with the way things have 
turned out, and neither should Americans be. It's a tragically lost 
opportunity."


Given Vice President Gore's active role in cultivating U.S. relations with 
Moscow, the report's release at the height of the presidential campaign is 
seen as timely by some Republicans, while others fear the exercise will be 
dismissed as crassly political. Cox said there was "zero" coordination with 
the Bush campaign.


Cox said the report will criticize the administration for identifying itself 
too closely with former Russian President Boris Yeltsin, giving Russia bad 
economic advice, ignoring corruption and relying on relationships with a few 
leaders instead of a broader range of representatives of independent 
organizations and private enterprises.


"The lion's share of our aid was aimed at shoring up the central government 
itself," Cox said. By comparison, he complained, U.S. aid programs for the 
rule of law and new financial institutions "were just a tiny fraction of our 
attention." Cox added, "Our adherence to Yeltsin as opposed to institutions 
magnified criticism of the United States because we were associated with 
people who were increasingly corrupt."


******


#6
RUSSIAN UNION OF JOURNALISTS CONDEMNS INFORMATION SECURITY DOCTRINE
Interfax 


Moscow, 14th September: The Russian Union of Journalists sharply today
criticized the information security doctrine that Russian President
Vladimir Putin had approved a few days ago. 


"This document is in and of itself a real and present danger to the
country's information security, in that it is written in a spirit very much
at odds with the principles of freedom of expression and openness of the
authorities enshrined in Russian law," the union's general secretary, Igor
Yakovenko, said. 


"Especially questionable is the conviction of the doctrine's authors that
information support of Russian policy requires the consolidation and
expansion of the state-owned mass media. This thoroughly fallacious idea
leads the country nowhere," Yakovenko argued. "Only Russia, Cuba and a few
formerly socialist countries have state-owned newspapers." 


"The call for updating the status of the foreign media that has thus far
been thoroughly defined by the law sounds very enigmatic. Even more
enigmatic is the provision concerning the setting up of regional bodies to
provide information security. This looks like a revival of censorship,"
Yakovenko said. 


The doctrine's call for fighting monopolies in the field of mass media is
puzzling because "the state is the sole monopolist of information
resources, while no private company is a monopoly. This concept does not
seem to be aimed against the state monopoly. Rather, it makes bogeymen of
the private media," Yakovenko said. This doctrine is shot through with "the
mentality of bygone years, as in the case of the call for the stepping up
of counter-propaganda. In other words, the spirit of the ideological
divisions in the Soviet Communist Party's Central Committee is very much
alive in this document," he charged. 


Yakovenko would not say what parts of the doctrine he in fact approved. "In
the Brezhnev constitution, 90 per cent of the text sounds quite nice but a
single article did away with this. Anything could be written about human
rights, but if the constitution includes Article 6, which proclaims the
leading and guiding role of the [Communist] Party, the other provisions are
irrelevant. The present doctrine also includes numerous good provisions,
but the others destroy them," he said. 


*****


#7
BBC MONITORING
RUSSIAN WHISTLE-BLOWER'S ACQUITTAL NO VICTORY FOR HUMAN RIGHTS - NEWSPAPER
Source: 'Segodnya', Moscow, in Russian 14 Sep 00 p1 


Significant though it is, the Russian Supreme Court's decision to uphold
the acquittal on treason charges of Aleksandr Nikitin, who passed
information to Norwegian environmentalists, should be seen as a hangover
from the Boris Yeltsin area, according to the Russian newspaper 'Segodnya'.
Under Vladimir Putin's presidency, definitions of state secrecy have been
significantly broadened, and Nikitin is unlikely to have been shown the
same leniency if the alleged offences had been committed now. The following
is the text of the article by Vitaliy Romanov and Valeriya Sycheva,
published in the newspaper on 14th September under the headline "First and
last acquittal - Aleksandr Nikitin case forces authorities to expand list
of state secrets": 


The Supreme Court presidium has fully acquitted Capt 1st Class Aleksandr
Nikitin, who was accused of spying and disclosing state secrets. Nikitin's
lawyer Yuriy Shmidt told `Segodnya' that this ruling sets a unique legal
precedent: until now nobody in Russia had ever been acquitted of a charge
of treason. 


The Supreme Court presidium ruling is doubly unique in that virtually the
entire state machine was working against Capt Nikitin. According to his
lawyer, "the court was under pressure from both the Federal Security
Service [FSS] and interested parties". Attempts to obtain a guilty verdict
were made at various times both by Viktor Cherkesov, formerly chief of the
St Petersburg FSS directorate and now presidential plenipotentiary
representative in the Northwest Federal District, and by Atomic Energy
Minister Yevgeniy Adamov. As for the FSS, according to Shmidt it tried
right up to the last moment to prevent an acquittal on the charge of
treason. Shmidt believes that this is why "the help of the
Prosecutor-General's Office was enlisted". The grounds for the
Prosecutor-General's Office appeal, as expounded by Deputy
Prosecutor-General Sabir Kekhlerov yesterday [13th September], boiled down
to the following. First, Nikitin is, after all, a spy and, second, his
civil rights (in particular, his right to be defended by a lawyer) were
violated during the investigation, so the investigation should be conducted
again. But the judges did not appreciate the lofty humanism of the
Prosecutor-General's Office's second argument. 


Even after its definitive defeat in the Supreme Court, the
Prosecutor-General's Office is still trying to protect its reputation.
Leonid Troshin, chief of the Prosecutor-General's Office's public relations
centre, stressed in an interview for `Segodnya': "We are still sure that
Nikitin gave away state secrets; it is just that they were not classed as
such at the time." The FSS declined to comment on the Supreme Court
presidium ruling. It turns out that attempts were made to convict Aleksandr
Nikitin retroactively. Unfortunately, this means that yesterday's court
ruling cannot be regarded as an unconditional victory for human rights.
Experts are also doubtful about the legal basis of the court ruling. Thus
Politika foundation head Vyacheslav Nikonov told `Segodnya': "If the
Kremlin had really wanted to, it could have influenced this ruling." The
political analyst did not rule out the possibility that the supreme seat of
power simply did not want to subject itself to another wave of accusations
of breaching citizens' rights and freedoms and was wary of complicating
relations with Norway, with which "underwater" cooperation has just been
established. 


The Supreme Court ruling deserves respect, of course. But the point is
that, if Nikitin had passed his materials to the Norwegian
environmentalists not five years ago but now, there would have been no
acquittal. Since then the special services have seen to it that the list of
things classed as state secrets has grown considerably. And it is still
growing by leaps and bounds. Even if the judiciary succeeds in upholding
its independence within the context of a strengthening vertical power
structure, it will soon have to operate in a totally different legislative
landscape. So Aleksandr Nikitin's acquittal is probably a hangover from the
Boris Yeltsin era, when the state had not yet set about making absolutely
everything secret. 


*****


#8
New York Times
September 15, 2000
[for personal use only]
U.S. Officials Say Bank of New York Transfers Involved Money in Russian Tax 
Cases
By BENJAMIN WEISER and LOWELL BERGMAN


After about two years of investigating the movement of billions of dollars 
through the Bank of New York, federal law-enforcement officials now say much 
of the money involved tax evasion by Russian businesses, and the 
investigators are prepared to help Moscow if Russia wishes to pursue its own 
cases.


In what began as one of the biggest money-laundering investigations in United 
States history, law-enforcement officials have determined that much of the 
wrongdoing — tax fraud and kidnapping — appears to have occurred in
Russia. 
The inquiry has also shown that the system for moving funds through the Bank 
of New York was used to transfer money to individuals connected with 
organized crime in Russia.


Newly released federal court documents said the Federal Bureau of 
Investigation found evidence that a small amount of the money, some $300,000, 
moved through the Bank of New York for the purpose of paying a kidnapping 
ransom and that a leading Russian bank was involved in transferring the 
payments to gain the release of a businessman. For its services, the Russian 
bank received a commission, federal prosecutors in Manhattan said in the 
court documents.


The documents, which were released last week over the strenuous objections of 
the Russian bank, Sobinbank, also said that federal investigators seized $15 
million last year from a Sobinbank account in the Bank of New York and that 
the F.B.I. now believed that Sobinbank-controlled accounts at the American 
bank were responsible for moving "the vast majority" of $7 billion channeled 
out of Russia from 1996 to 1999.


The accounts of that bank and a smaller Russian bank, the government said, 
"were, in short, the pipeline for this illegal scheme," the prosecutors said.


The documents describe in some detail how money moved out of Russia through 
the Bank of New York and for what purposes.


The Bank of New York has not been accused of wrongdoing. It has said it is 
fully cooperating with government investigators. Sobinbank has also not been 
charged. The bank said yesterday that it "had no knowledge of any criminal 
activities connected with funds passing through" the Bank of New York account.


Sobinbank, founded in Moscow in 1990, became one of the most politically 
connected financial institutions in the country. It was put together by a 
collection of larger powerful banks, some of which had ties to President 
Boris N. Yelstin's inner circle, including Boris A. Berezovsky, Russia's 
leading financier and media mogul. Sobinbank was raided last year, and if 
Russian authorities decide to pursue a case against the bank, that could mean 
taking on some of the most influential people in the country.


The release of the Sobinbank court documents occurs as Louis J. Freeh, 
director of the Federal Bureau of Investigation, is in Moscow this week for 
meetings with Russian prosecutors and other officials. A senior American 
law-enforcement official said Mr. Freeh might meet the Russian president, 
Vladimir V. Putin, and discuss some findings of the investigation, with an 
offer to help the Russians.


"Louie was briefed by the F.B.I. in New York and the U.S. attorney for the 
Southern District about the case and about what we can do for the Russians," 
the official said. "If Putin wants to know where all that money went, we can 
help him." 


Mr. Freeh, in a news conference yesterday in Moscow after meeting Interior 
Minister Vladimir B. Rushailo, made no mention of the Bank of New York 
inquiry. But an American official said Mr. Freeh planned to raise "a range of 
issues" with Russian officials at later meetings.


The deputy chairman of Sobinbank, Andrei Serebrennikov, said in a statement 
the government's seizure of $15 million on deposit at the Bank of New York 
was "not based on any substantiated wrongdoing by Sobinbank" but rather on 
"the unproven theory that the seized funds" and bank account "were associated 
with illegal money-laundering activities by persons other than Sobinbank."


"The bank is affirmatively saying that it hasn't done anything wrong, and the 
government hasn't produced any evidence to the contrary," said Michael Lesch, 
a lawyer in Manhattan for the bank.


The bank made similar arguments in court when it unsuccessfully tried to 
regain control of the money.


The newly released documents show that prosecutors told a federal judge in 
Manhattan, Richard C. Casey, that the evidence supported "an inference of the 
complicity" of Sobinbank in the illegal activity in the Bank of New York 
accounts.


Judge Casey, in refusing to overturn the seizure order and also unsealing the 
proceedings, wrote, "The court cannot fathom how billions of Sobinbank's 
dollars could have been transferred out of its constantly replenished 
B.O.N.Y. account, to accounts in the United States, without Sobinbank's 
knowledge or willful blindness to the scheme."


The documents show that the government obtained a court order on Aug. 20, 
1999, to seize the $15 million from the Sobinbank account and a much smaller 
sum, about $11,000, from an account controlled by a bank called DKB.


The office of United States Attorney Mary Jo White in Manhattan said in the 
court papers that "the degree to which Sobinbank was a participant in the 
illegal activity in its correspondent account" would be investigated further. 
Her office had no additional comment yesterday.


******


#9
Wall Street Journal Europe
September 15, 2000 
[for personal use only] 
While You Wait, Why Not Join GUUAM?
By Vladimir Socor, a senior analyst with the Washington-based Jamestown 
Foundation.


Last week in New York, five formerly Soviet-ruled countries announced new 
steps toward consolidating their independence as partners of the Western 
world. Although their meeting took place out of the limelight of the U.N. 
millennium summit, it produced more significant results than the larger 
confab.


Presidents Eduard Shevardnadze of Georgia, Leonid Kuchma of Ukraine, Haidar 
Aliev of Azerbaijan and Petru Lucinschi of Moldova, joined by a 
representative of Uzbekistan's President Islam Karimov, affirmed their unity 
of purpose on Sept. 6. Their broad goal is to turn these five countries' 
informal regional grouping, known as GUUAM, from a mere acronym into an 
operating and potentially expanding entity.


Georgia, Ukraine, Azerbaijan and Moldova originally formed the GUAM group in 
1997, with Uzbekistan joining last year. The initial goal was to 
counterbalance the influence of Moscow and its loyalists within the 
Commonwealth of Independent States, making sure that the CIS does not turn 
into a revamped USSR. Beyond that, the GUUAM countries aimed to uphold their 
common interests in international forums; align with Western positions in 
those forums; and promote oil and gas transport routes leading directly to 
Western markets, so as to reduce Russian leverage over producer and consumer 
countries alike.


During that initial period GUUAM also discussed creating joint units to 
provide security for regional pipelines and perform peacekeeping missions in 
the South Caucasus. And they jointly resisted attempts by Moscow to revise 
the Conventional Forces in Europe Treaty in ways that would have permitted 
higher Russian force levels in or near GUUAM countries. Last year, the five 
countries decided to appoint "national GUUAM coordinators" in order to launch 
multilateral economic cooperation, both within the group and with Western 
partners.


Yet these intentions hardly advanced beyond the stage of discussion. 
Top-level political attention to these proposals was spotty, and funding 
scarce. Key meetings of GUUAM were, as a rule, held in the West -- Strasbourg 
in 1997, Washington in 1999, and now New York -- rather than in the member 
countries; meanwhile, the governments did little to generate public support 
at home for GUUAM's worthy goals. Over the past year or so, the group seemed 
to be fading out of the picture with an unfulfilled agenda -- even as its 
raison d'etre gained added validity with the ascent of Kremlin hard-liners.


The presidents' meeting last week signaled their resolve to reenergize the 
group and build on its real potential. The priorities for now will include: 
promotion of international trade and transit; resolution of local conflicts; 
institutionalization; and the enlargement of the group's membership.


The presidents reaffirmed GUUAM's initial goal of promoting westbound 
pipelines, as well as the Transit Corridor Europe-Caucasus-Central Asia, the 
planned route of which traverses GUUAM countries. These Western projects 
equally serve the global economy and these countries' own aspiration to 
develop as part of that economy.


Beyond that publicized agenda, the presidents agreed in New York to begin 
negotiations for a free-trade area of these five countries. As presidents 
Kuchma, Shevardnadze and Aliev pointed out, every attempt at introducing a 
free-trade system within the CIS has been a failure. (See, "This Customs 
Union Can't Get Its Act Together," WSJE op-ed page, May 26). Virtually all 
CIS countries hold Moscow's protectionist policies responsible for that 
failure.


A free-trade area of the GUUAM, on the other hand, might attract other CIS 
member countries. The GUUAM presidents last week pledged to maintain 
visa-free travel arrangements among their member countries on a bilateral 
basis. That decision, too, sets GUUAM apart from the rest of the CIS. Russia 
recently moved to scrap the multilateral CIS agreement on visa-free travel in 
order to gain extra political leverage over individual CIS countries.


On the security front, the presidents jointly upheld the territorial 
integrity of existing states and inviolability of their borders as the basis 
for the settlement of local conflicts. While in New York, Mr. Shevardnadze 
publicly censured Moscow's veto of a recent U.N. Security Council draft 
document which would have formalized Abkhazia's political status as a 
constituent, if autonomous, part of Georgia. Moldova is currently seeking 
international support for a settlement along those same lines in its 
Transdniester region. Azerbaijan, the only country of those three that is 
free from Russian troops, seeks to resolve its conflict with Armenia through 
direct, bilateral negotiations under Western auspices.


>From its inception, GUUAM was open to accession by other CIS member 
countries. Now the group is looking to add member or observer countries 
beyond the framework of the CIS. Discussions about enlargement focus on 
neighbors to the West. Possibilities include Poland -- a NATO member -- 
which, with Slovakia, borders on Ukraine. Romania not only borders Moldova; 
Georgia looks to both Romania and Bulgaria as neighbors across the Black Sea.


While some would hesitate to irritate Moscow to the extent of inviting a NATO 
country into GUUAM, a country like Romania is a different matter. It will not 
be in NATO soon; but it is keenly interested in participating in the transit 
of Caspian oil via the Black Sea toward Danubian Europe. Bucharest may well 
reckon that a bold political move toward GUUAM could advance Romania's 
chances to become a transit country. This week in Tbilisi, Mr. Shevardnadze 
announced that President Emil Constantinescu has informed him that Romania is 
prepared to apply officially to join the five-country group.


Whether it enlarges in the near future or not, GUUAM can fulfill its 
political and economic potential if the national leaderships demonstrate 
greater consistency of purpose. Holding regular ministerial meetings and 
publicizing GUUAM's agenda would provide such a demonstration.


European Union countries have ample reason to welcome the prospect of a 
functional and cohesive group of countries, the territories of which stretch 
from Central Europe to Central Asia. Such a group would become a factor of 
stability and political cohesion to the east of the EU, advancing the 
post-Soviet decolonization process to the point of no return. It would also 
promote the transit projects and trade flows that the EU has recognized as 
vital to its own future, and for which it plans a massive economic and 
political investment in the years ahead.


*****


#10
From: "Ryan Krivoshey" <ryankrivoshey@hotmail.com>
Subject: Festival of Russian Films
Date: Thu, 14 Sep 2000 


FOR IMMEDIATE RELEASE: September 13, 2000
CONTACT: Alexander Zhurbin, Chairman of the Organizing Committee, 
212-619-3033


2nd annual
New York Festival of Russian Films
A Presentation of Contemporary Russian Cinema
October 22 - 29, 2000 ­ Opening & Closing Night at the Ziegfeld


We are proud to announce the 2nd annual New York Festival of Russian Films, 
a presentation of new work from Russia’s leading filmmakers. Headed by 
Honorary Presidents Nikita Mikhalkov and Robert Altman, this year’s program 
will feature new films from Pavel Lounguine, Alexander Proshkin, 
Oscar-winning director Vladimir Menshov, and others, as well as, the first 
U.S. retrospective of visionary filmmaker Alexander Sokurov, including the 
U.S. premiere of his new documentary.


The recent dismemberment of Goskino, Russia’s State Committee for 
Cinematography has raised concerns over the future of Russian film. 
Perceived as a return to a government-controlled film industry, the move 
provoked outrage from Russia’s filmmaking community and sparked immediate 
protests and demonstrations by prominent filmmakers, actors, and industry 
professionals. Accusing President Vladimir Putin of attempting to destroy 
Russian cinema, Russian filmmakers now find themselves calling for the 
re-establishment of an agency that was founded by Lenin. The films emerging 
from Russia today encapsulate this paradoxical view of reality, whether 
harkening back to grander times, or portraying the gritty realism of modern 
Russia, they possess a frenetic energy, a striking originality that could 
not be produced at any another time.


The 2nd annual New York Festival of Russian Films will open with the U.S. 
premiere of Captain’s Daughter, Alexander Proshkin’s adaptation of Pushkin’s 
classic novel of military intrigue and epic romance in czarist Russia. Other 
highlights will include: Cannes prize-winner, Wedding, a scathing, satirical 
comedy from Pavel Lounguine (director of Taxi Blues); Moscow, a bold, 
nightmarish romp through Russia’s newfound capitalism, from Alexander 
Zeldovich; Oscar winner Vladimir Menshov’s Envy of the Gods; Khudoinazarov’s 
festival favorite Luna Papa; and Uchitel’s His Wife’s Diary (Official 
Selection at Karlovy Vary Festival); as well as a rare screening of Abram 
Room’s timeless film A Severe Young Man (1934).


We are also proud to present the first U.S. retrospective of acclaimed 
filmmaker Alexander Sokurov. Arguably the most innovative and important 
Russian filmmaker working today, Alexander Sokurov’s ground-breaking films 
have garnered multiple awards and graced numerous critic’s top ten lists but 
have received limited exposure in the west. This retrospective will premiere 
films never-before-shown in the U.S., including: Days of Eclipse, a 
visionary masterpiece of a young doctor’s solitary excursion into a barren 
and scorched republic (based on a novel by the Strugatski brothers, authors 
of Tarkovsky’s Stalker and Alexei German’s upcoming film); Moscow Elegy, a 
documentary/tribute to Andrei Tarkovksy; Sad Numbness, a surreal refiguring 
of George Bernard Shaw’s classic Heartbreak House; and featuring the U.S. 
premiere of Sokurov’s astonishingly beautiful, new documentary, Dolce, the 
story of a renowned Japanese writer’s widow, who lives an isolated existence 
with her handicapped daughter on a remote island in the middle of the ocean.


The 2nd annual New York Festival of Russian Films will take place on
October 22 & 29 at the Ziegfeld Theater, 141 West 54th Street
October 23 ­ 28 at the Clearview Cinemas, 239 East 59th Street


For press inquires, please contact:
Ryan Krivoshey, Publicist & Programming Associate, 212-396-3562 or at 
ryankrivoshey@hotmail.com


*****


#11
Obshchaya Gazeta
No. 37
[translation from RIA Novosti for personal use only]
RUSSIA STILL FACING RUNAWAY INFLATION
By Mikhail ZADORNOV

State Duma members Alexander Zhukov and Mikhail Zadornov 
have criticized the Government not so long ago for understating 
specific inflation parameters (for the 2000-2001 period) within 
the framework of its budgetary estimates. A rather paradoxical 
situation has now emerged. Global oil prices have hit an 
all-time high last week, that is, more than $34 per barrel. 
Russia continues to scoop up increasingly greater hard currency 
revenues. The rouble-dollar exchange rate is quite stable. 
Nonetheless, local ticket, gasolene, tobacco, alcohol, food and 
other prices keep growing all the time. So, how can this 
paradox be explained? We asked this question to former minister 
of finance Mikhail Zadornov, who is now a member of the State 
Duma's budgetary committee.

The current inflation spree can be explained by three 
factors. First of all, this country boasts excessive money 
supply volumes. In other words, such money is not required by 
the population and the economy alike. But where did all this 
money come from? The Central Bank of Russia has already bought 
more than $11 billion worth of hard currency since early 2000, 
issuing roubles in return and thereby swelling money supply 
volumes by over 30 percent over the same period. Consequently, 
nationwide payments and settlements are still marked by 
excessive money supply volumes despite continued economic 
growth (7-8 percent since January 2000) and less impressive 
barter deals. All surplus money is accumulated at the Central 
Bank, e.g. at banks' correspondent accounts, at bank deposits 
and in the form of budgetary-account balances. All in all, the 
Russian economy now handles approximately 300 billion roubles' 
worth of surplus money, which tends to affect prices, too.
Second, production cost inflation makes itself felt. The 
thing is that Russia's natural monopolists, such as Gazprom, 
RAO UES (Unified Energy Systems) and its Railways Ministry, had 
reconciled themselves to the fact that their electricity, gas 
and railroad-transport prices used to grow at a slower pace 
(than consumer prices did) for nearly 18 consecutive months 
ever since the August 1998 economic and financial melt-down. 
Add to this skyrocketing housing/municipal- utilities prices in 
many Russian regions. All this affects production costs, as 
well as the price of most production goods and consumer goods 
alike.
And, third, the State Committee on Statistics has 
registered a certain increase in popular-income levels. This 
trend can be explained by the indexation of wages and pensions. 
The producers of goods and services don't always manage to meet 
rising demand, thereby entailing higher commodity prices.
The ordinary man-in-the-street always thinks that prices 
keep growing at a faster rate than the above-mentioned State 
Committee on Statistics claims. All we have to do is believe 
such assertions because we don't doubt the official 
methodology. Meanwhile the State Committee for Statistics notes 
that local prices have increased by 12.6 percent over the 
January-August 2000 period. The Government claims that 
inflation will total 18-20 percent by late 2000. At the same 
time, the Duma's budgetary committee thinks that it will reach 
at least 21-22 percent. In the meantime our estimates for the 
2001 period differ greatly from those of the Cabinet. The 
Government's draft federal budget implies that the consumer 
price index will rise by 12 percent next year. However, the 
State Duma is unanimous in thinking that it's most likely to 
soar by 15-18 percent instead. However, we can do nothing but 
speculate at a time when the monetary and currency exchange 
policy of the Central Bank and the Government still remains 
unclear. The Central Bank promises to submit its monetary 
policy proposals and estimates to the Duma by October 1.
Consequently, this would enable us to compare specific 
budgetary forecasts and those dealing with the Central Bank's 
monetary policy (for the sake of assessing their accuracy). 
Meanwhile the Russian Government should do its best in 
order to curb inflation as quickly as possible. This can be 
accomplished by tying down part of all surplus money supply.
By all looks, the Cabinet should repay at least part of all 
debts being owed to the Central Bank, also using specific 
financial instruments, e.g. securities, for removing part of 
all money from circulation. The Government should also clarify 
its monetary and currency exchange policy for the entire 2001 
period. Specific economic guidelines should be stipulated, 
thereby making it possible to calm down market players, who, in 
turn, won't be nervous and won't thus steer toward higher 
prices. The discussion of the draft 2001 federal budget, due to 
take place late in September or early this October, will enable 
us to find out whether the Cabinet is contemplating such 
measures, or not.
Apart from macro-economic stability, we need serious 
changes inside the real economy. As a result, it would become 
possible to get rid of inflation once and for all, instead of 
merely slowing it down. The output of goods and services should 
tally with the nominal popular-income increment, preferably 
exceeding its levels. More fast-paced labor productivity and 
production increment would prevent subsequent price hikes. 
Evidently, this should be facilitated by quite a few production 
factors, e.g. the renewal of fixed corporate assets and their 
streamlined expenses. To cut a long story short, we've got to 
restructure the entire Russian economy.

******


#12
Russian TV Personality Sergei Dorenko on Free Speech: Comment

Moscow, Sept. 14 (Bloomberg)
- Russian TV personality Sergei Dorenko, whose popular show on the 
state-controlled ORT channel was canceled recently, talked about his 
relationship with President Vladimir Putin, the so-called oligarchs, and the 
outlook for free speech in Russia in an interview with Bloomberg. His 
comments follow: 


``First, I think the tale about the oligarchs is fantastic. The oligarchy 
doesn't exist. The state here and the president personally make you rich and 
make you poor. There is no capitalism here. There is no tradition of 
capitalism here - 150 years ago, Russian capitalism was based on production 
for the army, or the construction of railways, under government concession. A 
corrupted government controlled everything. They gave you a concession only 
if you paid 10, 20 percent or more. That's our experience with capitalism, 
and it's the same in the past 10 years: a corrupt government at all levels - 
village level, state level, federal level - decides who gets rich.'' 


On tycoon and politician Boris Berezovsky: 


``Putin invited Berezovsky to be a member of the team, at the right hand in 
all the Kremlin meetings. But Berezovsky said his property is in danger, so 
he needs to create a political opposition, and a civil society. 


``I have big political differences with Berezovsky. His attitude to Chechnya, 
to Yeltsin, I disagree with, I criticize. We are personal friends. But I have 
big differences with him. We have big disagreements. What we agree on is 
defense of private property. I don't think, and neither does he, that 
redistribution of property is a good idea. It's important to stop the 
stealing, but not to redistribute. Putin put Yeltsin at point zero, Jan. 1 
this year - Yeltsin is untouchable. This should be the zero point for the 
whole economy. He has to declare a zero point from Jan. 1, 2000. We know that 
it's not justice that Putin is exercising against (media mogul Vladimir) 
Gusinsky. It's a punishment for non- loyalty to Putin personally. The same 
with ORT, to punish Berezovsky for non-loyalty.'' 


On his own relations with Putin: 


``What happened to me was very simply. The president invited me to be a 
member of his team three times, from January. He invited me to speak 
personally with him. He called me into a small hallway between rooms and 
said, `I am very grateful to you for what you did for me.' I said, `Vladimir 
Vladimirovich, I appreciate your gratitude but I did nothing for you. I 
fought against ideas - the imperialism of (former Prime Minister Yevgeny) 
Primakov, and I defended private property against Primakov, who was pink - 
not red, but pink. I was against the authoritarianism of Luzhkov and 
Primakov. But I did this for me, and my right to live in this country and to 
educate my children here.' He said, `Well, we are members of one team.' 


``Then, later, when I defended Gusinsky (after he was arrested and jailed), I 
said on TV that Putin is equal to Primakov. Putin invited me again to speak 
with him at the Kremlin and asked me, `Is there a problem between us?' He 
said, `We are members of one team and I appreciate loyalty. You have no 
reason to be afraid.' I said, `I am not a member of your team, I fought 
against ideas.' 


``On Aug. 29, he invited me again and said, `I want you to be a member of my 
team, because I will control ORT.' I said, `I am a member of the team of my 
viewers.' He said, `So I see you haven't made a decision yet.' I said, `I 
have made a decision, to be a member of my team of viewers.' This was after a 
video I made about the (sinking of the nuclear submarine) Kursk. He thought I 
was a betrayer. This is how he thinks.'' 


On the struggle for control of ORT, part-owned by Berezovsky: 


``The struggle is going on, of course. Putin admits only one opinion, one 
point of view. He thinks in these terms. He wants all the channels to be 
controlled by him, because he is a virtual president, a virtual product. Like 
any spirit generated by something, he wants to control the machine that 
created him. TV generates him at every moment. He wants me to be a laser beam 
that creates him, because without TV, he doesn't exist. This is his idea. He 
was nothing until Tatiana Dyachenko (former President Boris Yeltsin's 
daughter and adviser) one day thought about one person loyal to Papa. And 
they thought first of (former Prime Minister Sergei) Stepashin, but he wasn't 
loyal, he talked in secret to Luzhkov. So they called Putin and said `You 
will be prime minister and then you will be president, if you are loyal.' 


``It was very logical for Putin. He understands the electorate and he doesn't 
respect it. One time I met him, it was in November or December last year and 
he had just come from some trip and I said, `Here are some fresh opinion 
polls' and I showed him one question, it was very strange, people said he was 
the best economist. I said, `You are not an economist at all. If they call 
you the best economist, soon they will call you the best poet. Strange 
people.' And he said, `No, normal people. Good people.' 


``He bases his power on the virtual power of TV. People wanted order, but 
what is order? For intellectuals, it means to stop robbery and violence on 
the streets. For others, I think it means, kill blacks and Caucasians. Today 
I am pushed out of my job, without explanation. But it was because of Putin. 
I think, to defend my right to work, I have to take a political job. It 
doesn't mean I have to start a new career, it means I have to get into 
politics to fight for my right to work. 


``Berezovsky is a politician. He doesn't even want to hear about business 
now. 


``I see my immediate future in politics. Several political forced invited me 
to join and I have a lot of free time.'' 


*****