October 4, 2000    
This Date's Issues: 4556 • 4557 • 4558 4559

Johnson's Russia List
#4557
4 October 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Christian Science Monitor: Fred Weir, Will Russia offer a graceful 
exit for Milosevic? The West hopes Moscow can negotiate a peaceful 
transition of power for a close ally. 
2. Interfax: Igor Denisov and Alexander Kruglov, MOSCOW'S YUGOSLAV 
POLICY: CAREFUL CALCULATION OR RUSSIAN ROULETTE?
3. Anatol Lieven: Response to critics.
4. Dean LeBaron: Marx to Market.
5. Peter D. Ekman: re: Reynolds 4553.
6. St. Petersburg Times: Alan Rousso, Is Cox Report an Intentional 
Misunderstanding of Russia? 
7. New York Times: John Varoli, Energy on Ice: Rising Oil and Gas 
Prices Revive Interest in Russia's Arctic Fields.
8. gazeta.ru: Press Minister Plans Stricter Measures for Foreign 
Media.
9. Tom Birchenough: Reply to: 4555-Aris/Media Most.
10. Jerry F. Hough: Re: 4555-Aris/Media Most.
11. Washington Times: Paul Saunders, Voice of the Kremlin? 
Russian 'information doctrine' threatens media.
12. Moscow Times: Yulia Latynina, FSB Grounds a Good Business.]


******


#1
Christian Science Monitor
October 4, 2000
Will Russia offer a graceful exit for Milosevic? 
The West hopes Moscow can negotiate a peaceful transition of power for a
close ally. 
By Fred Weir Special to The Christian Science Monitor 


As pressure increases at home and abroad for Yugoslav President Slobodan
Milosevic to leave office, Russia is seeking to play a key role as
intermediary. 


A nudge from Moscow has helped to persuade Mr. Milosevic to back down at
least once before, and might present the best chance for a peaceful exit
from the present crisis, Russian experts say. 


President Vladimir Putin, in the middle of a four-day state visit to India,
has offered to meet with Milosevic and Vojislav Kostunica - the opposition
candidate who outpolled him in Sept. 24 elections - "to discuss means of
resolving the current situation." 


Milosevic has yet to make a formal reply. Mr. Kostunica reportedly is
willing to travel to Moscow as early as tomorrow, if formally invited. 


But opposition protests are mounting against a runoff vote set for Sunday.
"Yugoslavia is on the brink of explosion, and the key issue now is to
ensure stability," says Yevgeny Kozhokhin, director of the official
Institute of Strategic Studies, a think tank that advises the Kremlin on
foreign policy. "Unfortunately the West is whipping up tension there with
its tough demands that Milosevic step down and face trial as a war
criminal.... Russia, which has never regarded Milosevic as a war criminal,
is the only country in Europe that can step in and play the role of honest
broker." 


US Secretary of State Madeleine Albright said Monday that Moscow's role
should be to persuade Milosevic to accept defeat and leave office. "We have
all been in very close touch with our Russian counterparts," Dr. Albright
said. "I think it is evident from their perspective that Kostunica won the
first round. They have said that." 


But experts close to the Kremlin say the matter is not quite so clear. "The
official results may have been faked, but the opposition claims might be
phony as well," says Alexander Karasyov, a Yugoslavia specialist with the
Russian Academy of Science's Institute of Slavic and Balkan Studies. "If we
can bring the two sides to a negotiating table, they may agree to hold a
second round under tight international scrutiny. Why should anyone fear
this, especially if it avoids violence?" 


Russia, a traditional ally of fellow Orthodox, Slavic Serbia, is the only
European state to retain close links with Milosevic. His brother, Borislav,
is the Yugoslav ambassador to Moscow. Russia strongly opposed last year's
NATO bombing campaign over the mistreatment of ethnic Albanians in Kosovo,
and Russian diplomacy may have been instrumental in persuading Milosevic to
accept a humiliating peace that handed the southern Serbian province over
to Western administration. Serbia and Montenegro make up what remains of
Yugoslavia. 


"It was only when Russia became actively involved in seeking a diplomatic
exit that the war came to an end," asserts Mr. Karasyov. "This shows that
the Serbian people trust Russia and will accept solutions mediated by us,
while Western demands will only stiffen their resentment." 


Since last year's Yugoslav war, Russia has defied NATO by sending millions
of dollars in aid to Belgrade and remains the embargoed country's sole
supplier of oil and gas. Earlier this year, Moscow hosted a visit by
Yugoslav Defense Minister Dragoljub Ojdanic, who, like Milosevic, has been
indicted by the International War Crimes Tribunal at The Hague. "Western
pressure only strengthens Milosevic's hand," says Sergei Romanenko, a
Balkan expert with the Institute for International Economic and Political
Studies in Moscow. But, he warns, "Russian intervention, unless it is very
carefully thought out, runs a similar risk of giving Milosevic more
political space to maneuver. Basically, the internationalization of the
situation has been disastrous." 


Russia may be the only country that can offer Milosevic a credible avenue
of escape from his enemies at home and abroad. But a sanctuary offer would
require at least the tacit agreement of the West, since Russia - a member
of the United Nations Security Council - could not be seen acting alone to
aid an indicted war criminal. "Under the right circumstances, Russia is
ready to take part in solving this problem," says Mr. Kozhokhin. "The main
priority ... is the urgent need to prevent the situation in Yugoslavia from
flying out of control." 


"The era of Milosevic is coming to an end in Yugoslavia, and Russia is the
one country that can help bring that about peacefully," says Alexander
Konovalov, an analyst with the independent Center of Strategic Assessments
in Moscow. "We can also assist Milosevic and his family to retire from the
scene, though it would probably be best if they didn't come to Russia," he
says. 


******


#2
MOSCOW'S YUGOSLAV POLICY: CAREFUL CALCULATION OR RUSSIAN ROULETTE?
By Interfax observers Igor Denisov and Alexander Kruglov


MOSCOW. Oct 3 (Interfax) - Moscow's Yugoslav policy reminds the
West of the well-known and deadly game Russian roulette.
Indeed, by offering to mediate and inviting Yugoslav President
Slobodan Milosevic and his rival Vojislav Kostunica to Moscow, Russia is
playing for high stakes, essentially trying to shape the future of a
country falling into the abyss of a crisis.
The crisis was precipitated when the Yugoslav Central Election
Commission declared that neither Milosevic nor Kostunica had gained more
than 50% of the vote in the September 24 elections and set a second
round of voting for October 8. The opposition responded by saying that
Kostunica had won in the first round and that it will boycott the second
round of voting. Milosevic insists on holding a second round no matter
what and says that Kostunica is supported by those who recently bombed
Yugoslavia.
What the West is doing may be viewed as openly pressuring
Yugoslavia. Using the stick and the carrot, the West says in no
uncertain terms that it regards Kostunica as having been elected and is
prepared to lift all sanctions against Belgrade if he takes office.
Without this Western support the opposition would hardly dare be so
defiant, essentially provoking the Milosevic regime to giving a tough
response.
The West is obviously ready for any eventuality, especially as NATO
forces are inside Yugoslavia, in Kosovo.
As always, Russia's position on Yugoslavia is different from that
of the West. Until very recently, Moscow tried to remain aloof from the
parties involved in the conflict, calling on the Yugoslavs for restraint
and the West for discontinuing pressure and interference, while ignoring
the West's calls to form a united front against Yugoslavia.
Russia has raised the stakes by inviting Milosevic and Kostunica to
Moscow. If the peace mission succeeds, Russia will win the world's
acclaim, the West would have to go along with the compromise the Serb
factions arrive at, and Moscow will seem a kind of wise older brother in
the eyes of the "brotherly Slavs."
If, however, the initiative fails in that the factions do not come
to Moscow at all or do not agree, both the West and the Serb opposition
may put the blame for wooing Milosevic on Moscow.
Incidentally, Kostunica has already said that Russian policy is
hesitant and "devoid of any specific position on the situation in
Yugoslavia."
Some Russian officials believe, however, that Russia runs no risk
in offering mediation. "If our mission fails, our counterparts in the
West may become the losers. They will have to handle Milosevic
themselves and this may result in the deterioration of the situation in
the Balkans," a source has told Interfax.
The Western allies may split over Yugoslavia, the source said.
"Germany and France are not very likely to support the possible use of
force by the United States if this ensues," he said.
We will see whether this calculation is correct. At the moment, the
logic of events in Yugoslavia seems to show that, like it or not, the
Milosevic regime has lost a vote of confidence and its days are
numbered. The question is, will it go with or without bloodshed. The
latter is quite possible. Sources have told Interfax that the opposition
may agree to a second round of the election if an international
commission monitors the vote counting as well as the voting.
The opposition would like the commission to act under the auspices
of Russian President Vladimir Putin, who would guarantee that Milosevic
honors his commitments, the sources say.
What is uncertain is whether Milosevic will make such commitments.


******


#3
Date: Tue, 03 Oct 2000 
From: Anatol Lieven <alieven@ceip.org>
Subject: Response to critics


Dear David,


I mustn’t take up much more of your valuable space, so just a few
paragraphs in response to critics of my pieces on western chauvinism vis
a vis Russia ­ though to my surprise and delight, the great majority of
responses have been extremely positive. I seem to have touched a chord
here, which is very encouraging.


Concerning Jonathan Steele’s remarks: though he and I differed greatly
during the Cold War, I’d agree with him that a reassessment of the real
motives for certain Soviet actions ­ for example the intervention in
Afghanistan in 1979 ­ is long overdue. On the whole, though, I think it
would be a mistake to underestimate the extent to which Communist
ideology did indeed drive Soviet policy. Under Stalin, it was the
imposition of savage Communist totalitarian regimes in Eastern Europe
which played a key part in driving the West to create NATO; a vaguer
Soviet geopolitical sphere of influence would have been much more
acceptable to Churchill at least ­ indeed he planned for a division of
Europe very much along these lines. Even under Brezhnev, the need to
show that Soviet-backed world revolution was still advancing led the
Soviet Union into bizarrely ambitious, horribly costly adventures in
Africa which had no relation whatsoever to the normally-defined
“national interests” of the Soviet Union or Russia.


However, on the whole I’m not very anxious to go on chewing over these
issues. As I argued in my letter, the Cold War is over and should be
transcended. I was on the anti-Communist side and rejoiced in
Communism’s fall, but as Clint Eastwood’s character says at the end of
The Outlaw Josey Wales, “I guess we all died a little in that damned
war”.


Concerning Andrew Miller’s much more hostile remarks:


First of all, my thanks to him for promoting me, but in fact I’m not a
professor, nor even a doctor. My views of the Soviet collapse, of the
nature of urban and partisan warfare, and other subjects were initially
shaped as a journalist in the field watching events happen. In the
various wars I witnessed, I spent most of my time covering the sides
fighting against Moscow and Moscow’s allies. My reporting on and
condemnation of Russian atrocities in the First Chechen War, of Armenian
atrocities in Karabakh, of Abkhaz ethnic cleansing of the Georgians (and
the role in the Abkhaz war of the Russian military), of Soviet brutality
in the Baltic are a matter of record. His scabrous suggestion of some
sort of analogy to sympathy for Hitler is therefore ludicrous as well as
contemptible.


Secondly, it is of course true that strong movements in the USA and the
West condemned US military behaviour in the Vietnam War, just as strong
movements in France condemned atrocities in the Indochinese and Algerian
wars. But if he had been of age in the West, would Mr Miller have been
one of the critics? We can’t say for sure, but we do know with absolute
precision the then positions of many leading American russophobes who
continue to play prominent roles in public life. In France, leading
figures deeply implicated in the Algerian debacle - like Francois
Mitterand ­ went on playing leading political and military roles to
their deaths. In both Algeria and Vietnam (and British campaigns like
that against the Mau Mau), the punishments handed out to Western
officers accused of atrocities were either derisorily slight or
non-existent. Is this of no relevance to present Western demands that
Russia punish its soldiers for atrocities in Chechnya? I admire the
nobility and courage of Russians like Sergei Kovalyov (though I wish
they were a bit more careful in his attitude to evidence) ­ but his
equivalents in the West are to be found among the Chomskys and Fondas,
not the Haigs and Brzezinskis; and for that matter the Chomskys and
Fondas have their own faults too.


However, I also do believe very strongly that Russia should in fact
punish its officers for atrocities, both as a matter of justice and
morality and as part of re-imposing order on what all too often
resembles a sort of armed rabble more than a modern organised force. I
also believe however that Western pressure for this would be better
phrased in the terms used by President Clinton during his visit to
Turkey (I am grateful to Stephen Holmes for pointing this out to me). He
criticised the Turkish government and military for some of their
policies towards the Kurds, but made it clear that he was doing so not
from some position of arrogant Western moral superiority, but as the
representative of a country which had itself been guilty of racism and
ethnic suppression and was still struggling to overcome these
pathologies.


This I believe is both a more honourable and a more effective way of
making this kind of criticism. By contrast, I would utterly condemn the
statements of certain German and Belgian politicians that Turkish
membership of the EU should be rejected, not for economic reasons or
because of particular actions by contemporary Turkish governments, but
because of supposedly innate, unchanging Turkish national features like
a negatively stereotyped “Islam”.


As to the failings of the Russian (and Ukrainian, Moldovan, Georgian
etc) economic reforms, I couldn’t agree more. Of course it would be
better if they were more like Poland or Estonia. What does that have to
do with the question at issue? And since this failure is true of the
entire Soviet Union except for the Baltic States, what is specifically
Russian about it?


A final point: concerning sympathy for Putin. One area in which I may
have been a bit ahead of the Western curve (though far behind Jonathan
Steele) was in my relatively early perception of the utterly corrupt
nature of the Yeltsin regime, and the way in which under a cover of
reformist rhetoric, this regime and its magnate supporters in fact
undermined the whole process of successful economic, democratic and
civic reform in Russia. A belated perception of this (albeit driven and
severely warped by electoral politics) now seems to be becoming the new
consensus in the West, at least to judge by the Cox report and much of
the public debate in the US.


Any sympathy I may have for the Putin regime is therefore strictly
relative to the disastrous record of his predecessor. I believe that
something had to be done to check the plundering of the Russian state
and the appalling decline in the well-being of so much of the Russian
population; and given Russia’s circumstances and international and
historical parallels, moves to check this decline were bound to involve
at least some element of authoritarianism. This does not mean however
that I have any liking for the personal character of Putin and for most
of what seem to be his basic attitudes and ideals. I made this clear in
my initial writing on the loss of the Kursk. Nor am I very hopeful that
he will in fact bring about positive change for Russia, at least without
causing severe losses in other areas. Once again, however, we would do
better to try to understand his regime with some reference to
contemporary international patterns (for good or evil) rather than
continually and exclusively refer back to past Soviet or Russian
imperial regimes which existed in utterly different historical and
cultural circumstances.


******


#4
From: "Dean LeBaron" <deanlebaron@compuserve.com>
Subject: Marx to Market
Date: Tue, 3 Oct 2000 


David:


Some of your readership may wish to read Marx to Markets the chronicle of
my experiences in the
Soviet Union, later Russia, and China during their transitions to a market
economy ten years
ago. The two paths are compared and the text, which formerly appeared as
Climbing Falling
Walls, has been updated. And an extensive collection of pictures is included.


Each chapter of the book is serialized weekly prior to its publication
several months. It
started this week. Reachable through my home page www.deanlebaron.com/


******


#5
From: "Peter D. Ekman" <pdek@co.ru>
Subject: re: Reynolds 4553
Date: Tue, 3 Oct 2000 


Garfield Reynolds says "As for NTV being dead economically, this is 
totally beside the point." I disagree. It's important not only for potential
investors, but also for international politics to know why NTV is
economically dead.


After the 1998 crash advertising revenues fell, perhaps by 80 percent, 
and are not expected to recover fully for several years. NTV gambled 
by not cutting their expenses, by launching an expensive satellite TV 
service, by financing their operations and expected growth through selling 
shares to state controlled Gazprom, and by borrowing $463 million with 
a Gazprom guarantee. It also gambled by backing the Fatherland-All Russia 
political party, apparently in the hopes of sharing in political spoils. 
It lost all five bets.


If a broadcaster doesn't have to face up to economic realities, then it is
free to become a purely political mouthpiece, paid for at government
expense. I think that it's best to pull the plug on this type of operation
whether or not you like their politics. It is certainly not surprising that
the government wants to pull the plug, since it is paying the expense through
Gazprom.


The importance for international politics is just in realizing that this is
not
a pure free speech issue. When NTV is handed over to Gazprom in
bankruptcy proceedings, the US should not blow its political capital in
objecting to the inevitable.


******


#6
St. Petersburg Times
October 3, 2000
Is Cox Report an Intentional Misunderstanding of Russia? 
By Alan Rousso
Alan Rousso is the director of the Carnegie Endowment for International Peace 
based in Moscow. He contributed this comment to the Los Angeles Times.


THE House of Representatives Speaker's Advisory Group on Russia did not 
bother to involve any Democratic members and has timed the release of its 
report to have the maximum negative impact on Vice President Al Gore's 
presidential campaign.


That's a shame, because the country very much needs to re-examine its Russia 
policy, and much of what the group, headed by Rep. Christopher Cox, 
R-California, has to say would make an important contribution.


The main criticisms the report makes about U.S. policy under the Clinton-Gore 
administration - that diplomacy was over-personalized, bad news ignored or 
downplayed, a small group of Russian reformers relied upon too heavily, 
corruption taken too lightly and democracy subordinated to macroeconomic 
reform - are not so much wrong as overstated.


Yes, mistakes were made in the effort to assist in Russia's historic 
transformation, but the size and complexity of the task were so enormous that 
some mistakes were inevitable.


The bigger problem with the way the report conveys these facts is that it 
leads the reader to believe that the main actors in this drama sat in 
Washington rather than Moscow. It is the height of arrogance to proclaim that 
the Russians deserve little or no credit for what goes right in their country 
and bear little or no blame for what goes wrong, and that is the message of 
the Cox report. The only thing missing is a chapter blaming faulty 
Clinton-Gore policy for Russia's underwhelming performance in international 
soccer tournaments.


Unfortunately, the type of balanced statement that appears almost as a 
footnote to the report's lengthy diatribe against the Clinton team - "It is 
quite correct that Russia is responsible for its own decisions and was never 
America's to lose - or for that matter to win - [but] to the extent that U.S. 
policy made a difference in Russia, it made conditions worse, not better" - 
is eclipsed by ridiculous chapter titles like "1998: Years of Bad Advice 
Culminate in Russia's Total Economic Collapse." Indeed, the drafters of the 
report commit many of the same errors attributed to Clinton-Gore: The group 
ignores inconvenient facts, spins evidence to rally support for its partisan 
point of view, fails to integrate the views of other less partisan analysts 
and crafts a lawyerly but tendentious case against its main culprit, Gore.


Yet the problems in the Cox report go deeper. The main attack is launched at 
the point on which Clinton and Gore are less vulnerable: the U.S. transition 
assistance effort. Meanwhile, the most damaging policy decisions, concerning 
the international environment created around the fragile Russian state, are 
left almost untouched. In their zeal to demonstrate how the Clinton 
administration failed the Russian people, the group misunderstood how the 
administration, with a lot of help from the Russians, failed to manage 
U.S.-Russia relations. Clinton-Gore did far more damage with their decisions 
to enlarge NATO, revise the alliance's strategic concept, bomb Serbia and 
Iraq and move to abrogate the Antiballistic Missile Treaty by developing a 
national missile defense than with their assistance to corrupt Russian 
officials who systematically impoverished the Russian people and created a 
self-serving economic elite.


The Cox report argues that the Clinton-Gore team's flawed efforts at the 
level of Russian domestic politics so poisoned the Russian population's 
sentiments toward the United States that cooperation on worthwhile 
international projects like NATO enlargement, NMD and intervention in the 
Balkans became impossible. But the connection between the domestic and 
international initiatives was far blurrier than acknowledged, and the causal 
arrows probably pointed in the other direction.


The report turns repeatedly to public opinion data showing that NATO 
enlargement and NMD had no real resonance among the general Russian 
population, whereas bad policy advice on privatization of state assets hurt 
the image of the United States more directly.


This reflects a failure to understand how policy is made in Russia. The 
Russian people still are treated as subjects rather than citizens, and their 
views didn't count for much in Boris Yeltsin's Russia. This goes back too 
many centuries to pin it on Clinton and Gore.


The foreign policy and strategic elites mattered far more in the policymaking 
process, and their revulsion at NATO enlargement and Kosovo was unequivocal. 
Overall, elites in Moscow were more favorable toward the Clinton-Gore 
approach to assisting Russian reform (as the report makes clear, they 
profited enormously) than the population that suffered its consequences. The 
Cox report is right to worry about the consequences of a long-term decline in 
U.S.-Russian relations, but it is wrong in the conclusions it draws about 
what caused that policy failure. Shifting the emphasis exclusively to 
American complicity in Russia's distorted transition from communism will not 
improve U.S.-Russia relations.


*******


#7
New York Times
October 3, 2000
[for personal use only] 
Energy on Ice: Rising Oil and Gas Prices Revive Interest in Russia's Arctic 
Fields
By JOHN VAROLI


ST. PETERSBURG, Russia, Oct. 2 — The far north of Russia is an inhospitable 
sheet of ice and snow more than half the size of the the 48 contiguous United 
States. But to Russian and foreign energy companies hungry for new supplies, 
the lure of profits has started to make the region inviting.


With huge reserves of oil and natural gas beneath frigid seas, the Russian 
Arctic is one of the last untapped treasure-troves of fuel. And the rising 
price of fuel has made the industry more confident that the risk and expense 
of getting it are justified, for Russia's needs and for export.


Russia's energy resources have, in fact, enhanced the country's economic 
power in just the last few months, as fuel prices have soared in the West and 
raised the prospect of shortages this winter. OPEC asked Russia to consider 
becoming a member at its meeting last week — the Russians declined —
and the 
European Union began talks with Russia over the weekend on sharply increasing 
its imports of Russian natural gas and oil.


Russian oil companies in particular are hoping the Arctic becomes their next 
Siberia, the main source of Russia's combustible fuel the last 30 years. By 
some measures, nearly half of Siberia's oil reserves have been exhausted.


"The Russian North has great potential to compensate for the drop in 
production in older wells in Siberia," said Vagit Alekperov, president of 
Lukoil Holdings, Russia's largest petroleum company.


Lukoil has aligned with Gazprom, the Russian natural gas monopoly, and 
Conoco, an American oil company, to tap the Russian Arctic. It is estimated 
that these companies, along with others, will invest more than $20 billion 
the next decade to extract the region's oil and gas.


Lukoil says it plans to spend at least $5 billion to develop the Timan 
Pechora region in the Komi Republic and the neighboring Nenets autonomous 
region. But that is not a lot of money considering Timan Pechora has one of 
the largest known reserves of oil, estimated at about 126 billion barrels, 
enough to supply the world for more than four years. At today's prices of 
roughly $32 a barrel, that oil is worth $4.032 trillion.


Some early efforts to exploit the region's resources failed, and energy 
companies have only recently re-evaluated the area.


A major reason is that oil prices have tripled the last 18 months, and 
natural gas prices have doubled in less than a year.


Developing the Russian Arctic's energy resources, however, will require many 
more billions of dollars than have been committed.


"The whole Arctic shelf is a vast province of giant oil and gas fields, but 
there is not enough money to develop all of it," said Igor Gramberg, director 
of the Institute of Oceanology and Mineral Resources in St. Petersburg.


Foreigners have been reluctant to bet, largely because of Russia's unstable 
history, shifting tax laws and reputation for violating contracts and 
reneging on debts. 


Conoco, which has operated in Russia nearly a decade, has one modest 
operation, a joint venture with Lukoil in Timan Pechora known as the Polar 
Lights Company, which produces about 13 million barrels of oil a year.


"We've managed to eke out a small profit," said John Capps, president of 
Conoco Russia, "but it has consumed more management and legal time just 
trying to protect our rights than it should."


Timan Pechora is already known for a notable failure — a consortium of 
Russian and foreign partners that included Texaco, Exxon, Amoco and a 
state-owned oil producer, Rosneft. Licensed in 1991, it collapsed after 
failing to convince investors that it was offering a profitable opportunity.


Mindful of such risks, Conoco and Lukoil have agreed to develop another oil 
field — known as the Northern Territory — in Timan Pechora that holds
about 
a billion barrels. But Conoco is insisting on a production-sharing 
arrangement that will give it 40 percent of the field's output.


Aside from the cost of drilling in the Arctic, delivering gas and oil to 
market may be the top challenge in a region that is almost always frozen.


Lukoil has just completed a $40 million oil terminal on the Pechora Sea, 
which will handle about 18 million barrels a year, with plans to triple that 
soon. The company has also spent the last two years creating an Arctic tanker 
fleet. Lukoil and other Russian companies are also planning a pipeline that 
will send oil south to the Gulf of Finland near St. Petersburg.


Moscow seems to be placing at least equal emphasis on developing the Arctic's 
deposits of gas. The importance of the gas was a theme sounded by President 
Vladimir V. Putin during a visit last spring to the port of Murmansk on the 
Barents Sea. "Nearly all our future supplies of natural gas lie under the 
seabed," he said.


In June at the World Gas Congress in France, the German oil and gas company, 
Wintershall, announced plans for a $1 billion joint venture with Gazprom to 
develop the Prirazlomnoye oil field on the Arctic shelf. And Rosshelf, a 
Gazprom subsidiary, hopes to sign a production sharing agreement with the 
Russian government by year-end to develop one of the world's largest natural 
gas deposits, the Shtokmanovskoye field in the Barents Sea.


*****


#8
gazeta.ru
October 3, 2000
Press Minister Plans Stricter Measures for Foreign Media 
Foreign media businesses in Russia may soon encounter serious obstacles. 
Russia's Press & Media Minister Mikhail Lesin said on Tuesday that the state 
is to enact regulations designed to "put foreign media companies on a par 
with the Russian media". 


On Tuesday Mikhail Lesin delivered a speech at a conference dedicated to 
information policy. Nobody expected any sensation from Mr.Lesin, especially 
since it has been less than a week since he miraculously retained his post in 
the Ministry following the revelation of his involvement in the controversial 
deal between Media-Most and Gazprom Media.. 


Thus it was certainly unexpected when Mikhail Lesin started talking about 
necessary amendments to federal legislation on the mass media in Russia. 
Judging by the Minister's words, the amendments will definitely not make life 
any easier for the representatives of the western media in Russia. 


"The legislation must be corrected to meet the present-day requirements," 
asserted the Minister. It emerged that those adjustments will first and 
foremost affect foreign media companies, though not all of them the minister 
stressed. 


"As regards to western media, not all legislative issues have yet been 
solved, however, they are linked to the work of certain companies," said the 
Minister. 


The Press Ministry has been preparing a new legal procedure of licensing for 
foreign media-companies. 


The Ministry is not satisfied with the current procedure for revoking 
licenses. Deputy Press Minister Lesin Andrei Romanchenko has on many times 
reiterated that the procedure must be radically simplified. 


It is absolutely clear whom new regulations will affect first of all - 
foreign media companies broadcasting in Russia. Those are the "hostile 
voices" of, for instance, Radio Liberty. In his time the former president of 
Russia Boris Yeltsin issued a special decree permitting Liberty to broadcast 
on the medium wave frequency in Moscow. 


Gazeta.Ru asked Radio Free Europe/Radio Liberty's broadcasting director 
Geoffrey Trimble to comment on Lesin's statement. Mr.Trimble told us he had 
difficulty in construing the Minister's words, for it was hard for him to 
understand what exactly Mr.Lesin meant by saying that the rights of foreign 
media must be put on a par with their Russian competitors. 


According to Mr.Trimble, his radio station operates under the same conditions 
as Russian broadcasters and enjoys no special privileges. Radio Liberty's 
license is granted for a period of 5 years, the same period as for Russian 
companies and the terms of its revocation are the same as for Russian 
stations. 


The Press Minister probably wants to reconsider licensing terms, but then the 
new conditions should also apply to Russian broadcasters or else the 
discrimination would be too obvious, said Mr.Trimble. 


Christophe Wanner of the German television company RTL informed Gazeta.Ru 
that he could not understand what Lesin meant by saying that Russian and 
foreign media companies must have equal rights. 


Wanner, who headed the RTL team reporting the Kursk submarine disaster, 
added, "We enjoy no privileges compared to the Russian media. We too adhere 
to principles of freedom of speech and pay taxes. Many may dislike the fact 
that we happened to be in the right place at the right time and showed 
everything that we wanted to, but that is not our problem," said Wanner. 


He also added that during his time working in Russia, he had never 
encountered any problems gaining access to necessary information, the company 
had never been deprived of accreditation and was never banned from filming. 


"I think, that it will remain that way in future. Let us wait and see what 
Lesin says later, although I didn't understand a thing about his statement," 
the RTL journalist told us. 


The reaction of correspondents for the Italian daily La Republica was 
similar. They are convinced that the Press Minister cannot effectively hinder 
western media accredited in Russia, for that would cause a major 
international scandal. 


Gazeta.Ru to get in touch with the Press Minister's office for comment, but 
in vain. However, ministerial lawyers acknowledged they had been working on 
amendments to the law on media for several months already. Those amendments 
pertain to the conditions for foreign television and radio broadcasting 
companies operating in Russia. 


The Press Ministry's lawyers admitted that certain restrictions would be 
imposed, especially those regarding licensing and revocation of licenses. But 
our interlocutors refrained from specifying how tough those restrictions 
would be. Hopefully, the Press Minister will soon clarify the issue. 


*******


#9
Date: Tue, 03 Oct 2000
From: "Tom Birchenough" <tombirch@online.ru> 
Subject: Reply to: 4555-Aris/Media Most


Ben Aris' comment on the Media-Most developments seems to move in the right
direction to encourage at least wider discussion of this issue.


At the very least, given the opacity of the holding's share structures -
which surely remain very opaque to most of us - it is worth pointing out
certain factors:


1 - As a commercial television channel, under any normal world
circumstances, the terrestrial broadcaster NTV would look an attractive
investment for any international media group.


Were it not, as Peter Ekman rightly points out, for the uncertainty that,
when profitability soon comes through - it may well have come through
already this year, all other factors notwithstanding - there would be
considerable uncertainty as to whether such a return to profit could be
exploited by any outside investor.


An interesting article written in an August edition, I believe, of Vlast
Magazine, pointed out that Gusinsky's main error so far was to move away
from business per se to aspire to the broader status of owner of independent
media outfits. The same article suggested, perhaps fancifully, that Kremlin
opposition to NTV was based not only on the fact that NTV was a politically
troublesome station, but that certain figures within the Kremlin
infrastructure had their eyes on NTV as a potentially profitable - maybe
Russia's only such - national television channel.


Such a conclusion is dictated by a number of very logical factors:
principally, that the cost of NTV's transmission stations for onward
broadcast of its programs is at least a fifth, if not considerably less, of
that of either RTR or ORT. Also that its audience is generally of more
interest to companies currently advertising


2 - Media-Most has not only continued to pay salaries, as Ben Aris points
out - though these are apparently not as high as at similar positions at
state channels - but also companies connected to Vladimir Gusinsky have not
ceased investment activity over the last 12-18 months.


Even as Vneshekonombank was calling in loans, Media-Most, or its associated
outfits, was continuing to buy stock, through Gibraltar-based sub-companies,
in the the US-owned CME media group, to name but one.


Somewhat surprisingly, this could well turn into a profitable investment for
Gusinsky, given that the fortunes of this company are expected to turn
around with the future resolution of court actions in the Czech Republic.


Gusinsky, or associated outfits, is also believed to retain not
inconsiderable holdings in Israel's Maariv media group.


3 - The holding continued to acquire film- and/or video-related holdings in
Russia. Principally, acquisition of all, or part, of Varus Video, and
subsequent creation of a new company Most-Video, this spring.


4 - Its long-term existing investments in Moscow have lately been utilized
in a way more likely dictated by political than economic factors.


Witness the holding's renovated Oktyabr multiplex cinema complex on the
Arbat - according to rumor, it cost anything between $23-30 million - which
is now effectively on ice, but must count as a considerable asset given the
future projected development of cinema exhibition in Russia.


5 - Gusinsky's NTV-Plus satellite service is universally acknowledged as his
major business mistake to date, in as much as it has not returned expected
revenue on its high costs, in any way predicted by its original business
plans.


However, it was launched long before the Aug. 1998 financial crash, but
somehow did not find the expected consumer response. However, it too could
well be considered - by any theoretical international investor - as a
long-term financial possibility, assuming that the local economcy grows.


Moreover, the Hughes consortium has apparently made no attempt to call in
the debts concerned, which are apparently guaranteed through to 2009 by the
USA's ExImbank


Nor has Media-Most apparently defaulted on such debts. (There is also very
little talk going around in the proposed "settlement" agreement of
obligations to Sberbank which have been rumored to run to as much as $300
million, too.)


Nor has Gusinsky, as far as I know, exploited potential lease-back
opportunities on this satellite obligation, which could have - by some
reports - freed up anything from $100-120 million in funds. I stress that
this is not information I have been able to confirm.


6 - It's surely naive to believe that CSFB was lending Media-Most that kind
of money before the 1998 financial crash out of anything except commercial
interest. At that time Media-Most looked set for a profitable - for all
concerned - international stock offering.


Had they done so directly, rather than via a Gazprom guarantee, we would
surely be looking at a very different scenario today.


The fact that CSFB's principle adviser on the issue moved over - before the
crash - to become a consultant for Media-Most also surely confirms that.


Indeed, had Media-Most floated internationally before the crash - had that
upset come a year later, that would have been no little possibility - we
might now be witnessing Vladimir Gusinsky and his associates buying back the
stock from a strong cash position.


7 - Finally, the word among various financial people after the Aug. 98
crisis was that Gusinsky et al were reluctant to part with their stock, even
then, for anything except an excessive amount of money - one which
effectively insisted on an over-valuation of their holdings.


Now, it appears, they are equally against surrendering any such control of
stock. Though this time, it looks like it's become a purely political
battle.


Either way, the longer the conflict goes on, the less the question of the
actual quality of the television channel, or other holdings involved, will
continue to matter.


*******


#10
Date: Tue, 03 Oct 2000 
From: "Jerry F. Hough" <jhough@duke.edu> 
Subject: Re: 4555-Aris/Media Most


The Media-Most story illustrates why I so 
enjoy doing American history now and spending so much time in the 
archives. Media-Most was never a business. Gusinsky is not a businessman 
nor Gazprom privatized. The "oligarchs" did not buy the media because of
their power, but because they were ordered to do so to subsidize them. Since
subsidies in Russia come in the form of loans or free delivery of goods for 
which debts are incurred, everyone is always bankrupt, and property rights
are 
non-existent. This is why the Russian economy is totally politicized in a 
way the Soviet economy never was. This is why the economy never improves. 
Luzhkov made the mistake of thinking of running for president. So 
property--really control over the subsidies flowing to them so they can 
be diverted--is taken from his clan and given to Chernomyrdin or 
Chubais'. I hope people recognize the sainted Kokh in Gazprom media, 
who was in the book bribery deal as part of the Chubais clan and denied a 
visa to the United States. It is sad that Russia is no better than 
Somoza's Nicaragua or old Zaire, I do not understand why Western neoliberal 
economists have been so insensitive to the fact that subsidies in the 
form of loans, "free" goods, and deferred taxes totally destabilize all 
property rights with all the effects they predict.


P.S. Of course, the American archives are wild too. Herbert Hoover in 
August 1942 wrote that he hoped the Germans would win at Stalingrad. 
Truman in July 1945 told Forrestal said it was probably good that the 
Slavs would control Europe. Acheson in August 1945 favored giving the 
atomic bomb to Russia. God knows how mankind survives.


*****


#11
Washington Times
October 3, 2000
Voice of the Kremlin? 
Russian 'information doctrine' threatens media
Paul J. Saunders
Paul J. Saunders is director of The Nixon Center.


New developments in Russia add to the mounting evidence that the Kremlin 
is seeking considerably greater influence over Russia's mass media. But 
viewing these battles solely as a defense of the country's free press ignores 
Russian realities and obscures other developments that may be more troubling.
Recent visits to the United States by the Russian oligarchs Boris 
Berezovsky and Vladimir Gusinsky have been clearly aimed at rallying American 
support for attempts by the two men to fend off government pressure on their 
media empires. Mr. Berezovsky is trying to maintain some influence at 
Russia's ORT public television, in which he owns a 49 percent stake, while 
Mr. Gusinsky hopes to find a way to keep control of his firm Media-MOST — 
currently in default on substantial loans from the gas monopoly Gazprom. As a 
part of this effort, each of the two has strongly criticized Russia's 
direction under President Vladimir Putin and stressed his own commitment to 
democracy, free markets and free expression.
In both cases, there is less here than meets the eye. In fact, the 
commitment of Mr. Berezovsky and Mr. Gusinsky to a free press seems inversely 
proportional to their closeness to the Kremlin. Both men were more than 
willing to allow their television stations and newspapers to become state 
propaganda organs to get their patron Boris Yeltsin re-elected; they became 
uncomfortable with this role only when it became clear that they would have 
considerably less access to, and influence over, Mr. Yeltsin's successor. 
Similarly, neither has hesitated to use the media under his control to 
advance personal political and business objectives.
Mr. Berezovsky's increasingly zealous "defense" of Russian democracy — 
conducted through his dramatic resignation from parliament, various open 
letters and attempts to find allies in the United States — seems to be 
largely a reprise of Mr. Gusinsky's highly successful exploitation of the 
opposition of his television station, NTV, to the Putin government and 
carefully cultivated Western contacts to blunt the Kremlin's strong pressure 
on him earlier this year. Mr. Berezovsky's case is harder to make, however; 
Mr. Gusinsky at least had the foresight to position himself as a "democrat" 
much earlier and has played at politics in Washington, where he has hired 
top-flight law and public relations firms, as well as in Moscow. Mr. 
Berezovksy's more recent "conversion" is much more obviously opportunistic.
Moreover, other developments may be more significant for Russian media 
freedom than the government's assaults on Mr. Gusinsky and Mr. Berezovsky. 
Russia's new "information doctrine" — which describes some media activity
as 
a threat to Russian security and provides a basis for greater state control
— 
is particularly troubling. It demonstrates a clear failure to understand the 
importance of the media as a check on government power and a fundamental 
mistrust of the ability of Russian citizens to decide for themselves which 
media outlets are reliable and which are not.
Press Minister Mikhail Lesin's admission that the government has 
classified a portion of his ministry's budget as "secret" is also of concern. 
Though Mr. Lesin claimed that the funds are to be used for "special 
propaganda measures" related to Russia's ongoing brutal intervention in 
Chechnya, many Russians have expressed concern that the government may have 
plans for secret subsidies to particular newspapers or other media.
On a related matter, the government's spending on the media is listed in 
next year's budget as a single line item rather than a group of individual 
accounts. Needless to say, this would also serve to conceal state support for 
favored media organizations.
While the Kremlin's pressure on Mr. Berezovsky and Mr. Gusinsky is 
multi-dimensional and is not solely related to their media holdings — after 
all, both have amassed great personal wealth under questionable circumstances 
— the information doctrine and new measures by the press ministry are less 
ambiguous in their impact. Each of these moves markedly alters the 
environment in which the Russian media operate.
They also change the relationship between the Russian media and its 
audience. Television and newspapers today are often heavily slanted toward 
particular political interests, but viewers and readers know who is paying 
for what. They also know which media the state controls and which it does 
not. Obscuring state support for media outlets not only weakens the free 
press, but also undermines the confidence of an already cynical public in the 
information they receive. Neither of these developments will contribute to 
Russian democracy.
The United States can and should express concern over declining press 
freedoms in Russia. But our support must be reserved for processes and 
institutions rather than individuals — particularly Russia's tycoons. Too 
much is at stake in Russia for America to become involved in Moscow's 
political intrigues.


******


#12
Moscow Times
October 4, 2000 
INSIDE RUSSIA: FSB Grounds a Good Business 
By Yulia Latynina 


Members of the Federal Security Service, or FSB, searched the offices of East 
Line Airlines on Sept. 19. East Line is a freight forwarder and the owner of 
Domodedovo Airport. All of the company's documents on freight forwarding were 
seized. FSB operatives began checking its planes. Two flights bringing cargo 
from China turned around and attempted to fly back to China. But they didn't 
succeed; due to a lack of fuel, the planes were forced to land in Nizhny 
Novgorod. 


This particular FSB raid on East Line is a significant event. The company 
first appeared at Domodedovo in 1993 when the airport was controlled by 
criminal groups. After drawn-out battles, the bandits decided to work the 
same schedule as the airport's ground crews: one day on, three days off. 


But in those days, the cargo handlers at Domodedovo weren't loading or 
unloading anything. They would simply let a client know that his cargo would 
rot if he didn't give a cut to the bandits on duty that day. Incoming cargo 
planes were actually unloaded by homeless people paid at the going rate. 


Over seven years, East Line managed to clean up this state of affairs. How? 
Simple: It built new sites within the Domodedovo complex that the bandits 
couldn't control. East Line built two cargo terminals, a fueling complex, a 
hotel and a facility for feeding flight crews. It rebuilt the airport itself, 
turning it into the nation's most modern airport. The company pumped $300 
million into the business. 


In this country, shipping cargo by air is often associated with the shipping 
of contraband goods. Customs fees are so high that almost any company that 
wants to remain competitive can do so only by, say, indicating that a 
shipment of Italian boots actually contains some other type of cargo. Kirill 
Kabanov, a former FSB officer who worked on customs issues and now works with 
the state anticorruption committee, says everyone in the cargo business knows 
what the unofficial customs fees are. He places the figure at $20 per 
kilogram of any cargo. Of those $20, $6 ostensibly go to the government; the 
remaining $14 reportedly is divided between customs agents, freight 
forwarders and their official protection. Multiply that $14 by 40 tons of 
cargo for every plane that flies, and by eight to 10 flights every day, and 
you get an idea of the size of the nation's customs volume. 


It's hard to conduct a business legally in this country f few can survive by 
doing so. Many businesses decide to bend the rules. But if a business does 
that, it can easily fall prey to competitors who want to squeeze it out of 
the market f or to members of law enforcement who want a cut themselves. 


There are few freight forwarders in this country, and only one of them f 
through the efforts of East Line chief Dmitry Kamenshchik f has bought an 
airport, cleaned it up of bandits and invested $300 million in it. But the 
more you invest in your business, the more vulnerable you are to pressure. 
Now East Line's activities are paralyzed, and its cargo planes aren't flying. 
Give us two or three more such FSB operations, and not only will foreigners 
stop investing in Russia; Russians will stop, too. 


Yulia Latynina is the creator and host of "The Ruble Zone" on NTV television. 


******