October 5, 2000    
This Date's Issues: 4560 • 4561 • 4562 

Johnson's Russia List
#4562
5 October 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Itar-Tass: RUSSIANS BUY MORE BREAD AS POVERTY BITES.
2. Moscow Times: Yevgenia Albats, Out With Old Media, In With New.
(re Pavlovsky) 
3. AFP: Putin renews bid to mediate amid Yugoslav election chaos.
4. Wall Street Journal: Anatol Lieven, We May Need Moscow To Deal 
With Milosevic.
5. Reuters: Oleg Shchedrov, ANALYSIS-Security-conscious Russia, 
India find common foe.
6. Financial Times (UK): Arkady Ostrovsky, Economic rebound for 
Russia.
7. Reuters: U.S. warns of arms business risks in Russia.
8. The Guardian (UK): News Corp joins Russian imbroglio. (Media-Most)
9. Moscow Times: Ana Uzelac, Where Putin's Pickles Come From.
10. the eXile: Matt Taibbi, Press Review: MT Drops the Ball.]


******


#1
RUSSIANS BUY MORE BREAD AS POVERTY BITES
ITAR-TASS 


Moscow, 2nd October: Bread production in Russia in the first eight months
of 2000 increased by 1 per cent from the same period of last year to
5,865,000 tonnes, according to the Department of Food and Processing
Industry and Baby Food of the Ministry of Agriculture. 


The production of cereals also increased to 497,800 tonnes compared to
490,300 tonnes last year. At the same time, the production of macaroni and
flour dropped. Macaroni production was 452,000 tonnes in the first eight
months of 2000, or only 96 per cent of last year's output, and flour
7,069,000 tonnes (97 per cent). 


Agriculture Ministry specialists attribute the increase in bread production
by the dwindling buying capacity of the population. As a result, bread
remains one of affordable staples. 


Macaroni and flour production is falling because the market is saturated,
while cereal production is growing as factories start working with new crops. 


In 1999, Russia produced 8.9m tonnes of bread, 679,100 tonnes of macaroni,
12.2m tonnes of flour and 868,300 tonnes of cereals. 


******


#2
Moscow Times
October 5, 2000 
POWER PLAY: Out With Old Media, In With New 
By Yevgenia Albats 


Today, the old media market has been sentenced to death." This statement 
appeared in the manifesto of Strana.ru, the new Internet adventure of Kremlin 
insider Gleb Pavlovsky. 


What did the media do to receive such a sentence? Read "Our Information 
Doctrine," also written by Pavlovsky: "The current state of the Russian [mass 
media] is vulnerable, financially dependent upon illegal forces and 
bureaucracy þ and cannot be preserved. The rearming of authorities and major 
public groups with instruments of access to information will increase the 
real level of national security." 


The style here is inelegant, but you can still read this in Pavlovsky's 
prose: The extant Russian media (particularly in their coverage of the Kursk 
submarine tragedy) pose a threat to national security, so they have been 
sentenced to death. According to Novaya Gazeta, Pavlovsky's Foundation for 
Effective Politics has prepared a list of politicians, experts and 
journalists trusted by the Kremlin who are to have access to the media. 
Others will not. 


How were these choices made? Pavlovsky explained that, too, in a public 
discussion with me on the TV show "Press Club." He stated, "For years, you 
were heaping dirt on the Russian state and the Russian army; therefore, I 
will do my best [to see] that you won't have access to the Kremlin." For 
years, I investigated and disclosed the dirty tricks of the Soviet political 
police, the KGB, whose best students now control the Kremlin. That's no 
coincidence. And Pavlovsky, who in the Soviet past was known as both a 
dissident and a dubious collaborator with state security organs, is now 
beating his breast to become their best and only safeguard. The methods of 
execution are clear, too. For one, "Press Club" used to be broadcast live f 
but no more. 


Thus, Strana.ru is beginning to replace "guilty" media. What is it selling? 
Stories entitled, "Putin said," "Putin suggested," "Putin will visit." At the 
end of my recent tour of the site, I expected to find "Putin went to the WC." 
Then I tried to determine who owns the site, who's footing the bill. After 
all, if "old" media are guilty of being "financially dependent upon illegal 
forces and bureaucracy," isn't it interesting to know which new media are 
presumed legal? 


But no luck. The web site makes no secret that it is related to the Kremlin, 
but, again, where does it get its funding? Other searchers f such as the 
newspaper Vedomosti, which posed the same question in a recent editorial f 
had no luck, either. Reporters asked Pavlovsky, who said, "The sponsors do 
not want [their identity] disclosed." 


Earlier last month, Nezavisimaya Gazeta, whose web site is also under the 
supervision of Pavlovsky's company, published an article devoted to strategic 
steps on providing national security: "The key factor that influences the 
current process of globalization is the existence of the World government," 
which, the author adds, serves as the headquarters for the "new world order." 
"This organization in its activities is oriented toward the interests of a 
small elite group united by its ethnicity. þ The triumph of power in the 
World government by a Hasidic-paramasonic group demands urgent correction," 
concludes the author, who acknowledged he was the general director of the 
information and analytical agency of the Kremlin's Department of Affairs. 


I'm at a loss: Should we assume that the old media's death sentence and their 
replacement with new media like Strana.ru will serve those "corrections?" And 
is it a covert operation against "the World government" that makes the web 
site veil its true owners in secrecy? 


Yevgenia Albats is an independent journalist based in Moscow. 


******


#3
Putin renews bid to mediate amid Yugoslav election chaos


MOSCOW, Oct 5 (AFP) - 
President Vladimir Putin renewed his offer Thursday to mediate between
Yugoslavia's rival presidential candidates as a reported annulment of the
first poll threatened to plunge the country deeper into crisis.


"I want to stress once again that my proposal is still on the table, but as
you know the Yugoslav opposition has appealed to the constitutional court,"
Putin told reporters during an official visit to India.


He was speaking shortly before the head of Yugoslavia's constitutional
court was quoted as saying the September 24 first-round vote had been
completely annulled.


The opposition was appealing an earlier "partial" annulment.


Putin renewed his invitation to Yugoslav President Slobodan Milosevic and
opposition challenger Vojislav Kostunica to hold emergency talks at the
Kremlin after both sides appeared to reject an offer first made Monday.


"The proposal remains valid. Our stand is absolutely open and targeted at
the democratic development of Yugoslavia," Putin said Thursday.


Russia wanted "the dramatic events in Yugoslavia to be over and Yugoslavia
to emerge from political isolation. We are doing everything to that end. We
are ready to cooperate with the international community and with all
Yugoslav parties," he added.


Kostunica, a moderate Serbian nationalist, claims he won an outright
victory over Milosevic in the first round.


But government election officials claimed Kostunica fell short of the 50
percent of the vote needed for outright victory and called for a run-off
ballot Sunday.


Putin said he would wait to hear the outcome of the opposition appeal to
Belgrade's constitutional court before deciding whether to adjust the
Russian position.


Kostunica denounced the court's "partial" annulment Wednesday amid
nationwide protests by opposition supporters, and vowed to boycott the
run-off vote.


He told Russian ORT television he could not accept Putin's invitation to
Moscow because it would be irresponsible "for a candidate who has received
the majority of votes" to leave the country in the aftermath of the election.


Milosevic aides have neither confirmed nor denied the possibility of the
embattled Yugoslav leader attending crisis talks with Putin in Moscow.


The head of the Russian State Duma (lower house) committee on foreign
affairs dismissed the likelihood of the Kremlin talks getting off the
ground in the near future.


"In the present circumstances, it is almost certain the two Yugoslav
presidential candidates will not be visiting Moscow," Dmitry Rogozin added.


However, Putin renewed his offer Thursday to broker the emergency talks in
a bid to secure his position as the key international mediator in
Yugoslavia's election crisis.


"We often hear our Western partners talk of Russia's leading role in
resolving the situation in Yugoslavia. We do not exaggerate our role and
importance, but we are not going to belittle it either," he said in Bombay.


Russia's main goal in the present crisis "is securing the democratic
development of Yugoslavia, which is one of our country's friends," he added.


Putin also called on Russia's partners to "support our efforts to resolve
the situation in Yugoslavia not just with words but with deeds."


The United States and the European Union have declared Kostunica the
outright winner and denounced the official results as fraudulent. Russia
has declined to say publicly who it thinks won the poll.


*****


#4
Wall Street Journal
October 5, 2000 
[for personal use only]
We May Need Moscow To Deal With Milosevic
By Anatol Lieven. Mr. Lieven, a senior associate at the Carnegie Endowment 
for International Peace in Washington, is author of "Chechnya: Tombstone of 
Russian Power" (Yale University Press, 1999).


The exchange on Yugoslav policy in Tuesday's presidential debate had a 
curious twist. George W. Bush essentially declared support for the old 
Clinton-Gore policy of seeking Russian help in the Balkans, which Al Gore was 
automatically forced to deny. Mr. Bush in turn was forced to agree with Mr. 
Gore that he would only enlist Russian mediation if Moscow agreed fully with 
U.S. policy.
The problem with their accord is that this is not what "mediation" means, and 
that there is little chance of Russia agreeing to mediate without its own 
policies and interests being taken into account. This is a pity, because on 
the basic goal of removing Mr. Milosevic, the position of the U.S. and much 
of Russian President Vladimir Putin's administration is the same. And it may 
well be that, as during the Kosovo War last year, a role for Russia could be 
the best or even the only way of forcing Mr. Milosevic to go into exile 
without further bloodshed.


Russia and the U.S. do have differences, as Mr. Gore noted. But a central one 
has been not Russian support for Mr. Milosevic as such, but Moscow's 
opposition to his indictment as a war criminal. This is not only Russia's 
attitude, nor is it necessarily politically wrong. As other writers have 
pointed out on this page recently, on numerous occasions the U.S. has helped 
remove wicked dictators from power not by promising to put them on trial, but 
by guaranteeing them safe and comfortable exiles.


By doing so, it avoided bloody civil wars that the democratic opposition 
would not necessarily have won. This is not a pretty business, least of all 
when dealing with someone as vile as Mr. Milosevic. But before it is 
denounced as morally unacceptable, it should be remembered that the Western 
commentators doing the denouncing are not those who will pay with their blood 
if their moral policy fails.
Mr. Bush was absolutely correct in his opposition to the use of U.S. force. A 
North Atlantic Treaty Organization invasion of Serbia to overthrow Mr. 
Milosevic is out of the question. It is impossible to organize on short 
notice, would almost certainly unite a majority of Serbs in violent 
hostility, and would be strongly opposed by both European members of NATO and 
the Pentagon. This means that the U.S. has to seek alternatives, of which the 
obvious one is to go on supporting the opposition in its campaign to get Mr. 
Milosevic to step down.


But despite some encouraging signs, at the time of writing it is still not 
certain that this alone will work. The cold, subtle monster in Belgrade may 
still be able to mobilize enough resources to crush the opposition and remain 
in power.


There is even a risk that Mr. Milosevic may launch some form of attack on the 
government of Montenegro in order to try to force a NATO intervention there. 
As so often before, this would allow him to portray himself as a Serbian hero 
fighting the aggressive West. In recent weeks, U.S. officials have admitted 
that they were relying on Moscow to deter Mr. Milosevic from such a course.


But Moscow is by no means sure that it wishes to be used in this way again. 
One reason for the Russian government's ambiguous stance concerning the 
present crisis is the presence of pro-Milosevic hardliners, especially in the 
Russian military. More important is that even Russian officials who 
desperately want to be rid of the Milosevic incubus resent the way Russia has 
been treated for its role in ending the war in Kosovo. Seen from Moscow, it 
was Russian pressure on Mr. Milosevic that brought him finally to agree to 
NATO's terms in June of last year -- pressure that took real courage given 
the fury of many Russians over NATO unilateralism.


If the mission of former Russian Prime Minister Viktor Chernomyrdin and 
former Finnish President Marti Ahtisaari had failed, NATO might well have 
been forced to launch a ground war. It would have won, but the strains this 
would have caused between the NATO allies would have risked destroying the 
alliance from within.


Russia believes it has received no tangible rewards for saving NATO from 
potential disaster in this way. (The Russian elites have received large 
amounts of International Monetary Fund money as a Western geopolitical bribe, 
but neither we nor they can admit that this is what it was.) Moreover, after 
brief expressions of gratitude by Western governments, the response of a 
majority of Western commentators has been a continued vilification of 
Russia's role in the Balkans.


As a Russian official told me bitterly: "To judge by the past, Western 
gratitude lasts about two weeks. So if we did help get Milosevic out of power 
peacefully, two weeks later there would be calls in the U.S. Senate to bring 
sanctions against us for protecting a war criminal."


So while there is considerable division in Moscow over what policy to follow 
with regard to Yugoslavia, there is a consensus that Russia must not simply 
be the channel for a new Western ultimatum. And if Russia is to provide 
asylum for Mr. Milosevic or facilitate his peaceful departure to some third 
country, it wants written guarantees that it will not then be subjected to 
future Western pressure for extradition.


Secondly, as Mr. Gore stated, Moscow wants Yugoslavian opposition leader 
Vojislav Kostunica to win through internationally supervised second-round 
elections, rather than Western-backed street protests. This is admittedly a 
tricky question, given Mr. Milosevic's capacity for clever ruthlessness in a 
tight corner; but it is not wholly unreasonable and is at least a point on 
which we can talk with the Russians.


Of course, we may decide that these Russian positions are unacceptable, and 
that we will act without consulting Moscow. Fine. But in that case, if the 
Serbian opposition is defeated, how precisely do we mean to act? On this, 
Messrs. Bush and Gore have an identical position. They don't know.
*******


#5
ANALYSIS-Security-conscious Russia, India find common foe
By Oleg Shchedrov

BOMBAY, Oct 5 (Reuters) - Nothing strengthens friendship better than the 
feeling of a common threat. 


Moscow and New Delhi, which clinched a strategic partnership on Tuesday 
during Russian President Vladimir Putin's visit to India, have found one in 
what they see as burgeoning international terrorism. 


Putin's premiership and six-month-old presidency have been marked by war in 
Chechnya and unrest in ex-Soviet Central Asian states seen by Russia as its 
soft underbelly. He found an understanding ear in India, beset by similar 
problems in Kashmir. 


In a further consolidation, Moscow and New Delhi pointed at Afghanistan, now 
almost fully controlled by the radical Taleban Islamic movement, as a nest of 
international terrorism and called for international efforts to tackle the 
problem. 


``We believe that the centre of international terrorism has largely shifted 
to that area,'' Putin told a news conference alongside Indian Prime Minister 
Atal Behari Vajpayee. 


Vajpayee said that he and Putin had agreed ``to evolve a common strategy'' to 
deal with Afghanistan. 


ANTI-TERRORIST CRUSADE 


Both countries appear to have good practical reasons to step up such a 
crusade. 


Putin launched a military operation in Chechnya a year ago and faces 
international charges that the Russian army engages in cruelty and mass 
violations of human rights. He insists that Russia is fighting international 
terrorists there rather than the local militants of the mountainous province. 


He says Russia is at the frontline of resistance to the common threat and 
therefore deserves help rather than criticism. 


The threat of international terrorism is also used by Russia to maintain its 
influence in Central Asian states facing Islamic insurgency. 


Gunmen based in Afghanistan's neighbour Tajikistan, itself the theatre of 
five years of civil war pitting Islamists against a secular government, 
raided Kyrgyzstan and Uzbekistan earlier this year. 


Putin says the same forces fomented both Russia's problems in Chechnya and 
the Central Asian violence. 


Most Central Asian countries all but ignored Russia in the initial 
post-Soviet search for alliances but have now rallied behind Putin in 
resisting the new threat. 


On October 12, Putin will discuss security cooperation with the regional 
leaders in the Kyrgyz capital of Bishkek. 


Analysts accompanying Putin in India said India also had reasons to blame 
outside forces for its problems in Kashmir. 


They said that this could help India muster international pressure on 
Pakistan, which it accuses of supporting both separatists in Kashmir and the 
Taleban in Afghanistan. 


India's parliament, which Putin addressed on Wednesday, applauded when he 
said the same forces were planning and carrying out terrorist attacks ``from 
the Philippines to Kosovo, including Kashmir and Russia's Northern Caucasus 
region.'' 


It was a clear reference to the Taleban. 


PAKISTAN IS A KEY TARGET 


Russia is also looking for ways to influence the Afghan radicals through 
Pakistan, especially after Taleban forces advanced to the borders of its 
allies in Central Asia. But it has to act cautiously to avoid allowing its 
deals with India's old foe to upset the renewed friendship with New Delhi. 


Putin sent his envoy, Sergei Yastrzhembsky, to Pakistan last week in a 
mission which rang alarm bells in India. However, Vajpayee said he was 
satisfied with Moscow's explanations. 


Focusing the new strategic union between Russia and India on an 
anti-terrorism campaign also appears a good way to demonstrate unity without 
triggering suspicions among other key players, primarily China and the United 
States. Both countries seek better relations with Beijing and Washington. 


Last month, India and the United States separately agreed to include 
Afghanistan on the agenda of their joint working group on anti-terrorism. 


China, another ``strategic partner'' for Moscow, faces a separatist movement 
in western Xinjiang region and is interested in joining forces to fight it. 


``In fact, the threat of international terrorism could help establish a kind 
of regional alliance of Moscow, Delhi and Washington, crucial for maintaining 
stability in Asia,'' senior Russian parliamentarian Vladimir Lukin told 
reporters in Delhi. 


Many in India seem ready to agree that Russia's new partnership with India 
could bear fruit. 


``If the Putin visit results in joint mechanisms for dealing with the looming 
chaos, a great deal will have been achieved,'' the Indian Express newspaper 
said in an editorial. 


******


#6
Financial Times (UK)
5 October 2000
Economic rebound for Russia
By Arkady Ostrovsky in Moscow
Kakha Bendukidze, the boss of Russia's largest and best known producer of 
heavy machinery is in good spirits. 


The order book of his Uralmash-Izhora group is already full for the next two 
years and last month he travelled to Ekaterinburg, an industrial city in the 
Urals, to be present at the delivery of a new mobile oil rig built by his 
company. 


The order for the $2.5m rig came from Tyumen Oil (TNK), one of Russia's most 
aggressively expanding oil groups. Mr Bendukidze, a Georgian-born biologist 
turned businessman, says he has orders for another 60 new rigs from Russian 
oil companies which, after several years of neglect, are starting to invest 
in new equipment. 


Uralmash-Izhora is known as "the factory of Russian factories" because it 
supplies the machine tools and drilling equipment that run most of Russia's 
heavy industry. Its total order book is $400m for the next two years and its 
operating profits increased by 141 per cent last year over 1998. 


Like many other manufacturing companies in Russia it has benefited from 
rising world oil prices and the impact of the 70 per cent fall in the value 
of the rouble. This has made its production cheap compared with foreign 
manufacturers and brought a stream of orders from export-oriented companies. 


"Our factory is a barometer of the Russian economy and what is good for the 
economy is good for us," says Mr Bendukidze. "We are seeing a significant 
growth in investment." 


The improvement of the Russian economy is undeniable. Gross domestic product 
grew by 7.5 per cent in the first six months of this year compared with the 
same period last year while real wages grew 24 per cent year on year in the 
first half. This is Russia's best economic performance in 30 years. 


For now, the central bank is keeping the rouble weak by buying dollars while 
the oil and gas energy sector, which accounts for about 40 per cent of the 
country's exports, is helping to fill state coffers through bigger tax 
returns and proceeds from the state's stake. The positive economic 
environment allowed the government to draft its first ever balanced budget 
which this week will be voted on by the Duma, the lower house of parliament. 


However, most Russian companies and economists know that the present economic 
conditions are unlikely to last long. Andrei Illarionov, chief economic 
adviser to president Vladimir Putin, argues that high oil prices could lead 
to the appreciation of the rouble, undermining the economy's competitiveness. 


Mr Illarionov says the rate of economic growth is already slowing. 


Alexei Mordashov, the 35-year-old director of Severstal, Russia's largest 
steel producer, which has been restructured with the help of McKinsey 
consultants, has no illusions about the difficult times ahead. "High 
commodity prices have given us some breathing space but these conditions are 
not going to last long. The Russian economy can only grow if we implement 
structural reform and create value-added production," he says. 


This is exactly what Mr Mordashov and several other Russian company managers 
have done. A new generation of Russian industrialists, instead of looting 
them for cash, have began to restructure Soviet-era behemoths and are 
starting to invest in production. 


The most positive indicator is the marked increase in domestic fixed 
investments. After years of falling investment and asset stripping, domestic 
investment in fixed assets in the first eight months of the year increased by 
17.6 per cent, albeit from very low levels. 


Thomas Veraszto, a partner at McKinsey in Moscow says many Russian companies 
are starting to make long-term plans. 


"Until recently few companies planned for more than two to three years ahead 
and the main tendency was to squeeze cash out of companies, bank it abroad 
and re-invest only in the most necessary assets with minor improvement in 
production. Now the average planning horizon in many industries has been 
extended to four to five years, in line with Putin's first term in office." 


Whether Russia's economic growth is sustainable will partly depend on reform 
of the banking and legal systems. But Russian economists agree that, ab ove 
all, their country's economic health will depend on the restructuring of 
individual companies and the ability of managers to motivate their employees 
to work. 


"The government must create the right conditions for restructuring, but it is 
the companies and their managers who will have to play the main part in the 
restructuring of their individual businesses," says Mr Mordashov. 


******


#7
U.S. warns of arms business risks in Russia
By Jonathan Wright

WASHINGTON, Oct 4 (Reuters) - Exasperated at Russia's treatment of an 
American businessman accused of spying, the United States warned Americans on 
Wednesday that it could be risky doing business with the Russian arms 
industry. 


``In Russia certain activities which would be normal business activities in 
the United States and other countries are still either illegal ... or are 
considered suspect,'' the State Department said in a consular information 
sheet. 


``Americans should be particularly aware of potential risks involved in any 
commercial activity with the Russian industrial-military complex, including 
research institutes, design bureaus and production facilities,'' it added. 


``Any misunderstanding or dispute in such transactions can attract the 
involvement of the security services and lead to investigation or prosecution 
for espionage,'' it said. 


The American, former naval officer and businessman Edmond Pope, has been in 
jail since April and Russian prosecutors have given the go-ahead for a trial 
on spying charges. 


The main charge against him is that he tried to obtain underwater missile 
technology from a Russian scientist. He could face up to 20 years in prison 
if convicted. 


The United States says that it has not seen any evidence that he broke 
Russian law and that he should go free. 


The warning, under review in the State Department for many weeks, is bound to 
annoy the Russian government, which said in August that attempts to link the 
Pope case with trade and economic relations would ``give cause for serious 
worry.'' 


The U.S. State Department, under pressure from members of Congress, has 
objected in particular to Pope's problems gaining access to medical 
inspections to see whether he has completely overcome a rare form of bone 
cancer. 


ALBRIGHT SAID ``CASE'' OUTRAGEOUS 


On Tuesday a U.S. House of Representatives committee approved a resolution 
calling on President Bill Clinton to cut all financial aid to Moscow and work 
to block Russia's entry to the World Trade Organisation unless it releases 
Pope. 


The measure, which could come up for a vote by the full House as early as 
next week, was approved unanimously by the House International Relations 
Committee. 


Secretary of State Madeleine Albright last week described Russia's handling 
of the case as ``outrageous'' and said Washington had raised it in Moscow 
``at the highest levels.'' 


The updated consular information sheet said that several U.S. citizens had 
been detained or arrested over the past few years on suspicion of spying 
while doing business. 


``Arrested Americans faced lengthy sentences -- sometimes in deplorable 
circumstances -- if convicted. In the most recent case, the arrested 
American's health suffered and he has not been allowed to receive independent 
medical evaluations or treatment despite the Embassy's efforts,'' it added. 


In a separate statement, the State Department said the Pope case raised 
questions about the risks to Americans engaged in such business dealings and 
about the ability of the United States to protect their welfare in detention. 


``Americans are well-advised to take this information into account before 
planning business-related travel to Russia,'' the statement added. 


********


#8
The Guardian (UK)
5 October 2000
News Corp joins Russian imbroglio 
Ian Traynor in Moscow and Jane Martinson in New York
Guardian


Rupert Murdoch's News Corporation is interested in buying Russia's biggest 
and most influential independent media group, according to reports in Moscow, 
though any deal would be controversial. 


The Media-most company of exiled mogul Vladimir Gusinsky is at the centre of 
a bitter battle for control of its assets with the Kremlin and Mr Gusinsky's 
main creditor, Gazprom, Russia's gas monopoly. It includes Russia's biggest 
private television channel, NTV, cable TV operations, a Moscow radio station, 
and a daily newspaper. 


Rem Vyakhirev, the powerful head of Gazprom, Russia's biggest company which 
is part-owned by the state, said he was insisting on taking over Media-most 
and selling it on unless Mr Gusinsky came up with the $211m (£144m) it owes 
and a further $272m due for repayment next year. 


"We are demanding the return of the debt. This is not politics," said Mr 
Vyakhirev in Delhi, where he is accompanying President Putin on an official 
visit. "If they can't pay the money, we'll take the Media-most shares and 
sell them to someone who will pay more." 


An western media holding company was showing an interest, he added. Gazprom 
sources told the Kommersant newspaper the prospective buyer was News Corp, 
which had shown its interest "orally and in written form". 


Martin Pompadur, an executive vice-president of News Corporation in charge of 
European operations, was understood to be on business in Russia this week, 
but News Corp declined to comment on what it called speculation. 


There is no sizeable foreign ownership of the media in Russia as the sector 
is heavily indebted and barely profitable. A foreign takeover of such a 
substantial group could cause political problems for Mr Putin, with 
communists and nationalists complaining of the country's second biggest TV 
channel becoming anti-Russian. 


Mr Gusinsky fled Russia for Spain in July after his offices were raided by 
heavily armed paramilitary police and he was briefly jailed. Criminal charges 
against him were suddenly dropped in return for his selling out to Gazprom. 
This agreement he now says was signed, under duress and at gunpoint. 


Dmitry Ostalsky, a spokesman in Moscow for Mr Gusinsky, said he knew nothing 
of the proposed Murdoch bid. "We've got nothing against western investors, 
but, of course, this is not normal because Gazprom does not own Media-most." 


Mr Vyakhirev said that under the deal signed on July 20, the gas company 
agreed to take on all of Media-most's debt and pay Mr Gusinsky a further 
$300m. 


The signing of that agreement was the prelude to Mr Gusinsky's flight to 
Spain. Three weeks ago a row erupted in public between Gazprom and Media-most 
when Mr Gusinsky repudiated it and produced a confidential appendix, signed 
by a government minister, promising him his freedom and the dropping of all 
charges as a trade-off for surrendering the business. 


NTV television has become the president's most formidable and most 
influential critic. The months-long battle for control of Media-most has 
raised fears in the West for press freedoms in Russia. 


*******


#9
Moscow Times
October 5, 2000 
Where Putin's Pickles Come From 
By Ana Uzelac
Staff Writer


Not all produce is created equal. When it comes to feeding the country's
political elite, some fruits and vegetables are clearly more equal than
others. 


"The strawberries should be big or medium, but not small," said Igor
Timofeyev, commercial director for the Nepetsyno farm, which since 1943 has
provided the state government with pervosortniye, or first-grade foodstuffs. 


"Cucumbers should be between 9 and 13 centimeters long, apples should have
a diameter of no less than 6 centimeters and the minimum weight of cabbage
should be 800 grams," he said. 


Nepetsyno is one of five state-owned farms feeding the powers that be.
Situated some 90 kilometers southeast of Moscow, the 7,000-hectare farm has
supplied fruit, vegetables, meat and dairy products to the government's
hungry leaders for longer than most of its workers can remember. 


But how a Nepetsyno cabbage is transformed into a plate of government-grade
kislaya kapusta f pickled cabbage, allegedly a favored dish of former Prime
Minister Viktor Chernomyrdin f is a closely guarded secret. Not even the
farm's top management knows on whose plates their food may eventually appear. 


"We know the White House primarily takes our apples and berries," Timofeyev
said. "The Duma, on the other hand, prefers our vegetables. But our best
client is still the Great Kremlin Palace, which buys everything Nepetsyno
has to sell." 


And when President Vladimir Putin throws a cocktail or dinner party, said
Nepetsyno director Alexander Nikolayev, the task of menu-planning falls to
the FSO, the federal bodyguard service. 


"We provide our normal products of standardized quality to the main
kitchens and then the FSO chooses the ones that will be served on given
occasions," Nikolayev said. "The fewer people who know what the president
and his guests are going to eat, the smaller the chance of someone
poisoning them." 


Galina Zagrebneva, director of the State Duma canteen, praised Nepetsyno's
produce. "They have fine vegetables and the best apples around. It rarely
happens that we have to send their products back." 


Then again, she argued, such quality is to be expected when you consider
the palates she caters to. "You understand that we have a very particular
clientele f we shouldn't really quarrel with a parliamentarian over a
rotten apple," Zagrebneva said. 


These days, however, the farm's most grueling test comes not from the Duma
but from the sometimes cruel reality of the market economy. 


Although Nepetsyno is still on the government payroll, its days of
exclusivity and state subsidies are over. For the past four years, only
half of Nepetsyno's harvests has gone to parliament cafeterias and
presidential dinner parties; the other half has to fight its way among
lesser produce to customers on the free market. 


The transition was difficult: The farm suffered a steep loss in 1995, its
first year without a budget subsidy and employees were suddenly faced with
having to make do without any special aid or tax breaks. 


"In the old days we would get anything we asked for," said Irina
Nikolayevna, a livestock specialist at Nepetsyno. "We would upgrade our
equipment almost every year, we could request the best seeds, buy the best
cows." 


Still, at first glance, Nepetsyno seems to have done quite well. Tidy
flower beds line the farm's administration building; inside, a marble
staircase with brass railings gleams in the light of discreet halogen lamps. 


Outside, the farm produces almost everything a state functionary would
dream of seeing on his plate: berries, potatoes, carrots, cabbages. A vast
apple orchard stretches for miles behind the main road. A small factory
makes sausage and meat products and a long row of stables houses the nearly
1,000 dairy cows used to produce fresh milk, cream and cottage cheese. 


Director Nikolayev, a healthy looking man sporting an elegant tie
emblazoned with cows, doesn't hide his pride in the what he's accomplished
since coming on as director in 1995 f by the standards of post-communist
farming, Nepetsyno borders on the miraculous. 


The farm closed last year with a profit of 20 million rubles ($730,000),
and workers have seen their average salary almost double to 2,000 rubles
($71) a month paid in steady installments f low by Moscow standards but
still far superior to the erratic payments of 300 rubles to 400 rubles
earned by workers at nearby privatized farms. 


According to the farm's commercial director, the secret of Nepetsyno's
success is the steady patronage of its No. 1 customer. 


"We have the best thing a farm could wish for: a stable and reliable client
that orders between 40 percent and 50 percent of our output and always pays
on time," Timofeyev said. 


A second secret is in its name: "Being called presidential means a much
smoother entrance into good shops," he added. 


It may also keep local criminal structures at bay. Livestock expert
Nikolayevna said she experienced the magic of the presidential shield in
1994 f one of the "hungry years," as she called them f after she raised a
pig and sold it on the local market. 


"The moment I sold it, two big guys approached me and asked for exactly
half of what I earned. I told them not to mess with someone who's protected
by the president," she said. "They backed off. I guess we have the best
krysha there is." 


*****


#10
From: Matt Taibbi <exile.taibbi@matrix.ru>
Subject: Press Review: MT Drops the Ball
Date: Thu, 5 Oct 2000 


MT Drops the Ball
Press Review
By Matt Taibbi
www.exile.ru


We should admit it: it was pretty tough for us here at the eXile to swallow 
at first when the Moscow Times unleashed its giant election fraud expose a 
few weeks ago. Not only was it a hell of a story, but it was subsequently 
totally ignored by the powers that be in the States, which allowed the 
Times to assume the kind of martyrdom we've been selfishly claiming for 
ourselves for the last three years or so. No, we were a pathetic sight to 
behold when that story came out. You should have seen it: we were like a 
just-punished dog which cringes, partially obscured by a piece of 
furniture, in some faraway corner of the house... miserably licking its own 
genitals because, after all, no one else will.


That said, what the hell is going on at the Times now? Just a week or two 
after insolently sticking its neck out with its expose, which alleged that 
Vladimir Putin committed widespread election fraud last year, the Times 
suddenly reverted back to its old dumb, junior-league evil ways. The same 
paper which was righteously shaking its fist at the despot two weeks ago 
was, by last week, issuing a bizarre series of mean-spirited editorials 
which were virtually indistinguishable from Kremlin press releases. The 
most striking of these documents was the loathsome September 22 letter from 
the editor, "Gusinsky Can't Pick and Choose", which was as ugly and 
treacherous a piece of text as the Times has ever published.


The tortured thesis of this piece is that Media-Most chief Vladimir 
Gusinsky shouldn't be held up as a champion of press freedom, because he is 
fiscally irresponsible. According to the Times, no one who owes money is 
entitled to any rights at all. Here's how the piece leads off:


'"I want it all, I want it all, I want it all, and I want it now," goes the 
popular 1980s hit by the rock group Queen.


'That anthem sounds very much like the song that tycoon Vladimir Gusinsky 
has been belting out in recent days as he scrambles to keep control of his 
Media-MOST empire.'


There are few things in the world more horrifying than a reactionary who 
uses gay glam-rock band lyrics to make his point. Worse, the Times 
editorial writer (who I hope to God wasn't my onetime friend Matt Bivens) 
is no Bill Buckley. Look at those awful phrases: "anthem sounds like the 
song", "belting out", "goes the hit"... this is a writer who attacks the 
language like a man wrestling a cow in the dark.


I mean, aside from everything else-- aside from the mere fact of quoting 
Queen, from all the redundant phraseology, from the desperate use of the 
word "anthem" when he couldn't think of a way to avoid using "song" five 
words later-- aside from all of this, the quote doesn't even make a whole 
lot of sense. "I want it all" doesn't seem to apply all that well to a 
man who doesn't actually want anything, in this instance, except to keep 
what he already has. It's a completely different sentiment from "I want to 
have it both ways," which is the idea that Times is after here.


Not only that, but the song wasn't that popular, and the phrase itself 
isn't that colorful or illustrative. These are minor issues compared to the 
great and terrible crimes which would come later in the article, but it 
certainly seems worth noting that the Times chose to introduce its serious 
argument on this relatively grave issue by quoting, with dubious 
justification, from an obscure, not particularly interesting song by... 
Queen. Newspaper editors don't have to be cool, but there are times when it 
helps.


The paper goes on to make its point using the intensely irritating standard 
rhetorical format used in most newspaper editorials, a format which 
generally looks something like this: "Blah blah blah blah blah (paragraph 
break). And also, in addition, blah blah blah blah blah (paragraph break). 
But in fact, blah blah blah blah blah!"


The pre-"But in fact" portion of the piece goes as follows:


'The stocky multimillionaire spent much of last week on a public relations 
road trip in the United States trumpeting the age-old American value of 
freedom of speech as being under threat in Russia. First Amendment rights 
are as American as apple pie, and Gusinsky appeared well aware of that fact 
as he wove into his itinerary a number of visits with leading American 
journalists and politicians.


'He painted a bleak picture of the independence of his media empire being
under fire from the Kremlin, and from the tone of Western press reports 
this week seems to have made a few friends.'


And now here comes the "But" part, followed by the regal entrance of the 
Times's odious central argument, that Gusinsky deserves no sympathy because 
he owes too much money:


'But there is another old-fashioned value in the United States that is no
doubt regarded by Wall Street as more important than freedom of the press:
financial responsibility. Almost any American with a credit card would
testify that he promptly pays on his debt every month-- if only to avoid
risking his credit record and ability to get a car or house loan for the 
next seven years.


'Furthermore, no company in the United States would be able to get away 
with owing almost half a billion dollars to a creditor and refusing to pay 
part of it back. The owner of the company would be forced to come up with 
the cash or go into bankruptcy.


'Put Gusinsky and his $473 million debt in the United States and see how 
far
he would get trying to fight off a creditor by waving a flag of free 
press.'


Wow, Jesus Christ! I'd already read that passage six times or so, and even 
re-typing it right now I got the creeps. What the fuck is the Times talking 
about? Have they gone nuts? Jesus! This would be a shocking thing for any 
newspaper to publish, much less one whose editor was last seen in public 
bragging voluminously in Brill's Content about his paper's role as a 
defender of press freedoms in Russia.


There are so many things wrong with this passage that it's hard to know 
where to begin. The most obvious place to start would be the fact that the 
Gusinsky affair has absolutely nothing to do with money anyway. The Times 
editorial was printed on September 22, a full two days after Press Minister 
Mikhail Lesin admitted to the existence of the so-called "protocol six" in 
the original deal signed with Gusinsky, in which the latter agreed to 
refrain from "discrediting" state institutions in exchange for his freedom. 


But even without that evidence, the Times must surely know that the attack 
on Media-Most isn't about money, but politics and nothing but. It's obvious 
that if Gusinsky were an ardent defender of the Kremlin, none of this would 
be happening. The fact is that NTV and the various Most publications have 
been the only real critics of the Putin regime and its various policies-in 
particular the war in Chechnya-and that this is why the Kremlin has decided 
to make its play for Gusinsky's empire. Everyone knows this. It's simply 
obvious on its face.


But let's just say, for the sake of argument, that the whole thing really 
was about money-- that Gazprom, being secretly short of cash, simply 
decided to shell out $300 million and cancel nearly a half-billion dollars 
worth of debt in order to acquire control over Gusinsky's hopeless 
money-loser of a media empire, in the hopes of turning it around quickly 
and cashing in on the potential profits. This is absurd, but let's just 
say. What then-should any media mogul who can't pay his bills be forced to 
put his company into receivership, under the control of an authoritarian 
government which clearly wants censorial power over its activities? The 
Times dares Gusinsky to take his $473 million in debt to the United States 
and see how far he would get there waving the flag of press freedom. But 
the fact is that television networks that go bad in the United States are 
either liquidated or bought up by private interests, not delivered into the 
hands of a censorious White House which already runs all the rest of the 
country's national media.


Then there is the insane sentence: "But there is another old-fashioned 
value in the United States that is no doubt regarded by Wall Street as more 
important than freedom of the press: financial responsibility." What does 
this mean? Wall Street wasn't mentioned anywhere before this passage, which 
leads one to suspect, first of all, that the Times equates Wall Street with 
the United States, that appealing for support to one really means appealing 
for support to the other. Secondly, while it may be true that Wall Street 
values financial responsibility more than press freedoms, I was not aware 
that it was considered decent yet to say so out loud. I've been out of the 
country for a while, so I can't be sure, but I'm pretty sure that calling 
speech freedom relatively unimportant is still considered bad citizenship 
in the U.S.


Beyond that, the passage just doesn't make any sense. Theoretically, at 
least, there's no reason why speech freedoms would ever have to take a back 
seat to financial responsibility. The right to free speech was not designed 
to mean the right to free speech, so long as you can afford it. It's 
supposed to be an absolute. The Times clearly doesn't agree. Twice 
already-once in a Russian-language editorial it ran prior to the 
presidential elections last March, and once in the Brill's piece-its editor 
Bivens has loudly advertised the paper's profitability as one of its chief 
virtues, arguing that the Times's ability to make money is a big part of 
what guarantees its independence. In this latest editorial, the paper 
argues the inverse, that Gusinsky's inability to make money is what 
deprives him of the right to independence.


This is extremely faulty, even dangerous thinking for any journalist to 
embrace. Independence and truthfulness in reporting should be 
inherent-journalists are supposed to insist upon it, not earn it. If you 
can't earn advertising revenue without lying, then the ethical editor goes 
without the ad revenue. If his publication dies, then so be it. This is 
society's failure, not the reporter's.


The problem with the Times's way of thinking is that it really is becoming 
more and more true that commercial success is becoming a necessary 
precondition of editorial candor. Increasingly, newspapers and television 
stations must be able to afford to be truthful, in order to fight off 
frivolous libel lawsuits by well-funded corporate antagonists, and to 
remain competitive in an atmosphere where rivals may be willing to say or 
do anything (or, more commonly, be willing to say or do nothing, or run 
nothing but sports and dumb sitcoms) to win the big advertisers.


But the solution to this problem isn't to encourage journalists to be more 
commercial-minded. The solution is exactly the opposite, to encourage 
journalists to do more to protect themselves against commerce, and defy the 
pressure to think only in terms of what will sell.


There was a time, many decades ago, when people from the marketing and 
sales wings of media companies were not allowed anywhere near the people 
responsible for content, like editors and journalists. A good example is 
the New Yorker magazine, which until the fifties physically banned 
salespeople from the editorial floor of their offices. But these days the 
sales and marketing people, along with the publishers and CEOs who are 
naturally sympathetic to bottom-line concerns, are the driving forces 
behind the content of most news programs and publications.


Journalists once resisted their influence, but the new generation tends to 
lack the nerve. Either that, or they take the Bivens route and convince 
themselves that profitability is an editorial virtue, when it manifestly is 
not. After all, if truthfulness were inherently popular, and naturally a 
hit with advertisers and politicians, it wouldn't need to be so closely 
protected. An editor should be proud of pissing off his readers and his 
advertisers, when they deserve it. He should be proud of costing his 
publisher money. That's because by doing so he adds to the real value of 
the enterprise, a value which isn't measured in money, but in credibility.


In this latter respect Gusinsky, for all his faults, has been a much more 
"responsible" media businessman than any of his competitors. The two rival 
state networks, ORT and RTR, are not credible, and so they are worthless. 
NTV, for all its bias, still has some credibility, and so it is worth 
something.


That the Times would even take this stance seems very odd, given its own 
precarious position here in Russia. By Bivens's own admission, the paper 
was pressured heavily by the Kremlin last year to change its editorial 
tune, particularly with regard to the Chechen war. According to Bivens's 
version, publisher Derk Sauer bravely warded off these attacks, agreeing 
only to "tighten up" some areas where, in Bivens's words, the paper had 
"indeed been sloppy." Now, I have no idea what that means, but whatever 
they did, it worked. The giant tax bill the company was reportedly 
presented vanished, and the paper was left to stay in print and run stories 
like its excellent expose of two weeks ago.


But the management of the paper surely knows that it has no guarantee that 
it will be able to escape the next time somebody from the government hands 
them a big bill. They must know that their fate was totally out of their 
hands last year, that they survived not because they could pay the bill, 
but just because the government failed then to demonstrate the kind of will 
it is showing now with Gusinsky.


For this reason it would seem to make sense that the paper would have to 
argue passionately against the treatment of Gusinsky, if it were to be 
faithful to its own interests. It should also be in a better position than 
just about anyone else to see the Most issue for what it is-politics. But 
instead, it blasts Gusinsky for being a deadbeat at a moment when the last 
vestiges of free speech are about to vanish in this country. It doesn't 
make any sense. Maybe the NTV employees could have flown coach more often, 
maybe they could have spent less on Yelena Khanga's makeovers, but this 
hardly seems important given the bigger picture of what is about to happen 
here.


The tone of the editorial becomes even more suspicious when considered in 
light of two others that the paper ran last week. In one, the Times cheered 
Vladimir Putin for his government's handling of the Onako auction. In 
another, it lent friendly advice to Interior Minister Vladimir Rushailo in 
"his efforts to root out corruption", which is an odd way to characterize 
the work of a man who has used the police the way Rushailo has.


There were plenty of reporters in town, including the London Times's Giles 
Whitell and Fred Weir of the Christian Science Monitor, who rushed to 
support the Moscow Times after it released its big scoop a few weeks ago. 
The paper had done a bold and risky thing, and it would have been left very 
much more exposed had not some other journalists publicly bolstered its 
credibility. Now the paper has turned its back on Vladimir 
Gusinsky-admittedly a scumbag, but a scumbag in the right in this 
instance-- just as the Hun is about to swallow him up. Make no mistake 
about it, if Most goes down, and it will, every reporter in this country 
employed by a Russia-based publication is fucked. It may take longer to get 
to the staff of the Moscow Times, but they'll get them, whether the paper 
continues to be profitable or not. That's unless they stick to quoting 
Freddie Mercury and helping Putin throw the others off the cliff, of 
course.


******