Johnson's Russia List
#5594
12 December 2001
davidjohnson@erols.com
A CDI Project
www.cdi.org

[Note from David Johnson:
1. AFP: Russian holiday season broken up with US threat on ABM.
2. BBC Monitoring: Politicians debate amendments as Russia celebrates 
Constitution Day.
3. Reuters: IMF says Russian economy is in strong position.
4. Financial Times (UK) letter: Carl Hamilton, Double-speak on EU trade 
policy with Russia.
5. Luba Schwartzman: ORT Review.
6. The Chronicle of Higher Education: Bryon MacWilliams, For Russia's
Universities, a Decade of More Freedom and Less Money. Facilities languish and top
scholars leave, but students have unprecedented options.
7. Asia Times: Sergei Blagov, Hollow ring to Russia's reassurances.
8. Stars and Stripes: Mark Oliva, Fitness expert who trained Russians for 
Afghanistan pushes Marines to their max.
9. pravda.ru: STATE DUMA DEPUTY YEVGENI PRIMAKOV: I DO NOT SUPPOSE MOSCOW
WILL COMPLETELY DUPLICATE ANY EXISTING MEGALOPOLIS.
10. Financial Times (UK): Andrew Jack, Russians in a pickle over arrival
of the euro.
11. Reuters: Russia's resurgence reshapes world oil hierarchy.] 

******

#1
Russian holiday season broken up with US threat on ABM
December 12, 2001
AFP 
 
Moscow maintained a stony silence in response to reports that Washington
will within days announce a withdrawal from the 1972 ABM treaty despite
Russian efforts to save the fundamental nuclear pact.

Russia marked Constitution Day on Wednesday -- the semi-formal start of a
month-long holiday season here -- and officialdom refused to be drawn on a
slate of media reports that Washington had made up its mind to abandon a
missile pact which is still viewed as the "cornerstone" of global stability
in Moscow.

The New York Times wrote that US President George W. Bush informed Vladimir
Putin of the decision in a telephone call last Friday when the Russian
leader was paying an official visit to Greece.

US officials said the formal Washington announcement would made by January
at the latest and could even be issued as early as Thursday.

The Anti-Ballistic Missile (ABM) treaty allows both Moscow and Washington
to give a six-month advance notice before unilaterally abandoning a Cold
War-era pact that forbids either side from developing broad missile defense
systems.

Citing a threat to US security from "rogue states" like North Korea and
Iran, Bush made construction of such a shield a key plank of his foreign
policy upon election last year.

But Bush has faced some pressure from Europe, US Congressional Democrats
and even Secretary of State Colin Powell, who question the wisdom of such a
unilateral approach at a time when Washington seeks allies in its global
anti-terror campaign.

Russian officials referred all inquiries about the ABM to a Monday
statement issued by Foreign Minister Igor Ivanov, who then said that Moscow
was prepared for the possibility of a unilateral US withdrawal from the pact.

Speaking at a joint press conference with Powell, Ivanov reported that he
and the visiting US secretary of state had made no progress on the missile
defense dispute.

"Our national security program takes the possibility (of a unilateral US
withdrawal) into account," Ivanov said without elaborating further.

His deputy Georgy Mamedov earlier called such a US decision "dangerous," a
view backed up Monday by German Chancellor Gerhard Schroeder.

Some Russian lawmakers attending a security conference in Washington said
Moscow was clearly not pleased with Bush's resolve, but was unlikely to
react violently to the move.

"There will be no hysterics" from Moscow in response to a formal US
announcement on the ABM, ITAR-TASS quoted Federation Council upper house of
parliament foreign affairs committee chairman Mikhail Margelov as saying.

Putin initially threatened to counter a US withdrawal from the pact by
abandoning all existing nuclear disarmament agreements and loading up on
multiple missile warheads as a defensive measure.

Such threats have not been repeated in recent weeks and Ivanov and Powell
even announced this week that they had been instructed to prepare terms of
a new nuclear disarmament agreement for Bush's visit to the Russian capital
next spring.

However, while seeming ready to accept further US testing of its futuristic
missile shield, Russia had sought to preserve the ABM in some form, the
treaty representing one of the last vestiges of Moscow's Soviet-era
superpower claims.

"Now, Moscow will have its hands untied," said Fond Politika research
institute chief Vyacheslav Nikonov, speaking to the ITAR-TASS news agency
at the Washington conference.

Nikonov suggested that Russia could now press ahead with Putin's threat to
load up on multiple warhead intercontinental ballistic missiles, a view
particularly popular in Moscow hawkish defense circles.

Sergei Karaganov, an expert on US-Russia relations, told Moscow news
agencies for his part that a unilateral US withdrawal meant that Russia no
longer needed to make its own sacrifices on strategic issues.

"All of the responsibility now rests with the US side and its allies,"
Karaganov said.

******

#2
BBC Monitoring
Politicians debate amendments as Russia celebrates Constitution Day 
Source: NTV, Moscow, in Russian 0500 gmt 12 Dec 01

[Presenter] Today is the eighth anniversary of the Russian constitution. It
is being celebrated against the backdrop of repeated suggestions of
amending this country's fundamental law. The discussion was rekindled after
the newly elected speaker of the Federation Council, Sergey Mironov, said
that a four-year presidential term was too short.

The constitution that has not been amended since 1993 is now on the brink
of reform. Three of its articles are untouchable, and can only be amended
through a constitutional assembly, the other articles introducing changes
to the existing bodies of power can be amended by a simple majority vote.

There is no uniform opinion in Russia as to whether its fundamental law
needs to be amended or not.

[Boris Nemtsov, captioned as head of the Union of Right Forces faction in
the State Duma] On the whole, the constitution is a good one. It is another
matter that in many respects it still remains a declaration of intent. Our
goal is to make it a working document and not a document that presents
interest only to historians and lawyers. Freedom of speech, civil rights
and freedoms, the division of power aimed at preventing authoritarian rule
are all guaranteed in Russia, at least in the constitution. We, the Union
of Right Forces, are against amending the constitution, particularly its
fundamental articles.

[Vladimir Zhirinovskiy, captioned as leader of the Liberal Democratic
Party] I think that three sets of amendments need to be introduced by all
means. Firstly, Russia should consist of larger territorial units.
Secondly, the presidential term needs to be extended because this country
is so huge that the president needs four years just to get to know it,
which leaves no time for actually ruling it. And, lastly, there should be a
reform of the parliament. The upper chamber needs to be dissolved: it is
absolutely superfluous.

*******

#3
IMF says Russian economy is in strong position
  
MOSCOW, Dec 12 (Reuters) - The International Monetary Fund says Russia is in 
a strong position to cope with lower oil prices and the outlook for 
structural economic reforms is rosy. 

Russia depends heavily on revenues from oil exports for its budget needs, and 
the price of crude has fallen recently because of a global slowdown in 
demand. 

"It is the mission's assessment that the large external current account and 
fiscal surpluses, together with the relatively comfortable level of foreign 
reserves, have placed Russia in a strong position to deal with the less 
favourable environment," the IMF said in a statement. 

The statement, obtained by Reuters on Wednesday, said a recent IMF mission to 
Russia had focused on "the implications of the recent deterioration in the 
external environment and the policy options available to the authorities in 
the case of a further deterioration in the coming year." 

The IMF said last week it did not believe the recent drop in oil prices would 
force Russia to take loans from the Fund or others to help maintain its 
budget. 

Russia, the world's second largest oil exporter, has faced a fall in revenues 
recently because of the drop in global oil prices. But Finance Minister 
Alexei Kudrin said last week borrowing from the IMF could still be avoided 
next year, despite the decline in revenues. 

Russia announced last week it would cut 150,000 barrels per day in oil 
exports from the first quarter of next year to show its willingness to help 
oil cartel OPEC support oil prices. The output cut seems likely to be enough 
to convince OPEC to make its own promised output reductions. 

Russia should benefit if oil prices are kept at current levels, although it 
is unclear how long this will last, given the global economic slowdown and 
weaker oil demand. The IMF was upbeat on Russia's economic reform outlook. 

"The mission also found that the government's plans and priorities suggest 
that the impressive momentum that has emerged in the structural reform area 
in 2001 is likely to be maintained next year." 

Both the Fund and the Russian government say their relationship is a far cry 
from the 1990s, when Moscow was the biggest borrower and its economy lurched 
from crisis to crisis. 

Russia has so far held back from agreeing to a new loan programme with the 
Fund and even decided to repay some IMF loans earlier this year. 

*******

#4
Financial Times (UK)
Decmeber 12, 2001
LETTERS TO THE EDITOR: Double-speak on EU trade policy with Russia 

From Prof Carl B. Hamilton.

Sir, Pascal Lamy and Chris Patten, the EU commissioners, argue in favour of
closer economic ties between Russia and the European Union ("Economic space
and beyond", December 5). They say: "Central to realising (this objective)
is the common economic space." Perhaps more interesting than this labelling
of a still undefined and future EU-Russia economic relationship is what the
two commissioners choose not to say.

First, they omit that the EU and Russia agreed in 1994 to create a free
trade area between them. When this is created, Russia will have achieved
the same trade relation with the EU as the UK, Sweden and the other
European Free Trade Association countries used to have. The 1994 agreement
on an EU-Russia free trade area is the most concrete and far-reaching
economic commitment so far vis a` vis Russia. Perhaps they buried it in the
opaque term "common economic space"? Why?

Second, the EU today restricts imports of steel from Russia. Steel is one
of the few manufactured goods that Russia is capable of exporting to the
EU. For Russia to be allowed free export of steel to the EU, the Union has
laid down two conditions: Russia would have to apply to its steel sector
both the EU's competition policy and the same international environmental
agreements as the EU does. In effect, this means continued quantitative
restriction and no free trade.

Third, the EU pursues surveillance of Russian exports of textiles and
clothing to the Union. When Russia becomes internationally more competitive
in these goods, the protectionist instrument is already installed for the
EU to restrict imports from Russia. Fourth, Russia enjoys preferential
treatment in the EU of the same sort as many developing countries do (the
so-called General Scheme of Preferences). However, where Russia has in some
cases managed to increase exports and has been successful, it has lost its
GSP treatment in the EU.

EU citizens have the right to demand that our commissioners make up their
minds and not resort to double-speak. Do we want our trade policy vis a`
vis Russia to be run by narrow-minded special interest groups, clever in
their lobbying in Brussels, or to be determined by our common geopolitical
interest of a stable, growing and increasingly democratic Russia? Or will
we have to look to the World Trade Organisation and the US to deliver
economic integration of Russia in the world economy and, as a side-effect,
also integration with the EU?

Carl B. Hamilton, Stockholm School of Economics, S-113 83 Stockholm, Sweden

******

#5
ORT Review
www.ortv.ru
Compiled by Luba Schwartzman (luba7@bu.edu)
Research fellow at the Institute for the Study of Conflict, Ideology and
 Policy at Boston University

HEADLINES,
Tuesday, December 11, 2001
- Russian Defense Minister Sergei Ivanov has arrived in Rostov-na-Donu to
meet with local military officials about the situation in Chechnya,
inspect the battle-readiness of military divisions in the North Caucasus
military district and discuss the fortification of the Russian-Georgian
border.
- The Yakutian Prosecutor's Office has announced the preliminary findings
in the investigation of the election activity of visiting political
technicians.  According to the information, a special top-secret Project
Yakutia was developed in Moscow to discredit the primary candidates in the
presidential elections.  A certain Evgeny Dushko organized the project.  
- Yakutia's Supreme Court has delayed the question of incumbent Mikhail
Nikolaev's candidacy for the third time.  The court is now scheduled to
review the case on December 14th.
- Georgian parliamentarian Koba Davitashvili has made a series of
accusations against the Georgian government.  He declared that the
government does not have the political willpower to bring order to the
country.  In particular, he mentioned the lawlessness in the Pankisi
Gorge.  
- Russian businessmen expect the new European currency to be very helpful
to the development of bilateral relations and investment.
- Foreign Minister Igor Ivanov has once again refuted reports that Russian
soldiers are taking part in military operations in Afghanistan.  
- State Duma deputies are preparing for the third and final reading of the
new version of the Labor Code.  Members of centrist factions are certain
that the document will be approved.
- Presidential Plenipotentiary to the Central Federal District Georgii
Poltavchenko was asked whether -- as of January 1st -- a governor can be
fired if his region is recognized to be bankrupt.  He explained that there
is a legal provision for this, but that such measures would be applied
only in certain sensitive situations.
- The trial of Chechen terrorist Salman Raduev is coming to an end.
General Prosecutor Vladimir Ustinov will read his final statement
tomorrow.  He is going to demand a life sentence for Raduev and a 15-year
imprisonment for the former deputy prime minister of Ichkeria, Turpal
Atgeriev.  The people of Dagestan would like to see Raduev executed, but
for this, a moratorium would have to be placed on the prohibition of the
death sentence.
- Commander-in-Chief of the Russian Fleet Vladimir Kuroedov has officially
presented the new Northern Fleet Commander, Vice Admiral Gennady Suchkov.
- A monument -- the only one in the world -- to Russian poet Osip
Mandelstam was rededicated in Vladivostok.  The original sculpture was
destroyed by hooligans in 1999.
- An operation to seek out the homeless in Kaliningrad has been completed.
About a thousand police officers took part in the raid.  Twenty-eight
people were the detained and brought to special shelters, where they
received food, shelter, and help in reapplying for documents.  Similar
operations will be conducted on a regular basis.
- Deputy Prime Minister Valentina Matvienko will conduct a meeting with a
number of regional leaders to discuss measures to deal with homeless
children.  Mativienko stated that over 360,000 children in Russia do not
attend school.  Over a million children do not live with their parents or
guardians -- they are easy prey for criminals, sexual assailants, and drug
dealers.
- A communication center is now operational in Grozny, allowing residents
to call anywhere in the world -- although they often have to wait in line
for over an hour to do so.  A beauty salon has also been opened, and small
improvised markets are sprouting up throughout the city.
- Security Council Chairman conducted a meeting in the Kremlin today to
discuss the elimination of chemical weapons.  Russia has promised to
destroy all chemical weapons reserves at three sites -- in Udmurtia, in
the Saratov region and in the Kurgan region.
- A memorandum on the Russian-Canadian cooperation on the development of
Russia's Northern regions was signed during Prime Minister Mikhail
Kasyanov's visit to Ottawa.

*******

#6
The Chronicle of Higher Education
December 14, 2001
For Russia's Universities, a Decade of More Freedom and Less Money
Facilities languish and top scholars leave, but students have unprecedented
options
By BRYON MacWILLIAMS
Moscow

It used to be that scholars here could be set for life. One's education
defined who he or she was in society. The Communist Party once provided
scientists and other academics with better salaries, better apartments,
and, at times, the ability to engage in scholarship for the sake of
scholarship. To this day one of the first questions Russians ask of
strangers is, "Who are you by education?" Only now a professor might sell
beer -- or books from his personal library -- from a folding table on the
street.

The abject state of scholars is emblematic of the degradation of higher
education here in the wake of the collapse of the Soviet Union 10 years ago
this month. A diploma and a job in academe mean less than they once did, in
a country proud of its achievements in physics, mathematics, technology,
and space. A rich legacy of research has withered.

"There are pockets of excellence," says Jan Sadlak, director of the UNESCO
European Center for Higher Education, in reviewing the current state of
Russian higher education. "There is a great core of mediocrity, and quite a
large number of very dubious initiatives thriving on the very high social
demand for education ... because people in Russia are fairly eager to learn.

"One thing that is very, very clear... is that the financial situation,
which means public state support for higher education, is lacking."

The severe decline has been noted, however, and some attempt at reversing
it has begun. The country's 2002 draft budget allocates more resources for
education than for the military, a first in the nation's history. 

Along with the drop in financing, many other changes have swept through
Russian universities in the last decade. Curriculums have been purged of
their former ideological mandate: Universities no longer offer courses in
Marxism-Leninism or Scientific Communism. The humanities, a weakness of the
Soviet system, have progressed rapidly. The sciences have remained
exceptionally strong. International exchange and cooperation has
flourished. The wildfire spread of private universities has given public
universities healthy competition and given students new institutions that
are flexible because they are largely free from regulation. This, in turn,
has fostered more freedom of choice in state institutions. 

More Students

College students are responding to those changes. The total number of
college students increased by 16.4 percent over the past year, while
enrollment in technical colleges rose by about 10 percent, according to the
newspaper Ekonomika i Zhizn.

But today many of the best young professors leave academe for more
lucrative employment -- often in foreign countries. Students select majors
with an eye toward marketing their education abroad. Admissions standards
are tilted in favor of the wealthy, not the scholarly. Good students from
rural areas are cut off from the good universities. The infrastructure at
campuses is crumbling. The volumes in libraries get staler by the day and
are not replenished. Outdated textbooks and laboratory equipment are not
being replaced. Fake diplomas are being sold on city streets. A cottage
industry of preparatory courses is leading to the outright purchase of
grades. Professors, perhaps the lowest-paid professionals in society, are
becoming criminals through their widespread acceptance of students' bribes,
to ensure good grades and acceptance into the department of their choice.

Educators openly acknowledge these realities. Still, many insist that a
college education in Russia is on a par with that in the West -- only less
expensive. Brainpower, they note, exists independent of material
surroundings. Says Yaroslav Kuzminov, rector of the State University Higher
School of Economics and an influential voice in the public dialogue on
education: "You don't need to tear down our schools. You need to
reinvigorate them, provide them with resources, and, to the greatest extent
possible, develop them."

"Even though many problems have accumulated on every level of education, we
are not prepared to give up the system of education that we have had,"
Vladimir Filippov, the minister of education, told The Chronicle. "We
definitely had one of the best systems of education in the world in the
'50s and '60s. But to restore it to when it was the best in the world,
today, is not the way to go. Now it already has been shown that the former
system of education does not answer a lot of the demands of society. Not
only that, but efforts to return to the old system are not realistic
because throughout the whole world, in Europe, everyone is headed toward a
system of so-called mass education."

He adds, "The principle must be education throughout one's entire life."

An Evolving System

In the realm of continuing education, more than any other, perhaps, higher
education has retained its indispensable role in Russian society. Community
colleges do not exist here. Associate degrees do not have an equivalent.
But a vigorous system of evening classes, weekend seminars, and specialized
training has evolved quickly, particularly in cities such as Moscow and St.
Petersburg.

"There is now an army of people who first got their degrees in the late
'80s and early '90s. We started our studies under the Soviet Union, but
graduated in a market economy. We had not known then what [fields] would be
needed later. Today most of the people who take evening classes and pursue
second degrees are doing so to be competitive, and to earn more money,"
says Vladislav Mazur, a lawyer in the Moscow office of an international
auditing and tax firm.

Such examples of scholarship being parlayed into free-market success are
often cited by President Vladimir Putin as priorities, and a source of
prestige for the country. "Yet I must honestly say that the government has
paid insufficient attention to education in the recent past," he
acknowledged in September, in a speech at Moscow State Pedagogical University.

In the 1990s, spending on education, which hovered at around 3 percent of
the gross national product, was among the lowest in the Commonwealth of
Independent States, a union of former Soviet republics. "It is some kind of
savagery," says Mr. Kuzminov. "For the fourth straight year Russia is
experiencing economic growth, but we are still 8 billion rubles in the red
to the system of education. It is a disgrace that cannot be seen anywhere
else in the world." As with many other sectors, the government has not
always paid what it has promised in the budget.

The State Council, an advisory body comprised largely of the governors of
Russia's 89 regions, has called for the allocation of 400 billion rubles
immediately, and 200 billion rubles annually through 2010, to modernize
curriculums and refurbish the deteriorating infrastructure on campuses and
in schools throughout the country. 

It appears that Mr. Putin has listened. The federal budget proposed for
2002 allocates some 78 billion rubles ($2.7-billion) primarily for higher
and continuing education, an increase of 39 percent over 2001 spending
levels and 59 percent over 2000 figures, according to records of the
Ministry of Education and the Education Committee of the State Duma, the
lower house of parliament.

When the federal allocation is combined with the 35 billion rubles slated
to be supplied by municipal governments, which are primarily responsible
for financing schools, the total is in excess of projected military
expenditures for 2002. The measures would double the salaries for
professors and administrators. Salaries for professors and instructors in
Primorsky Krai, in the far southeast, are about 1,500 rubles ($31) per
month, whereas a professor in Khakassia, in eastern Siberia, earns about
1,830 rubles ($63). Viktor Sadovnichy, rector of Moscow State University,
by far the most prestigious institution in the country, reports an official
monthly salary of 2,791 rubles and 40 kopeks. "If I did not receive an
academic stipend, I probably could not live. Grants help somewhat," he
says, speaking of extra money he receives for sitting on various councils
and committees.

Because of low faculty salaries, only 50 percent of students from
departments capable of generating academics or schoolteachers move into
teaching positions upon graduation, according to the Education Ministry.

'Catastrophic' Conditions

The increases in spending, however, have garnered only the subdued
endorsement of educators. Some characterize the measures as fleeting, and
cosmetic. For example, the capital outlay sets aside 1 billion rubles
($34-million) for laboratory equipment -- the condition of which has been
called "catastrophic" by the Education Ministry. The budget also allocates
only 400 million rubles for book purchases, or about 100,000 rubles
($3,300) per university library.

"The main reason for the brain drain from Russia is not low salaries, but
the absence of necessary [laboratory] equipment. The contemporary
scientific process is constructed so that discoveries may be announced in
scientific journals only if you have worked on modern, certified
instruments," says Mr. Sadovnichy of Moscow State.

The new spending also does little to improve stipends for students. If a
student this year received 100 rubles ($3.33) per month, next year he or
she would receive between 400 and 500 rubles ($16.60). A sum of $17 is
sufficient to cover the cost of dormitory housing, but not public
transport, let alone food. 

The populace, however, now accepts that a free education is no longer
guaranteed. About 1.5 million, or 33 percent of the estimated 4.5 million
students, pay for a portion of their education, whereas in 1995 only
200,000 of the estimated 2.5 million students paid, the RIA Novosti news
agency reports.

Tutors and Bribes

These figures refer only to official tuition costs. Parents have become
accustomed to a vast system of private tutors -- more often than not
professors -- who provide lessons to help students gain admission into the
institution of their choice. The lessons, in reality, are bribes to ensure
high marks on rigorous entrance exams and a student's ultimate acceptance
by an institution's admissions board.

"In regard to corruption, I want to say that there is no country in the
world where you find corruption all over the place but not in education.
That never happens, never," Mr. Filippov says. "If the laws are such in a
country that they allow ... corruption, then they allow corruption in
education, too."

Mr. Filippov's staff last year teamed up with the General Prosecutor's
Office to install a telephone hotline for reporting such abuses. Bribery
offenses may carry prison terms under Russian law. Still, its backers say
the project failed -- despite a nationwide promotion -- because of a
general reluctance to name names.

Arrests of professors are almost unheard of in Russia. In August a court in
the Novosibirsk Oblast, in Siberia, sentenced a professor from a technical
college to four years in prison for altering grades for money. Lenta.ru, an
Internet-based news agency, suggested that the professor was not reported
merely for bribery, but because she demanded too much money.

The Education Ministry is experimenting with a plan to curtail bribery and
corruption through a series of five unified state exams, similar in format
to the SAT in the United States. If adopted nationwide in 2004, as
expected, students would not need to travel to the institution of their
choice just to take an entrance exam. Instead, they would take one test,
and the scores would be sent to up to 10 different institutions --
therefore eliminating subjectivity and, at the same time, reducing the
avenues for bribery.

Another consequence of the subjective admissions policies is evident in the
demographics. In 1991 some 30 percent of students enrolled in Moscow
universities were from the city or its suburbs; the figure is now 70
percent. "The strongest universities were built for all of Russia, not just
Moscow and the Moscow suburbs," Mr. Filippov says. The president's vision
of a "managed democracy" headed by a strong central government -- regarded
by liberals as a euphemism for authoritarian rule -- has led to a
resurgence in academe of a government obsession with internal security
threats from abroad. The Federal Security Service, or FSB, is widely
suspected of being behind the drafting of an austere system of oversight
for the Russian Academy of Sciences that is being likened to a drawing down
of the former Iron Curtain. The directive, which the government attempted
to keep secret, mandates the monitoring of contact with foreigners by the
academy's 53,000 scientists as well as the potential restriction of access
to the Internet.

Threatened Freedoms

The anticipated clampdown on academic freedom prompted George Soros, the
American businessman, to reconsider his philanthropic activities and
investments in Russia. Mr. Soros' Open Society Institute has done more
toward bringing universities online than the combined undertakings of the
government programs "Electronic Russia" and "Common Educational Environment."

Academic freedom is also said to be at risk because of the government
program "Russian Language," which aims to increase proficiency in Russian
and exert the language in regions where a local dialect is spoken. Last
spring nearly the entire staff of the department of Komi folklore and
Finno-Ugric literature at the state university in Syktyvkar, about 625
miles northeast of Moscow, was fired after protesting the introduction of a
new policy mandating that subjects be taught in Russian, not Komi.

As far as freedom to criticize goes, theoretically and, in most cases,
practically, it exists. The FSB has given some visiting academics,
including Jack Tobin, a Fulbright scholar, a hard time and the Putin
administration indicated its displeasure at a textbook that mocked those
former communist bureaucrats who only halfheartedly embrace democracy. 

But books and teaching materials are influenced less by the lack of freedom
of speech than pure economics. In most instances, the government must
approve teaching materials for state institutions. But the institutions
don't have the money for new textbooks anyway. They don't have computers so
the professor can go online and get independent materials or correspond by
e-mail. And the libraries no longer can afford subscriptions to foreign and
domestic periodicals, or purchase new books, so the professors are frozen
out there, too. Money limits professors more than censorship.

In at least one region, Chechnya, higher education has been effectively
eviscerated by two wars in the past decade. Earlier this year, one FSB
agent was killed and another was seriously wounded as they left Grozny
State University. A car driven by the university's rector was later
hijacked, apparently in retaliation, as it left the campus. Elsewhere, two
medical students were critically injured -- one lost both legs -- in June
during an explosion near a military checkpoint in the capital, Grozny. 

The Russian government is not ready for educational reform, in Chechnya or
anywhere else. The word "reform" was even shunned in September during a
gathering of the State Council as it undertook to evaluate the health of
the national system of education. Some more critical observers hint that
the discussion to begin rehabilitation is premature when a system is in the
advanced stages of gangrene.

*******
 
#7
Asia Times
December 12, 2001
Hollow ring to Russia's reassurances 
By Sergei Blagov 

MOSCOW - As the recently rediscovered partnership between Russia and the
United States reaches new highs, Moscow remains keen to convince its
so-called "strategic partners" in Asia that the rapprochement with
Washington is not being achieved at the expense of Russia's southeastern
neighbors. 

Notably, in the wake of US Secretary of State Colin Powell's visit to
Moscow earlier this week and his meetings with President Vladimir Putin,
the Kremlin was keen to reassure its Asian partners. 

Ongoing rapprochement between Russia and the US "does not mean any changes
in Russian foreign policy in Asia", the official RIA news agency quoted "an
informed diplomatic source" as stating following Powell's talks in Moscow. 

Russia still views its "political and economic presence in the Asia-Pacific
region as an important priority of the Russian foreign policy," the source
said. Moreover, "the rapprochement between Russia and the US may improve
stability and predictability in Asia," RIA commented. 

Furthermore, there should be "no doubts in the firmness of ties" between
Russia and China, according to the source. Any allegations that Russia's
current drift towards the US amounts to a "betrayal" of Moscow's partners
in Asia, notably China, are "groundless provocations aimed at undermining
relations between Moscow and Beijing", RIA quoted the Kremlin sources.
Russia and China are still in "close strategic partnership", the agency said. 

However, circumstantial evidence may suggest otherwise. For instance, words
of reassurance aimed at Beijing came from an anonymous source and not from
a high-ranking official. 

Notably, on December 11 Guennady Seleznyov, chairman of the State Duma, the
lower chamber of the Russian parliament, visited Beijing and met Chinese
President Jiang Zemin, as well as Premier Zhu Rongji. According to RIA,
they discussed China's World Trade Organization membership, bilateral
economic ties and even shuttle trade business. There was no mention of a
"bilateral strategic partnership" or issues of strategic stability,
favorite themes of previous bilateral discussions. 

Just five months ago, Russia and China inked a historic bilateral pact
aimed at creating a "just international order" and counterbalancing US
global predominance. On July 16, Putin and Jiang signed the Treaty of Good
Neighborly Relations, Friendship and Cooperation. The treaty, the first
such concord since a 1949 pact between China and the Soviet Union, stated
the two nations were not forming a military alliance, while saying that
bilateral "military-technical cooperation is not directed against third
countries". 

In the joint statement signed on July 16, Putin and Jiang expressed hope
for a "multipolar" world, a concept that reflected Russia's and China's
shared concern over what they viewed as American dominance in the world. In
their statement, Jiang and Putin reasserted their view of the 1972
Anti-Ballistic Missile Treaty as the "cornerstone of strategic stability".
They warned that the proposed American anti-missile defense could undermine
the existing strategic balance and spark a new arms race. 

In recent years, a concept of "multipolar" world has been Moscow's favorite
mantra, designed to argue that the US should not be allowed to dominate the
world as a single superpower. Needless to mention that following September
11 there has been no talk of a "multipolar" world in Moscow. 

On the other hand, at the fifth annual summit of the "Shanghai Five" in
China last June the group was transformed into a new international body,
the Shanghai Cooperation Organization, or SCO. Moscow and Beijing were
expected to push the SCO to become a sort of counterbalance to Washington's
perceived predominance. However, the SCO was rarely, if ever, mentioned
during the discussions relative to the Afghan settlement and Central Asia. 

Incidentally, on December 11, the Kyrgyz Popular Assembly, or parliament,
approved a presence of some 40 US combat aircraft and nearly 4,000
servicemen to be based at Manas, the international airport of the Kyrgyz
capital of Bishkek. Kyrgyz President Askar Akayev told parliament that the
US military presence was to become a "cornerstone of stability and security
in Kyrgyzstan". 

Kyrgyz Foreign Minister Muratbek Imanaliyev claimed that this decision had
been previous agreed with and approved by Kyrgyzstan's SCO partners. 

Still, despite the new partnership between Russia and the United States,
the Kremlin is still reluctant to become directly involved in Afghanistan.
"There will be no units of Russian armed forces in Afghanistan," Sergei
Ivanov told journalists on December 11, dismissing media speculation that
Russia has been preparing a 1,000-strong peace-keeping unit. This
information is "absolutely untrue", he said. 

Ivanov has repeatedly ruled out any Russian military involvement in
Afghanistan, even as UN peace-keepers. Moreover, Russian Defense Minister
Sergei Ivanov expressed doubts whether the UN would actually send
peace-keeping troops to Afghanistan, because "it's not Kosovo". In the
meantime, Russia plays a "key role" in humanitarian aid efforts in
Afghanistan, Ivanov told Russian RTR television. 

Although grim memories of the Soviet invasion from 1979 to 1989 are yet to
disappear in Afghanistan, nonetheless, the Russians hurried to make their
presence felt in Afghan capital. 

Uniformed Russians with Kalashnikov assault rifles now guard a plot of land
in the heart of Kabul where a field hospital has been built. About 100 men
from the Emergency Situations Ministry, headed by deputy minister Valery
Vostrotin, set up base last month. This ministry usually deals with helping
the victims of natural disasters, such as floods. 

"Russia is yet to make a decision whether it will take part in a
peace-keeping mission in Afghanistan," Foreign Minister Igor Ivanov stated
on December 11. Obviously, there are some Russian units to guarantee the
security of the Russian humanitarian mission in Kabul, he said. 

At the meeting with Powell, Putin thanked the US for helping Russian
humanitarian missions into Afghanistan. At Bagram airport "our specialists
and your specialists very effectively worked together", Putin said, quoted
by RIA. Russia sends humanitarian aid through Kabul's Bagram airport, which
is controlled by US troops. 

On the other hand, Russian politicians warn about the immense challenges,
now faced by Afghanistan. "Historical experience of recent decades
indicates that Afghan factions are unable to reach a viable compromise
themselves, this is why the UN support to Bonn talks became a crucial
factors," argued Boris Pastukhov, State Duma deputy and former Soviet
ambassador in Afghanistan. It is very important now to forestall
Afghanistan's disintegration or renewed clashes between factions, he stated. 

Therefore, Moscow moves towards closer ties with the US with a few second
thoughts about its "strategic" partners in Asia. Nonetheless, the Kremlin
is still hesitant about playing any role in international peace-keeping
efforts in Afghanistan. 

*******

#8
Stars and Stripes
December 12, 2001
Fitness expert who trained Russians for Afghanistan pushes Marines to their
max
By Mark Oliva, Okinawa bureau
Pacific edition

CAMP FOSTER — A Soviet martial arts expert is showing Marines in Okinawa
how exhaustion, hunger and pain are just getting to the good stuff.

Pavel Tsatouline, a former Soviet special forces sergeant, is helping the
Marine Corps Martial Arts Program on Okinawa and pushing the limits on
Marine Corps hand-to-hand combat training. But his ideas for more effective
workouts aren’t found in gyms.

"I teach how to dip deep into your reserves and perform at a 100 percent
even when you are exhausted, sleep deprived, hungry and hurt," Tsatsouline
said. "The Marine instructors I trained in Quantico immediately added five
to seven repetitions to their push-up ‘max’ with the help of so-called
‘high-tension techniques.’ "

Tsatsouline’s methods teach Marines to maximize the power they exert.

Recently, he taught Marine drill instructors at San Diego Marine Corps
Recruit Depot in the Physical Conditioning Platoon, where recruits who
aren’t strong enough are brought to standard. The next day, all eight
recruits passed the required physical fitness tests to rejoin training.

Tsatouline has taken his methods outside military circles to police special
weapons and tactics teams, and the Department of Energy’s Nuclear Security
Teams, the men and women who guard the nation’s nuclear supplies.

Tsatsouline’s physical training is drawn from workout techniques he taught
to Soviet conscripts in the late-1980s. He later emigrated to the United
States and became a citizen.

Tsatsouline’s methods focus on battlefield soldiers, who must perform at
peak levels under stress, often without sleep or proper nutrition.

"You have to remember, a Marine has to perform under stress," Tsatsouline
said. "That’s where conventional physical training fails you. Three days
between workouts fails to condition the body for the constant demands the
battlefield places on your body."

Once the techniques for drawing more power from body reserves are mastered,
Tsatsouline steps up the training with a heavy emphasis on combat techniques.

"We apply this strength to hand-to-hand combat, climbing, and firearms
skills," he said. "Not a new way of holding a rifle or performing a knee
strike, but techniques that radically speed up the skill acquisition.
Remember, the Soviet special forces had to rely on many conscripts,
including myself, and had to produce results within months."

According to Marine Lt. Col. George Bristol, director of the Marine Corps
Martial Arts Program, there are plans for Tsatsouline to travel to several
more Marine bases, including those on Okinawa.

"Real fighting is not like the ‘pop’ martial arts," Bristol said from his
office in Quantico. "His stuff is so basic and devoid of high-tech
gadgetry, it made total sense to me that he advise us on how to train more
effectively for hand-to-hand combat."

Bristol said Tsatsouline’s connection to Marines is instantaneous. He said
there’s a camaraderie, even thought they spent years training to fight each
other. Also, having an expert from outside Marine circles is a hit with
martial arts instructors he’s training.

"My son has a saying," Bristol said. "It’s called, ‘the mystery of the new
dude.’ We have a guy from a completely different background who’s
reinforcing the same techniques we’re preaching."

Tsatsouline, in his late 30s, is particularly engaging with the Marines he
trains, Bristol added. His own body is an example. Bristol estimates
Tsatsouline stands about 5-foot-10 and weighs about 175 pounds.

"Despite his build, he has phenomenal body power," Bristol said. "His
strength-to-weight ratio is off the charts. This is a guy, who on the sly,
coaches powerlifters.

Bristol said Tsatsouline offered to write a new physical training manual
and to continue to train Marines.

And he’s doing it for free.

"I got an e-mail on Sept. 12 from Pavel," Bristol said. "He said based on
the events of Sept. 11, he wouldn’t take any money for what he’s doing."

******

#9
pravda.ru
December 12, 2001
STATE DUMA DEPUTY YEVGENI PRIMAKOV: I DO NOT SUPPOSE MOSCOW WILL COMPLETELY
DUPLICATE ANY EXISTING MEGALOPOLIS 

Question. Yevgeni, you seem to be a person on a world scale. However, for
all that, you live in the city and walk along its streets. Do this city’s
issue concern you? 

Of course, I am not a person of world scale. I have never been to any other
planet and to outerspace. I have been living in Moscow since 1948. Earlier,
I lived in Tbilisi and finished school there. Afterwards, I came to the
capital and entered the Institute of Oriental Studies. Therefore, since
that time, I have been living here, except the five years I spent abroad.
Moscow is my native city, and I cannot imagine myself in any other parallel
place independent of Moscow life. 

Question. Do you think Moscow life of recent years is similar to what you
remember from 1948? 

Moscow has seriously changed since that time. It is now completely another
city, more similar to Western capitals: huge houses, lights, a lot of
restaurants and cafes, traffic jams. I suppose this will remain in the
history as “Luzhkov Moscow” or something like that. These are signs of
urbanization: new people come here, foreigners, ect. Though, that old
Moscow also had its charm, which now belongs now the memory. 

Now we have social stratification. It has appeared not long ago, though it
has become already a habitual issue. Do you feel comfortable living in a
city where there are so many poor people? 

It is sad to see an old woman in the street begging for money. Of course, I
understand it is typical for every country turning to a market system.
However, it is completely impossible to get accustomed to it and look at it
calmly. Unification is typical for another kind of society. During Soviet
times, another groups of people stood out with their incomes, for example,
Soviet scientists. I was 22 when I was elected to Soviet Academy of
Sciences. At that time, a member of the Academy received 500 rubles a
month, while the exchange rate was 63 kopecks for one dollar. I still
receive 440 rubles as an academician. You see the difference? However,
those privileges existed only for separate categories of citizens who
really deserved them. This could not cause social protest. Other people’s
salaries were more or less equal. Now, mass categories of workers do not
earn enough, while separate businessmen earn much, even too much. Of
course, it is not bad that somebody earns much if he fairly earns his
money, though, it is not good when scientists or actors earn so little.
Now, people who work with other people, teachers and doctors, earn less
than those who work with metals or papers, because, earlier, it was
supposed that citizens who work in material production produced the gross
domestic product. While others do not create material value, so they make
up the so-called “non-production sector. Apropos, after I became the
government’s chairman, I cancelled a decree passed earlier abolishing
additional payments to teachers for checking up class works and academic
degrees. 

However, now, to high-paid categories state employees belong to high paying
categories who, officially, do not receive such large salaries. 

So, it means they evade laws or they are corrupted. It is with what we all
have to fight. 

Fiscal institution cannot see it, while their people next door probably do. 

Recently, I have been visiting restaurants from time to time. And there are
many people there, including youth. Such young people possess enough money
to spend it in restaurants. Though, they do not look like functionaries.
Where do they get such big money? 

Moscow seems to be similar to big Western cities, though there is still not
an accurate division: rich districts and poor districts. 

In general, you are right. Though I suppose, in the very center, there are
no more poor people. 

Most people even cannot afford to have children. 

One child in a family is not a problem, while two or three, yes. And this
causes a dangerous tendency. Apropos, Moscow attracts people first of all
due to its high living standard. And mayor Luzhkov really does much to help
pensioners, which cannot be said about other cities’ administrations.
Though, of course, Moscow has higher incomes than other cities; there are
so many big banks and companies here, whose taxes partly come to the local
budget. 

Though, the situation with Moscow budget does not look as cloudless, as
usual. 

Theoretically, the federal authorities are right to suppose that people in
all of Russia's regions should have the same living standard independently
of where they live. And, besides, it is very important to preserve the
united economical space. In our country, many people probably suppose that
Moscow should share it's 'fat' with other regions. However, they did not
take into account that in this way, the economical development of the
country could be hampered. That is why I and my colleagues from the
Fatherland faction do our best to prevent this practice. All these pumped
over means are usually spent for consumption, while it would be better if
Moscow plants, which are, as a rule, more developed, penetrate into regions
and produce something together with the local producers. In this way,
regional infrastructures would be developed. 

It looks like Moscow is no longer an industrial city. What place does it
occupy in the division of labour inside the country? 

You know, it is everywhere that big cities are being relieved of industry.
I cannot say that it is bad. Though, industry withdrawn from the capital
should continue its existence somewhere else. But industrial works’
withdrawal from Moscow does not signify their annihilation. 

Moscow’s future could be predicted looking at London, Paris, and New York,
could not it? 

We have our own specification. To me, Moscow will not completely repeat any
existing megalopolis. For example, when we speak about rich and poor
districts, let us say in New York, we cannot see the same in Moscow. New
York was historically formed in this way. There are ethnic districts there,
Chinese, Italian, ect. And it is still being developed in the same way.
Brighton Beach is a relatively new district settled with imigrants from the
USSR. 

In Moscow, there are now many imigrants from Third World countries that
have never belonged to the USSR: the Vietnamese, Afghans, the Chinese,
Pakistanis, and Nigerians. 

Though, as a rule, they live illegally in Moscow. 

Therefore, do they live worse in their warm countries than here in Moscow
if they come here? Even Turks prefer Moscow to Istanbul. 

As a rule, Turks work as builders here and stay in Moscow for a long time.
It is significant, without doubts. Though, it is not the main argument that
our life is better. For example, in its expensiveness; Moscow seriously
outdoes many European cities. 

So, it turns out that we have a rich city? To make sense of it, it would be
enough just to go to a supermarket. It is a paradox: the country’s
destruction, economy’s volumes have been reduced, while the consumers’
market is so rich? 

Here, there is an element of a subsistence society. You know what is
interesting? In the West, some perishable goods are being marked down, and
they can be bought cheaper, for example, in the evening. While, in our
supermarkets, there is not such a system. The sellers prefer to
artificially keep high prices, and they never will sell the goods cheaper.
Flower are withering, but they cannot be sold cheaper than a monopoly
price. The mafia works here. It is bad. Because poor people, pensioners,
could buy some foods for example at the end of the day. Paradoxes and
absurdities, it seems, will not leave our reality for a long time. 

Anatoli Baranov 
PRAVDA.Ru 

*******

#10
Financial Times (UK)
December 12, 2001
Russians in a pickle over arrival of the euro
By Andrew Jack in Moscow

Russians traditionally carry out a high proportion of their purchases in
cash. Wary after repeated government monetary manipulations and banking
frauds, many prefer to keep their savings in cash, tucked away in pickle
jars or under their beds. 

By all accounts most of those savings are in dollars, but in the next few
days, there may be a palpable rush for those jars, as the message is
beginning to get through that Deutschmarks, Finnish markka and other
euro-connected currencies are about to be withdrawn from circulation. 

Tuesday was officially "euro day" in Russia, representing the culmination
of weeks of work by the European Commission in trying to raise awareness of
the single European currency ahead of the launch of euro notes and coins on
January 1 2002. 

Some 175,000 leaflets and 35,000 posters have been printed; a travel guide
to the 12 eurozone countries published; "euro stands" set up in shopping
centres; and television advertising spots planned for the end of the year. 

But in spite of the fact that the European Union represents one of Russia's
most important export markets, and considerable quantities of eurozone
banknotes are currently in circulation within the country, the countdown
has been met with widespread apathy in Russia, and even contradictory and
hostile reactions from officialdom. 

The stakes are high. An estimated 35 per cent of Russia's trade is
currently with EU countries, and that is expected to rise to 50 per cent
with EU enlargement in the next few years. Yet Russia's transactions and
official reserves in eurozone currencies appear to remain modest. 

Two years ago a report, by the Institute of Europe at the Academy of
Sciences in Moscow, warned there was an "unjustifiably disproportionate"
reliance on the dollar compared with its role in Russian trade and its
global importance. That could risk destabilising the domestic economy and
pose "a real threat to the country's security". 

No one knows how much eurozone currency is in Russia, with estimates of up
to $1bn-$2bn in total, but there are fears that indivi duals holding this
cash will find it difficult to exchange after the start of next year, or
that exchange booths will exact high commissions for doing so. 

That is one reason why, among the euro-adjacent countries, Russia has been
allocated a disproportionate part of the European Commission external euro
educational budget - E53,000 ($47,000). 

At a euro conference in Moscow on Tuesday, Andrei Kazmin, head of the
state-controlled savings bank Sberbank, which holds four-fifths of Russian
retail deposits, warned that even his institution might not be ready for
euro cash transactions by January 1. 

Like several of his colleagues, he pointed the finger of blame indirectly
at the Russian Central Bank, which has yet to make final approvals allowing
the state customs committee to release euro banknotes to the country's
commercial banks. 

The central bank has been busy distancing itself in the last few days from
reports in the local media that it has been advising Russians to avoid
changing currency into euros for the coming year because of the risk of
being stung with counterfeit notes. 

European diplomats have privately been concerned for some time at the
apparent lack of preparations being made by the central bank, which refuses
to provide any information on what proportion of its own reserves, let
alone the money held by Russians, are held in European currencies. 

Alexei Kudrin, the finance minister, bemused the audience at Tuesday's
conference with a suggestion that up to 20 per cent of Russia's reserves
were held in euro currencies. 

Tatiana Paramonova, the central bank's deputy governor, went on to argue
that a tenth of its reserves were denominated in euros. That appeared to
contradict previous statements by Viktor Gerashchenko, the governor, that
more than 92 per cent of the Central Bank's reserves were held in dollars. 

There was no clarity from the central bank's traditionally uncommunicative
press office. It said on Tuesday that all such information was a state
secret. 

Mr Gerashchenko said last week that his institution took a purely pragmatic
view and that its split in reserves simply reflected the relative volumes
of currencies that were traded at present, although he anticipated there
would be a gradual shift to the euro over time. 

He was set to provide a little clarity on Tuesday night, as one of the
leading Russian figures attending a 350-person musical and culinary euro
gala. The price? E400. 
 
*******

#11
YEARAHEAD-Russia's resurgence reshapes world oil hierarchy
By Andrew Mitchell

NEW YORK, Dec 12 (Reuters) - If the turbulent history of Russian oil is
anything to go by, Moscow's truce in an emerging power struggle with the
OPEC cartel will not last long. 

The mighty Russian oil economy's resurgence from its post-Soviet slumber
has awakened a rivalry with longtime powerhouse Saudi Arabia and recast the
global alliances that oil underpins. 

At stake are billions of dollars that multinational oil firms are itching
to pour into the former Soviet Union and OPEC nations alike as leading
producers gradually free rich reserves from decades of state control. 

"There used to be a phrase about Russia, 'Right oil, wrong country.' Over
the last few years there has been a subtle but probably real shift," said
Professor Ronald Oligney at the University of Houston.  

"They do see themselves playing a role on the big stage and have an
increased ability to do so." 

Home to nine percent of the world's oil production and a third of its
natural gas reserves, Russia is by far the biggest power outside OPEC's
largely state-run energy ranks. 

Moscow's recent reluctance to join OPEC in cutting oil supply to lift weak
prices spoke volumes about the changed mindset since the state let loose a
new breed of private energy giants to run their own show. 

Russia last week made grudging concessions to OPEC's demands,
acknowledgement that all-out price war against the cartel's low-cost supply
would starve Moscow of export dollars needed to service heavy debts.  

OPEC NERVOUS 

Russia's fledgling oil renaissance means Saudi Arabia -- which took over as
leading world producer in 1992 when post-Soviet FSU supply collapsed -- is
now looking nervously over its own shoulder.  

Forced into a series of production cuts by a slowing world economy Saudi
Arabia's output is less than a million barrels per day above Russia's seven
million bpd total as Moscow embeds itself once more as base supplier to
Europe. 

OPEC's insistence that Russia pull its weight in the price boosting effort
looked to many like a backlash from Riyadh after Saudi Oil Minister Ali
al-Naimi failed to win more than token cuts in a Moscow visit last month. 

Fellow OPEC members like Iran are just as worried about a torrent of new
supply looming from FSU republics Kazakhstan and Azerbaijan, where the
United States has worked hard to cultivate oil supplies outside the
volatile Middle East. 

It will hardly be the first time that a sudden rush of Russian oil has sent
the global industry scurrying to readjust. As world oil prices crashed in
the mid-eighties around 12 million bpd was gushing out of the USSR. 

"Time after time in years past the fortunes of Russian oil have had
significant global impact, beginning in the nineteenth century when the
development of an oil industry around Baku broke the global grip of
Standard Oil," wrote Daniel Yergin in his history of the oil industry, 'The
Prize.' 

This time the United States, which gobbles a quarter of the world's fuel,
is welcoming Russia's re-emergence as concern over supply security
encourages the Bush administration to develop new oil allies. 

SAUDI STRAINS 

Strains between Washington and the ruling Saudi family since the September
11 attacks have intensified U.S. public concern over reliance on Saudi oil,
although the Afghan conflict has so far been notable for not disrupting
energy supply. 

"The US-Saudi relationship will muddle through the latest difficulties
because both nations are linked strategically and economically. However,
Saudi Arabia has appeared to be less inclined to provide moderate oil
prices," said consultant Amy Jaffe of the Baker Institute for Public Policy. 

If a U.S. move against Iraq disturbs Baghdad's supply next year Washington
will look to both Saudi and Russian oil as key back-up options. 

Moscow's unsteady embrace of the free market has so far made it much easier
for domestic firms than outsiders to make Russian oil ventures work. 

Most famously, supermajor BP <BP.L>'s $500 million investment in local
producer Sidanko turned sour within months in a scuffle over ownership of
its assets amid widespread reports of cronyism and corruption.  

While international firms are slowly getting used to the potential
pitfalls, analysts warn the government must improve incentives for foreign
technology and financial muscle if Russia's oil revival is to gather steam. 

"You need a legal environment, a production sharing agreement environment,
you need security for your investment, sanctity of contract," said Julia
Nanay of Washington's Petroleum Finance Company (PFC). 

CASPIAN COOPERATION 

The Middle East's bigger, cheaper reserves have as yet proved just as
frustrating for would-be foreign investors, with Saudi Arabia and Kuwait
refusing to let international firms at their oil and Iran making only
modest headway. 

When the fields do open up the new Russian giants will be right there
competing for energy prizes -- especially in pivotal Gulf countries where
sanctions are holding U.S. firms back. 

Lukoil <LKOH.RTS> has already tied up an enormous production deal in Iraq
-- behind only Saudi Arabia in oil reserves -- to be implemented as soon as
U.N. sanctions are lifted. Gas behemoth Gazprom <GAZP.MO> is in Iran. 

While Russia once did all it could to smother independent Kazakh and Azeri
oil projects, Moscow is now poised to build up its role in the region while
Iran -- a natural conduit for Caspian oil to Asia -- is shackled by U.S.
sanctions. 

"On the one hand we have Russia becoming the U.S's oil partner," said PFC's
Nanay. "And on the other we have Russian companies that are going to be
very serious competitors." 

*******

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