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JRL #7049 Plain Text - Entire Issue

1. Reuters: Russian workers flex muscles, demand share of wealth.
2. Baltimore Sun: Douglas Birch, Russian space program is handed new
responsibility. Columbia disaster shifts fate of station and crew
3. Moscow Times: Yulia Latynina, TV Becoming The Opiate of the Bosses.
4. Vedomosti: Kirill Rogov, TWO WORLDS AND IN BETWEEN. What is a party
system for?

5. Jamestown Foundation Russia and Eurasia Review: Elena Chinyaeva,
6. Russia Business List: RenCap, 2003: Another Reform Odyssey.
7. Catherine Fitzpatrick: Re: Robert Bruce Ware/7045(reply to McFaul/7044).
8. gazeta.ru: Zhirinovsky in hot water over anti-US rant.
(interview with Nuclear Energy Minister Alexander RUMYANTSEV)

10. Baltimore Sun: Liz Atwood, Feasting on real Russian fare. (cookbook)
11. Financial Times (UK): Andrew Jack, Chubais pushes for UES
transformation: With 680,000 staff, the company is the largest and most inefficient power
generator in the world, analysts say. Now the former Kremlin chief of staff
wants to privatise it
12. Los Angeles Times: Dean Kuipers, The Russians are coming; Techno-pop
t.A.T.u. and pop-country (yes, as in Nashville) Bering Strait are making
moves in the U.S. Is it the beginning of an invasion?

13. The New York Times: Sabrina Tavernise, Capitalism Spawns a New Leisure
Class: Mall Rats


FEATURE-Russian workers flex muscles, demand share of wealth
By Melissa Akin

MOSCOW, Feb 5 (Reuters) - When Siberian air traffic controllers went on
hunger strike in December to press for higher pay, it was a turning point
for workers who felt betrayed by profit hungry bosses and the start of a
winter of discontent.

The controllers saw more flights over Siberia and new money rolling into
the industry, but they got none of it. Barred by law from walking out, they
refused food for a total of 11 days until doctors declared them unfit to
work and a major airport at Omsk was closed.

The protest won the air traffic controllers a 28.5 percent pay hike -- some
staff had been surviving on as little as $80 a month -- and a wave of
strike threats began at some of Russia's biggest enterprises.

The threat of a pay strike at metals giant Norilsk Nickel (GMKN.RTS) has
sent world nickel prices soaring.

At Aeroflot, flight crews and ground staff have threatened to ground the
flagship carrier if pay demands are not met.

Labour leaders say such high-profile pay strikes by relatively well paid
workers in crucial Russian industries are almost unprecedented.

"People are starting to ask, 'What am I worth'?" said Eduard Vokhmin,
programme director at the AFL-CIO's Solidarity Centre, a legal assistance
organisation in Moscow.

Russian workers have rarely forced that question. The last time Russia saw
a big wave of strikes was in the mid-1990s when some companies were not
paying wages at all.

"Salaries should just be paid. That's a priori. That was a degradation, an
upside-down situation," Vokhmin said.

"Now a normal situation is starting -- pay comes on time but it is so low
that the cost of labour has become an issue."

It is becoming an issue as the ground shifts under the Russian economy.


Norilsk Nickel management was famous for its ability to cut deals with
restive workers and head off union strikes before the possibility was ever
broached in the newspapers.

Norilsk, the world's largest palladium producer, was built as a forced
labour camp above the Arctic circle where prisoners of Stalin's Gulag were
literally worked to death. Now it is a blue-chip corporation, but the
Arctic weather and sky-blackening pollution have not improved with the
advent of capitalism.

As compensation for hellish conditions, workers received medical care, free
holidays and nearly three months of annual leave, a legacy of the Soviet
social safety net.

The trouble began when new management promised to improve efficiency, like
every other blue chip firm. It slashed social benefits, cut annual leave,
and said salary increases would lag inflation.

Transparency of cashflows is a demand of both Norilsk workers and the air
traffic controllers, a pre-emptive measure to ensure they know how much
they could be paid. Labour leaders have noticed companies' coffers are not
exactly bare.

"A lot depends on information about where the money is going. We have a big
gap between workers' salaries and management's. This is a big problem,"
said Vasily Veryovkin, deputy chairman of the Russian Oil and Gas Workers'

The corporate efficiency drive is expected to see millions of workers laid
off in coming years and labour leaders shrug in dismay when asked if the
still-frail Russian economy can absorb the new masses of unemployed.


The biggest layoffs will come at state concerns such as the state railway
corporation and power utility Unified Energy System (EESR.RTS), both
undergoing massive restructuring.

Frustration has mounted as inflation continues to run high and household
costs shoot up as the government raises the cost of heat and hot water,
claiming public utilities are in ruins and money is needed to fix them.

But the nation's workers are not taking to the streets. Union leaders say
there is little in the way of a labour market, so Russian unions are
relatively weak. That weakness is also a function of Russia's huge
territory, and partly a reflection of a brotherhood in toil which exists

Management even participates in some company-wide labour unions, especially
in the oil and gas sector -- a phenomenon Vokhmin of the AFL-CIO calls
'vertically integrated unions for vertically integrated companies.'

"We defend what we have and try to get more from employers, but we say you
can't kill the goose that lays the golden eggs," said Veryovkin of the oil
and gas union.

"Senior management always supports us," he said. "A lot of the
responsibility (for conflicts) lies with local management."

Still, the authorities have not looked kindly on union activity or leaders.
In December, an American AFL-CIO activist, Irene Stevenson, was deported
from Moscow airport on her return from the Christmas holiday, although she
had a new, valid visa.

The AFL-CIO said the government cited a law allowing deportations on
grounds of national security concerns.

A Novosibirsk judge banned hunger strikes by air traffic controllers,
raising a chuckle from the union president.

"Some of the guys have already said they'll spend their raise on a load of
food," Sergei Kovalyov said. "Next we'll protest by binging. Then the court
can try to ban overeating."


Baltimore Sun
February 5, 2003
Russian space program is handed new responsibility
Columbia disaster shifts fate of station and crew
By Douglas Birch
Sun Foreign Staff

MOSCOW -- The technicians and cosmonauts working in Russia's once-glorious
space program were laboring in obscurity a week ago, ignored by the world
they had once astonished.

Today, the fate of the $100 billion International Space Station, and the
three crew members aboard, depends on those same scientists and engineers,
working to figure out how to keep the station in orbit and the crew alive
during the months to come.

"Every section of our organization, every department knows what should be
done in an emergency such as this," said Aleksandr Aleksandrov, chief of
flight testing services for Energia, the government-controlled company that
runs Russia's manned space programs.

After the loss Saturday of the space shuttle Columbia, NASA grounded all
shuttle flights indefinitely. That means Russia's cramped but reliable
Soyuz capsules are the only available means for ferrying crews to and from
the station. Russia's Progress unmanned supply ships, with cargo capacities
of about 5 tons, are the only available spacecraft for delivering supplies.

The bottle-shaped Progress craft are also the only vehicles capable of
periodically nudging the station back up into its designated orbit, to
prevent it from catastrophically re-entering Earth's atmosphere.

Russia's cash-starved space program could suddenly receive hundreds of
millions of dollars. It is possible that it could also resurrect its own
space shuttle, the Buran, a spacecraft largely copied from NASA's
unclassified shuttle blueprints of the 1970s and 1980s.

At the very least, Russian space scientists and engineers will again be in
the spotlight.

What is remarkable, though, isn't the potential revival of Russia's space
industry but its near-demise. The Soviet Union sent the first satellite
into orbit. It lofted the first animal, man and woman into space. It was
the first to crash an unmanned spacecraft on the moon. A Soviet cosmonaut
was the first to walk in space.

But when the Soviet Union crashed, it took the space program with it.

"Everyone was thinking that it all belonged to the old Soviet Russia, and
the new Russia didn't need it," Leonid Gorshkov, deputy director of space
programs for Energia, said yesterday. "The 1990s were a hard time."

Russia's space dominance began with the launch of Sputnik on Oct. 4, 1957.
Before Washington even knew there was a space race, Russia was ahead. That
launch was quickly followed by others, culminating in the first manned
space flight, by former fighter pilot Col. Yuri Gagarin in April 1961.

The 'Chief Designer'

These triumphs were masterminded by Soviet space pioneer Sergei P. Korolev
-- a veteran of Stalin's gulag who studied captured V-2 rockets in Germany
after World War II. By the time he became the top Soviet rocket scientist,
Korolev's name was a state secret: He was referred to only as the "Chief

Gagarin was another matter. The 27-year old test pilot instantly became a
Soviet hero and still enjoys an Elvis-like popularity here. His 108-minute
flight might have served as the high mark of Soviet international prestige.

In response to Russia's successes, President John F. Kennedy pledged to put
men on the moon. Confident Soviet scientists eagerly took up the challenge
but, according to Gorshkov, quickly started to lose ground.

Soviet science of the time lacked the resources, and the technical
sophistication, to solve the daunting problems presented by a moon mission.
In particular, engineers had trouble developing a suitable rocket.

"We had failure after failure," said Gorshkov, who began his career at
Energia as a junior engineer in the late 1960s and later became its chief
designer. American astronauts walked on the moon in July 1969. By then, it
was clear the Soviets would rather quit the race than come in second.

But since there was still civilian and military interest in manned
missions, a team that included Gorshkov started designing the world's first
space station, on Dec. 31, 1969. Borrowing from the design for a secret
military project, the engineers built the space station Salyut ("salute"),
its name a gesture to the memory of Gagarin, who died in a March 1968 air

Salyut's first three-man crew arrived in June 1971, then headed back to
Earth. By the time their capsule reached land, all three men had
suffocated. Their capsule had depres- surized in the upper atmosphere,
losing all its oxygen.

The Soviet program had already survived other tragedies, some of them
hushed up by authorities. A series of Salyut stations were launched, and in
1979 two cosmonauts spent six months in space, smashing every endurance

"When we were making the first Salyut station, the longest cosmonauts
stayed in space was 18 days," Gorshkov said. "We were very proud."

NASA, meanwhile, completed a series of Apollo moon missions, conducted
scientific experiments aboard the small space station called Skylab and
launched its shuttle program.

Russian started designing its Buran space shuttle and building a bigger,
longer-lasting space station -- Mir. Its first section was sent into space
in April 1986.

"Mir was the peak of our achievements," said Gorshkov. "After it was
launched, we came to realize what faults it had, and what kind of
improvements we should have made." It remained in orbit 15 years, proving
itself one of the most durable spacecraft in history.

The weakness in the Soviet economy finally caught up with the space program
in 1989 when the Kremlin began slashing the budget, and the cutting
accelerated during the economic chaos of the 1990s. The Buran flew just once.

Government officials were deaf to the pleas of the space program. "It was
not only that they were less interested," Gorshkov said. "It was worse.
They put up obstacles to stop developments in this field."

At about the same time, NASA was having trouble getting money for a space
station from Congress. Sensing an opportunity, Russian space officials
approached their American counterparts in 1993.

The two space communities had been working together on and off since the
era of detente in the early 1970s. They decided to collaborate on one of
the biggest public works projects in history, the International Space Station.

While designing the new station, Russian engineers gamely struggled to keep
Mir in orbit. Short of money, they charged a Japanese television network
$12 million for allowing a journalist to travel to the station. They
produced ads aboard the vehicle and considered having a feature film made

"I didn't like it very much," Gorshkov said. "But it is something

Mir suffered a series of technical failures. There was a fire aboard in
1997, followed quickly by a collision with a Progress cargo ship. The crash
destroyed solar panels and punctured the hull. The crew saved the
spacecraft, but it required months of repairs.

End of the line

Even the Russian genius for getting by, making do, couldn't keep Mir
flying. In 2001, technicians at the Russian Mission Control Center steered
the abandoned station out of orbit and into the upper atmosphere over the
Pacific, where it broke up in a shower of fiery debris.

Construction had been begun on the International Space Station, drawing
financial and technical support from Europe, Canada and Japan as well as
the United States and Russia. The first station component -- a Russian-made
Zvezda module -- was launched in 1998.

Russia's manned space program then seemed to lose its remaining luster. The
space shuttle did all the glamorous work: delivering astronauts and most
supplies to the space station, as well as construction supplies.

A Soyuz is always kept docked to the station for use as an escape vehicle,
but it has a limited life in orbit. Twice a year, cosmonauts fly a
replacement module to the International Space Station, occasionally with a
tourist aboard paying about $20 million for the flight. About six times a
year, Russia dispatches unmanned Progress cargo vehicles to the station, as
it did Sunday.

Until the Columbia disaster, Americans showed little interest in shuttle
flights. With few manned missions of their own, Russians cared even less.

"We would like the Russian media to cover more of the international space
programs, but there is no interest," complained a spokesman for the Russian
Aviation and Space Agency.

Money from the U.S.

That could soon change.

Russia's manned space program might expand rapidly in the next few months.
The United States, which pays for most of the costs of the space station,
could order several new Soyuz and Progress vehicles.

Some scientists are even talking about reviving the Buran. They say they
still have all the necessary launch equipment and a warehouse full of spare

Talks between NASA and Energia about expanding Russia's role were expected
to begin this week.

Gorshkov, now in charge of planning a manned mission to Mars, has watched
his agency shrink. During the 1990s, he said, college graduates didn't want
to work for impoverished state agencies.

Russia's space effort might revive now, he said, but the future lies in
nations working together, not in a resumption of a space race: "Such huge
programs as the flight of man to Mars, of course, should be a joint one."


Moscow Times
February 5, 2003
TV Becoming The Opiate of the Bosses
By Yulia Latynina

Last Thursday the new general director of NTV television, Nikolai
Senkevich, appointed Alexei Zemsky as his first deputy. Zemsky possesses
two obvious qualifications for the job: Senkevich knows him; and Zemsky, a
producer of entertainment programming, once had a hand in producing a live
broadcast of President Vladimir Putin.

When NTV staffers learned of the appointment from a wire report, they
voiced their displeasure on the evening news. The network's executives
couldn't pull the plug because, apparently, they had no idea what buttons
to push or where the control panels were, and the people who could have
helped them were busy trashing them on the air.

On Friday, the journalists really cut loose, requesting a meeting with
Gazprom chief Alexei Miller. What were they thinking? Miller can't decide
to meet with someone at the drop of a hat. And talk about putting a guy in
an awkward position. Miller had just gotten through introducing Senkevich
to Putin. After all this, Senkevich goes and announces that one year from
now he will have racked up one year's worth of TV experience. After his
meeting with Putin it probably never occurred to him that he might not
survive that first year. Following a meeting with Putin, even a poodle
could last a year in the director's chair.

This story has three morals.

Two years ago we watched as businessmen very efficiently took over NTV.
They attacked from so many directions at once that the network's executives
didn't have time to react. They paid off the NTV security guards and drove
a wedge between the journalists.

This year we have seen what happens when bureaucrats try to do a
businessman's job. How hard could it be to replace the general director of
a company in which you own the controlling stake? Harder than it looks,
judging by all the egg on their faces. This is the first moral of the story.

The goal of all this seems to have been to demonstrate the president's
tight grip on the television industry. Instead, we saw what an influx of
the tsar's appointed servants can do to the command structure of a major

The problem is that incompetent management of a TV network becomes
immediately obvious to its viewers, whereas incompetent management of a
corporation only shows up at the end of the year on the balance sheet. It
seems to me that Gazprom's 137 billion ruble budget deficit last year is
directly related to Miller's habit of not rushing into decisions. This is
the second moral of the story.

Those in power view television as an enterprise producing something called
"control of the populace." But this is a subtle form of control: It uses
information, not the lash. NTV's former general director, Boris Jordan,
maintained a balance between pliability and independence, allowing him to
control his staff while his staff influenced the viewers.

Then they appointed the totally pliable Senkevich to replace Jordan, but he
is unable to control his staff. Although maybe it's no big deal. He could
just fire Tatyana Mitkova and Savik Shuster and hire a bunch of journalists
from Turkmenistan -- or even better, from Zaire, where during the reign of
the unforgettable Mobutu Sese Seko the broadcasting day opened with a
picture of the sky from which the figure of the soaring president gradually
emerged with a radiant light like a halo above his head.

However here's the rub: If you keep the pliable Senkevich in charge, you'll
have no trouble controlling the picture, but you'll lose control of the
audience entirely. From a means of controlling the populace, television
will become the opiate of the leadership. And this is the third moral of
the story.

Information is like pain. No one likes to feel pain. But you have to
contend with two incontrovertible facts. If you modify the nervous system
so as to feel no pain, you risk discovering too late that your backside is
on fire. And, you can't tune the nervous system using an enema, even if the
enema is administered by an


February 5, 2003
What is a party system for?
Author: Kirill Rogov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

Now, while Yabloko and the Union of Right Forces exchange
pointless blows to each other's public image, and the PR agencies and
advertising agencies grab their share of campaign budgets for the
tedious forthcoming elections, it is a good time to look at the
question of why those elections will be so dull. Everyone knows the
answer: the Kremlin is to blame for everything. But if we look at the
situation in more detail...
According to recent polls, liberal rhetoric based on the ideals
of private property, reduction of state participation, and maximal
freedom of competition doesn't have much appeal for voters these days.
Even educated, successful, and independent people use paternalistic
cliches in speaking of state issues. They depict the state as a strong
and authoritative father or arbiter, who is supposed to see to and
defend overall national interests as well as the interests of specific
groups in society.
However, in practice the same people show no remorse about
evading taxes or bus fares, avoiding military service, mistrusting the
police, and trying bribes in order to settle any conflict - in short,
they bypass the state on a daily basis. In fact, people consider it
more normal to give some money to a traffic policeman than to go to
the bank and pay the same sum as a fine. Many of them did not
participate in the recent census, unwilling to draw the state's
attention to themselves.
This comfortable ambiguity seems to be the most significant
feature of contemporary Russian society. The average Russian citizen
exists in a space between practical alienation from the state as it
is, and a spiritual loyalty to the "ideal state". Putin partially
embodies this craving for the Ideal State. This is exactly how they
want to see it: firm but not arrogant; restrained and rational;
concealing a commitment to justice behind bureaucratic cliches;
principled, but pragmatic. That is why nothing has substantially
damaged Putin's approval rating: neither this winter's freezing
weather, nor the Moscow theater hostage-taking, nor the Kursk
submarine disaster.
The other side of the coin is that Putin's rating is next to
impossible to turn into a political structure or an effective plan of
action. Courageous ideas and correct slogans inevitably get bogged
down in the efforts of all sorts of official groups, business
interests, and public demands - all of which pull in different
directions. The attempt to create a political party to follow in
Putin's wake leads to the formation of an awkward party called United
Russia: an amalgam of a ruling party, the president's fan club, and
the queue for the feeding trough.
Apparently, the phenomenon of Putin's popularity rating has
arisen in Russia in order to demonstrate that even having a very
popular president is still not sufficient for a nation's normal
development. It also shows that stability is a precondition rather
than a mechanism for development. And it makes it clear that the
unanimity of society in its loyalty to the Ideal State cannot replace
a natural public debate about real state-building. Actually, this is
precisely why a normal party system is needed.
(Translated by Arina Yevtikhova)


Jamestown Foundation
Russia and Eurasia Review
Volume 2, Issue 3
February 4, 2003

By Elena Chinyaeva
Elena Chinyaeva, who holds a doctorate in modern history from Oxford
University, is a writer with the leading Russian political weekly

At face value, the economic results of the last year in Russia are rather
good: The economy grew by 4.2 percent, which is more than the 3.5-4 percent
the government predicted at the beginning of the year. For the fourth
consecutive year the state budget ran a surplus. The government continued
to pay off its foreign debts on schedule while it worked on domestic
structural reforms. International rating agencies raised the rating of
Russia's sovereign debts to just below investment grade level. All that
helped Russia to reach its main foreign policy success of the year. It was
finally granted full membership of the G-7 group of leading industrial
countries at their June meeting in Kananaskis, Canada, with the right to
participate in discussions and decision-making regarding global economic
policy. Russia was also removed from the Financial Action Task Force black
list of countries facilitating money laundering.

Observers inside the country see 2002 as a year of lost opportunities,
however, because Russia failed to achieve a qualitative breakthrough in its
economic development. Given that 2003 is an election year for Russia's
parliament and the last year before the presidential ballot, one would not
expect any major changes to rock the status quo in the immediate future.

Nonetheless, a number of such changes are still needed. Government
officials themselves acknowledge that last year's economic growth was due
to the high world prices on oil, gas and metals, gold included, which are
still Russia's primary exports. Inflation remains high at over 14 percent
(compared to 18.6 percent in 2001 and 20.2 percent in 2000), and according
to some analysts the internal factors stimulating growth have now been
exhausted. The dubious quality of economic development is revealed by the
lag of investment growth behind the rise in GDP in 2002. The rates of
investment and GDP growth respectively were 1 and 5 percent in 1999, 17
percent and 9 percent in 2000, 7.5 percent and 5 percent in 2001, and 2.5
percent and 4.2 percent in 2002.

2000 was the last year that saw growth stimulated by the effects of the
1998 ruble devaluation. After that, world oil prices helped sustain growth,
but the government has largely failed to create conditions for further
qualitative growth. As the real income of the population started to grow
imports increased, indicating that domestic industries remain mainly

The current government headed by Mikhail Kasyanov was formed to fulfill the
so-called presidential program of economic development after Vladimir Putin
was elected in March of 2000. It envisaged a number of reforms, including
cutting taxes and breaking up state monopolies, developing a legislative
base for business and simplifying conditions for small and medium-sized

The main reform achievement of the administration was tax reform, but this
stopped half-way with the 13 percent flat rate on personal incomes its only
real result. The tax on corporate profits was also officially lowered, from
35 to 24 percent, but because allowances for investments were abolished,
the effective tax rate actually rose, from 17 to 24 percent. Meanwhile, a
new unified payroll tax (for pensions and social benefits) made the life of
employers more difficult. For small businesses, the tax changes made almost
no difference. As a result, a large portion of Russian business remains in
the shadow economy. Opinion polls confirm that most of the ordinary public
have not seen positive benefits from the tax reforms.

The reforms of the monopolies--the gas giant Gazprom, the power system EES,
the railways and the utilities (in effect, another state monopoly and
perhaps the most inefficient one)--remained incomplete. The same goes for
banking reform. No wonder, then, that the investment rate has dropped
dramatically. Not only are there no stimuli to invest, the investment
capacity of the Russian economy in its present state is restricted--it
simply would not be able to absorb investment even if it comes. Low
investment capacity is evident for instance from the fast growth in real
estate prices, especially in Moscow, where money is concentrated. In the
absence of investment instruments, a weak banking system and no stimuli to
open new businesses, investors buy real estate, driving up prices
regardless of the quality of what they are acquiring.

The main problem in the country's economic life seems to be the absence of
an official economic policy. If any, it consists of a single principle:
non-interference with "natural market forces." Rather than being a real
reflection of the government's genuine commitment to liberalism, it serves
as an excuse to avoid responsibility, since an active policy that produces
real change might have potentially threatening political repercussions.

While the government is unable, or unwilling, to come up with a coherent
economic policy, the president's economic adviser Andrei Illarionov does it
with an inexhaustible degree of enthusiasm. Illarionov, a liberal-minded
economist who had long argued for a controlled devaluation of the ruble
before August 1998, was conscripted to articulate the president's economic
views once Putin took office. Since then Illarionov has become a source of
both valuable economic ideas and scandalous criticism of almost everyone
who has anything to do with the country's economic policy.

Illarionov appears to have what the government is lacking--a clear set of
views on how to achieve a sustainable economic growth by using the domestic
resources: lowering taxes, decreasing inflation, weakening the ruble,
cutting state spending from the current 35 percent of GDP to 12 percent,
lowering foreign debts and taking no more loans, avoiding rises in state
monopolies' tariffs, unifying and lowering import and export duties,
liberalizing the currency market, deregulating state interference in
economic matters, and no restrictions on oil exports (with the revenue used
to pay down Russia's international debts).

Illarionov uses every opportunity to advance his views, participating in
numerous economic conferences and international meetings of state
officials. And as he could hardly be accused of being overly diplomatic, he
has made enemies at all levels of economic life. His main target is Anatoly
Chubais, whom he sharply criticized for what now are seen as the mistakes
of the reformist period as well as for the intended reform of the EES,
headed by Chubais. Unlike Chubais, who wants to break up the monopoly
horizontally into generating entities and a state-controlled distribution
system, Illarionov argues for vertical disintegration of the monopoly into
a number of regional EES.

Arguing against a strong ruble, Illarionov has repeatedly clashed with
Viktor Gerashchenko, the former head of the Central Bank. And, of course,
Kasyanov, together with all members of the government's economic bloc, as
well as Duma deputies in charge of economic issues, have been the target of
Illarionov's constant criticism. On various occasions, they have been
accused of mishandling foreign debt, high inflation, bad budgets, and even
creating the threat of excessive foreign investment. The media have long
followed Illarionov's public appearances, not so much for his economic
ideas, as in expectation of a public scandal.

Though his views appear a coherent liberal worldview, they are more than a
set of "right" ideas than a program to be implemented. Not surprisingly,
the government and the Central Bank's officials continue to run their own
affairs as they see fit. Liberal economists who form the current government
do not object in principle either to lowering state spending or inflation,
but with obligations to keep the public quiet, if not happy, they cannot
afford to cut wages or subsidies to the underfunded social sphere.

Illarionov's other ideas are equally controversial. In his interpretation,
balancing the budget, clearing foreign debt and "sterilizing" the influx of
dollars have become obsessions rather than instruments of economic policy.
He argues that low oil prices would be good for the economy--too many
dollars would harm the economy, investments should be no more than 17-20
percent of the GDP, otherwise the economy becomes "too lazy." Meanwhile, he
has been actively against any restrictions on Russian oil exports at a time
when prices are high.

Supporting the reform of the state monopolies, he has been sharply against
any increase in their tariffs as that drives up inflation. And--his
favorite issue--a strong ruble is bad for the economy. And since his views
on these two matters differed from that of international economic bodies,
Illarionov does not hesitate to sharply criticize them as well. Thus,
Martin Gilmore, the former head of the IMF office in Moscow, who believed
that the strong ruble would help increase the average wage, also became a

There is, however, a man who seems to have succumbed to Illarionov's
passionate preaching. Putin not only has kept Illarionov on as his adviser
for three years, but has also taken some of his ideas onboard in his
official statements. Thus, in his 2001 budget appeal the president argued
for a stabilization fund (money set aside to keep inflation down and
external and state accounts in balance), and in his 2002 budget appeal he
called for medium-term (three-years) budget planning--both ideas authored
by Illarionov.

Yet, the adviser's influence obviously has limits. Thus, the president,
formerly a staunch supporter of tax reform, declared in mid-2002 that the
time had come to halt reforms and tax cuts. The stabilization fund was
created by the government in the form of a budget reserve fund, which
appears to have already been used to help the regions. And the idea of
lowering state spending to 12 percent of GDP in a pre-election year is not
worth a mention. From time to time the oligarchs are able to intervene and
pressure the government to act on a particular issue, such as raising
tariffs on imported cars. But such interventions do not amount to a
coherent program. Quite the contrary.

Thus, between the radical views of Illarionov and the no-action policy of
the Russian government, the Russian economy continues to wander in the dark
without clear guidance, grazing here and there on oil and metal exports and
hoping that everything will somehow sort itself out. In a paradoxical
symbiosis, the liberal beliefs in the self-organizing forces of the market
easily converge with the notorious concept of Russian fatalism, producing a
synergy of inaction.


From: Ben Aris <benaris@online.ru>
Date: Wed, 05 Feb 2003
Subject: [RusBizList] RBL502 -- Feb 4 (just banks)

Russia Business List
Tuesday, February 4, 2003

2003: Another Reform Odyssey

This is the fourth in our series of pieces looking at the path of reform
that we are producing ahead of the spring session of 2003. When the first
report was put together in spring 2001, reforms were being adopted at a pace
unseen since the initial transition from the defunct socialist economy to
the market pricing mechanisms in 1991-1992. In subsequent sessions, the
reform process continued, albeit at a slower pace. As time passed, and as
more and more difficult reforms were tackled, the pace of reform has slowed
down even more, and the passing of any reform touching upon important vested
interests has required direct interference from the Kremlin, to which the
Duma still appears to be obedient.

However, as elections have started to approach, the Kremlins own readiness
to push through unpopular reforms seems to have started to dissipate. It
would seem that the Kremlin is not so much concerned with the presidential
elections in March 2004, but rather with the parliamentary elections due in
December 2003, in which it would like to secure a qualified majority in the
next Duma. Such a task is very controversial in so far as its impact on
reforms is concerned.

On the one hand, in order to get the pro-Kremlin United Russia party and its
allies a qualified majority, unpopular reforms need to be put on hold.
However, if such a majority is secured, then presumably this would mean a
strong boost to all kinds of post-election reforms. It is easy to see that
the opposite is also true -- the more unpopular reforms that are adopted
this year, the less are the chances of obtaining a pro-Kremlin majority in
the next Duma. Therefore, some slowdown now would appear logical -- a
slowdown for a year, followed by rapid reforms for four years appears a
better choice than an attempt to force through reforms now (risking revolt
among deputies concerned that such a push will cost them their seats) , and
a complete stalemate, such as in 1996-1998, for the next four years.

All this discussion would have made perfect sense and would have been very
close to reality were it not for an unexpected revolt by the Minister of
Economic Development and Trade, German Gref. In late January, his ministry
released a wake-up report, demanding the rapid acceleration of reforms, and
threatening that the alternative was that economic growth would founder by
2006. While this forecast sounds overly grim, it may not necessarily be
overly pessimistic, and growth could indeed slow down to levels of around 2%
per year, or very close to zero. In particular, Gref demanded the
acceleration of the following reforms:

Overhauling the public administration;

Decreasing the states involvement in the redistribution of resources;

Bringing institutional conditions in line with the demands of businesses;

Increasing the degree of openness of the Russian economy, and the
transparency of corporate finances;

Reforming the energy sector;

Reforming the social security system;

Concentrating state support of industry in the sectors of the new

We fully endorse the first six elements of Grefs list, but would be
slightly more careful about the final one. Indeed, all of the reforms on the
above list are those which have proved to be exceptionally hard to pass, but
they are also those which are vital if Russia is to continue to grow. It is
not particularly likely that Gref released this list without having received
some sort of a nod from the Kremlin, which makes us hopeful that there could
be a new sense of urgency to reform at the very top, thus bringing hopes for
a renewed reform effort.


From: "Catherine Fitzpatrick" <catfitzny@earthlink.net>
Subject: Re: Robert Bruce Ware 7045
Date: Tue, 4 Feb 2003

Re: Robert Bruce Ware 7045 (reply to McFaul 7044)

In his long and misplaced attack on Michael McFaul, as in other past
contributions, we see an aggressiveness from Robert Bruce Ware on the
Chechen issue that is inexplicable unless we consider whether his own field
work focusing on the view from Dagestan in fact has put him too close to
his subject although "field work" apparently doesnt necessarily mean
some kind of rigorous sociological research (if he has done it he does not
cite it) but merely visits to the region. First-hand impressions are
important, of course, and Ware no doubt has beneficial insights. But if the
rest of us have not yet made a field trip to this particular region, we
arent thereby deprived of having an opinion on an important subject like
Chechnya about which there is actually a great deal of news and
commentary on all sides of the issue from people who do go there regularly
or live there. There are plenty of people adopting a stance for or against
the war on Iraq, for example, without ever having been to Iraq or even the
Middle East.

Ultimately, however, lack of field experience isnt really the point. Ware
is just plain wrong when he says that human rights activists or
humanitarians abandoned the Caucasus region between the wars and after the
first year of the second war, and were simply all scared off because of
Chechen unruliness, and dont have the courage of their convictions about
Chechens as victims to go and stay in a region that is dangerous to them
primarily because of Chechen banditry, not because of Russian military
atrocities. In fact, Russian NGOs and foreigners in organizations like the
ICRC are well represented among the victims of Chechen bandits precisely
because they remained in the area. Non-governmental groups like Medicins
san frontieres, Human Rights Watch as well as intergovernmental agencies
like OSCE and UNHCR have remained in the region all this time; the OSCE
mission was recently forced to leave by the Russian government, not by
Chechen criminals. One well-respected local organization, Memorial Society
Human Rights Center, has been there from the very beginning throughout both
wars, and they have been joined by smaller groups in recent years like
Society for Russian Chechen Friendship. Ware could certainly not accuse the
Memorial monitors of not going out into the field; they have offices right
in the field. And yet their accounts give a very different version of the
story than Ware if we could ever get to see them on Johnsons list. Far
from being unconcerned about abuses of all kinds on all sides, most foreign
human rights and humanitarian workers in Chechnya will tell you that their
greatest challenge is applying the humanitarian/human rights ethic to
people who do not share this ethic Russians and Chechens alike.

As these people who live and work in the region will tell you, the dangers
to their lives come from vengeful Chechen fighters (who are mad at
ineffectual foreigners) as well as drunken Russian soldiers (who might
shoot off their rifles on a whim), and yet the overall danger to the
ordinary Chechen civilian every day comes mainly from the latter, not the
former. Nevertheless, these foreigners continue to risk providing us with
field reporting that shows the majority of human rights violations are
committed by Russian troops, not Chechen fighters, because the sheer amount
of numbers are far greater, and the Russians have overwhelming force. To be
sure, Ware always makes a quick genuflection to the reality of federal
human rights atrocities of this nature all the sweeps, the murders, the
massacres, the torture but he never wants to persist in looking at the
whole picture and draw the relevant conclusions as others on the scene do
about the primary need to focus on Russian atrocities, not only because
they are wrong but because they are ineffective in dealing with the problem
of Chechen crime and terrorism.

Ware also seems to fail to grasp how the world system to protect human
rights functions, and how human rights movements have necessarily had to
arrange themselves accordingly, and the mandate and resource limitations
they face in dealing with all evils -- the two sets of massive human
rights abuses, those, on the one hand, committed by Russian troops against
people in Chechnya, and on the other hand, those committed by people in
Chechnya against their neighbors to which he refers. First, the two sets
of abuses (technically the former is a "violation" and the latter an
"abuse" of human rights) are not equal or equivalent, because the two sides
are not equal in size or power the Russian military is overwhelmingly
larger. Second, there are numerically many more violations committed by
Russian troops against Chechens than by Chechens against others. Third, the
Russian policy toward Chechnya is a concerted, organized centralized state
policy whereas the attacks of Chechens on other Chechens or their neighbors
is the sum of a variety of scattered bands or individuals not subordinate
to central command. Fourth, the two types of abuses are not equal or
equivalent in the way they can be addressed by the international community
through existing mechanisms. Russian troops violation of human rights are
the proper subject of the international community, as human rights
violations of international agreements by which the Russian state is bound;
by contrast, Chechens abuses of Russian or Chechen civilians or their
neighbors are the proper subject of the Russian government and police as
crimes, i.e. violation of the federal criminal code. Even if you could
demonstrate a legitimate Chechen state power as such that deliberately
attacked neighboring republics, as distinct from a guerilla movement or
bands not under central control, it would still be the responsibility of
Russian federal authority to deal with the abuses. And even if you could
make the case for Chechen combatants responsibility for violation of the
rules of law under international humanitarian law (separate from human
rights treaties), ultimately you would only have recourse to the Russian
state to address the problem in the real world.

What non-state actors commit in these situations like Chechnya when they
commit kidnappings is *crime* not human rights violations. This may seem
like a distinction without a difference when you are about to get your head
cut off, but the world system to protect human rights as evolved around
these distinctions for 50 years. Some of the Chechen fighter actions could
be characterized as violations of the rules of war under international
humanitarian law (distinct from human rights law), and in that sense their
actions become of concern to the international community and international
human rights groups, but this area is less developed. The International
Criminal Court that could possibly look at such a case isnt functioning
yet, but when it does begin to function, we could hardly expect the Russian
government if it ever eventually ratifies the ICC statute -- to take a
case of Chechen violations of the laws of war to the ICC, and thereby open
up the possibility of the prosecution of their own soldiers for even
greater violation of the rules of war. Ultimately to address the kind of
Chechen abuses Ware means, more professional and effective Russian security
and policing methods are needed, as well as a recognition that when those
same forces violate human rights on a massive scale and are corrupt and
demoralized themselves, that project becomes almost futile.

Increasingly, international human rights groups concern themselves with the
evils of non-state actors as much as of states, but it has not been so
traditionally, and the areas for effective work are more limited. Memorial,
Amnesty International, or Human Rights Watch all condemn hostage-taking
terrorist acts like Nord-Ost in public statements, but they will not seek a
dialogue with the boyeviki as they might seek with Russian generals.
Clearly, human rights groups have to be preoccupied mainly with states
because states are responsible for human rights, and address the violation
of rights by states, not the commission of crimes by non-states which
states themselves much address. That may be a highly unsatisfactory form of
social action for Bruce Ware, and for the people living in a situation
where crime and terrorism seem more relevant than more abstract
international human rights violations, but if they want to address those
issues, they need a different kind of NGO than a human rights watchdog
group, i.e. they need a community group concerned with common decency and
public safety which forces the Russian police to operate effectively and
lawfully to stop ordinary crime. Any volunteers?

Thus, in looking at the second set of massive abuses to which Ware
refers, we have no choice to send victims of Chechen crime back to the
Russian police (or the pro-Moscow Chechen administration) the Russian
police which were supposed to be keeping law and order in the first place,
in what is after all their republic. They have not succeeded in doing this,
and didnt do it in between the wars, either due to neglect or corruption
or willful malice or all three. If the Chechen people were disorderly in
between the wars, where were the keepers of order? Duma Deputy Sergei
Kovalev has talked about the troops and tanks sitting idle in Dagestan just
over the border the summer of 1999 which did nothing to stop Chechen
incursions, when he monitored the region weeks before the second war, and
was told by generals to whom he complained that we have no gasoline.
Suddenly, after Basayevs invasion, the gasoline became available.

To go deeper, if Russians dont want Chechens to be criminals, they have to
think how they got that way. Then we can discuss how to deal with
criminal behavior that develops as a way of life in a traumatized
population suffering displacement, loss of relatives, lack of education,
and so on. How they got that way is of course a very long story having to
do with historical Russian wars in the Caucasus, deportation under Stalin,
and the failure in the Soviet era to invest in this poor region, and a
tendency to exploit it. Today, most human rights activists would tell you
that the Russian military atrocities against young Chechen teenage boys in
particular torture, murder, disappearances has only ensured that a new
generation has grown up, without benefit of even a Soviet secular
education, to chose Islamic fanaticism along with ordinary banditry and
crime that is, if they can even survive their teenage years. I can
remember the desperate attempts right before the second war by a few
intellectuals in Grozny to try to get English language lessons and some
kind of education abroad for some Chechen youth, if only in Poland let
alone London -- to try to have some kind of basic stock from which to grow
an educated urban elite some day. Even getting a passport to leave Russia
posed a significant challenge for such NGO efforts.

Can we learn anything about this subject from our own experience? In the
United States, Americans have spent the decades since abolition of slavery
dealing with the problem of crime in the African-American community most
victims of black crime are themselves African-Americans. The civil rights
struggle is one thing, taking place on one plane; the struggle against
crime is a different topic, although as with Chechnya, you could muddle the
issue and talk about two kinds of massive abuses. All kinds of schools
of thought, from conservative to liberal, have evolved to deal with this
chronic issue of crime, and its relationship to discrimination. Maybe crime
levels have dropped in major urban centers in America; but now the prisons
are overflowing with young black males, setting up the next cycle of crime
when they are released. By insisting that human rights activists (and
Sovietologists) always equate Russian federal human rights violations and
Chechen crime, in discussing this historically victimized group, Ware is
behaving like some whites in the U.S. saying that civil rights activists
can't crusade for equality for blacks without addressing black crime first.
He insists we all go on a field trip and have our faces rubbed right into
the dirt of some nasty Chechen crime first-hand, and get a taste of what it
is like to fear for our lives in the lawless field in order to qualify for
this discussion. We are to ensure every debate about human rights is
balanced by an equal and opposite discussion of crime. But we dont have
to do this. Rather, the challenge for him is to pull back from his facile
anti-Chechen racist stereotypes for half a moment to see if there might be
more to the story, and to see if there are other remedies besides giving a
pass to genocidal Russian policy, to solve the problems of both Chechen
victimhood and Chechen crime.

Compare Wares comments about Chechens to a passage from The Southern Case
for School Segregation (James J. Kilpatrick, 1962, quoted in an
interesting article in The New Yorker this week, Reporting Civil Rights,
about the radicalism, unruliness, and even Communist influence in the civil
rights movement):

[Manifestly, the resistance to a coerced racial equality is wide and
deep. Why is this so? The answer, in blunt speech, is that the Negro race,
as a race, has not earned equalityThe failure of the Negro race, as a
race, to achieve equality cannot be blamed wholly on white oppression. This
is the excuse, the crutch, the piteous and finally pathetic defense of
Negrophiles unable or unwilling to face reality. In other times and other
places, sturdy, creative, and self-reliant minorities have carved out their
own destiny; they have compelled acceptance on their own merit; they have
demonstrated those qualities of leadership and resourcefulness and
disciplined ambition that in the end cannot ever be denied. But the Negro
race, as a race, has done none of that.]

Substitute the word Negro (used in the 1960s) for Chechen; substitute
the phrases human rights activists" and "imbalanced Sovietologists for
white critics and "Negrophiles"; substitute the phrase Russian
oppression for white oppression -- and you have the viewpoints of Bruce
Ware about Chechens. They are offensive; they do not contribute to genuine


February 5, 2003
Zhirinovsky in hot water over anti-US rant
By Ksenia Solyanskaya

Vladimir Zhirinovsky has all but admitted to using obscene language in an
angry outburst aimed at George Bush and caught on film during a visit last
year to Iraq. Zhirinovsky is still planning, however, to sue the channels
that have shown the controversial footage over the past few days, accusing
them of violating his privacy and publishing the tape without his permission.

On Tuesday the uncensored monologue of a person very much resembling an
intoxicated Vladimir Zhirinovsky was the issue for discussion at the State
Duma Council the governing body of the lower house, which comprises the
heads of all the political factions. Over the past weekend the scandalous
footage of Zhirinovskys rant about George W. Bush, made up mainly of
expletives, was played on all Russias federal television channels, and the
vice-speakers colleagues seem somewhat taken aback by his behaviour.

''If this did take place, then its a real scandal,'' the head of the Duma
ethics commission Galina Strelchenko told RIA-Novosti news agency. After
the session Strelchenko told the journalists how Zhirinovsky responded to
the questions of his surprised colleagues. The head of the far-right
Liberal-Democratic Party claimed that the video was a fabrication and is
altogether groundless. He also urged the Duma leaders to guard him from

Nonetheless, the outspoken vice-speaker will have to prove his innocence at
least once more at a session of the Duma ethics commission on Friday. The
commission is set to conduct a thorough investigation into the incident so
as to establish how the journalists came across the video that has cast the
vice-speaker in an especially bad light. It is noteworthy, that the
chairwoman of the commission is ready to believe Zhirinovsky and to accuse
journalists of forgery.

''We want to known where they got that tape and whether it is real,''
Strelchenko said. ''To carry out a decision the commission by all means
will need truthful documents. It this is a matter of slandering our
colleague, the commission will act as his defender.''

Strelchenko has no doubts that he will personally attend the examination of
his case. ''Vladimir Volfovich [Zhirinovsky] is the most disciplined
deputy. Wherever he is invited, whenever he is invited, he always appears
on time. And if he cant, he will, by all means, let someone know.''

The lions share of the expletives in Zhirinovskys recorded statement was
addressed to George W. Bush, who, the Russian deputy predicted, would end
up in a Butyrskaya prison cell soon. Besides, the vice-speaker uttered
unquotable expressions concerning Bill Clinton, Monica Lewinsky, George
Bush Sr., as well as threatening to send Australia to the ocean floor, and
suggested that instead of bombing Iraq, America, together with Russia,
should attack Tbilisi and Baku.

TV crews of the TVS and Moskovia channels recorded it all last September at
a private party that Zhirinovsky attended during his trip to Iraq. Neither
of the channels dared to play the footage then, but last week the
controversial video was leaked on the web. Newsru.com posted the video on
its site, and over the weekend NTV and TVS, as well as some other national
channels showed the tape in their weekly analytical programmes. All the
obscenities in Zhirinovskys speech were removed, making his monologue
sound like one long 'beep'.

If it is proven that the video is not a fake, Zhirinovsky may lose his
vice-speakers post in the State Duma, Galina Strelchenko said on Tuesday.
But, to all appearances, most of the deputies are reluctant to apply harsh
sanctions against the LDPR leader. ''So far, we are not intending to take
any measures [against him],'' Gennady Seleznyov said of his deputy. ''Well
wait and see, and in general, I treat those videos philosophically,'' Artur
Chilingarov, another Duma vice speaker, told the press.

According to the Peoples Deputy Group leader Gennady Raikov, in line with
the house regulations only the LDPR faction itself has the power to recall
Zhirinovsky from the vice-speakers post.

In the meantime, it appears that it will not be difficult for the
commission to authenticate the video. As Gazeta.Ru has learnt, Zhirinovsky
himself has virtually acknowledged the fact that the video is genuine. At
the same time, LDPR lawyers are working on a lawsuit to be filed shortly
against the channels that played the video.

If the tape indeed is a fabrication, Zhirinovsky will undoubtedly accuse
the press of libel, however, the charges contained in his suit concern
violations of privacy and showing the video without his permission, though
the draft claim may be subject to some further changes. In the meantime,
the head of the LDPRs legal service has gone to Saratov where he is
defending Eduard Limonov.

The director of the Institute for the Problems on Information Law Andrei
Rikhter explained to Gazeta.Ru that the journalists are guarded against
such claims by the law on mass media. Article 49 of that law provides that
a journalist is required to obtain permission for a publication from the
person it is about with the exception of cases when such publications are
necessary for securing public interests. ''And this is in the publics
interest,'' Rikhter noted, ''since Zhirinovsky is the deputy chairman of
the State Duma and he was speaking of the national interests, not about his
family and children.''


Vremya Novostei
No. 20
[translation from RIA Novosti for personal use only]
Washington refers to these three countries as an axis of
evil; but can they produce their own nuclear weapons? Vremya
Novostei correspondent Andrei ZLOBIN asked this and some other
questions to Russia's Nuclear Energy Minister Alexander
IAEA director-general Dr. Mohammed ElBaradei has said that
inspections on Iraqi territory show that Baghdad lacks any
nuclear-weapons program, weapon-grade nuclear technologies, as
well as nuclear warheads themselves, Rumyantsev noted.

Question: Maybe, the Iraqi side hid such weapons well
Answer: All secret services agree that no nuclear weapons
were either bought or sold. It's impossible for any given
country to destroy or conceal weapon-grade facilities all on
its own. Not a single trace of Iraqi nuclear facilities was
discovered, thus showing clearly that Baghdad lacks nuclear
weapons. Nuclear powers learn about the appearance of
weapon-grade facilities elsewhere in no time at all. Everyone
found out about South African nuclear facilities immediately
after their construction.

Question: Dr. ElBaradei visited Russia last month. Did he
discuss this issue with you?
Answer: We didn't even touch upon this subject because
it's crystal clear that Iraq doesn't have any nuclear

Question: Will Russia agree to launch nuclear cooperation
with Baghdad, if anti-Iraqi sanctions are lifted?
Answer: Yes, if the sanctions are lifted, and if Iraq
becomes interested in creating its own nuclear facilities.
Every country, which has signed the nuclear-weapons
non-proliferation treaty, has the right to use nuclear energy
for peaceful purposes. For their own part, those countries,
which boast nuclear technologies, are duty-bound to help them.

Question: Iraq therefore lacks nuclear weapons. And what
about North Korea?
Answer: I don't think North Korea has such weapons. Mind
you, it's impossible to hide nuclear-weapon secrets at this
stage. One can surf the Internet, finding nuclear-bomb
blue-prints there, as well as do-it-yourself instruction
However, it takes years to establish a nuclear industry. In the
meantime neither Russia, nor IAEA have any evidence of the
fact that North Korea possesses a weapon-grade nuclear sector.
We also discussed this topic with Dr. ElBaradei.

Question: But the CIA claims that Pyongyang will assemble
eight nuclear bombs before the year is out.
Answer: It takes 60-70 kg of plutonium to make eight
nuclear warheads. But the thing is that North Korea doesn't
have so much weapon-grade plutonium. On the other hand, though,
Pyongyang can assemble a "dirty" bomb out of radioactive waste;
but such bombs can't be called nuclear weapons. The use of
"dirty" bombs won't lead to disastrous results. It's just like
spraying nuclear substances all over a big city's main street.
This outrage would cause a political outcry, arousing the
public at large all the same. However, no disastrous
consequences would ensue.
Deactivation teams would arrive, scrubbing the area clean and
washing away all radioactive waste.

Question: Can Pyongyang produce nuclear weapons with the
help of its remaining Soviet-made equipment?
Answer: No. It's an open secret that such nuclear units
can't be used to turn out weapon-grade materials. Present-day
technical-control means and space satellites make it well-nigh
impossible to conceal nuclear weapons. You see, a
radio-chemical plutonium factory covers an area of several
hundred hectares. Any specialist will locate this enterprise,
after studying the appropriate photos. For instance, the whole
world was stunned, after US satellites detected two
suspicious-looking buildings in Iran.

Question: Can South Korea make its own nuclear bomb?
Answer: Yes, sure. The national potential makes it
possible to accomplish this objective over a two-year period.
However, Seoul is in no mood to go nuclear.

Question: Do we cooperate with South Korea?
Answer: Yes, we supply uranium enabling South Korea to
produce its own nuclear fuel.

Question: Iran is yet another axis-of-evil country. How
can you explain all that fuss about the Bushehr nuclear power
Answer: An NPP can't be used to make nuclear weapons. Any
country wishing to obtain nuclear weapons should also establish
its own radioactive-fuel industry. The Bushehr NPP, now being
built with Russian assistance, is identical to a similar NPP
being constructed by the United States in North Korea. Nor do
we violate any international treaties. IAEA conducted 60
inspections in Iran last year, registering no violations
Meanwhile Russia considers its cooperation with Teheran to be
economically profitable.

Question: The United States is trying to convince Moscow
that the construction of the Iranian NPP also threatens Russian
Answer: It was the United States, which built the Iranian
research reactor. A plan for expanding the national nuclear
power industry was drafted under the Shah; at that time, it was
intended to build about 20 NPPs on Iranian territory.
Therefore, you are free to draw your own conclusions.

Question: Does Russia intend to build any additional
nuclear power units in Iran?
Answer: Teheran would like to build six nuclear power
units within the next few decades. We'll take part in an
international tender, if any. As I see it, we have every chance
of winning such a tender.

Question: Does Iran have any facilities for making nuclear
Answer: No.

Question: Does this mean that none of these three
countries has its own nuclear weapons?
Answer: At any rate, they apparently lack any facilities
making it possible to develop nuclear weapons.

Question: Myanma has asked Russia to build a nuclear
reactor. But what about the ruling military regime there?
Answer: I don't know whether Myanma has a military regime.
Still I know perfectly well that Myanma has joined the nuclear
weapons non-proliferation treaty. Myanma, which is also a
full-fledged IAEA member, completely fulfils its obligations.
That's why we are studying the possibility of building a
research reactor there.
Transcript by Andrei ZLOBIN.


Baltimore Sun
February 5, 2003
Feasting on real Russian fare
By Liz Atwood
Sun Staff

In a few weeks, Baltimore will be treated to sights and sounds of Russia as
the city celebrates the 300th anniversary of St. Petersburg. Area
restaurants will be joining in the Vivat! (Long Live) St. Petersburg
festivities with Russian-inspired food and drinks.

But if you'd like to pay homage to authentic Russian food in your own
kitchen, I would recommend Catherine Cheremeteff Jones' A Year of Russian
Feasts (Jellyroll Press, 2002, $16.95).

Jones, an American who is a descended from Russian royalty, knows the
difference between what Russians eat and what Westerners think Russians eat.

So don't look for Chicken Kiev or Beef Stroganoff or Charlotte Russe
recipes in this book. Her borscht is a hot vegetable soup, not the cold
beet soup we are accustomed to seeing.

The ingredients are simple, and despite her aristocratic blood, most of the
dishes are traditional village fare. Beets, cabbage, apples, eggplant and
potatoes are common ingredients, reflecting the food of a people used to
long winters and a short growing season.

Some dishes, like the beet salad, are easy to make, while others, like the
meat-filled dumplings called pelmeny, can take all day to prepare.

Some of the 40 recipes in this book were passed on to Jones from her
grandmother, and others she collected while living in Russia in the early
1990s. The chapters are organized in a way that reflects her dining
experiences during her stay - "Vegetarian Dinner in a Communal Apartment,"
"Spring and the Russian Bliny Festival," "A Birthday Party at Viktor's" and
"Autumn and Mushroom Hunting."

And along with the recipes, Jones relates stories and explanations about
the Russian food and celebrations.

Other Russian cookbooks may have more recipes, but I haven't seen any that
show a better understanding of Russian food.


Financial Times (UK)
February 5, 2003
Chubais pushes for UES transformation: With 680,000 staff, the company is
the largest and most inefficient power generator in the world, analysts
say. Now the former Kremlin chief of staff wants to privatise it.
By Andrew Jack

Unified Energy System controls 100 gigawatts of capacity across the 11 time
zones of the Russian Federation, with some equipment dating from before the
revolution in 1917.

After months of fierce lobbying, public outcries and more than one crisis
meeting chaired by President Vladimir Putin, the Russian parliament will
vote on plans to dissolve a company with 680,000 staff, possibly the
largest ever corporate break-up.

The critical second reading in the Russian parliament of legislation
designed to liberalise the electricity sector also comes against the
background of disastrous reform elsewhere in the world.

The collapse in wholesale prices after deregulation has, for example, led
to black-outs in California. In Russia's harsh climate, mangled reform of a
vast generating, transmission and distribution entity - in which the state
will still hold 52 per cent - would not only damage the country's fragile
market economy; it could also prove lethal.

Anatoly Chubais, the former Kremlin chief of staff under Boris Yeltsin and
the current chief executive of UES, is pushing for a definitive break with
the past. "Electricity still operates in the Soviet style," he says. "The
consumer is chained to the producer. There is no choice, no competition and
no stimulus to save costs or to invest."

Mr Chubais is pushing for the full liberalisation of the power sector by
eliminating the politically influenced energy commissions that set prices.
He wants to see UES broken up, along with the existing regional, vertically
integrated power companies in which it holds usually controlling stakes
into competing generation and distribution businesses.

There is a widespread consensus in favour of reform. Fedor Tregubenko,
utility analyst at Brunswick UBS Warburg in Moscow, describes UES as both
"the largest and the most inefficient power generator in the world".

Its generating assets are inefficient, on average 30 years old, and high
staffing levels leave productivity well below its peers in other emerging
or transition markets.

Revenues are equally distorted. Regional and federal tariff commissions
control prices. At best, that produces a cost-plus system that offers no
incentives to cut costs and insufficient revenues to generate profit and
stimulate investment.

At worst, political interference ensures that subsidised electricity goes
to influential customers.

Some progress has been made in improving efficiency and shifting from the
barter agreements that, as recently as 1999, accounted for almost
two-thirds of the company's bill settlement. But Mr Chubais, whose
management team took over in 1998, is seeking more radical reform.

But Mr Chubais' reputation as a "Bolshevik", willing to take messy and
ruthless decisions, adds to the complications of the reform process.

He has some formidable personal and political opponents, and he has to take
account of the interests of outside investors who bought into UES and the
regional energy companies when they were part-privatised during the 1990s.

Moreover, the federal parliamentary elections looming in December have led
many politicians to express fears that liberalisation could lead to price
rises and power supply problems.

More basic interests are also at work. One lobbyist says the leader of a
parliamentary group asked him for tens of millions of dollars in exchange
for his support. "Some deputies understand that this is Russia's last gravy
train and we won't have such a fundamental law again for a long while," he

Mr Chubais shares this analysis and warns that without substantial new
investment soon, the system faces crisis. "Reform and liberalisation is the
only realistic way to cut prices and create incentives for energy
businesses to cut costs," he says. "Nothing in the past 2,000 years of
world history has been more effective for that than competition."

However, questions remain about the pace of the proposed changes. "You need
reform but for it to be successful you also need an independent regulator
and you should not have the monopolist itself in charge of the changes,"
says Christof Ruhl, chief economist at the World Bank's Moscow office. Both
conditions are open to question in Russia.

Given the country's recent history, dominated by powerful oligarchs, weak
institutions and few hard-and-fast rules, Mr Chubais' supporters argue that
he is one of the few men capable of forcing through the reforms.

"He is trying to finalise the peaceful revolution begun in 1991," says a
long-time colleague. "This is the final step. He understood you have to
restructure UES if you want to create a market economy. We must finish the

Since his appointment four years ago, Mr Chubais has helped change UES'
corporate culture, introducing tough new management information systems and
more transparent accounting, and eliminating corrupt barter transactions.

But the company's shares, once the flagship of the Russian stock market,
have underperformed its peers.

Andrei Illarionov, President Putin's economic adviser, recently dubbed UES
"a national disgrace". He argued that Mr Chubais has devised the power
reform in a way that furthers his own political goals and will leave him
with continued monopolistic power over the electricity sector in the future
through control of the grid.

Grigory Yavlinsky, the head of the liberal Yabloko party and a
long-standing political rival, warns that politically influential oligarchs
may buy up large parts of the sector - at the expense of minority
shareholders and customers alike. "Chubais accepted the creation of bandit
capitalism and so long as he is in power, the backdoor will always be the
widest," he says.

Mr Yavlinsky argues that none of the regional energy companies created by
electricity reform should have a single investor owning more than 40 per
cent. "It's extremely important for our democracy and for the development
of small and medium-sized business to undermine oligopolistic control," he

Recent interventions by Mr Putin suggest that the laws on power reform will
be passed soon. But, in a compromise, the drafts circulating suggest the
government - and regional governors - will now have the final say on the
timetable for implementing liberalisation.

Hodson Thornber, a former power consultant who is now a managing director
at the Moscow investment bank Renaissance Capital, says the result looks
promising. But he warns: "Russia won't be reformist for ever. The lesson of
electricity reform everywhere is that it gets stuck. The question is when
it stops."


Los Angeles Times
February 5, 2003
The Russians are coming; Techno-pop t.A.T.u. and pop-country (yes, as in
Bering Strait are making moves in the U.S. Is it the beginning of an
By Dean Kuipers, Special to The Times

In Russia's post-Soviet thaw, the red of the Communist era is being
replaced by the prospects of green. At least that's what's caught the eye
of the U.S. record industry as the onetime Siberia of world pop culture
starts to turn out its first generation of international pop-music

"All the Things She Said" by t.A.T.u., a pair of saucy, dance-pop Lolitas
from Moscow, is the fastest-rising single in the United States, ranking No.
5 on the most recent Billboard sales chart. Driven by that video's
aggressive sexuality, the group's debut album, "200 Km/H in the Wrong
Lane," jumped 57 spots in the latest album chart to No. 53.Meanwhile,
pop-country band Bering Strait earned a Grammy nomination for its
bluegrass-inflected instrumental "Bearing Straight." Expatriates from
Obninsk, about 60 miles southwest of Moscow, the seven musicians have been
in Nashville for almost five years struggling to break into the
born-in-the-U.S.A. country idiom. The two acts have very little in common,
other than strict classical music training and mid-'80s upbringings with
easy access to "decadent" Western pop culture.

Bering Strait is hungry for American recognition and fame; t.A.T.u. claims
not to care.

"This is the first generation in Russia that has the ability to reach out
to us in the West," says Martin Kierszenbaum, t.A.T.u.'s
artists-and-repertoire executive at Interscope Records, which released the
duo's album in December. "They basically grew up after the fall of
communism, so they have one foot entrenched in Russian traditions like bard
music, a very melancholy, robust folk music. And they have the other foot
in straight-up MTV: jeans and Madonna singles."

Lena Katina and Julia Volkova of t.A.T.u. (pronounced "tattoo," the name
has no meaning) say that they met when they were both 11-year-old singers
in a touring vocal group. Tiny, redheaded Katina and dark, pixieish Volkova
fell in love, they say, and at age 15 or so they answered a casting call
for Svengali-like producer and psychologist Dr. Ivan Shapovalov, who writes
all their material: t.A.T.u. was born.

Russian pop, t.A.T.u. style, is not quite a revolution, but a frantic,
Prodigy-meets-Dido affair ranging from strident techno-pop with a slight
Eastern tint to quieter piano moments. The Russian version of the album
came out in 2001 and the single won MTV Russia's video of the year honor.
Producer Trevor Horn (Pet Shop Boys, Frankie Goes to Hollywood) reworked
three of the best tracks for the album's English-language version, and the
single debuted at No. 1 in the U.K. this week.

But t.A.T.u.'s two don't exactly act like pop stars. They duck the
spotlight, often have caustic one-liners for the press, say they're
inspired by no other pop music and live with their parents in Moscow. They
are anti-Britneys.

"We are all alone in the world. We are unique," say Lena, 18, and Julia,
17, combining their responses through a translator in a phone interview
from Moscow, when asked about bands they might have seen on MTV. "There is
no other band in the world that we want to be like."

Asked whether it's important to make it in America, Lena, who speaks
English well, picks up on the cultural bias of the question and yells,
"Moscow is the best city in the world!" They say they have no plans to live
anywhere else. As for touring, Kierszenbaum says it will happen, though no
plans are in place.

It may be that rock stardom simply has no native model yet in Russia, but
Bering Strait has tried a different tack.It's used its naivete regarding
the music biz to offer Nashville the possibility of a new twist on the
country formula.

The members all shared a classical guitar teacher who loved bluegrass
music, and became a band in 1988, when they were 10 years old. Weaned on
Earl Scruggs, Bill Monroe, Garth Brooks and the Nitty Gritty Dirt Band, by
age 12 they were a novelty act.

In 1994, the band got a steady gig in a Mexican restaurant in Moscow. Art
dealer Ray Johnson brought them to Tim DuBois, a collector of Russian art
who, as head of the Arista Nashville label, had signed the likes of Alan
Jackson, Brooks & Dunn and Diamond Rio.

"They were great entertainers, but if I were to have signed them at that
time, it would have been too much about the novelty of the fact that they
were from Russia," says DuBois, who brought them to Arista 2 1/2 years later.

"The Ballad of Bering Strait," a documentary film on the band that opens
Feb. 21 at the Laemmle Sunset 5, sees the group start with a bang at the
Grand Ole Opry, then lose four record deals in as many years. It's a quiet,
introspective film, in which the twentysomethings echo the seriousness of
t.A.T.u.'s Katina and Volkova, though in a friendlier way. Bering Strait
seems interested less in fame than in simply persevering.

"If we were to stay in Moscow and play country music, we'd be bound to play
those clubs for the rest of our lives," says lead guitarist Ilya Toshinsky,
with a notable drawl on the word "couuuuntry." "It would still be like an
exotic attraction for Western tourists."

Like t.A.T.u., Bering Strait breaks only a little new ground on its debut
album. Released in January, "Bering Strait" is mostly straight-ahead
pop-country (plus one Russian folk song) featuring the Americanized vocals
of Natasha Borzilova and Lydia Salnikova. (The band will headline the Roxy
on Feb. 18.)

Its most remarkable points are the blazing instrumentals and the fact that
it's on Nashville's hottest new label, Universal South, DuBois' venture
with former MCA Nashville head Tony Brown (George Strait, Reba McEntire,
Trisha Yearwood, Steve Earle). But opinions are mixed as to whether it's
the edge of a new crimson tide.

"I doubt that we're going to be overrun by Russian bands anytime soon,"
says DuBois with a laugh, though he adds that a couple of other bands there
have come to his attention.

"I'm going to say yes," says Interscope's Kierszenbaum, who also works with
Sting and Smash Mouth. "Because in the process of working with Julia and
Lena, I've discovered this incredible wealth of talent from Moscow. They
bring something completely fresh and exotic, in terms of the melodies and
the approach."

Bering Strait's Toshinsky feels that it's just a matter of time. "The
songwriting is there, the ideas are there," he says. "The execution is just
not there yet."


The New York Times
February 5, 2003
Capitalism Spawns a New Leisure Class: Mall Rats

They come on free shuttle buses and flock together in the food court. They
play video games for hours in the Soyuz computer store. They are Moscow
mall rats.

The "rats" -- and their habitat -- are still rarities in Moscow. The first
mall -- a gaudy tomb of luxury stores that appeared in 1997 underneath a
central public square -- was more a museum than a place to shop. Later, a
Turkish retailer began opening malls in Moscow's thickly settled suburbs.
Now, the Russian capital has 21 malls, one for every 500,000 people, fewer
even than in Warsaw, a city one-fifth the size, according to the Moscow
office of Jones Lang LaSalle, a real estate consultancy.

But the word is spreading that the mall is the place to be. Benches,
tree-lined alleyways and food courts are becoming cold-weather alternatives
to traditional hangouts -- city parks and the Old Arbat street. In the gray
slush of Saturday, teenagers jammed into shuttle buses that run to a new
mall in southwestern Moscow. In other neighborhoods, they walked or hitched
rides from their parents.

"It's a great place to come and have a rest from my parents," said Anvyar
Ilyasov, 16, standing with a cluster of boys at a Sony PlayStation in an
electronics store in the Mega mall in southwest Moscow. "My friends told me
about it."

In Soviet times, of course, those parents shopped in drab department stores
where almost all items were behind glass and lines predominated.
Understandably, they were skeptical of malls at first, thinking they were
only for rich people. Indeed, after the Soviet Union collapsed in 1991, the
older generation switched to outdoor markets, where even in winter clothes
flutter on canvas sales stalls and cabbages are hawked out of the backs of

"People have this impression about malls, they are afraid to walk in," said
Stanislav V. Tishenko, a manager at a new Moscow mall.

But the economy is growing, wages -- particularly in Moscow -- are rising,
and the outdoor markets are closing -- 167 now, down one-third since 1999.
Last month, the city authorities closed two of the most popular outdoor

"If that happened five years ago, there would have been a mutiny," said
Mariya Volkenshtein, a sociologist at Validata Market Research in Moscow.
Malls, she said, are "becoming normal for everyone."

The teenagers remember little or nothing of Soviet shopping agony. Their
faces go blank when asked about lines. Instead of the no-frills consumption
of their parents' day, young Russians today are surrounded by capitalism at
its most raw.

They feast on American culture, but scorn American politics. Aleksei
Shulenin, dressed in a knit hat pulled down over his ears, a Nike shirt and
baggy jeans, looked as if he had been plucked from the halls of an American
high school. He spoke admiringly of American music and movies.

"Americans think they can do anything," he said between bites of a burrito
bought at the nearby Mexican fast food restaurant. "Americans believe
whatever their government tells them."

But there are other forms of quiet flattery. The word shopping has made its
way into the Moscow vernacular. One of the larger malls that opened last
year calls itself WayMart, just one letter off from the giant American
retailer. The mall's management says the likeness is pure coincidence.

What Moscow malls lack in number they make up for in size. Mega is Eastern
Europe's biggest mall, though still smaller than most American malls. It
contains an indoor skating rink, and has had 1.5 million visitors since it
opened last month, said Olga Starichenko, the mall's spokeswoman.

Mallgoers, according to Mega's marketing surveys, are ages 25 to 45. Most
are at the upper end of Moscow's midwage earners, which means they take
home monthly salaries of $300 to $400. Muscovites earn more than double the
Russian average wage.

Some of the high-schoolers have taken after-school jobs, something unheard
of for their parents. Christina Khlystalova, 16, said she earned extra
spending money by handing out advertising leaflets outside subway stops,
much to the chagrin of her mother, a hairdresser.

"It's easy to find work in Moscow now," said Yevgeniya Kostomarova, who
works at a computer store to supplement her finances. "You have to show
some initiative, but you can advance without personal connections to the

Almost all the teenage mall-rovers claimed to be from middle-class
families, but few could agree on a definition. A group of friends in a mall
on Kashirskoye Shosse in southeastern Moscow said their middle-class
parents owned foreign luxury cars, like BMW's. Out of a group of five,
three had cellphones, every one had an e-mail address, and the girls had
nose piercings. Mr. Ilyasov, on the other hand, said his parents could not
afford to buy a car.

It is too early to tell if shopping habits will turn around completely.
Russians have traditionally traveled to the center of Moscow to shop. Now,
as more buy cars, the new malls are reversing the flow, luring people out
to the city's edges, much like shopping patterns in the United States.

At the mall on Kashirskoye Shosse, Ms. Khlystalova and her two girlfriends
talked about their lives over hamburgers and French fries. There is really
nothing special in a mall, they agreed.

"It's a place we go when we're bored," Ms. Khlystalova said.