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JRL #7055 Plain Text - Entire Issue

1. New York Times: Sabrina Tavernise, A Russian Tilts at Graft (It Could Be a Quixotic Task). (Georgi Satarov)
2. Reuters: France looks to Putin for anti-war support on Iraq.
3. Reuters: Iraq hopes Russia vetoes any UN resolution on war.
4. Luba Schwartzman: TV1 Review.
5. The Economist (UK): Russia's economy. Change those lightbulbs. High oil prices make Russia's economy look much better than it really is.
6. Nezavisimaya Gazeta: VERSHBOW: SADDAM HUSSEIN'S EMIGRATION REMAINS AN ALTERNATIVE TO A MILITARY SOLUTION. US Ambassador Alexander Vershbow: "We will take Russia's interests into account in post-Saddam Iraq."
7. Konservator: Pavel Sviatenkov, A GEOPOLITICAL EXPLOSION. Trans-Atlantic friendship as Russia's last chance.
8. Rossiyskie Vesti: Mikhail Smirensky, WILL THE FAMILY BE ABLE TO PRIVATIZE THE KREMLIN? Intrigues and power-struggles within the Kremlin's old guard.
9. Reuters: Smiles replace hammer and sickle at Aeroflot.
10. Moscow Times: U.S. Tries to Speed Up Visas.
11. Moscow Times: Valeria Korchagina, Bill Lifts Cash Limit to $3,000.
12. Baltimore Sun: Scott Shane, Vivat! A cultural feast. Baltimore throws a party to celebrate 300 years of arts inspired by St. Petersburg.
13. Asia Times: Hooman Peimani, Russia turns to Iran for oil exports.

*******

#1
New York Times
February 10, 2003
A Russian Tilts at Graft (It Could Be a Quixotic Task)
By SABRINA TAVERNISE

MOSCOW, Feb. 5 Not long after Boris N. Yeltsin chose him as an adviser,
Georgi A. Satarov decided to conduct an experiment. He invited top
officials from Russia's police force, its Federal Security Service, and
prosecutor's office to the Kremlin. Then he proposed that the officials
plant bribe-givers in their ranks. 

The idea was to identify sources of corruption in government. It was based
on the F.B.I's Abscam campaign of the 1970's that entrapped members of
Congress who took bribes from agents posing as Arab businessmen.

The Russian officials "didn't like it at all," said Mr. Satarov, his eyes
creasing with a smile. "From the tone of their voices and the expression on
their faces, you could tell they didn't want to do it."

The ruse never got off the ground. But it would be a recurring theme for
Mr. Satarov, who went on to spend five years inside the Kremlin during some
of the most tumultuous times in Russia's transition to capitalism. Fighting
corruption would eventually turn into his life's work.

Mr. Satarov, tall and stooped with a Santa Claus smile, last year published
two groundbreaking studies that illustrated, in eye-popping detail, exactly
how much Russians pay in bribes. His research institute, Information for
Democracy, surveyed 7,504 Russians to piece together what was the first
comprehensive picture of Russian graft.

It was not pretty. The researchers estimated that Russian citizens pay
about $3 billion in bribes annually about half of what they pay in income
tax. Business owners, meanwhile, were found to fork over a whopping $33
billion to keep things running smoothly, a sum just less than half of all
of last year's federal budget revenues. Traffic police officers rake in
$368 million, beaten only by education employees, who take $449 million.
The list goes on.

That Russia is corrupt surprised no one. Russians had become blas about
the problem after a decade-long economic roller coaster ride. Mr. Satarov's
numbers were important, instead, because they showed the sheer magnitude of
the problem and helped people realize how much of a drag it was on the
economy.

"Measuring it let people digest it," said Mr. Satarov at his institute in
what used to be the international Soviet youth headquarters and is now an
office building squeezed in between a tailor shop and a beauty salon. "Then
they began to feel correspondingly disgusted."

Corruption is not, as many here will claim, an inextricable part of the
mysterious Russian soul, but a curable sickness, Mr. Satarov says. That
attitude and his lack of cynicism sets him apart from the Russian elite,
who roll their eyes at the navet of anticorruption campaigns. 

Mr. Satarov's experience as an insider gave him unique view of the problem
of Russian corruption. The Kremlin simmered with scandals in the giddy
1990's. Privatization gave away valuable assets in cozy deals. Bureaucrats
were profiteering from oil sales abroad at hundreds of times the domestic
price and using the National Sports Fund to import luxury goods tax free.

Mr. Satarov, now 55, was one of a group of intellectuals who were swept
into government in the romantic rush that followed the fall of the Soviet
Union. He came from academics. As a mathematician in the 1980's, Mr.
Satarov bided his time making models of voting patterns in the American
Senate. Studying the Duma, or Soviet Parliament, was senseless it always
voted unanimously.

Life got interesting in the late 1980's. The Soviet Parliament began to
vote its mind. Then, in the topsy-turvy landscape of the new Russia, Mr.
Satarov leapt from a research institute into the halls of the Kremlin. He
was invited by Mr. Yeltsin himself, who wanted a wise, intellectual
counterbalance to his team of career bureaucrats.

If later his work on corruption took the form of mathematical formulas, it
began in the real world. He fought for the dismissal of a bribe-taking
regional mayor. (He won.) He disclosed a scheme used by a political party
to skim money from the state budget. But those battles were short asides to
his main tasks of advising Mr. Yeltsin and writing speeches for him.

He rejected the only bribe he was ever offered. But on his Kremlin salary
of $1,000 a month, far more than the Russian average, that was not hard.
Still, he is not rich. He lives in a one-bedroom apartment in Moscow with
his wife. He works on a computer with a hard drive that drones loudly,
indicating imminent failure. A handwritten sign taped to his photocopier
warns potential users that the machine is broken.

He left government in 1997, when, in his words, being an intellectual and
remaining a bureaucrat were mutually exclusive. The businessmen had risen
to power and were bossing state officials and, in some cases, making
government policy. By then, the government had hardened, grown cynical, and
lost the idealism of the early 1990's. Corruption was flourishing.

He was intrigued by the roots of corruption. In Russia, unlike in the West,
personal relations transcended professional ones. The same threads that
tied people together bound the bribe taker to the giver. Corruption was not
just a simple crime. It was part of the fabric of Russian society.

It has been for centuries. Under the czars it was the stuff of literature
and folklore. Then in Soviet times, government officials treated property
that supposedly belonged to the people as if it was their own. But by most
accounts, bureaucrats began to grow very rich only after Communism
collapsed, when partial economic liberalization made certain state posts
extremely lucrative.

"Our list of the 50 most influential Russian businessmen includes two
government ministers," said Mr. Satarov. At least a third of parliamentary
deputies have their own businesses. Government posts, including some
reports say minister and even deputy prime minister, have been bought.

Russia's economy plunged into deep recession after the fall of the Soviet
Union. In the vacuum that ensued, salaries shrank to a pittance. In the
early days of capitalism, furthermore, the line between corruption and new
thinking was blurred. Everyone was a state employee, and almost any
activity could have qualified as corruption. 

Low state wages are still a problem. Mr. Satarov has tried to help
bureaucrats tell their embarrassing secrets in public. He published a study
late last year showing that most state workers would be happy with salaries
of $500 to $800 a month about quadruple what they make now.

In some cases, bribes have so corrupted institutions that they have
virtually disintegrated. Take Russia's public education system. Teachers
and administrators, some of the lowest paid people in the work force, were
sustained by bribes from students. But the bribery spread. Now students can
buy good grades. 

"Corruption has deformed the system," said Mr. Satarov. "Instead of
awarding degrees to our smartest young people, we are awarding degrees to
our most able corrupters."

His campaign has had an impact. But sardonic Russian-style hand-wringing
has also been evident. There is a saying among the Russian elite, "How much
do we need to pay Duma deputies so they stop taking bribes?"

********

#2
France looks to Putin for anti-war support on Iraq
By Richard Balmforth

PARIS, Feb 10 (Reuters) - France, one of Europe's loudest anti-war voices,
dug in its heels further on Monday against early U.S. military action
against Iraq and prepared to look for support from visiting Russian
President Vladimir Putin.

As the Kremlin leader flew into Paris for talks with President Jacques
Chirac, France led a move within NATO that blocked planning for steps to
defend Turkey in the event of war against Iraq.

The NATO alliance called a special meeting of its 19 nations' envoys after
France, then Belgium and Germany, "broke silence" -- a procedure which
essentially blocked U.S.-driven discussion of defensive measures for Turkey.

The three countries -- which undertook their action despite Washington's
irritation -- have argued that preparations for war, even the defence of a
NATO ally, could undermine diplomatic efforts to avert a war with Iraq.

Russia, like France one of the five veto-wielding permanent members of the
U.N. Security Council, is also in favour of giving arms inspectors more
time to carry out searches for banned weapons which Washington says Iraq is
holding.

But Putin, who was due to meet Chirac later on Monday after arriving on a
three-day state visit, has to balance this against his need to nurture a
new-found relationship with the United States which he sees as vital for
Russia's economic recovery.

Putin, on a three-day state visit planned long before the Iraq crisis came
to a head, has been given a rough ride in the French media over his
handling of Russia's own war in separatist Chechnya.

Before he arrived, a group of about 20 demonstrators carrying posters
denouncing him as a liar and undemocratic staged a protest in front of the
Paris headquarters of the Russian state airline Aeroflot.

His talks with Chirac were likely to focus on how to persuade the United
States not to launch military action.

Figuring prominently was a proposal spelled out by Germany, which Putin
visited on Sunday, to beef up U.N. inspections of Iraqi sites, possibly by
using U.N. troops.

EUROPEAN RESISTANCE

Germany and France have led European resistance to U.S. plans to use force
if it believes it necessary to ensure Iraq holds no weapons of mass
destruction and to remove President Saddam Hussein.

"Anyone who follows events around Iraq can see that, in essence, the
positions of Russia, France and Germany practically coincide," Putin told
reporters in Germany on Sunday.

The German proposal, which builds on a French call for enhanced U.N. arms
inspections in Iraq before consideration of new U.N. resolutions, has
raised hackles in Washington, which sees it as a stalling mechanism.

Washington and Britain, its closest ally on Iraq, favour the idea of a new
Security Council resolution possibly endorsing the use of force.

U.S. President George W. Bush's hawkish defence secretary, Donald Rumsfeld,
said at the weekend he had not been officially informed of the initiative
and U.S. officials said it was "extraordinary" he had not been told.

France, while denying media reports of a secret Franco-German plan,
maintained on Monday that ideas put forward by Foreign Minister Dominique
de Villepin to boost inspections presented the best means of keeping
pressure on Iraq.

"The time has not yet come for a second resolution," said French European
Affairs Minister Noelle Lenoir on LCI television, arguing de Villepin's
proposals at the Security Council on February 5 offered a chance to get
Iraq to disarm.

"They put pressure on Iraq to cooperate more, which by the way is what is
happening," she said.

Top U.N. arms inspectors Hans Blix and Mohamed ElBaradei said on Sunday
after visiting Baghdad they had detected "the beginning of a change of
heart on the part of Iraq" in cooperating with them in their searches for
signs of chemical, biological and nuclear arms programmes.

Putin, aware Washington measures Russia by a different yardstick from that
used for its traditional allies, was clearly mindful on Sunday of possible
harm to his new and warm ties with Bush.

He told reporters in Germany there were "no barriers for further
coordination" of moves with France and Germany. But he added it was "not
right" to generate anti-U.S. feeling.

********

#3
Iraq hopes Russia vetoes any UN resolution on war

BAGHDAD, Feb 10 (Reuters) - Iraq said on Monday it hoped its traditional
ally Russia would veto any U.N. resolution that would authorise the use of
force against Baghdad.

"If this happens, we hope that Russia uses its veto power to foil it," said
Iraq's acting Oil Minister Samir Abdulaziz al-Najem.

"The Russians are our friends and we hope they will take the right decision
to avoid an aggression on Iraq," Najem, who is also a senior Baath Party
member, told Russian reporters in Baghdad.

Russia, which hopes to recover Soviet-era debts from Iraq, has long opposed
war. But analysts say it will want to avoid jeopardising the alliance it
has forged with Washington since the September 11 attacks on the United
States.

U.S. President George W. Bush said last week he would back a second United
Nations resolution endorsing use of force against Iraq if it failed to
cooperate fully with U.N. inspectors hunting for nuclear, chemical and
biological weapons in the country.

Russia, along with fellow veto-wielding Security Council members China and
France, believes there is no need now for such a resolution.

Russian President Vladimir Putin starts a three-day state visit to France
on Monday certain to be dominated by discussions on how to persuade
Washington not to attack Baghdad.

Putin and German Chancellor Gerhard Schroeder said after a meeting in
Berlin on Sunday they hoped Iraq could be disarmed of any weapons of mass
destruction peacefully. This was also broadly the attitude of France and
China, Putin said.

"The Russian stance as declared by Mr Putin is to give U.N. weapons
inspection teams more time to close all (weapons) files," Najem said.

*******

#4
TV1 Review
www.1tv.ru
Compiled by Luba Schwartzman (luba_sch@hotmail.com)
Research Analyst, Center for Defense Information, Moscow office

WEEKEND HIGHLIGHTS,
Saturday, February 8, 2003
- Chechen Prime Minister Mikhail Babich has submitted his registration. The 
document declares that he is taking another position, however, according to 
Interfax, Banich is not revealing what his new job will be. He may be 
replaced by Nikolai Aidinov, the representative of the Chechen government to 
the Russian Cabinet of Ministers, or Aleksandr Korobeinkikov, the deputy 
presidential plenipotentiary to the Southern Federal District.
- Russian President Vladimir Putin had a telephone conversation with British 
Prime Minister Tony Blair.
- President Putin met with Russian Prime Minister Mikhail Kasyanov and the 
ministers of the power organs to discuss questions of domestic and foreign 
policy. Interior Minister Boris Gryzlov reported on his visit to strategic 
sites in the Krasnoyarsk Krai. He declared that security measures are 
carried out at the highest level.
- President Putin discussed the situation in Southeast Asia in a telephone 
conversation with Indian Prime Minister Vajpayee.
- Security services directors, military commanders and regional officials 
met in Khankala to discuss and approve a plan for ensuring security during 
the Referendum on the Chechen Constitution.
- The Far East Military Prosecutors Office has initiated a criminal case 
against Captain Aleksei Basistov, who beat up three of his subordinates with 
a sapper shovel. One of the victims was hospitalized with a brain injury.
- The Caucasus Four the parliament speakers of Azerbaijan, Armenia, 
Georgia and Russia met in Kislovodsk to discuss relations between their 
nations.
- The Foundation for the Study of Public Opinion conducted a poll in 
anticipation of parliamentary elections, asking Russians what party they 
would vote for if the elections were held the next Sunday. United Russia 
and the Communist Party received 24% of the vote each, the Liberal Democrat 
Party received 7%, Yabloko got 5%, and the Union of Right Forces got 3%.
- Between 6,000 and 8,000 Kaliningrad residents gathered in the citys 
central square, protesting the new rates for heating and hot water. The 
rates were doubled on February 1st.
- First and second generation Russian emigres in the US are debating whether 
America needs a war in Iraq.
- Audience members of the official premier of the resumed Nord Ost musical 
included those who did not get a chance to finish watching it the first 
time.
- President Putin congratulated actor Vyacheslav Tikhonov on his 75th 
birthday and awarded him with a medal for Achievements to the Fatherland of 
the 3rd degree.
- The latest chess match between a human, Garry Kasparov, and a computer 
program, Deep Junior, ended in a tie.
- The search for the victims of last falls glacier continues in North 
Ossetia.
- The crew of the USSR-V6 zeppelin was honored today. 65 years ago, the 
aircraft was sent to the polar circle to save scientists who had drifted off 
on an ice floe, but the zeppelin hit a mountain and only 6 of the 19 crew 
members survived.
- The influenza epidemic has affected 14 Russian regions. All schools in 
the Tyumen Oblast have been closed for a quarantine.

Sunday, February 09, 2003
- Russian President Vladimir Putin begins his European tour with a two-day 
working visit to Germany. Putin and German President Johannes Rau will 
attend the opening events of the Year of Russian Culture in Germany, 
including a concert of the St. Petersburg Philharmonic Orchestra and an 
exhibition of Kazermir Malevichs art works.
- President Putin will also meet with German Prime Minister Gerhard 
Schroeder to discuss the situation in Iraq. Berlin like Moscow and Paris 
is against a military operation in Iraq.
- A resolution establishing passenger airline transportation was accepted 80 
years ago today.

*******

#5
The Economist (UK)
February 8-14, 2003
Russia's economy 
Change those lightbulbs
High oil prices make Russia's economy look much better than it really is

IT TAKES a sense of humour to be a Russian economist. At least, the 
Russian economy ministry thinks so. Its website has a page of jokes 
about economists, including a section on "How many economists does it 
take to change a lightbulb?" One answer is: "There is no need to 
change it. All the conditions for lighting exist."

At the moment, that is true. Russia's bulb is burning nicely. Since 
the devaluation of 1998, high oil prices and a big boost in oil 
output have helped the economy recover. Few are worried about the 
effects of a war in Iraq. Russia's treasury is so stuffed with cash 
that even if oil prices fell to a third of their current $30 levels, 
the central government could end the year with its books in balance. 

The oil barons, dazzled by the bulb and the riches it has brought 
them, want it to burn even brighter. They fear that bottlenecks in 
the state oil-pipeline system will keep them from growing. Last month 
at the World Economic Forum in Davos, Mikhail Khodorkovsky, head of 
Russia's biggest oil producer, Yukos, attacked the government's 
refusal to let the oil firms build their own pipelines. "I thought 
the state acknowledged a long time ago that the private sector is 
more effective than the state sector," he said. 

But if the government's main motive is to keep the politically-
connected magnates (known locally as "oligarchs") in check, another 
good reason is that Russia does not need a brighter bulb, but more 
bulbs of different kinds; indeed, some of the oligarchs are 
diversifying fast. For they realise that the country is too dependent 
on commodity prices. Oil and gas make up over two-fifths of exports; 
adding metals puts the figure at more than a half; counting oil 
products it goes up to 63%. When prices fall, the bulb will dim and 
the country could be plunged back into darkness. But while they are 
high there is little pressure to develop other bits of the economy. 

As a result, according to the World Bank, from 2001 to 2002 growth 
accelerated in the industries that export natural resources but 
slowed in those that produce goods for the home market. And small and 
medium-sized businesses grew more slowly than the overall economy. 

The authorities want to promote small business and attract 
investment, but it is a slow task. A new World Bank survey finds that 
deregulation has improved things: for the first time, Russian small 
businesses reported that their biggest challenge is competition from 
each other rather than the heavy hand of government. But bureaucracy 
and corruption, plus a dearth of loans from the still-struggling 
banking system, still stop these bright little sparks from growing 
into fully-fledged bulbs. 

These structural problems, coupled with worries about the future, 
mean that the riches of the oil bonanza are not flowing into more 
productive channels. Fixed investment in 2002 grew more slowly than 
the year beforean ominous sign given the dire need to modernise 
clapped-out factories, equipment and public services. Some economists 
reckon that fixed investment in new plant and capital should be 
around 11% of GDP a year; the current rate is some 6%far too little 
to sustain a real recovery. And foreign direct investment is still 
much too low; it has hovered below 1% of GDP under President Vladimir 
Putin.

A good chunk of this "foreign" investment is, in any case, Russian 
money returning from havens like Cyprus and Latvia. The government 
wants to coax it back. However, how much is still leaving is hotly 
disputed. The government says that capital outflows last year fell to 
a bit over $11 billion, down from $16 billion in 2001 and $24 billion 
in 2000. Alfa Bank, a Russian bank, agrees about the drop, but 
produces different figuresan outflow of $22 billion. But Troika 
Dialog, another Moscow-based finance outfit, thinks capital flight 
actually grew last year, to $25 billion, and that outflows have been 
much the same since 1996. Besides this, estimates Alfa Bank, Russians 
hold a staggering $40 billion to $60 billion in cash. This is not 
likely to flow into the banks until trust in them, and in the tax 
system, rises. 

The government is trying to change the bulbs. But some have been 
screwed in very tight. A banking reform to overhaul regulation and 
create a deposit-insurance scheme was supposed to go to parliament at 
the end of last year, but the state-owned Sberbank seems to be 
blocking it, fearingsince it holds most depositsthat its 
contributions to the fund would pay for the mistakes of more reckless 
private banks. 

Streamlining bureaucracy is as ever under discussion, but that, 
again, is easier said than done. Under the reforming Mr Putin, 
federal officialdom has actually grown. The restructuring of the 
electricity sector has been repeatedly delayed, as competing 
interests fight over who will control power stations and the grid. 

With a general election in December and a presidential one next year, 
some of these changes will have to wait for a quieter political 
environment. Until then, Russia must hope that oil prices stay high 
enough to keep the bulb burning. Yet if they do not, advises the 
ministry soothingly, economics tells us that there is no need to 
worry. "If the government leaves everything as it is, the lightbulb 
will screw itself in."

*******

#6
Nezavisimaya Gazeta
February 10, 2003
VERSHBOW: SADDAM HUSSEIN'S EMIGRATION REMAINS AN ALTERNATIVE TO A 
MILITARY SOLUTION
US Ambassador Alexander Vershbow: "We will take Russia's interests 
into account in post-Saddam Iraq"
Author: Alexander Kuranov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
FEW HAVE ANY REMAINING DOUBTS THAT THE OPERATION WILL GO AHEAD. THE 
ONLY QUESTION IS WHEN: A DAY, A MONTH FROM NOW? ALEXANDER VERSHBOW, US 
AMBASSADOR TO RUSSIA, DISCUSSES THE IRAQ SITUATION AS WELL AS 
PROSPECTS FOR US-RUSSIA RELATIONS.

Since the United States has already put over $2 billion into 
preparations for military action against Iraq, few have any remaining 
doubts that the operation will go ahead. The only question is when: a 
day, a month from now? Alexander Vershbow, US Ambassador to Russia, 
discusses the Iraq situation as well as prospects for US-Russia 
relations.

Question: Mr Ambassador, do you already know when the war with 
Iraq will start?
Alexander Vershbow: No, the US administration has not made any 
decision on that as yet. However, the schedule for action in relation 
to Iraq is clearly such that the window of opportunity for a 
diplomatic solution to the crisis, which was opened for Saddam, may 
soon close.

Question: In other words, there will definitely be a war?
Alexander Vershbow: There still remains a small chance for a 
diplomatic solution - and it is growing smaller. But the delay cannot 
last long.

Question: Might the war be postponed or even canceled if Saddam 
makes Iraq completely transparent?
Alexander Vershbow: According to statements from Mr. Blix and 
Secretary of State Colin Powell, Saddam Hussein is consistently 
avoiding implementation of UN Resolution No. 1441. The return to the 
political resolution of this crisis is possible only if Hussein starts 
to assist international experts and to destroy mass destruction 
weapons. 

Question: May the US agree to giving Saddam Hussein political 
asylum in some other country in order to avoid a war?
Alexander Vershbow: Yes, this remains an alternative to the 
military solution to the problem. But people knowing Saddam Hussein's 
personality think it practically unlikely that he may seek political 
asylum in some other country. 

Question: To all appearances, the US administration already has 
plans for its postwar policy in Iraq. Will there be some kind of 
occupation regime in Iraq? Will Iraq remain an independent state?
Alexander Vershbow: We don't keep these plans a secret. There is 
active work with Iraqi opposition groups: we are helping them unite 
and develop a joint strategy for restoring the nation's economy and 
political system. I'm not aware of all the details, but I know that 
there is no such plan as yet. 
On the whole, I think the Afghanistan scenario will be employed 
in regard to Iraq too.

Question: Why do you think Germany and France disagree so 
fervently with the position of the US regarding Iraq?
Alexander Vershbow: In fact, no one in the world really wants 
this war. President Bush would also like to find a peaceful way out of 
this situation. But the latest statements of the French government 
show that France does not completely rule out the possibility of using 
military force against Iraq if the present problems cannot be solved 
by political methods. In my opinion, our disagreements with Paris 
mostly concern tactics rather than the strategy for action against 
Saddam Hussein. 
Germany recently joined the UN Security Council as a temporary 
member. But its position causes some tension in relations between 
Washington and Berlin. However, it is not ruled out that Germany will 
vote for the use of force against Iraq if there is no other 
alternative. 
Maybe the most important aspect of this problem is that the 
authority and mandate of the UN Security Council have been dominating 
in the cause of resolution of the current situation in Iraq. If Saddam 
Hussein manages to evade all threats unpunished and continues acting 
in the same way, this will negate the authority of the UN Security 
Council.

Question: Why do you think Iraq rather than any other state 
should be punished right now? Does the US fear to deal with semi-
nuclear Pyongyang?
Alexander Vershbow: The US does not feel too comfortable about 
the current situation in North Korea, especially in the light of the 
opening of a new nuclear power plant. We don't have any illusions in 
this connection: it is clear that the actual aim of the power plant is 
not electrical energy, but plutonium that may be used for creation of 
nuclear weapons. 
We still believe that political regulation of the North Korean 
crisis is quite possible and that Pyongyang is not as dangerous as 
Iraq so far. We are ready to start a dialogue with the North Korean 
authorities, but we don't intend to yield to blackmail. 
Oil is not the actual reason for the upcoming military campaign 
in Iraq, since there are many less risky and expensive methods for 
resolving such issues. The cost of the upcoming military operation may 
be up to $200 billion. We could conclude a bargain with Saddam 
Hussein, lift sanctions against Iraq, and untie the hands of American 
oil companies. 
Of course, military action is not the only method for fighting 
terrorism. But it is necessary to conduct military action against 
specific gangs in some cases, as it was in Afghanistan. But there are 
many other mechanisms, including activities of law enforcement 
agencies and human rights advocates, by means of which criminal gangs 
may be disclosed and their probable actions may be prevented.
Besides, international political and economic efforts are 
necessary to eliminate the roots of terrorism. We have to show future 
generations that there are some approaches to solving such problems 
other than violence. 

Question: Is anti-Americanism as ineradicable as terrorism?
Alexander Vershbow: Of course, we are concerned about the 
development of anti-American attitudes around the world, especially in 
Muslim countries. These attitudes are astonishing, since we support 
freedom and defend it from dictators. We think that the values we are 
defending will eventually help all peoples in the world and encourage 
their spiritual development. 

Question: Which important events are expected in the Russian-
American dialogue this year?
Alexander Vershbow: We are hoping that the US Senate and the Duma 
will soon ratify the Moscow treaty on strategic arsenals. The further 
extension of cooperation on the bilateral basis and within the 
framework of the Russia-NATO Council will help protect security in the 
world. 
I also hope for considerable development of our economic 
relations. I think Russia will be able to increase oil exports to the 
American market. In this connection we pay special attention to 
construction of an oil pipeline between Western Siberia and Murmansk 
and construction of a terminal for servicing oil tankers in Murmansk. 
Progress in the cause of Russia's joining the WTO is possible too. I 
also hope that in a month or two the US Congress will finally free 
Russia from the Jackson-Vanik amendment. 
Our countries will continue cooperating in the international 
sphere on a number of issues, e.g. the problems of Iraq, North Korea, 
Afghanistan, and the Middle East. We are also looking forward to 
Bush's visit to St. Petersburg scheduled for the end of May devoted to 
the 300th anniversary of this city. 

Question: Are there any agreements between Moscow and Washington 
that Russia's interests will be taken into account in postwar Iraq?
Alexander Vershbow: This topic is being discussed, and we have 
already assured Russia that its economic interests will be taken into 
account in the course of restoration of the economy of postwar Iraq. 
However, we cannot give any guarantees in this field, since the Iraqi 
people and their new democratic government will have the deciding vote 
in the course of resolving such issues. We also believe that the new 
Iraqi regime will be more likely to repay debts to Russia than the 
current one. 

Question: Is it planned to involve enterprises of the Russian 
military-industrial sector in developing the US national missile 
defense system? 
Alexander Vershbow: Of course, we would like to cooperate with 
Russian scientists and companies that could make their contribution to 
developing the national missile defense. I think Russia is also 
interested in creation of such a system able to protect its territory 
and troops against potential threats. 
To make it possible for Russian specialists to participate in 
some projects related to the missile defense system, it is necessary 
that we should prepare a general strategy of cooperation in this 
field. We know that the Russian authorities are concerned about this 
and that President Putin has issued a call to protect Russian 
technologies and intellectual property.
(Translated by Kirill Frolov )

*******

#7
Konservator
February 7, 2003
A GEOPOLITICAL EXPLOSION
Trans-Atlantic friendship as Russia's last chance
Author: Pavel Sviatenkov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
RUSSIA SHOULD LOOK TO THE UNITED STATES, NOT TO EUROPE. THE US 
DOESN'T WANT TO SEE RUSSIA AS A SUPERPOWER, ANY MORE THAN EUROPE DOES; 
BUT IT IS IN US INTERESTS TO HAVE A STRONG AND STABLE RUSSIA WHICH IS 
CAPABLE OF BECOMING A COUNTERWEIGHT TO THE EXPANDING EUROPE.

It is entirely possible that a new great power may arise within 
the next decade - in competition with the United States. And it will 
not be China. If the nations of Eastern Europe join the European 
Union, this will result in 500 million people across a gigantic 
territory controlled by a pool of leading European states (Germany, 
France, Italy). Of course, such an expanse cannot be kept under 
control without creating a viable federation. This is what is now 
being done by a Convention headed by former French president Valery 
Giscard D'Estang. At the very least, it will be a "United States of 
Europe" (the body which gave the United States its Constitution was 
called a Convention). Financial unification has already been 
implemented. All that remains is to create a unified state and unified 
armed forces. As the experience of unifying Germany has shown, these 
two matters could be resolved within a short period of time, from the 
historical perspective.
Europe is forced to expand in order to compensate for Germany's 
power. The more nations become part of a united Europe, the less 
likely it is that Germany will be capable of dictating its will to the 
European Community, ignoring the opinions of its closest allies - 
France and Italy - and not taking Britain's stance into account. 
Germany's population (80 million) and economic influence are 
insufficient to ensure sole dominance in a united Europe. However, if 
it is possible to unite the human resources of Germany (80 million), 
France (60 million), and Italy (60 million) - and add the resources of 
Spain (35 million) and BeNeLux (15 million) - this would create a firm 
foundation for dominance across the continent. Germany, France, and 
Italy - joined by Spain and the BeNeLux nations - make up the domain 
of Greater Europe. Its natural border in the east runs along the 
margins of Russia, and in future might run along the Urals.
The Arab nations of the Mediterranean lie within the 
gravitational field of the new Europe. It is quite possible that they, 
as well as Israel, will in time become part of the European Union. 
This is understandable - in order to ensure its own security, Europe 
will have to make it impossible for unfriendly states to establish 
military bases in the Mediterranean; it will have to turn the 
Mediterranean Sea into the European Lake, bringing the Suez Canal and 
the Straits of Gibraltar under its control. Hence the determination to 
bring the strategic islands of Malta and Cyprus into the European 
Union. Libya recently became an associate member of the EU. Obviously, 
in order to extend membership to the Mediterranean states, the EU has 
to put an end to the Arab-Israeli conflict; this is why the European 
nations are showing active support for the Palestinian peace process 
and the "land for peace" formula. If a peace settlement is achieved, 
the Arab states of the Mediterranean will start joining the European 
Union: first the small states like Tunisia, Libya, and Lebanon - then 
larger states such as Egypt.
The less-developed nations of Eastern Europe will become reserves 
of cheap labor for the EU - primarily Ukraine, with a population which 
is huge by European standards. Ukrainians could become a good 
alternative to Turkish workers. Turkey will join the European Union as 
well, of course, but much later, since it lags far behind the 
standards of European civilization. However, one step towards this has 
already been taken: a pro-European Islamic government has come to 
power in Ankara, one which is prepared to work at carrying out EU 
directives on democratizing Turkish society.
Under these circumstances, the position of the United States 
would become extremely vulnerable. It would retain its primacy in 
NATO; but that bloc is only controllable as long as the US is dealing 
with separate European states. If the European Union becomes a 
federation, NATO would automatically turn into an alliance between the 
United States and United Europe - an alliance in which the United 
States would have a hard time giving orders.
The US needs a systematic counterweight to Europe. Islamic 
extremism is too weak for that purpose. It is capable of terrorist 
attacks, but it cannot oppose a United Europe. For a serious battle 
with the EU, the Americans will either have to create an "Arab 
Caliphate" or rely on Russia. But an "Arab Caliphate" entails the risk 
of the US losing control of the world's oil resources. The US might 
try to put together an anti-Europe coalition of Arab states, a kind of 
"Arab EU". In October 2002, the heads of the national banks of Saudi 
Arabia, Kuwait, Bahrain, Qatar, the UAE, and Oman resolved to create a 
customs alliance between these states and introduce a common currency 
by 2010. However, such a coalition might not last long if the 
communication lines of the Americans are severed and they lose control 
of the Mediterranean - which would certainly happen if the EU expands 
according to the scenario described above. Then the Arab states of the 
Gulf would become part of Europe's sphere of influence.
The "Great Turan" project (Turkey plus Kazakhstan plus Uzbekistan 
plus Azerbaijan) remains stalled. And even in combination, these 
nations could not stand up to the European Union (Greater Europe would 
be 50% more populous, and Turkey's weak economy is incapable of 
supporting Turkey's claims to the role of regional great power). 
Moreover, Turkey itself, which might be the natural leader of such an 
anti-Russian and anti-European bloc, is currently striving for EU 
membership.
So where is Russia's place in this new geopolitical situation? 
The united Europe is interested in us as a vassal - a weak and divided 
one. In order to bring to life De Gaulle's vision of "Europe from the 
Atlantic to the Urals", the Europeans must first of all break up 
Russia into pieces, since Russia today extends far beyond the natural 
borders of Europe. The broken-up European part of Russia would either 
be included in the EU or become a junior partner and a buffer between 
Europe and China.
Even in its present weakened state, Russia could still be a 
counterweight to Europe: a kind of "Europe II" project. The only 
question is whether anyone wants this to happen. Wouldn't it be more 
useful for the United States to have China clash with the European 
Union across "the expanses of Eurasia"?
Russia and Turkey together could probably become a counterweight, 
if the chosen strategy is to prevent the Europeans from penetrating 
the heartland. In theory, "naval powers" - of which the United States 
is one - must not permit this; especially since the United States 
itself has now penetrated the heartland (military bases in Uzbekistan 
and Kyrgyzstan). From this point of view, a Trans-Arctic alliane with 
Russia would probably even be advantageous for the United States.
Then the situation needs to be examined in the light of whether 
Russia should be strong or weak. A weak Russia couldn't be a 
counterweight; it could only be an obedient vassal of the united 
Europe (and this is what the united Europe wants). In other words, 
paradoxically enough, strengthening Russia is in the interests of the 
United States as well as Russia itself. Only a (relatively) strong 
Russia can be a substantial partner for the US in restraining Europe. 
Accordingly, Putin and his plan to strengthen Russia are a priori 
preferable to supporters of "human rights".
In light of the above, the entire political situation in Russia 
can be viewed through the prism of a confrontation between pro-
European and pro-American political forces: where the pro-European 
forces support a weaker Russia - and, correspondingly, a stronger 
Chechnya - with a high level of fragmentation across Russia's 
political territory. The pro-American forces support a relatively 
strong and united Russia, as a lever of influence on Europe.
Siding with Europe is a losing bet. Russia is too big a nation; 
it simply won't fit into a united Europe. If Russia joins the EU, its 
huge population would create a parallel center of power in Europe - 
something the Germany-France coalition would never permit. Therefore, 
Russia's lot is to remain outside Europe - outside a strong Europe 
which actively tries to intervene in Russia's internal affairs and 
supports separatist movements on Russia's territory.
Thus, at present, being oriented towards the United States seems 
more productive. The US doesn't want to see Russia as a superpower, 
any more than Europe does; but it is in US interests to have a strong 
and stable Russia which is capable of becoming a counterweight to the 
expanding Europe.

******

#8
Rossiyskie Vesti
February 6, 2003
WILL THE FAMILY BE ABLE TO PRIVATIZE THE KREMLIN?
Intrigues and power-struggles within the Kremlin's old guard
Author: Mikhail Smirensky
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
YELTSIN'S FAMILY SEEMS TO BE CLOSE TO LOSING ITS SOLIDARITY. THE 
FIRST INDICATORS OF THIS APPEARED LAST SUMMER. OBSERVERS NOTED OLEG 
DERIPASKA'S INTENTION TO ALLY HIMSELF WITH THE SECURITY STRUCTURES, 
HIS CONTACTS WITH UNITED RUSSIA'S GENERAL COUNCIL AND HIS INTRIGUES 
AGAINST MIKHAIL KASIANOV.

Lately, there have been some indications that the problem of 
settling the Chechnya conflict has added to the issues splitting 
"Yeltsin's Family". For instance, a newspaper controlled by Alexander 
Voloshin, who is close to Oleg Deripaska, has started actively 
supporting Akhmed Kadyrov - saying that "a constitutional referendum 
should turn the rebel republic into a full-value region". Analyst say 
the position of the paper reflects Deripaska's plans to stabilize the 
situation in Chechnya by any means available. The point is that since 
Bazovy Element took over the Armenian Armenal aluminum company last 
year, Deripaska has started planning to develop aluminum projects in 
the Trans-Caucasus republic, which requires an end to the Chechen war 
and a normal situation in the region.
It is no coincidence that representatives of the Union of Right 
Forces are disagreeing with the position in the aforementioned 
articles. Therefore, they continue clarifying the situation with 
Russian Joint Energy Systems (RJES) and the aluminum magnate on the 
Chechen political field, which is secondary for them, since last 
December the latter disrupted plans to reform RJES, proposed by 
Anatoly Chubais.
The position of Roman Abramovich, who aims to keep Mikhail 
Kasianov as prime minister, is less unequivocal. For instance, the 
Prosecutor General's Office connected with this group doubted the 
court decision on Budanov's case, which coincides with the 
requirements of the part of Chechens who are dissatisfied with Kadyrov 
and his stabilization and the position of the Union of Right Forces. 
Evidently, the recent attack on the methods for settling the Chechen 
conflict used by human rights advocates at the presidential human 
rights commission has something to do with the positions of this 
Family group. According to analysts, Boris Berezovsky - he is close to 
Abramovich's group - agrees with human rights advocates who insist on 
the inadmissibility to carry the referendum and presidential election 
in Chechnya until the war is over. The periodicals controlled by 
Berezovsky has started an informational campaign to support human 
rights advocates. It is not ruled out that a greater flexibility and 
uncertainty of this part of the Family is connected with some of its 
prior obligations to leaders of separatist groups.

YOU HAVE NOT BEEN HERE...

Kadyrov has become a convenient target on the threshold of 
elections. As a major presidential contender in Chechnya, he is trying 
to unite around him the majority of Chechen clans both in Chechnya and 
outside the republic. That is why it is important for him to play the 
role of a defender of people's interests. Consequently, he is trying 
to shift all the responsibility for the situation in the republic to 
the Russian military. It would be a good reason to start a scandal 
which would make it possible for him to play the popular in Chechnya 
role of a federal government opponent.
However, Vladimir Putin and his team think that Kadyrov has had 
enough freedom and do not allow him to extend it. Apparently, this is 
also a reason for the scandal around the dismissal of Chechen Finance 
Minister Abramov. Having appointed to this position a member of his 
team Isaev, Kadyrov has tried to gain control of major financial 
current - while the St. Petersburg was the most concerned about it. 
Experts say the major mission of Chechen Prime Minister Babich was to 
prevent it. The latest crisis in the leadership of the republic shows 
that so far the St. Petersburg team has been unable to gain control of 
the politically important "Chechen button".

ONLY A LOVERS' TIFF?

There has been a new stage of opposition between the Kremlin's 
two major strategists - Voloshin and Surkov. Some sources say speaking 
about this conflict that head of the presidential administration has 
told Sukrov to determine his position between the Family and the St. 
Petersburg team.
According to our sources, just before New Year Voloshin told 
Surkov to stop the projects that were raising the Family's concerns. 
In particular, it concerned his contacts with the radical nationalist-
patriotic circles and rejection of participation in Berezovsky's 
attempts to build connections between the Communist Party and radical 
liberals. However, Surkov preferred to make plans independently. As a 
result, in late December rumor had it in Moscow that Surkov's 
dismissal was almost decided.
However, apparently as the political situation develops, Surkov 
is finding new possibilities to continue his games. They say the 
development of the situation around Chubais' team which is being in a 
complicated situation now and is likely to lose its internal stability 
if RJES head has to leave his post, has been handy for the talented PR 
consultant.
At present, some tough competition for this position has started. 
The rumor says it may become vacant in February, when the government 
will try to shift the responsibility for winter energy supply problems 
to Chubais and try to dismiss him. In this situation, Surkov has 
started lobbying for combining the forces of the Union of Right Forces 
and the Alfa-group. According to him, this makes it possible to 
substantially change the situation inside the party favorably for the 
Kremlin and to use the present discrepancies between different groups 
in the Union of Right Forces, including the discrepancies between 
Chubais and Nemtsov. Judging by our information, Nemtsov has already 
been hinted that he may have troubles in 2003.
At the same time, as we have already noted, there are also 
disagreements in the St. Petersburg team due to discrepancies between 
the president's personal interests and the group interests of the "St. 
Petersburg clan" which controls major security structures. All the 
above gives grounds for serious doubts that the Kremlin will be able 
to mobilize its forces in the near future to act as a united political 
player.
(Translated by Arina Yevtikhova)

*******

#9
FEATURE-Smiles replace hammer and sickle at Aeroflot
By Samantha Shields

MOSCOW, Feb 10 (Reuters) - By the end of this year Aeroflot's logo will no
longer bear the hammer and sickle -- a symbol of the Soviet era most of
Russia dropped over a decade ago.

But the giant state airline, which turns 80 this month, hopes the belated
change will help banish the visions of scowling cabin staff and rickety
planes its name conjures up for many travellers.

The new logo -- still under debate -- is part of Aeroflot's image overhaul,
to include staff training in polite and efficient service and cheerier
uniforms and cabins.

Founded in the early days of the Soviet era, Aeroflot (AFLT.RTS) has more
than survived the Union's traumatic collapse 11 years ago.

The airline, flag carrier for the world's largest country, expects to
almost quadruple 2002 net profit to $74.2 million and boost it another 35
percent to around $100 million this year.

And by the end of 2005, it should have a leaner and more fuel-efficient
fleet, much of it foreign-made.

"For 70 years, Aeroflot was a state bureaucratic structure that did what it
was told to do by the government," Lev Koshliakov, the company's deputy
general director told Reuters.

"Today it's a shareholding managed by modern economic methods on the basis
of our real market position."

Aeroflot rode out the global airline crisis that followed the September 11,
2001 attacks on the United States much better than its peers because it was
less dependent on transatlantic flights and able to grab market share as
its competitors cut flights to Russia.

AMBITIOUS GROWTH TARGETS

Koshliakov said the company intended to secure its ambitious growth targets
by restructuring its fleet and cutting costs.

Aeroflot's fleet now consists of 27 Boeings and Airbuses along with over
100 Russian aircraft, some of which are grounded because they are old.

By December 2005 it will comprise 18 Airbuses and nine Boeings through
different leasing arrangements but only around 50 Russian planes will remain.

"We're just beginning the fleet restructuring project, but we hope it will
eventually lead to a considerable reduction in leasing costs, about $100
million a year," Koshliakov said.

Growing financial prosperity has led to grumbles of discontent among staff,
who earn anything between $400 and $3,000 a month, and feel they deserve a
piece of the improving action.

Aeroflot began pay talks this month with unions representing a third of its
15,000 staff who are threatening to strike.

The dispute coincides with looming strike action at mining giant Norilsk
Nickel and is another example of Russian workers flexing their collective
muscle to squeeze more money from their employers.

Koshliakov was confident that a strike would be averted.

"We have no reason to think the threat to strike will be fulfilled, we are
in dialogue with the unions to solve the problems," he said.

LEAVING BAD OLD DAYS BEHIND

Customers are slowly coming around to the idea that Aeroflot might have
moved away from the bad old days of the early 1990s when the company had
split into hundreds of tiny "babyflots," many operating just one or two
planes.

Russian airline safety hit rock bottom during that period of economic chaos.

Industry analysts say safety has been a major problem since then because
the vast majority of Russia's civil fleet was built before the collapse.
Few carriers have the money to buy new planes or to modernise existing ones.

Aeroflot's head Valery Okulov has repeatedly urged the government to
tighten safety standards and force bankrupt carriers out of business.

At least 10 crashes involving Tupolev 154s, the workhorse of the Russian
fleet, were recorded between 1990 and 1995.

"I don't think they deserve their much-maligned reputation anymore, I fly
to London from Moscow on Aeroflot rather than British Airways," said one
Moscow-based foreign businessman, though he added that service could be
"patchy."

Aeroflot, which usually offers cheaper flights, scored well on consumer Web
sites, although again service was seen as its weak point.

Koshliakov said the company was struggling to change the perceptions of air
travellers and of its staff.

"You have to understand that in Soviet literature and Soviet society no one
was supposed to serve anyone else and so the most despised professions were
the service ones," he said.

********

#10
Moscow Times
February 10, 2003
U.S. Tries to Speed Up Visas

Security checks on applicants for visas to the United States will not be
eased for anyone, but U.S. consulates are trying speed up the processing of
applications, Washington's top visa official said.

"I don't think we are ever going to be able to go back to doing visas the
way we did before Sept. 11 [2001]," said Janice Jacobs, U.S. deputy
assistant secretary of state for consular affairs, in an interview late
last week.

Introduction of the checks has created backlogs worldwide, and Jacobs said
she hoped these would be cleared soon.

The United States is getting good cooperation from several countries in
performing the checks, she said. "Russia has been particularly helpful." 

Asked if Russians might benefit from the partnership that it has formed
with the United States with its support for U.S. President George Bush's
war on terrorism, she said the measures adopted applied to all
nationalities and religious groups and that no exceptions could be made. 

Starting this year, most applicants will be interviewed before receiving a
visa, a measure that will affect Russians little because this is already
the case, she said.

As part of measures to stop visitors using forged documents or visas, an
interactive database is being updated every five months. It carries
details, including photos, of all visa applications, successful or not,
that can be accessed by all U.S. officials working with foreigners, she said.

A biometric measure, "probably a fingerprint," will be introduced to all
U.S. visas from October next year, she said.

*******

#11
Moscow Times
February 10, 2003
Bill Lifts Cash Limit to $3,000
By Valeria Korchagina 
Staff Writer 

The State Duma earned the applause of foreigners and economists alike
Friday by passing long lobbied for legislation that will make it easier to
take cash out of the country.

Lawmakers passed in the third and final reading amendments to the law on
currency controls that will allow all travelers -- both Russians and
foreigners -- to carry out up to $3,000 without declaring the sum and up to
$10,000 with a declaration. Amounts of more than $10,000 must be wired
through banks.

Currently, Russians may take out up to $1,500 without either a declaration
or documentation. But foreigners must declare every cent and provide
documents, such as a declaration stamped upon entry or a bank certificate
proving how the money was imported.

The legislation -- the result of intense negotiations between the Duma, the
Federation Council and the Cabinet -- is expected to gain Federation
Council approval and be signed into law by President Vladimir Putin within
the next few months.

Friday's vote was the second attempt to ease cash currency flows out of the
country. Lawmakers originally passed a more liberal version of the bill on
Dec. 20, which allowed up to $10,000 to be taken out of the country without
a declaration. The Federation Council rejected the bill a week later.

The new version is likely to get the remaining stamps of approval without a
glitch, observers said Friday.

"We expect the bill not to have any troubles any more," said Andrew Somers,
president of the American Chamber of Commerce in Russia. 

Somers called the adoption of the bill not only a sign of common sense, but
a victory that finally makes Russians and foreigners equal.

"Everyone won. It's doubly good: Foreigners get equal treatment, and
Russians can take $3,000 out," said Somers, who, like the European Business
Club, has lobbied the government to make such changes for more than two years.

Many foreigners, unaware of the harsh regulations, have been stopped at the
border while trying to leave with unspent and often insignificant sums. 

Others have had substantial amounts confiscated.

More experienced foreigners, including Somers himself, have learned that
some customs officials show more common sense than the law and allow
foreigners to take out the small sums needed to catch a cab at their port
of arrival.

"What I have been doing is just tell them honestly that I have, lets say,
$80 for the cab," Somers said in a telephone interview Friday. "And customs
officers would usually let me go."

He said his personal record in taking money out of the country in such a
manner was $120.

But, Somers stressed, frequent trouble at customs was unsettling and left a
bad impression with foreigners, including much-needed foreign investors.

The current system was put in place largely in an attempt to staunch high
capital flight throughout the 1990s. 

The threat is over and the government has better things to worry about than
the negligible amounts of money leaving the country in the pockets of
travelers, analysts said.

"All the capital that could leave has already gone," said Christopher
Weafer, chief strategist at Alfa Bank.

Apart from Russia's image, the economy too could benefit from more liberal
currency controls, said Alexei Moiseyev, economist at investment bank
Renaissance Capital.

According to Moiseyev, allowing more cash to move out of the country could
help ease the pressure on the ruble from Russia's current positive balance
of trade and inflow of currency into the country.

"The current system is ridiculous and harmful," he said.

Weafer also welcomed the fact that once the amendments kick in, there would
be a point of reference in the issue, replacing the often hectic and
incoherent changes that have occurred in the past.

The large amounts of hard currency in the economy also push interest rates
on ruble accounts below the inflation rate and generally slow the
development of the banking sector, Moiseyev said.

*******

#12
Baltimore Sun
February 9, 2003
Vivat! 
A cultural feast
Baltimore throws a party to celebrate 300 years of arts inspired by St.
Petersburg 
By Scott Shane
Sun Staff

What if you could invite all of St. Petersburg's artistic geniuses to
dinner one night -- poets, novelists, composers, painters, dancers?
Vanquish time, forget mortality. Borrow somebody's mansion, and round them
up for an evening.

Do it soon, while Baltimore is throwing Vivat!, a remarkable 300th birthday
party for the Russian city, quite possibly the biggest celebration of St.
Petersburg ever held outside its own boundaries. Gather them all in one
place -- these people who pioneered psychological fiction, abstract
painting, modern dance. Get a look at the artists whose influence is all
around you, even if you've never set foot in Russia.

But how would you seat them? Alphabetically?

Put, say, Fyodor Dostoyevsky, whose novels drew their existential agony
from the garrets of the 19th-century city, next to Sergei Diaghilev, ballet
impresario whose Ballets Russes revolutionized dance in the 20th. See what
develops.

(And in case he needs rescuing from the intense Fyodor Mikhailovich, seat
at the same table a couple of Diaghilev's star dancers, Anna Pavlova and
Vaslav Nijinsky. And perhaps they would like to meet their successors at
the Kirov Ballet, the defectors Rudolf Nureyev and Mikhail Baryshnikov.)
Or, play it safer. Seat the greatest of the 19th-century composers
together, Peter Tchaikovsky with Modest Mussorgsky.

On second thought, maybe not. Tchaikovsky thought Mussorgsky, the
anti-establishment rebel, vulgar and untrained. Mussorgsky returned the
feelings, scorning Tchaikovsky as a mercenary product of the St. Petersburg
Conservatory.

All right: put Tchaikovsky with Anton Rubinstein, first director of the
conservatory and founder of a tradition of Russian piano virtuosity that is
still with us today. (Note: Make sure the mansion has a grand piano; coax
Rubinstein to play something.)

Move Mussorgsky next to Alexander Pushkin, the greatest Russian poet, whose
tragic drama Boris Godunov Mussorgsky turned into a powerful opera. They'd
have something to talk about.

On second thought, scratch that. Pushkin died in a duel, Mussorgsky was a
heavy drinker. ... It could end badly.

(Note: Invite the man who serves as conductor of both the Baltimore
Symphony Orchestra and the St. Petersburg Philharmonic. If things get truly
out of control, perhaps Yuri Temirkanov can lead everybody in Russian folk
songs.)

OK, who else?

You could match up some of the great 20th-century exiles: Marc Chagall, a
revolutionary in painting, with Igor Stravinsky, a kindred spirit in music,
and with Vladimir Nabokov, prose virtuoso of Lolita. All were educated in
St. Petersburg, then headed West to abandon Russia forever -- except in
their work, which remained forever obsessed with that country.

Who's left out? The 19th-century writer Nikolai Gogol -- peculiar fellow,
no question, but one whose short stories are unsurpassed in world
literature for sheer Twilight Zone eeriness. Put him next to Nabokov, a big
fan who wrote in his book on Gogol: 'Passing as it were through Gogol's
temperament, Petersburg acquired a reputation of strangeness which it kept
up for almost a century.

The composer Nikolai Rimsky-Korsakov is a big hit with Americans -- plus,
unlike the rest, he's been to Baltimore before, aboard a warship dispatched
by the czar in 1863 to show support for Abraham Lincoln during the Civil
War. Seat him with Dmitri Shostakovich, whose defiant Leningrad Symphony
rallied the suffering city during World War II -- they can compare
centuries, compare czarism with Stalinism.

Speaking of Stalinism... an invitation must go to Anna Akhmatova, whose
courageous poetry documents both the Stalinist terror and the unspeakable
horror of the 900-day Nazi siege.

If you're inviting Akhmatova, surely you should include Osip Mandelstam,
another world-class St. Petersburg poet who died in a Gulag transit camp in
1938. His fate was all the more poignant because of his famous remark about
art and the regime: 'Only in our country is poetry respected -- they'll
kill you for it.

And how about Joseph Brodsky, the late, great contemporary poet imprisoned
for 'social parasitism' in the 1960s (Leningrad judge: 'Who included you
among the ranks of the poets?' Brodsky: 'No one. And who included me among
the ranks of the human race?'). Kicked out of the Soviet Union in 1972, he
settled in the United States, where he won the Nobel Prize for literature
and became U.S. poet laureate, helping launch a project to give out tens of
thousands of poetry anthologies at bus stations, schools and hotels. (The
Gideon Bible shouldn't object, he quipped; they've been cooped up with
telephone books all these years.)

Whoever else you might add -- and how much vodka and steamed crabs can you
afford? -- there is no question about who would have to be seated at the
head table. Towering over this crew of eccentric aesthetes would be the
6-foot-7 Peter the Great himself. Impetuous, brutal, crude, he was
nonetheless the first of St. Petersburg's great artists, for his
masterpiece was the fabulous city itself.

No one who sees them will forget any time soon the pastel facades of the
palaces along the gray-green water of the Neva River, the gold pinnacle of
the Admiralty, the web of canals and bridges, the formal gardens and
elaborate ironwork.

It's a shifting, dreamlike place, whether in the half-light of short winter
days or the long twilight of summer nights. Not even the name holds still:
renamed Petrograd during World War I to shed the Germanic suffix; then
renamed Leningrad in honor of the man who famously arrived at the city's
Finland Station in 1917, bringing revolution; returned to St. Petersburg by
referendum in 1991. All along Russians have simply and affectionately
called it 'Peter.

In the number, variety and originality of the artists it has produced over
the last 180 years, St. Petersburg rivals any city in the world. But what
made it so productive of art? What, Nabokov might have punned, made St.
Petersburg such a culture dish?

'There's a really interesting link between Petersburg and creativity,' says
Jeffrey Brooks, a cultural historian of Russia at Johns Hopkins University.
'It's one of those amazing places where culture just blossoms. ... But no
one has really been able to explain it.

In Russian literature, Brooks says, the order of an autocratic society is
often posed against the freedom that bursts out in the temporary oblivion
of the binge, the (usually vodka-soaked) prazdnik or holiday. Against the
regimented background, St. Petersburg, he says, 'is often imagined as one
of those spaces where freedom is possible, a place that's chaotic and wild.

In a country whose politics to this day cycle between outward-looking
Westernizers and inward-looking Slavophiles, this most European of Russian
cities had a fertile mix of cultures.

'That fusion of Russian and European identities is at the heart of the
great Russian renaissance of the 19th century,' says Orlando Figes, an
historian at the University of London who explores the idea in Natasha's
Dance, his mammoth study of Russian culture.

St. Petersburg gave artists 'a sense of being part of a universal,
classical culture,' he says. 'But underlying this notion of Petersburg as
an ideal city is the notion of Petersburg as an apocalyptic city, a sense
of living in a civilization which is fragile.'

One reason for the fragility was the class structure, which always
threatened to explode in revolutionary violence.

'The contrast between the Europeanized elite and the workers who just came
from the country created a tension,' says Steven G. Marks, a Clemson
University historian of Russia. 'It's a tension that symbolizes the modern
world. ... Petersburg was a troubled place, but there was a vibrancy
because of it.'

Finally, there's the origin of the city. St. Petersburg was an idea, an
absurd dream forced in defiance of logic onto a hostile landscape -- a
swamp at the latitude of mid-Hudson Bay.

'It's the city of infinite possibility, because Peter invented it out of
the mud,' Brooks says.

Appalled by Russia's backwardness, the czar was inspired by what he saw on
his 1698 grand tour across Europe with 250 pals and servants. His traveling
motto was: 'I am a pupil and need to be taught.

(That admirable modesty did not extend to his conduct: he borrowed a
mansion outside London and trashed the place, burning the furniture,
smashing the windows, and using the paintings for target practice.)

Impressed by all he saw, Peter decided to wrench Russia by brute strength
into Europe, starting with a new capital.

Pushkin's great poem 'The Bronze Horseman' (whose title refers to the
statue that has become the city's enduring symbol: Peter on a rearing horse
atop a massive granite base) describes the giant czar brooding over his plan.

Any Russian can recite the opening from memory (though Pushkin loses almost
everything in translation):

At the edge of the desolate waves, He stood, full of deep thoughts, And
looked into the distance... Here we are destined by nature To break open a
window to Europe.... 

But while portraying Peter as a titanic figure, Pushkin chooses as his hero
a nobody, a minor clerk named Evgeny who loses his beloved in the floods
that plague the city. In the background is the haunting fact that, even as
an army of workers built Peter's imagined city, at least 10,000, possibly
20,000 or more, succumbed to accidents, disease and cold.

'Built on bones,' Russians say of the city. The human cost of construction
would only prefigure the violence that has repeatedly shadowed St.
Petersburg's elegance.

This duality is literally built in to the city: across the Neva from the
magnificent Winter Palace and Hermitage (which houses the czars' matchless
collection of Western art) stands the Peter-Paul Fortress, where dissenters
were imprisoned and executed.

Scholars credit Pushkin with creating Russia's literary language. The works
he completed before his death at 38 rival Shakespeare's plays in richness
of language, range of characters and emotional power.

One of those he inspired was Gogol, whose St. Petersburg stories lend a
phantasmagoric quality to even the city's bustling main boulevard, Nevsky
Prospect. Their fantastic plots involve peculiar people: a timid clerk dies
of fright and grief after his new coat is taken; a man's nose goes missing,
turning up in a barber's loaf of bread. A reader barely begins to read 'The
Overcoat' before reality begins to leak away: 'In the department of... but
it is better not to name the department.

From Gogol, Dostoyevsky inherited a sense of the human mind as a torture
chamber.

'I swear that too great lucidity is a disease,' says the neurotic narrator
of Notes from Underground, written in 1864. 'For everyday needs, the
average person's awareness is more than sufficient, and it is half or a
quarter of that of the unhappy nineteenth century intellectual,
particularly if he's unfortunate enough to live in Petersburg, the most
abstract and intentional city on earth.

To read Crime and Punishment (1866), grandfather of all psychological
thrillers, is to sympathize with an ax murderer -- to understand why the
destitute Raskolnikov does what he does and thus feel complicit in it.

The flowering of literature helped define St. Petersburg as a separate
realm where the rules of the universe appeared to be suspended.

'In Gogol, anything -- anything at all -- can happen on Nevsky Prospect,'
Brooks says. 'In Dostoyevsky, the streets and canals are a moral theater
where the unthinkable can be done.

This notion of St. Petersburg as a distinctive place is tied up with the
Slavophile belief in Russia's spiritual superiority.

'I make no attempt to compare Russia to the Western nations in the matter
of economic or scientific renown,' Dostoyevsky said in a famous 1880 speech
at the unveiling of a Pushkin monument. 'I say only that the Russian soul,
the genius of the Russian people, is perhaps among all nations the one most
capable of upholding the ideal of a universal union of mankind.

But there's another school, one that views lofty talk about the Russian
soul as a bit of a con job. What counts, according to this cold-eyed
theory, is money.

'I'm a little bit cynical about this mystical St. Petersburg stuff,' says
Blair A. Ruble, director of the Kennan Institute, a leading Russian studies
center in Washington. 'My own view is that culture really is a product of
wealth.

By moving the seat of government and the court to St. Petersburg, Ruble
says, Peter guaranteed a concentration of wealth unmatched in the empire.
The key to the city's artistic output, then, is not the Russian soul but
the Russian throne -- sometimes occupied by German nobility, he notes.

St. Petersburg's elite not only built incomparable palaces but also
patronized artists and endowed a series of arts institutions that had huge
influence, even when great talents rebelled against them: the Academy of
Arts (1757), the Mariinsky Theater of opera and ballet (1860) and the
Conservatory (1862), and the Russian Museum (1895).

Russia's greatest 19th-century painters, known as the Wanderers, broke with
the Academy and its stilted classical subjects and began to paint the real
Russia: stunning canvases of historical and village scenes, some of which
approach photographic realism. Americans might know Ilya Repin's Volga
Boatmen.

Likewise the composers known as the 'Mighty Handful' -- including
Mussorgsky and Rimsky-Korsakov -- rebelled against the staid Conservatory
with a self-consciously nationalist music.

But it's probably fair to say they would not have existed without the
traditions they rejected. They found their own patrons among wealthy
Russians, sometimes among the emerging mercantile class rather than the
landed nobility.

Diaghilev was a bankrupt nobleman with entrepreneurial instincts. He
realized that, two centuries after it began importing from the West, St.
Petersburg was ready to export original art.

His creation, the Ballets Russes, would rivet the attention of European
audiences. For a decade or so, St. Petersburg would join the avant-garde of
world art.

'The whole of modern dance can be traced back to the Ballets Russes,' says
Marks, the Clemson historian and author of How Russia Shaped the Modern
World. Leaving St. Petersburg for Europe in 1909, Diaghilev's troupe set a
pattern that would drain great artists from Russia through the Soviet era.
But they were not yet leaving out of fear.

'They left because they were convinced the world needed to see Russian
art,' Marks says. 'And because Diaghilev convinced them they were going to
make a killing.' (He was right.)

Among Diaghilev's brilliant collaborators was Leon Bakst, a designer whose
sets and costumes were hugely influential, going beyond theatrical arts to
fashion and interior design, Marks says. In the winter of 1922-23, Bakst
came to Baltimore and designed a small theater at Evergreen, the mansion of
railroad heiress Alice Garrett.

By no means did all of St. Petersburg's avant-garde artists flee the city
after the Bolshevik revolution. For a time, an extraordinary arts scene
flourished in the new Soviet Union, though the center of gravity shifted to
Moscow after the capital moved there in 1918.

Sergei Eisenstein, who trained as an engineer in St. Petersburg and set
some of his films there, pioneered the new art of cinema. Painters such as
Kasimir Malevich, who invented the abstract, geometric style called
Suprematism ('Black Square'), were 'the cutting edge of the cutting edge of
European art,' Brooks says.

He calls it a 'tragic moment,' because the avant-garde artists deluded
themselves into thinking they had something in common with the avant-garde
politicians: 'These artists were flattered that the Bolsheviks paid them
attention.

By the late 1920s, Eisenstein, Malevich and many others collided with the
Stalinist demand for Socialist Realism -- inspiring, storytelling art to
instruct and galvanize the 'new Soviet man.

Russian artists had always struggled with the state; Czar Nicholas I once
informed Pushkin that he would serve as the poet's personal censor. But
Stalin and his successors were far narrower in their taste and deadlier in
enforcing it.

For St. Petersburg, suffering through the Stalinist purges and the Nazi
blockade in which more than 500,000 people died of starvation and cold, the
nadir for artists came during the grim rule over Soviet culture of Andrei
Zhdanov, Stalin's brutish Leningrad Communist Party chief.

After the war, Zhdanov crushed every hint of creative independence,
denouncing the poet Akhmatova as 'half nun, half harlot.

He also attacked Shostakovich, declaring that 'a melody that can be hummed'
was the key to great music.

Zhdanov's reward, upon his death in 1948, was to have Leningrad State
University named for him; his name was quietly removed only after the
collapse of Soviet rule in 1991.

'My feeling is that the purges and the war actually devastated Petersburg
and made it a second-rate cultural city,' says Ruble, of the Kennan
Institute. If that's true, of course, the rest of the world was the
beneficiary, as writers, artists and dancers fled abroad and thrived.

In recent years, there have been modest revivals -- a vibrant rock music
scene, a few young writers of striking originality -- accompanied by hard
times for institutions that the Soviet government had supported, including
the Conservatory and the Kirov Ballet. As in the West, painters drive cabs;
composers wait tables.

Artists today have more liberty, and less material support, than at any
time in the city's three centuries. Perhaps the oligarchs of the new era
will try patronage to polish their image, the creative ghosts that haunt
the city on the Neva will inspire a new generation, and the artists of St.
Petersburg will be heard from again. 

******

#13
Asia Times
February 10, 2003
Russia turns to Iran for oil exports
By Hooman Peimani 
Dr Hooman Peimani works as an independent consultant with international
organizations in Geneva and does research in international relations. 

As stated late last month by LUKoil spokesman Dimitri Dolgov, Russia has
taken steps to increase its crude-oil exports via Iran through swap deals
with that country. The Russians, who began such exports in November, are
working toward signing a long-term contract with the National Iranian Oil
Co (NIOC) to increase the volume of their annual swap deals with Iran to 1
million tons beginning next month. 

In his reference to the ongoing negotiations between LUKoil and NIOC,
Dolgov stated, "We are going to supply oil to Iran," a clear indication of
confidence that the two sides will finally sign an agreement to that
effect. Among others, LUKoil's success in increasing the amount of oil
supplies to Iran to 45,000 barrels per day (bpd) in December when it made a
swap deal of US$167.45 million with NIOC should have been a major reason
for his confidence. 

For Russia, swap deals with Iran are a new way to increase its oil exports
and decrease its costs, while diversifying its methods. In this case,
Russian crude oil will be used in Iran's northern refineries for domestic
consumption in return for an equivalent amount of Iranian oil delivered to
Russia's designated buyers at Iran's Persian Gulf oil terminals. This
arrangement will make Russian oil available to non-European buyers at a
competitive price by sharply decreasing the cost of exports currently done
by oil tankers loaded at Russia's Black Sea ports, such as Novorossisk. 

For all Russian swap deals with Iran, Russian crude oil produced by
LUKoil's subsidiary, Nizhnevolzhskneft, will be shipped from the Russian
Caspian ports of Astrakhan and Volgagrad to the Iranian Caspian port of
Neka to be carried farther down into Iran through the 16-inch Neka-Sari
pipeline. A Chinese consortium led by China Petroleum and Chemical Corp and
China National Petroleum Corp built the pipeline last year. 

Having a recently enlarged oil terminal, Neka has been the destination for
swap deals for other Caspian countries, mainly Kazakhstan and Turkmenistan.
These countries transfer their oil by small sea tankers to Neka to be used
in the northern part of Iran. Neka is already connected to Tehran via an
old pipeline with the capacity of 40,000 bpd, which limits the amount of
transferable oil. To remove this barrier, the Chinese consortium is
building another pipeline with a much larger capacity. 

The Neka-Sari pipeline is the first phase of the three-phase Neka-Tehran
pipeline (392 kilometers) to connect Neka's oil terminal to Tehran's oil
refinery in the southern part of the capital in the municipality of Ray. By
next month, the Neka-Sari pipeline's capacity will reach 50,000 bpd, as
announced in December by Ali Reza Baba-i, NIOC's person in charge of
transferring Caspian oil from Neka. The second phase, the 32-inch
Sari-Veresk pipeline, will add about 115,000 bpd to that capacity to be
increased further by 270,000 bpd when the last phase, the 32-inch
Veresk-Ray pipeline, is online. 

According to NIOC, the total capacity of the Neka-Tehran pipeline will
reach about 500,000 bpd through the construction of additional pumping
stations. Thus, once the pipeline is fully operational, Iran will be able
to increase significantly swap deals with the Central Asian oil exporters
(Kazakhstan, Turkmenistan and Uzbekistan). 

Oil is not the main attraction of swap deals for Iran, a country with the
fifth-largest proven oil reserves (about 99 billion barrels). In fact, its
reserves may well be far larger than that, as indicated by new oil
discoveries over the past few years, such as those in the central part of
the country. However, swap deals make sense for Iran, whose main operating
oil wells are in its southern regions. To supply their northern and central
oil refineries and petrochemical complexes, the Iranians have to transfer
oil from south to north via pipelines and land oil tankers. Swap deals
enable them to supply these facilities at a much lower expense, while
generating income for handling swap operations. Moreover, such operations
increase their regional and international political influence. 

Having these considerations in mind, Iran began swap deals with the
Caucasian (Azerbaijan) and Central Asian (Kazakhstan, Turkmenistan and
Uzbekistan) countries in the mid-1990s when those land-locked states with
no direct access to international oil markets sought to find alternatives
to Russian pipelines for their oil exports. In particular, US opposition to
any major Iranian involvement in Caspian oil exports excluded Iran as a
major export route and made limited swap deals the only available means for
the Iranians to play a role in such exports. Prior to the initiation of the
Russian-Iranian swap deals, the domination of US oil companies on the
Caspian oil industry excluding that of Russia left a small amount of crude
oil available for swap deals. Being the product of non-US development
projects, their annual volume ranged between 200,000 and 300,000 bpd. 

Russia's swap deals with Iran are a major development for both sides. Not
only will they help the Russians expand their share of international oil
markets significantly, they will enable Iran to turn itself into a major
player in Caspian oil exports, as Russia has decided to increase
substantially the amount of its oil exports via Iran. This development
demonstrates that country's efforts to consolidate its position as a major
global oil exporter by diversifying and expanding its export routes and
means. 

Its existing westward oil pipelines and its Black Sea oil terminals put
Russia in a suitable position to supply European markets, while making its
exports to the growing Asian markets complicated and costly. The Iranian
Persian Gulf oil terminals address this problem by facilitating Russian oil
exports to those markets without requiring a heavy investment in Russia's
oil-export infrastructure. 

Russia's growing ties with Iran in the oil field, as reflected in its
1-million-ton swap deal, indicate the Russians' determination to follow
their national interests despite US efforts to weaken Iran economically and
politically. Such ties also reveal Iran's attempts to establish itself as a
major transit route for all Caspian oil exporters, including Russia, its
strategic ally.